USX - U.S. Xpress announces realignment plan expects to reduce total costs by $25M

U.S. Xpress ( NYSE: USX ) on Wednesday announced a realignment plan - which includes job cuts and real estate consolidation - to improve operating profitability and cash flow, and reduce balance sheet leverage.

The plan focuses on improving over-the-road ( OTR ) operations with limited impact to its dedicated and brokerage businesses.

USX expects total costs to be reduced by ~$25M on an annualized basis starting in Q4 based on actions already taken.

The firm reduced its headcount by eliminating organizational overlaps and duplicative functions, which is expected to reduce annualized wage costs by ~$20M starting in Q4.

USX expects to incur severance-related charges of $0.6M in Q3.

The firm is undergoing real estate footprint rationalization, focusing on divesting non-core real estate holdings.

In Q3, USX terminated the lease agreement for its Atlanta office and expects to incur a charge of $1.2M in the quarter.

USX projected annualized savings of ~$2M from the lease termination starting in Q4. The company eliminated ~$3M in additional annualized costs from other areas of business.

USX's liquidity is in excess of $135M as of Aug. 31 and it expects its liquidity to improve over the rest of the year.

The company said it is seeing an increase in insurance and claims expense as claim settlements accelerated.

USX projected ~$15M in additional insurance and claims expense, primarily driven by one large claim, in Q3 vs. Q2.

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