The financials aren’t getting better for Van Buren-based USA Truck. A first quarter income loss of $4.89 million followed a full year 2016 loss of $7.69 million, with the company working through management changes and its second turnaround plan in less than five years.
The 2016 loss was a wide swing from 2015 when the company posted full year net income of $11.069 million, up 76.1% compared to 2014 net income. 2015 was the second consecutive year of growth for a company that has struggled since the Great Recession.
For the first quarter ended March 31, the company posted a net income loss of $4.89 million, well above the $1.807 million loss during the first quarter of 2016. The per share loss was 61 cents. Total revenue in the quarter was $101.67 million, down from $110.618 million in the first quarter of 2016.
First quarter financials missed expectations. The three analysts who cover the company had a consensus estimate of a 12-cent per share loss. Only one analyst offered an estimate on revenue, and that was $109.3 million.
The first quarter bottom line was somewhat complicated by a $4.5 million one-time charge to cover an “adverse development on auto and workers’ compensation claims.” But the company also posted an expense reduction of $2.61 million related to an income tax benefit.
USA Truck President and CEO James Reed said the company is on the right path to returning to profitability “in the relative near-term.”
“Having now completed three months in the role as USA Truck’s CEO, I believe we are making important strides toward improving our Trucking segment’s productivity, and taking the right steps in building a lean and efficient company that can generate profits in the relative near-term and create sustainable value over time. My first priority has been, and will continue to be, returning USA Truck to profitability as quickly as possible,” Reed noted in the earnings statement.
One of Reed’s priorities is a “Trucking turnaround.” The company has struggled in recent quarters to have enough drivers for its truck fleet. The unseated tractor percentage was 8.3% in the quarter, up considerably from the 3.1% in the fourth quarter of 2016. However, the average seated tractor count was 1,563, up 1% compared to the first quarter of 2016.
The company also reported that base revenue per seated tractor per week rose 0.9% to $3,040.
“These metrics demonstrate progress toward our goals of increasing average seated tractor count by 5-7% over the fourth quarter 2016 average of 1,547, and increasing base revenue per seated tractor per week by 3-5% over the full year 2016 average of $2,998,” Reed noted.
Other turnaround priorities noted by Reed included a “commitment to reducing costs,” rebuilding the top management, improving base revenue per loaded mile, and generating more revenue for the company’s USAT Logistics division.
Key leadership changes in the past two years include the following.
• April 2017: Jason Bates is hired as the new chief financial officer, and Cheryl Stone was hired as senior vice president-human resources
• January 2017: CFO James Reed is promoted to CEO following the sudden resignation of Randy Rogers
• May 2016: Michael Borrows resigns as CFO and executive vice president
• July 2015: Thomas Glaser named president and CEO, replacing John Simone
• April 2015: Glaser named interim chief operating officer, after former CEO John Simone takes medical leave
USAT Logistics, the company’s non-asset division, posted operating revenue of $31.39 million in the quarter, down from $34.916 million in the first quarter of 2017. Operating income during the quarter was $709,000, down from $2.006 million in the same quarter of 2016. The company reported that its effort to open a logistics office in Mexico was delayed by the Mexican government, but finally opened March 1.
The company shaved $5 million, or 33.3%, from its operating income gain for the year. A previously announced “positive impact” on operating income of between $15 million and $11 million was reduced to $10 million to $6 million.
“[M]uch softer demand in our logistics business and slower pace of seating of tractors made for a slower than expected start to the year. As a result, although we continue to execute on these business initiatives, we now expect they will have a $6 million – $10 million positive impact on 2017 operating income when compared to 2016,” the company noted.
The company also noted it expects to make a profit in the third quarter of 2017.
Shares of USA Truck (NASDAQ: USAK) closed Tuesday at $6.63. In the past 52 weeks the stock has traded between $21.46 and $5.78.