USA Truck interim Chief Operating Officer Thomas Glaser turned to the National Football League to put Chief Executive Officer John Simone's medical leave in perspective last week.
He compared Simone's absence because of a "serious medical condition" to that of Indianapolis Colts Coach Chuck Pagano, who had to step away from his team for 12 games after being diagnosed with leukemia in 2012. Indianapolis went on to become one of the surprises of the 2012 NFL season in Pagano's absence, winning nine of 12 games to earn a playoff berth.
"When he became ill, the coaching staff jumped up and they almost made it to the Super Bowl," Glaser said. "That's the feeling this company has. ... They're going to make John proud."
USA Truck's turnaround plan will be tested while Simone tends to medical issues, the extent of which the company has declined to reveal at the CEO's request. Executives for the Van Buren-based company said last week there is no timetable in place for Simone's return, but also stressed there is no plan to search for a new leader. They expressed confidence that USA Truck's success would continue without him.
Management experts and financial analysts believe the company's ability to succeed will depend on the blueprint in place and the effectiveness of the management group Simone assembled.
"If they have good systems and processes in place they'll be able to carry on without him," said Warren Stone, a management professor at University of Arkansas at Little Rock who also does private consulting with companies dealing with management succession. "They could use the leadership that he could provide. But other than that, there's no reason -- as long as they have a good, stable team around him -- that they wouldn't continue as before."
Simone's impact on the company has been evident since he was named CEO in February 2013. He was selected because of his experience in helping financially struggling companies and pushed USA Truck to profitability in 2014. The company reported net income of $6 million in 2014 after sustaining losses of $9.1 million in 2013 and $17.6 million in 2012.
USA Truck stock opened at $4.85 a share the day Simone was named CEO. It climbed as high as $32.14 in the past year and closed at $27.43 on April 2, which was the final day of trading before USA Truck announced Simone would be taking a medical leave of absence.
Brad Delco, an analyst for Stephens Inc. in Little Rock, acknowledged Simone's impact after Monday's announcement, saying in an email he had been "very instrumental in executing the turnaround plan." But Delco also recognized one of the cornerstones of Simone's plan in that "the team seems to be built out well around him."
Russell Overla was hired as executive vice president for truckload operations in June 2013, while Jeff Lester became executive vice president for risk management and safety two months later. Michael Borrows was named executive vice president and chief financial officer last September.
"What I've seen is an outpouring of 'let's do it better,'" Borrows said about the company's response to Simone's leave of absence. "Let's try harder and let's make it even better. I think we see people even stepping up more and we're going to see that as we kind of move through the chronology here."
Glaser, who was appointed to the company's board of directors last spring and has executive experience in the trucking industry, will oversee the operations as interim chief operating officer. He described his "10,000-foot view" of the company as a board member becoming a "500-foot view."
He has plenty of familiarity in day-to-day operations as well after serving as interim COO from January 2013 to June 2013. Glaser believes the continuity will help the company stay on track.
"I know many of the people and I know many of the managers," Glaser said. "It made it a very easy introduction. I think it was welcomed, to be honest with you. It's not someone from the outside. It's someone they know. And the management team is strong enough. They've really rallied together."
The market did react negatively to news of Simone's medical leave Monday with USA Truck stock dipping as low as $24.80 before closing the day at $25.68 a share. The closing price fell to $25.07 on Tuesday, which was the company's lowest at closing since Dec. 22. It rebounded later in the week.
Donald Broughton, a senior research analyst and chief market strategist with Avondale Partners, said it was "reasonable to assert the weakness of the shares was directly related to the announcement." He said how the company fares now without Simone will depend on results.
"I think it's up to the rest of the team to just work harder as they say," Broughton said.
Glaser and Borrows don't believe that will be a problem for USA Truck, which has worked through plenty in the past two years including a takeover attempt by Knight Transportation.
Borrows said 2014 was a good year for the company, but USA Truck remains focused on making 2015 even better while Simone is on medical leave.
"Some would say the turnaround has happened. You're profitable," Borrows said. "We're not as profitable as we think we can be at any stretch. There's a lot of leverage left in this model. So everybody is very focused on moving that forward."
SundayMonday Business on 04/12/2015