The financials are improving but the losses continue at Van Buren-based USA Truck, with the trucking company reporting Wednesday (July 24) a first half 2013 loss of $3.5 million, better than the $8.4 million for the same period of 2012.
A second quarter loss of $1 million was booked, but was an improvement over a $3.5 million loss during the second quarter of 2012. The per share loss of 10 cents, however, missed the consensus analyst estimate of a 6 cent per share loss.
Total revenue for the first six months of 2013 reached $271.766 million, up 7.3% compared to the 2012 period. Second quarter total revenue was $139.738 million, up 7.84% over the second quarter of 2012.
“We reduced our net loss by 70.0%, marking our second consecutive quarter of material year-over-year improvement in operating results,” USA Truck CEO John Simone noted in the earnings statement. “We believe our turnaround plan gained traction during the June quarter, extending the year-over-year improvements in base revenue, operating income and net loss we achieved during the March quarter. While we are encouraged by our progress, we are not satisfied and have not yet achieved our top priorities of returning to profitability and restoring shareholder value.”
Simone was named CEO in February, and replaced Cliff Beckham, who was moved to the post of chief financial officer. Simone has more than 30 years of operational and management experience in the transportation industry with leading companies that include UPS, Ryder, and Greatwide Logistics. He was the CEO of LinkAmerica where he led a successful operational turnaround.
COST REDUCTIONS
An area of improvement cited by Simone in the report was in reducing operating costs in the truck segment. According to USA Truck, trucking revenue was up 13.3% in the quarter, with costs up only 8.2%.
“Despite those cost improvements, we believe substantial opportunity remains to realize more earnings leverage in our Trucking model in the areas of asset productivity, equipment maintenance, insurance and claims, fuel economy and driver retention,” noted the USA Truck report. “Internal efforts to improve those costs are at various stages of implementation, and we are taking measures that we anticipate will accelerate the pace of progress.”
The average number of in-service tractors during the quarter was 2,241, up from 2,171 during the 2012 quarter. Base revenue per loaded mile was only slightly improved from $1.627 in the 2012 quarter to $1.629 in the 2013 quarter.
In its logistics and brokerage business, the company reported second quarter operating income of $2.7 million, up from $2 million in the 2012 quarter. The increase came with a 5.2% drop in segment revenue.
FINANCIAL HISTORY
Significant financial gains will be required in the second half of 2013 if the company is to avoid five consecutive years of losses. The company reported a $17.54 million loss for 2012, a 2011 net income loss of $10.77 million, a 2010 loss of $3.308 million, and a $7.177 million loss in 2009.
Many transportation industry analysts are not optimistic about improved conditions for trucking companies in the second half of 2013. Tepid freight demand, driver shortages, increased costs from a change in federal hours-of-service rules and an inability to seek higher shipping rates are cited as some of the factors that could limit trucking company earnings.
“Projections are that the driver shortage could climb to 100,000 by year end, pushing up wages and benefits to attract and retain drivers. Given that we are already at or close to a one hundred percent turnover rate for drivers, these labor costs could rise quickly as qualified drivers jump companies in search of better pay,” said Rosalyn Wilson, a supply chain expert and senior business analyst with Vienna, Va.-based Delcan Corp., who provides economic analysis for the Cass Freight Index.
Simone said efforts to improve “miles per seated tractor” and “several internal initiatives” helped USA Truck reduce driver turnover by 31.2%.
The thinly-traded shares of USA Truck (NASDAQ: USAK) closed Wednesday at $5.83, down 46 cents. During the past 52 weeks the share price has ranged from a $6.98 high to a $2.65 low.