Echo beats on both revenue and earnings

Echo’s split between contract and spot shifted to 62% contract freight, up from 53% a year ago. The shift to more contract freight put pressure on net revenue margins because of the speed at which the market flipped, capacity tightened and trucking rates increased rapidly in June. 

So far in July, revenue per day is up 10% year-over-year while TL shipments per day are up 12% and LTL shipments per day are up 9%. 

Echo Chairman and CEO Doug Waggoner praised his workforce’s ability to respond to what he called one of the most volatile quarters ever seen, as market conditions changed rapidly within the three-month period due to the COVID-19 pandemic. Additionally, Waggoner noted that he was encouraged by the increased business volumes in the second half of the quarter that have continued into July. 

Managed transportation revenue fell by 6.1% to $117.9 million in the quarter due to a 13% reduction in LTL shipments and a 3% reduction of LTL revenue per shipment. 

Echo’s book of business shifted in interesting ways during the first quarter of 2020, toward contracted truckload and away from spot and LTL. Truckload volumes grew 4% in the quarter while LTL volumes fell 9%, increasing truckload’s share of revenue by 301 bps to 68.4%. 

Echo also included in its presentation a slide about liquidity. With $5.4 million in cash on the balance sheet and $82.4 million in available credit from its asset-backed lending (ABL) facility, management used the ABL credit line to finance maturity of the convertible notes on May 1. Echo repaid $25 million of the ABL credit line in the second quarter.

The midpoint in Echo’s guidance for Q3 revenue was about 5% above the third quarter of 2019, and the company did not provide further guidance due to continued uncertainty.