If there is a comeback kid in the Arkansas corporate world, it would have to be Van Buren-based USA Truck. Officials with the long-haul trucking and logistics company announced 2014 net income of $6.033 million, a more than $15 million swing from the $9.11 million loss in 2014, and a gain that ended five consecutive years of losses.
The 2014 per share net income of 58 cents beat the 51 cents per share that was the average of estimates among analysts who cover the company. Full year revenue for the company was $602.477 million, up 8.55% compared to 2013.
Driving the solid annual gain was a healthy fourth quarter in which net income was $4.182 million, much better than the $4.636 million loss in the fourth quarter of 2013. However, the 2013 quarter saw the company, which has a self-funded insurance program, post a $5.97 million charge to boost its long-term claims reserve. The company also posted a $1.5 million charge in the 2013 quarter for expenses related to fighting a hostile takeover attempt by Phoenix-based Knight Transportation.
Knight’s takeover attempt also crimped 2014 earnings by $2.8 million.
The fourth quarter per share earnings of 40 cents blew past the consensus estimate of 18 cents. Revenue during the quarter was $150.07 million, up 6.1% compared to the same quarter in 2013.
“Our robust fourth quarter capped a transformative year for USA Truck,” President and CEO John Simone said in the earnings report released early Wednesday (Feb. 11). “As a result of our company-wide focus on operational execution, profitable growth and cost effectiveness, we delivered our ninth consecutive quarter of improved results, our third consecutive quarter of positive operating income, and the Company’s highest quarterly earnings per share in more than nine years.”
The publicly held trucking company has lost more than $48 million in the five years before 2014. The company posted a net loss of $9.11 million in 2013, a net loss of $17.671 million in 2012, a 2011 loss of $10.77 million, a 2010 loss of $3.308 million, and a $7.177 million loss in 2009.
Barring an acquisition, several more years of positive numbers will be needed for the company to dig out of debt.
“Our balance sheet strengthened and our increased cash flow generated from operations will allow us additional flexibility. Year over year, our debt was reduced by a total of $11.4 million to a total of $117.5 million,” USA Truck Chief Financial Officer Michael Borrows said in the earnings report.
Simone said the improved financial are a result of “strong process on the execution of our turnaround plan.” That plan was implemented shortly after Simone arrived at USA Truck in February 2013. During his first few weeks on the job Simone analyzed the operations and issued what he called a “100-day plan.” The plan included 27 “high-leverage activities” he believed could restore profits. The 27 activities included reducing insurance costs and claims expense, improving fuel efficiency, and lowering maintenance costs while also improving overall maintenance operations.
The company also was focused on diversifying the business model by growing their Strategic Capacity Solutions (SCS) – logistics and freight brokerage – division. The division generated 29.7% of total revenue – $178.982 million – for the company in 2014, up from 24.6% in 2014.
While it was a robust fourth quarter, key metrics for 2014 show that struggles remain on the trucking side. For example, the operating ratio for the full year was 101.1%, better than the 105.4%, but still reflecting a loss of 1.1 cents for every dollar of revenue. And potentially reflecting pressure from an industrywide driver shortage, the percentage of in-service tractors without a driver in 2014 was 7%, up from the 5.1% in 2013. The number of “deadhead” miles was 12.7% in 2014, up from 11.8% in 2013, and the total miles driven fell from 223,923 in 2013 to 215,479 in 2014.
The weak metrics in the key categories were primary culprits in the company posting a $3.532 million operating income loss in the trucking division. However, it was a big improvement over the $17.667 million operating loss in 2013.
Saving the day with respect to full-year figures was the SCS division, which posted operating income of $20.775 million, more than double the $9 million in 2013.
Company execs believe that improvements to the key metrics seen in the fourth quarter will continue into 2015. The operating ratio in the fourth quarter was 95.1% compared to 109.1% in the 2013 quarter. Operating income for the trucking division during the fourth quarter was $4.24 million, an almost $12 million improvement over the operating loss of $7.613 million in the fourth quarter of 2013.
“In 2015, we believe USA Truck is well positioned to deliver another year of growth and continued operating improvements,” Simone said in the statement. “We are sharpening our focus on enhancing the Company’s ability to provide capacity solutions by growing our dedicated business, growing our SCS footprint and our owner-operator fleet. In addition, we will continue to refine our Truckload network.”
Although thinly traded, investors have rewarded the company’s overall improved performance. USA Truck shares (NASDAQ: USAK) closed Tuesday at $27.67, up 25 cents. During the past 52 weeks the share price has ranged from a $13.29 low to a $30.51 high.