USA Truck ends 2017 with $7.5 million profit, revenue up 4.1%

by Jeff Della Rosa (JDellaRosa@nwabj.com) 311 views 

USA Truck earned $14.822 million in the fourth quarter, offsetting losses in the first two quarters of 2017, and ended the year with net income of $7.497 million, largely as a result of tax reform. In 2016, the Van Buren-based carrier reported a $7.699 million loss.

Excluding tax reform, fourth-quarter adjusted net income was $2.813 million, or 35 cents per diluted share, an improvement compared to a loss of $3.725 million in the same quarter of 2016. The carrier beat analyst expectations of 10 cents per share.

On Thursday (Feb. 1), the carrier reported 2017 profits were $7.497 million, or 93 cents per share, as opposed to a $7.699 million loss, or 90 cents per share loss, in 2016. In the fourth quarter, that ended Dec. 31, earnings were $14.822 million, or $1.84 per share, compared to a $3.812 million loss, or 48 cents per share loss, in the same period in 2016.

For the year, revenue rose 4.1% to $446.533 million. In the fourth quarter, revenue increased 19.5% to $123.27 million. The carrier beat analyst expectations of $116.7 million. The company’s operating ratio improved 900 basis points to 95.5% in the quarter, from 104.5% in the same period in 2016.

“The fourth quarter adjusted results represent the third highest adjusted EPS for USA Truck in the last 10 years,” President and CEO James Reed said in the earnings statement. “When I, and other members of our new management team, joined the company during the course of 2017, we committed to improved operational and financial results. We have now delivered on that commitment for the second consecutive quarter.”

In the third quarter of 2017, the carrier had net income of $409,000.

“While these results help validate our leadership team’s strategy and execution, the quarter was not without its challenges,” Reed said. “We continue to be impacted by this increasingly tight driver and independent contractor recruiting environment and increasing cost pressures in our logistics business that could threaten margins. These will be our key focus areas throughout 2018, as we seek to further increase shareholder value.”

TRUCKING
In the trucking segment, revenue rose 2.6% to $302.052 million, from 2016. In the fourth quarter, revenue increased 19.8% to $83.777 million. The increase reflected a 20.1% rise in base revenue per loaded mile.

In 2017, the segment had an operating loss of $9.667 million, down from an operating loss of $14.789 million in 2016. In the fourth quarter, operating income was $3.498 million and an adjusted operating ratio of 95.2%, compared to a $6.181 million operating loss and adjusted operating ratio of 109.8%. This was a $9.7 million improvement in operating income and a 1,460 basis point improvement in adjusted operating ratio as the segment increased its amount of peak season freight compared to the same period in 2016. This led to the rise in base revenue per loaded mile to $2,106 and a 16.1%, or $487 per week, increase in base revenue per seated tractor, from the same period in 2016.

Total miles per seated tractor fell 2.9%, or 58 miles per tractor. Deadhead miles, or miles big rigs spend hauling empty trailers, increased 40 basis points as a result of the company’s decision to haul more freight in the higher margin peak season.

Unseated tractor percentage was 5.5%, representing a 380 basis point improvement from the same period in 2016. Average seated tractor count rose 2.7% to 1,588. “While the change in both unseated tractor percentage and total seated tractor count improved year-over-year on average for the quarter, each trended unfavorably throughout the quarter, as the driver and independent contractor markets continue to be challenging,” Reed said. “We have implemented a variety of initiatives designed to help mitigate this industry-wide issue and expect this to remain a significant area of focus in 2018.”

USAT LOGISTICS
In the brokerage segment, revenue increased 7.4% to $144.481 million in 2017, from 2016. In the fourth quarter, revenue rose 19% to $39.493 million, from the same period in 2016.

For 2017, operating income rose 4.5% to $7.599 million. In the fourth quarter, operating income rose 29.3% to $1.995 million. Gross margin fell 70 basis points to 17.9%, from 18.6% in the same period in 2016. A tight spot market in the period led purchased transportation costs to rise and challenged the segment to maintain margins. The ELD mandate, which went into effect in December, led carriers to increase rates preemptively.

Shares of USA Truck (NASDAQ: USAK) closed at $20.08, down 8 cents or 0.4%, on Thursday. In the past 52 weeks, the stock has ranged between $21.98 and $5.73.

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