USFreightways Reports First Quarter Results
CHICAGO--April 19, 2001--USFreightways Corporation reported revenue for the first quarter ended March 31, 2001 of $621,393,000 compared to $618,690,000 reported for the first quarter which ended April 1, 2000. Net income for the current year's quarter was $8,451,000, or 32 cents diluted earnings per share, compared to $22,316,000 net income for last year's first quarter, equivalent to 81 cents diluted earnings per share. There were 64 working days in the current year's quarter compared to 65 for last year's quarter.Income was negatively impacted across all lines of business due to the continued slowing of the economy and resultant lower volumes; continued losses in the Company's freight forwarding business and, to a lesser extent, bad weather during the quarter.
Less-than-truckload (LTL) revenue at the regional trucking subsidiaries decreased 1.8% from the 2000 first quarter, LTL shipments decreased 2.8% and LTL tonnage decreased 5.1%. LTL revenue per shipment increased 1% from $113.36 to $114.55. Average weight per LTL shipment decreased 2.3% to 1,120 pounds compared to 1,147 pounds last year.
While all of the LTL trucking companies were affected by the slowdown in the economy, USF Holland was affected the most with decreases in revenue and tonnage of 4.9% and 8.1% respectively compared to last year's first quarter. This is due to the dramatic slowdown in the automotive industry and other heavy manufacturing based in the central United States,
Operating earnings for the regional trucking group were $24,098,000 in 2001 compared to $38,183,000 for the same period of 2000, a 37% decline. The LTL group's operating ratio increased from 91.9 in 2000 to 94.8 this year. Despite an approximate 5.3% average reduction in the labor force since November 2000 (equivalent to approximately 950 workers), labor and related fringe benefits increased due to annual contractual increases at our unionized carriers along with increases in group health costs ranging from 12% to 30% across the regional trucking companies. Claims and operating expenses also increased year over year.
Operating earnings for the logistics group decreased 34% from $4,242,000 in the 2000 quarter to $2,781,000 in the current quarter while revenue increased 6% from $67,125,000 to $71,159,000. Profit declines were primarily due to lower activity at USF Processors as a major customer concluded a period of significantly increased volumes and also a less profitable mix of business in the Food and Consumer units in USF Logistics.
At USF Worldwide, the new management team, under the leadership of John Gallahan, has reduced fixed costs and made organizational changes that should show benefits throughout the remainder of the year. However, USF Worldwide showed continued losses as revenue declined equally in its domestic and international business, leading to deterioration in the gross margins of both areas. USF Asia showed lower losses as volumes increased with their expansion, and the Company's newly acquired UK forwarding operations generated $8.5 million revenue and showed a modest profit.
On a positive note, Asia Group has received a Class A operating authority in China. The scope of this Class A license elevates the Company's China operations to a new level, one attained by only a handful of global forwarders.
USF Glen Moore recorded operating earnings of $836,000 at an operating ratio of 96.6 compared to $945,000 and an operating ratio of 95.2 in 2000 as depreciation and fuel expenses increased in the current year.
Capital expenditures for the quarter amounted to approximately $16 million mainly for revenue equipment and information technology. Last year, capital expenditures amounted to $46 million, mainly for revenue equipment and terminal facilities.
In light of the current economic conditions and the lower capital expenditures, the Company has reduced its net debt, thereby improving its debt to capital ratio to 28.3% in the current quarter compared to 31.3% at December 31, 2000.
Samuel K. Skinner, Chairman, President and Chief Executive Officer of USFreightways, commented, "The disappointing results of the first quarter were clearly affected by the current economic slowdown. We do not see any indication that the slowdown is over and we believe that it will continue at least through the remainder of the year. We have therefore increased our marketing efforts and intensified our aggressive cost reduction programs significantly."
USFreightways provides comprehensive supply chain management services, including high-value, regional less-than-truckload (LTL) transportation, logistics, domestic and international freight forwarding and premium regional and national truckload transportation. For more information, contact the Company at www.usfreightways.com.
This release contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission including forms 8K, 10Q and 10K.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited (Dollars in thousands)
Quarter Quarter
Ended Ended
March 31, April 1,
2001 2000
Revenue
LTL Trucking $ 459,019 $ 470,864
TL Trucking 24,668 19,897
Logistics 71,159 67,125
Freight Forwarding 66,547 60,804
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Total Revenue $ 621,393 $ 618,690
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Income from operations (loss)
LTL Trucking $ 24,098 $ 38,183
TL Trucking 836 945
Logistics 2,781 4,242
Freight Forwarding (3,294) 716
Corporate and other (4,610)(a) (3,327)(a)
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Total Income from operations $ 19,811 $ 40,759
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Interest expense (5,580) (4,571)
Interest income 134 192
Other income, net 36 493
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Income before income taxes 14,401 36,873
Income taxes (5,680) (14,823)
Minority interest (270) 266
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Net income $ 8,451 $ 22,316
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Net income per share - Basic $ 0.32 $ 0.84
Average shares outstanding - Basic 26,191,561 26,509,438
Net income per share - Diluted $ 0.32 $ 0.81
Average shares outstanding - Diluted 26,775,002 27,456,591
(a) After deduction for amortization of intangibles of $1,737 and
$1,669 in the first quarters of 2001 and 2000 respectively.
REVENUE and OPERATING RATIOS
Unaudited (Dollars in thousands)
Quarter Ended
March 31, 2001 and
April 1, 2000
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Operating
Company (Region) Revenue Ratio (b)
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Holland (Midwest) 01 $239,320 93.0%
00 251,745 89.7%
Bestway (Southwest) 01 38,894 93.9%
00 36,899 90.1%
Red Star (Northeast) 01 64,405 100.9%
00 66,830 98.0%
Reddaway (West Coast, Northwest) 01 65,109 94.1%
00 63,588 92.7%
Dugan (Plains, South) 01 51,291 96.6%
00 51,802 94.8%
(b) Operating ratio is direct operating costs as a percentage of
revenue.