USA Truck calls 1Q results ‘disappointing’

user-gravatar Headshot

USA Truck on Thursday, April 19, announced base revenue of $94.5 million for the first quarter ended March 31, a decrease of 2.4 percent from $96.8 million for the same quarter of 2006. Net income decreased 97.7 percent from $3.4 million to $0.08 million.

“Demand for truckload services was softer than any quarter we have experienced in several years,” said Jerry D. Orler, president and chief executive officer of Van Buren, Ark.-based USA Truck. “However, freight demand did improve from lows in January and February to a steadier freight environment in March.”

Orler said USA Truck began the first quarter with more fleet capacity than freight availability. “That imbalance was caused by our fleet growth in 2006, our firm stance on rate increases in 2006 and the decelerating freight conditions over the last few quarters,” he said. “Compounding this problem, we manned over 100 additional tractors that did not previously have drivers during the fourth quarter of 2006, which increased the imbalance between fleet capacity and freight availability, effectively adding 4.3 percent capacity to our fleet during a soft freight environment.”

In response to that series of events, Orler said, the company implemented a number of internal programs with the goal of balancing fleet capacity and freight availability by March 31. “Due to the improving freight environment in March and the progress achieved with our internal programs, we substantially regained that balance at quarter-end,” he said. “We will now focus our efforts on freight selection in the coming quarters. The lack of revenue volume has applied pressure to our operating margins. However, with a few exceptions, we are generally pleased with our cost structure. While the lack of revenue was the most significant component of the margin erosion, cost pressures also contributed.”

Orler said USA Truck’s internal initiatives to reduce driver turnover have shown dramatic improvements, both year-over-year and sequentially. “Despite the disappointing results this quarter, we are encouraged by our operating performance in March,” he said. “Now that we have improved our balance between freight demand and fleet capacity, we are concentrating on achieving the six long-term strategic objectives we addressed in our 2006 Annual Report on Form 10-K. Consistent with those strategic objectives, we repurchased 487,499 shares of the company’s common stock during the first quarter of 2007 and a total of 717,499 shares over the past two quarters. Our current repurchase authorization has 1,776,501 shares remaining.”