Editor's note: Story is updated with changes throughout.
Van Buren-based USA Truck continues to lose money, but the losses are trending lower and officials with the trucking company maintain that their turnaround plan is delivering better results.
The company recorded a loss of $1.589 million during the first quarter of 2014, an improvement over the $2.474 million during the first quarter of 2013. Total revenue was $145.489 million, up 10.1% compared to the first quarter of 2013.
The 15 cent loss for earnings per share was better than the consensus estimate of a 20-cent per share loss, according to the earnings report released early Wednesday (April 30).
Company officials said the company improved during a quarter in which several rounds of severe winter weather made operations difficult. USA Truck President and CEO John Simone said during the earnings call that the weather-related impact on operational income is estimated to be $2.5 million. The company also recorded an expense of $400,000 related to its defense of the failed hostile takeover attempt by Phoenix-based Knight Transportation.
"The unusual frequency and severity of winter storms disrupted our Trucking operations throughout January, February and the first week of March,” Simone said in the earnings statement. “The final three weeks of March, however, were characterized by unusually strong freight volumes, which outstripped both our and the industry's supply of trucks, creating widespread dislocations in the marketplace as pent-up shipping demand from the severe winter met a worsening shortage of drivers in the industry.”
The first quarter loss follows a 2013 that saw improvements, but continued losses. USA Truck posted a net loss of $9.11 million in 2013. While an improvement compared to the net loss of $17.671 million in 2012, it marks the fifth consecutive year of losses for the trucking company.
The company has lost more than $47.9 million in the past five years. The last time the company strung together meaningful numbers was in the middle of the previous decade when 2004, 2005 and 2006 delivered net income of $7.432 million, $15.568 million and $12.441 million, respectively.
"We are continuing to execute our turnaround plan, focusing on the same high-leverage activities that drove significant improvement in our results throughout 2013. We are pleased with our progress in many areas,” Simone said in the statement. “One obstacle facing the entire industry is the shortage of drivers brought on by more restrictive federal hours-of-service rules, increasing opportunities in other industry verticals such as housing and energy, and long-term demographic trends in which more drivers are leaving our industry each year than are entering it.”
During the USA Truck earnings call, Simone said the turnaround plan is “largely back on track” in the second quarter, but it will take several months to recruit and retain enough drivers to return to a normal seated-truck count. He said the company increased staff support for recruiting, changed marketing efforts and may have to take an expense hit with higher driver pay.
“We are evaluating pay. Nothing is off limits at this point,” Simone said during the call.
Simone stressed during the call that a big part of the company’s turnaround will be continued growth of the Strategic Capacity Solutions (SCS) segment of the company. That segment provides logistics and freight brokerage services. The company reported that SCS revenue was 31.8% of the overall revenue in the quarter, and operating income quadrupled to $5.1 million.
Brad Delco, a transportation industry analyst with Little Rock-based Stephens Inc., estimated in a Feb. 25 investor note that USA Truck would post a $1.9 million loss in the quarter. Delco estimates the company will earn $1 million in the next quarter, and end the year with net income of $2.6 million, or earnings per share of around 25 cents. (Stephens Inc., Delco’s employer, has a market position in Arkansas Best and USA Truck, and does investment and non-investment business with the companies.)
USA Truck does not offer guidance on future earnings.
The market did not like the earnings report. USA Truck shares (NASDAQ: USAK) closed Wednesday at $16.60, down $1.26 per share, or more than 7%. During the past 52 weeks the share price ranged from a $19.57 high to a $4.95 low.