enant Logistics (US:CVLG)2020-01-24 22:41Financial Data and Key Metrics Changes - The Truckload segment's revenue, excluding fuel, decreased by 13.4% to $152.8 million, primarily due to a 10.4% decrease in average freight revenue per truck and a $105 million or 3.4% average truck decrease compared to the previous year [6][10] - Average freight revenue per total mile was down $0.242 or 11.3%, while average miles per tractor increased by 1.1% [7] - Total lease-adjusted indebtedness, net of cash, increased by approximately $50 million to $304.6 million, with a net lease-adjusted indebtedness to total capitalization ratio of 46.5% compared to 42.6% a year ago [12] Business Line Data and Key Metrics Changes - The Managed Freight segment's revenue, excluding fuel, decreased by 15.5% to $57 million from $67.5 million, attributed to reduced peak season capacity needs from brokerage customers [10] - The Truckload segment's operating cost per mile, net of surcharge revenue, decreased by approximately $0.033 compared to the previous year, mainly due to lower employee wages and health claims costs [9] Market Data and Key Metrics Changes - The company noted a capacity and demand imbalance affecting freight revenue, with a reduction in certain customers' peak season team capacity needs [8] - The average age of the tractor fleet was two years at the end of 2019, down from 2.2 years at the end of 2018 [11] Company Strategy and Development Direction - The company aims to reduce financial volatility by reallocating assets to more profitable operations and enhancing sustainable long-term earnings power through disciplined strategic planning [18][19] - Focus areas include tightening the one-way irregular route Truckload freight network and reallocating capacity from solo-driven refrigerated to more profitable dedicated and dry-van opportunities [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving performance in 2020, driven by declining truckload industry capacity and continued U.S. economic expansion [17] - The first quarter is expected to be challenging, with profitability unlikely, but there is potential for improvement in the second half of the year [31][32] Other Important Information - The company expects to dispose of most excess tractor units in the first half of 2020 [11] - A significant new long-term business in dedicated Truckload service is scheduled to begin in the second quarter of 2020 [20] Q&A Session Summary Question: What are the demand and capacity trends seen in January? - Management noted that a significant part of the business is up compared to the same time last year, with utilization expected to increase by 2% to 3% year-over-year in the first quarter [22][25] Question: How are early 2020 bids and pricing trends? - Management believes rates have bottomed out, with some increases observed, particularly in dedicated services, while existing business remains flat [26][29] Question: What is the outlook for profitability in the first quarter and full year? - Management does not expect profitability in the first quarter but sees potential for improvement in the second half of the year [31][32] Question: Can you provide insights on the managed services pipeline? - The company has five significant startups planned, with an annualized revenue opportunity of $50 million to $60 million, expected to build throughout the year [39][54] Question: How will fleet size change throughout the year? - A slight decrease in fleet size is anticipated in the first half, with potential growth in the second half as new dedicated accounts come online [50][61]