USA Truck's revenue fell 21 percent during the fourth quarter of 2015, but the Van Buren-based company reported a 10.8 percent increase in net income for the three-month period to close out its second-straight profitable year.
Net income of $3.9 million, or 39 cents a share, was an improvement from last year's fourth quarter when the trucking and logistics company reported $3.6 million in earnings, or 34 cents a share.
Former Chief Executive Officer Tom Glaser said the profit growth was a sign there's progress in the company's plan to improve operations even as revenue dropped to $118 million, well below last year's fourth-quarter total of $150.1 million. Brad Delco, a transportation analyst for Little Rock-based Stephens Inc., said the fourth quarter performance proved to be better than expected.
"I would say overall these were good results," Delco said. "We were expecting them to generate 25 cents a share of earnings and they generated 39 cents. So, clearly, they beat our expectations. There are puts and takes to it of course, but I think overall the thought is these are good results."
The quarter wrapped up a challenging year for the company, highlighted by former CEO John Simone's leave of absence and eventual resignation for health reasons. Glaser took over the CEO role in July before being replaced by Randy Rogers two weeks ago. He is now vice chairman of the company's board.
While USA Truck's full-year revenue fell nearly 16 percent from $602.5 million to $507.9 million in 2015, the company was profitable. USA Truck reported full-year net income of $11.1 million, up 76 percent from $6.3 million. Earnings per share for the year rose from 60 cents in 2014 to $1.06 last year.
Glaser said an expansive plan to improve trucking operations led to the success. The company strengthened its leadership team, revamped trucking lanes, reduced the size and age of its fleet, and hired more experienced drivers. There was lower volume, but USA Truck cut maintenance expenses by 13 percent and insurance claims by 15 percent in 2015.
"The many initiatives we implemented to re-energize our trucking turnaround, combined with trucking's strengthened leadership and the refreshing of our fleet, have enabled us to accelerate the progress underway," Glaser said.
Fourth quarter operating revenue in the company's trucking division dropped nearly 25 percent to $80.3 million. Glaser said the decrease was because of a subdued freight environment along with the reduced fleet size. The company also generated more than $10 million less in fuel surcharge revenue because of lower fuel prices.
USA Truck had 1,718 seated tractors during the quarter, down from 2,043 during the same period a year ago. The company reported an overall reduction of 417 trucks in its fleet in 2015 after selling 817 older tractors and acquiring 400 new ones. USA Truck also replaced 1,500 trailers.
"Right-sizing and refreshing our fleet was an important objective for 2015 as we reset our network," said USA Truck Chief Financial Officer Michael Borrows. "We exceeded the targets we set."
The brokerage division, Strategic Capacity Solutions, accounted for $37.7 million in fourth-quarter revenue, down from $43.8 million a year ago. The decrease was primarily due to a softer market and the decline in fuel surcharge revenue.
USA Truck expects growth under the leadership of Rogers, who spent 15 years at DHL Supply Chain. Rogers participated in Tuesday's earnings call and said he would delve into a more detailed plan for the brokerage division during the company's first quarter earnings call, but he believes the company's business model is a "winning one."
"With SCS and trucking, we serve much of the same geography," Rogers said. "Ninety percent of our customers use both services, and we're working from the same [information technology] platform. We can certainly do much more with this experience and information and I believe I can help us leverage this platform and set the company on an exciting growth path."
The company repurchased 708,000 shares of its common stock during the fourth quarter as part of its 1 million share repurchase program. The remaining shares were repurchased as of Jan. 8, according to Borrows, and the board has authorized a new 2 million share repurchase program.
Shares of USA Truck stock closed Tuesday trading at $15.46, down 97 cents.
Delco said the quarter's results are proof that the company has been successful in controlling costs to generate profits. But he cautioned that "one quarter doesn't make a trend, so we'll see how they continue to execute going forward."
"I think for USA Truck to truly earn its stripes, we have to see how well they do in a more difficult environment," Delco said. "I don't know if they've necessarily been tested yet on that front. Generally speaking, the market in 2016 doesn't seem to be setting up to be as strong as it was in 2015."
Business on 02/03/2016