Income for USA Truck off 32%
3Q revenue falls 19% from 2014
USA Truck reported a 32.5 percent drop in net income and a 19 percent decline in revenue for the third quarter of 2015.
The Van Buren-based transportation company reported net income of $2.7 million, down from $4.0 million during the same period last year. It saw earnings fall from 38 cents per share to 26 cents per share as revenue dropped to $123.5 million from $153.6 million a year ago.
Flat demand across the industry and investment related expenses kept earnings from being as high as the company would have liked, CEO Tom Glaser said. USA Truck did beat analyst estimates of 24 cents per share.
Glaser, who was named as the company’s head in July, said USA Truck experienced some “noise” in the the third-quarter numbers. As drags on the company’s earnings, he cited a $2.9 million charge related to severance pay and startup costs for two new offices, a change in the company’s accounting practices related to tires and larger-thannormal expenses related to the purchase of new trucks.
Since assuming his current position, Glaser has been busy reshaping the company’s management team and said the changes would help USA Truck’s long-term prospects. Responsibilities for the trucking operation have been centralized, which could help trim future costs, the CEO said, also noting that the company expects maintenance costs to go down now that it’s trimmed the average age of its fleet from five years to a little more than two.
“What we’re doing is basic blocking and tackling,” Glaser said. “We’re focused on a growth platform that is sustainable for the future.”
CEO John Simone resigned July 9 after being diagnosed with lung cancer. Glaser had been serving on the company’s board and then as chief operating officer during what was originally a leave of absence for Simone.
Trucking revenue was $85.3 million, down 21 percent from the third quarter last year. Companies across the industry have seen fuelsurcharge revenue decline, and USA Truck was not immune, reporting surcharge revenue dropped to $10.6 million from $22.2 million in last year’s third quarter.
USA Truck purchased 800 new trucks this year to improve the average age of its fleet. The company has also sold off 400 trucks.
During the third quarter USA Truck closed two of its eight maintenance shops and will begin using third-party roadside assistance. It’s a move aimed at reducing costs and decreasing the time required to get trucks back on the road after problems arise.
USA Truck’s brokerage division, Strategic Capacity Solutions, reported revenue
of $38.5 million for the third quarter. It was down from $45.3 million during the same time period in 2014. USA truck opened new offices for its brokerage division in El Paso, Texas, and Kansas City, Mo.
“Our third quarter was really devoted to moving us forward and moving us forward faster, to accelerate the progress in trucking business by improving costs and operations,” Glaser said. “We’ll continue to leverage our SCS business and take advantage of our opportunities there. We’ve expanded our trucking leadership management team. We have a solid network, customers and a workforce committed to helping us. We’re on the right path.”
USA Truck will continue its stock buyback program. It has repurchased more than 500,000 shares this year, including 245,979 shares worth $4.7 million in the third quarter.
Chief Financial Officer Michael Borrows said the company is authorized to purchase a total of 1 million shares by July 2018.
“Our intention remains to cautiously, but aggressively, repurchase a full 1 million shares,” Borrows said.
Adam Wyden, an investor in the company and, at times, an outspoken critic of USA Truck management, was among those who dialed into an investor call Wednesday. Wyden asked several pointed questions but was complimentary of the direction of the company under Glaser.
“Thank you for all your good work,” Wyden said after a nearly 10-minute back-andforth with company executives. “I’m very excited about all the new people driving the ship you have here.”
Shares of USA Truck closed trading Wednesday at $19.40, up $0.50.
Stephens Inc. transportation analyst Brad Delco said the company’s performance wasn’t bad considering the state of the industry. Demand is down compared with last year, and Delco said the company appears to be headed in a positive direction under Glaser.
“Generally speaking, people are excited to have Tom at the helm, running the show, and excited to see what results he can deliver,” Delco said. “I don’t know that we’ve seen them just yet. People are looking forward to seeing how the changes being implemented will eventually lead to better margin performance in the quarter and years to come.”