Assisted by rising freight rates and booming demand for capacity, USA Truck Inc. powered its way to revenue of $181 million and earnings per share of 54 cents during the third quarter.
It was the second consecutive quarter of record revenue for the Van Buren, Arkansas-based carrier. The third-quarter results also beat analyst expectations of quarterly earnings at 49 cents per share on revenue of $177 million.
“We believe overall that the market is the long-term arbiter of value and we intend to just keep improving earnings and controlling what we can,” James Reed, USA Truck’s president and CEO, said during an earnings call Friday. “Our balance sheet is strong and improving and our liquidity and leverage metrics position us well for future growth.”
USA Truck’s (NASDAQ: USAK) trucking division delivered third-quarter revenue of $113 million, a 16% year-over-year increase.
“The same tinderbox environment that has been widely reported was experienced by USA Truck in the quarter,” Reed said. “It was especially robust in September, when we had collaborative opportunities to reprice contracts with many of our best customers.”
In recent months, USA Truck was able to negotiate several long-term commitments from customers all the way into the middle of next year.
“Pricing remains very strong as we have secured rate increases with each of our top five customers, among many other customers,” Reed said.
The trucking division’s third-quarter operating income was $4.5 million, up from $3.5 million during the same quarter last year. Revenue per truck per week increased 20% year-over-year from $3,460 to $4,149.
The average number of seated tractors during the third quarter was 1,750, which represented a decrease of 4.2% when compared to an average of 1,827 in the third quarter of 2020.
USA Truck’s average unseated tractor percentage was 5.8%, an improvement from 7.2% during the same quarter last year and 7% compared to the second quarter of 2021.
Reed said the availability of drivers and replacement tractors from OEMs continue to challenge the trucking industry.
“The cost of recruiting drivers remains high and equipment costs — if one can get the equipment — are rising quickly,” Reed said. “We’ve worked tirelessly to keep trucks seated and have been relentless about growing revenue per tractor.”
Reed said driver recruitment and retention remains the company’s top priority for the foreseeable future.
“The cost of recruiting a driver has increased approximately 18% year-over-year. We continue to utilize the most targeted and tech-enabled methods available to recruit and train drivers and will continue to do so,” Reed said.
USA Truck’s brokerage division, USAT Logistics, recorded third-quarter revenue of $81.5 million, a 57% increase year-over-year.
Revenue per load during the third quarter increased 37% to $599 compared to the same period last year. Load count increased 14.4% year-over-year to 4,638 loads during the quarter.
The company’s brokerage division accounted for 46.4% of base revenue and 41.6% of consolidated adjusted operating income during the third quarter.
“It now appears likely [logistics] could generate over $300 million in revenue in the year and more than $12.5 million in operating income over that same time period,” Reed said.
|USA Truck||Q3/21||Q3/20||Y/Y Gross Change||Y/Y % Change|
|Total revenue (in millions)||$180.9||$141.7||$39.2||27.6%|
|Average number seated tractors||1,750||1,827||-77||-4.2%|
|Revenue per truck per week||$4,149||$3,460||$689||20%|
|Total miles (in thousands)||41,034||44,684||-3,650||-8.1%|
|Adjusted OR||95.3%||95.8%||-50 bps||-0.5%|
Reed also discussed how COVID-19 vaccine mandates could affect driver recruitment and freight rates throughout the trucking industry. He believes that the U.S. trucking industry should have a vaccine exemption.
“We align ourselves with lobbying groups and industry associations that represent our views and the American Trucking Associations has done a very good job, representing a view that we share, which is that we believe transportation should have an exemption, just like it does in Canada for this type of mandate. That’s our position for now,” Reed said.
Last week, the American Trucking Associations and the Truckload Carriers Association sent a letter to federal officials asking for a trucking industry exemption from the vaccine mandate.
ATA President and CEO Chris Spear said even if only 1% of drivers leave the trucking industry over the vaccine mandate, the disruption would be massive and crippling to the supply chain and economy.
Reed said freight rates could skyrocket if a vaccine mandate were pushed onto the trucking industry.
“We do believe that there would be a material impact on the availability of drivers as a result of a mandate,” Reed said. “I believe freight could go to $8 to $10 a mile if that happens. It could lead to severe consequences and more capacity constraints.”
If President Biden does implement a vaccine mandate for the trucking industry, USA Truck would comply, Reed said.
“We’ve begun creating a contingency plan around that assuming that the mandate is going to happen,” Reed said.
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