USA Truck posts big quarterly income loss – again

Van Buren-based USA Truck reported Friday that its third quarter revenue fell 2.3% and it lost $6.1 million in the quarter compared to a 2011 third-quarter loss of $4.3 million.

The 59 cent per share loss was far worse than the consensus estimate of a 25 cent per share loss from the two analysts who still follow the publicly held trucking company. And although the earnings report was released after the markets closed, the share price (NASDAQ: USAK) closed Friday at $2.93, setting a new 52-week low.

Ouch.

For the first nine months of 2012, the long-haul carrier recorded a net loss of $14.4 million, considerably worse than the $6.4 million loss during the same period of 2011. Revenue for the first nine months of 2012 totaled $301.7 million, down from the $310.8 million during the same period f 2011.

Cliff Beckham, president and CEO of USA Truck, said the company faced weak economic conditions and a U.S. manufacturing sector slowdown during the quarter.

“Freight demand was relatively weak overall for a third quarter and we did not experience the level of increase in freight volumes during the quarter that we normally expect. We attribute this to slower growth in the United States economy, a slight contraction in manufacturing activity, and one fewer business day than in the 2011 quarter,” Beckham noted in the earnings report released Friday after the close of markets.

Beckham said higher fuel prices, an inability to obtain higher shipping rates and driver issues didn’t help.

“Drivers remain difficult to attract and retain, requiring increased expense and focus despite the somewhat slower demand environment. In response to the more difficult environment, we maintained our fleet at 160 fewer trucks compared with the third quarter of 2011,” Beckham explained.

The company also revealed that it again hired “an experienced truckload executive” to improve operations. USA Truck hired David Hartline in August 2011 as the executive vice president and chief operations officer. Hartline was hired to bring his almost 20 years of trucking industry experience to USA Truck and help guide “operational execution and leadership development.” Hartline is no longer employed by USA Truck.

“We determined that the percentage of our business comprised of very short haul loads (under 300 miles) was too high, which was negatively impacting equipment utilization and the ability of drivers to earn adequate compensation,” Beckham said following the statement about bringing on a new executive.

He said the company also looked at margins for each customer to determine profitability.

“As a result of this re-evaluation, we accelerated the exit and replacement of specific lanes and loads that failed to meet our new criteria. The timing was not optimal given the weak freight environment, but we believed the overall benefits to our drivers, customers, and future financial results justified the timeline.”

The poor financial report comes within the same quarter that USA Truck was able to obtain a new credit line. The new agreement, made with Wells Fargo Capital Finance and PNC Bank, placed all assets of the company up as collateral for a new $125 million revolving credit agreement. Of that, USA Truck has access to $28.3 million, with $75.9 million repaying the obligation of the previous credit agreement.

Prior to the new deal, USA Truck paid at least $400,000 in penalties for breach of finance covenants, and conditions weren’t expected to improve.

An inability to generate cash has been a problem for the longhaul carrier. USA Truck posted a 2011 net income loss of $10.777 million, more than triple the loss during 2010 and in a year when other trucking companies began to see improved financials. Also, 2011 marked the third consecutive year of losses for USA Truck. In 2010, the company reported a loss of $3.308 million, and a $7.177 million loss in 2009.

Although the debt load grew at USA Truck, Chief Financial Officer Darron Ming offered an optimistic quote.

“We believe our balance sheet and sources of liquidity remain solid and adequate to support our business for the foreseeable future. At September 30, 2012, our outstanding debt, less cash, represented 54.6% of our balance sheet capitalization, compared to 47.4% at December 31, 2011,” Ming noted.