USA Truck's New Management Navigates a Learning Curve

by Marty Cook  on Monday, Feb. 24, 2014 12:00 am  

USA Truck CEO John Simone, an experienced turnaround artist, put together a 27-point plan that has helped the Van Buren company’s stock price almost triple in the past year. (Photos by Kat Wilson)

Outside Interest

Simone isn’t the only one, as shown by the company’s stock price. USA Truck shares closed at $4.75 on Feb. 15, 2013 — Simone took over three days later on Presidents Day when the stock market was closed — and the stock closed at $13.68 on Feb. 18, 2014. Much of the run-up came after Knight announced its offer of $9 a share (and the assumption of $147 million in debt) in September, but Simone said that was just part of the stock story.

Knight’s interest in the company — and USA Truck’s rejection of Knight’s offer — gave publicity to the turnaround at USA Truck. When Knight made its offer public, the stock was trading at $6.46, but it has lately traded comfortably above $13.

Two investment companies have made major investments in USA Truck in recent months. Stone House Capital owns more than 1.5 million shares (14.7 percent of the outstanding shares), and Baker Street Capital owns 1.4 million shares (13.3 percent).

“The stock price started to climb when we told our third-quarter story,” Simone said. “When I talk to some of our newest shareholders, I ask them, ‘Why USA Truck?’ Knight going public [with its offer] did bring some visibility and piqued some interest, and when they started doing their diligence, they saw something special here.”

Simone and Beckham aren’t quite ready to send a thank you bouquet to Knight’s management, though. USA Truck filed a breach of contract lawsuit against Knight and asked a court to force the Phoenix company to divest itself of the 1.3 million shares of USA Truck it owns.

In a settlement earlier this month, Knight agreed to vote its shares at the 2014 shareholder meeting according to USA Truck’s board of directors’ recommendation and not acquire any more assets through September. The takeover bid isn’t dead, but USA Truck doesn’t have to worry about it until the fall.

The company’s board of directors had voted in a Shareholders’ Rights Plan before the Knight takeover bid. The so-called “poison pill” kicks in when one individual or company owns more than 15 percent of USA Truck and lets other shareholders have the option of buying new shares of stock at half price, which would effectively dilute the other holdings.

“It was a distraction,” Simone said of Knight’s bid. “We have a large workforce that was concerned. It took a lot of our time to keep the workforce calm and focused. I spent a lot of my time in front of customers, and that comes up a lot.

“It was a big relief from Cliff and my perspective because we had to spend a significant amount of time dealing with that situation. It does get our employees’ focus back on the job at hand.”

Beckham said the company has nine months to put USA Truck out of reach for Knight — or anyone else, for that matter.

“We all know that we have to make hay while the sun shines,” Beckham said. “If we maintain the trajectory we are on, it’s definitely over. Our thoughts are focused on making sure that doesn’t become an issue again.”

 

 

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