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USA Truck Reports Second Quarter 2017 Results

USA Truck Reports Second Quarter 2017 Results

  • 2Q 2017 net loss of ($2.8) million, or ($0.35) per share versus 2Q 2016 net loss of ($1.3) million, or ($0.15) per share
  • Progress in various key measures achieved during the second quarter of 2017, including base revenue per loaded mile, miles per seated tractor per week, and base revenue per seated tractor, providing evidence of improved operational execution
  • The Company confirms its expectation of positive third quarter operating income

Category:

Wednesday, August 2, 2017 4:00 pm CDT

Dateline:

VAN BUREN, Ark.

Public Company Information:

NASDAQ:
USAK
"The following are the specific areas we are focused on in improving our Trucking operating results. I am encouraged by the long-term implications of the improvement in these fundamental operating trends: Yield improvements:"

VAN BUREN, Ark.--(BUSINESS WIRE)--USA Truck, Inc. (NASDAQ: USAK), a leading capacity solutions provider, today announced its financial results for the three and six months ended June 30, 2017.

For the quarter ended June 30, 2017, consolidated operating revenue was $107.4 million compared to $109.9 million for the prior-year period. Base revenue, which excludes fuel surcharge, was $96.0 million compared to $99.5 million for the 2016 period. The Company reported a net loss of ($2.8) million, or ($0.35) per share for the second quarter 2017, compared to a net loss of ($1.3) million, or ($0.15) per share, for the same quarter in 2016, on approximately 0.7 million (8.1%) decrease in average shares outstanding. The Company’s second quarter 2017 consolidated operating ratio was 102.8%, compared to 100.5% in the 2016 quarter.

Loss per share for the quarter ended June 30, 2017 included $1.3 million, or $0.10 per share, net-of-tax, of expenses relating to new management hires during the second quarter, $0.3 million, or $0.02 per share, net-of-tax, related to a change in expensing of board compensation without any annual increase, $0.3 million, or $0.02 per share, net-of-tax, relating to non-escheated liabilities to various jurisdictions, and $0.1 million, or $0.01 per share, net-of-tax, of severance costs included in salaries, wages and employee benefits. Included in loss per share for the quarter ended June 30, 2016, was $0.7 million, or $0.05, net-of-tax, per share of severance costs included in salaries, wages and employee benefits.

President and CEO James Reed commented, “The entire organization is committed to returning this company to profitability and building a business that we believe will stand the test of time. The second quarter marked my first full quarter as CEO and while we are not happy with the consolidated results, we believe they show progress in the specific areas that we previously said we would focus.

Building our leadership team: “We filled out our leadership team during the quarter, with both previously announced and new additions. Each of these leaders has had an immediate impact on our business in meaningful ways and all have or are in the process of relocating to the Van Buren / Fort Smith area. Each of these leaders personify the type of principled, focused, experienced, and results-driven individuals we hope will drive USA Truck to its full potential.

Trucking turnaround: “The following are the specific areas we are focused on in improving our Trucking operating results. I am encouraged by the long-term implications of the improvement in these fundamental operating trends:

  • Yield improvements: “We believe our network engineering initiatives have directly led to improvements in our rate per loaded mile, and we continue to work with our customers to improve our network and price positions. Coupled with a more strategically defined network, base revenue per loaded mile increased $0.05 per mile, or 2.9% when compared to 2Q16, which also represented a 1.3% increase over 1Q17.
  • Base revenue per seated tractor increased $77 per week, or 2.6% when compared to 2Q16, which represented a 0.2% increase over 1Q17.
  • Miles per seated tractor per week increased 22 miles per tractor, or 1.1% when compared to 2Q16, which represented a 0.3% decrease over 1Q17.
  • Seated tractors: “Our focus on seating tractors resulted in a sequential improvement in our unseated tractor count to 8.0%. This remains short of our goal of 5%. We believe we are on track to increase average seated tractor count by 5-7% over the fourth quarter 2016 average of 1,547, and increasing base revenue per seated tractor per week by 3-5% over the full year 2016 average of $2,998.

Drive gross margin of USAT Logistics: “Demand and resulting load count, revenues, and gross margin results began to show improvement in May and continued to strengthen through the balance of the second quarter. The sales agent initiative gained momentum and produced its most successful quarter since inception. Continued focus on expense control and increasing productivity – as measured by loads per headcount – yielded a decision to reallocate regional center headcount from underperforming centers to the stronger performing centers. The USAT Logistics de Mexico office in Celaya, Mexico became fully operational and began generating revenue in the latter part of the second quarter.

Ongoing commitment to reducing costs: “We exceeded our stated annual cost reduction goals for the year during the second quarter by reducing costs by $3.6 million compared to the second quarter of 2016. Fixed controllable costs were reduced in operations and maintenance, salaries, wages and employee benefits, and operating taxes and licenses. These savings were partially offset by a previously announced driver pay increase, higher insurance and claims costs, lower gain on sale of used equipment, and a change in expensing of board of director compensation that resulted in an acceleration of the expense into the quarter, but no increase in annual expense is expected for the full year. As a result, total cost per mile improved sequentially $0.066 in the quarter.

“Overall, results are improving and we believe operating profits are on the near-term horizon. Third quarter 2017 will be the first complete quarter with our new leadership team intact and I look forward to the synergies of the team’s expertise and time in their positions as we expect to see our efforts and direction take root. Already, this team has been instrumental in implementing significant changes in business execution that should improve earnings relative to prior quarters. We reiterate our expectation of returning to operating profitability in the third quarter of 2017 and look forward to that as the launch point for continued improved operating results. This is an exciting time in our industry and, we believe, an inflection point in the history of USA Truck.”

Trucking

For the second quarter 2017, Trucking operating revenue declined $4.0 million, or 5.2%, year over year, to $71.5 million, compared to second quarter 2016. This was primarily due to 9.1% fewer seated tractors, partially offset by a 2.9% increase in base revenue per loaded mile. Operating loss was ($4.8) million for the 2017 period compared to ($2.7) million for the 2016 period. This change was primarily the result of the aforementioned $4.0 million decrease in operating revenue and an increase in associated variable operating expenses, partially offset by the reductions in fixed controllable costs described above. Cost reduction remains an organization-wide priority as the team works to re-engineer the freight network.

USAT Logistics

Operating revenue was $35.8 million, up 4.2% versus second quarter 2016 and up 14.1% sequentially over first quarter 2017. USAT Logistics gross margin grew 23.5% sequentially over first quarter 2017, and was down less than 2% when compared to the same period in 2016, reflecting a slightly lower margin environment as a result of tighter capacity. We remain committed to the success of our USAT Logistics initiatives as we believe market dynamics are beginning to show improvement.

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: 2017       2016 2017       2016
Operating revenue (in thousands) $ 71,545 $ 75,504 $ 141,825 $ 151,206
Operating loss (in thousands) (1) $ (4,843 ) $ (2,733 ) $ (11,971 ) $ (7,102 )
Operating ratio (2) 106.8 % 103.6 % 108.4 % 104.7 %
Adjusted operating ratio (3) 107.6 % 103.0 % 109.2 % 101.1 %
Total miles (in thousands) (4) 40,833 44,979 81,283 88,850
Deadhead percentage (5) 12.8 % 12.6 % 13.0 % 12.5 %
Base revenue per loaded mile $ 1.762 $ 1.712 $ 1.751 $ 1.752
Average number of in-service tractors (6) 1,722 1,834 1,713 1,825
Average number of seated tractors (7) 1,584 1,743 1,574 1,751
Average miles per seated tractor per week 2,007 1,985 2,010 1,952
Base revenue per seated tractor per week $ 3,046 $ 2,969 $ 3,042 $ 2,991
Average loaded miles per trip 560 594 569 578
 
USAT Logistics:
Operating revenue (in thousands) $ 35,813 $ 34,384 $ 67,203 $ 69,300
Operating income (in thousands) (1) $ 1,877 $ 2,176 $ 2,606 $ 4,182
Gross margin (in thousands) (8) $ 6,620 6,714 11,979 13,432
Gross margin percentage (9) 18.5 % 19.5 % 17.8 % 19.4 %
 
                    (1)   Operating income or loss is calculated by deducting operating expenses from operating revenues.
(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 reconciliation 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 taking revenue less purchased transportation.
(9) Gross margin percentage is calculated by taking revenue less purchased transportation expense and dividing that amount by revenue.
       
Three Months Ended
6/30/2017       3/31/2017       12/31/2016       9/30/2016       6/30/2016
Base loaded rate per mile $ 1.762 $ 1.740 $ 1.754 $ 1.725 $ 1.712
 
 

Balance Sheet and Liquidity

As of June 30, 2017, our total debt and capital lease obligations was $127.8 million, our total debt and capital lease obligations, net of cash (“Net Debt”), was $127.6 million and our stockholders’ equity was $51.0 million. Net Debt to Adjusted EBITDA(a) increased sequentially to 6.4x compared with 5.6x as of March 31, 2017. The Company had approximately $42.2 million available under its credit facility as of June 30, 2017. The Company has a modest capex plan for the remainder of 2017; therefore, we expect any operating cash flow will be directed toward the repayment of debt, with the goal of reducing our leverage ratio to more comfortable levels.

Second Quarter 2017 Conference Call Information

USA Truck will hold a conference call to discuss its second quarter 2017 results on August 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 August 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 #10109692.

(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 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. It defines EBITDA as net income (loss), plus interest expense net of interest income, provision for income tax expense (benefit) and depreciation and amortization. It defines Adjusted EBITDA as these items 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 surcharges, as a percentage of operating revenue excluding fuel surcharge revenue. Adjusted earnings (loss) per diluted share is defined as earnings (loss) before income taxes plus restructuring, impairment and other costs, and severance costs included in salaries, wages and employee benefits 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 Net Debt, 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.

Net Debt, 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 ratio, 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 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.

 
 
 
 
 
USA TRUCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
(in thousands, except per share data)
 
      Three Months Ended       Six Months Ended
June 30, June 30,
Revenue 2017     2016 2017     2016
Operating revenue $ 107,358   $ 109,888   $ 209,028   $ 220,506  
 
Operating expenses
Salaries, wages and employee benefits 29,221 30,627 59,860 63,201
Fuel and fuel taxes 10,479 11,391 21,253 21,580
Depreciation and amortization 6,879 7,599 14,523 14,871
Insurance and claims 5,561 5,438 13,893 10,206
Equipment rent 2,633 1,861 4,747 3,722
Operations and maintenance 7,950 10,299 14,521 19,512
Purchased transportation 41,005 38,030 78,408 74,432
Operating taxes and licenses 1,024 1,260 1,974 2,381
Communications and utilities 598 851 1,264 1,731
Gain on disposal of assets, net (77 ) (182 ) (337 ) (578 )
Restructuring, impairment and other costs --

--

-- 5,264
Other   5,051     3,271     8,287     7,104  
Total operating expenses   110,324     110,445     218,393     223,426  
Operating loss   (2,966 )   (557 )   (9,365 )   (2,920 )
 
Other expenses
Interest expense, net 950 731 1,953 1,295
Other, net   128     133     226     337  
Total other expenses, net   1,078     864     2,179     1,632  
Loss before income taxes (4,044 ) (1,421 ) (11,544 ) (4,552 )
Income tax benefit   (1,198 )   (75 )   (3,808 )   (1,399 )
 
Consolidated net loss and comprehensive loss $ (2,846 ) $ (1,346 ) $ (7,736 ) $ (3,153 )
 
Net loss per share
Average shares outstanding (basic)   8,028     8,734     8,028     9,069  
Basic loss per share $ (0.35 ) $ (0.15 ) $ (0.96 ) $ (0.35 )
 
Average shares outstanding (diluted)   8,028     8,734     8,028     9,069  
Diluted loss per share $ (0.35 ) $ (0.15 ) $ (0.96 ) $ (0.35 )
 
 
 
 
 
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

6/30/2017     3/31/2017     12/31/2016     9/30/2016
Net loss $ (2,846 ) $ (4,890 ) $ (3,812 ) $ (734 )
Add:
Depreciation and amortization 6,879 7,644 7,672 7,411
Income tax benefit (1,198 ) (2,610 ) (1,896 ) (224 )
Interest expense, net   950     1,003     969     913  
 
EBITDA 3,785 1,147 2,933 7,366
Add:
Non-cash equity compensation 131 21 281 302
Impairment on assets held for sale

--

-- 2,839 --
Severance costs included in salaries, wages and employee benefits   82     817     142     --  
 
Adjusted EBITDA $ 3,998   $ 1,985   $ 6,195   $ 7,668  
 
 
 

ADJUSTED EARNINGS (LOSS) PER SHARE RECONCILIATION

 
      Three Months Ended   Six Months Ended
June 30, June 30,
2017     2016 2017   2016
Loss per share $ (0.35 ) $ (0.15 ) $ (0.96 ) $ (0.35 )
Adjusted for:
Severance costs included in salaries, wages and employee benefits 0.01 0.08 0.11 0.08
Restructuring, impairment and other costs -- -- -- 0.58
Income tax expense effect of adjustments   --     (0.03 )   (0.04 )   (0.25 )
Adjusted (loss) earnings per share $ (0.34 ) $ (0.10 ) $ (0.89 ) $ 0.06  
 
 
 
 
 
 

ADJUSTED OPERATING RATIO RECONCILIATION
(UNAUDITED)
(dollar amounts in thousands)

 
Consolidated       Three Months Ended       Six Months Ended
June 30, June 30,
2017     2016 2017     2016
Operating revenue $ 107,358 $ 109,888 $ 209,028 $ 220,506
Less:
Fuel surcharge revenue   11,320     10,375     23,162     18,976  
Base revenue   96,038     99,513     185,866     201,530  
Operating expense 110,324 110,445 218,393 223,426
Adjusted for:
Restructuring, impairment and other costs

--

--

--

(5,264 )
Severance costs in salaries, wages and employee benefits (82 ) (697 ) (899 ) (697 )
Fuel surcharge revenue   (11,320 )   (10,375 )   (23,162 )   (18,976 )
Adjusted operating expense $ 98,922   $ 99,373   $ 194,332   $ 198,489  
Operating ratio 102.8 % 100.5 % 104.5 % 101.3 %
Adjusted operating ratio 103.0 % 99.9 % 104.6 % 98.5 %
 
 
 
Trucking Segment Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Revenue $ 71,731 $ 75,750 $ 142,202 $ 151,786
Less: intersegment eliminations   186     246     377     580  
Operating revenue 71,545 75,504 141,825 151,206
Less: fuel surcharge revenue   8,828     8,227     18,015     15,048  
Base revenue   62,717     67,277     123,810     136,158  
Operating expense 76,388 78,238 153,796 158,308
Adjusted for:
Restructuring, impairment and other costs

--

--

--

(4,848 )
Severance costs in salaries, wages and employee benefits (56 ) (697 ) (642 ) (697 )
Fuel surcharge revenue   (8,828 )   (8,227 )   (18,015 )   (15,048 )
Adjusted operating expense $ 67,504   $ 69,314   $ 135,139   $ 137,715  
Operating ratio 106.8 % 103.6 % 108.4 % 104.7 %
Adjusted operating ratio 107.6 % 103.0 % 109.2 % 101.1 %
 
 
 

USAT Logistics Segment

Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Revenue $ 36,878 $ 37,087 $ 69,528 $ 72,997
Less: intersegment eliminations   1,065     2,703     2,325     3,697  
Operating revenue 35,813 34,384 67,203 69,300
Less: fuel surcharge revenue   2,492     2,148     5,147     3,928  
Base revenue   33,321     32,236     62,056     65,372  
Operating expense 33,936 32,207 64,597 65,118
Adjusted for:
Restructuring, impairment and other costs

--

--

--

(416 )
Severance costs in salaries, wages and employee benefits (26 ) -- (257 ) --
Fuel surcharge revenue   (2,492 )   (2,148 )   (5,147 )   (3,928 )
Adjusted operating expense $ 31,418   $ 30,059   $ 59,193   $ 60,774  
Operating ratio 94.8 % 93.7 % 96.1 % 94.0 %
Adjusted operating ratio 94.3 % 93.2 % 95.4 % 93.0 %
 
 
 
 
 
 

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share data)

 
      June 30,     December 31,
Assets 2017   2016  
Current assets: (as recast)
Cash $ 166 $ 122
Accounts receivable, net of allowance for doubtful accounts of $959 and $608, respectively 56,024 55,127
Other receivables 3,591 6,986
Inventories 413 413
Assets held for sale 1,034 4,661
Prepaid expenses and other current assets   4,527     6,187  
Total current assets   65,755     73,496  
Property and equipment:
Land and structures 31,772 31,500
Revenue equipment 250,238 269,953
Service, office and other equipment   26,131     25,295  
Property and equipment, at cost 308,141 326,748
Accumulated depreciation and amortization   (114,232 )   (106,465 )
Property and equipment, net 193,909 220,283
Other assets   1,070     1,189  
Total assets $ 260,734   $ 294,968  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 18,807 $ 18,779
Current portion of insurance and claims accruals 12,873 10,665
Accrued expenses 8,696 7,533
Current maturities of capital leases 14,761 16,742
Insurance premium financing   1,314     3,943  
Total current liabilities 56,451 57,662
Deferred gain 582 652
Long-term debt 80,175 96,600
Capital leases, less current maturities 31,560 35,133
Deferred income taxes 31,580 37,775
Insurance and claims accruals, less current portion   9,424     8,558  
Total liabilities 209,772 236,380
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 12,154,788 shares, and 12,156,376 shares, respectively 122 122
Additional paid-in capital 68,373 68,375
Retained earnings 50,227 57,963
Less treasury stock, at cost (3,853,064 shares, and 3,849,815 shares, respectively)   (67,760 )   (67,872 )
Total stockholders’ equity   50,962     58,588  
Total liabilities and stockholders’ equity $ 260,734   $ 294,968  
 
 
 
 

Contact:

USA Truck, Inc.
Jason Bates, EVP & CFO, 479-471-2672
Jason.Bates@usa-truck.com

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