Tough year for USA Truck

John Simone’s first year as chief executive officer at USA Truck has been a full one.

Since being named head of the Van Buren trucking and transportation operation Feb. 19 last year, Simone has worked to reverse the company’s financial fortunes, overhauled the management team, fought off a competitor’s hostile takeover attempt and seen stock prices jump by 240 percent.

Simone was hired for his experience in dealing with turning around financially struggling companies. Even for someone with Simone’s background, the past year has been hectic.

“We covered a lot of ground,” Simone said. “We’ve made substantial progress ina year of great adversity and changes. We had a lot of distractions. As the new guy coming in you know that change can bring uneasiness, but we made tremendous strides. Look at our trajectory.”

USA Truck reported fourth quarter results Tuesday and while the company reported another loss, Simone and company executives were encouraged by what they saw. By eliminating a pair of one-time expenses, including nearly $1.5 million spent as part of the fight against Knight Transportation’s takeover attempt, Simone said USA Truck would have reported $1.3 million in profit.

Measures implemented or overseen by Simone helped improve operating income at USA Truck by $20 million during the past year.

In 2012, for example, USA Truck lost about $1 million in expenses related to its ownership of 500 intermodal containers. During 2013 the company unloaded those containers and shifted to a leasing model when it needed to accommodate customer needs related to shipping on rail or water, rather than by truck. Instead of paying for the containers, even when they weren’t in use, USA Truck eliminated the expense and broke even in its intermodal shipping for the year, Simone said.

Further helping USA Truck’s cause was the addition of customers.

The company added accounts despite the uncertainty of its financial picture and the possibility that Knight Transportation might pull off its takeover attempt. USA Truck added three Fortune 100 companies among its top 10 customers and generated $36 million in annual net revenue for the fourth quarter.

Simone went on a listening tour of USA Truck facilities and customers during his first three months on the job. He pointed to a customer satisfaction survey and quarterly reviews with customers as methods used to help generate new business despite the transition and uncertainty.

Shooting straight with customers and potential customers also helped, he said.

“There were questions, I think customers really had them in the early stages of my visits,” Simone said. “We put their mind at ease. We were honest with them about where we stood and what our plan was. That’s where the trust and respect came from. We made commitments and then followed through. Others noticed.”

Simone and USA Truck have worked to change their freight network, transitioning away from a short-haul model that the company struggled to manage. Additional steps to help the company included changes throughout the executive positions at USA Truck.

Chief Financial Officer Cliff Beckham, who held the CEO role before Simone, said he was appreciative of his new boss’s work so far. Simone inherited a difficult position, Beckham acknowledged.

“I tell John a lot I’m glad I’m not the CEO anymore,” Beckham said. “It’s a really hard job. It’s been very interesting for me to be able to watch this from the front row. The most significant thing I’ve noticed we do better today than what we were doing before is our approach to solving problems.They’re all interconnected and it’s hard to get every one tackled, but John’s approach has been to take them on all simultaneously.”

Working through the financial issues would have been tough enough. Simone, Beckham and others at USA Truck have also had to contend with the unwanted interest from Knight Transportation.

Thanks to a recent lawsuit settlement agreement, Knight is at bay at least through Sept. 30. Until then the Phoenix based company can’t vote or exert any influence on shareholder meetings and has agreed not to acquire any stock beyond its existing 1.3million shares in USA Truck.

Should another company offer more than the $9 per share Knight offered in September 2012, then Knight would be allowed to vote on whether or not USA Truck sells. Once Sept. 30 arrives, Knight could re-evaluate its offer.

While the quarterly results remain losses, investors remain optimistic about USA Truck. Shares have traded as high as $16.38 over the past 52 weeks and have dipped below $13 just once the last three months.

Simone remains confident the company will reverse its losses in the near future. Based on his previous turnaround jobs, he sees all the pieces in place.

Comparing turnaround situations is difficult, Simone said. What he likes about USA Truck more than any other opportunities, he said, is that he gets “more excited every day.”

“We have everything we need in terms of people, assets and customers to be successful,” Simone side. “That’s the best way I can describe it. I didn’t have that in some of my other turnarounds. We have plenty of credit available. There’s no old fleet to replace. We have good technology and we’ll continue to invest.

“There is nothing broken beyond repair.”