U.S. Xpress Raises Over $250 Million in Stock Issue
A decade after its owners took the company private, U.S. Xpress Enterprises, Inc. returned to Wall Street June 14 to raise more than $250 million of equity and again become a publicly traded company.
The stock offering was priced lower than what U.S. Xpress had predicted and hoped for recently, reflecting investor concerns that the traditionally cyclical trucking industry may be nearing its peak.
U.S. Xpress ranks No. 21 on the Transport Topics Top 100 list of the largest North American for-hire carriers.
But in spite of the lower initial price on June 14, investors bid up the stock during its first day of trading on the New York Stock Exchange by 4.25%.
U.S. Xpress is selling more than 18 million shares at an initial price of $16 per share, netting the company more than $250 million of new capital to pay down debt and another $22 million to buy out some of the founding family members who wanted to sell their stake in the company.
Shares of U.S. Xpress rose 68 cents per share in trading June 14 to close at $16.68.
In its prospectus for the stock sale last week, U.S. Xpress said it had expected to initially debut its return to the stock market at a price of $18 to $20 a share. Under the leadership of company president and CEO Eric Fuller — the 41-year-old son of company co-founder Max Fuller — U.S. Xpress has spent the past three years restructuring its management, streamlining its operations and preparing to its return to Wall Street.
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The elder Fuller and his co-founder Pat Quinn, who started U.S. Xpress in 1986, took the company public for the first time in 1994 but then bought up the stock to take it private again in 2007.
“We think the company is really well positioned now to go to the market,” Eric Fuller said June 14 from the New York Stock Exchange, where his company began trading. “We were an entrepreneurial, growth-oriented company for a long time. But when I went into my role (as president and later CEO) I tried to shift the focus to a more professionally managed organization that makes decisions based upon metrics and data and we’ve tried to build a strong culture for success.”
Fuller said changes in management, technology and culture, which are ongoing, have helped restore profitability to U.S. Xpress and the improving economy and economies of scale should sustain that growth.
The stock issue pays down much of the company’s debt and allows U.S. Xpress to own, rather than lease, its Tunnel Hill, Ga., facility.
“That will dramatically change our leverage and be transformative in positioning us for the future,” Fuller said.
Fuller said the lower initial stock offering price from what the company predicted reflected some investor concerns that trucking may not sustain its robust growth as the economy reaches full employment and getting more truck drivers will be much harder in the future.
“We’ve had a strong trucking cycle for a number of quarters, and the market was a little concerned about the cycle and that maybe we were at a peak,” Fuller said. “I don’t believe we are at a peak and I see signs that continue to drive the market that will last for quite a while.”
Although some of the founding family members of the company cashed in on their holdings with the June 14 stock offering, Fuller said he and his father were buying more stock.
U.S. Xpress expects to continue to grow organically, but over time Fuller said as a publicly traded company with less debt it will be positioned to make strategic acquisitions, as warranted.
U.S. Xpress said in its prospectus for the stock offering that it had a net loss of $3 million in calendar year 2017, down from the $16.5 million lost in 2016.
In the first three months of 2018, however, U.S. Xpress earned nearly $1.16 million, compared with a loss of more than $4.4 million a year ago.
The company’s new Class A common stock will be traded on the NYSE under the symbol “USX.”
