USA Truck financials re-enter positive territory

Van Buren-based USA Truck re-entered positive territory during the second quarter with revenue up more than 22% and net income moving into the black after two consecutive quarters of more than $4.5 million in losses.

The long-haul trucking company posted second quarter net income of $598,000, less than the $900,000 in the second quarter of 2010. Per share earnings of 6 cents beat analyst estimates of 4 cents.

Thanks partially to a boost in fuel surcharge revenue, USA Truck recorded $139.027 million in revenue, up 22.3% compared to the 2010 period.

“Despite a relatively soft freight environment in the first six weeks of the quarter, we nearly tripled our earnings excluding the effect of last year’s fuel hedge gain, which amounted to approximately $1.2 million pretax, or $0.07 per share,” Cliff Beckham, USA Truck president and CEO, said in the earnings statement. “As we progress toward full implementation of our VEVA (Vision for Economic Value Added) strategic plan, we believe our diversified model of integrated and complimentary service offerings exhibits more signs of maturity.”

For the first half of 2011, the company has an income loss of $2.118 million, up compared to a $2.096 million loss during the 2010 period. The company lost $2.7 million in the first quarter. Total revenue for the first half of 2011 is $263.069 million, up 19.95% compared to the 2010 period.

A freight recession that began in the fall of 2006 caught up to USA Truck in late 2008. The long-haul carrier posted a net income loss of $7.177 million in 2009 and a net income loss of $3.308 million in 2010. However, total revenue in 2010 was $460.161 million, up 20.3% compared to 2009. The company posted 2009 revenue of $382.36 million, down 28.6% compared to the $535.62 million in 2008.

Higher fuel prices and costs related to recruiting and retaining qualified drivers continued to hamper earnings, Beckham said. At the end of the first quarter, the company said about 10% of its trucks sat idle because of a lack of drivers. To counter that, the company increased driver compensation by 3 cents per mile. Also, driver recruiting and training costs were 20% higher. Driver compensation, recruitment and training reduced earnings by 11 cents per share during the second quarter.

“We expect that most of these costs will subside upon reaching our goal of 3% unmanned tractors,” the company advised in the earnings report.

An average of 9.1% of the USA truck fleet was unmanned during the quarter compared to 6.5% last year. The 2.6% difference, according to the company, reduced earnings by almost 5 cents per share due to a reduction in miles per tractor per week.

Darron Ming, vice president and chief financial officer, said the company bought 305 tractors and 350 trailers during the first six months of 2011 which added $16.3 million in debt to the company’s books. The company plans to buy another 250 tractors during the next six months.

Ming also said cash flow was hurt in the process of passing along higher fuel prices to customers. Fuel and fuel tax costs for the company during the first half of 2011 totaled $71.058 million, 27.7% higher than in the 2010 period.

The company is hoping diversification of its revenue model will generate new revenue and protect the company from future economic downturns.

In its Strategic Capacity Solutions division (freight brokerage service), revenue for the first half of 2011 totaled $29.439 million, up 100% compared to the segment income in the 2010 period. Operating income in the segment for the first half of the year was $3.606 million, up 190% compared to the 2010 period. USA Truck added three SCS branch offices during the second quarter, bringing the number of branches to 11.

“Not only did our SCS team members execute the model well, but they also provided solutions for over 16,000 loads for our SCS customers, most of whom are also Trucking customers who appreciate the additional capacity,” Beckham noted in the report.

The company’s fledgling intermodal segment delivered $10.503 million in revenue during the first half of the year, up 106.5% compared to the 2010 period. However, the segment posted an operating income loss of $496,000 for the first half of 2011. Beckham said the company expects the segment to be profitable in the third quarter.

USA Truck shares (NASDAQ: USAK) were set to open on Thursday at $11.34. During the past 52 weeks, the share price has ranged from a $16.91 high to a $9.75 low.