A major bond rating agency has downgraded its assessment of Chattanooga's biggest trucking company despite the company's improved earnings in recent months.
Standard & Poor's Ratings Services cut its rating late Thursday for U.S. Xpress Enterprises Inc. from B+ to B after analysts said the company's earnings were below expectations and the earnings levels were in more danger of not meeting its debt requirements.
"The company is currently in compliance with its [bond] covenants," S&P credit analyst Anita Ogbara said. "However, we expect covenant cushion to deteriorate during the first half of 2012."
Ogbara said S&P's outlook for U.S. Xpress is "stable," which she said reflects "our expectation that operating performance will improve and its liquidity position will stabilize over the next few quarters."
"The ratings on U.S. Xpress reflect the company's highly leveraged capital structure and the intensely competitive, highly fragmented, cyclical truck-load market in which it operates," Ogbara said.
Founded in Chattanooga in 1985 by Max Fuller and Pat Quinn, stock in U.S. Xpress was publicly traded on the Nasdaq stock exchange until the co-founders bought up the outstanding stock and took the truck carrier private in a 2007 leveraged buyout.
Quinn, who owned half of the company, died earlier this month.
Although the company no longer has publicly traded stock, U.S. Xpress corporate bonds are rated by services such as S&P. U.S. Xpress is one of the nation's largest transportation carriers with more than 10,000 employees, including more than 1,000 at its Chattanooga headquarters facilities. U.S. Xpress has laid off 36 employees in Chattanooga in the past three months, company officials said.
Standard & Poor's categorizes U.S. Xpress' business profile as "weak," its financial profile as "aggressive" and its liquidity as "adequate."
Greg Thompson, a spokesman for U.S. Xpress, declined to comment on the financial report or bond downgrade.