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8-K - FORM 8-K - USA TRUCK INCusak20160503b_8k.htm

Exhibit 99.1

 

 

 

 

USA Truck Reports First Quarter 2016 Results

 

 

New management team moving forward to accelerate earnings improvement

 

Asset-light division rebranded USAT Logistics, reflecting strength of 3PL capabilities

 

Streamlining of network and overhead reductions drive $5.3 million, or $0.34 per share in costs

 

Adjusted 1Q 2016 EPS of $0.15 (a), before restructuring, impairment and other costs of $0.34, resulting in GAAP loss per share of $(0.19) for 1Q 2016, compared with $0.20 and $0.16 of adjusted and GAAP EPS, respectively, year over year

 

Van Buren, AR – May 5, 2016 – USA Truck, Inc. (NASDAQ: USAK), a leading capacity solutions provider headquartered in Van Buren, AR, today announced its financial results for the three months ended March 31, 2016.

 

President and CEO Randy Rogers commented, “The first quarter was marked by four notable achievements. First, we finished assembling the senior management team we expect to lead us into the future and took major strides toward mapping out our strategy internally. We now have installed a new Chief Executive Officer, President—Trucking, and President—Asset Light in the past six months, and we continue to benefit from the financial leadership and business experience of our CFO, who joined us in 2014. Second, we posted adjusted earnings per share of $0.15, which represented a solid achievement in a difficult freight market. Third, we continued to invest capital effectively by constraining fleet size, growing independent contractors, and repurchasing our shares. Fourth, we implemented significant network infrastructure changes to lighten our cost structure and move toward a more variable cost model.

 

“We have already made significant structural changes in our Trucking operations – which while absolutely necessary to drive long-term growth and shareholder value – are not without some level of short-term disruption and expense which we experienced during the first quarter of 2016. Importantly, during the quarter, we took the following actions that resulted in $5.3 million of restructuring, impairment and other costs:

   

 

Closed two additional maintenance facilities that were underutilized and inefficient, moving these costs from fixed to variable, as we made strides in balancing our network and adjusting our operational footprint. These actions bring the total number of maintenance facilities closed in the past six months to four, leaving four facilities remaining.

 

Shut down unnecessary drop yards, and the operations terminal in South Carolina, and removed unnecessary above ground fuel storage tanks.

 

Closed two unproductive asset-light branch offices and restructured around fewer, more efficient regional centers. We continue to maintain 10 asset-light regional offices.

 

Reduced staff department headcounts approximately 10%.

  

 
 

 

 

In addition to the items included above, we continued to make progress on our efforts to reduce costs, invest capital wisely, re-design core processes in operations and make better use of technology:

  

 

Reduced recruiting and advertising spending through re-alignment of orientation and training schedules and more efficient investment of our recruiting and onboarding dollars.

 

Significantly reduced capital spend in 2016 while maintaining an average tractor fleet age of approximately two years and an average trailer fleet age of approximately five years.

 

Increased our flexible independent contractor fleet by 15%. As a result, 14% of our Trucking capacity is asset-light covered by independent contractors.

 

Continued to refine the freight network with a focus on lane balance and profitability, customer service improvements, including billing and EDI efficiencies, and smarter use of technology in managing the network.

 

Mr. Rogers noted, “We are confident in our ability to make strides in safety/collision, maintenance, network optimization and other areas of efficiency as we work on essential process re-design and optimization this year. Our organization is engaged and showing tremendous resolve and commitment to changing the status quo to ensure success. With a new leadership team in place and a highly motivated organization, we expect improvements in our operating ratio and return on invested capital (‘ROIC’) as we progress through the year.

 

“By executing our plan we expect to achieve an improvement in Trucking’s adjusted operating ratio and set a target to improve by 200 basis points this year as compared to full-year 2015. Excluding gains on the sale of equipment, we expect Trucking adjusted operating ratio improvement of as much as 410 basis-points as compared with 2015. We believe we now have a clear line of sight to operating our Trucking business at or below a 90% adjusted operating ratio by the fourth quarter of 2017.”

 

“During the quarter, we also made progress in refining our strategy to significantly increase the contribution of our asset light business, which we have rebranded as USAT Logistics to better reflect the full 3PL capabilities within USA Truck. USAT Logistics is working hand in hand with our Trucking division to make better use of our owned assets to further improve utilization, reduce empty miles and provide a valuable outlet at times when discounted capacity is needed to further balance the Trucking network. At the same time, Trucking is now more closely connected to Logistics, taking full advantage of the flexibility Logistics provides with respect to providing expanded capacity and geographic diversity for our customer base.”

 

Mr. Rogers concluded, “We believe our franchise is uniquely positioned to benefit from further optimization given our average length of haul, geographic footprint and service characteristics. Our team is fully committed and engaged in accelerating the pace of change and we will be accountable for strengthening the quality of the Company’s earnings and increasing ROIC to an acceptable level for our shareholders.”

 

Three-Month Financial Results

Consolidated base revenue was $102.0 million for the quarter ended March 31, 2016, compared to $115.5 million for the same quarter of 2015. Consolidated net loss was ($1.8) million, or a ($0.19) per diluted share, for the first quarter of 2016, compared to a net income of $1.6 million, or $0.16 per diluted share, for the same quarter of 2015. Included in loss per diluted share for the first quarter 2016 was $5.3 million, or $0.34, net-of-tax, per diluted share relating to restructuring, impairment and other costs. Included in earnings per share for the first quarter of 2015 was $0.8 million, or $0.04, net-of-tax, per diluted share related to loss on debt extinguishment. Adjusted consolidated earnings per diluted share was $0.15 for the first quarter of 2016, and $0.20 per diluted share, for the same quarter of 2015.

 

 
 

 

 

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

  

   

Three Months Ended

 
   

March 31,

 
   

2016

   

2015

 
   

(unaudited)

 

Trucking:

               

Operating revenue (in thousands)

  $ 75,702     $ 95,787  

Operating (loss) income (in thousands) (1)

  $ (4,369 )   $ 1,550  

Adjusted operating ratio (2)

    99.3

%

    98.1

%

Total miles (in thousands) (3)

    43,872       50,592  

Deadhead percentage (4)

    12.4

%

    12.0

%

Base revenue per loaded mile

  $ 1.793     $ 1.832  

Average number of in-service tractors (5)

    1,814       2,178  

Average number of seated tractors (6)

    1,758       1,988  

Average miles per seated tractor per week

    1,920       1,979  

Base revenue per seated tractor per week

  $ 3,014     $ 3,190  

Average loaded miles per trip

    563       616  
                 

USAT Logistics:

               

Operating revenue (in thousands)

  $ 34,916     $ 37,100  

Operating income (in thousands) (1)

  $ 2,006     $ 2,976  

Net revenue (in thousands) (7)

    6,718       6,741  

Gross margin percentage (8)

    18.7

%

    17.4

%


 

(1)

Operating income (loss) is calculated by deducting operating expenses from operating revenues.

 

(2)

Adjusted operating ratio is calculated as operating expenses less Restructuring, impairment and other costs, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue. See GAAP to non-GAAP reconciliation below.

 

(3)

Total miles include both loaded and empty miles.

 

(4)

Deadhead percentage is calculated by dividing empty miles into total miles.

 

(5)

Tractors include company-operated tractors in service, plus tractors operated by independent contractors.

 

(6)

Seated tractors are those occupied by drivers.

 

(7)

Net revenue is calculated by taking revenue less purchased transportation.

 

(8)

Gross margin percentage is calculated by taking revenue less purchased transportation expense and dividing that amount by revenue. This calculation includes intercompany revenues and expenses.

 

Balance Sheet and Liquidity

Executive Vice President and CFO Michael Borrows said, “With a strong balance sheet and approximately $82 million in available liquidity under our revolving line of credit, USA Truck has the resources to invest in our people, assets, and technology. In addition, we intend to continue to evaluate ways to increase shareholder returns, whether through the recently approved two million share repurchase program approved by our Board of Directors, investments in new business opportunities or acquisitions, or allocating capital to our business units that are best positioned to drive further value creation to our stakeholders.”

 

During the first quarter of 2016, USA Truck repurchased 445,432 shares of common stock (4.7% of total shares outstanding) under its repurchase authorizations at a weighted average price of $16.82 per share for an aggregate purchase price of $7.5 million.

 

As of March 31, 2016, our total debt and capital lease obligations, net of cash (“Net Debt”), was $103.9 million and our stockholders’ equity was $84.6 million. Net Debt to Adjusted EBITDA(a) increased year-over-year to 1.8x compared with 1.6x as of December 31, 2015.

 

 
 

 

 

First-Quarter 2016 Conference Call Information 

USA Truck will hold a conference call to discuss its first-quarter 2016 results on May 5, 2016 at 8:00 AM CT / 9:00 AM ET. To participate in the call, please dial 1-866-652-5200 (U.S./Canada) or 1-412-317-6060 (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 “Investors” menu. A telephone replay of the call will also be available through Friday, May 13, 2016, and may be accessed by calling 1-877-344-7529 (U.S.) or 412-317-0088 and by referencing conference ID #10083783.

 

(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 “EBITDA”, “Adjusted EBITDA”, “Adjusted operating ratio”, and “Adjusted earnings per diluted share”, as we define them, are not presented in accordance with GAAP.

 

The Company defines EBITDA as net income (loss), plus interest expense net of interest income, provision for income taxes and depreciation and amortization. It defines Adjusted EBITDA as these items plus non-cash equity compensation, loss on extinguishment of debt, restructuring, impairment and other costs. Adjusted operating ratio is calculated as operating expenses less restructuring, impairment and other costs, net of fuel surcharges, as a percentage of operating revenue excluding fuel surcharge revenue. Adjusted earnings per diluted share is defined as earnings or loss before income taxes plus loss on extinguishment of debt, and restructuring, impairment and other costs reduced by our statutory income tax rate, divided by 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 EBITDA, Adjusted EBITDA, Adjusted operating ratio and Adjusted earnings 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 because it provides investors and securities analysts the same information that we use internally for purposes of assessing our core operating performance.

 

EBITDA, Adjusted EBITDA, Adjusted operating ratio and Adjusted earnings per diluted share are not substitutes for their comparable GAAP financial measures, such as net income, cash flows from operating activities, operating margin, 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, we have provided reconciliations of EBITDA, Adjusted EBITDA, Adjusted earnings per diluted share and Adjusted operating ratio to 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 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 “expects,” “estimates,” “anticipates,” “projects,” “believes,” “plans,” “goals,” “intends,” “may,” “will,” “should,” “could,” “potential,” “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 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. 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 is a capacity solutions provider of transportation and logistics services that include truckload, dedicated contract carriage, intermodal and brokerage spot market throughout the continental United States, Mexico and Canada.

 

This press release and related information will be available to interested parties at our website, www.usa-truck.com, under the “Financial Releases” tab of the “Investor Relations” menu.

 

Company Contact

Michael Borrows, EVP & CFO

USA Truck, Inc.

(479) 471-3523

Michael.Borrows@usa-truck.com 

 

Investor Relations Contact

Harriet Fried / Jody Burfening

LHA

(212) 838-3777

hfried@lhai.com

 

 
 

 

 

USA TRUCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands, except per share data)

 

   

Three Months Ended

 
   

March 31,

 
   

2016

   

2015

 

Revenue:

               

Operating revenue

  $ 110,618     $ 132,887  
                 

Operating expenses:

               

Salaries, wages and employee benefits

    32,573       37,872  

Fuel and fuel taxes

    10,189       17,978  

Depreciation and amortization

    7,272       10,802  

Insurance and claims

    4,768       6,194  

Equipment rents

    1,860       783  

Operations and maintenance

    9,213       10,291  

Purchased transportation

    36,403       38,770  

Operating taxes and licenses

    1,122       1,320  

Communications and utilities

    880       863  

Gain on disposal of assets, net

    (396 )     (503 )

Restructuring, impairment and other costs

    5,264       --  

Other

    3,833       3,991  

Total operating expenses

    112,981       128,361  

Operating (loss) income

    (2,363 )     4,526  
                 

Other expenses:

               

Interest expense, net

    565       630  

Loss on extinguishment of debt

    --       750  

Other, net

    203       202  

Total other expenses, net

    768       1,582  

Income (loss) before income taxes

    (3,131 )     2,944  

Income tax (benefit) expense

    (1,324 )     1,309  
                 

Net (loss) income and comprehensive (loss) income

  $ (1,807 )   $ 1,635  
                 

Net income (loss) per share:

               

Average shares outstanding (basic)

    9,381       10,395  

Basic (loss) earnings per share

  $ (0.19 )   $ 0.16  
                 

Average shares outstanding (diluted)

    9,381       10,516  

Diluted (loss) earnings per share

  $ (0.19 )   $ 0.16  

 

 
 

 

 

GAAP TO NON-GAAP RECONCILIATIONS

(UNAUDITED)

(in thousands)

 

   

Three Months Ended

 
   

March 31,

 
   

2016

   

2015

 
                 

GAAP net (loss) income

  $ (1,807 )   $ 1,635  

Add:

               

Income tax (benefit) expense

    (1,324 )     1,309  

Interest, net

    565       630  

Depreciation and amortization

    7,272       10,802  
                 

EBITDA

  $ 4,706     $ 14,376  

Add:

               

Restructuring, impairment and other costs

    5,264       --  

Non-cash equity compensation

    131       226  

Loss on debt extinguishment

    --       750  
                 

Adjusted EBITDA

  $ 10,101     $ 15,352  

 

 

 

ADJUSTED (LOSS) EARNINGS PER SHARE RECONCILIATION

 

   

Three Months Ended

 
   

March 31,

 
   

2016

   

2015

 
                 

(Loss) earnings per diluted share

  $ (0.19 )   $ 0.16  

Adjusted for:

               

Loss on debt extinguishment, net of tax

    --       0.04  

Restructuring, impairment and other costs, net of tax

    0.34       --  

Adjusted earnings per diluted share

  $ 0.15     $ 0.20  

  

 
 

 

 

ADJUSTED OPERATING RATIO RECONCILIATION

 

 

Trucking Segment

 

Three Months Ended

 
   

March 31,

 
   

2016

   

2015

 

Revenue

  $ 76,036     $ 96,402  

Less: intersegment eliminations

    334       615  

Operating revenue

    75,702       95,787  

Less: fuel surcharge revenue

    6,821       14,243  

Base revenue

    68,881       81,544  

Operating expense

    80,071       94,237  

Adjusted for:

               

Restructuring, impairment and other costs

    (4,848 )     --  

Fuel surcharge revenue

    (6,821 )     (14,243 )

Adjusted operating expense

  $ 68,402     $ 79,994  

Operating ratio

    105.8

%

    98.4

%

Adjusted operating ratio

    99.3

%

    98.1

%

 

 

USAT Logistics Segment

 

Three Months Ended

 
   

March 31,

 
   

2016

   

2015

 

Revenue

  $ 35,911     $ 38,671  

Less: intersegment eliminations

    995       1,571  

Operating revenue

    34,916       37,100  

Less: fuel surcharge revenue

    1,780       3,175  

Base revenue

    33,136       33,925  

Operating expense

    32,910       34,124  

Adjusted for:

               

Restructuring, impairment and other costs

    (416 )     --  

Fuel surcharge revenue

    (1,780 )     (3,175 )

Adjusted operating expense

  $ 30,714     $ 30,949  

Operating ratio

    94.3

%

    92.0

%

Adjusted operating ratio

    92.7

%

    91.2

%

 

 
 

 

 

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

   

March 31,

   

December 31,

 
   

2016

   

2015

 

Assets

               

Current assets:

               

Cash

  $ 1,403     $ 87  

Accounts receivable, net of allowance for doubtful accounts of $870 and $608, respectively

    56,260       53,324  

Other receivables

    3,678       5,094  

Inventories

    457       748  

Assets held for sale

    5,229       7,979  

Income taxes receivable

    8,485       6,159  

Prepaid expenses and other current assets

    5,745       4,876  

Total current assets

    81,257       78,267  

Property and equipment:

               

Land and structures

    33,480       32,910  

Revenue equipment

    286,020       289,045  

Service, office and other equipment

    22,628       22,156  

Property and equipment, at cost

    342,128       344,111  

Accumulated depreciation and amortization

    (136,894 )     (137,327 )

Property and equipment, net

    205,234       206,784  

Other assets

    1,350       1,405  

Total assets

  $ 287,841     $ 286,456  

Liabilities and Stockholders’ Equity

               

Current liabilities:

               

Accounts payable

  $ 25,220     $ 24,473  

Current portion of insurance and claims accruals

    10,589       10,706  

Accrued expenses

    13,997       8,836  

Current maturities of capital leases

    16,375       12,190  

Total current liabilities

    66,181       56,205  

Deferred gain

    660       701  

Long-term debt, less current maturities

    75,900       70,400  

Capital leases, less current maturities

    13,003       18,845  

Deferred income taxes

    38,962       37,943  

Insurance and claims accruals, less current portion

    8,585       8,585  

Total liabilities

    203,291       192,679  

Commitments and contingencies

               

Stockholders’ equity:

               

Preferred Stock, $.01 par value; 1,000,000 shares authorized;

           

Common Stock, $.01 par value; 30,000,000 shares authorized; issued 12,125,170 shares and 11,946,253 shares, respectively

    121       119  

Additional paid-in capital

    67,443       67,370  

Retained earnings

    64,064       65,871  

Less treasury stock, at cost (2,727,664 shares and 2,268,608 shares, respectively)

    (47,078 )     (39,583 )

Total stockholders’ equity

    84,550       93,777  

Total liabilities and stockholders’ equity

  $ 287,841     $ 286,456