USA Truck Plans to Cut Costs Following Disappointing Q3 Earnings
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USA Truck posted disappointing earnings when the Van Buren, Ark.-based carrier released its third-quarter financial report Oct. 31.
The company’s year-over-year net income fell to a loss of nearly $1.4 million, or a negative 16 cents per share, after reporting a profit last year of $3.3 million, or 40 cents a share, in 2018.
Revenue declined 1.2% to $130.9 million from $132.5 million in the same period a year ago.
The company’s numbers missed Wall Street’s expectations, which were anticipating a price of 10 cents per share.
The company’s operating ratio also slumped to 99.9 from 96.5, a basis points difference of 340 from last year.
Operating ratio, or operating expenses as a percentage of revenue, is used to measure efficiency. The lower the ratio, the greater the company’s ability to generate profit.
“The third quarter marked a continuation of the challenging freight environment the industry has experienced in 2019. A seasonally soft market, coupled with increased trucking capacity in the market, has created an environment where shippers are motivated to allocate a larger portion of their freight to the spot market and low-priced carrier options. This environment continues to adversely impact results in both our Trucking and USAT Logistics segments,” CEO James Reed said.
In a press release the company said it will spend the remainder of 2019 and 2020 cutting costs to improve its financial situation. Officials said already they have begun eliminating 5% to 10% of fixed costs in all departments and they have saved $5.6 million.
The company also said it will better track bid awards to monitor customer commitments, and continue its terminal expansion to lower its repair costs, as well as add to its logistics division sales force.
There were some bright spots in the report. Revenue in the truckload division increased 7.8% year-over-year to just below $94 million from $86.8 million in 2018. But revenue per truck per week fell 8% year-over-year to $3,142 as the carrier reported “lower volumes on committed lanes coupled with spot market pricing pressure.”
The Logistics division saw revenue fall by 19.9% to $39.4 million from $49.1 million in 2018.
USA Truck ranks No. 64 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. USAT Logistics ranks No. 47 on the TT list of top freight brokerage firms and No. 40 on the TT list of top dedicated contract carriers.
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