USA Truck posts $3 million loss in first half of 2008

At the end of the first six months in 2008, Van Buren-based USA Truck Inc. had produced a paltry net income of $189,000.

Turns out, those were the good old days.

For the first six months of 2009, the long-haul trucking company posted a loss of $3.02 million. Total revenue for the period is $185.8 million, down 32% from the revenue of the first six months of 2008.

In the most recent quarter ended June 30, the company posted a net loss of $1.14 million, compared to second quarter 2008 net income of $2.13 million. The quarterly loss of 11 cents per share was far more than analysts’ estimates of a 4 cents per share loss.

“Freight conditions have steadily deteriorated since the current freight depression began in the second half of 2006,” Clifton Beckham, USA Truck president and CEO, said in the quarterly earnings statement released Thursday (July 16). “Freight availability remains at historically low levels and pricing competition has been fierce as excess tractor capacity, buoyed by lenient lenders and lower fuel prices, continues to exist in the marketplace.”

The lack of freight resulted in the company logging 120.32 million miles for the first six months of 2008, an almost 20% reduction from the same period in 2008.

The company said it has suffered from having an “historical freight network” tied to the midwest U.S. that has seen a “collapse of the automotive industry” and downturn in other manufacturers located in that area.

Also, with too many trucking companies chasing too little freight, many shippers have “repeatedly rebid and re-awarded lanes to capitalize on truckload pricing competition,” according to the USA Truck statement. The company said it lost some business because it was unwilling to lower its pricing structure.

Because the trucking sector is noted as a bellwether for the overall economy, the company’s belief that freight demand recovery will not happen in 2009 is not good news.

“We do not anticipate a meaningful recovery in freight demand during the remainder of 2009. We believe that the truckload industry’s prospects for recovery are heavily tied to business inventories, which remain well above their historical inventory-to-sales ratio,” the company noted in its statement. “Once inventory destocking ends, then we believe that inventory replenishment will provide a boost to trucking volumes. However, such an event seems unlikely in the near term based on current sales and inventory trends.”

Inventory destocking is not likely to end soon. The Commerce Department reported July 14 that manufacturers’ and trade inventories were down 8% in May 2009 compared to May 2008. In February, the Commerce Department reported that wholesale inventories had reached a 17-year low.

Panjiva, a Web publication focused on global shipping in the manufacturing sector, notes there were about 118,000 manufacturers shipping to the U.S. in February 2009, down 20.2% from the number shipping to the U.S. in February 2008. The decline in inventories and exported goods to be shipped from ports is part of what is causing what USA Truck calls a “freight depression.”

However, the company has been able to reduce its total debt from $97.6 million as of Dec. 31, to $87.04 million as of June 30. And by reducing capital expenditures more than $36 million in the first six months of 2009, USA Truck was able to improve its cash flow and raise its cash holdings to $2.39 million.

Shares of USA Truck (NASDAQ: USAK) closed Wednesday at $13.44. During the past 52 weeks, the share price has ranged from a $19.53 high to a $9.88 low.