Knight: USA Truck shows 'only limited improvement'

Posted: November 4, 2013 at 8:37 a.m.

Knight Transportation Inc. continued maneuvering to buy Van Buren-based USA Truck Inc. on Monday by releasing a presentation to shareholders reinforcing the $9-per-share cash offer originally proposed in August.

Phoenix-based Knight said in a statement issued with the presentation that USA Truck's third-quarter results "demonstrate only limited improvement" and said "its recent share price surge is unsupported by either industry or company specific fundamentals." USA Truck Inc. on Oct. 17 reported a third-quarter net loss of $600,000, or a 6 cent loss per share, compared with a net loss of $6.1 million, or 59 cents per share, in third-quarter of 2012.

Knight claimed in its presentation that USA Truck has "consistently underinvested in its fleet and equipment" and argued that the carrier "operates one of the oldest fleets in its publicly traded peer group."

The Phoenix-based company said it "continues to believe that its $9.00 per share, all-cash proposal fully and fairly values USA Truck, especially in light of USA Truck's consistent underperformance, including nine consecutive quarters of losses totaling approximately $30 million."

Knight also argued that USA Truck's recent stock-market performance is unsustainable, citing "minimal sequential improvement" in the carrier's operating ratios, and noting that USA Truck's stock value rose 51 percent between Oct. 16 and Friday, while its truckload peer index rose only 3 percent. USA Truck closed Friday at $13.64; it traded at $5.43 before Knight in September disclosed it had offered $9 in cash per share for the company in late August.

USA Truck had rejected the $242 million offer, saying it undervalued the company.

"The continued, accelerating improvement in our results clearly illustrates the rapid progress we're making in our turnaround," USA Truck President and Chief Executive Officer John Simone said in a statement alongside the company's third-quarter earnings release.

Knight argued in its presentation that its offer is more attractive than USA Truck's "standalone prospects" and added it "remains willing to modestly increase the proposed purchase price if USA Truck can demonstrate value that has not already been identified."