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USA Truck, Covenant Transportation Narrow Losses

Arkansas-based truckload carrier and logistics provider, USA Truck, cut its net loss from $2.5 million in the first quarter of last year to $1.6 million in the first quarter of this year. This resulted in a diluted loss per share of 15 cents compared to 24 cents during the same time frame.

by Staff
April 30, 2014
USA Truck, Covenant Transportation Narrow Losses

 

4 min to read


Arkansas-based truckload carrier and logistics provider, USA Truck, cut its net loss from $2.5 million in the first quarter of last year to $1.6 million in the first quarter of this year. This resulted in a diluted loss per share of 15 cents compared to 24 cents during the same time frame.

Revenue increased to $145.5 million from $132 million a year earlier.

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“Despite the most severe winter weather we have experienced in decades across our operating geography, we posted another quarter of strong year-over-year progress towards our operational improvement goals,” said President and CEO John Simone. “Our business model proved resilient with our asset-light Strategic Capacity Solutions [logistics] business delivering record performance even as the harsh weather impeded our trucking operations.”

Asset-based trucking revenue, not including fuel surcharge, increased 0.5% to $80.2 million, while non-asset based Strategic Capacity Solutions revenue rose 49.1% to $37.4 million. SCS posted its strongest quarter ever, accounting for 31.8% USA’s consolidated base revenue and more than quadrupling operating income to $5.1 million, while the trucking operation saw its operating loss increase to $6.1 in the quarter compared to $4 million a year earlier.

“The unusual frequency and severity of winter storms disrupted our trucking operations throughout January, February and the first week of March,” said Simone. ‘The final three weeks of March, however, were characterized by unusually strong freight volumes, which outstripped both our and the industry’s supply of trucks, creating widespread dislocations in the marketplace as pent-up shipping demand from the severe winter met a worsening shortage of drivers in the industry.”

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More information is on the USA Truck website.

Meantime, the parent to the trucking company Covenant Transport and others, Covenant Transportation Group, based in Tennessee, reports it had total revenue of $161 million in the first quarter of the year, a decrease of 2.3% compared with the first quarter of 2013.

It narrowed its net loss to $1.4 million, or nine cents per share, compared with net loss of $2 million, or 13 cents per share, in the first quarter of 2013.

Freight revenue, excluding fuel surcharges was $126.3 million, a decrease of 1.5% compared with the first quarter of 2013.

“Operating results for our asset-based operations were basically flat as our operating ratio was 100.2% compared with 100.4% in last year’s first quarter,” said Chairman, President, and CEO, David R. Parker. “Although we are not satisfied with these results, an improvement in the face of harsh winter weather and the expected unfavorable impact of the February implementation of our enterprise management system at our Southern Refrigerated Transport subsidiary was a small victory.”

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Overall, he said “freight demand was relatively strong, the rate environment was favorable, qualified professional drivers remained in short supply, and the weather hampered our efficiency.”

For the quarter, total revenue in the company’s asset based operations decreased to $150.3 million, a drop of $7.3 million compared with the first quarter of 2013. This consisted of lower freight revenue of $5.4 million, along with lower fuel surcharge revenue of $1.9 million.

“The $5.4 million decrease in freight revenue related to a 6.8% decrease in our average tractor fleet, partially offset by a 1.6% increase in average freight revenue per tractor per week and an increase of freight revenue contributed from our refrigerated intermodal service offering,” Parker said. “We experienced cost pressure in several areas. Salaries, wages and related expenses increased approximately 2.4 cents per mile due to employee pay adjustments since the first quarter of 2013.”

Covenant says it plans to take delivery of approximately 950 new company tractors in the current fiscal year and dispose of 1,250. In the first quarter it took delivery on about 125 new ones while getting rid of around 300.

“We now expect the average fleet size for the 2014 year to be approximately 2%-3% below that of fiscal 2013,” Parker said. “With a relatively young average company tractor fleet age of two years at March 31, we believe there is significant flexibility to manage our fleet, and we plan to regularly evaluate our tractor replacement cycle and new tractor purchase requirements.”

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Covenant’s non-asset based brokerage and other operations saw first quarter revenue increase 48.5%, to $10.7 million from $7.2 million in the same quarter of 2013. Operating income was approximately $541,000 for an operating ratio of 94.9%, compared with an operating loss of $267,000 and an operating ratio of 103.7% in the first quarter of 2013.

There are more details on the Covenant website.

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