AAWW reported adjusted 2Q EPS of $4.71/share vs. our estimate of $2.20 and Cons. of $2.13. This includes $0.94 from a previously announced rent refund that we’ve excluded from continuing EPS in our model. So we view underlying EPS as more like $3.78. Adjusted EPS doesn’t include anything related to the $200M CARES Act grant AAWW received in 2Q.
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This morning (08/04/20), EXPD reported 2Q EPS of $1.09 vs. Cons. of $0.72 and our estimate of $0.68. Despite weak air and ocean volumes, total net revenue, EBIT and EPS increased +13%, +29% and +24% y/y, each materially improved from -6%, -15% and -10% last quarter. Net revenue was 2,200bp better than our model – driven almost entirely be airfreight – as we clearly underestimated forwarders’ ability to capitalize on soaring airfreight spot rates. With high expectations after peer reports, the stock increased 1%.
PCAR filed its 10-Q yesterday (8/3/20) with lots of helpful information not in its earnings reports, including truck pricing, FinCo trends, and raw materials data. PACR’s overall retail past due accounts declined on both a sequential and y/y basis in 2Q, with U.S. past due accounts at its lowest level in 6 quarters. But we saw an interesting mix shift in 2Q as past-due balances with fleets declined 11% q/q and 15% y/y, while past-due balances with owner operators increased 11% sequentially and 45% y/y to their highest level in over 7 years. So PCAR’s data clearly reveals some pressure on small truckers right now, which is part of our positive view on TL stocks as we expect further upward pressure on TL spot rates in 2H and TL contract rates next year.
After the close (8/3/20), YRCW reported 2Q adjusted EBITDA of $38M, down 44% y/y but much better than our -$27M estimate. Revenue declined 20% y/y and was in line with our expectations, but margins in 2Q were a lot better than we expected. Excluding a $6M gain on sale, YRCW reported a 101% OR, flat sequentially and 270bp worse y/y, but 600bp better than our low expectations in the quarter. Following the 2Q beat, the stock traded up ~40% after-hours.
Strong Month for Transports. Our WR Transport Index increased 10.0% in July, materially outperforming the S&P 500 by 450bp and the XLI by 560bp. Transports outperformed every single S&P sector last month, and each transport sector relatively outperformed the market with the Integrators (+24%), Truck OEMs (+12%) and Forwarders (+10%) performing relatively best, and the Rails, TLs and LTLs (each up 8%) relatively lagging. Our Transport Index is now up 9% YTD, outperforming the S&P 500 by 800bp and more materially outperforming the XLI by 2,000bp.
Our WR Transport index rose 2.1% last week, outperforming the 1.7% rise in the S&P 500 and 0.2% drop in the XLI. It was a wild week for transports with some big stock moves, led by UPS (+21%) after its record beat and great earnings call under new CEO Carol Tomé. And the week ended with WSJ reports of a potential buyout of KSU. Overall, the Integrators (+10%), non-asset Forwarders (+7%) and Rails (+2%) performed best last week, while the LTLs (-2%) performed worst. Our Transport index is now up 9% YTD, materially outperforming the 1% rise in the S&P 500 and 12% drop in the XLI.
We spoke with a mid-sized retail shipper about small package and truck pricing and demand trends. This shipper has seen a large spike in online since March and as stores are re-opening, online sales growth is moderating a little bit and in-store purchasing is rebounding but isn’t yet close to pre-COVID levels. This shipper primarily uses UPS and as a result of the spike in residential deliveries, our contact has been forced to pay UPS’s peak season and oversize surcharges that were recently implemented. Our contact has been trying to find ways to mitigate these surcharges but hasn’t had any success. Looking ahead, our contact expects these surcharges to remain in place for the rest of the year and suspects that UPS could raise its peak season surcharges as we get closer to the holidays and actual peak season. Meanwhile, this shipper primarily uses truck brokers for TL capacity.
2Q In-Line with Pre-Report. After the close, FWRD reported 2Q EPS of $0.33, in line with its recent pre-report of $0.30-$0.34. This excludes $0.22 of EPS losses from Pool Distribution that’s now being reported in discontinued operations. On this basis and excluding Pool a year ago, total revenue declined 7% y/y, while margins declined 470bp y/y and EPS declined 55% y/y.
Large 2Q Beat on Record Margins. This morning, ODFL reported 2Q EPS of $1.25 vs. Cons. of $1.03 and our estimate of $1.08. Tonnage declined 12% y/y (30bp worse than our model) and yields net of fuel declined 0.5% y/y (60bp better than our model). But despite the largest revenue decline in a decade, ODFL’s OR was flat y/y, improved 260bp sequentially and was 260bp better than our model. Despite the large beat, the stock fell 1%.
Large 2Q Beat. After the close, HUBG reported adjusted 2Q EPS of $0.60, materially above Cons. of $0.23 and our estimate of $0.27. Net revenue declined 19% y/y, but was 1,000bp better than we expected on much better gross yields. Operating costs also continued to beat our expectations.
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