Friday, October 27, 2006

Solid revenue boosts YRC bottom line

But the Overland Park freight hauler sees a slow-up in ’06’s last quarter.

YRC Worldwide Inc.’s profits were up about 12 percent on record revenues in the third quarter, the firm reported Thursday.

But the largest U.S. trucking company said it expects a slowdown for the remainder of the year as the economy downshifts.

For the three months ending Sept. 30, the Overland Park-based company posted net income of $95.79 million, or $1.64 a share, on $2.57 billion in revenue.

During the comparable period last year, YRC earned $85.29 million, or $1.42 a share, on $2.49 billion in sales.

The third-quarter earnings-per-share figure included expenses of 8 cents a share for reorganization costs and losses on a sale of a subsidiary and other property. YRC said it does not consider it part of its core operations, which would put its adjusted diluted earnings per share at $1.72.

The average estimate among trucking analysts for YRC’s third quarter had been $1.73 a share, according to a Thomson Financial survey.

“We delivered a solid quarter with record revenue and earnings per share,” said Bill Zollars, YRC’s chairman and chief executive, in a news release. “Our operating companies continued to execute well while effectively reducing our cost base.”

Zollars said that all of YRC’s units have performed solidly this year. “With that said, the economy is growing at a much slower pace, and we believe that will impact our earnings growth in the fourth quarter.”

YRC said it expected fourth-quarter earnings between $1.40 and $1.50 a share, which would put full-year earnings at $5.45 to $5.55 a share. YRC previously had forecast full-year earnings of $5.65 to $5.85 a share.

Other trucking companies that have issued third-quarter reports also have said their businesses were being affected by a slowing U.S. economy.

Jason Seidl of Credit Suisse lowered his YRC quarterly forecast to $1.66 a share earlier this month, noting that other carriers had lowered estimates based on evidence of a sluggish domestic economy.

Seidl’s report on Oct. 2 also lowered YRC’s full-year earnings estimate for 2006 to $5.50 a share from $5.73 a share.

Nevertheless, Seidl said the cost savings that YRC should realize from its acquisitions of Roadway Corp. and USF Corp. should continue into 2007, making it an attractive stock.

“As such, we maintain our position that YRCW is a solid choice for investors seeking exposure to the trucking industry that are not averse to volatile stocks,” Seidl said in his report.

Before earnings were released, YRC’s stock rose 39 cents and closed at $39.20 a share.

In after-hours trading, the stock price dipped to $38.50, down 70 cents an hour after the markets closed.

Monday, October 23, 2006

ABF Sees Trucking Softness

Arkansas Best slumped 8% after missing third-quarter earnings targets by a nickel and pointing to softness in the truckload freight market.

The Fort Smith, Ark., transportation giant made $31.5 million, or $1.24 a share, for the quarter ended Sept. 30. That's down from the year-ago continuing operations profit of $40.2 million, or $1.58 a share. Excluding certain items, latest-quarter earnings were $1.26 a share.
Revenue rose to $507 million from $463 million a year earlier.

Analysts surveyed by Thomson Financial were looking for a $1.31-a-share profit on sales of $503 million.

"ABF's quarterly operating ratio wasn't quite as good as the superior number that we posted in the third quarter of last year, but it still reflected an excellent result," the company said. "In the third quarter of this year, ABF took aggressive steps to improve service levels to customers. In addition to reducing spot volume tonnage, ABF has added approximately 2,000 new employees throughout its network, resulting in a net increase of over 750 in ABF's total employee count since the first of the year. The additional employees also allowed us to reduce our rail usage and thus increase the amount of freight moving in ABF's linehaul network. This successful recruiting effort will also position ABF for future growth, especially as we expand in the regional markets."

The company said since the end of the third quarter, total tonnage per day has dropped by the mid-to-high single digits from a year ago. Excluding the impact of reductions in spot volume tonnage that ABF continues to experience, the percentage change in early October tonnage is flat to down in the low, mid-single digits compared to the same period last year.
"In early October, ABF began to experience a slowdown in freight tonnage that appears to be related mostly to retail customers who have delayed the timing of normal holiday orders," said CEO Robert Davidson. "In addition, based on the continuing decline of ABF's spot volume tonnage, we suspect that this slowdown is related to softness in the truckload market."

Shares fell $3.63 to $41.08.

Local truckers take pride in driving for dollars

At 5 feet and 105 pounds, Helen Dame of Bedford doesn't look like someone you'd expect to see driving a tractor-trailer.

But the grandmother of four has been a truck driver for the last 22 years, 19 of them with BSP Trans Inc. of Londonderry, ever since she decided that, as a single mother with two children, she could make good money by driving a truck.

"I wanted to drive locally, no long trips, so that I could be home at night with my kids,'' says Dame, who has been driving every working day from Londonderry to Boston for the last 21 years, picking up trailers there sometimes twice a day.

Dame is active in NH Professional Drivers Association, which yesterday held its 11th annual Convoy for Kids at New Hampshire International Speedway. It's an event she has chaired twice.

It was Dame who persuaded the association to become involved with CASA (Court Appointed Special Advocates), an organization that helps physically and sexually abused children, as one of the charities it supports.

"She's our goodwill ambassador,'' says Michael Greany, executive vice president of BSP, of the company's longtime employee who several years ago was featured on television.

About 65 truckers, including some from Maine and Connecticut, took part in the convoy, according to Mickey Rafeal of Pittsfield, who organized this year's event.

One driver, David Paul, also known as "Animal," who drives for Pike Industries, held two car washes during the summer to raise money for the event and other drivers sought out donations from businesses in their home towns.

Yesterday, drivers brought toys and games for the Concord area Salvation Army, food and cash for the New Hampshire Food Bank, as well as money for CASA, said Rafeal, who drives for Roadway Express in Concord and has been a driver for 33 years.

He said Pike Industries sent 14 trucks yesterday and many of the companies represented had matched the dollar amount their drivers raised.

Randy Cowles of Chester, a million-mile driver and one of the founders of the association, said the group was formed so drivers would have a voice at the state level. It started the Convoy for Kids as a way to show its commitment to the communities in which the drivers live.

"We wanted to show that we do more in life than drive trucks,'' says Cowles.

Lance Rickenberg of Henniker, a truck driver for Pike, says he's about to join the association because he likes the kinds of things it does.

"This is a great way to do it, to help people out,'' says Rickenberg, who has been a truck driver for 25 years and has done everything from hauling produce, plowing snow and driving a propane delivery truck.

He says trucking would be a lonely job were it not for the constant chatter of drivers over the CB radios, something that enables them to share information about road conditions as well as to form friendships with people they've never met before.

His favorite trucks are dump trucks and he's still getting used to his new one, which has an automatic transmission.

"There's no shifting, there's air conditioning, air ride seats and a CD player. It's really comfortable,'' says Rickenberg.

But driving still requires constant attention. "You're always thinking. You have to think ahead, especially when cars pull out right in front of you and don't seem to realize that a truck weighing 23,000 pounds can't just stop on a dime,'' he says.

Ray Miller of Franklin, a driver for 41 years who has handled everything from cattle trucks to double trailer semis in all 48 of the lower states, says he still likes the manual shift trucks the best.

He now drives for GMI Asphaltics of New Hampton and was at the event bringing toys in a Peterbilt 359 tri-axle that his granddaughter, Jessica Arteaga of Northfield, had helped him decorate.

Miller says he tried to make the switch away from driving several years ago. "I tried mechanic-ing'. But every time I heard one start up, I wanted to be behind the wheel."

And he's glad that he's been a truck driver all these years. "I've gotten to see quite a lot of this country. I wouldn't trade what I've done for any other kind of life,'' says Miller.

Sunday, October 22, 2006

Dispute spins out of a plan to slow trucks

An industry group says the idea is driven by a desire for safety. Critics see other motives.

The American Trucking Associations group wants the government to require truck makers to place speed limiters on their vehicles to prevent them from going faster than 68 mph.

“This issue was raised by our safety committee, debated by our safety committee, and recommended by our safety committee. This is designed to improve truck safety and all highway safety. Period.”

Dave Osiecki, vice president of safety, security and operations for the American Trucking Associations

Citing safety concerns on the nation’s highways, an influential trucking industry group is seeking new federal regulations requiring devices limiting the top speed of big rigs.

Critics of the proposal, however, say some big trucking companies are trying to use the safety issue to restrict competition and reduce turnover in an industry that is grappling with a shortage of drivers.

The American Trucking Associations on Friday submitted a petition to the National Highway Traffic Safety Administration asking that the agency require truck manufacturers to place speed limiters, also called governors, on their vehicles to prevent them from going faster than 68 mph.

“For the sake of safety, there is a need to slow down all traffic,” said Bill Graves, the president and chief executive of the trucking group, which is based in Alexandria, Va. “The trucking industry is trying to do its part with this initiative. No vehicle should be capable of operating at excessive speeds on our nation’s highways.”

The trade group said that while the federal government focuses on equipment failure, driver fatigue and impaired driving, speeding is the most significant factor in truck crashes.

As much as 90 percent of trucks already have some type of speed limiter, according to the trade group. It contends a small number of truck drivers are speeding and creating greater chances for accidents.

The Grain Valley-based Owner-Operator Independent Drivers Association, which has more than 145,000 members in the United States and Canada, disagrees and questions the American Trucking Associations’ motives.

Big trucking companies want to limit smaller competitors, said Todd Spencer, the group’s executive vice president.

Spencer said big trucking companies should pay drivers by the hour instead of the mile. He said that paying by the mile creates incentives for employees to drive faster because federal rules limit how many hours they can drive each day.

“This is a PR campaign touting safety, but it’s really about big trucking companies acting in their own self-interest,” Spencer said. “Any trucking company can set their own speed limits. But if they do, their drivers will go work for other companies where they can drive longer distances and receive more pay. If these companies paid by the hour instead of by the mile, the issue’s gone.”

Spencer also said the American Trucking Associations’ wish to limit truck speed to 68 mph would actually make the roads more dangerous. He said it would create an even greater disparity between truck speeds and how fast the general public drives, potentially causing more accidents.

“Slower isn’t necessarily better all the time,” Spencer said. “Cars are going to be more likely to run into the back of a truck at these slower speeds. It flies in the face of common sense.”

There are 24 states where the speed limit for trucks on interstate highways is 70 mph and higher.

Yellow Transportation Inc. has limited its trucks to a maximum speed of 62 mph for several years, said James Welch, its president and chief executive officer.

Yellow Transportation, the biggest unit of trucking giant YRC Worldwide Inc. of Overland Park, has been an industry leader in reducing its accident rate, Welch said.

“We certainly believe in slower speeds for trucks,” Welch said. “It’s served us well. The faster you’re going when you’re pulling a 53- or 56-foot trailer, the more reaction time you need. So the slower speeds are definitely better.”

YRC says it has consistently lobbied for slower speeds for trucks. In 2002, the company urged all states to limit the maximum truck speed to 65 mph for safety reasons.

Spencer, of the independent truckers group, said he thinks other motives are at work in the lobbying of the big carriers.

“It’s no secret the big companies want bigger trucks and trucks with longer-vehicle combinations such as triple trailers,” he said. “If everybody else has to drive slower, that gives them a competitive advantage.”

The American Trucking Associations emphasized that safety is the only concern driving this proposal.

“This issue was raised by our safety committee, debated by our safety committee, and recommended by our safety committee,” said Dave Osiecki, the group’s vice president of safety, security and operations. “This is designed to improve truck safety and all highway safety. Period.”

The trade group’s proposal is just the first step in seeking a new federal regulation.

The National Highway Traffic Safety Administration would have to agree to review the issue and hear from other parties if it decides to explore the matter. Spencer of the owner-operators group said his organization would file its objection to the proposal if the federal agency pursues it any further.

A spokesman for the agency could not be reached late Friday.

Federal statistics show that U.S. fatalities resulting from truck crashes has been relatively stable since 1994. Between 1994 and 2004, the number of truck-involved deaths averaged 5,176 per year. In 2004, truck-involved deaths totaled 5,190.

Public Citizen, a consumer advocacy group, said the American Trucking Associations’ proposal could improve truck safety, but other measures could also help. Since most drivers are paid by the mile and can work only a limited number of hours, the temptation to speed exists, said Joan Claybrook, president of Public Citizen.

“The real issue is they should pay drivers by the hour, then they wouldn’t encourage them to speed,” she said.

One local driver also said a speed limiter of 68 mph would be impractical.

Robert Merrell, an owner-operator from Liberty, said such a limit would be detrimental to fully loaded trucks trying to head up mountains and steep inclines, particularly in places like the Rocky Mountains and the Appalachians.

“You need to generate a little speed when you start heading up those mountains,” said Merrell, who was driving outside Dallas on Friday. “A governor at 68 miles per hour would bog everything down too much. Trucks you see going 35 or 40 miles per hour up those hills will be going 15 or 20 miles per hour. The traffic problems would be immense.”

Merrell, who said he never drives faster than 68 mph for fuel-efficiency purposes, said the notion that truck drivers are accident-prone is a misperception.

“We’re not all tailgating and trying to be NASCAR semi-drivers,” he said. “Most truck drivers drive pretty decent. I think the best thing you can do to make it safer out here is to set the same speed limits for everybody.”

The proposal

The American Trucking Associations proposed a federal regulation to place speed limiters on new trucks to limit their speed to a maximum of 68 mph.

The proposal is aimed at reducing the number of truck accidents and fatalities.

The measure would apply to trucks that weigh 26,000 pounds or more, which includes most trucks with double rear axles.