Higher insurance costs, not enough “safe and productive drivers,” and lower revenue per shipment in its logistics division were some of the reasons behind a $7.69 million loss in 2016 for Van Buren-based USA Truck Inc.
The truckload and logistics operator reported fourth quarter and full year financials Tuesday morning (Feb. 7), with the full year numbers including a $5.3 million loss tied to “restructuring, impairment and other costs.” The per share loss for the year was 90 cents.
The 2016 loss is a wide swing from 2015. USA Truck ended 2015 on a high note, with full year 2015 net income reaching $11.069 million, up 76.1% compared to 2014 net income. It was the second consecutive year of growth for a company that has struggled since the Great Recession.
The full year consensus estimate among the four analysts who cover the company was 18 cents per share on revenue of $434.4 million. Full year revenue was $429.099 million, down from $507.934 million in 2015.
Fourth quarter activity produced a net loss of $3.812 million, well off the $3.937 million gain in the fourth quarter of 2015. Revenue in the quarter reached $103.135 million, below the $117.984 million in the same quarter of 2015. The fourth quarter consensus estimate was 4 cents per share on revenue of $108.3 million.
Trucking segment operating loss for the year totaled $14.789 million, a more than $25 million gap compared with operating income of $11.088 million in 2015. Base revenue per seated tractor was $2,998 in 2016, down 7.3% compared with $3,235 in 2015. The average number of seated tractors fell from 1,824 in 2015 to 1,674 in 2016.
“The performance of our Trucking segment has massive room for improvement. Intense focus on improving business fundamentals, key operating metrics and employee engagement are expected to drive this business to acceptable performance levels over the long run,” the company noted in the earnings report. “The two most immediate opportunities are seating a higher percentage of our tractor fleet with safe and productive drivers, and capitalizing on market conditions to improve base revenue yield.”
Martin Tewari, president-trucking for USA Truck, said pricing trends entering 2017 are improving and federal regulatory changes – primarily electronic log rules likely to reduce the number of trucks available nationwide to haul freight – should help improve metrics like revenue per seated tractor.
“We expect to realize price upside related to recent awards by mid-February 2017 and are aggressively looking to upgrade our freight mix in the current bid season. We expect this price lift will allow us to increase our base revenue per seated tractor per week by approximately 3-5% over the 2016 full year average,” Tewari noted.
The national freight market has been tough for not only USA Truck. Donald Broughton, managing director, chief market strategist and senior transportation analyst with Avondale Partners, noted in the December Cass Freight Index that trucking trends are changing as commerce migrates from brick-and-mortar retailers to online purchases. With that trend, “we are becoming more focused on the number of loads moved by truck and less focused on the number of tons moved by truck,” Broughton wrote.
He said tonnage appears to be rising, but the number of truck loads declined in five of the last seven months of 2016.
“No matter how it is measured, the data coming out of the trucking industry has been both volatile and uninspiring,” Broughton said.
USAT-Logistics posted full year operating revenue of $134.573 million, down from $153.454 million in 2015. Operating income fell from $11.983 million in 2015 to $7.273 million in 2016. To boost growth, the company announced that its logistics division would expand into Mexico.
“As we move into 2017, USAT Logistics is pursuing new growth. To further expand our Logistics business and to better support our assets operating in Mexico, we are announcing the establishment of USAT Logistics de Mexico, an experienced team in Central Mexico that brings in-depth market knowledge and customer and carrier relationships,” Jim Craig, chief commercial officer and president-USAT Logistics, said in the earnings report.
In addition to a tough business environment, the company also made several sudden management changes, with the most recent being a new CEO. James Reed, who was hired in October as chief financial officer, replaced Randy Rogers as the company’s president and CEO. Reed also assumed Rogers’ position on the board of directors. Reed replaced Rogers “effective immediately,” according to a Jan. 30 news release. Rogers, who was named president and CEO in January 2016, “is leaving the company to pursue other opportunities.” Also “effective immediately,” James “Jim” Craig, president of USAT Logistics, has been appointed as executive vice president and chief commercial officer, which is a new position.
Shares of USA Truck (NASDAQ: USAK) closed Monday at $8.35, up 4 cents. In the past 52 weeks, the stock has traded between $21.46 and $7.65.