U.S. Xpress stock dropped nearly 16% Thursday on the heels of news that operational problems with the company’s Variant trucking division had contributed to an operating loss in the fourth quarter of 2021.
In a call with analysts on Wednesday evening, CEO Eric Fuller expressed confidence that the long-term strategy of the technology-enabled Variant trucking business is sound, despite recent setbacks.
“The changes that we’re making in Variant are within our control,” Fuller told analysts. “We have the right people internally with expertise to execute our remediation plan and we’ve seen improvement in our key metrics in January, which gives us confidence that we are moving in the right direction.”
On Wednesday, the company reported an operating loss of $5.1 million, or 10 cents per share, in the fourth quarter of 2021 compared to operating income of $15.1 million, or 15 cents per share. Analysts had predicted earnings of 8 cents per share in the fourth quarter of 2022.
In December, U.S. Xpress dismissed the president of Variant, Cameron Ramsdell, shifting Variant’s technology and operations teams to report directly to Fuller. Variant had delivered good results through the first half of the year, but had scaled to a point where the business needed to more quickly transition from a rapid-growth-mode startup to more disciplined management processes, Fuller told analysts.
“The last four weeks we have seen significantly improved results just about across the board in our revenue per truck and our turnover staff and in our phones, like everything that we track and look at,” he said. “Things are moving in the right direction. So we feel very confident that we are moving in the direction that’s going to start driving positive earnings growth over the next year.”
At market close Thursday, U.S. Xpress stock was trading at $3.71, down from $4.44 from the close of trading Wednesday. The Chattanooga-based trucking company began trading on the New York Stock Exchange in 2018, when its stock was initially offered at $16 a share. The stock’s lowest point came in April 2020, when it traded at $2.98. One year ago, the stock was priced at $8.51 a share.
U.S. Xpress launched Atlanta-based Variant in June 2019, and built the business from the ground up to pioneer a technology-focused approach to trucking, Fuller said. Variant uses artificial intelligence and digital platforms to recruit, plan, dispatch and manage its fleet. The progress of that work won’t be linear, he added.
“In the disruptive startup model, history shows there is risk acting too early or too late and in integrating too much or too little,” he said.
“Based on the growth of Variant to 1,550 tractors in almost three years, the immediate progress in restoring operating metrics this past month and the strong cooperation and unified teamwork between Variant and other trucking experts, I believe Variant has progressed better than most efforts at internal disruption,” Fuller said. “Although it has not been, and we never thought it would be, a straight line forward.”
Contact Mary Fortune at mfortune@timesfreepress.com. Follow her on Twitter at @maryfortune.