Editor's note: Story updated with changes throughout.
The financial picture at Van Buren-based USA Truck appears to be improving, but the company still 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.
According to the earnings report released early Tuesday (Feb. 11), the company would have posted a fourth quarter gain if not for a $5.97 million charge to boost the long-term claims liability reserve and a $1.5 million charge for expenses related to fighting the hostile takeover attempt by Phoenix-based Knight Transportation. That attempt came to an effective end on Feb 4. with a "standstill" agreement approved by both trucking companies.
Instead, the fourth quarter saw a loss of $4.636 million, more than the $3.24 million in the fourth quarter of 2012. The 45 cent per share loss missed the consensus estimate of a 1 cent per share loss. Revenue for the quarter was $141.416 million, up 4.93% compared to the same period in 2012.
For the full year, the company posted a loss of $9.11 million, better than the $17.671 in 2012. The company posted a 2011 loss of $10.77 million, a 2010 loss of $3.308 million, and a $7.177 million loss in 2009.
Revenue for the year was $555.005 million, up 8.3% compared to revenue in 2012.
'TURNING POINT'
"The fourth quarter capped a turning point year for USA Truck, with improvements in virtually every area of our business," President and CEO John Simone said in the earnings report. "Our results reflect the growing positive momentum of our strategic plan, which focuses on three critical areas – operational execution, profitable revenue growth and cost effectiveness.”
The one-time charge is a function of the company being self-insured. The decision to take the charge came “right at the wire” at the end of the quarter and was a tough call.
“it was disappointing that we had to take the charge, but it was the right thing to do,” Simone said in an interview with The City Wire, adding that it will help level costs going forward.
The report noted several areas in which company officials reported improvements. Those include:
• Reduction of debt by $12 million;
• The first quarter of positive operating income since the second quarter of 2011;
• Operating income growth of 74.4% for the year in the Strategic Capacity Solutions segment; and
• Increased length of haul and increase in rates during the quarter.
"We are very pleased with our fourth-quarter performance, especially since we are still in the early stages of implementing our turnaround plan and see many opportunities for continued improvement,” Simone noted in the report. “Given the substantial headway we have made over the past year and the momentum we carry into 2014, we believe our goal of returning USA Truck to profitability is achievable for the full year 2014."
BACK IN THE BLACK
Returning to profitability in 2014 will require continued improvement in the company’s operating ratio, which remained relatively high at the end of the year. The year end operating ratio was 105.4, meaning that the company lost $1.054 for each dollar in revenue. However, that operating ratio was an improvement over the 110 operating ratio at the end of 2012. The operating ratio for the fourth quarter was 109.1.
During an interview with The City Wire, Simone said he is confident the OR will keep moving in the right direction and the company will be “fully profitable” in 2014.
“We have 17 areas that will provide significant cost savings to our business, and some of the largest areas are improving our safety and claims ... and we’re going to be doing that by” changing the hiring process and placing “more rigor around our training programs,” Simone explained.
Another key in improving OR is in controlling costs related to driver retention, Simone said. He said the trucking environment now favors good drivers who have the ability to work for the company that treats them the best. USA Truck operates with a little more than 2,000 company drivers and around 100 owner-operators.
“Good drivers are like free agents today. Good drivers can go anywhere and get a job,” he said.
Retaining good drivers will require the company to ensure driver time is “better utilized” so that drivers are spending as much time on the road and not waiting for new loads, maintenance and other down-time factors, Simone said. Driver utilization was improved, with the company recording a 3.6% gain in miles per seated truck during the quarter.
“We’re here to serve the driver so we can take care of our customers,” Simone said, adding that the company is not perfect in how it works with drivers but is pushing for continued improvement.
The other part of the USA Truck plan to reach profitability is in gaining marketshare and doing more business with existing customers. Simone said USA Truck secured $36 million in net new revenue during the quarter, with the full year seeing $152 million in net new revenue posted. On top of that, the company added three Fortune 500 companies to its top 10 customer list in terms of revenue. Also, 96% of the top 100 customers by revenue purchased more than just one service from USA Truck, up from 67% compared to a year ago.
Link here for a PDF report from USA Truck of its fourth quarter and full-year earnings.
USA Truck shares (NASDAQ: USAK) closed Monday at $14.82. The market responded Tuesday to the report by dropping the price on the thinly-traded stock to $14.07 in mid-day trading. During the past 52 weeks the share price has ranged from a $16.38 high to a $4.37 low.