While USA Truck saw another loss in its quarterly financial report, the second-quarter loss wasn’t as bad as the first quarter. And, the company has made progress on its previously stated goals as it continues to predict a profitable third quarter.
On Wednesday (Aug. 2), the Van Buren-based carrier reported a loss of $2.84 million, or a 35 cents per share loss, in the quarter that ended June 30, down from a loss of $1.34 million or a 15 cents per share loss, in the same period in 2016. Revenue declined 2% to $107.35 million, from $109.88 million
For the first half of the year, the carrier reported a $7.736 million loss, more than the $3.153 million loss in the same period in 2016. Revenue fell 5% to $209.02 million, from $220.50 million in the first half of 2016.
For the second quarter, the carrier missed analysts’ expectations of a 10 cents per share loss but beat their expectations of $99.6 million for revenue.
In the trucking segment, top-line revenue fell 5% to $71.73 million in the second quarter, from $75.75 million in the same period in 2016. In the first half of the year, revenue declined 6% to $142.20 million, from $151.78 million. In the USAT logistics segment, top-line revenue decreased slightly to $36.87 million in the second quarter, from $37.08 million in the same period in 2016. In the first half of the year, revenue declined 4% to $69.52 million, from $72.99 million.
“The entire organization is committed to returning this company to profitability and building a business that we believe will stand the test of time,” President and CEO James Reed said in the earnings statement. “The second quarter marked my first full quarter as CEO, and while we are not happy with the consolidated results, we believe they show progress in the specific areas that we previously said we would focus.”
The company has been building its leadership team, adding Allen Lowry as vice president of safety and risk management, Rick Hainlen as vice president of revenue operations, Kim Littlejohn as vice president and chief technology officer, Jason Bates as chief financial officer and Cheryl Stone as senior vice president of human resources.
“Each of these leaders has had an immediate impact on our business in meaningful ways and all have or are in the process of relocating to the Van Buren/Fort Smith area,” Reed said. “Each of these leaders personify the type of principled, focused, experienced and results-driven individuals we hope will drive USA Truck to its full potential.”
The company has worked to turnaround the trucking segment.
“I am encouraged by the long-term implications of the improvement in these fundamental operating trends,” Reed said.
As for yield improvements, “we believe our network engineering initiatives have directly led to improvements in our rate per loaded mile, and we continue to work with our customers to improve our network and price positions,” he said. “Coupled with a more strategically defined network, base revenue per loaded mile increased (5 cents) per mile or 2.9% when compared to (the second quarter of 2016).”
Also, base revenue per seated tractor rose 2.6% or $77 per week, from the same quarter in 2016. Miles per seated tractor per week rose 1.1% or 22 miles per tractor, from the same period in 2016.
“Our focus on seating tractors resulted in a sequential improvement in our unseated tractor count to 8%. This remains short of our goal of 5%. We believe we are on track to increase average seated tractor count by 5-7% over the fourth quarter 2016 average of 1,547, and increasing base revenue per seated tractor per week by 3-5% over the full year 2016 average of $2,998.”
As for driving gross margin at USAT logistics, “demand and resulting load count, revenues, and gross margin results began to show improvement in May and continued to strengthen through the balance of the second quarter. The sales agent initiative gained momentum and produced its most successful quarter since inception,” Reed said. “Continued focus on expense control and increasing productivity — as measured by loads per headcount — yielded a decision to reallocate regional center headcount from underperforming centers to the stronger performing centers.”
The USAT Logistics de Mexico office in Celaya, Mexico, began operating late in the second quarter.
For the company’s plan to reduce costs, “we exceeded our stated annual cost reduction goals for the year during the second quarter by reducing costs by $3.6 million compared to the second quarter of 2016,” Reed said. Costs were reduced in operations and maintenance, salaries, wages, employee benefits, operating taxes and licenses. The cost reductions were partially offset by a driver pay increase, higher insurance and claims costs, lower gain on sales of used equipment and a change in how members of the board of directors are paid “that resulted in an acceleration of the expense into the quarter but no increase in annual expense is expected for the full year.”
Reed said results “are improving and we believe operating profits are on the near-term horizon. Third quarter 2017 will be the first complete quarter with our new leadership team intact, and I look forward to the synergies of the team’s expertise and time in their positions as we expect to see our efforts and direction take root. Already, this team has been instrumental in implementing significant changes in business execution that should improve earnings relative to prior quarters.”
Shares of USA Truck (NASDAQ: USAK) closed at $8.81, down 9 cents or 1.01% on Wednesday. In the past 52 weeks, the stock has traded between $18.10 and $5.73.
In July, spot dry-van rates rose 9.8%, from the same month in 2016, according to DAT Solutions. Spot market capacity rose 0.3%, and the number of loads hauled rose 89%.
“An unexpected boost in freight volumes lifted load-to-truck ratios for all equipment types in late July,” according to DAT. “Rates did not follow suit, although they remain atypically strong for the season. National average van rates dipped 2 cents and reefers lost 1 cent. Only flatbed rates rose, adding 1 cent per mile to the national average.”
For the week of July 29, dry-van rates fell to $1.79 per mile, from the previous week. In the first week of July, rates hit $1.90 per mile.
“We got a welcome surge of spot market freight to close out July,” according to DAT. “It’s unusual to see an uptick in volumes at this point in the summer, but the top 100 van lanes set all-time records for volumes last week.”