USA Truck Drives Off The Nasdaq List

USA Truck Drives Off The Nasdaq List
(Illustration by Sarah Campbell-Miller. Sources: Shutterstock, USA Truck)

There are still regulatory hurdles and compliance details to iron out, but USA Truck Inc.’s days as an independent publicly owned company are numbered.

The Van Buren company, founded by former ArcBest executive Bob Powell in 1983, accepted a $435 million takeover offer by German logistics giant DB Schenker on June 23. Once the deal is done, which both companies believe will be by the end of the year, USA Truck will become a division of DB Schenker and vanish from the Nasdaq listings.

“It is just a match made in heaven,” USA Truck CEO James Reed said after the deal was announced.

The acquisition ends a turbulent 15 years for USA Truck, which fell on hard times after Powell retired as CEO in 2007. Powell, who died in October, had founded USA Truck as a truckload segment for ArcBest called Crawford Produce Inc.

CPI became USA Truck in 1986 and Powell formed a partnership to purchase it in 1989. The company went public in 1992.

It was a steady regional performer until shortly after Powell stepped down as CEO; he remained as chairman of the board of directors until 2011. Powell’s replacement as CEO was Jerry Orler, who had been a co-founder of the company with Powell, but Orler retired seven months later when he turned 65.

Orler’s replacement was a true company man, Cliff Beckham, who had joined the company in 1994 as a staff accountant and worked his way up to chief financial officer. Under Beckham’s leadership, the company turned a $3 million profit in 2008.

Then the honeymoon ended and Beckham and USA Truck found themselves in a new environment.

Earnings Plummet

Beckham wasn’t helped by the recession that hit the country shortly after his first full year on the job.

USA Truck’s earnings plummeted as the company posted five consecutive fiscal losses from 2009 through 2013. The company lost more than $7 million in 2009, $3.3 million in 2010, nearly $11 million in 2011, $17.6 million in 2012 and $9 million in 2013.

Beckham was out as CEO by the end, being replaced by John Simone in early 2013. He returned to CFO for a year before leaving near the end of 2014.

Beckham, now COO of Trekker in St. Louis, said that if he had it to do over he would have focused all his energies on building a solid freight network based on pricing. Because of the desperate times, USA Truck got into a spiral of chasing whatever freight was offered, even at poor prices, just to keep trucks rolling.

“I would have done something different,” Beckham said. “That’s something you learn through experience. I would have spent all my time in the freight, and I would have spent my time working on pricing that freight and building that freight network from the ground up. It seems awfully simple, but there are so many different aspects operating a company of that size.”

Under Simone’s leadership, USA Truck seemed to have righted itself, although that turned out to be a bit of an illusion. The company had to fight off a $242 hostile takeover attempt in 2013 by Knight Transportation of Phoenix, which it had escaped by 2014.

The surging economy led to $17.4 million in profits in 2014-15, but when the industry cooled so did USA Truck’s profits, again. It’s unknowable whether Simone would have handled the subsequent losses because he never got a chance. Struck with lung cancer, he took a leave of absence in April 2015 and died in March 2016.

He was replaced on an interim basis by Tom Glaser, who had been brought on board as a consultant in 2011. The board hired Randy Rogers as full-time CEO in January 2016 but he lasted just a year. USA Truck lost nearly $8 million in 2016 and saw its revenue plummet from $507.9 million to $429.1 million.

A New Day

Glaser, a member of the board, said Rogers was a smart, personable executive, but spent too much time poring over numbers in his office and not enough time in the shops and loading yards. The bright spot of Rogers’ tenure was the November 2016 hiring of CFO James Reed, who had held the same position at Interstate Distributor Co. of Tacoma, Washington.

Reed was a devout numbers guy, but he was also a fervent believer in the power of culture and had a diverse background with executive positions at companies such as Intel and T-Mobile.

Reed said he knew fixing USA Truck’s disastrous business model of chasing freight was important, but fixing the company culture was equally key. Almost immediately he gave cultural ownership to the employees by having a meeting during which 29 company influencers debated and argued before agreeing on USA Truck’s six core values.

Reed drove the employees and his leadership team hard, but no harder than he drove himself. The focus was on building a sustainable freight network and building a team that trusted and believed in each other.

“There were just a lot of poor decisions, just chasing immediate flashes in the pan,” Reed said. “There wasn’t an appreciation for what it meant to build a long-term sustainable franchise. Coming in I initially was pretty much alone. We didn’t have much of a leadership team. I was pretty clear about expectations early on. People were overwhelmed a little bit I guess by the clarity of expectations. We always had a lot of employees who frankly wanted to be led but they hadn’t had any sort of consistency.”

Jason Bates, a close friend who Reed brought on as CFO, said the disillusioned employees of USA Truck were understandably slow to believe in the latest leadership team. He said when he joined USA Truck three months after Reed’s promotion, it was a “little bit of a dumpster fire.”

“There were good people there,” said Bates, now CFO at Daseke Inc. in Dallas. “They needed to believe that leadership was invested and were willing to run through walls with them. James is not an old-school trucker, but he is a dynamic leader. We wanted to run through walls for him.”

Under Reed’s leadership, revenue increased from $446.5 million in 2017 to more than $710 million in 2021, and USA Truck posted four profitable years, including $12.2 million in 2018 and $24.8 million in 2021.

That success attracted DB Schenker, which first contacted Reed in September 2021 about buying the company. The initial offer was for $27 a share, but after some negotiations during the next six months, the two sides agreed on $31.72 per share.

Reed said when he became CEO he gave the board the financial goals he wanted the company to hit in five years. He said USA Truck hit just about every mark he had set out.

“You hope the board is going to give you the time to do it; I’m not always sure they were going to,” Reed said. “They never indicated I was on the block, but I would have thought I was frequently on the block.

“I don’t want anyone to think we are declaring victory and high-fiving and chest-bumping in the hallways. This company still has more to accomplish. I knew the ingredients were right and we were doing the right things, but I also feel in many respects we got very lucky.”