USA Truck misses income estimate, second quarter revenue down 1.3%

$1,000. That is the second-quarter net income for Van Buren-based USA Truck, well below the $2.544 million in the same quarter of 2018. Revenue in the quarter was $133.622 million, down 1.3% from the $135.381 million in the same quarter of 2018.

The 0 cents per share earnings missed the consensus estimate of 23 cents, and revenue missed the estimate of $142.57 million.

The quarter, which ended June 30, saw the company take a hit of about $600,000 related to a decline in value of assets held for sale, costs associated with the historic Arkansas River flooding, and expedited stock and other payments related to the May 24 death of Board Chairman Richard Peiser.

USA Truck President and CEO James Reed said a “softer freight environment” and a decline in spot rates resulted in lower revenue and income for the trucking and logistics – USAT Logistics – segments.

“Despite increased spot market participation, we were able to maintain the gains made in past quarters in our base revenue per loaded mile, and further improved our deadhead percentage both year over year and sequentially,” Reed noted in a press release posted Thursday (July 25) after the markets closed. “Declining spot rates experienced during the quarter also put pressure on USAT Logistics’ volumes and compressed average revenue per load in that business.”

Most market watchers have reported a slowdown in volume and reduction in prices for the shipping and logistics sector. Donald Broughton, the author of the Cass Freight Index, noted in his June report that the declines in the shipments index have been significant enough to ask, “Will the (second-quarter 2019) GDP be negative?” In June the shipments index fell 5.3%, while the expenditures index rose 0.9%.

SEGMENT PERFORMANCE
Operating revenue in the trucking segment during the quarter was $96.069 million, ahead of the $85.569 million in the same quarter of 2018. Operating income for the segment was $837,000, below the $2.153 million in the 2018 quarter. First-half operating revenue was $190.609 million, better than the $164.302 million in the first half of 2018. Operating income in the first six months was $2.445 million, up 45% from the $1.689 million in the first half of 2018.

Operating revenue with USAT Logistics during the quarter was $37.553 million, down from the $49.812 million in the same quarter of 2018. Operating income for the segment was $1.146 million, down 47% from the $2.158 million in the 2018 quarter. First-half operating revenue in logistics was $76.987 million, well below the $96.092 million in the first half of 2018. Operating income in the first six months was $3.459 million, down from the $5.014 million in the first half of 2018.

Reed said in response to market conditions the company has planned the following initiatives for the back half of 2019:
• Hire sales staff in the USAT Logistics segment to increase volume;
• Continue the campaign to reduce fixed costs by 5% to 10%;
• Target customer campaigns to improve chances of winning service bids; and
• Expand the terminal footprint and decrease dependence on outside repairs in high volume locations, while offering amenities to drivers in those locations.

Net income in the first six months of the year is $1.502 million, well below the $3.579 million during the first half of 2018. Revenue during the first six months reached $267.596 million, better than the $260.394 million in the same period of 2018.

The flat second-quarter follows a first quarter that was the most profitable for the shipping and logistics company since the first quarter of 2006. First-quarter 2019 net income was $1.501 million, up 45% compared to the $1.035 million in the first quarter of 2018. Revenue during the first quarter was $133.974 million, up 7.16% compared to the $125.013 million in the 2018 quarter. The company posted 2018 net income of $12.204 million, better than what the market expected and ahead of the $7.497 million in 2017. Total 2018 revenue was $534.06 million, up almost 20% compared to $446.533 million in 2017.

USA Truck shares (NASDAQ: USAK) closed Thursday at $9.66, down 12 cents. During the past 52 weeks, the share price has ranged between $23.44 and $9.11.