story by Michael Tilley
mtilley@thecitywire.com
The new CEO of Van Buren-based USA Truck has issued a guideline that top executives with the company will work primarily from the company’s corporate offices, a change from the previous policy that allowed some execs to be based elsewhere. The change resulted in the departure of only one top exec.
According to Michael Borrows, chief financial officer for the transportation and logistics company, CEO Thomas Glaser has said executive vice presidents with the company should transition to working Monday-Friday – excluding normal business travel – at the Van Buren headquarters rather than working from home or another office location.
The new guideline is a change from that allowed by former CEO John Simone, who left the company earlier this year to focus on his treatment for lung cancer. Simone is widely credited with helping to turn around the struggling company. 2014 net income of $6.033 million was a more than $15 million swing from the $9.11 million loss in 2013, and ended five consecutive years of losses.
However, Borrows said Monday that more work is needed to keep the company on a positive turnaround trend, which is why Glaser asked executives to “rethink things” and their role with the company if they could not commit to being in Van Buren. A more focused corporate environment is likely part of Glaser’s commitment to “realize operating income improvements of approximately $50 million over the next several years” through efforts to reduce expenses and grow revenue streams.
“If you’re going to be a leader, be here,” Borrows said, summarizing the thinking behind the new guideline.
Jeff Lester, who was serving as executive vice president-chief risk officer, is the only exec so far to not stay with the company under the new directive. Lester, who resigned Aug. 24, joined the company during the third quarter of 2013 and was hired by Simone. Prior to joining USA Truck Lester brings 25 years’ experience to USA Truck, including work in safety, compliance, risk management, security, insurance and independent contractor programs.
And while the company is on better financial ground, Borrows said safety and risk management continue to be areas that need work. For the six months ended June 30, 2015, insurance and claims expense increased around $200,000 to $12.1 million, up compared to $11.9 million during the same period in 2014, according to the company’s 10Q filing with the federal Securities and Exchange Commission. As a percentage of consolidated operating revenue, insurance and claims expense increased to 4.5%, compared to 4% for the same period in 2014. As a percentage of consolidated base revenue, the expense line item increased to 5.2%, compared to 4.9% for the same period in 2014.
Second quarter financials for the publicly held company did not necessarily carry higher the trends seen in previous quarters. The trucking, brokerage and logistics company announced Aug. 4 that second quarter net income was $2.46 million, better than the $722,000 during the second quarter of 2014. However, the 2014 quarter took a $2.163 million hit to earnings for legal costs related to a hostile takeover attempt by Knight Transportation. Total revenue during the quarter was $133.573 million, down almost 13% compared to the same period in 2014.
“Pricing and fuel efficiency were better than last year, while other areas still have significant room to improve, including maintenance, risk management and, importantly, driver retention,” Glaser said in the second quarter earnings report.
Glaser said at the time that the company is taking several steps to “accelerate the pace of improvement” in the trucking segment. Those include: reducing the size of the tractor fleet by 400 in 2015 by retiring 800 older tractors and replacing them with 400 tractors that are more fuel efficient and require less maintenance; Increasing driver pay and increasing driver home time with improvements in scheduling, dispatch and other methods; and reducing overall corporate costs to reflect a trucking operation with 400 fewer tractors.
Borrows also said Glaser wants execs to be more involved in the region. For example, Borrows is a new member of the 2016 Leadership Fort Smith class.
“I think that’s what we want to see; our executives participating in the community,” Borrows said.
USA Truck shares (NASDAQ: USAK) closed Monday at $19.75, up 19 cents. During the past 52 weeks the share price has ranged from a $32.14 high to a $13.90 low.