USA Truck rejects Celadon offer, reports third quarter loss

by The City Wire staff ([email protected]) 40 views 

Officials with Van Buren-based USA Truck said Friday (Oct. 21) they are not interested in a deal with Celadon.

Executives with Celadon Trucking Services announced Oct. 11 an interest in acquiring or merging with USA Truck, and asked USA Truck management to meet about a possible transaction. At risk in a possible deal would be the about 500 jobs at USA Truck’s corporate headquarters in Van Buren.

Indianapolis-based Celadon noted in its Securities & Exchange filing that it had purchased $4.66 million in USA Truck shares, or almost 6.3% of the company.

“Among other factors, the Board of Directors considered the recent management changes and the Board’s desire to remain focused on increasing value through operational improvements. Accordingly, the Board of Directors unanimously decided to decline a meeting at this time,” noted the USA Truck statement.

The Celadon rebuff was part of the company’s third-quarter earnings report which showed a loss of $4.305 million in the quarter, and a loss of $6.423 million for the first nine months of 2011. In the comparative 2010 periods, the company earned $586,000 and had a net loss of $1.51 million, respectively.

“The third quarter of 2011 presented several challenges. These included a major operating system transition, softer than expected freight volumes, and a persistently high number of unmanned tractors,” USA Truck President and CEO Cliff Beckham said in the earnings report. “We were unable to overcome these challenges and produce sufficient revenue to operate profitably. We have addressed a number of the underlying problems, but we still have work to do in order to achieve sustained profitability.”

Beckham said in an Aug. 22 statement that “unanticipated difficulties” in implementing new software and a “deterioration” in truckload market conditions would result in a poor third quarter report. In Friday’s report, Beckham said higher costs — wages, fuel, equipment, etc. — outpaced the increase in trucking revenue per mile. The company also lost two major accounts in the quarter.

“In a softer overall freight market, we had fewer opportunities to replace all of this business with high-quality freight,” Beckham said.

Total revenue for the third quarter was $130.137 million, up 9.5% compared to the 2010 period. For the first nine months of 2011, total revenue is $393.207 million, up 16.3% compared to the 2010 period.

If trends continue, 2011 could mark the third consecutive year of a losses for USA Truck. In 2010, the company reported a loss of $3.308 million, and a $7.177 million loss in 2009.

In a move to right the ship, USA Truck in August hired trucking industry veteran David Hartline as the chief operations officer. Language in the earnings report suggests Hartline’s role in company is extensive.

“Since August, we have been implementing changes in our operational discipline, market emphasis, customer service, and driver relations to reflect the experience and philosophies of our Chief Operating Officer for Trucking. Along with the implementation of our new operating system, this has required a significant investment in training our operations personnel. We believe certain metrics associated with on-time delivery, pre-booking of freight, load planning, freight market selection, and driver miles are beginning to show improvement,” Beckham said in the statement.

Hartline has nearly 20 years of industry experience. For the past 14 years he was employed by Liberty, Iowa-based Heartland Express Inc., most recently as director of Southeastern Operations. Hartline earned a bachelor’s degree in business administration from The Citadel Military College of South Carolina and a masters in project management from the Keller Graduate School of Management.

Shares of USA Truck (NASDAQ: USAK) were set to open Friday morning at $6.47, well below the Thursday close of $7.87. During the past 52 weeks the share price has ranged from a $15.03 high to a $6.75 low.