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USA Truck losses continue

story by Kim Souza
ksouza@thecitywire.com

USA Truck Inc. can’t seem to the outrun the losses and negative operating fundamentals that have plagued the carrier for the past four quarters.

The Van Buren-based trucking firm incurred a net loss of $3.486 million, compared to $598,000 lost in the year-ago period.

Revenue without fuel surcharges slid 4.6% to $103.52 million for the three months ending June 30, as the carrier reported major challenges in its traditional trucking operations with too many unmanned tractors. Fuel surcharges totaled $26.049 million in the quarter, down 14.7% from the prior year.

CEO Cliff Beckham noted in the release that the firm experienced difficulty expanding its customer base amid weaker demand from the manufacturing sector.

Beckham said operationally the firm’s execution has been disappointing but he’s recently hired experienced personnel and engaged industry consultants for a full analysis that he hopes will improve freight planning and overall freight mix.

Wall Street expected a little stronger performance on the revenue side in the quarter but shares traded higher following the earnings release Thursday morning (July 19).

Shares (NASDAQ: USAK) opened trading at $4.73, rising to $4.94 by mid morning on light volume for the thinly traded company.

The ongoing losses during the past year has put the trucking firm out of compliance with its debt covenants, a serious concern for the highly leveraged company.

At the end of June, USA Truck’s debt comprised 50.9% of its balance sheet, up from 47.4% six months earlier.

Beckham said the firm had obtained a waiver for its non-compliance which would buy them a little more time to renegotiate a new five-year revolving credit facility with a different lender. The waiver is good through Sept. 30.

“We anticipate the new facility will afford us improved pricing and significantly greater financial flexibility,” Beckham said.

For the six months ended June 30, USA Truck incurred capital expenditures of approximately $19.9 million. For the balance of 2012 the firm anticipates net capital expenditures to be approximately $7.4 million.

While concerns are warranted, USA Truck did have a few bright spots in the recent quarter.

In the SCS segment (brokerage division) revenue grew to $26.25 million, up 46% from a year ago. This segment improved base revenue per manned tractor and lower fuel expense. An increase in purchased transportation expense pressured the gross margin, and the fixed costs rose faster than freight volumes as continued growth necessitated the addition of branch offices.

Intermodal revenue totaled $5.42 million, up 2% from June 2011 and these two asset-light business units together produced roughly 28% of the company’s total revenue in the recent quarter as the traditional carrier tries to diversify its operation away from its former truck-load model.

That said, the firm’s trucking segment continues to run in reverse. This unit posted $71.84 million in revenue for the recent quarter, down more than 12% from the year-ago period.

Average weekly revenue per tractor declined 9.2% to $2,546. The firm also struggled with a 12.2% unmanned tractor count during the quarter driven by difficulty in hiring and retaining drivers.

Analysts say driver turnover is at its highest rate since early 2008. Turnover rates among large long haul carriers hit 90% in the first quarter of this year, according to the American Trucking Association.

Beckham said the company has implemented a series of recruiting and retention initiatives that has helped bring down the number of unmanned tractors in the past two quarters, but there is more work to do.

Jason Seidl, freight analyst with Dalhman Rose & Co., said carriers will likely face headwinds as the move toward 2013 and the economy sputters at a slower pace than seen earlier this year.

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He said there is little room for price gains in freight loads amid tepid demand and more carrier transitioning freight away from truckload to asset-light divisions such as intermodal and brokerage.

FINANCIAL SNAPSHOT
Total Revenue
2Q 2012: $129.569 million
2Q 2011: $139.027 million

Net Income
2Q 2012: $-3.486 million
2Q 2011: $598,000

Earnings Per Share
2Q 2012: -34 cents
2Q 2011: 6 cents

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Average: 1.8 (4 votes)

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Comments

Asset-Light Divisions?

"...more carrier transitioning freight away from truckload to asset-light divisions such as intermodal and brokerage." Really? Haven't seen too many trains pulled up unloading at Wal-Mart stores these days. Thats a good idea except somewhere you are still going to have to find a trucker willing to get his hands dirty. Otherwise a good article but I worry about all the good people and jobs at USA...

Actually, they have to find a

Actually, they have to find a trucker willing to do what USA Truck demands, for what USA Truck is willing to pay. So far, they've done this to the extent that they've lured in drivers with zero experience and messed them over- and got away with it because the greenhorns don't know any better. I was one of them. I lasted longer than most- 30 months.

USA Truck

USA Truck is a great and wonderful company, and we are lucky to have you in our region. We all support you and you'll make it. You are and will continually be a great company. i have many friends there who feel lucky to be there. You are one of the bright shinig stars in our community.

Brian's Response

Don't comment if you don't know what you are talking about! Are you even old enough to have an opinion on this? You certainly never have worked here. Any friend you have is almost surely a supervisor or below. Almost 100% of management from when the last CEO "departed" has turned over; multiple times in some cases.Your ill-timed and ridiculous comments on several posts on varying topics are as out of touch as you. No one wants the region to lose more jobs but this la-la land approach of painting everything rosy even when it is clearly not is disingenuous and dangerous. Remember the story of the Emperor With No Clothes? Looks like you also have a bright future as a city director....you are learning to look at things and not see the obvious or refuse to. I would say you are a carbon copy of two of the current directors.

USA Truck

Until the Board of Directors wakes up and realizes that Cliff Beckham is running that company into the ground, it will never make a penny. I am not sure that he has turned a profit since the day he weaseled his way into his position. Good Luck USA Truck. We need your jobs in the River Valley.