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USA Truck Announces Third Quarter 2014 EPS of $0.26 per Share

USA Truck Announces Third Quarter 2014 EPS of $0.26 per Share

  • Base revenue up 10.6% over 3Q13 to $125.9 million
  • Operating income of $5.4 million compared to 3Q13 operating loss of $0.2 million
  • EBITDA up 33.3% to $16.0 million compared to $12.0 million in 3Q13
  • Debt reduced $14.5 million (11.2%) YTD, 18.8% YOY

Category:

Monday, November 3, 2014 7:08 am CST

Dateline:

VAN BUREN, Ark.

Public Company Information:

NASDAQ:
USAK
"We’re pleased to announce USA Truck’s eighth consecutive quarter of improving financial results and our second consecutive period of GAAP profitability. We achieved earnings per share of $0.26, a $0.32 improvement over the prior-year period and our most profitable quarter in eight years."

USA Truck, Inc. (NASDAQ: USAK), a leading North American transportation and logistics provider, today announced its financial results for the three months ended September 30, 2014.

President and CEO John Simone commented, “We’re pleased to announce USA Truck’s eighth consecutive quarter of improving financial results and our second consecutive period of GAAP profitability. We achieved earnings per share of $0.26, a $0.32 improvement over the prior-year period and our most profitable quarter in eight years.

“Both our Trucking and asset-light Strategic Capacity Solutions (SCS) businesses realized revenue gains and positive operating income, a direct outcome of our intense focus on operational effectiveness, while also benefiting from today’s strong demand environment. We continued to lower our consolidated operating ratio, this quarter by 450 basis points. Our strong operating cash flow of $19.6 million positioned us to pay down almost $11 million in debt. For the year to date, we have reduced debt by a total of $14.5 million; over the past 12 months, we have reduced debt by $26.5 million.

“Our third-quarter results were driven by a 10.6% increase in base revenue while operating expenses rose only 5.7% (net of fuel surcharge recoveries). In our Trucking business, our operating improvement initiatives enabled us to sustain the asset utilization gains we have realized since beginning our turnaround and achieve a 370 basis-point improvement in Trucking’s operating ratio. We reached a key milestone in our turnaround plan by bringing Trucking’s operating ratio under 100, and we intend to continue that trend.”

Mr. Simone continued, “Trucking rate per loaded mile increased 9.4%, a sequential improvement from 2Q14’s 7.1% increase as a result of our ongoing and comprehensive yield and network management initiatives. Our fleet fuel efficiency initiatives produced a 10.5% improvement in miles-per-gallon, or $3.2 million, while offsetting higher driver-related costs. Our focus on unseated truck count continues to be a top priority and we believe our driver recruitment and retention efforts are making incremental inroads in this important area. We believe these efforts, as well as our strategic and operational initiatives, will continue to drive improvement in our truckload business.

“Our SCS business was the strongest contributor to 3Q’s positive results even as our truckload business continued to experience improvement and turned profitable this quarter. SCS’ base revenue rose 24.2% to $39.9 million, accounting for about one-third of our consolidated base revenue. Operating expenses net of fuel surcharge increased only 17.7%, reflecting ongoing productivity gains that helped improve SCS’ operating ratio by 480 basis points. We believe the overall freight market’s tight capacity underscores the importance of this strategic aspect of our Company’s integrated business model.”

USA Truck Chairman Robert A. Peiser added, “We are pleased that the fundamentals of the business have remained robust in the fourth quarter and the USAK team is continuing to execute well on the Company’s operations strategy. Our goal is to end the year on a strong note, deliver positive consolidated operating income and positive EPS for 2014, and position USA Truck for continuing operating improvements next year. Towards this end, the Board of Directors, following an extensive operational review to identify both immediate and long-term steps to enhance performance, has recently endorsed a strategy of continuing to increase the emphasis on growing SCS, our dedicated business and our owner-operator fleet. We also believe that improved financial performance will be achieved through continued refinement of the Company’s truckload network in addition to the many other initiatives that are being pursued.”

Mr. Peiser concluded, “John and I particularly want to acknowledge the hard work and focus of all the USA Truck team members, who have been key to improving our Company’s performance. We appreciate all their contributions and look forward to continued progress.”

Three-Month Financial Results

Total base revenue increased 10.6% to $125.9 million for the quarter ended September 30, 2014, from $113.9 million for the same quarter of 2013. Trucking operating revenue increased 3.3% to $108.3 million, while SCS operating revenue rose 22.7% to $45.3 million. Consolidated net income was $2.7 million, or $0.26 per diluted share, for the third quarter of 2014 compared to a net loss of ($0.6) million, or ($0.06) per share, for the same quarter of 2013.

Nine-Month Financial Results

Total base revenue increased 11.6% to $368.5 million for the nine months ended September 30, 2014, from $330.2 million for the same period of 2013. Consolidated net income was $1.9 million, or $0.18 per diluted share, for the nine months ended September 30, 2014, compared to a net loss of ($4.5) million, or ($0.43) per share, for the same period of 2013.

For the nine months ended September 30, 2014, the Company recorded approximately $2.6 million, or $0.25 per diluted share, in legal and other defense costs. These costs were incurred primarily in connection with Knight Transportation’s unsolicited proposal to acquire USA Truck, the related litigation and the February 2014 Settlement Agreement. These unusual non-operating costs were recorded in “Other expenses (income)” in the accompanying condensed consolidated statement of operations and comprehensive income (loss).

       

 

Three Months Ended

Nine Months Ended
September 30, September 30,
2014     2013 2014     2013

 

(unaudited)

Trucking:
Operating revenue (in thousands) $ 108,318 $ 104,904 $ 317,230 $ 311,744
Base revenue (in thousands) (1) $ 86,076 $ 81,761 $ 249,489 $ 242,988
Operating income (loss) (in thousands) (2) $ 83 $ (2,968 ) $ (7,772 ) $ (10,054 )
Operating ratio (3)

99.9

%

103.6

%

103.1

%

104.1

%

Total miles (in thousands) (4) 54,600 55,516 163,009 166,844
Empty mile factor (5)

13.3

%

11.4

%

12.7

%

11.4

%

Base revenue per loaded mile $ 1.819 $ 1.663 $ 1.753 $ 1.645
Average number of in-service tractors (6) 2,179 2,250 2,205 2,232
Percentage of in-service tractors unseated

5.2

%

6.2

%

7.1

%

5.3

%

Average number of seated tractors (7) 2,066 2,111 2,049 2,114
Average miles per seated tractor per week 2,011 2,001 2,040 2,024
Base Trucking revenue per seated tractor per week $ 3,170 $ 2,948 $ 3,122 $ 2,947
Average loaded miles per trip 615 602 617 596

Strategic Capacity Solutions (8):

Operating revenue (in thousands) (8) $ 49,359 $ 38,650 $ 144,507 $ 107,510
Intercompany revenue (in thousands) $ 4,059 $ 1,732 $ 9,332 $ 5,667
Net revenue (in thousands) (9) $ 45,300 $ 36,918 $ 135,175 $ 101,843
Operating income (in thousands) (2) $ 5,336 $ 2,764 $ 16,405 $ 6,079
Gross margin (10)

17.3

%

14.0

%

17.8

%

14.0

%

 
(1) Base revenue represents operating revenue excluding fuel surcharge revenue.
(2) Operating income or loss is calculated by deducting total operating expenses from operating revenues.
(3) Operating ratio is calculated by dividing total operating expenses, net of fuel surcharge revenue, by base revenue.
(4) Total miles include both loaded and empty miles.
(5) Empty mile factor 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) Includes results of our rail intermodal operating segment.
(9) Net revenue represents SCS operating revenue less intercompany revenue.
(10) Gross margin is calculated by taking total revenue less purchased transportation expense and dividing that amount by total revenue. This calculation includes intercompany revenues and expenses.
 

Balance Sheet and Liquidity

Mr. Simone added, “Our debt decreased during the third quarter by $10.7 million sequentially to $114.4 million. Net of cash, this represented 53.1% of our total capitalization. Year to date, our debt is down $14.5 million. At quarter end, we had $38.9 million of net borrowing availability on our revolving credit facility, net of the required minimum availability of $18.8 million.”

Third-Quarter 2014 Conference Call Information

USA Truck will hold a conference call to discuss its third-quarter 2014 results on November 3, 2014 at 8:00 AM CT / 9:00 AM ET. To participate in the call, please dial 1-800-351-6807 (U.S. / Canada) or 1-334-323-7224 (International), access code 541247. The slide presentation that will accompany the call may be accessed using the following link: https://www.yourcall.com/webecho/GuestLogin.aspx?ConfRef=78215399&Pin=1533.

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 for 30 days following the call at 1-877-919-4059, access code 46088628.

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 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 the defense costs incurred primarily in connection with the unsolicited proposal from Knight Transportation to acquire USA Truck, pretax. EBITDA and Adjusted EBITDA are measures used by management to evaluate the Company’s ongoing operations and as a general indicator of its operating cash flow (in conjunction with a cash flow statement that also includes, among other items, changes in working capital and the effect of non- cash charges). Management believes these measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the comparative evaluation of companies. Because not all companies use identical calculations, the Company's presentation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. EBITDA and Adjusted EBITDA are not recognized terms under GAAP, do not purport to be alternatives to, and should be considered in addition to, and not as a substitute for or superior to, net income (loss) as a measure of operating performance or to cash flows from operating activities or any other performance measures derived in accordance with GAAP as a measure of liquidity. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management's discretionary use as they do not reflect certain cash requirements such as interest payments, tax payments and debt service requirements.

Pursuant to the requirements of Regulation G, we have provided a reconciliation of EBITDA and Adjusted EBITDA to GAAP net income as an exhibit to 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,” “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 transportation and logistics provider headquartered in Van Buren, Arkansas, with terminals, offices and staging facilities located throughout the United States. We transport commodities throughout the continental U.S. and into and out of portions of Canada. We also transport general commodities into and out of Mexico by allowing through-trailer service from our terminal in Laredo, Texas. Our Strategic Capacity Solutions and Intermodal service offerings provide customized transportation solutions using the latest technological tools available and multiple modes of transportation.

   
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,

 

2014

    2013 2014     2013
Revenue:
Total base revenue 125,947 113,856 368,527 330,206
Total fuel surcharge revenue   27,671   27,966     83,878   83,381  
GAAP operating revenue   153,618   141,822     452,405   413,587  
 
Operating expenses:
Salaries, wages and employee benefits 39,388 34,771 113,930 105,001
Fuel expense 28,449 33,224 92,156 101,837
Depreciation and amortization 10,671 11,633 33,274 33,399
Insurance and claims 6,466 6,807 18,353 19,220
Operations and maintenance 12,863 12,319 37,554 37,476
Purchased transportation 43,755 37,470 129,543 103,677
Operating taxes and licenses 1,414 1,400 4,215 4,104
Communications and utilities 1,026 1,014 3,159 3,084
Other   4,167   3,388     11,588   9,764  
Total operating expenses   148,199   142,026     443,772   417,562  
Operating income (loss) 5,419 (204 ) 8,633 (3,975 )
 
Other expenses (income):
Interest expense 816 967 2,271 2,752
Defense costs 65 -- 2,593 --
Other, net   4   (611 )   52   (711 )
Total other expenses, net   885   356     4,916   2,041  
Income (loss) before income taxes 4,534 (560 ) 3,717 (6,016 )
Income tax expense (benefit)   1,817   42     1,867   (1,542 )
 
Net income (loss) and Comprehensive income (loss) $ 2,717 $ (602 ) $ 1,850 $ (4,474 )
 
Net income (loss) per share information:
Average shares outstanding (Basic)   10,357   10,322     10,350   10,324  
Basic earnings (loss) per share $ 0.26 $ (0.06 ) $ 0.18 $ (0.43 )
 
Average shares outstanding (Diluted)   10,476   10,322     10,482   10,324  
Diluted earnings (loss) per share $ 0.26 $ (0.06 ) $ 0.18 $ (0.43 )
 
   
RECONCILIATION OF GAAP NET INCOME (LOSS) TO EBITDA
(UNAUDITED)
(in thousands)
 
Three Months Ended     Nine Months Ended

 

September 30,

September 30,

 

2014

    2013 2014     2013
GAAP net income (loss) $ 2,717 $ (602 ) $ 1,850 $ (4,474 )
Add:
Income tax expense (benefit) 1,817 42 1,867 (1,542 )
Interest, net 816 967 2,271 2,752
Depreciation and amortization   10,671   11,633     33,274   33,399  
 
EBITDA $ 16,021 $ 12,040 $ 39,262 $ 30,135
Add:
Defense costs, pretax   65   --     2,593   --  
 
Adjusted EBITDA $ 16,086 $ 12,040 $ 41,855 $ 30,135
 

Contact:

Company Contact
Michael Borrows, EVP & CFO
USA Truck
(479) 471-2672
Michael.Borrows@usa-truck.com
or
Investor Relations Contact
Harriet Fried / Jody Burfening
LHA
(212) 838-3777
hfried@lhai.com

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