U.S. Xpress Enterprises (USX) Misses Q4 EPS by 3c, Revenues Beat

U.S. Xpress Enterprises (NYSE: USX) reported Q4 EPS of $0.15, $0.03 worse than the analyst estimate of $0.18. Revenue for the quarter came in at $455.74 million versus the consensus estimate of $459.12 million.

Fourth Quarter 2020 Highlights

• Operating revenue of $455.6 million compared to $449.6 million in the fourth quarter of 2019
• Operating income of $15.1 million compared to $1.4 million in the fourth quarter of 2019
• Net income attributable to controlling interest of $7.6 million, or $0.15 per diluted share
• Brokerage revenue grew to $76.4 million, up 41% as compared to the year ago quarter, with 60% of volumes processed across the Company’s digital platform
• Variant exited the year with 688 tractors, providing 9.4% of Truckload revenues in the quarter

Eric Fuller, President and CEO, commented, “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. At the same time, we improved profitability and de-leveraged our balance sheet. We intend to continue successfully developing and implementing the digital initiatives that we believe are re-engineering our company to be a market leader in growth and profitability over the next decade.

“We believe Variant represents an entirely new paradigm for operating trucks in an Over-the-Road environment utilizing artificial intelligence and digital platforms to recruit, plan, dispatch and manage its fleet. The division’s operating model, powered by cutting edge technology, has generated a more than 20% improvement in utilization while significantly reducing driver turnover, and safety incidents per million miles, all as compared to our legacy OTR fleet. 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 OTR tractors, in total, by the end of the first quarter of 2021.

Longer term, we see an opportunity to significantly grow Variant given the expected scalability of the operating model which we believe will believe will drive further cost and profitability improvements. Given the highly fragmented nature of the $800 billion U.S. trucking market, we believe this presents us with a long runway for growth. 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.”

Mr. Fuller continued, “While we experienced earnings degradation in our Dedicated division as driver and capacity costs accelerated faster than we were able to pass them through to our customers in the fourth quarter, our long-term expectations for improved Company-wide profitability have not changed. We are addressing customer pricing in certain Dedicated accounts and intend to continue to aggressively scale Variant. Taken together, we expect our profitability and earnings to improve over the course of 2021.”

Outlook

Mr. Fuller concluded, “Our Company is at a clear inflection point as we proved the Variant business model over the last year while also implementing a digital platform in our Brokerage Segment, which we believe positions the Brokerage business for profitable growth. Looking ahead, we see a large, fragmented market where we believe we can take meaningful share as we scale our digital platforms. In Variant, our goal is to transition our entire legacy OTR fleet to our digital fleet, over the medium term, which will drive improved profitability and revenue growth. In Brokerage, we are targeting more than 20% annual revenue growth given the scale advantages that our digital platform provides. Taken together, we expect revenue growth to accelerate and profitability to improve in the years ahead.”

For earnings history and earnings-related data on U.S. Xpress Enterprises (USX) click here.

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