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8-K - FORM 8-K - USA TRUCK INCusak20160201_8k.htm

Exhibit 99.1

 

 

USA Truck Reports Record Fourth Quarter and Full-Year 2015 Results

 

 

4Q 2015 EPS Increases to $0.39 from $0.34 for 4Q 2014

 

Full-Year 2015 EPS Increases to $1.06 from $0.60 for 2014

 

Full-Year 2015 Adjusted EPS Increases to $1.27 from $0.76 for 2014

 

Initiatives to Accelerate Operational Improvements Take Hold

 

New Two Million Share Repurchase Program Authorized

 

Van Buren, AR – February 2, 2016 – USA Truck, Inc. (NASDAQ: USAK), a leading capacity solutions provider headquartered in Van Buren, AR, today announced its financial results for the three months and year ended December 31, 2015.

 

Vice Chairman Tom Glaser commented, “Our fourth-quarter results reflect the progress we have made improving profitability in our Trucking operations. The many initiatives we implemented to reenergize our Trucking turnaround, combined with Trucking’s strengthened leadership and the refreshing of our fleet, have enabled us to accelerate the progress underway. Our improved fourth-quarter results, particularly the 260-basis-point improvement in Trucking’s year-over-year operating ratio, illustrate the significant operating leverage the Company can build on as we move into 2016.”

 

For the fourth quarter of 2015, operating revenue was $118.0 million compared to $150.1 million for the prior-year period, reflecting improved pricing offset by lower volume. Base revenue, which excludes fuel surcharges, was $106.5 million compared to $125.8 million for the same period in the prior year. For the fourth quarter of 2015, net income increased to $3.9 million, or $0.39 per diluted share, up from $3.6 million, or $0.34 per diluted share, for the 2014 quarter. On an adjusted basis, the Company achieved earnings per diluted share of $0.38(a) for the 2015 fourth quarter, compared to $0.35(a) for the 2014 period.

 

Mr. Glaser continued, “We continue to focus on improving service to our customers, creating network and other efficiencies, lowering costs, and finally, continuing to strengthen the management and board leadership and culture of USA Truck to realize our significant potential. With the recent addition of Randy Rogers – a proven executive in logistics and transportation management – as USA Truck’s President, CEO and director, we have taken another key step that we believe will further strengthen our strategy as a capacity solutions provider. This includes the expansion of SCS, our asset-light business, which we believe offers compelling growth potential. As in 2015, we will continue our focus on improving return on invested capital, our core performance measure.”

 

President and CEO Randy Rogers added, “I am pleased to have joined USA Truck at such a meaningful time in its history. It has been exciting to see first-hand in the past few weeks the dedication and enthusiasm of USA Truck’s team members, who have been pivotal in transforming the culture and making this a great place to work. The progress made in such a short period in our Trucking business under our new leadership team is impressive and I look forward to working closely with them to generate further improvements. Furthermore, I believe our asset light business is built on a strong, scalable platform and I am excited about the opportunity to leverage my experience in logistics as we position our asset light business strategically to accelerate significant growth and to further position USA Truck as a leading capacity solutions provider.”

 

 
 

 

 

Full-Year Results

For the year ended December 31, 2015, operating revenue was $507.9 million compared to $602.5 million for the prior-year period. Base revenue, which excludes fuel surcharges, was $449.0 million compared to $494.3 million for 2014. Net income increased to $11.1 million from $6.3 million for 2014. For the year ended December 31, 2015, earnings per diluted share increased to $1.06 from $0.60 for the same period in the prior year. Included in earnings per diluted share for 2015 was $0.75 million, or $0.04, net-of-tax, per diluted share loss related to debt extinguishment and $2.7 million, or $0.17, net-of-tax, per diluted share relating to restructuring, severance and related costs. Included in earnings per share for 2014 was $2.8 million, or $0.16, net-of-tax, per diluted share related to defense costs. On an adjusted basis, the Company achieved earnings per diluted share of $1.27(a) for the year ended December 31, 2015 compared to $0.76(a) for 2014.

 

The following table includes key operating results and statistics by reportable segment (2014 has been recast to reflect the change in accounting principle for tires):

 

   

Three Months Ended

   

Year Ended

 
   

December 31,

   

December 31,

 
   

2015

   

2014

   

2015

   

2014

 

Trucking:

         

(Recast)

           

(Recast)

 

Operating revenue (in thousands)

  $ 80,284     $ 106,265     $ 354,480     $ 423,495  

Operating income (loss) (in thousands) (1)

  $ 4,523     $ 3,216     $ 11,088     $ (3,122 )

Adjusted operating ratio (2)

    93.9

%

    96.3

%

    95.5

%

    100.9

%

Total miles (in thousands) (3)

    42,758       52,471       186,686       215,479  

Deadhead percentage (4)

    13.5

%

    12.8

%

    12.6

%

    12.7

%

Base revenue per loaded mile

  $ 1.932     $ 1.898     $ 1.885     $ 1.788  

Average number of in-service tractors (5)

    1,804       2,194       1,970       2,202  

Average number of seated tractors (6)

    1,718       2,043       1,824       2,047  

Average miles per seated tractor per week

    1,894       1,954       1,963       2,019  

Base revenue per seated tractor per week

  $ 3,164     $ 3,233     $ 3,235     $ 3,151  

Average loaded miles per trip

    538       598       582       612  
                                 

Strategic Capacity Solutions:

                               

Operating revenue (in thousands)

  $ 37,700     $ 43,807     $ 153,454     $ 178,982  

Operating income (in thousands) (1)

  $ 2,749     $ 4,370     $ 11,983     $ 20,775  

Gross margin percentage (7)

    18.3

%

    17.3

%

    18.0

%

    17.7

%

 

 

(1)

Operating income or loss is calculated by deducting operating expenses from operating revenues.

 

(2)

Adjusted operating ratio is calculated as operating expenses less unusual items, 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, “During the quarter, we continued to support USA Truck’s operations through focused balance sheet management, which also included investing in ourselves through our share repurchase program authorized by the board. As of December 31, 2015, our total debt and capital lease obligations, net of cash, was $101.3 million and our stockholders’ equity was $93.8 million. Debt to Adjusted EBITDA(a) declined year-over-year, to 1.6x 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, decreased by $16.0 million, while the outstanding obligations of financing provided by operating leases increased by $20.9 million, locking in the benefits of a favorable leasing environment. As of December 31, 2015, we had $90.8 million of borrowing availability under our revolving line of credit.”

 

Stock Repurchase Program

During the fourth quarter of 2015, USA Truck repurchased 707,759 shares of common stock (7.3% of total shares outstanding) under its stock repurchase program at a weighted average price of $18.69 per share for an aggregate purchase price of $13.2 million. As of December 31, 2015, 953,738 shares (9.9% of total shares outstanding) were purchased, and on January 8, 2016, the Company had repurchased the full one million shares of common stock included in the repurchase program authorized in August 2015.

 

The Company’s board of directors recently authorized the repurchase of up to an additional two million shares of the Company’s common stock. Mr. Rogers remarked, “Driving greater value to our stockholders will continue to be an important element of our capital allocation philosophy as we look to create value both as a capacity solutions leader and through the strategic use of the Company’s balance sheet and strong liquidity position.”

 

Any share repurchases will be made using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or any combination of such methods, in accordance with applicable trading and other securities laws and regulations. The authorization expires in February 2019 unless earlier terminated or extended by the board of directors. Repurchased shares will be held as treasury stock and may be used for reissuance under the Company’s Employee Stock Purchase Plan or the Company’s 2014 Omnibus Incentive Plan, or for general corporate purposes as the board of directors may determine. Share repurchases are permitted under the Company’s primary credit facility and other contractual arrangements, subject to customary conditions.

 

The specific number of shares the Company ultimately repurchases, and the actual timing and amount of share repurchases, will depend on market conditions and other factors, as well as the applicable requirements of federal securities law. In addition, the stock repurchase program may be suspended, extended or terminated by the Company at any time without prior notice, and the Company is not obligated to purchase a specific number of shares.

 

Fourth-Quarter 2015 Conference Call Information

USA Truck will hold a conference call to discuss its fourth-quarter 2015 results on February 2, 2016 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 10078425. 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 February 10, 2016 and may be accessed by calling 1-855-669-9658 and by referencing conference ID #10078425.

 

 
 

 

 

(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 operating expenses less restructuring, severance and related costs, net of fuel surcharges, as a percentage of operating revenue excluding fuel surcharge revenue. 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 normalized 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 our year end audit, 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.

 

Company Contact

Michael Borrows, EVP & CFO

USA Truck, Inc.

(479) 471-3523

Michael.Borrows@usa-truck.com 

 

Investor Relations Contact

Harriet Fried / Jody Burfening

LHA

(212) 838-3777

hfried@lhai.com

 

 
 

 

 

USA TRUCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands, except per share data)

 

   

Three Months Ended

   

Year Ended

 
   

December 31,

   

December 31,

 
   

2015

   

2014

   

2015

   

2014

 

 

         

(Recast) (1)

           

(Recast) (1)

 
Revenue:                                

Operating revenue

  $ 117,984     $ 150,072     $ 507,934     $ 602,477  
                                 

Operating expenses:

                               

Salaries, wages and employee benefits

    35,113       39,480       140,649       153,410  

Fuel expense

    11,316       23,936       58,511       116,092  

Depreciation and amortization

    7,529       10,676       37,480       44,071  

Insurance and claims

    3,681       6,557       21,183       24,910  

Equipment rents

    1,681       762       4,424       3,089  

Operations and maintenance

    8,304       11,962       39,644       45,634  

Purchased transportation

    39,341       42,574       161,370       172,117  

Operating taxes and licenses

    1,499       1,374       5,720       5,589  

Communications and utilities

    867       903       3,599       4,062  

Gain on disposal of assets, net

    (1,781 )     (283 )     (7,547 )     (1,107 )

Restructuring, severance and related charges

    (151 )     --       2,742       --  

Other

    3,313       4,545       17,088       16,957  

Total operating expenses

    110,712       142,486       484,863       584,824  

Operating income

    7,272       7,586       23,071       17,653  
                                 

Other expenses (income):

                               

Interest expense, net

    565       737       2,237       3,008  

Defense costs

    --       171       --       2,764  

Loss on extinguishment of debt

    --       --       750       --  

Other, net

    93       193       743       245  

Total other expenses, net

    658       1,101       3,730       6,017  

Income before income taxes

    6,614       6,485       19,341       11,636  

Income tax expense

    2,677       2,933       8,272       5,351  
                                 

Net income and comprehensive income

  $ 3,937     $ 3,552     $ 11,069     $ 6,285  
                                 

Net income per share information:

                               

Average shares outstanding (basic)

    10,033       10,374       10,337       10,356  

Basic earnings per share

  $ 0.39     $ 0.34     $ 1.07     $ 0.61  
                                 

Average shares outstanding (diluted)

    10,059       10,492       10,401       10,485  

Diluted earnings per share

  $ 0.39     $ 0.34     $ 1.06     $ 0.60  

 

(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

   

Year Ended

 
   

December 31,

   

December 31,

 
   

2015

   

2014

   

2015

   

2014

 
           

(Recast) (1)

           

(Recast) (1)

 

Net income

  $ 3,937     $ 3,552     $ 11,069     $ 6,285  

Add:

                               

Depreciation and amortization

    7,529       10,676       37,480       44,071  

Income tax expense

    2,677       2,933       8,272       5,351  

Interest, net

    565       737       2,237       3,008  
                                 

EBITDA

  $ 14,708     $ 17,898     $ 59,058     $ 58,715  

Add:

                               

Non-cash equity compensation

    291       120       1,093       366  

Defense costs

    --       171       --       2,764  

Restructuring, severance and related charges

    (151 )     --       2,742       --  

Loss on debt extinguishment

    --       --       750       --  
                                 

Adjusted EBITDA

  $ 14,848     $ 18,189     $ 63,643     $ 61,845  

 

 

ADJUSTED EARNINGS PER SHARE RECONCILIATION

 

   

Three Months Ended

   

Year Ended

 
   

December 31,

   

December 31,

 
   

2015

   

2014

   

2015

   

2014

 
           

(Recast) (1)

           

(Recast) (1)

 

Earnings per diluted share

  $ 0.39     $ 0.34     $ 1.06     $ 0.60  

Adjusted for:

                               

Loss on debt extinguishment, net of tax

    --       --       0.04       --  

Restructuring, severance and related charges, net of tax

    (0.01 )     --       0.17       --  

Defense costs, net of tax

    --       0.01               0.16  

Adjusted earnings per diluted share

  $ 0.38     $ 0.35     $ 1.27     $ 0.76  

 

(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.

 

 
 

 

 

ADJUSTED OPERATING RATIO RECONCILIATION

 

 

Trucking Segment

 

Three Months Ended

   

Year Ended

 
   

December 31,

   

December 31,

 
   

2015

   

2014

   

2015

   

2014

 
           

(Recast) (1)

           

(Recast) (1)

 

Revenue

  $ 80,911     $ 106,418     $ 356,528     $ 424,082  

Less: intersegment eliminations

    627       153       2,048       587  

Operating revenue

    80,284       106,265       354,480       423,495  

Less: fuel surcharge revenue

    8,846       19,458       46,799       87,198  

Base revenue

  $ 71,438     $ 86,807     $ 307,681     $ 336,297  

Operating expense

  $ 75,761     $ 103,049     $ 343,392     $ 426,617  

Adjusted for:

                               

Restructuring, severance and related charges

    151       --       (2,742 )     --  

Fuel surcharge revenue

    (8,846 )     (19,458 )     (46,799 )     (87,198 )

Adjusted operating expense

  $ 67,066     $ 83,591     $ 293,851     $ 339,419  

Operating ratio

    94.4

%

    97.0

%

    96.9

%

    100.7

%

Adjusted operating ratio

    93.9

%

    96.3

%

    95.5

%

    100.9

%

 

(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.

 

 

SCS Segment

 

Three Months Ended

   

Year Ended

 
   

December 31,

   

December 31,

 
   

2015

   

2014

   

2015

   

2014

 

Revenue

  $ 38,514     $ 48,417     $ 158,295     $ 192,924  

Less: intersegment eliminations

    814       4,610       4,841       13,942  

Operating revenue

    37,700       43,807       153,454       178,982  

Less: fuel surcharge revenue

    2,629       4,796       12,182       20,935  

Base revenue

  $ 35,071     $ 39,011     $ 141,272     $ 158,047  

Operating expense

  $ 34,951     $ 39,437     $ 141,471     $ 158,207  

Adjusted for:

                               

Fuel surcharge revenue

    (2,629 )     (4,796 )     (12,182 )     (20,935 )

Adjusted operating expense

  $ 32,322     $ 34,641     $ 129,289     $ 137,272  

Operating ratio

    92.7

%

    90.0

%

    92.2

%

    88.4

%

Adjusted operating ratio

    92.2

%

    88.8

%

    91.5

%

    86.9

%

 

 
 

 

 

USA TRUCK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share data)

 

   

December 31,

   

December 31,

 
   

2015

   

2014

 

 

         

(Recast) (2)

 
Assets                

Current assets:

               

Cash

  $ 87     $ 205  

Accounts receivable, net of allowance for doubtful accounts of $608 and $1,020, respectively

    53,324       71,186  

Other receivables

    5,094       5,604  

Inventories

    748       1,863  

Assets held for sale

    7,979       3,536  

Income taxes receivable

    6,159        

Prepaid expenses and other current assets

    4,876       5,197  

Total current assets

    78,267       87,591  

Property and equipment:

               

Land and structures

    32,910       31,596  

Revenue equipment

    289,045       348,251  

Service, office and other equipment

    22,156       18,812  

Property and equipment, at cost

    344,111       398,659  

Accumulated depreciation and amortization

    (137,327 )     (182,964 )

Property and equipment, net

    206,784       215,695  

Other assets

    1,405       658  

Total assets

  $ 286,456     $ 303,944  

Liabilities and Stockholders’ Equity

               

Current liabilities:

               

Accounts payable

  $ 24,473     $ 23,582  

Current portion of insurance and claims accruals

    10,706       10,230  

Accrued expenses

    8,836       8,252  

Current maturities of long-term debt and capital leases

    12,190       24,048  

Total current liabilities

    56,205       66,112  

Deferred gain

    701       589  

Long-term debt and capital leases, less current maturities

    89,245       93,464  

Deferred income taxes

    37,943       35,064  

Insurance and claims accruals, less current portion

    8,585       9,647  

Total liabilities

    192,679       204,876  

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 11,946,253 shares, and 11,873,071 shares, respectively

    119       119  

Additional paid-in capital

    67,370       65,850  

Retained earnings

    65,871       54,802  

Less treasury stock, at cost (2,286,608 shares, and 1,340,438 shares, respectively)

    (39,583 )     (21,703 )

Total stockholders’ equity

    93,777       99,068  

Total liabilities and stockholders’ equity

  $ 286,456     $ 303,944  

 

(2) The Company has early adopted ASU 2015-17 effective December 31, 2015 on a retrospective basis. Adoption of this ASU resulted in a reclassification of the Company’s net current deferred tax asset to the net non-current deferred tax liability in its Consolidated Balance Sheet as of December 31, 2015 and 2014.