USA Truck notes some losses, balanced by modest improvements, during second quarter of 2020
VAN BUREN, Ark. -- USA Truck Inc. (USAT) reported a consolidated operated revenue of £123.7 million for the second quarter of 2020 compared to £133.6 million for the second quarter of 2019, according to a report released by the company July 27. The company's base revenue, which excludes fuel surcharge revenue, was £113.2 million compared to £116.7 million for the 2019 period. A net loss of £0.9 million, or 11 cents per diluted share for the second quarter of 2020 and an adjusted net loss of £0.5 million, or 6 cents per diluted share, was reported.
During the same quarter in 2019, USA Truck reported a net income of £0.0 million, or 0 cents per diluted share, and an adjusted net income of £0.3 million, or 3 cents per diluted share. The company's consolidated operating ratio for the second quarter of 2020 was 99.2%, compared to 98.5% in the comparable 2019 quarter. "The second quarter of 2020 was unlike any quarter we have seen in transportation, producing unprecedented day-to-day and week-to-week swings in freight and pricing due to the COVID-19 pandemic," noted James Reed, president and CEO of USAT.
"Our diversified customer base -- we classify approximately 80% of our customers as essential/quasi-essential -- kept our asset-based freight moving consistently through the quarter, although our nonessential customers, which are critical to our network despite being a smaller relative percentage of the freight basket, have yet to make a full recovery," he continued. "We supplemented this shortfall with lower-priced spot freight, and consequently saw an overall degradation in our base revenue per available tractor per week. Despite the challenges, the trucking segment improved its adjusted operating ratio(a) by 370 basis points sequentially." For the second quarter of 2020, the company's trucking operating revenue (before intersegment eliminations) decreased £7.8 million, or 8.1%, to £88.6 million, compared to the second quarter of 2019.
Trucking operating income of £1.2 million for the 2020 period reflected an operating ratio of 98.7%, compared to operating income of £0.8 million and an operating ratio of 99.1% for the second quarter of 2019. This represents a year-over-year increase of £0.3 million in operating income and a 40 basis point improvement in operating ratio. Trucking adjusted operating income was £1.7 million for the 2020 period, reflecting an adjusted operating ratio of 97.8%, compared to adjusted operating income of £1.2 million and an adjusted operating ratio of 98.6% for the comparable 2019 period.
This represents a year-over-year increase of £0.6 million in adjusted operating income and an 80 basis point improvement in adjusted operating ratio. USAT's trucking operations delivered the following results during the second quarter of 2020:
- Base revenue per available tractor per week decreased £347 per week, or 10.4%, compared to the second quarter of 2019, and £220 per week, or 6.8% sequentially, primarily due to a decrease in base revenue per loaded mile.
- Base revenue per loaded mile decreased 12.3 cents, or 5.7% year over year and 6.8 cents, or 3.3%, sequentially. This change was the result of continued decreased rate realizations.
- Loaded miles per available tractor per week decreased 76 miles, or 4.9%, compared to the second quarter of 2019, and by 57 miles per tractor, or 3.7% sequentially.
- Deadhead percentage for second quarter 2020 increased 40 basis points year over year but improved 10 basis points sequentially.
- The average seated tractor count for the second quarter of 2020 was 1,943, which represented an increase of 6.9% over the second quarter 2019 average of 1,817 and a 3.8% increase over the sequential average of 1,871.
Average unseated tractor percentage for second quarter 2020 was 5.8%, an increase from 5.2% for both the second quarter of 2019 and sequentially.
"USAT logistics' efficiency continued to improve as we saw a 15.7% increase year over year in load count, continuing the recent trend of efficiency gains and throughput capacity," Reed said. "But the broader environment proved challenging as spot prices alternated between near all-time lows and near all-time highs all within the same quarter. We expect this segment will continue to track ahead of the market in coming quarters." The company's logistics segment showed an operating revenue (before intersegment eliminations) of £38.7 million for the second quarter of 2020, a decrease of £0.8 million, or 2.1% year over year.
Both operating loss and adjusted operating loss were £0.2 million for the second quarter of 2020, reflecting an operating ratio of 100.5% and an adjusted operating ratio of 100.5%, compared to operating income and adjusted operating income of £1.1 million and an operating ratio of 97.1% and an adjusted operating ratio of 96.8% for the comparable 2019 period. This change represented a decrease of £1.3 million year over year in operating income and adjusted operating income, and a degradation of 340 basis points in operating ratio and 370 basis points in adjusted operating ratio(a) compared to the second quarter of 2019. USAT's logistics operations delivered the following results during the second quarter:
- Gross margin dollars decreased 27.9%, or £1.8 million year over year, to £4.7 million for the second quarter 2020, but increased 18.7%, or £0.7 million, sequentially.
- Gross margin percentage for the second quarter of 2020 decreased 430 basis points to 12.2% compared to 16.5% in the second quarter of 2019, but increased 110 basis points sequentially from 11.1%.
- Revenue per load decreased 15.4%, or £212 per load year over year, and decreased 11.8%, or £155 per load, sequentially.
- Load count increased by approximately 4,500 loads, or 15.7%, year over year and by 6,100 loads, or 22.4%, sequentially.
"Our organization is continuing to show progress in key initiatives of regionalization, technology, and cost control.
Regionalization is starting to gain traction, as we anticipate the opening of a terminal in the Dallas, Texas, market by the end of third quarter," Reed said, adding that he expects the Dallas terminal to lower USAT's over-the-road maintenance costs and improve the company's driver retention. "Additionally, we have entered into an agreement for delivery of an additional 189 new tractors that we expect to be completed during 2020. This transaction will reduce our average age of the fleet, improve maintenance costs further, and contribute to our cost reduction initiatives," he said. "We believe we are well positioned as market capacity is tightening.
We continue to focus on providing great service to our customers, improving utilization on our trucks, and increasing volumes through our USAT logistics segment." As of June 30, USAT's total debt and lease liabilities was £189.5 million, total debt and lease liabilities, net of cash ("net debt"), was £189.4 million, and total stockholders' equity was £75.5 million. Net debt to adjusted EBITDAR for the trailing 12 months that ended June 30 was 4.1x.
In addition, the company had approximately £38 million available to borrow under its credit facility as of June 30.