U.S. Xpress, on the verge of being acquired by Knight-Swift, recently laid off about 150 employees as its earnings report filed with the Securities and Exchange Commission showed a significantly widened loss for the truckload carrier.
“We did recently make the difficult decision to reduce roles in a few business areas in response to challenging market conditions,” a spokeswoman said in an email to FreightWaves.
The LinkedIn profiles of several U.S. Xpress (NYSE: USX) staffers began showing the layoffs last week. It also had two rounds of layoffs last year.
While the spokeswoman did not offer information on the number of layoffs, sources within Chattanooga, Tennessee-based U.S. Xpress provided the estimate of 150 employees. Most of the employees were in human resources, information technology, back office and the company’s brokerage, with some layoffs also in asset-based areas.
“Our industry is experiencing a prolonged lack of freight demand that has negatively affected trucking logistics companies,” the spokeswoman said. “We are no exception.”
That tough freight market was evident in the earnings filed Wednesday as a 10-Q report with the SEC. With the pending merger with Knight-Swift, no first-quarter earnings news release was issued, nor was there a call with analysts, which is the norm for companies about to be acquired. (For example, TravelCenters of America did not have an earnings call as it prepares to be absorbed into BP.)
The financial numbers that would have been discussed in an earnings call were grim. U.S. Xpress reported an operating loss of $29.9 million for the quarter, a big fall from the just under breakeven figure of $210,000 reported in the first quarter of 2022. The operating loss in the fourth quarter of 2022 was $5.67 million.
Net income widened to a loss of $27.1 million compared to $8.9 million a year ago and a net loss of $9.2 million in the fourth quarter.
Among some of the first-quarter line items that made for a significantly worse performance, revenue prior to fuel surcharge declined to $437.8 million from $464.3 million; salaries, wages and benefits rose to $181.7 million from $169 million; and interest expense increased to $7 million from $3.8 million. Purchased transportation declined to $96.5 million from $150.6 million.
Truckload revenue was actually higher, up to $441.1 million compared to $423.2 million a year ago. But brokerage revenue plummeted to $51.6 million from $93.9 million.
U.S. Xpress closed out the first quarter with cash on hand of $3 million, up from $2.3 million at the end of 2022. But U.S. Xpress’ long-term debt, a key reason for it to become a public company in 2018, was $376.8 million at the end of the first quarter, up from $354.3 million in the fourth quarter.
(To put those numbers into perspective, in the first 10-Q U.S. Xpress filed with the SEC after the second quarter of 2018, the company reported long-term debt of $282.2 million. But that was down from $480.5 million at the close of 2017, when it was a private company, fueled by using some of the proceeds of the IPO to repay debt.)
U.S. Xpress did not provide an operating ratio figure in its SEC filing. But using the standard methodology of dividing operating expenses by operating revenue — $522.58 million divided by $492.72 million — the OR at U.S. Xpress, including fuel, was about 106%.
By contrast, truckload carrier peer Heartland Express had an adjusted OR of 91.4% in the quarter, and Marten Transport’s adjusted OR was 88.6%.
In the 10-Q filing, U.S. Xpress revealed it had settled an action in the federal district court for central California for $4.69 million. It was a class action suit brought by a driver that was then extended to the wider class. The original suit, according to U.S. Xpress, “alleged that class members were not paid for off-the-clock work, were not provided duty free meal or rest breaks, and were not paid premium pay in their absence, were not paid the California minimum wage for all hours worked in that state, were not provided accurate and complete itemized wage statements and were not paid all accrued wages at the end of their employment, all in violation of California law.”
That payment is expected to be made within 30 days of Sept. 14, so that charge would not be in the first-quarter report.
The SEC filing also included details on a previously reported class action settlement with disgruntled investors from the opening months of the IPO.
No closing date has been set yet for the Knight-Swift (NYSE: KNX) acquisition.
Disclosure: FreightWaves founder and CEO Craig Fuller retains ownership of U.S. Xpress shares through his family trust.
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