Financial Releases Details

USA Truck, Inc. (NASDAQ:USAK), a leading capacity solutions provider headquartered in Van Buren, AR, today announced its financial results for the three and nine months ended September 30, 2015.

“The third quarter was devoted to accelerating the pace of improvement in our Trucking operations as we began implementing the strategic leadership and tactical initiatives we previously outlined,” said Tom Glaser, USA Truck’s President and CEO.

For the third quarter of 2015, operating revenue decreased to $123.5 million from $153.6 million for the prior-year period on improved pricing offset by lower volume. Base revenue, which excludes fuel surcharges, decreased to $109.8 million from $125.9 million for the same period in the prior year. For the third quarter of 2015, net income decreased to $2.7 million, or $0.26 per diluted share, from $4.0 million, or $0.38 per diluted share, for the 2014 quarter. Included in the results for the 2015 third quarter was a charge of $2.9 million, or $0.17, net-of-tax, per diluted share, relating to restructuring, severance and related costs. On an adjusted basis, the Company produced earnings per diluted share of $0.43^(a) for the 2015 third quarter as compared to $0.38^(a) for the 2014 period.

“An important first step was to reorganize our Trucking business and senior management team, including the appointment of a new President – Trucking,” Mr. Glaser added. We also added new operational leadership in critical areas of maintenance, safety, recruiting, and driver retention. As part of the reorganization of our Trucking business, we took steps to streamline overhead and realign roles and responsibilities. We took actions to rationalize our maintenance program and facilities, and continued to dispose of high-cost tractors while investing in newer equipment. We believe these initiatives will improve operational efficiency and customer service, better align our fixed cost base with a newer and right sized tractor fleet and better support our driver team members.

“In SCS, we are implementing new generation technology intended to enable our customers to leverage our carrier partners and expect to roll out these enhancements in the first quarter of 2016. Additionally, we further expanded our footprint by opening two new brokerage branches. SCS will grow the depth of our value-added services, to include refrigerated, flatbed, expedited and LTL service offerings.”

Mr. Glaser continued, “For the remainder of 2015, our goals for Trucking are to fully implement the efficiency enhancement of our maintenance program, take further steps to improve driver recruiting, training and retention, and advance the strategy of right-sizing the fleet and reducing the average age of the equipment and realize our stated goal of bringing our Trucking operating ratio in line with the industry. For SCS, our goals are to increase load volume and improve service offerings. We believe the benefits of these initiatives will be apparent in the coming quarters.

“Over the longer term, our plan is to build and grow a sustainable base for our Trucking business through improved lane management, asset utilization, customer service and driver retention. We are also focused on growing revenue and improving the profitability of SCS, a business segment we believe offers significant growth potential.”

Mr. Glaser concluded, “In all that we do, our goal is to be better today than yesterday and better tomorrow than today. We thank our team members for embracing our commitment to this goal.”

Nine-Month Results

For the nine months ended September 30, 2015, operating revenue decreased to $389.9 million from $452.4 million for last year’s period. Base revenue, which excludes fuel surcharges, decreased to $342.4 million from $368.5 million for the 2014 period. Net income increased to $7.1 million from $2.7 million for the same period last year. For the nine months ended September 30, 2015, earnings per diluted share increased to $0.68 from $0.26 for the same period in prior year. Included in earnings per diluted share for the 2015 period was $0.8 million, or $0.04, net-of-tax, per diluted share loss related to debt extinguishment and $2.9 million, or $0.17, net-of-tax, per diluted share relating to restructuring, severance and related costs. Included in earnings per share for the prior year period was $2.6 million, or $0.15, net-of-tax, per diluted share related to defense costs. On an adjusted basis, the Company achieved earnings per diluted share of $0.89^(a) for the nine months ended September 30, 2015 as compared to $0.41^(a) for the 2014 period.

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

			Three Months Ended										Nine Months Ended
			September 30,										September 30,
			2015					2014					2015					2014
Trucking:									(Recast)										(Recast)
Operating revenue (in thousands)			$	84,982				$	108,318				$	274,196				$	317,230
Operating income (loss) (in thousands) (1)			$	2,460				$	2,176				$	6,565				$	(6,338)
Adjusted operating ratio (2)				92.8	%				97.5	%				96.0	%				102.5	%
Total miles (in thousands) (3)				44,559					54,600					143,928					163,009
Deadhead percentage (4)				12.3	%				13.3	%				12.3	%				12.7	%
Base revenue per loaded mile			$	1.902				$	1.819				$	1.871				$	1.753
Average number of in-service tractors (5)				1,838					2,179					2,025					2,205
Average number of seated tractors (6)				1,718					2,066					1,858					2,049
Average miles per seated tractor per week				1,973					2,011					1,986					2,040
Base revenue per seated tractor per week			$	3,293				$	3,170				$	3,260				$	3,122
Average loaded miles per trip				577					615					596					617
Strategic Capacity Solutions:
Operating revenue (in thousands)			$	38,508				$	45,300				$	115,754				$	135,175
Operating income (in thousands) (1)			$	2,999				$	5,336				$	9,234				$	16,405
Gross margin percentage (7)				18.3	%				17.3	%				17.9	%				17.8	%

(1)		Operating income or loss is calculated by deducting total operating expenses from operating revenues.
(2)		Adjusted operating ratio is calculated as total operating expenses, 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)		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, “Through focused balance sheet management, we continue to proactively enhance our flexibility to support operational improvements and growth initiatives. As of September 30, 2015, our total debt and capital lease obligations, net of cash, was $71.9 million and our stockholders’ equity was $102.9 million. Debt to Adjusted EBITDA^(a) continued to decline, and was 1.1x compared with 1.9x as of December 31, 2014.

“Since the end of 2014, the Company's balance sheet debt and capital lease obligations, net of cash, have decreased by $45.4 million, while the outstanding obligations of financing provided by operating leases increased by $10.5 million. As of September 30, 2015, we had approximately $115 million of borrowing availability under our revolving line of credit.”

Stock Repurchase Program

During the third quarter of 2015, USA Truck repurchased 245,979 shares of common stock under its stock repurchase program at a weighted average price of $19.11 per share for an aggregate purchase price of $4.7 million. As of October 30, 2015, the Company had repurchased a total of 462,002 shares of common stock. The remaining authorized amount for stock repurchases under the Company’s program is approximately 0.5 million shares with a termination date in July 2018.

Third-Quarter 2015 Conference Call Information

USA Truck will hold a conference call to discuss its third-quarter 2015 results on November 4, 2015 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), access code 10072729. A live webcast of the conference call will be broadcast in the Investor Relations section of the Company’s web site www.usa-truck.com, under the “Events & Presentations” tab of the “Investor Relation” 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 “Presentations” tab of the “Investors” menu. A telephone replay of the call will also be available through November 11, 2015 and may be accessed by calling 1-855-669-9658 and by referencing conference ID # 10072729.

^(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, 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 and defense costs incurred primarily in connection with the unsolicited proposal to acquire USA Truck and the restructuring, severance and related costs. Adjusted operating ratio is calculated as total operating expenses, net of fuel surcharges, as a percentage of operating revenue excluding fuel surcharge revenue and unusual items. Adjusted earnings per diluted share is defined as income before income taxes plus loss on extinguishment of debt, defense costs and restructuring, severance and related costs reduced by our income taxes, 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 normal quarter-end closing and interim review procedures, 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 web site, www.usa-truck.com, under the “Financial Releases” tab of the “Investor Relations” menu.

USA TRUCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except per share data)
			Three Months Ended						Nine Months Ended
			September 30,						September 30,
			2015			2014			2015			2014
Revenue:						(Recast) (1)						(Recast) (1)
Operating revenue			$	123,490		$	153,618		$	389,950		$	452,405
Operating expenses:
Salaries, wages and employee benefits				32,028			39,388			105,536			113,930
Fuel expense				12,960			28,449			47,195			92,156
Depreciation and amortization				8,702			10,792			29,951			33,395
Insurance and claims				5,405			6,466			17,502			18,353
Operations and maintenance				11,533			10,649			34,083			35,999
Purchased transportation				40,613			43,755			122,029			129,543
Operating taxes and licenses				1,439			1,414			4,221			4,215
Communications and utilities				989			1,026			2,732			3,159
Gain on disposal of assets, net				(3,008)			(302)			(5,766)			(824)
Restructuring, severance and related charges				2,893			--			2,893			--
Other				4,477			4,469			13,775			12,412
Total operating expenses				118,031			146,106			374,151			442,338
Operating income				5,459			7,512			15,799			10,067
Other expenses (income):
Interest expense, net				493			816			1,672			2,271
Defense costs				--			65			--			2,593
Loss on extinguishment of debt				--			--			750			--
Other, net				78			4			650			52
Total other expenses, net				571			885			3,072			4,916
Income before income taxes				4,888			6,627			12,727			5,151
Income tax expense				2,161			2,621			5,595			2,418
Net income and comprehensive income			$	2,727		$	4,006		$	7,132		$	2,733
Net income per share information:
Average shares outstanding (basic)				10,442			10,357			10,439			10,350
Basic earnings per share			$	0.26		$	0.39		$	0.68		$	0.26
Average shares outstanding (diluted)				10,470			10,476			10,515			10,482
Diluted earnings per share			$	0.26		$	0.38		$	0.68		$	0.26

(1) During the third quarter of 2015, the Company changed its accounting policy for tires. Historical financial results have been recast to reflect the change in accounting principle.

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						Nine Months Ended
			September 30,						September 30,
			2015			2014			2015			2014
						(Recast)						(Recast)
Net income			$	2,727		$	4,006		$	7,132		$	2,733
Add:
Depreciation and amortization				8,702			10,792			29,951			33,395
Income tax expense				2,161			2,621			5,595			2,418
Interest, net				493			816			1,672			2,271
EBITDA			$	14,083		$	18,235		$	44,350		$	40,817
Add:
Non-cash equity compensation				446			27			802			246
Defense costs, pretax				--			65			--			2,593
Restructuring, severance and related charges				2,893			--			2,893			--
Loss on debt extinguishment, pretax				--			--			750			--
Adjusted EBITDA			$	17,422		$	18,327		$	48,795		$	43,656

ADJUSTED EARNINGS PER SHARE RECONCILIATION
			Three Months Ended						Nine Months Ended
			September 30,						September 30,
			2015			2014			2015			2014
						(Recast)						(Recast)
Earnings per diluted share			$	0.26		$	0.38		$	0.68		$	0.26
Adjusted for:
Loss on debt extinguishment, net of tax				--			--			0.04			--
Restructuring, severance and related charges, net of tax				0.17			--			0.17			--
Defense costs, net of tax				--			--			--			0.15
Adjusted earnings per diluted share			$	0.43		$	0.38		$	0.89		$	0.41

ADJUSTED OPERATING RATIO RECONCILIATION
Trucking Segment			Three Months Ended								Nine Months Ended
			September 30,								September 30,
			2015				2014				2015				2014
							(Recast)								(Recast)
Revenue			$	85,369			$	108,440			$	275,617			$	317,664
Less: intersegment eliminations				387				122				1,421				434
Operating revenue				84,982				108,318				274,196				317,230
Less: fuel surcharge revenue				10,635				22,242				37,953				67,740
Base revenue				74,347				86,076				236,243				249,490
Operating expense				82,522				106,142				267,631				323,568
Adjusted for:
Restructuring, severance and related charges				(2,893)				--				(2,893)				--
Fuel surcharge revenue				(10,635)				(22,242)				(37,953)				(67,740)
Adjusted operating expense			$	68,994			$	83,900			$	226,785			$	255,828
Operating ratio				97.1	%			98.0	%			97.6	%			102.0	%
Adjusted operating ratio				92.8	%			97.5	%			96.0	%			102.5	%

SCS Segment			Three Months Ended								Nine Months Ended
			September 30,								September 30,
			2015				2014				2015				2014
Revenue			$	39,505			$	49,359			$	119,781			$	144,507
Less: intersegment eliminations				997				4,059				4,027				9,332
Operating revenue				38,508				45,300				115,754				135,175
Less: fuel surcharge revenue				3,103				5,430				9,553				16,139
Base revenue				35,405				39,870				106,201				119,036
Operating expense				35,509				39,964				106,520				118,770
Adjusted for:
Fuel surcharge revenue				(3,103)				(5,430)				(9,553)				(16,139)
Adjusted operating expense			$	32,406			$	34,534			$	96,967			$	102,631
Operating ratio				92.2	%			88.2	%			92.0	%			87.9	%
Adjusted operating ratio				91.5	%			86.6	%			91.3	%			86.2	%

USA TRUCK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share data)
			September 30,			December 31,
			2015			2014
Assets						(Recast)
Current assets:
Cash			$	2,132		$	205
Accounts receivable, net of allowance for doubtful accounts of $974 and $1,020, respectively				56,752			71,186
Other receivables				5,268			5,604
Inventories				1,426			1,863
Assets held for sale				11,343			3,536
Deferred income taxes				6,878			7,707
Prepaid expenses and other current assets				3,883			5,197
Total current assets				87,682			95,298
Property and equipment:
Land and structures				32,360			31,596
Revenue equipment				281,706			348,251
Service, office and other equipment				21,783			18,812
Property and equipment, at cost				335,849			398,659
Accumulated depreciation and amortization				(138,897)			(182,964)
Property and equipment, net				196,952			215,695
Other assets				1,470			658
Total assets			$	286,104		$	311,651
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable			$	33,582		$	23,582
Current portion of insurance and claims accruals				13,516			10,230
Accrued expenses				20,757			8,252
Current maturities of long-term debt and capital leases				7,231			24,048
Total current liabilities				75,086			66,112
Deferred gain				1,024			589
Long-term debt and capital leases, less current maturities				66,764			93,464
Deferred income taxes				34,013			42,771
Insurance and claims accruals, less current portion				6,322			9,647
Total liabilities				183,209			212,583
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 11,936,040 shares, and 11,873,071 shares, respectively				119			119
Additional paid-in capital				67,195			65,850
Retained earnings				61,934			54,802
Less treasury stock, at cost (1,578,849 shares, and 1,340,438 shares, respectively)				(26,353)			(21,703)
Total stockholders’ equity				102,895			99,068
Total liabilities and stockholders’ equity			$	286,104		$	311,651