Market Overview

USA Truck Reports Second Quarter 2018 Results

Share:
  • 2Q 2018 net income of $2.5 million, or $0.31 per diluted share
    versus 2Q 2017 net loss of ($2.8) million, or ($0.35) per diluted share
  • 2Q 2018 consolidated operating revenue increased 26.1% to $135.4
    million from $107.4 million in 2Q 2017
  • Continued YoY improvement in base revenue per loaded mile,
    base revenue per available tractor per week, and average unseated
    tractor count

USA Truck, Inc. (NASDAQ:USAK), a leading capacity solutions provider,
today announced its financial results for the three and six months ended
June 30, 2018.

For the quarter ended June 30, 2018, consolidated operating revenue was
$135.4 million compared to $107.4 million for the prior-year period.
Base revenue, which excludes fuel surcharge, was $119.1 million compared
to $96.0 million for the 2017 period. The Company reported net income of
$2.5 million, or $0.31 per diluted share for the second quarter 2018,
compared to a net loss of ($2.8) million, or ($0.35) per diluted share,
for the same quarter in 2017. The Company's second quarter 2018
consolidated operating ratio was 96.8%, compared to 102.8% in the
comparable 2017 quarter.

President and CEO James Reed commented, "USA Truck maintained momentum
through the second quarter of 2018, delivering the fourth consecutive
quarter of consolidated profitability, as well as producing positive
operating income in both the Trucking and Logistics segments. Our
trucking operations generated impressive year-over-year and sequential
progress in our most critical metric, revenue per truck per week, which
was a key contributing factor in our Trucking segment's operating ratio
improvement of 930 basis points year over year and 310 basis points
sequentially. Our continued focus on strengthening strategic customer
relationships, adding density to our network, and providing strong
customer service has also led to new dedicated opportunities which we
expect will enhance utilization and be accretive to the bottom line. We
remain focused on seating trucks, improving base revenue per available
tractor per week and increasing volume in our USAT Logistics segment. We
believe increased performance in these areas will continue to deliver on
our goals of continued improvement in our consolidated results and
maximizing shareholder value."

Trucking: For the second quarter of 2018, Trucking operating
revenue increased $14.0 million, or 19.6%, to $85.6 million, compared to
the second quarter of 2017. This increase was primarily due to a 21.7%
increase in base revenue per loaded mile. Trucking operating income was
$2.2 million for the 2018 period, reflecting an operating ratio of
97.5%, compared to a ($4.8) million operating loss and an operating
ratio of 106.8% for the comparable 2017 period. This represents an
improvement of $7.0 million year-over-year in operating income and a 930
basis point improvement in operating ratio.

Trucking operations showed the following during the second quarter 2018:

  • Base revenue per available tractor per week increased $564 per week,
    or 19.5%, when compared to the second quarter of 2017, and increased
    $203 per week, or 6.3% sequentially over the first quarter of 2018.
  • Base revenue per loaded mile increased 21.7% to $2.145 for second
    quarter 2018 from $1.762 in second quarter 2017. This continues a
    trend of sequential and year-over-year increases that began mid-2017
    with focused network and rate improvement efforts.
  • Loaded miles per available tractor per week decreased 29 miles per
    tractor, or 1.8%, when compared to the second quarter of 2017, and
    decreased 8 miles per tractor, or 0.5%, sequentially over the first
    quarter of 2018. Deadhead percentage for second quarter 2018 increased
    70 basis points year-over-year and 80 basis points sequentially over
    the first quarter of 2018. We expected these impacts from the
    intentional, targeted shifts in our freight mix that favorably
    contributed to yield increases in overall revenue per truck per week,
    which we believe is our most critical metric.
  • Average unseated tractor percentage for second quarter 2018 was 6.7%,
    which represents an improvement of 130 basis points year-over-year and
    60 basis points sequentially over the first quarter of 2018. The
    average seated tractor count for the second quarter of 2018 was 1,558,
    which represented a 1.6% decrease compared to our second quarter 2017
    average of 1,584.

USAT Logistics: Operating revenue increased 39.1%, or $14.0
million year-over-year to $49.8 million for the second quarter of 2018,
and increased 7.6%, or $3.5 million sequentially over first quarter
2018. Operating income increased $0.3 million, or 15.0% year-over-year
and decreased $0.7 million, or 24.4% sequentially, which was a direct
result of continuing to service our contractual freight while striving
to mitigate higher market-based purchased transportation costs, as
opposed to abandoning commitments and purely pursuing spot market
transactions. We believe building a strategic partnership with our core
customers will enable USAT Logistics to grow volume and market share
over the long term.

  • Gross margin percentage for the second quarter of 2018 decreased to
    15.1% from 18.5% when compared to the same quarter in 2017, and
    decreased 190 basis points sequentially from 17.0% for the first
    quarter of 2018.
  • Revenue per load increased 31.7%, or $399 per load, year-over-year,
    and decreased 5.0%, or $88 per load, over first quarter of 2018.

Segment Results
The following table includes key operating
results and statistics by reportable segment:

    Three Months Ended     Six Months Ended
June 30, June 30,
Trucking: 2018     2017 2018     2017
Operating revenue (in thousands) $ 85,569 $ 71,545 $ 164,302 $ 141,825
Operating income (loss) (in thousands) (1) $ 2,153 $ (4,843 ) $ 1,689 $ (11,971 )
Operating ratio (2) 97.5 % 106.8 % 99.0 % 108.4 %
Adjusted operating ratio (3) 97.1 % 107.6 % 98.9 % 109.2 %
Total miles (in thousands) (4) 39,560 40,833 78,103 81,283
Deadhead percentage (5) 13.5 % 12.8 % 13.1 % 13.0 %
Base revenue per loaded mile $ 2.145 $ 1.762 $ 2.078 $ 1.751
Average number of seated tractors (6) 1,558 1,584 1,546 1,573
Average number of available tractors (7) 1,638 1,672 1,628 1,663
Average number of in-service tractors (8) 1,668 1,722 1,661 1,713
Loaded miles per available tractor per week 1,608 1,637 1,612 1,644
Base revenue per available tractor per week $ 3,449 $ 2,885 $ 3,350 $ 2,879
Average loaded miles per trip 522 560 532 569
 
USAT Logistics:
Operating revenue (in thousands) $ 49,812 $ 35,813 $ 96,092 $ 67,203
Operating income (in thousands) (1) $ 2,158 $ 1,877 $ 5,014 $ 2,606
Gross margin (in thousands) (9) $ 7,513 6,620 15,397 11,979
Gross margin percentage (10) 15.1 % 18.5 % 16.0 % 17.8 %
 
        (1)     Operating income (loss) is calculated by deducting operating
expenses from operating revenue.
(2) Operating ratio is calculated as operating expenses as a percentage
of operating revenue.
(3)

Adjusted operating ratio is calculated as operating expenses less
restructuring, impairment and other costs, and severance costs
included in salaries, wages and employee benefits, net of fuel
surcharge revenue, as a percentage of operating revenue excluding
fuel surcharge revenue(a).

(4) Total miles include both loaded and empty miles.
(5) Deadhead percentage is calculated by dividing empty miles into total
miles.
(6) Seated tractors are those occupied by a driver, both
Company-operated and independent contractor.
(7) Available tractors are all those Company tractors that are available
to be dispatched, including available unseated tractors, and our
independent contractor fleet.
(8) In-service tractors include all of the tractors in the Company
fleet, including Company-operated tractors and independent
contractors.
(9) Gross margin is calculated by deducting purchased transportation
expense from USAT Logistics operating revenue.
(10) Gross margin percentage is calculated as gross margin divided by
USAT Logistics operating revenue.
 

Balance Sheet and Liquidity
As of June 30, 2018, total debt
and capital lease obligations was $90.3 million, total debt and capital
lease obligations, net of cash ("Net Debt")(a), was $90.3
million and total stockholders' equity was $70.1 million. Net Debt to
Adjusted EBITDA(a) for the trailing twelve months improved to
2.1x from 2.6x at March 31, 2018 and a high of 6.4x at June 30, 2017.
The Company had approximately $68.2 million available to borrow under
its credit facility as of June 30, 2018.

Second Quarter 2018 Conference Call Information
USA Truck
will hold a conference call to discuss its second quarter 2018 results
on Friday, July 27, 2018 at 8:00 AM CT / 9:00 AM ET. To participate in
the call, please dial 1-844-824-3828 (U.S./Canada) or 1-412-317-5138
(International). A live webcast of the conference call will be broadcast
in the Investor Relations section of the Company's website www.usa-truck.com,
under the "Events & Presentations" tab of the "Investor Relations" menu.
For those who cannot listen to the live broadcast, the presentation
materials and an audio replay of the call will be available at our
website, www.usa-truck.com,
under the "Events & Presentations" tab of the "Investor Relations" menu,
or may be accessed using the following link: https://services.choruscall.com/links/usak180427.html.
A telephone replay of the call will also be available through August 3,
2018, and may be accessed by calling 1-877-344-7529 (U.S.),
1-855-669-9658 (Canada), or 1-412-317-0088 (International) and by
referencing conference ID #10121309.

(a) About Non-GAAP Financial Information
In
addition to our GAAP results, this press release also includes certain
non-GAAP financial measures, as defined by the SEC. The terms base
revenue, "Net Debt", "EBITDA", "Adjusted EBITDA", "Adjusted operating
ratio", "Adjusted net income", and "Adjusted earnings (loss) per diluted
share", as we define them, are not presented in accordance with GAAP.

The Company defines Net Debt as total debt, including insurance premium
financing and capital lease obligations, net of cash. The Company
defines EBITDA as net income (loss), plus interest expense net of
interest income, provision for income tax expense (benefit) and
depreciation and amortization. The Company defines Adjusted EBITDA as
EBITDA plus non-cash equity compensation, restructuring, impairment and
other costs, and severance costs included in salaries, wages and
employee benefits. Adjusted operating ratio is calculated as operating
expenses less restructuring, impairment and other costs and severance
costs included in salaries, wages and employee benefits, net of fuel
surcharge revenue, as a percentage of operating revenue excluding fuel
surcharge revenue. Adjusted net income is defined as net income (loss)
less restructuring, impairment and other costs and severance costs
included in salaries, wages and employee benefits. Adjusted earnings
(loss) per diluted share is defined as earnings (loss) per share plus
the per-share impact of restructuring, impairment and other costs, and
severance costs included in salaries, wages and employee benefits, plus
or minus the per share tax impact of those adjustments using a statutory
income tax rate. The per-share impact of each item is determined by
dividing it by the weighted average diluted shares outstanding. These
financial measures supplement our GAAP results in evaluating certain
aspects of our business. We believe that using these measures improves
comparability in analyzing our performance because they remove the
impact of items from our operating results that, in our opinion, do not
reflect our core operating performance. Management and the board of
directors focus on Net Debt, EBITDA, Adjusted EBITDA, Adjusted operating
ratio, Adjusted net income, and Adjusted earnings (loss) per diluted
share as key measures of our performance, all of which are reconciled to
the most comparable GAAP financial measures and further discussed below.
We believe our presentation of these non-GAAP financial measures is
useful to investors and other users because it provides them the same
information that we use internally for purposes of assessing our core
operating performance.

Net Debt, EBITDA, Adjusted EBITDA, Adjusted operating ratio, Adjusted
net income, and Adjusted earnings (loss) per diluted share are not
substitutes for their comparable GAAP financial measures, such as net
income, cash flows from operating activities, operating margin ratio,
diluted earnings per share, or other measures prescribed by GAAP. There
are limitations to using non-GAAP financial measures. Although we
believe that they improve comparability in analyzing our period to
period performance, they could limit comparability to other companies in
our industry if those companies define these measures differently.
Because of these limitations, our non-GAAP financial measures should not
be considered measures of income generated by our business or
discretionary cash available to us to invest in the growth of our
business. Management compensates for these limitations by primarily
relying on GAAP results and using non-GAAP financial measures on a
supplemental basis.

Pursuant to the requirements of Regulation G and Regulation S-K, we have
provided reconciliations of EBITDA, Adjusted EBITDA, Adjusted operating
ratio, Adjusted net income, and Adjusted earnings (loss) per diluted
share to the most comparable GAAP financial measures at the end of this
press release.

Cautionary Statement Concerning Forward-Looking Statements
Financial
information in this press release is preliminary and based upon
information available to the Company as of the date of this press
release. As such, this information remains subject to the completion of
our quarterly review procedures, and the filing of the related Quarterly
Report on Form 10-Q, which could result in changes, some of which could
be material, to the preliminary information provided in this press
release.

This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements are made pursuant to the provisions of the
Private Securities Litigation Reform Act of 1995. These statements
generally may be identified by their use of terms or phrases such as
"seek," "expects," "estimates," "anticipates," "projects," "believes,"
"hopes," "plans," "goals," "intends," "may," "might," "likely," "will,"
"should," "would," "could," "potential," "predict," "continue,"
"strategy," "future" and terms or phrases of similar substance.
Forward-looking statements are based upon the current beliefs and
expectations of our management and are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified, which
could cause future events and actual results to differ materially from
those set forth in, contemplated by, or underlying the forward-looking
statements. Accordingly, actual results may differ materially from those
set forth in the forward-looking statements. Readers should review and
consider the factors that may affect future results and other
disclosures by the Company in its press releases, Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, and other filings with the
Securities and Exchange Commission. Any forward-looking statement speaks
only as of the date on which it is made. We disclaim any obligation to
update or revise any forward-looking statements to reflect actual
results or changes in the factors affecting the forward-looking
information, except as required by law. In light of these risks and
uncertainties, the forward-looking events and circumstances discussed in
this press release might not occur. All forward-looking statements
attributable to us, or persons acting on our behalf, are expressly
qualified in their entirety by this cautionary statement.

References to the "Company," "we," "us," "our" and words of similar
import refer to USA Truck, Inc. and its subsidiary.

About USA Truck
USA Truck provides comprehensive capacity
solutions to a broad and diverse customer base throughout North America.
Our Trucking and USAT Logistics divisions blend an extensive portfolio
of asset and asset-light services, offering a balanced approach to
supply chain management including customized truckload, dedicated
contract carriage, intermodal and third-party logistics freight
management services. For more information, visit usa-truck.com or usatlogistics.com.

This press release and related information will be available to
interested parties at our investor relations website, http://investor.usa-truck.com.

 
USA TRUCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
(UNAUDITED)
(in thousands, except per share data)
 
    Three Months Ended     Six Months Ended
June 30, June 30,
Revenue 2018     2017 2018     2017
Operating revenue $ 135,381   $ 107,358   $ 260,394   $ 209,028  
 
Operating expenses
Salaries, wages and employee benefits 31,645 29,221 63,882 59,860
Fuel and fuel taxes 13,984 10,479 27,463 21,253
Depreciation and amortization 7,477 6,879 14,657 14,523
Insurance and claims 5,341 5,561 10,943 13,893
Equipment rent 2,151 2,633 4,869 4,747
Operations and maintenance 8,913 7,950 16,874 14,521
Purchased transportation 55,817 41,005 104,855 78,408
Operating taxes and licenses 1,262 1,024 1,764 1,974
Communications and utilities 677 598 1,390 1,264
Gain on disposal of assets, net (395 ) (77 ) (564 ) (337 )
Restructuring, impairment and other costs (reversal) -- -- (639 ) --
Other   4,198     5,051     8,197     8,287  
Total operating expenses   131,070     110,324     253,691     218,393  
Operating income (loss)   4,311     (2,966 )   6,703     (9,365 )
 
Other expenses
Interest expense, net 833 950 1,651 1,953
Other, net   113     128     233     226  
Total other expenses, net   946     1,078     1,884     2,179  
Income (loss) before income taxes 3,365 (4,044 ) 4,819 (11,544 )
Income tax expense (benefit)   821     (1,198 )   1,240     (3,808 )
 
Consolidated net income (loss) and comprehensive income (loss) $ 2,544   $ (2,846 ) $ 3,579   $ (7,736 )
 
Net earnings (loss) per share
Average shares outstanding (basic)   8,205     8,028     8,141     8,028  
Basic earnings (loss) per share $ 0.31   $ (0.35 ) $ 0.44   $ (0.96 )
 
Average shares outstanding (diluted)   8,227     8,028     8,167     8,028  
Diluted earnings (loss) per share $ 0.31   $ (0.35 ) $ 0.44   $ (0.96 )
 
 
GAAP TO NON-GAAP RECONCILIATIONS
(UNAUDITED)

(dollar amounts in thousands, except per share amounts)

 

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION

 

 

   

Three Months Ended

6/30/2018     3/31/2018     12/31/2017     9/30/2017
Net income $ 2,544 $ 1,035 $ 14,822 $ 409
Add:
Depreciation and amortization 7,477 7,180 7,150 6,790
Income tax expense (benefit) 821 419 (10,291 ) 339
Interest expense, net   833   818     886     970  
 
EBITDA 11,675 9,452 12,567 8,508
Add:
Non-cash equity compensation

304

(136 ) 170 137
Severance costs in salaries, wages and employee benefits -- 711 -- 31
Restructuring, impairment and other costs (reversal)   --   (639 )   --     --  
 
Adjusted EBITDA $

11,979

$ 9,388   $ 12,737   $ 8,676  
 
 

ADJUSTED NET INCOME (LOSS) RECONCILIATION

 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Net income (loss) $ 2,544 $ (2,846 ) $ 3,579 $ (7,736 )
Adjusted for:
Severance costs included in salaries, wages and employee benefits -- -- 711 --
Restructuring, impairment and other costs (reversal) -- 82 (639 ) 899
Income tax expense (benefit) effect of adjustments   --   --     --     --  
Adjusted net income (loss) $ 2,544 $ (2,764 ) $ 3,651   $ (6,837 )
 
 

ADJUSTED EARNINGS (LOSS) PER DILUTED SHARE RECONCILIATION

 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Earnings (loss) per diluted share $ 0.31 $ (0.35 ) $ 0.44 $ (0.96 )
Adjusted for:
Severance costs in salaries, wages and employee benefits -- --

0.09

 

--
Restructuring, impairment and other costs (reversal)

 

-- 0.01

(0.08

)

0.11
Income tax expense (benefit) effect of adjustments   --   --     --     (0.04 )
Adjusted earnings (loss) per diluted share $ 0.31 $ (0.34 ) $ 0.45   $ (0.89 )
 
 

ADJUSTED OPERATING RATIO RECONCILIATION

(UNAUDITED)

(dollar amounts in thousands)

 
Consolidated     Three Months Ended     Six Months Ended
June 30, June 30,
2018     2017 2018     2017
Operating revenue $ 135,381 $ 107,358 $ 260,394 $ 209,028
Less:
Fuel surcharge revenue   16,274     11,320     31,008     23,162  
Base revenue   119,107     96,038     229,386     185,866  
Operating expense 131,070 110,324 253,691 218,393
Adjusted for:
Severance costs in salaries, wages and employee benefits -- (82 ) (711 ) (899 )
Restructuring, impairment and other costs (reversal) -- -- 639 --
Fuel surcharge revenue   (16,274 )   (11,320 )   (31,008 )   (23,162 )
Adjusted operating expense $ 114,796   $ 98,922   $ 222,611   $ 194,332  
Operating ratio 96.8 % 102.8 % 97.4 % 104.5 %
Adjusted operating ratio 96.4 % 103.0 % 97.0 % 104.6 %
 
 
Trucking Segment Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Revenue $ 85,685 $ 71,731 $ 164,531 $ 142,202
Less: intersegment eliminations   116     186     229     377  
Operating revenue 85,569 71,545 164,302 141,825
Less: fuel surcharge revenue   12,123     8,828     23,298     18,015  
Base revenue   73,446     62,717     141,004     123,810  
Operating expense 83,416 76,388 162,613 153,796
Adjusted for:
Severance costs in salaries, wages and employee benefits -- (56 ) (484 ) (642 )
Restructuring, impairment and other costs (reversal) -- -- 587 --
Fuel surcharge revenue   (12,123 )   (8,828 )   (23,298 )   (18,015 )
Adjusted operating expense $ 71,293   $ 67,504   $ 139,418   $ 135,139  
Operating ratio 97.5 % 106.8 % 99.0 % 108.4 %
Adjusted operating ratio 97.1 % 107.6 % 98.9 % 109.2 %
 
 

USAT Logistics Segment

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Revenue $ 50,616 $ 36,878 $ 97,391 $ 69,528
Less: intersegment eliminations   804     1,065     1,299     2,325  
Operating revenue 49,812 35,813 96,092 67,203
Less: fuel surcharge revenue   4,151     2,492     7,710     5,147  
Base revenue   45,661     33,321     88,382     62,056  
Operating expense 47,654 33,936 91,078 64,597
Adjusted for:
Severance costs in salaries, wages and employee benefits -- (26 ) (227 ) (257 )
Restructuring, impairment and other costs (reversal) -- -- 52 --
Fuel surcharge revenue   (4,151 )   (2,492 )   (7,710 )   (5,147 )
Adjusted operating expense $ 43,503   $ 31,418   $ 83,193   $ 59,193  
Operating ratio 95.7 % 94.8 % 94.8 % 96.1 %
Adjusted operating ratio 95.3 % 94.3 % 94.1 % 95.4 %
 
 

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share data)

 
    June 30,     December 31,
Assets 2018 2017
Current assets:
Cash $ 29 $ 71
Accounts receivable, net of allowance for doubtful accounts of $643
and $639, respectively
61,150 55,138
Other receivables 9,497 2,787
Inventories 415 458
Assets held for sale 2,451 112
Prepaid expenses and other current assets   5,256     6,025  
Total current assets   78,798     64,591  
Property and equipment:
Land and structures 31,847 31,452
Revenue equipment 227,431 252,484
Service, office and other equipment   26,522     26,209  
Property and equipment, at cost 285,800 310,145
Accumulated depreciation and amortization   (115,780 )   (122,329 )
Property and equipment, net 170,020 187,816
Other assets   1,332     1,448  
Total assets $ 250,150   $ 253,855  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 32,240 $ 24,332
Current portion of insurance and claims accruals 17,995 13,552
Accrued expenses 11,498 9,108
Current maturities of capital leases 8,014 12,929
Insurance premium financing   1,330     4,115  
Total current liabilities 71,077 64,036
Deferred gain 1,488 480
Long-term debt 54,950 61,225
Capital leases, less current maturities 25,994 29,216
Deferred income taxes 18,274 21,136
Insurance and claims accruals, less current portion   8,242     11,274  
Total liabilities 180,025 187,367
Stockholders' equity:
Preferred Stock, $0.01 par value; 1,000,000 shares authorized; none
issued
--
Common Stock, $0.01 par value; 30,000,000 shares authorized; issued
12,015,174 shares, and 12,142,391 shares, respectively
120 121
Additional paid-in capital 65,738 68,667
Retained earnings 69,039 65,460
Less treasury stock, at cost (3,702,444 shares, and 3,853,064
shares, respectively)
  (64,772 )   (67,760 )
Total stockholders' equity   70,125     66,488  
Total liabilities and stockholders' equity $ 250,150   $ 253,855  
 

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