USA Truck issues third quarter warning

Thanks to problems with new software and the old problems of a soft economy, it doesn’t appear that Van Buren-based USA Truck Inc. will be able to build upon its positive second quarter numbers.

The long haul trucking company reported Monday (Aug. 22) it will likely report a third-quarter income loss, compared to a net income of $600,000 in the third quarter of 2010. Prior to Monday’s notice, the consensus of analyst estimates was that USA Truck would post third quarter earnings per share of 8 cents.

Second quarter net income, reported July 21, totaled $598,000, and followed two consecutive quarters of more than $4.5 million in losses.

“We believe the main factor is a temporary but significant decrease in the efficiency of our truckload operations associated with our efforts in implementing our new enterprise management software. We are actively addressing this issue and expect the negative impact to be short-term,” USA Truck President and CEO Cliff Beckham said in the statement released Monday.

Beckham said the software was tested and implemented within smaller divisions of the company. However, when implementing companywide, “unanticipated difficulties” made it difficult for the company to manage the transfer of goods.

“We had planned for a modest reduction of efficiency during July associated with initial live usage and refinement of the new system. The magnitude and duration of the reduction in efficiency have been greater than we anticipated,” Beckham explained. "Our entire executive and operations teams are dedicated to correcting these problems, and we are gaining some improvement in August. We are also receiving strong support from our software provider. We continue to believe we selected the right system for the long term, and upon resolution of our internal issues, we fully anticipate that the new operating system will enhance our operation efficiencies."

A “deterioration in general truckload market conditions,” isn’t helping, according to Beckham. He said in the statement that revenue miles are down 15% compared to July 2010, but were “trending somewhat better” during early August.

Bad financial news is not something USA Truck needs more of.

For the first half of 2011, the company has an income loss of $2.118 million, up compared to a $2.096 million loss during the 2010 period. The company lost $2.7 million in the first quarter. Total revenue for the first half of 2011 is $263.069 million, up 19.95% compared to the 2010 period.

A freight recession that began in the fall of 2006 caught up to USA Truck in late 2008. The long-haul carrier posted a net income loss of $7.177 million in 2009 and a net income loss of $3.308 million in 2010. However, total revenue in 2010 was $460.161 million, up 20.3% compared to 2009. The company posted 2009 revenue of $382.36 million, down 28.6% compared to the $535.62 million in 2008.

USA Truck shares (NASDAQ: USAK) closed Monday at $10.95, down 3 cents. The third quarter expectations notice was released after the markets closed. During the past 52 weeks, the share price has ranged from a $16.91 high to a $9.75 low.