USA Truck Reports First Quarter 2019 Results

1Q 2019 net income of $1.5 million, or $0.18 per diluted share versus 1Q 2018 net income of $1.0 million, or $0.13 per diluted share

USA Truck, Inc. announced its financial results for the three months ended March 31, 2019.

For the quarter ended March 31, 2019, consolidated operating revenue was $134.0 million compared to $125.0 million for the prior-year period. Base revenue, which excludes fuel surcharge revenue, was $118.4 million compared to $110.3 million for the 2018 period. The Company reported net income of $1.5 million, or $0.18 per diluted share for the first quarter 2019 and adjusted net income of $2.0 million, or $0.24 per diluted share, compared to net income and adjusted net income of $1.0 million, or $0.13 per diluted share and $1.1 million, or $0.14 per diluted share, respectively, for the same quarter in 2018. The Company’s first quarter 2019 consolidated operating ratio was 97.1%, compared to 98.1% in the comparable 2018 quarter.

President and CEO James Reed commented, “The first quarter of 2019 marks the 2^nd consecutive first quarter of profitability and the most profitable first quarter since 2006. Add that to seven consecutive quarters of profitability, and our leadership team can drop the ‘new’ moniker – this team continues to improve results quarter after quarter and year after year. The first quarter was important in the making of USA Truck’s narrative about our ability to compete, our self-help story, and our position in the marketplace.

The quarter presented a complex environment with dropping spot rates that put pressure on our logistics business, a continued challenging driver market, increasing fuel prices, relative seasonally soft first quarter demand, and another unusually difficult weather season. Despite that, USA Truck grew revenue 7.2% and trucking revenues grew 20.4%. Even after all of the above, our team increased earnings per share by $0.05 per diluted share, or 38.5%, and adjusted earnings per share by $0.10 per diluted share, or 71.4%, year over year.

The team here is unwavering in its commitment to continue to improve results and outpace market forces in our operational and financial measures. It was a tough quarter, but we persevered and produced a result that demonstrates progress toward becoming one of the best performing companies in our sector. USA Truck is, indeed, back and we are eager to achieve our full potential.”

Trucking: For the first quarter of 2019, Trucking operating revenue (before intersegment eliminations) increased $16.1 million, or 20.4%, to $94.9 million, compared to the first quarter of 2018. This increase was primarily due to a 11.7% increase in base revenue per loaded mile. Trucking adjusted operating income was $2.3 million for the 2019 period, reflecting an adjusted operating ratio of 97.2%, compared to an adjusted operating loss of $0.6 million and an adjusted operating ratio of 100.8% for the comparable 2018 period. This represents an improvement of $2.1 million year-over-year in operating income and a 360 basis point improvement in operating ratio.

Trucking operations showed the following during the first quarter 2019:

• Base revenue per available tractor per week increased $129 per week, or 4.0%, when compared to the first quarter of 2018, and decreased $72 per week, or 2.1% sequentially, primarily due to a seasonally robust 4^th quarter freight environment and a seasonally slower 1^st quarter freight environment.
• Base revenue per loaded mile increased 11.7% to $2.244 for first quarter 2019 from $2.009 in first quarter 2018, and decreased $0.117, or 5.0% sequentially, in line with seasonal norms.
• Loaded miles per available tractor per week decreased 112 miles, or 6.9%, when compared to the first quarter of 2018, but increased sequentially by 44 miles per tractor, or 3.0%. Deadhead percentage for first quarter 2019 increased 70 basis points year-over-year, but improved 200 points sequentially.
• The average seated tractor count for the first quarter of 2019 was 1,767, which represented a 15.2% increase compared to our first quarter 2018 average of 1,534, and a 2 tractor increase sequentially over the fourth quarter 2018 average of 1,765. Average unseated tractor percentage for first quarter 2019 was 7.8% compared to 5.3% for the first quarter of 2018 and increased 150 basis points sequentially. These changes were primarily related to the increasingly challenging driver recruiting environment, combined with the OEM equipment delays late last year.

USAT Logistics: Operating revenue (before intersegment eliminations) was $41.4 million for the first quarter of 2019, a decrease of $5.3 million, or 11.4% year-over-year. Operating income decreased $0.5 million, or 19.0% year-over-year. We continue to deepen carrier and customer relationships regardless of market dynamics.

• Gross margin dollars decreased 2.5%, or $0.2 million year-over-year, to $7.7 million for the first quarter 2019, and increased 18.3%, or $1.2 million sequentially.
• Gross margin percentage for the first quarter of 2019 increased to 18.5% from 16.9% when compared to the same quarter in 2018, and increased 350 basis points sequentially from 15.0% for the fourth quarter of 2018.
• Revenue per load decreased 14.9%, or $0 per load year-over-year, and 5.1%, or $0 per load, over fourth quarter of 2018.
• Load count increased 4.1%, or 1,098 loads year-over-year, and 1.2%, or 317 loads, over fourth quarter of 2018.

Balance Sheet and Liquidity

As of March 31, 2019, total debt and lease liabilities was $182.0 million, total debt and lease liabilities, net of cash (“Net Debt”)^(a), was $181.4 million and total stockholders’ equity was $83.3 million. Net Debt to Adjusted EBITDAR^(a) for the trailing twelve months ended March 31, 2019 was 2.6x giving proforma effect to the Davis Transfer acquisition. The Company had approximately $50.0 million available to borrow under its Credit Facility as of March 31, 2019.

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