USA Truck Losses in Fourth Quarter 'Unacceptable,' New CEO Says
USA Truck Inc. lost money in the fourth quarter and for the full year in 2016, results that newly installed CEO James Reed criticized in a blunt assessment of the overall performance over the past 12 months.
The Van Buren, Arkansas, motor carrier reported $3.8 million in net losses, or a loss of 48 cents per share. In the year prior, the trucking company earned $3.9 million in net income, or 39 cents per share. For the full calendar year, USA Truck lost $7.7 million, or a 90-cent loss, compared with a net income of $11.1 million, or $1.06, in 2015.
“[We] understand that we must execute and accelerate the pace of change at the company. Our results have been unacceptable,” Reed said in a call with investors and industry analysts. “We will not stand still. Our strategy is sound but our execution and pace have not been. Now that has changed.”
Without mentioning former CEO Randy Rogers, he also didn’t mince words about the previous management.
“We bring an intensity and immediacy to the table that I can say with certainty has not existed at USA Truck,” Reed said.
Revenue in the fourth quarter dropped 13% to $103.1 million; in the full year it decreased 16% to $429.1 million. On the expense side, USA Truck recorded a $2.84 million impairment charge because of the weak used truck market and the impact on the value of its aging fleet.
Within the company, the trucking division performed worse than the logistics unit. Trucking revenues declined 13% in the quarter and 17% for the full year. The amount leftover after expenses were deducted from the revenues were negative in both the quarter and full year. The operating loss was $6.2 million in the quarter and $14.8 million for the full year, compared with an operating income of $4.52 and $11.1 million respectively in 2015.
The number of tractors with a driver dropped to 1,705 in the quarter, down from 1,804 in the year prior.
“The overall freight environment in our business was just okay in the fourth quarter,” Reed said, acknowledging that driver retention was a problem. “However, upward price pressure was evident during the peak of the quarter as tightening capacity became more of an issue in our sector than it was in 2015. We wrestled with higher than expected unseated tractors, which limited our ability to fully take advantage of the improving conditions.”
USA Logistics revenue was $33.2 million in the quarter and $134.6 million for the full year, both 12% declines on a year-over-year basis. Operating income was $1.54 million in the quarter, down from $2.75 million in the year prior; for the full year it was $7.27 million, down from $12 million.
Jim Craig, newly-named executive vice president and chief commercial officer, said that the company hired new sales agents in the fourth quarter to aggressively court new freight business. Currently, USA Logistics has 21 agents, but he said the number would likely grow in 2017.
Craig also announced that the logistics division opened a new office in Mexico.
“We expect that new office to generate meaning revenue and to be operating profitably before the end of 2017,” he said.
USA Truck ranks No. 53 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
