USA Truck Inc. posted its fourth-consecutive quarterly loss Tuesday, prompting shares to drop to their lowest value in over three years.
The company posted a $3.8 million net loss for the fourth quarter of 2016 compared with a $3.9 million profit from the same quarter in 2015. The loss for the entire year totaled $7.7 million compared with a profit of $11.1 million in 2015.
The Van Buren company's new chief executive, James Reed, called the results "unacceptable" and promised a "return to profitability in the first half of the year and beyond."
On Jan. 30, Reed became the company's third leader since mid-2015.
"I feel like I've had this conversation three times now in the last two years. In the past, the CEO makes lots of promises, which all sound good, but the execution has not really been there," said Brad Delco, transport analyst at Stephens Inc.
"This is an organization that needs stability at the top and somebody to really drive change. Every time they go through a management transition, the company is losing precious time and at the same time burning through shareholders' capital," he said.
The quarter's 48-cent loss per share missed analysts' consensus prediction of 4 cents in earnings per share for the quarter. USA Truck shares trading on the Nasdaq exchange dropped almost 17 percent Tuesday, closing at $6.95, the lowest since late 2013.
"The longer it's going to take to turn around, the more the shareholders will have to suffer in the short term," said Delco.
The company had $103.1 million in revenue for the quarter ending Dec. 31, down about 13 percent from $118 million in 2015.
Its trucking segment makes up nearly 70 percent of total business. The division posted a loss of about $6.2 million in the quarter, more than reversing a $4.5 million profit from 2015.
In describing some cost-cutting strategies, Reed noted that while the company did not meet a goal of increasing independent-contractor drivers to 20 percent in 2016, "we remain committed to this outcome and have exciting programmatic changes in the works that we hope to reveal in the future quarters."
USA Truck reported having around 280 owner-operators at the end of 2016 and about 1,400 company-owned tractors. By increasing the percentage of independent contractors, or owner-operators, trucking companies are able to minimize overhead costs while maintaining their revenue streams.
Delco noted that "trucking revenue excluding fuel in 2016 was off about 30 percent from its peak in 2007. Driver head count was almost 2,600 then, so essentially, you have a trucking business that's been shrinking since 2007."
Reed pointed out that some of the company's January 2017 results were "encouraging," specifically an 8.3 percent rise in productivity per truck per week compared with January 2016.
The brokerage division, USAT Logistics, posted a $1.5 million profit, down almost half from 2015. Jim Craig, the president of the segment, announced the company will introduce USAT Logistics de Mexico and open an office in central Mexico.
The company also reaffirmed plans to grow the logistics segment to 45 percent of total business by the end of 2017.
Reed concluded on an optimistic note about his "aggressive plan" for profitability in 2017: "There is no magic formula or silver bullet to deliver on these items. It's just pick-and-shovel work, and we have a team that enjoys and is experienced at that kind of effort."
Delco acknowledged that "there's a lot of focus on making things better. We've heard this before, and the proof will be in the pudding."
"We think management and the board need to be held accountable by investors," Delco said. "They need to act with a hyper sense of focus, and with the idea that time is of the essence. It's been four years of trying to get things back to more meaningful profitability."
Business on 02/08/2017