Analyst Note| Matthew Young, CFA |
Narrow-moat Echo Global Logistics posted robust first-quarter gross revenue growth of 45% (year over year), nicely ahead of our forecast on impressive pricing acceleration. Growth was again driven by strong freight demand (including heavy retailer restocking), abundant spot opportunities, business wins in the managed transportation segment, and surging sell rates to shippers. The truckload volume rose 13%, while TL revenue per shipment spiked 39% thanks to extremely tight market capacity (greater pricing power), and Echo’s efforts to boost customer contract rates to catch up with large increases in buy rates paid to truckers. LTL loads were up 10%. Management raised its 2021 revenue guidance 15% at the midpoint, implying excellent operating conditions will persist near-term despite comparisons turning difficult.