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EXPD reported ongoing 1Q EPS of $0.38, at the low end of its pre-report range of $0.38-$0.40 and well below prior Consensus of $0.43 before the pre-report. While EXPD has reported weak results the past two quarters with EPS down 3% y/y in 4Q:11 and 9% in 1Q:12, our Outperform thesis has not been based on strong near-term volumes and 1Q results. Rather, our call is and remains that international air and ocean volumes have bottomed and EXPD’s net revenue and EPS growth should re-accelerate throughout this year into easing comps, particularly in EXPD’s core Asian markets.
RRTS reported 1Q EPS of $0.25, $0.02 above our estimate and Consensus and above management’s guidance range of $0.22 to $0.24. Generally, we believe management’s plan to increase its mix of lower-cost independent contractors versus 3rd party carriers is positive for LTL margins the next few quarters and should reduce near-term risk of gross yield pressure. RRTS’s LTL market share gains have also accelerated over the past couple of quarters and this has continued so far into 2Q. RRTS has also seemingly been integrating its acquisitions well and we sense more deals are in the pipeline.
TNTE’s 1Q report was weaker than we expected due to poor results in its core European region, but management confirmed that the timeline for the UPS deal to close in 3Q remains intact, barring any unforeseen setbacks. With respect to the timeline, UPS must submit its official Offering Memorandum to the Dutch Authority for the Financial Markets (AFM) by May 11, and this merger approval document should become publicly available by the end of May or early June. We continue to believe FDX can and should enter the bidding for TNTE, but based on its recent acquisitions in Poland and France, and its public comments against the idea, it seems increasingly unlikely FDX will bid for TNTE. As a result, we are lowering our target price on TNTE from €12 to €10 (still above the €9.50 price UPS has agreed to pay) to reflect a reduced, but still possible, likelihood of a FDX bid.
Last night ACT Research reported March prelim Class 8 net orders of just 17.2K, down from 22.0K and 22.4K in Mar and Apr. The Apr order pace implies annual demand of 210K, and pulls the 3- and 6-month trailing annual order rates down to 235K and 265K.
MTOR reported $95M of adj EBITDA, slightly above our $93M est despite lower rev of $1.16B vs our $1.22B and cons $1.2B. F2Q EPS of $0.33 beat our $0.27 est and cons $0.25, excluding $3M ($0.03/shr) of restructuring charges, though $0.04 of EPS benefit was from a quickly falling tax rate.
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