U.S. Xpress lays off staff, reports significant loss to SEC

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 scale back roles in just a few business areas in response to difficult 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 12 months.

While the spokeswoman didn’t offer information on the variety of layoffs, sources inside Chattanooga, Tennessee-based U.S. Xpress provided the estimate of 150 employees. Many of the employees were in human resources, information technology, back office and the corporate’s brokerage, with some layoffs also in asset-based areas. 

“Our industry is experiencing a chronic lack of freight demand that has negatively affected trucking logistics corporations,” the spokeswoman said. “We are not any exception.”

That tough freight market was evident within 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 corporations about to be acquired. (For instance, TravelCenters of America didn’t have an earnings call because it prepares to be absorbed into BP.)

The financial numbers that will have been discussed in an earnings call were grim. U.S. Xpress reported an operating lack of $29.9 million for the quarter, an enormous fall from the slightly below breakeven figure of $210,000 reported in the primary quarter of 2022. The operating loss within the fourth quarter of 2022 was $5.67 million.

Net income widened to a lack of $27.1 million in comparison with $8.9 million a 12 months ago and a net lack of $9.2 million within the fourth quarter.

Amongst a number 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 advantages 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, as much as $441.1 million in comparison with $423.2 million a 12 months ago. But brokerage revenue plummeted to $51.6 million from $93.9 million.

U.S. Xpress closed out the primary quarter with money readily available of $3 million, up from $2.3 million at the top of 2022. But U.S. Xpress’ long-term debt, a key reason for it to change into a public company in 2018, was $376.8 million at the top of the primary quarter, up from $354.3 million within the fourth quarter. 

(To place those numbers into perspective, in the primary 10-Q U.S. Xpress filed with the SEC after the second quarter of 2018, the corporate reported long-term debt of $282.2 million. But that was down from $480.5 million on the close of 2017, when it was a non-public company, fueled by utilizing a number of the proceeds of the IPO to repay debt.)

U.S. Xpress didn’t provide an operating ratio figure in its SEC filing. But using the usual 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%. 

In contrast, truckload carrier peer Heartland Express had an adjusted OR of 91.4% within the quarter, and Marten Transport’s adjusted OR was 88.6%.

Within the 10-Q filing, U.S. Xpress revealed it had settled an motion within the federal district court for central California for $4.69 million. It was a category motion suit brought by a driver that was then prolonged to the broader class. The unique suit, in line with U.S. Xpress, “alleged that class members weren’t paid for off-the-clock work, weren’t provided duty free meal or rest breaks, and weren’t paid premium pay of their absence, weren’t paid the California minimum wage for all hours worked in that state, weren’t provided accurate and complete itemized wage statements and weren’t paid all accrued wages at the top of their employment, all in violation of California law.”

That payment is predicted to be made inside 30 days of Sept. 14, in order that charge wouldn’t be within the first-quarter report.

The SEC filing also included details on a previously reported class motion 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.

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