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USA Truck reports net losses as revenues decline 30 January 2020

Q4 was particularly tough for the logistics business

USA Truck Inc. announced its financial results for the three and twelve months ended December 31, 2019. For the quarter ended December 31, 2019, consolidated operating revenue was US$124.1 million down 12.0% compared to US$141.1 million for the prior year period. Base revenue, which excludes fuel surcharge revenue, was US$108.7 million down 12.6% compared to US$124.3 million for the 2018 period. The Company reported a net loss of (US$4.8) million for Q4, 2019 compared to net income of US$5.3 million for Q4 2018. The Company's fourth quarter 2019 consolidated operating ratio was 102.9%, compared to 93.8% in the comparable 2018 quarter.

For the full-year period, operating revenue declined 2.1% to US$522.6 million. Operating income declined by 89.1% to US$2.3 million, as net losses reached US$4.7 million, from net income of US$12.2 million in 2018.

Results were meaningfully impacted by the difficult freight market during Q4, 2019. The soft spot market and widely reported supply-demand imbalance affected both 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 organisational changes that aim to enhance business in the long term, but which resulted in the Company experiencing the effects of a tough market more severely than its peers.

The fourth quarter was particularly tough for the logistics business which experienced lower volumes and margins given the turmoil in the broader industry. While Q4 was challenging, the Company has been encouraged by the progress and momentum gained over the last month and a half, specifically in its Trucking operations. January has begun with what it believes is a positive market inflection, customer bid activity and freight volumes are improved over recent trends. The Company has also increased its win percentage in the bid process including recent dedicated contracts.

For Q4, 2019, Trucking operating revenue (before intersegment eliminations) decreased US$7.8 million, or 7.8%, to US$92.1 million, compared to Q4, 2018. Trucking operating loss of (US$2.6) million for the 2019 period, reflected an operating ratio of 102.8%, compared to operating income of US$7.4 million and an operating ratio of 92.6% for Q4, 2018. This represents a decrease of US$10.0 million year over year in operating income and a 1,020 basis point decline in operating ratio.

At USAT Logistics, operating revenue (before intersegment eliminations) was US$33.6 million for Q4, 2019, a decrease of US$10.8 million, or 24.4% year over year. Both operating loss and adjusted operating loss were (US$0.9) million for Q4, 2019, reflecting an operating ratio of 102.8% and an adjusted operating ratio of 103.1%, compared to operating income and adjusted operating income of US$1.3 million and an operating ratio of 97.1% and an adjusted operating ratio of 96.8% for the comparable 2018 period. This change represented a decrease of US$2.2 million year over year in operating income and adjusted operating income and a degradation of 570 basis points in operating ratio and 630 basis points in adjusted operating ratio compared to Q4, 2018.