U.S. Xpress 2Q Earnings Expected to Drop by 30%

U.S. Xpress Enterprises of Chattanooga, Tenn., said its second-quarter earnings would be roughly a third lower than analysts' expectations. The company also reported that it has reached a settlement in its dispute with Employee Solutions Inc.

The carrier announced June 3 that, although revenue was expected to be 25% higher in the second quarter of 1999 compared with the same period in 1998 quarter, it will fall below forecasts due primarily to problems with equipment utilization.

Under the terms of the settlement, U.S. Xpress will receive cash and ESI common stock. The trucking company will record a one-time pre-tax charge of $1.25 million, or 5 cents for each common share, against its second-quarter 1999 earnings.

U.S. Xpress filed a lawsuit in U.S. District Court in Chattanooga against ESI in July 1998, alleging breach of contract and other claims for damages. ESI had provided professional employer organization services for the carrier since January 1997. U.S. Xpress claimed ESI had canceled its contract with the carrier and refused to honor insurance claims that had already been filed by U.S. Xpress employees.

The company expects second-quarter earnings -- after the charge for the settlement of the ESI matter -- to be 30% to 36% less than the 38 cents a share reported in 1998.

U.S. Xpress said equipment utilization at its truckload operation had been hurt by operational issues related to the integration of the company's 1998 acquisitions.

The company completed its acquisition of PST Vans in August, bringing its total equipment to about 4,400 tractors and 9,000 trailers.

It paid $12.5 million in cash and 1.1 million shares of its Class A common stock for PST.

For the full story, see the June 7 print edition of Transport Topics. Subscribe today.

1798