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8-K - FORM 8-K - USA TRUCK INCusak20171102_8k.htm

Exhibit 99.1

 

 

USA Truck Reports Third Quarter 2017 Results

 

 

3Q17 net income of $0.4 million, or $0.05 per diluted share, versus 3Q16 net loss of ($0.7) million, or ($0.09) per diluted share; first profitable quarter since 2015

 

3Q17 consolidated operating revenue increased 8.3% to $114.2 million from $105.5 million in 3Q16; first positive year-over-year change in quarterly revenue since 2014

 

Sequential progress in key measures during 3Q17, including base revenue per loaded mile, base revenue per seated tractor, deadhead percentage, and average unseated tractor count

 

Company expects sequential and year-over-year improved financial performance in 4Q17

 

Van Buren, AR November 2, 2017USA Truck, Inc. (NASDAQ: USAK), a leading capacity solutions provider, today announced its financial results for the three and nine months ended September 30, 2017.

 

For the quarter ended September 30, 2017, consolidated operating revenue was $114.2 million compared to $105.5 million for the prior year period. Base revenue, which excludes fuel surcharge revenue, was $102.4 million compared to $94.7 million for the 2016 period. The Company reported net income of $0.4 million, or $0.05 per diluted share for the third quarter of 2017, compared to a net loss of ($0.7) million, or ($0.09) per diluted share, for the same quarter in 2016. The Company’s third quarter 2017 consolidated operating ratio was 98.4%, improved from 100.0% in the third quarter 2016.

 

President and CEO James Reed commented, “We believe these results show that we are capable of making and keeping our commitments to progress. I personally thank the whole team at USA Truck for their shared commitment to these results. We expect to improve results through disciplined network management and pricing, enhanced partnership with customers, and improved execution in our day-to-day operations, in conjunction with our ongoing safety initiatives. While we are pleased to report positive net income, it is important for all of us to recognize that the turnaround is still in its beginning stages and our expectations are for further improvement throughout 2018.”

 

Trucking: For the third quarter of 2017, Trucking operating revenue increased $3.1 million, or 4.2%, year-over-year, to $76.5 million, compared to third quarter of 2016.  This was primarily due to a 7.6% increase in base revenue per loaded mile, partially offset by a 4.2% decrease in loaded miles.  Trucking operating loss was ($1.2) million for the 2017 period compared to ($1.5) million for the 2016 period.  This loss was primarily driven by the combination of rising fuel costs throughout the quarter, elevated driver recruiting expenses, and underutilization of our tractors relative to desired levels; however, these headwinds were offset by our improving yield, as we continue to work on refining the network.

 

We remain intensely focused on improving Trucking operating results, and driving operational improvements with the goal of positioning us for long-term success. The following areas are specific areas of focus for our Trucking operations:

 

 

Yield improvements: We have seen our base rate per loaded mile increase 7.6% to $1.856 in 3Q17 from $1.725 in 3Q16 and a 5.3% increase sequentially over 2Q17, indicating that our network engineering initiatives have begun to take hold. The hurricanes in Texas and Florida positively impacted this rate increase by approximately $0.01, primarily due to repositioning of empty trucks related to the freight imbalance in the affected areas.

 

 

Base revenue per seated tractor increased $130 per week, or 4.3% when compared to 3Q16, and $81 per week, or 2.7% when compared to 2Q17.

 

 

 

 

 

Miles per seated tractor per week decreased 82 miles per tractor, or 4.1%, when compared to 3Q16, and 63 miles per tractor, or 3.2%, sequentially over 2Q17. However, deadhead percentage for 3Q17 improved by 90 basis points when compared to 3Q16 and 50 basis points sequentially over 2Q17.

 

 

Seated tractors: Our average unseated tractor percentage for 3Q17 was 6.5%, which represents a 150 basis point sequential improvement. The average seated tractor count was 1,628, which represented a 5.2% increase over our 4Q16 average of 1,547. The driver market continues to be challenging, and remains a significant area of emphasis throughout the organization.

 

Drive gross margin of USAT Logistics: USAT Logistics operational performance continued to improve throughout 3Q17. Operating revenue was $37.8 million, up 17.7% versus 3Q16 and up 5.5% sequentially over 2Q17. Gross margin increased 130 basis points to 20.2% compared to 18.9% in 3Q16. USAT Logistics saw higher quarterly volumes when compared to the same period last year, driven primarily by increased spot market freight due to favorable movement in industry demand relative to capacity. While this market dynamic has been a positive one for USAT Logistics, we remain committed to our plan of building strong long-term customer relationships through superior service and competitive pricing.

 

Segment Results

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

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 

 

 

2017

   

2016

   

2017

   

2016

 

Trucking:

                               

Operating revenue (in thousands)

  $ 76,450     $ 73,367     $ 218,275     $ 224,573  

Operating loss (in thousands) (1)

  $ (1,194 )   $ (1,505 )   $ (13,165 )   $ (8,607 )

Operating ratio (2)

    101.6

%

    102.1

%

    106.0

%

    103.8

%

Adjusted operating ratio (3)

    101.8

%

    102.3

%

    106.6

%

    101.5

%

Total miles (in thousands) (4)

    41,081       43,365       122,365       132,216  

Deadhead percentage (5)

    12.3

%

    13.2

%

    12.8

%

    12.8

%

Base revenue per loaded mile

  $ 1.856     $ 1.725     $ 1.787     $ 1.743  

Average number of in-service tractors (6)

    1,742       1,742       1,722       1,797  

Average number of seated tractors (7)

    1,628       1,648       1,591       1,717  

Average miles per seated tractor per week

    1,920       2,002       1,972       1,967  

Base revenue per seated tractor per week

  $ 3,127     $ 2,997     $ 3,074     $ 2,992  

Average loaded miles per trip

    546       590       561       582  
                                 

USAT Logistics:

                               

Operating revenue (in thousands)

  $ 37,785     $ 32,091     $ 104,988     $ 101,391  

Operating income (in thousands) (1)

  $ 2,998     $ 1,547     $ 5,604     $ 5,729  

Gross margin (in thousands) (8)

  $ 7,619     $ 6,050     $ 19,598     $ 19,481  

Gross margin percentage (9)

    20.2

%

    18.9

%

    18.7

%

    19.2

%

 

(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. See GAAP to non-GAAP reconciliations below.

(4)

Total miles include both loaded and empty miles.

(5)

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

(6)

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

(7)

Seated tractors are those occupied by drivers.

(8)

Gross margin is calculated by deducting purchased transportation expense from USAT Logistics operating revenue.

(9)

Gross margin percentage is calculated gross margin divided by USAT Logistics operating revenue.

 

 

 

 

   

Three Months Ended

 
   

9/30/2017

   

6/30/2017

   

3/31/2017

   

12/31/2016

   

9/30/2016

 

Base loaded rate per mile

  $ 1.856     $ 1.762     $ 1.740     $ 1.754     $ 1.725  

 

Balance Sheet and Liquidity

As of September 30, 2017, our total debt and capital lease obligations was $120.9 million, our total debt and capital lease obligations, net of cash (“Net Debt”), was $120.7 million and our stockholders’ equity was $51.5 million. Net Debt to Adjusted EBITDA(a) decreased sequentially to 5.8x compared with 6.4x as of June 30, 2017. The Company had approximately $45.4 million available under its credit facility as of September 30, 2017. The Company anticipates a modest capital expenditure plan for the remainder of 2017; therefore, we expect free cash flow will be directed toward the repayment of debt.

 

Third Quarter 2017 Conference Call Information

USA Truck will hold a conference call to discuss its third quarter 2017 results on November 3, 2017 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. A telephone replay of the call will also be available through November 10, 2017, 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 #10113231.

 

(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”, 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 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, impairments on assets held for sale, 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 earnings (loss) per diluted share is defined as net income (loss) per share plus the per share impact of restructuring, impairment and other, and severance costs included in salaries, wages and employee benefits, less 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 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 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 and Adjusted earnings (loss) per diluted share 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,” “hopes,” “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, 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.

 

 

Company Contact

USA Truck, Inc.

Jason Bates, EVP & CFO

(479) 471-2672

jason.bates@usa-truck.com

 

Jimmie Acklen, Investor Relations

(479) 471-3430

jimmie.acklen@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

   

Nine Months Ended

 
   

September 30,

   

September 30,

 

 

 

2017

   

2016

   

2017

   

2016

 

Revenue

                               

Operating revenue

  $ 114,235     $ 105,458     $ 323,263     $ 325,964  
                                 

Operating expenses

                               

Salaries, wages and employee benefits

    29,813       29,131       89,674       92,332  

Fuel and fuel taxes

    11,759       10,932       33,012       32,512  

Depreciation and amortization

    6,790       7,411       21,313       22,282  

Insurance and claims

    5,344       5,620       19,236       15,826  

Equipment rent

    2,703       1,861       7,449       5,582  

Operations and maintenance

    8,259       8,170       22,780       27,682  

Purchased transportation

    42,543       37,218       120,951       111,650  

Operating taxes and licenses

    972       1,003       2,946       3,384  

Communications and utilities

    679       673       1,943       2,404  

Gain on disposal of assets, net

    (215 )     (181 )     (551 )     (759 )

Restructuring, impairment and other costs

    --       --       --       5,264  

Other

    3,784       3,578       12,071       10,683  

Total operating expenses

    112,431       105,416       330,824       328,842  

Operating income (loss)

    1,804       42       (7,561 )     (2,878 )
                                 

Other expenses

                               

Interest expense, net

    970       913       2,922       2,209  

Other, net

    86       87       311       423  

Total other expenses, net

    1,056       1,000       3,233       2,632  

Income (loss) before income taxes

    748       (958 )     (10,794 )     (5,510 )

Income tax expense (benefit)

    339       (224 )     (3,469 )     (1,623 )
                                 

Net income (loss) and comprehensive income (loss)

  $ 409     $ (734 )   $ (7,325 )   $ (3,887 )
                                 

Net earnings (loss) per share

                               

Average shares outstanding (basic)

    8,027       8,069       8,029       8,736  

Basic earnings (loss) per share

  $ 0.05     $ (0.09 )   $ (0.91 )   $ (0.44 )
                                 

Average shares outstanding (diluted)

    8,039       8,069       8,029       8,736  

Diluted earnings (loss) per share

  $ 0.05     $ (0.09 )   $ (0.91 )   $ (0.44 )

 

 

 

 

GAAP TO NON-GAAP RECONCILIATIONS

(UNAUDITED)

(dollar amounts in thousands, except per share amounts)

 

ADJUSTED EARNINGS (LOSS) BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION  

 

 

    Three Months Ended  
   

9/30/2017

   

6/30/2017

   

3/31/2017

   

12/31/2016

 

Net income (loss)

  $ 409     $ (2,846 )   $ (4,890 )   $ (3,812 )

Add:

                               

Depreciation and amortization

    6,790       6,879       7,644       7,672  

Income tax expense (benefit)

    339       (1,198 )     (2,610 )     (1,896 )

Interest expense, net

    970       950       1,003       969  
                                 

EBITDA

    8,508       3,785       1,147       2,933  

Add:

                               

Non-cash equity compensation

    137       131       21       281  

Impairment on assets held for sale

    --       --       --       2,839  

Severance costs included in salaries, wages and employee benefits

    31       82       817       142  
                                 

Adjusted EBITDA

  $ 8,676     $ 3,998     $ 1,985     $ 6,195  

 

 

ADJUSTED EARNINGS (LOSS) PER DILUTED SHARE RECONCILIATION

 

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2017

   

2016

   

2017

   

2016

 

Earnings (loss) per diluted share

  $ 0.05     $ (0.09 )   $ (0.91 )   $ (0.44 )

Adjusted for:

                               

Severance costs included in salaries, wages and employee benefits

    --       --       0.12       0.08  

Restructuring, impairment and other costs

    --       --       --       0.60  

Income tax effect of adjustments

    --       --       (0.04 )     (0.26 )

Adjusted earnings (loss) per diluted share

  $ 0.05     $ (0.09 )   $ (0.83 )   $ (0.02 )

 

 

 

 

ADJUSTED OPERATING RATIO RECONCILIATION

(UNAUDITED)

(dollar amounts in thousands)

 

Consolidated

 

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2017

   

2016

   

2017

   

2016

 

Operating revenue

  $ 114,235     $ 105,458     $ 323,263     $ 325,964  

Less: fuel surcharge revenue

    11,849       10,797       35,011       29,773  

Base revenue

    102,386       94,661       288,252       296,191  

Operating expense

    112,431       105,416       330,824       328,842  

Adjusted for:

                               

Restructuring, impairment and other costs

    --       --       --       (5,264 )

Severance costs included in salaries, wages and employee benefits

    (31 )     --       (930 )     (697 )

Fuel surcharge revenue

    (11,849 )     (10,797 )     (35,011 )     (29,773 )

Adjusted operating expense

  $ 100,551     $ 94,619     $ 294,883     $ 293,108  

Operating ratio

    98.4

%

    100.0

%

    102.3

%

    100.9

%

Adjusted operating ratio

    98.2

%

    100.0

%

    102.3

%

    99.0

%

 

Trucking Segment

 

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2017

   

2016

   

2017

   

2016

 

Revenue

  $ 76,811     $ 73,644     $ 219,013     $ 225,430  

Less: intersegment eliminations

    361       277       738       857  

Operating revenue

    76,450       73,367       218,275       224,573  

Less: fuel surcharge revenue

    9,540       8,451       27,555       23,499  

Base revenue

    66,910       64,916       190,720       201,074  

Operating expense

    77,644       74,872       231,440       233,180  

Adjusted for:

                               

Restructuring, impairment and other costs

    --       --       --       (4,848 )

Severance costs included in salaries, wages and employee benefits

    (23 )     --       (665 )     (697 )

Fuel surcharge revenue

    (9,540 )     (8,451 )     (27,555 )     (23,499 )

Adjusted operating expense

  $ 68,081     $ 66,421     $ 203,220     $ 204,136  

Operating ratio

    101.6

%

    102.1

%

    106.0

%

    103.8

%

Adjusted operating ratio

    101.8

%

    102.3

%

    106.6

%

    101.5

%

 

USAT Logistics Segment

 

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2017

   

2016

   

2017

   

2016

 

Revenue

  $ 41,907     $ 33,476     $ 111,435     $ 106,473  

Less: intersegment eliminations

    4,122       1,385       6,447       5,082  

Operating revenue

    37,785       32,091       104,988       101,391  

Less: fuel surcharge revenue

    2,309       2,346       7,456       6,274  

Base revenue

    35,476       29,745       97,532       95,117  

Operating expense

    34,787       30,544       99,384       95,662  

Adjusted for:

                               

Restructuring, impairment and other costs

    --       --       --       (416 )

Severance costs included in salaries, wages and employee benefits

    (8 )     --       (265 )     --  

Fuel surcharge revenue

    (2,309 )     (2,346 )     (7,456 )     (6,274 )

Adjusted operating expense

  $ 32,470     $ 28,198     $ 91,663     $ 88,972  

Operating ratio

    92.1

%

    95.2

%

    94.7

%

    94.3

%

Adjusted operating ratio

    91.5

%

    94.8

%

    94.0

%

    93.5

%

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share data)

 

   

September 30,

   

December 31,

 

 

 

2017

   

2016

 

Assets

               

Current assets:

               

Cash

  $ 193     $ 122  

Accounts receivable, net of allowance for doubtful accounts of $1,047 and $608, respectively

    58,814       55,127  

Other receivables

    3,509       6,986  

Inventories

    427       413  

Assets held for sale

    622       4,661  

Prepaid expenses and other current assets

    3,451       6,187  

Total current assets

    67,016       73,496  

Property and equipment:

               

Land and structures

    32,493       31,500  

Revenue equipment

    254,462       269,953  

Service, office and other equipment

    25,256       25,295  

Property and equipment, at cost

    312,211       326,748  

Accumulated depreciation and amortization

    (117,206 )     (106,465 )

Property and equipment, net

    195,005       220,283  

Other assets

    1,024       1,189  

Total assets

  $ 263,045     $ 294,968  

Liabilities and Stockholders’ Equity

               

Current liabilities:

               

Accounts payable

  $ 29,399     $ 18,779  

Current portion of insurance and claims accruals

    11,736       10,665  

Accrued expenses

    7,665       7,533  

Current maturities of capital leases

    15,021       16,742  

Insurance premium financing

    --       3,943  

Total current liabilities

    63,821       57,662  

Deferred gain

    531       652  

Long-term debt

    77,500       96,600  

Capital leases, less current maturities

    28,382       35,133  

Deferred income taxes

    31,890       37,775  

Insurance and claims accruals, less current portion

    9,424       8,558  

Total liabilities

    211,548       236,380  

Commitments and contingencies

               

Stockholders’ equity:

               

Preferred Stock, $.01 par value; 1,000,000 shares authorized; none issued

    --       --  

Common Stock, $.01 par value; 30,000,000 shares authorized; issued 12,149,376 shares, and 12,156,376 shares, respectively

    121       122  

Additional paid-in capital

    68,498       68,375  

Retained earnings

    50,638       57,963  

Less treasury stock, at cost (3,853,064 shares, and 3,849,815 shares, respectively)

    (67,760 )     (67,872 )

Total stockholders’ equity

    51,497       58,588  

Total liabilities and stockholders’ equity

  $ 263,045     $ 294,968