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Karen Pelletier James Lowe Geneice Bassue Lee Dubois.

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Presentation on theme: "Karen Pelletier James Lowe Geneice Bassue Lee Dubois."— Presentation transcript:

1 Karen Pelletier James Lowe Geneice Bassue Lee Dubois

2 Overview History Current Strategy Issues Mission and Vision External Audit, CPM, EFE Internal Audit, Stock Performance, Financials, IFE Matrix Analysis – SWOT, SPACE, BCG, GSM, IE, QSPM, EPS/EBIT Recommendations Implementation / Evaluation Questions?

3 History 1983: Forerunner of USA Truck is created which was Arkansas Best Corporation formed CPI, Inc 1988: USA Truck becomes independent company : USA Truck experienced 25% and 15% growth respectively and they also saw revenues and net income reach $53 million and $2 million, respectively in : Initial public offering of stock raises $13 million. They offered 1.2million stocks at $12.50 each 1993: USA Truck saved $500,000 in retraining costs and driver turnover had declined from 105 percent to 85 percent per year 1994: USA Truck operated a fleet of 711 tractors and 1,202 trailers with 712 drivers, gathering $92.5 million in revenues and $8.1 million in net income. 1995: USA Truck open a driver support and maintenance facility in Shreveport, Louisiana

4 History 1996: Revenues increased to $108.3 million and they operated 862 tractors and 1,510 trailers, employing 922 drivers 1997: USA Truck included trailer service to Mexico through Laredo, Texas and added 53-foot trailers to its fleet to serve this market. They also installed onboard communications via two-way satellite mobile messaging and global positioning (GPS). 1999: USA Truck acquires Carco Carrier Corporation which operated under the name CCC Express for $37 million. 2000: USA Truck instituted a 16 percent pay increase to attract new drivers 2005: USA Truck received ISO 9001:2000 certification (this is the International Organization for Standardization's and is the most rigorous international standard for Quality Management and Assurance. Part of the ISO 900 and 1400 family)

5 Who We Are USA Truck INC is a full-load trucking service that offers medium haul shipping to distances from 700 to 1,000 miles one way, specializing in just-in-time delivery. We serve the contiguous 48 states, primarily east of the Rocky Mountains; Quebec, and Ontario, Canada; and Mexico through Laredo, Texas. USA truck transports "dry van" goods, such as paper and paper products, glass, retail merchandise, automotive parts, aluminum, chemicals, and manufacturing materials. All with a fleet of more than 1,700 tractors, and 3, foot and 53-foot trailers carry over 650 truckloads per day. Stock Symbol: USAK We operate on the NASDAQ stock exchange

6 Current Operating Strategy Operating Strategy that involves the six following goals Operate every tractor at least 2,450 miles per week Provide a minimum of 98% on-time service Maintain a modern fleet of revenue-producing equipment Tightly control cost through a sophisticated bench marking program Leverage technology Annually grow revenue 15%

7 Issues Rising cost of fuel Driver shortage Insurance cost Hours of service regulations Highway infrastructure spending Increased security requirements

8 Mission Statement At USA Truck, we focus on customers and markets that demand premium service so that we can achieve premium rates and develop long-term, service-oriented relationships (1). We strive to provide the best, most efficient on-time trucking and logistics services in the North American market today (2, 3). All our trucks incorporate the latest GPS systems and two-way satellite mobile messaging systems to ensure quick, on-time delivery to our customers and clients (4). We have an operating strategy that will continue to help us grow and become more and more profitable as the years pass (5). Our quality service and efficiency philosophy motivates us to get your goods to you in the quickest and most efficient manner (6). USA Truck is committed to surpassing competition with our just-in-time delivery method that gets goods where they need to be at least 98% of the time (7). We utilize the newest technology and fuel-efficient equipment to minimize damage done to our surroundings and our environment (4, 8). USA truck strives to recruit the most dedicated employees, and in turn we provide them with superior pay and top notch benefits (9).

9 Vision Statement At USA Truck our vision is to become a leader in the trucking industry and to exponentially grow our logistics division to become the top in the nation.

10 External Audit Opportunities Increase in revenues through cross-border operations Room for expansion in industry Speedier handling of trucks at warehouse & loading docks to improve bottom line Use of technology to improve timing Increase of profitability through trailer utilization Increase in manufacturing & consumer spending increases demand for trucking business

11 External Audit Fuel costs are rising Surplus in the market for used trucks Rising interest rates Driver shortages High costs of insurance, license & registration fees Increased security requirements Increase in regulation Industry has a growing trend towards consolidation Labor unions Threats

12 CPM

13 EFE

14 Internal Audit 95% of revenue are from repeat customers Sophisticated benchmarking program 15% annual growth Profit margins ranked among the top in industry Currently there are not any employees that belong to a union Improving weekly mileage per tractor Offers logistics division for one stop shopping experience Strengths

15 Internal Audit Increased maintenance cost due to aging fleet Biggest customers are not on long term contracts Operating ratio goal of 88% has only been met once Still below benchmark for weekly mileage per tractor Past problems of integrating a merger 14% of USA’s trucks were idled in 2000 because of driver shortages Canadian revenues are less than 1% of revenues Currently only a dry van truckload carrier Weaknesses

16 Stock Performance No dividends paid, no splits

17 Income Statement

18 Balance Sheet

19

20 Financial Ratios

21

22 Net Worth Analysis Stockholders Equity + Goodwill $ 860,950 Net Income X 5 $ 731,280 Share price = $ / EPS (Net Income) $ 101,075 # Shares Outstanding X Share Price $ 158,814 ========================================== Method Average $ 463,029

23 IFE

24 Matrix Analysis

25 SWOT Matrix Strategies Expand services further into Canada & Mexico (S3, O1) Improve loading and processing time by using innovative technology (S2, O3, O4) Expand offerings such as entering food industry (S3, O5) Expand logistics division to meet increasing demand (S7, O2, O6) Focus more on LTL market to increase trailer utilization through larger loads & improve mileage per tractor (S6, O5) SO Strategies

26 SWOT Matrix Strategies Market more in Canada to expand market share (W7, O1, O2) Increase client base further into Canada to improve mileage per tractor (W4, O5, O2) Expand fleet to accommodate higher demand & replace aging trucks (W1, O6) WO Strategies

27 SWOT Matrix Strategies Improve trucker relations through better benefits & working schedules (S5, T4, T9) Start a program that increases driver pay per mile more based on tenure to increase driver retention (S5, T4) Invest more in logistics division to expand company as a whole (S7, T 8) Seek acquisition of smaller company in Western North American region (S3, T8) ST Strategies

28 SWOT Matrix Strategies Start a driving school to train new truck drivers & increase driver retention (W6, T4) Increase driver salaries & benefits to retain employees & deter from creating a union (W6, T4) Purchase newer, more fuel efficient trucks (W1, T1) WT Strategies

29 SPACE Matrix

30

31 GSM

32 BCG Market Share Leader in the national truckload trucking market: Swift USA Truck’s revenues are about 10% of Swift’s. Industry Growth Rate is approximately 5% USA Truck’s trucking division represents about 80% of total revenues Market Share Leader in the logistics market: Union Pacific USA Logistics' revenues are < 1% of UP’s. Industry Growth Rate is approximately 4.2% USA Truck’s logistics division represents about 20% of total revenues

33 BCG

34 IE Matrix

35 QSPM

36 Recommended Strategies Increasing number of drivers and driver retention: Implementation of a CDL driving school Better benefits for employees (retirement, pay, medical, etc) Improving recruiting efforts (job fairs, etc) Providing better driver evaluation and education. Use of slip-seating technique and other techniques to lessen # of miles per driver. Approximate costs: About $10,000,000 (to start small in-house driving classes at different centers, improve driver pay system and benefits, extra staffing needed for recruiting and teaching, etc)

37 Recommended Strategies Expand services further into Canada and Mexico Seek out new client companies in areas of these countries not currently served by USA Truck. Expand marketing efforts in these countries. Purchase a few new trucks to serve these areas. Will increase average mileage per trailer per week. This is an example of Market Penetration and/or Development. Estimated costs: Approximately $10,000,000 (based on purchase of new trucks, increased marketing, research and development efforts, etc)

38 Recommended Strategies Improve and expand logistics division Currently, the logistics division accounts for 20% of the company’s overall revenues. We hope to increase this. Overall expand the logistics division – staffing, number of centers, brokerage, etc. This division is currently growing at a very fast rate so it will not be quite as difficult to expand. Expansion will be needed to accommodate this growth. This is an example of Product Development Approximated budget: About $20,000,000

39 EPS/EBIT

40 Implementation The driver increase strategy will need to be implemented first to provide enough drivers to cover Canadian / Mexican expansion. After new drivers are trained and new trucks are purchased, USA truck can seek out new customers in un-served areas of the US, Canada, and Mexico. The logistics department has been growing steadily and rapidly each year, so expansion of this department can occur while other strategies are being implemented. This will hopefully increase the number of drivers, driver retention rates, number of customers, geographic area served, and products and services offered by USA Truck and USA Logistics.

41 Evaluation Periodic driver performance evaluations & employee satisfaction surveys. Evaluate revenues and profits brought in by each new truck used, and also by each new geographic area (city, state, province, etc) we obtain to figure out which are the biggest moneymakers. Evaluate percentage of revenue growth in the logistics division for each year of growth to determine the optimal growth point and growth percentage. Compare employee retention rates on a yearly basis to determine how many people are staying and which strategies are working. Figure out how many current employees have gone through the USA Truck driving course, and evaluate how long their tenure is/was and what percentage of employees took the course.

42 Resources The Business Source Premier The Business and Company Resource Center Strategic Management 11th Edition

43

44 Questions?


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