USA Truck (USAK) Misses Q4 EPS by 43c, Revenues Miss

USA Truck (NASDAQ: USAK) reported Q4 EPS of ($0.52), $0.43 worse than the analyst estimate of ($0.09). Revenue for the quarter came in at $124.1 million versus the consensus estimate of $134.37 million.

• 4Q 2019 loss per diluted share of ($0.56) versus 4Q 2018 earnings per diluted share of $0.64
• 4Q 2019 adjusted loss per diluted share(a) of ($0.52) versus 4Q 2018 adjusted earnings per diluted share(a) of $0.68
• 4Q 2019 Trucking operating revenue (before intersegment eliminations) decreased 7.8% to $92.1 million from $99.9 million in 4Q 2018

President and CEO James Reed commented, "Our results were meaningfully impacted by the difficult freight market during the fourth quarter of 2019. The soft spot market and widely reported supply-demand imbalance affected both our contract and spot market opportunities during the quarter. Market rates remained pressured during the quarter and shippers allocated large portions of their freight spend to the lowest cost alternatives. Adding to the near term pressures were organizational changes we expect will enhance our business in the long term, but which resulted in our experiencing the effects of a tough market more severely than our peers. Those organizational changes reflect our execution on key initiatives discussed in prior quarters, including:

• Regionalization – during the fourth quarter, we on-boarded all four regional leaders, who are focused on building out our regional teams, training our people, and improving operational processes. Our regional service centers / terminals are in different stages of progress, and we expect to have Atlanta, GA functioning as a market region in the first quarter of 2020; Carlisle, PA completed in second quarter 2020; and Dallas, TX up and running later in the year as well.
• Technology – we have invested in technology upgrades – upgrading our transportation management system, deploying a best-in-class electronic logging device system that integrates with our existing tech environment, and entering into strategic partnerships with third party providers to enhance our capabilities in both Trucking and USAT Logistics.
• Cost Control – during the quarter we completed a reduction in force of approximately 8% of our non-driver support staff – to help offset the significant market headwinds. Continued identification of cost savings opportunities is an essential element of our 2020 operating plan.

The fourth quarter was particularly tough for our logistics business which experienced lower volumes and margins given the turmoil in the broader industry. We are committed to growing and returning USAT Logistics to its profitable trajectory through intense focus on increasing load count, using technology partners to proactively book and manage freight, and expanding our presence in higher touch freight modes where we are very successful.

The fourth quarter was challenging, but we are encouraged by the progress and momentum gained over the last month and a half, specifically in our Trucking operations. January has begun with what we believe is a positive market inflection – customer bid activity and freight volumes are improved over recent trends. We have also increased our win percentage in the bid process including recent dedicated contracts, which speaks to our customers’ confidence in the changes we are making. As the market improves and our self-help efforts continue to gain momentum, we believe the future of USA Truck is bright.”

For earnings history and earnings-related data on USA Truck (USAK) click here.

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