First quarter net income for Van Buren-based USA Truck was $1.116 million, a big improvement over the $1.589 million loss in the first quarter of 2014, and the 10th consecutive quarter in which the once-troubled trucking firm improved its financial performance.
Total revenue in the quarter reached $132.887 million, down 8.6% compared to the $145.489 million in the first quarter of 2014. Most of the revenue decline was the result of a more than $10 million reduction in fuel surcharge revenue brought about by lower diesel fuel prices.
The first quarter report follows a financial turnaround in 2014. Net income in all of 2014 was $6.033 million, a more than $15 million swing from the $9.11 million loss in 2014. The swing ended five consecutive years of losses. Prior to 2014, the company would post five consecutive years of losses that totaled almost $48 million – wiping out the $45.76 million in net income earned between 2001 and 2008.
“We extended our track record to 10 consecutive quarters of year-over-year financial improvement and turned in a profitable first quarter for the first time since 2007. This quarter’s results reflect positive contributions from both our Trucking segment and our SCS segment, once again demonstrating the benefits of USA Truck’s integrated service offerings,” Interim Chief Operating Officer Thomas Glaser said in the earnings report.
It was announced April 6 that CEO John Simone is on indefinite leave to battle a “serious medical condition.”
A big help in the quarter was the swing on expenses from lower fuel prices and ongoing equipment upgrades and route changes that created a 4.8% improvement in miles per gallon. The fuel expense for the quarter was $17.978 million, well below the $33.003 million in the 2014 quarter.
Operating income in the company’s trucking division was $600,000 in the quarter, better than the operating loss of $6.1 million in the first quarter of 2014. Revenue per active truck exceeded $3,000 for the fifth straight quarter, with an 8.15% rate increase per loaded mile. Revenue per seated tractor was $3,190, better than the $3,027 in the first quarter of 2014.
However, the top line and bottom line numbers in the segment were held back by an inability of the company to hire enough drivers to handle the demand.
“Overall freight volume for the quarter was impacted by a lower seated truck count, reflecting the ongoing industry driver shortage. To support asset utilization during the quarter, we accelerated plans to dispose of older tractors. Additionally, we expect to implement a significant increase in driver pay on June 1,” Glaser said in the report.
The company reported an average of 1,988 seated tractors – truck with drivers – in teh quarter, down from a 2,061 average during the first quarter of 2014.
Despite the challenges, the company’s trucking segment operating ratio was 99.2, compared to 107.6 in the first quarter of 2014. The ratio, a key metric in the trucking industry, shows that the company spent 99.2 cents for every dollar it earned.
Operating income in USA Truck’s growing Strategic Capacity Solutions – a logistics and brokerage business – was $2.976 million in the quarter, down from $5.077 million in the 2014 quarter. Revenue during the quarter for SCS was $38.671 million, below the $45.252 million in the 2014 quarter.
“Revenue was impacted by the softer spot market during the first quarter of 2015, compared to the uniquely strong spot market created by the harsh winter weather in the prior year,” the company noted.
USA Truck execs have said growth in the SCS segment is important to diversifying the revenue stream. The SCS revenue was 29.1% of total company revenue in the first quarter, down slightly from 29.7% in all of 2014, and better than the 24.6% in 2013.
And according to the company’s report, it is moving toward reducing its debt load by $11.3 million in the quarter.
“We also realized a $13.9 million increase in cash flow from operations, reflecting improved profitability, working capital management and enhanced operational effectiveness. We believe our sustainable profitability, combined with approximately $100 million of available borrowing capacity under our revolving line of credit at March 31, afford us significant financial flexibility as we execute on our strategy,” noted Chief Financial Officer Michael Borrows.
Shares of USA Truck (NASDAQ: USAK) closed Monday at $25.41. During the past 52 weeks the share price has ranged from a $32.14 high to a $13.90 low.