July 31--USA Truck posted its first quarter of positive net income in three years as the company continues to drive its turnaround plan with diversification, efficiency and "crisp execution," USA Truck President and CEO John Simone said.
The Van Buren-based trucking company announced Thursday in its second-quarter report that it saw a 12.1 percent increase in base revenue to $125.0 million over the same period last year. Negatively, there was $2.2 million in legal fees defending a hostile takeover attempt from Knight Transportation and a continuing driver shortage, and a 2.1 percent decrease in trucking as more drivers drop out of the race.
Diversification came with the company's Strategic Capacity Solutions brokerage business contributing a base revenue of $41.8 million, a 39 percent increase over last year. And 92 of 100 of their top clients are using all of USA Truck's resources.
However, Federal Motor Carrier Safety Administration regulations announced last July put a cap on the number of hours a trucker driver could work in a day.
Industry insiders like Jennifer Hosier, human resources manager at Drivers Select Inc., say the new regulations have resulted in a loss of drivers across the country as "time away from family doesn't make it worth the loss in pay." USA Truck has seen their unseated-truck percentage go up from 5.6 percent to 8.1 percent since the ruling.
"They're still operating at a 2.1 percent loss in the trucking segment," said Brad Delco, investment banking associate with Stephens Inc. "The good news was kind of priced in with the stock today."
USA Truck's stock opened at $18.74 Thursday morning and jumped to $19.50 before closing at $18.49.
Driver retention is improving though and "recruiting efforts are going well," Simone said during a conference call after the report was released. USA Truck has 1,856 trucks with 140 being owner/operators.
With this being USA Truck's seventh consecutive quarter of improved year-over-year financial results, Simone called it a "testament to the multiple revenue growth, operational and cost-efficiency initiatives."
"We posted our first quarter of positive net income in three years," Simone stated in a news release. "While continuing the work of implementing our turnaround plan, the progress we are making is evident in virtually every area of our business."
Despite a harsh winter, Simone said, USA Truck's results on an adjusted basis for the first six months of 2014 were also positive. The company saw adjusted earnings per share of $0.07 compared to a loss of $0.38 in the same period last year.
"This performance was made possible by crisp execution within this highly efficient service against the backdrop of a market characterized by strengthening demand and tight capacity," Simone stated. "Our SCS segment accounted for over one-third of our consolidated base revenue during the quarter, substantially strengthening and diversifying our integrated business model."
With fuel surcharge collections increasing 7.4 percent, the company increased revenue per total mile by 5.7 percent and grew its "miles-per-seated-tractor-per-week" number by 1.3 percent, their highest level in more than three years.
Elevated medical benefit plan costs, the report states, added pressure during the quarter, but USA Truck "achieved improvements" in critical areas such as insurance and claims, fuel and maintenance costs. The company also took steps the administration believes will increase its seated truck count, something they say remains one of management's top priorities.
"The availability of qualified drivers continues to be problematic across the truckload industry," the report states.
"Although the shortage of drivers and more restrictive hours-of-service rules continue to present challenges for our industry, the demand and pricing environment in the truckload marketplace is healthy and we believe our 2014 goals of positive consolidated operating income and adjusted EPS are achievable," Simone concluded.
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