USA Truck says new software likely to cause 3Q net loss

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Updated Aug 26, 2011

USA Truck on Monday, Aug. 22, announced that it expects to report a net loss for the third quarter of 2011. “It is too early in the quarter to predict a range of expected net loss,” said Cliff Beckham, president and chief executive officer of the Van Buren, Ark.-based company. USA Truck reported net income of $0.6 million for the third quarter of 2010.

Beckham said the company attributes the anticipated loss on “a temporary but significant decrease in the efficiency of our truckload operations associated with our efforts in implementing our new enterprise management software. We are actively addressing this issue and expect the negative impact to be short-term.”

Beckham said USA Truck implemented live usage of the new operating system across its Trucking operations on July 7 after months of planning testing with its Strategic Capacity Solutions and Intermodal operations. “During the month of July and continuing into the first part of August, we have experienced unanticipated difficulties with load visibility, load planning and load dispatching associated with the transition,” he said. “These issues became apparent upon live cutover because of the huge transactional volume in comparison with the volumes experienced during testing. We had planned for a modest reduction of efficiency during July associated with initial live usage and refinement of the new system. The magnitude and duration of the reduction in efficiency have been greater than we anticipated.”

Beckham said the company also believes the drop in efficiency is related in part to deteriorating general truckload market conditions. “Our average loaded rate per mile and the percentage of loads moved in our Spider Web network remain within our range of expectations,” he said. “But our velocity, miles per tractor per week and empty mile factor have been impacted.” Revenue miles were about 15 percent below those experienced in July 2010 but are trending somewhat better during the first half of August, Beckham said.

“Our entire executive and operations teams are dedicated to correcting these problems, and we are gaining some improvement in August,” he said. “We are also receiving strong support from our software provider. We continue to believe we selected the right system for the long term, and upon resolution of our internal issues, we fully anticipate that the new operating system will enhance our operation efficiencies.”