Third-quarter revenue and adjusted net income fell for USA Truck but net income for the first nine months of the year is up more than 160% compared to the same period in 2014, and the company is squeezing more money per mile out of fewer trucks.
Net income for the Van Buren-based trucking and logistics company totaled $2.727 million in the third quarter, down from $4.006 million in the third quarter of 2014. However, one-time charges related to restructuring and severance pay cost the company $2.9 million. Without the charges net income would have been up more than 40% on the quarter.
Per share earnings were 26 cents in the quarter, below the 38 cents in the 2014 quarter. Adjusted for the one-time charge, per share income was 43 cents.
Total revenue during the quarter was $123.49 million, below the consensus estimate of $133.72 million and down almost 20% compared to the $153.618 million in the third quarter of 2014.
“The third quarter was devoted to accelerating the pace of improvement in our Trucking operations as we began implementing the strategic leadership and tactical initiatives we previously outlined,” Tom Glaser, USA Truck president and CEO, said in the earnings statement pushed out Wednesday (Nov. 4) before the markets opened.
‘PACE OF IMPROVEMENT’
Revenue for the first nine months of the year hit $389.95 million, well below the $452.405 million during the same period of 2014. However, net income during the first nine months is $7.132 million, well ahead of the $2.733 million during the same period of 2014.
Operations in 2015 follow a turnaround in 2014 that saw the company end five consecutive years of losses. The 2014 net income of $6.033 million was a more than $15 million swing from the $9.11 million loss in 2013.
The “pace of improvement” has been Glaser’s common theme since taking over earlier this year after previous CEO John Simone had to resign for health reasons. Simone presided over the improved financial performance and helped push back against a hostile takeover attempt by Phoenix, Ariz.-based Knight Transportation.
Areas in which Glaser has said he is focused include: reducing the size of the tractor fleet by 400 in 2015 by retiring 800 older tractors and replacing them with 400 tractors that are more fuel efficient and require less maintenance; Increasing driver pay and increasing driver home time with improvements in scheduling, dispatch and other methods; and reducing overall corporate costs to reflect a trucking operation with 400 fewer tractors.
According to the financials provided by USA Truck in its quarterly report, the company made progress on reducing key expenses. Fuel costs, thanks primarily to lower diesel prices, for the first nine months of the year totaled $47.195 million, almost half of the $92.156 million during the same period of 2014. Insurance and claims costs are down 4.63%, operations and maintenance costs are down 5.32%, and salaries and benefits totaled $105.536 million for the first nine months, down 7.36%.
Also, the company reported an average number of seated (with drivers) trucks at 1,986 through the first nine months of the year, down from 2,040 during the same period of 2014.
The base revenue per seated tractor per week through the first nine months of the year was $3,260, better than the $3,122 in the same period of 2014.
LOGISTICS, LOOKING AHEAD
Revenue and operating income at Strategic Capacity Solutions (SCS), USA Truck’s logistics and brokerage division, is off the pace set in 2014. Operating revenue for the first three quarters of the year totaled $115.754 million, almost $20 million below the same period in 2014. Operating income in the division for the first three quarters was $9.234 million, well below the $16.405 million in the same period of 2014.
Glaser said the company is taking action to improve the SCS outlook.
“In SCS, we are implementing new generation technology intended to enable our customers to leverage our carrier partners and expect to roll out these enhancements in the first quarter of 2016. Additionally, we further expanded our footprint by opening two new brokerage branches. SCS will grow the depth of our value-added services, to include refrigerated, flatbed, expedited and LTL service offerings,” Glaser said in the statement.
The company has been able to reduce its debt load. Long-term debt and leases as of Sept. 30 totaled $66.764 million, down from $93.464 million at the end of 2014.
Glaser also said the hiring of Martin Tewari as president of Trucking is a part of the company’s ongoing turnaround effort. Tewari, who has more than 25 years in the industry, was hired in September.
“For the remainder of 2015, our goals for Trucking are to fully implement the efficiency enhancement of our maintenance program, take further steps to improve driver recruiting, training and retention, and advance the strategy of right-sizing the fleet and reducing the average age of the equipment and realize our stated goal of bringing our Trucking operating ratio in line with the industry,” Glaser said in the earnings report. “For SCS, our goals are to increase load volume and improve service offerings. We believe the benefits of these initiatives will be apparent in the coming quarters.”
USA Truck shares (NASDAQ: USAK) closed Tuesday at $18.90, up 22 cents on the day. During the past 52 weeks the share price has ranged from a $32.14 high to a $16.33 low.