USA Truck Inc (NASDAQ:USAK) Q2 2020 Earnings Conference Call - Final Transcript
Jul 28, 2020 • 09:00 am ET
Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jack Atkins with Stephens. Please go ahead.
Hey, guys. Good morning, thanks for taking my question.
James D. Reed
Sure, thanks. Good to hear from you Jack.
So I guess, James, let me go back to your comments around the rate environment in July. I thought that was pretty encouraging. Your comment that rates are up 5% sequentially, I'm assuming that's a loaded mile comment. And is that versus the average rate in the second quarter?
James D. Reed
And I guess, just kind of more broadly, now that there's some increased rate momentum in favor of asset carriers here over the last couple of months, is there an opportunity for you to maybe reprice some of the freight that may be some lower-yielding freight that you had to take over the course of the last year, just given sort of where the freight market has been? And how should we think about the impacts that could have to the third quarter more broadly?
James D. Reed
Yes, great questions. Before I answer that, I don't mean to be too complimentary, but thank you for your piece last night. It was clear that you really read the details, and your observation on the tax rate was right on point in understanding our sequential improvement. So thank you for that. With respect to the rate environment, July is up 5% versus the Q2 average. So that's exactly right, the way you said that. In terms of repricing, I kind of casually touched on our network efforts. We really undertook an intense review of our network because we had to make a real-time pivot based on the loss of many of these non-essential shippers. We have no idea when or if they'll come back.
I mean we talk to them, and they're hopeful, but we'll see. And in doing that, we absolutely did what you said, and we've identified some opportunities. And so just in really practical terms, what we're doing on a weekly basis is going back to the bottom 10% of our yielding freight, and we're raising prices. We're doing it relatively across the board. We have some strategic customer relationships where what we really care about is kind of the profitability on the round in through and out of that market. But yes, we are absolutely undertaking that right now, and it's something that we do as part of our regular cadence.
And then in terms of impacts on the quarter, I mean, I didn't say this in my comments, but I'll say it now in this question. We've been very conservative in our own internal estimates. And we -- obviously, we don't share our internal estimates. We just feel like we got so burned in '19 and so burned in the first part of '20 that we're reticent and hesitant to do anything risky. That said, if the market continues like July, I mean, you can kind of do your own