Usa truck reports second quarter 2019 results
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, 2019. for the quarter ended june 30, 2019, consolidated operating revenue was $133.6 million compared to $135.4 million for the prior-year period. base revenue, which excludes fuel surcharge revenue, was $116.7 million compared to $119.1 million for the 2018 period. the company reported net income of $0.00 million, or $0.00 per diluted share for the second quarter 2019 and adjusted net income(a) of $0.3 million, or $0.03 per diluted share, compared to net income and adjusted net income(a) of $2.5 million, or $0.31 per diluted share for the same quarter in 2018. the company's second quarter 2019 consolidated operating ratio was 98.5%, compared to 96.8% in the comparable 2018 quarter. additionally, the company recorded expenses of $0.6 million, or $0.05 per diluted share, net of tax, during the second quarter of 2019 related to the impairment of certain tractors held in assets held for sale, the arkansas flood, and accelerated vesting of our former chairman's restricted stock and retainer. president and ceo james reed commented, "the second quarter of 2019 was a challenge due to the softer freight environment, declining spot rates and unrealized bid awards. these factors combined to put pressure on our performance. we elected to procure additional freight volumes from the spot market in the trucking business to mitigate unrealized customer freight tenders. despite increased spot market participation, we were able to maintain the gains made in past quarters in our base revenue per loaded mile, and further improved our deadhead percentage both year over year and sequentially. declining spot rates experienced during the quarter also put pressure on usat logistics' volumes and compressed average revenue per load in that business. our competitive response was to implement the following initiatives that, we believe, will improve our operational and financial results as we move into the second half of 2019: hiring additional sales personnel in the usat logistics segment to increase volume; continuing the company-wide campaign to reduce fixed costs by 5-10%; targeting customer campaigns to improve actualization of bid awards received; and expanding the terminal footprint and decreasing dependence on outside repairs in high volume locations, while offering amenities to our drivers in those locations. even in the face of these challenges, the company remained profitable in the quarter. usa truck's recent past would suggest this is a 'function shift' from prior results in down markets. we believe that staying profitable in this market demonstrates that the usa truck self-help story is working to improve results." trucking: for the second quarter of 2019, trucking operating revenue (before intersegment eliminations) increased $10.8 million, or 12.6%, to $96.5 million, compared to the second quarter of 2018. trucking operating income was $0.8 million for the 2019 period, reflecting an operating ratio of 99.1%, compared to operating income of $2.2 million and an operating ratio of 97.5% for the second quarter of 2018. this represents a decrease of $1.3 million year over year in operating income and a 160 basis point decline in operating ratio. adjusted operating income(a) was $1.2 million for the 2019 period, reflecting an adjusted operating ratio(a) of 98.6%, compared to adjusted operating income(a) of $2.2 million and an adjusted operating ratio(a) of 97.1% for the comparable 2018 period. this represents a decrease of $1.0 million year over year in adjusted operating income(a) and a 150 basis point decline in adjusted operating ratio(a). trucking operations delivered the following results during the second quarter 2019: base revenue per available tractor per week decreased $99 per week, or 2.9%, compared to the second quarter of 2018, and decreased $25 per week, or 0.7% sequentially, primarily due to lower volumes on committed lanes coupled with spot market pricing pressure, offset by improved miles sequentially. base revenue per loaded mile remained essentially flat at $2.140 year over year, and decreased $0.104, or 4.6%, sequentially. this sequential decrease is primarily a result of the increased spot market volume, which drove our rate per mile lower. loaded miles per available tractor per week decreased 43 miles, or 2.7%, compared to the second quarter of 2018, but increased sequentially by 61 miles per tractor, or 4.1%. deadhead percentage for second quarter 2019 improved 80 basis points year over year and 70 basis points sequentially. the average seated tractor count for the second quarter of 2019 was 1,817, which represented a 16.6% increase compared to our second quarter 2018 average of 1,558, and a 50 tractor increase sequentially over the first quarter 2019 average of 1,767. average unseated tractor percentage for second quarter 2019 was 5.2% compared to 4.9% for the second quarter of 2018 and 7.8% for the first quarter of 2019. these changes were primarily related to the company's continued focus on attracting and retaining qualified professional drivers in this challenging recruitment environment. usat logistics: operating revenue (before intersegment eliminations) was $39.6 million for the second quarter of 2019, a decrease of $11.0 million, or 21.8% year over year. both operating income and adjusted operating income(a) were $1.1 million for the 2019 period, reflecting an operating ratio of 97.1% and an adjusted operating ratio(a) of 96.8%, respectively, compared to operating income and adjusted operating income(a) of $2.2 million and an operating ratio of 95.7% and an adjusted operating ratio(a) of 95.3% for the comparable 2018 period. this change represented a decrease of $1.0 million year over year in operating income and adjusted operating income(a) and 140 basis points in operating ratio and 150 basis points in adjusted operating ratio(a) for the second quarter of 2018. usat logistics operations delivered the following results during the second quarter 2019: gross margin dollars decreased 13.1%, or $1.0 million year over year, to $6.5 million for the second quarter 2019, and decreased 15.0%, or $1.2 million, sequentially. gross margin percentage for the second quarter of 2019 increased to 16.5% from 14.8% when compared to the same quarter in 2018, but decreased 200 basis points sequentially from 18.5% for the first quarter of 2019. revenue per load decreased 18.4%, or $310 per load year over year, and 8.5%, or $127 per load, over the first quarter of 2019. load count decreased 4.2%, or 1,252 loads year over year, and increased 4.3%, or 1,198 loads, over first quarter of 2019. segment results the following table includes key operating results and statistics by reportable segment: three months ended six months ended june 30, june 30, 2019 2018 2019 2018 trucking: (in thousands) operating revenue (before intersegment eliminations) $ 96,476 $ 85,685 $ 191,378 $ 164,531 operating income (1) $ 837 $ 2,153 $ 2,445 $ 1,689 adjusted operating income (2) $ 1,178 $ 2,153 $ 3,468 $ 1,586 operating ratio (3) 99.1 % 97.5 % 98.7 % 99.0 % adjusted operating ratio (4) 98.6 % 97.1 % 97.9 % 98.9 % total miles (5) 44,683 39,560 87,447 78,103 deadhead percentage (6) 12.7 % 13.5 % 13.0 % 13.1 % base revenue per loaded mile $ 2.140 $ 2.145 $ 2.191 $ 2.078 average number of seated tractors 1,817 1,558 1,792 1,546 average number of available tractors (7) 1,916 1,638 1,916 1,628 average number of in-service tractors (8) 1,945 1,668 1,950 1,661 loaded miles per available tractor per week 1,565 1,608 1,535 1,612 base revenue per available tractor per week $ 3,350 $ 3,449 $ 3,362 $ 3,350 average loaded miles per trip 500 522 493 532 usat logistics: operating revenue (before intersegment eliminations) $ 39,575 $ 50,616 $ 81,025 $ 97,391 operating income (1) $ 1,146 $ 2,158 $ 3,459 $ 5,014 adjusted operating income (2) $ 1,146 $ 2,158 $ 3,459 $ 5,189 gross margin (9) $ 6,532 $ 7,513 $ 14,219 $ 15,397 gross margin percentage (10) 16.5 % 14.8 % 17.5 % 15.8 % load count 28.8 30.1 56.5 56.6 balance sheet and liquidity as of june 30, 2019, total debt and lease liabilities was $192.7 million, total debt and lease liabilities, net of cash (“net debt”)(a), was $192.5 million and total stockholders' equity was $84.0 million. net debt to adjusted ebitdar(a) for the trailing twelve months ended june 30, 2019 was 2.9x giving proforma effect to the davis transfer acquisition. the company had approximately $59.0 million available to borrow under its credit facility as of june 30, 2019. second quarter 2019 conference call information usa truck will hold a conference call to discuss its second quarter 2019 results on friday, july 26, 2019 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, or may be accessed using the following link: https://services.choruscall.com/links/usak190726.html. a telephone replay of the call will also be available through august 2, 2019, 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 #10133073. (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," "ebitdar," "adjusted ebitdar," "adjusted operating ratio," "adjusted operating income (loss)," "adjusted net income (loss)," 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, including insurance premium financing and lease liabilities, net of cash. the company defines ebitdar as net income (loss), plus interest expense net of interest income, provision for income tax expense (benefit), depreciation and amortization and equipment rent. the company defines adjusted ebitdar as ebitdar plus non-cash equity compensation, severance costs in salaries, wages and employee benefits, transaction costs related to acquisition, and impairment of assets held for sale. adjusted operating ratio is calculated as operating expenses excluding severance costs included in salaries, wages and employee benefits, restructuring, impairment and other costs, amortization of acquisition related intangibles, and transaction costs related to acquisition, net of fuel surcharge revenue, as a percentage of operating revenue, excluding fuel surcharge revenue. adjusted operating income (loss) is defined as operating income (loss) excluding severance costs included in salaries, wages and employee benefits, restructuring, impairment and other costs, amortization of acquisition related intangibles, and transaction costs related to acquisition. adjusted net income (loss) is defined as net income (loss) excluding severance costs included in salaries, wages and employee benefits, restructuring, impairment and other costs, amortization of acquisition related intangibles, and transaction costs related to acquisition plus or minus the income tax effect of such adjustments using a statutory tax rate. adjusted earnings (loss) per diluted share is defined as adjusted net income (loss) divided by the weighted average number of diluted shares outstanding during the period. 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, ebitdar, adjusted ebitdar, adjusted operating ratio, adjusted operating income (loss), adjusted net income (loss), and adjusted earnings (loss) per diluted share as key measures of our performance and liquidity, 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, ebitdar, adjusted ebitdar, adjusted operating ratio, adjusted operating income (loss), adjusted net income (loss), and adjusted earnings (loss) per diluted share are not substitutes for their comparable gaap financial measures, such as total debt, net income, cash flows from operating activities, operating 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 net debt, ebitdar, adjusted ebitdar, adjusted operating ratio, adjusted operating income (loss), adjusted net income (loss), and adjusted earnings (loss) per diluted share to the most comparable 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 quarterly report on 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 "seek," "expects," "estimates," "anticipates," "projects," "believes," "hopes," "plans," "goals," "intends," "may," "might," "likely," "will," "should," "would," "could," "potential," "predict," "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, quarterly reports on form 10-q, 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 expression refer to usa truck, inc. and its subsidiaries. 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 for our customers 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 income (unaudited) three months ended six months ended june 30, june 30, 2019 2018 2019 2018 (in thousands, except per share data) operating revenue $ 133,622 $ 135,381 $ 267,596 $ 260,394 operating expenses: salaries, wages and employee benefits 33,806 31,645 69,896 63,882 fuel and fuel taxes 14,102 13,984 27,733 27,463 depreciation and amortization 9,125 7,477 17,943 14,657 insurance and claims 7,160 5,341 14,440 10,943 equipment rent 2,568 2,151 5,288 4,869 operations and maintenance 8,481 8,913 15,754 16,874 purchased transportation 49,072 55,817 97,353 104,855 operating taxes and licenses 1,311 1,262 2,428 1,764 communications and utilities 719 677 1,486 1,390 loss (gain) on disposal of assets, net 141 (395 ) (4 ) (564 ) impairment of assets held for sale 367 — 367 — reversal of restructuring, impairment and other costs — — — (639 ) other 4,787 4,198 9,008 8,197 total operating expenses $ 131,639 $ 131,070 $ 261,692 $ 253,691 operating income 1,983 4,311 5,904 6,703 other expenses: interest expense, net 1,595 833 3,336 1,651 other, net 171 113 308 233 total other expenses, net 1,766 946 3,644 1,884 income before income taxes 217 3,365 2,260 4,819 income tax expense 216 821 758 1,240 consolidated net income and comprehensive income $ 1 $ 2,544 $ 1,502 $ 3,579 net earnings per share: average shares outstanding (basic) 8,554 8,205 8,479 8,141 basic earnings per share $ 0.00 $ 0.31 $ 0.18 $ 0.44 average shares outstanding (diluted) 8,567 8,227 8,498 8,167 diluted earnings per share $ 0.00 $ 0.31 $ 0.18 $ 0.44 gaap to non-gaap reconciliations(a) (unaudited) adjusted earnings before interest, taxes, depreciation and amortization, rent (a) (in thousands) three months ended 6/30/2019 3/31/2019 12/31/2018 9/30/2018 (in thousands) net income $ 1 $ 1,501 $ 5,325 $ 3,300 add: depreciation and amortization 9,125 8,818 6,932 6,735 equipment rent 2,568 2,720 3,055 2,916 income tax expense 216 542 1,862 1,272 interest expense, net 1,595 1,741 1,187 811 ebitdar(a) 13,505 15,322 18,361 15,034 add: non-cash equity compensation 705 589 559 437 severance costs included in salaries, wages and employee benefits — 319 — — transaction costs relating to acquisition — — 239 325 impairment of assets held for sale 367 — — — adjusted ebitdar(a) $ 14,577 $ 16,230 $ 19,159 $ 15,796 adjusted net income (loss) reconciliation(a) three months ended six months ended june 30, june 30, 2019 2018 2019 2018 (in thousands) net income $ 1 $ 2,544 $ 1,502 $ 3,579 adjusted for: severance costs included in salaries, wages and employee benefits — — 319 711 reversal of restructuring, impairment and other costs — — — (639 ) amortization of acquisition related intangibles 341 — 704 — income tax effect of adjustments (87 ) — (261 ) (18 ) adjusted net income(a) $ 255 $ 2,544 $ 2,264 $ 3,633 adjusted earnings (loss) per diluted share reconciliation(a) three months ended six months ended june 30, june 30, 2019 2018 2019 2018 (in thousands) earnings per diluted share $ 0.00 $ 0.31 $ 0.18 0.44 adjusted for: severance costs included in salaries, wages and employee benefits — — 0.04 0.09 reversal of restructuring, impairment and other costs — — — (0.08 ) amortization of acquisition related intangibles 0.04 — 0.08 — income tax effect of adjustments (0.01 ) — (0.03 ) — adjusted earnings per diluted share(a) $ 0.03 $ 0.31 $ 0.27 $ 0.45 net debt reconciliation(a) june 30, 2019 2018 (in thousands) total current debt and lease liabilities $ 31,468 $ 9,344 long-term debt 96,213 54,950 leases, less current maturities 65,049 25,994 total debt 192,730 90,288 less: cash (198 ) (29 ) net debt(a) $ 192,532 $ 90,259 adjusted operating ratio reconciliation(a) consolidated three months ended six months ended june 30, june 30, 2019 2018 2019 2018 (in thousands) operating revenue $ 133,622 $ 135,381 $ 267,596 $ 260,394 less: fuel surcharge revenue (16,901 ) (16,274 ) (32,341 ) (31,008 ) base revenue $ 116,721 $ 119,107 $ 235,255 $ 229,386 operating expense $ 131,639 $ 131,070 $ 261,692 $ 253,691 adjusted for: severance costs included in salaries, wages and employee benefits — — (319 ) (711 ) reversal of restructuring, impairment and other costs — — — 639 amortization of acquisition related intangibles (341 ) — (704 ) — fuel surcharge revenue (16,901 ) (16,274 ) (32,341 ) (31,008 ) adjusted operating expense $ 114,397 $ 114,796 $ 228,328 $ 222,611 operating income $ 1,983 $ 4,311 $ 5,904 $ 6,703 adjusted operating income(a) $ 2,324 $ 4,311 $ 6,927 $ 6,775 operating ratio 98.5 % 96.8 % 97.8 % 97.4 % adjusted operating ratio(a) 98.0 % 96.4 % 97.1 % 97.0 % trucking segment three months ended six months ended june 30, june 30, 2019 2018 2019 2018 (in thousands) operating revenue $ 96,069 $ 85,569 $ 190,609 $ 164,302 intersegment activity 407 116 769 229 operating revenue (before intersegment eliminations) $ 96,476 $ 85,685 $ 191,378 $ 164,531 less: fuel surcharge revenue (13,034 ) (12,135 ) (24,799 ) (23,322 ) base revenue $ 83,442 $ 73,550 $ 166,579 $ 141,209 operating expense (before intersegment eliminations) $ 95,639 $ 83,532 $ 188,933 $ 162,842 adjusted for: severance costs included in salaries, wages and employee benefits — — (319 ) (484 ) reversal of restructuring, impairment and other costs — — — 587 amortization of acquisition related intangibles (341 ) — (704 ) — fuel surcharge revenue (13,034 ) (12,135 ) (24,799 ) (23,322 ) adjusted operating expense $ 82,264 $ 71,397 $ 163,111 $ 139,623 operating income $ 837 $ 2,153 $ 2,445 $ 1,689 adjusted operating income(a) $ 1,178 $ 2,153 $ 3,468 $ 1,586 operating ratio 99.1 % 97.5 % 98.7 % 99.0 % adjusted operating ratio(a) 98.6 % 97.1 % 97.9 % 98.9 % usat logistics segment three months ended six months ended june 30, june 30, 2019 2018 2019 2018 (in thousands) operating revenue $ 37,553 $ 49,812 $ 76,987 $ 96,092 intersegment activity 2,022 804 4,038 1,299 operating revenue (before intersegment eliminations) $ 39,575 $ 50,616 $ 81,025 $ 97,391 less: fuel surcharge revenue (4,087 ) (4,208 ) (7,929 ) (7,803 ) base revenue $ 35,488 $ 46,408 $ 73,096 $ 89,588 operating expense (before intersegment eliminations) $ 38,429 $ 48,458 $ 77,566 $ 92,377 adjusted for: severance costs included in salaries, wages and employee benefits — — — (227 ) reversal of restructuring, impairment and other costs — — — 52 fuel surcharge revenue (4,087 ) (4,208 ) (7,929 ) (7,803 ) adjusted operating expense $ 34,342 $ 44,250 $ 69,637 $ 84,399 operating income $ 1,146 $ 2,158 $ 3,459 $ 5,014 adjusted operating income(a) $ 1,146 $ 2,158 $ 3,459 $ 5,189 operating ratio 97.1 % 95.7 % 95.7 % 94.9 % adjusted operating ratio(a) 96.8 % 95.3 % 95.3 % 94.2 % usa truck inc. condensed consolidated balance sheets (unaudited) assets june 30, 2019 december 31, 2018 current assets: (in thousands, except share data) cash $ 198 $ 989 accounts receivable, net of allowance for doubtful accounts of $436 and $575, respectively 65,078 57,189 other receivables 4,222 5,688 inventories 774 722 assets held for sale 2,077 2,611 prepaid expenses and other current assets 5,232 7,675 total current assets 77,581 74,874 property and equipment: land and structures 33,262 32,434 revenue equipment 300,864 280,623 service, office and other equipment 28,503 28,094 property and equipment, at cost 362,629 341,151 accumulated depreciation and amortization (120,445 ) (115,766 ) property and equipment, net 242,184 225,385 operating leases - right of use assets 13,574 — goodwill 5,231 4,926 other intangibles, net 17,133 17,837 other assets 1,730 1,003 total assets $ 357,433 $ 324,025 liabilities and stockholders' equity current liabilities: accounts payable 23,773 23,482 current portion of insurance and claims accruals 14,387 15,852 accrued expenses 7,875 9,366 current finance lease obligations 21,665 17,292 current operating lease obligations 7,578 — long-term debt, current maturities 1,339 — insurance premium financing 886 4,435 total current liabilities 77,503 70,427 deferred gain 171 84 long-term debt, less current maturities 96,213 85,300 long-term finance lease obligations 59,012 53,460 long-term operating lease obligations 6,037 — deferred income taxes 24,292 23,518 insurance and claims accruals, less current portion 10,209 9,963 total liabilities 273,437 242,752 stockholders' equity: preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued — — common stock, $0.01 par value; 30,000,000 shares authorized; issued 11,989,229 shares, and 12,011,495 shares, respectively 120 120 additional paid-in capital 62,718 66,433 retained earnings 79,969 78,467 less treasury stock, at cost (3,408,015 shares, and 3,650,060 shares, respectively) (58,811 ) (63,747 ) total stockholders' equity 83,996 81,273 total liabilities and stockholders' equity $ 357,433 $ 324,025
