USA Truck reported $2.5 million in net income, or 23 cents per share, for the second quarter of 2015, but executives said they're taking a comprehensive look at ways to "restore" the company's momentum after a dip in revenue.
The earnings rise topped the second quarter of 2014, when USA Truck reported $722,000 in net income, or 7 cents per share. The company benefited from higher prices, fuel efficiency measures and lower fuel costs to beat analyst estimates of 21 cents per share for the quarter.
Base revenue decreased by 6.2 percent, falling to $117.2 million after USA Truck posted $125 million in the second quarter of 2014. Total revenue of $133.5 million -- which reflected fuel surcharge earnings of $16.3 million -- fell short of analyst predictions of $142.5 million.
Tom Glaser, who replaced John Simone as USA Truck's chief executive officer on July 9 after a three-month stint as interim chief operating officer, said the company has significant room for improvement and plans to "accelerate the pace."
"We're implementing a lot of actions to energize USA Truck's turnaround and get back on track," Glaser said on a conference call. "The efforts of all our team members are key to restoring that momentum."
USA Truck reported $93.8 million in revenue from its trucking division, which was below the $106.3 million from the second quarter of 2014. Operating income was $2 million.
The number of tractors was 1,869 for the quarter, which was down from 2,019 a year ago. Total miles fell from 54,796 to 48,777. Glaser said part of the decline is a product of the company's emphasis on improving safety and lowering maintenance costs within the trucking division.
USA Truck is trying to streamline its trucking operations, reducing the tractor count by 400 before the end of the year. The company plans to sell off 800 older tractors and purchase 400 new ones to improve fuel economy, reduce maintenance costs and improve reliability.
Maintenance facilities also are being reviewed by the company after Glaser said the numbers "have to improve."
USA Truck increased driver pay June 1. Glaser said the company is moving away from student drivers to those with more experience, believing it will lower accident rates and safety costs while providing better service for customers.
"Drivers follow trucking companies with good reputations," Glaser said. "In the past, our reputation has not been that good. In the last 2½ years, we have re-energized ourselves and we're building a reputation as a better carrier, which is attracting better drivers. So we've taken a step backward in order to go forward by improving our maintenance cost, improving our driver pay and improving our safety scores."
Brad Delco, a transportation analyst with Stephens Inc. in Little Rock, viewed the initiatives as a "return to basics." He said they could lead to increased profitability and better margins.
"Based on these results, there's still a lot of opportunities for USA Truck to capitalize on a strong freight environment, but has to maintain their discipline on cost in order to do so," Delco said. "So management is focused on the right areas in order to drive that profitability improvement."
USA Truck's brokerage division -- Strategic Capacity Solutions -- reported $36.9 million in base revenue during the second quarter, which was a decrease from $41.8 million in 2014.
Operating income fell to $3.3 million in the second quarter from $6 million last year.
Glaser said the decline was due to lower revenue, higher purchased transportation costs and start-up expenses to support the division's growth plans. He said the company intends to restore the pace of growth and improve profitability with more volume, improved technology and expanded service options in intermodal, refrigerated and flatbed shipping.
"I think we should start seeing benefits within the next six months," Glaser said.
In addition to the initiatives, USA Truck announced plans to repurchase up to 1 million shares of company stock.
Chief Financial Officer Michael Borrows said the buyback will begin later this week and that the company plans to be "moderately aggressive." Shares will be repurchased over an unspecified period.
USA Truck stock closed Tuesday trading at $21.54, up $1.92 a share. Company stock has traded as high as $32.14 and as low as $13.90 over a 52-week period.
"Our intention is to acquire the full million shares over time," Borrows said.
Business on 08/05/2015