U.S. Xpress finished 2020 with operating income of $15.1 million in the fourth quarter compared to $1.4 million in the fourth quarter of 2019, and earnings per share of 15 cents, which was shy of the 17 cents analysts predicted.
Operating income in 2020 overall was $43.5 million for the Chattanooga-based trucking firm, up from $26 million in 2019. The launch and expansion of Variant, the company's digital fleet, was a critical milestone for the business last year, CEO Eric Fuller said.
"2020 was one of the most important years in our company's history as we successfully launched and scaled Variant, our digital fleet, from 0% to more than 9.4% of truckload revenues in the fourth quarter, grew our digital brokerage from 1.4% to more than 60% of brokerage transactions in the fourth quarter, and continued to invest in the future of our business," Fuller said in a release announcing the results Thursday.
Variant uses artificial intelligence and digital platforms to recruit, plan, dispatch and manage its fleet. The approach has cut driver turnover, and increased efficiency and safety compared to the company's legacy fleet, Fuller said.
"Variant's improved operating metrics all held steady as we grew this division by 40% to 688 tractors through the fourth quarter, and we remain firmly on track to meet or exceed our phase one goal of converting 900 legacy over-the-road tractors, in total, by the end of the first quarter of 2021," he said.
Staff photo by Doug Strickland / U.S. Xpress CEO Eric Fuller at the company's headquarters.A fragmented $800 billion U.S. trucking market presents U.S. Xpress with opportunity for growth, Fuller said.
"Our plans include accelerated growth of Variant as we target more than 1,500 tractors in the division by the end of 2021, and at least 20% growth in our brokerage division," he said. "Looking ahead, we see a large, fragmented market where we believe we can take meaningful share as we scale our digital platforms."
Ultimately, U.S. Xpress plans to transition its entire legacy over-the-road fleet to a digital fleet, and that is expected to improve profitability and growth, he said.
The industry is facing challenges, however, including a driver shortage exacerbated by limited capacity in driver training because of COVID-19, Fuller added. That led to higher driver and capacity costs in 2020, he said.
In an economic outlook they released last week, U.S. Xpress leadership reported they anticipate additional unemployment assistance and stimulus dollars will drive consumption greater freight volumes while sidelining drivers from the labor market. They also reported that they anticipate the ongoing pandemic and slow vaccination efforts will temper growth for the first half of the year, but expect a steady recovery into the second half of the year as coronavirus cases slow.
- Compiled by Staff Writer Mary Fortune