Another carrier posts a bad loss

USA Truck, Inc. (NASDAQ: USAK) reported an adjusted loss of $0.13 per share excluding amortization from an acquisition in the third quarter of 2019. The company reported earnings of $0.43 per share in the third quarter of 2018 and analysts were expecting earnings of $0.10 per share this quarter.

Consolidated revenue declined 1.3% year-over-year to $131 million in the quarter. Average seated tractors increased more than 20% year-over-year given the company’s prior acquisition of Davis Transfer Company in October 2018. Revenue in the truckload (TL) division increased 8% year-over-year to $94 million. Revenue per truck per week declined 8% year-over-year to $3,142 as the carrier reported “lower volumes on committed lanes coupled with spot market pricing pressure.”

USA Truck was forced to the spot market to find freight for its trucks. The first part of the goal was accomplished as loaded miles per tractor per week declined only 1.8% year-over-year. However, revenue per loaded mile declined 6% to $2.10 as spot market rates remain pressured. Adjusted operating ratio for the division was 340 basis points (bps) worse year-over-year at 99.9%.

“The third quarter marked a continuation of the challenging freight environment the industry has experienced in 2019. A seasonally soft market, coupled with increased trucking capacity in the market has created an environment where shippers are motivated to allocate a larger portion of their freight to the spot market and low-priced carrier options. This environment continues to adversely impact results in both our Trucking and USAT Logistics segments,” stated USA Truck’s president and CEO James Reed.

Given the poor result, management has outlined several initiatives designed to improve operations and financial performance moving forward. The company plans to eliminate 5% to 10% in fixed costs, better track bid awards to monitor customer commitments, continue terminal expansion to lower repair costs and add to its logistics salesforce.

Management provided no real expectations on these efforts other than to say that it has already implemented roughly $5.6 million in annual cost savings in 2019.

The company’s logistics segment reported a 20% year-over-year decline in revenue to $39 million. Load count increased 8%, but revenue per load dropped more than 25%, or $443, compared to the prior year period. Gross margins declined 480 bps to 12.2% and the group was barely profitable on an operating basis, producing $244,000 of operating income.

USA Truck ended the quarter with $189 million in net debt, levered 3.1 times on a net debt-to-adjusted earnings before interest, taxes, depreciation, amortization and restructuring/rents (EBITDAR).

The company will host a conference call with analysts and the media on November 1 at 9:00 a.m. EDT to discuss these results.