Posted 10/21/2011 07:34 am
Updated 1 year ago
USA Truck Inc. of Van Buren has rebuffed an overture from a larger trucking rival, Celadon Group of Indianapolis, which wanted to meet with USA Truck and discuss a possible merger.
USA Truck reported its response to Celadon in a third-quarter earnings news release on Friday. In the news release, it also announced a plan to streamline its management structure and reported a wider third-quarter net income loss.
Last week, Celadon revealed in a regulatory filing that it has a 6 percent stake in USA Truck and was interested in possibly merging with the company.
In the filing, available here, Celadon said it had requested a meeting with its smaller competitor "to discuss a possible association between Celadon Group" and USA Truck, "potentially including a combination of the two companies."
On Friday, USA Truck said its board of directors had reviewed Celadon's filing.
"Among other factors, the board of directors considered the recent management changes and the board's desire to remain focused on increasing value through operational improvements," the company said in its earnings news release. "Accordingly, the board of directors unanimously decided to decline a meeting at this time."
Celadon, which did $550 million in revenue in 2010, is a familiar name in Arkansas trucking. In 2008, one of its subsidiaries has purchased Continental Express Inc. of Little Rock for $24 million.
The company said it has reduced its executive management team from nine members at the beginning of the second quarter to seven members at the end of the second quarter, to five members as of Friday.
The move puts Trucking division COO David B. Hartline over all sales, pricing and operations activities in that division. The company elimated its corporate strategy department, and moved the management of its information systems and engineering operations under the authority of CFO Darron Ming.
For the third quarter, USA Truck reported a net loss of $4.3 million or 42 cents per share, a bigger loss than the $600,000 or 6 cents per share it reported in the same quarter of 2010.
Base revenue rose 1.9 percent to of $102.6 million for the quarter.
Cliff Beckham, president and CEO, said the company faced several challenges, including a continued driver shortage and the final steps of implementing a new software system.
"Our business environment was softer than in the second quarter. We felt a modest step-down in overall freight demand in our markets, which we attribute to slower growth in the U.S. economy," he said. "In addition, we began phasing out service on two major accounts, one due to the end of a project and one due to inadequate pricing. In a softer overall freight market, we had fewer opportunities to replace all of this business with high-quality freight.
"Industry-wide, we believe freight demand and trucking capacity are in relative equilibrium, but the spot market is less robust than during the second quarter. This contributed to a reduction in overall miles and an increase in our percentage of non-revenue miles."