We reached out to the CFOs of all the U.S. airline, A&D, and transport companies we cover and asked a few basic questions about tax reform, including: (1) how will your capital spending plans change, (2) how likely will your company compete away the benefits, (3) how will tax reform change your decisions to buy or lease capital equipment, and more. We are aggregating all responses into a few charts and providing a high-level summary below. We’re keeping the identities of respondents anonymous.
Search Coverage List, Models & Reports
Search Results1-10 out of 3985
On Friday (01/19/18), KSU reported 4Q EPS of $1.38 vs. Cons. of $1.36 and our est. of $1.42. KSU reported 10% revenue growth which should be best among the rails in 4Q. KSU expects mid-single digit volume growth to continue in C18, but mgmt believes mix could be a headwind and also guided to several non-operating EPS headwinds this year. The stock initially opened down 3%-4%, but rallied through the day and finished down just 1%.
Our WR Transport index was flattish last week and underperformed the 1% rise in the S&P 500. We’re seeing some differentiation to start the year, with UPS, FDX and the LTLs all nicely outperforming, but the Canadian rails and some of the TLs each underperforming. Earnings season kicked off last week, with reports from CSX, JBHT, CP and KSU. Here are a few common themes and things we’ve learned so far from reports:
We spoke with a large, private 3PL about recent TL pricing and capacity trends. Our contact believes the market has been loosening up slightly the past few weeks, but it remains much tighter than normal for this time of year. This 3PL’s tender acceptance are currently in the high 80s, improved from the high 70s during peak season but well below the high 90s in a typical January. He believes this reflects a combination of ELDs, bad weather and strong demand. With respect to ELDs, our contact believes that most drivers that plan to exit the market have now already done so. As a result, this 3PL doesn’t expect the ELD impact to get much worse in April when hard implementation will begin. On the rate side, our contact is currently seeing spot rates at 15%-25% premiums to contractual rates, and he’s expecting contract rates to increase 7%-10% this year, with brokers at the high end or above, and asset-based carriers toward the lower-end.
CP reported 4Q EPS of C$3.22, in line with Cons. and $0.02 above our estimate. Relative to our expectation, revenue growth was in line and margins were 50bp better. Despite headwinds from currency, fuel, incentive and stock-based comp, and materially lower y/y real estate gains, CP’s OR improved 10bp y/y to a new all-time record and normalized incremental margins were over 80%. Mgmt was very upbeat on the call about volume and EPS momentum entering 2018.
Excluding one-time items and normalizing for a high tax rate, JBHT reported 4Q EPS of $1.01, in line with our estimate and its pre-report range. Relative to our expectations, ICS (brokerage) EBIT was much better, Intermodal and TL were modestly better, and Dedicated was a lot worse. JBHT didn’t provide any operating or EPS guidance for C18, but mgmt expects a ~25% tax rate this year and around $600M of net CapEx.
The STB released Dec. headcount data for the U.S. rails today (1/17/2018). Total rail headcount declined 3.2% y/y in Dec., with the biggest declines at CSX followed by NSC (see Ex. 1). Total headcount also declined sequentially for the 9th straight month despite stronger than expected rail volumes in 2H:17. So while rail service metrics are facing some pressure, labor productivity trends remain very favorable, particularly for CSX and NSC.
Excluding tax benefits ($0.03) and comp reversals for Hunter Harrison ($0.02) but including real estate gains ($0.02) which we expect to continue, we view CSX’s clean 4Q EPS as $0.59 vs. Cons. of $0.56 and our estimate of $0.57. Revenue was in line with our model (weaker than expected volumes offset by better yields) and underlying margins improved 490bp y/y and beat our model by 110bp.
This morning (01/16/18), FDX announced it is re-aligning its specialty logistics and e-commerce businesses into a new structure within its Express segment. Starting in F4Q, GENCO results will move from Ground to Express, and FedEx Custom Critical results will move from Freight (LTL) to Express. There’s no EPS impact from these changes, but it will impact segment margins and EBIT going forward (we don’t expect FDX will restate prior-period results).
We spoke with a chemicals shipper about current demand and rail transportation trends. Demand for chemicals remains strong and our contact expects volumes will continue to grow modestly in 2018, with particular strength in plastics. Rail service deteriorated in Texas at the end the year because of consecutive long holiday weekends and extremely cold weather that congested rail terminals. Because of the back-up, our contact has temporarily shifted some business to tank trucks. Our contact is still seeing tight truck capacity, but rail service has now started to improve around the Gulf. Our contact expects rail rate increases of around 4% this year, in line with past years. In terms of the regulatory environment, our contact would love to see some action from the STB this year, but is skeptical any meaningful reform will take place because the Board still lacks a full complement of members and Washington is preoccupied with other higher priority issues. Lastly, our contact is pleased wit
- 1 of 399
- next →