USA Truck sees sustained growth amid uncertain market forces

USA Truck Inc. posted its seventh consecutive quarter of record earnings Thursday and expects 2022 to be another record year, said James Reed, president and CEO.

The truckload carrier posted adjusted earnings per share of $1.48 during the first quarter, beating analysts’ estimate of 76 cents per share.

Total revenue in the quarter was $201.1 million, above the $158.5 million in the same year-ago quarter and higher than the consensus estimate of $185.6 million.

“Our performance year to date is far ahead of last year,” Reed said on a call with analysts Friday. “We have successfully restructured our network to de-risk and rebalance our portfolio. We have created a business that insulates against downside risk through a growing dedicated business and more emphasis on asset-light, owner-operator business and a nonasset logistics business that on its own is near a top 50 broker.”

Reed said the company is aware that falling spot rates, as well as rising equipment and fuel costs, are affecting the trucking industry, but believes its business model will weather any freight recession.

“We have never relied on the spot market for our business improvement; we were right around 7% of our freight derived from the spot market in the first quarter,” Reed said. “While some companies are retreating to the safe harbor of contractual rates away from the exposure of spot rates, we never left the safety of the harbor and therefore are much less exposed to market moves on pricing.”

Van Buren, Arkansas-based USA Truck (NASDAQ: USAK) is a carrier operating in the U.S., Mexico and Canada. The company operates in two segments: trucking and USAT Logistics. The USAT Logistics segment provides freight brokerage, logistics and intermodal rail services.

The company operates a fleet of 2,157 tractors, which includes 641 independent contractor tractors and 6,548 trailers.

The trucking division reported operating revenue of $116.1 million in the first quarter, up from $103.1 million during the same period last year.

Total miles and loads transported were down, but higher rates led to increased revenue. The average rate per loaded mile was $2.91 in the first quarter, up from $2.49 in 2021, and the average revenue per loaded truck per week was $4,265, up from $3,814.

The logistics segment had adjusted operating revenue of $97.4 million and adjusted operating ratio of 89.1% for the quarter. Load count increased 24.8% year over year to 41,300. Revenue per load increased 14.2% to $294.

Reed said driver recruitment and acquiring new trucks from OEMs continue to be significant hurdles.

“It remains historically difficult to recruit drivers as our cost per hire, while down 2.7% quarter over quarter, is still near all-time highs,” he said. “Each of the OEMs have imposed building material cost increases or surcharges, some over $10,000. Trailer costs are up almost 50% in the last three years, and insurance premiums remain near all-time highs as well.”

In January, USA Truck agreed to purchase 10 Nikola Tre BEV trucks. The agreement also includes the option to purchase an additional 90 Nikola zero-emission trucks over the next two years.

Reed said the company expects to receive the trucks from Nikola in the second quarter of the year. He was also asked if autonomous trucks could alleviate driver recruiting issues.

“We do frankly think there’s a time when [autonomous trucks] will become inevitable, when they will become part of our fleet,” Reed said. “We don’t think it’s an incontrovertible fact that drivers go away. In fact, we hope that’s not the outcome. We think there will be specific applications where it makes the most sense, but you can rest assured that we will be on top of the trend and in the marketplace, as appropriate.”