Shares of Chattanooga's biggest trucking company dropped by 4.9% Friday after the company hauled in less less money this spring than a year ago due to a slowdown in the freight market.
U.S. Xpress Enterprises said operating income in the three months ended June 30 totaled $8.8 million on revenues of $413.9 million this year. A year ago, the company had $20 million of operating income on revenues of $449.8 million in the same period.
U.S. Xpress said adjusted net income totaled $2.9 million, or 6 cents per share, in the second quarter of 2019 compared with $11.3 million in in the second quarter of 2018 prior the company becoming publicly traded in June 2018.
"The freight market remained challenging through the second quarter driven by weaker than seasonal demand combined with capacity growth as a result of more favorable market conditions in 2018," U.S. Xpress CEO Eric Fuller said. "This supply - demand imbalance severely pressured spot pricing through the quarter which adversely impacted parts of our business. These headwinds overshadowed what remained a strong contract market where contract rates rose over 8%, year over year."
Fuller said spot pricing for over the road freight was down by more than 30% this spring. U.S. Xpress was hit especially hard because it shifted 350 of its tractors from Mexico cross-border business to its general over-the-road fleet near the end of last year.
"In the fourth quarter of 2018, the timing seemed right for this transition and it was still the correct long-term move for our network," Fuller said. "However, the timing ended up hurting us this quarter in terms of rates and the ability to generate sufficient miles per truck.
Fuller said he expects results to improve through the balance of 2019.
"Based on our history, we believe the market conditions experienced in the first half of 2019 are not representative of a typical market," he said.
Despite the drop in income and profits this year, Fuller said he believes "we have the strategy, management team, revenue base, modern fleet, and capital structure that position us very well to execute upon our initiatives, drive further operational gains, and deliver long term value for our shareholders."
But on Friday shares of U.S. Xpress fell after the earnings results were announced. From its initial offering price of $16 a share in June, 2018, U.S. Xpress stock has dropped 69.5%, shedding more than $366 million in market value in the company.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.