UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,D.C. 20549

FORM 10-Q

(Mark One)

☒
~~[X]~~	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020


☐
~~For the quarterly period ended~~	~~March 31, 2019~~


~~[ ]~~	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from - to - .

Commission File Number: 1-35740

USA TRUCK INC.

(Exact name of registrant as specified in its charter)



~~USA TRUCK,INC.~~
~~(Exact name of registrant as specified in its charter)~~ Delaware		71-0556971

~~Delaware~~		~~71-0556971~~
(State or other jurisdiction of incorporation		(I.R.S. Employer Identification No.)
or organization)

3200 Industrial Park Road
Van Buren, Arkansas		72956
(Address of principal executive offices)		(Zip Code)

479-471-2500

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



~~479-471-2500~~
~~(Registrant’s telephone number, including area code)~~

~~N/A~~
~~(Former name, former address and former fiscal year, if changed since last report)~~

~~Securities registered pursuant to Section 12(b) of the Act:~~
Title of each class	Trading Symbol(s):	Name of each exchange on which registered:
Common Stock, $0.01 Par Value	USAK	The NASDAQ Stock Market LLC ~~(NASDAQ~~ (NASDAQ Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:



Large accelerated filer [ ]	Accelerated filer ~~[X]~~☒	Smaller reporting company ~~[ ]~~☒
Non-accelerated filer [ ]		Emerging growth company ~~[ ]~~☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ~~[ ]~~☐ No [X]

The number of shares outstanding of the registrant’s common stock, as of ~~April 19, 2019,~~May 1, 2020, was ~~8,538,645.~~

8,687,518.

Table of Contents

USA TRUCKINC.

TABLE OF CONTENTS


Item No.	Caption		Page
		PART I – FINANCIAL INFORMATION
1.		Financial Statements
		Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2020 and December 31, 2019		2
		Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income (unaudited) - Three months ended March 31, 2020 and March 31, 2019		3
		Condensed Consolidated Statements of Stockholders’ Equity (unaudited) - Three months ended March 31, 2020 and March 31, 2019		4
		Condensed Consolidated Statements of Cash Flows (unaudited) - Three months ended March 31, 2020 and March 31, 2019		5
		Notes to Condensed Consolidated Financial Statements (unaudited)		6
2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
3.		Quantitative and Qualitative Disclosures About Market Risk		26
4.		Controls and Procedures		26
		PART II – OTHER INFORMATION
1.		Legal Proceedings		27
1A.		Risk Factors		27
2.		Unregistered Sales of Equity Securities and Use of Proceeds		28
3.		Defaults Upon Senior Securities		28
4.		Mine Safety Disclosures		28
5.		Other Information		28
6.		Exhibits		29
		Signatures		30

Item No. Caption Page

PART I – FINANCIAL INFORMATION

1.
Financial Statements

Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2019 and December 31, 2018
2
Condensed Consolidated Statements of Income and Comprehensive Income (unaudited) - Three months ended March 31, 2019 and March 31, 2018
3
Condensed Consolidated Statements of Stockholders' Equity (unaudited) - Three months ended March 31, 2019 and March 31, 2018
4
Condensed Consolidated Statements of Cash Flows (unaudited) - Three months ended March 31, 2019 and March 31, 2018
5

Notes to Condensed Consolidated Financial Statements (unaudited)

6
2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

15
3.
Quantitative and Qualitative Disclosures About Market Risk

28
4.
Controls and Procedures

29

PART II – OTHER INFORMATION

1.
Legal Proceedings

29
1A.
Risk Factors

29
2.
Unregistered Sales of Equity Securities and Use of Proceeds

30
3.
Defaults Upon Senior Securities

30
4.
Mine Safety Disclosures

30
5.
Other Information

30
6.
Exhibits

31

Signatures

32

Table of Contents

PART I – FINANCIAL INFORMATION

~~ITEM 1. FINANCIAL STATEMENTS~~

USA TRUCK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share data)
Assets March 31,
2019 December 31,
2018
Current assets:
Cash $ 584
$ 989
Accounts receivable, net of allowance for doubtful accounts of $484 and $575, respectively 63,345
57,189
Other receivables 4,474
5,688
Inventories 742
722
Assets held for sale 2,296
2,611
Prepaid expenses and other current assets 7,102
7,675
Total current assets 78,543
74,874
Property and equipment:
Land and structures 32,981
32,434
Revenue equipment 290,506
280,623
Service, office and other equipment 28,379
28,094
Property and equipment, at cost 351,866
341,151
Accumulated depreciation and amortization (115,811 ) (115,766 )
Property and equipment, net 236,055
225,385
Operating leases - right of use assets 15,433
—
Goodwill 5,231
4,926
Other intangibles, net 17,474
17,837
Other assets 1,713
1,003
Total assets $ 354,449
$ 324,025
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 29,934
$ 23,482
Current portion of insurance and claims accruals 17,270
15,852
Accrued expenses 7,308
9,366
Current maturities of finance leases 17,574
17,292
Current maturities of operating leases 8,423
—
Insurance premium financing 2,144
4,435
Total current liabilities 82,653
70,427
Deferred gain 223
84
Long-term debt 92,450
85,300
Finance leases, less current maturities 54,396
53,460
Operating leases, less current maturities 7,010
—
Deferred income taxes 24,463
23,518
Insurance and claims accruals, less current portion 9,963
9,963
Total liabilities 271,158
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 12,007,077 shares, and 12,011,495 shares, respectively 120
120
Additional paid-in capital 62,392
66,433
Retained earnings 79,968
78,467
Less treasury stock, at cost (3,420,044 shares, and 3,650,060 shares, respectively) (59,189 ) (63,747 )
Total stockholders’ equity 83,291
81,273
Total liabilities and stockholders’ equity $ 354,449
$ 324,025

~~See accompanying notes tocondensedconsolidated financial statements.~~

~~Table of Contents~~

ITEM 1.

FINANCIAL STATEMENTS

USA TRUCK INC.

CONDENSED CONSOLIDATED ~~STATEMENTS OF INCOME AND~~~~COMPREHENSIVEINCOME~~

BALANCE SHEETS

(UNAUDITED)

~~(in thousands, except per share data)~~

Three Months Ended
March 31,
2019 2018

Operating revenue $ 133,974
$ 125,013

Operating expenses
Salaries, wages and employee benefits 36,090
32,237
Fuel and fuel taxes 13,631
13,479
Depreciation and amortization 8,818
7,180
Equipment rent 2,720
2,718
Insurance and claims 7,280
5,602
Operations and maintenance 7,273
7,961
Purchased transportation 48,281
49,038
Operating taxes and licenses 1,117
502
Communications and utilities 767
713
Gain on disposal of assets, net (145 ) (169 )
Restructuring, impairment and other costs (reversal) —
(639 )
Other 4,221
3,999
Total operating expenses 130,053
122,621
Operating income 3,921

2,392

Other expenses
Interest expense, net 1,741
818
Other, net 137
120
Total other expenses, net 1,878
938
Income before income taxes 2,043
1,454
Income tax expense 542
419

Consolidated net income and comprehensive income $ 1,501

$ 1,035

Net earnings per share
Average shares outstanding (basic) 8,375
8,035
Basic earnings per share $ 0.18
$ 0.13

Average shares outstanding (diluted) 8,399
8,040
Diluted earnings per share $ 0.18
$ 0.13

~~Seeaccompanyingnotes tocondensedconsolidated financial statements.~~

~~Table of Contents~~

~~USA TRUCK,INC.~~

~~CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY~~

~~(UNAUDITED)~~

~~(in thousands)~~

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Treasury
Stock
Total
Shares
Par
Value
Balance at December 31, 2018 12,012
$ 120
$ 66,433
$ 78,467
$ (63,747 ) $ 81,273
Issuance of treasury stock —
—
(4,558 ) —
4,558
—
Stock-based compensation —
—
589
—
—
589
Net share settlement related to restricted stock vesting (5 ) —
(72 ) —
—
(72 )
Net income —
—
—
1,501
—
1,501
Balance at March 31, 2019 12,007
$ 120
$ 62,392
$ 79,968
$ (59,189 ) $ 83,291

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Treasury
Stock
Total
Shares
Par
Value
Balance at December 31, 2017 12,142
121
68,667
65,460
(67,760 ) 66,488
Issuance of treasury stock —
—
(2,094 ) —
2,094
—
Stock-based compensation —
—
(136 ) —
—
(136 )
Forfeited restricted stock (49 ) �� —
—
—
—
—
Net share settlement related to restricted stock vesting (2 ) —
(40 ) —
—
(40 )
Net income —
—
—
1,035
—
1,035
Balance at March 31, 2018 12,091
121
66,397
66,495
(65,666 ) 67,347


Assets	March 31, 2020		December 31, 2019
Current assets:	(in thousands, except share data)
Cash	$	85	$	97
Accounts receivable, net of allowance for doubtful accounts of $654 and $369, respectively		53,223		49,853
Other receivables		9,896		5,408
Inventories		719		769
Assets held for sale		245		2,542
Prepaid expenses and other current assets		8,822		7,855
Total current assets		72,990		66,524
Property and equipment:
Land and structures		34,000		33,077
Revenue equipment		317,329		309,573
Service, office and other equipment		30,388		30,235
Property and equipment, at cost		381,717		372,885
Accumulated depreciation and amortization		(133,808)		(124,216)
Property and equipment, net		247,909		248,669
Operating leases - right of use assets		9,830		11,775
Goodwill		5,231		5,231
Other intangibles, net		16,113		16,453
Other assets		1,478		2,058
Total assets	$	353,551	$	350,710
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	26,387	$	29,421
Current portion of insurance and claims accruals		11,575		12,466
Accrued expenses		7,982		6,518
Current finance lease obligations		29,363		30,779
Current operating lease obligations		4,602		6,050
Long-term debt, current maturities		4,613		6,165
Total current liabilities		84,522		91,399
Deferred gain		46		80
Long-term debt, less current maturities		95,501		83,349
Long-term finance lease obligations		56,847		58,397
Long-term operating lease obligations		5,347		5,812
Deferred income taxes		25,769		24,017
Insurance and claims accruals, less current portion		9,445		9,445
Total liabilities		277,477		272,499
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 11,961,748 shares, and 11,987,572 shares, respectively		120		120
Additional paid-in capital		59,325		63,238
Retained earnings		71,218		73,769
Less treasury stock, at cost (3,222,972 shares, and 3,434,231 shares, respectively)		(54,589)		(58,916)
Total stockholders’ equity		76,074		78,211
Total liabilities and stockholders’ equity	$	353,551	$	350,710

Seeaccompanyingnotes to condensed consolidated financial statements.

Table of Contents

USA TRUCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Three Months Ended
March 31,
2019 2018
Operating activities:
Net income $ 1,501
$ 1,035
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 8,818
7,180
Deferred income tax, net 945
(949 )
Share-based compensation 589
(136 )
Gain on disposal of assets, net (145 ) (169 )
Reversal of previously recorded restructuring, impairment and other costs —
(639 )
Other 139
(51 )
Changes in operating assets and liabilities:
Accounts receivable (4,942 ) (1,230 )
Inventories and prepaid expenses (403 ) (598 )
Accounts payable and accrued liabilities 754
9,734
Insurance and claims accruals 1,418
1,369
Other long-term assets and liabilities (710 ) 61
Net cash provided by operating activities $ 7,964
$ 15,607

Investing activities:
Acquisition of Davis Transfer Company (net of cash) (305 ) —
Capital expenditures (17,041 ) (307 )
Proceeds from sale of property and equipment 5,858
1,308
Net cash (used in) provided by investing activities $ (11,488 ) $ 1,001

Financing activities:
Borrowings under long-term debt 12,050
5,878
Payments on long-term debt (6,235 ) (16,138 )
Payments on finance lease obligations (3,110 ) (6,373 )
Net change in bank drafts payable 486
—
Net payments for tax withholdings for vested stock-based awards (72 ) (40 )
Net cash provided by (used in) financing activities $ 3,119
$ (16,673 )

Decrease in cash (405 ) (65 )
Cash:
Beginning of period 989
71
End of period $ 584

$ 6

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 1,482
$ 834
Income taxes —
—

Supplemental disclosure of non-cash investing activities:
Purchases of revenue equipment included in accounts payable $ 3,214
$ —

USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND

COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)


	Three Months Ended
	March 31,
	2020		2019
	(in thousands, except per share data)
Operating revenue	$	126,773	$	133,974

Operating expenses:
Salaries, wages and employee benefits		35,845		36,090
Fuel and fuel taxes		11,863		13,631
Depreciation and amortization		10,011		8,818
Insurance and claims		5,857		7,280
Equipment rent		2,292		2,720
Operations and maintenance		8,896		7,273
Purchased transportation		47,814		48,281
Operating taxes and licenses		1,159		1,117
Communications and utilities		813		767
Loss (gain) on disposal of assets, net		38		(145)
Other		4,497		4,221
Total operating expenses		129,085		130,053
Operating (loss) income		(2,312)		3,921

Other expenses:
Interest expense, net		1,684		1,741
Other, net		46		137
Total other expenses, net		1,730		1,878
(Loss) income before income taxes		(4,042)		2,043
Income tax (benefit) expense		(1,491)		542

Consolidated net (loss) income and comprehensive (loss) income	$	(2,551)	$	1,501

Net (loss) earnings per share:
Average shares outstanding (basic)		8,633		8,375
Basic (loss) earnings per share	$	(0.30)	$	0.18

Average shares outstanding (diluted)		8,633		8,399
Diluted (loss) earnings per share	$	(0.30)	$	0.18

Seeaccompanyingnotes tocondensedconsolidated financial statements.

Table of Contents

USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


	Common Stock			Additional
		Par		Paid-in		Retained		Treasury
	Shares	Value		Capital		Earnings		Stock		Total
	(in thousands)
Balance at December 31, 2019	11,988	$	120	$	63,238	$	73,769	$	(58,916)	$	78,211
Issuance of treasury stock	—		—		(4,327)		—		4,327		—
Stock-based compensation	—		—		471		—		—		471
Forfeited restricted stock	(15)		—		—		—		—		—
Net share settlement related to restricted stock vesting	(11)		—		(57)		—		—		(57)
Net loss	—		—		—		(2,551)		—		(2,551)
Balance at March 31, 2020	11,962	$	120	$	59,325	$	71,218	$	(54,589)	$	76,074


	Common Stock			Additional
		Par		Paid-in		Retained		Treasury
	Shares	Value		Capital		Earnings		Stock		Total
	(in thousands)
Balance at December 31, 2018	12,012	$	120	$	66,433	$	78,467	$	(63,747)	$	81,273
Issuance of treasury stock	—		—		(4,558)		—		4,558		—
Stock-based compensation	—		—		589		—		—		589
Net share settlement related to restricted stock vesting	(5)		—		(72)		—		—		(72)
Net income	—		—		—		1,501		—		1,501
Balance at March 31, 2019	12,007	$	120	$	62,392	$	79,968	$	(59,189)	$	83,291

See accompanying notes to condensed consolidated financial statements.

Table of Contents

USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three Months Ended March 31,
	2020		2019
Operating activities:	(in thousands)
Net (loss) income	$	(2,551)	$	1,501
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		10,011		8,818
Deferred income tax, net		1,752		945
Share-based compensation		471		589
Loss (gain) on disposal of assets, net		38		(145)
Other		33		139
Changes in operating assets and liabilities:
Accounts and other receivables		(6,600)		(4,942)
Inventories and prepaid expenses		(917)		(403)
Accounts payable and accrued liabilities		109		754
Insurance and claims accruals		(594)		1,418
Other long-term assets and liabilities		581		(710)
Net cash provided by operating activities	$	2,333	$	7,964
Investing activities:
Acquisition of Davis Transfer Company (net of cash)		—		(305)
Capital expenditures		(11,137)		(17,041)
Proceeds from sale of property and equipment		1,036		5,858
Net cash used in investing activities	$	(10,101)	$	(11,488)
Financing activities:
Borrowings under long-term debt		21,025		12,050
Payments on long-term debt		(10,425)		(6,235)
Principal payments on financing lease obligations		(4,150)		(3,110)
Net change in bank drafts payable		1,363		486
Net payments for tax withholdings for vested stock-based awards		(57)		(72)
Net cash provided by financing activities	$	7,756	$	3,119
Decrease in cash		(12)		(405)
Cash:
Beginning of period		97		989
End of period	$	85	$	584
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	1,450	$	1,482
Income taxes		5		—
Supplemental disclosure of non-cash investing:
Sales of revenue equipment included in accounts receivable	$	1,259	$	—
Purchase of revenue equipment included in accounts payable		—		3,214

See accompanying notes to condensed consolidated financial statements.

Table of Contents

USA TRUCK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

March 31, ~~2019~~

2020

NOTE 1 – BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the ~~opinion of the management~~accounts and operations of USA Truck Inc., and present our financial position as of March 31, 2020 and December 31, 2019 and the ~~accompanying unaudited~~results of our operations, comprehensive (loss) income and cash flows for the three months ended March 31, 2020 and 2019.

These condensed consolidated financial statements ~~have been~~and notes are prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and do not include all of the information normally included with financial statements prepared in accordance with generally accepted accounting principles ~~generally accepted in~~(“GAAP”) of the United States (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements required by GAAP have been condensed or omitted. All normal recurring adjustments considered necessary for a fair presentation have been included. Operating results forStates. Additionally, the ~~three month periods ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019.~~Company has elected to utilize certain abbreviated reporting requirements available to smaller reporting companies. These financial statements should be read in conjunction with the audited consolidated financial statements and ~~footnotes~~notes thereto included in ~~the Company's~~our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~

2019.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

These condensed consolidated financial statements and notes are unaudited. However, in the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair presentation of the results for the periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year ending December 31, 2020.

The accompanying condensed consolidated financial statements include USA Truck Inc., and its wholly owned subsidiaries: International Freight Services, Inc. ~~("IFS"~~(“IFS”), a Delaware corporation; Davis Transfer Company Inc. (“DTC”), a Georgia corporation, ~~("DTC"),~~ Davis Transfer Logistics Inc. (“DTL”), a Georgia corporation, ~~("DTL"),~~ and B & G Leasing, L.L.C. (“B & G”), a Georgia limited liability ~~company, ("~~company. Collectively, B & G,~~" and collectively with~~ DTC, and DTL ~~"Davis~~comprise “Davis Transfer ~~Company")~~Company”. References in this report to “it,” “we,” “us,” “our,” or the “Company,” and similar expressions refer to USA Truck Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in preparing the condensed consolidated financial statements. Certain amounts reported in prior periods have been reclassified to conform to the current year presentation.

~~References to the “Company,” “we,” “us,” “our” or similar terms refer to USA Truck, Inc. and its subsidiary.~~

~~NOTE 2~~–~~NEWACCOUNTING PRONOUNCEMENTS~~

In February 2016, the FASB issued ASU No. 2016-2, Leases, which requires lessees to recognize a right-to-use asset and a lease obligation for all leases. Lessees are permitted to make an accounting policy election to not recognize an asset and liability for leases with a term of twelve months or less. Lessor accounting under the new standard is substantially unchanged. Additional qualitative and quantitative disclosures, including significant judgments made by management, will be required.

Change in estimate

The Company ~~adopted~~reviews the ~~new standard beginning~~estimated useful lives and salvage values of its fixed assets on an ongoing basis, based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice. During the first quarter of ~~2019 using a modified retrospective transition approach, which includes a number~~2020, the Company lowered the salvage value of ~~practical expedients. The effect~~its tractor fleet from 30% to 25% to better reflect current estimates of the ~~adoption~~value of such equipment upon its retirement. This change is ~~reflected within~~being accounted for as a change in estimate. During the ~~financial statements~~quarter ended March 31, 2020, this change in estimate resulted in an increase in depreciation and ~~Note 10.~~

~~Table~~amortization expense of ~~Contents~~

~~NOTE~~3–~~REVENUE RECOGNITION~~

~~Revenue is measured based upon consideration specified in~~approximately $0.4 million.

Risks and Uncertainties

In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a ~~contract with a customer. The Company recognizes revenue over time, as contractual performance obligations are satisfied by transferring~~global pandemic, and the ~~benefit~~President of the ~~service~~United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. In view of the rapidly changing business environment, unprecedented market volatility and heightened degree of uncertainty resulting from COVID-19, we are currently unable to fully determine its future impact on our ~~customer. The benefit is transferred to~~business. However, we are monitoring the ~~customer as~~progression of the ~~service is provided~~pandemic, further government response and ~~revenue is recognized accordingly via time-based metrics. A corresponding contract asset~~development of ~~$1.5 million~~treatments and ~~$1.1 million was recorded~~vaccines and their potential effect on our financial position, results of operations, cash flows and liquidity. These events could have an impact in future periods on certain estimates used in the March 31, 2019 and December 31, 2018 balance sheets, respectively, in the Accounts receivable line item. The Company is entitled to receive payment as it satisfies performance obligations with customers. The amount of remaining performance obligations relating to loads in process at 11:59 pm as of the end of each reporting period was deemed to be immaterial. Our business consists of two reportable segments, Trucking and USAT Logistics. For more detailed information about our reportable segments, see Note 4.

~~The Company’s revenue types are line haul, fuel surcharge and accessorial. Line haul revenue represents the majority~~preparation of our revenue and consists of fees earned for freight transportation, excluding fuel surcharge. Fuel surcharge revenue consists of additional fees earned by the Company in connection with the performance of line haul services to partially or completely offset the cost of fuel. Accessorial revenue consists of ancillary services `provided by the Company,first quarter financial results, including, but not limited to ~~stop-off charges, loading~~impairment of goodwill, other intangible assets and ~~unloading charges, tractor or trailer detention charges, expedited charges, repositioning charges, etc. These accessorial charges~~other long-lived assets, income tax provision and recoverability of certain receivables. Should the pandemic continue for an extended period of time, the impact on our operations could have a material adverse effect on our financial condition, results of operations, cash flows and liquidity.

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Accounting standards issued but not yet adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This update requires measurement and recognition of expected versus incurred credit losses for financial assets held. For smaller reporting companies, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are ~~recognized as revenue throughout~~currently evaluating the ~~service provided.~~ effect of adopting ASU 2016-13.

NOTE 2 – REVENUE RECOGNITION

The following tables set forth revenue disaggregated by revenue type and ~~segment (in thousands):~~

Three Months Ended
March 31,
Revenue type 2019 2018
Trucking
USAT
Logistics
Eliminations Total Trucking
USAT
Logistics
Eliminations Total
Freight 81,423
36,630
(2,210 ) 115,843
66,917
40,973
(608 ) 107,282
Fuel surcharge 11,765
3,842
(167 ) 15,440
11,175
3,559
—
14,734
Accessorial 1,714
977
—
2,691
754
2,243
—
2,997
Total $ 94,902
$ 41,449
$ (2,377 )
$ 133,974
$ 78,846
$ 46,775
$ (608 ) $ 125,013

segment:


	Three Months Ended March 31,
	2020								2019
	Trucking		USAT Logistics		Eliminations		Total		Trucking		USAT Logistics		Eliminations		Total
Revenue type	(in thousands)
Freight	$	80,903	$	31,667	$	(2,874)	$	109,696	$	81,423	$	36,630	$	(2,210)	$	115,843
Fuel surcharge		11,287		3,077		(172)		14,192		11,765		3,842		(167)		15,440
Accessorial		1,804		1,081		—		2,885		1,714		977		—		2,691
Total	$	93,994	$	35,825	$	(3,046)	$	126,773	$	94,902	$	41,449	$	(2,377)	$	133,974

At March 31, 2020 and December 31, 2019, the Company had contract assets of $1.3 million and $0.9 million, respectively.

NOTE4 3 – SEGMENT REPORTING

The Company’s ~~two~~2 reportable segments are Trucking and USAT Logistics. In determining its reportable segments, the ~~Company's management~~Company’s chief operating decision maker focuses on financial information, such as operating revenue, operating expense categories, operating ratios and operating income, as well as on key operating statistics, to make operating decisions.

Trucking. Trucking is comprised of one-way truckload and dedicated freight motor carrier services. Truckload provides motor carrier services as a medium-haul common and contract carrier. USA Truck has provided truckload motor carrier services since its inception, and continues to derive the largest portion of its gross revenue from these services. Dedicated freight provides truckload motor carrier services to specific customers for movement of freight over particular routes at specified times.

USAT Logistics. USAT ~~Logistics'~~Logistics’ service offerings consist of freight brokerage, logistics, and rail intermodal services. Each of these service offerings match customer shipments with available equipment of authorized third-party motor carriers and other service providers. The Company provides these services to many existing Trucking customers, many of whom prefer to rely on a single service provider, or a small group of service providers, to provide all their transportation solutions.

Revenue equipment assets are not allocated to USAT Logistics as freight services for customers are brokered through arrangements with third-party motor carriers who utilize their own equipment. To the extent rail intermodal or other USAT Logistics operations require the use of Company-owned assets, they are obtained from the Company’s Trucking segment on an as-needed basis. Depreciation and amortization expense is allocated to USAT Logistics based on the Company-owned assets specifically utilized to generate USAT Logistics revenue. All intercompany transactions between segments reflect rates similar to those that would be negotiated with independent third parties. All other expenses for USAT Logistics are specifically identifiable direct costs or are allocated to USAT Logistics based on relevant cost drivers, as determined by management.

In determining its reportable segments, the Company’s management focuses on financial information, such as operating revenue, operating expense categories, operating ratios and operating income, as well as on key operating statistics, to make operating decisions.

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A summary of operating revenue by segment is as ~~follows (in thousands):~~

follows:


	Three Months Ended
	March 31,
	2020		2019
Operating revenue	(in thousands)
Trucking revenue (1)	$	93,994	$	94,902
Trucking intersegment eliminations		(994)		(341)
Trucking operating revenue		93,000		94,561
USAT Logistics revenue		35,825		41,449
USAT Logistics intersegment eliminations		(2,052)		(2,036)
USAT Logistics operating revenue		33,773		39,413
Total operating revenue	$	126,773	$	133,974

Three Months Ended
March 31,
Operating revenue 2019 2018
Trucking revenue (1) $ 94,902
$ 78,846

Trucking intersegment eliminations (341 ) (113 )
Trucking operating revenue 94,561
78,733

USAT Logistics revenue 41,449
46,775

USAT Logistics intersegment eliminations (2,036 ) (495 )
USAT Logistics operating revenue 39,413
46,280

Total operating revenue $ 133,974

$ 125,013


~~(1)~~1)	Includes foreign revenue of ~~$9.5~~$8.6 million and ~~$9.9~~$9.5 million for the three months ended March 31, 2020 and 2019, ~~and 2018,~~ respectively. ~~All foreign revenue is collected in U.S. dollars.~~

A summary of operating (loss) income ~~(loss)~~ by segment is as ~~follows (in thousands):~~

Three Months Ended
March 31,
Operating income (loss)
2019 2018
Trucking $ 1,609
$ (464 )
USAT Logistics 2,312
2,856

Total operating income $ 3,921
$ 2,392

follows:


	Three Months Ended
	March 31,
	2020		2019
Operating (loss) income	(in thousands)
Trucking	$	(1,688)	$	1,609
USAT Logistics		(624)		2,312
Total operating (loss) income	$	(2,312)	$	3,921

A summary of depreciation and amortization by segment is as ~~follows (in thousands):~~

Three Months Ended
March 31,
Depreciation and amortization 2019 2018
Trucking $ 8,579
$ 7,026

USAT Logistics 239
154

Total depreciation and amortization $ 8,818
$ 7,180

follows:


	Three Months Ended
	March 31,
	2020		2019
Depreciation and amortization	(in thousands)
Trucking	$	9,776	$	8,579
USAT Logistics		235		239
Total depreciation and amortization	$	10,011	$	8,818

NOTE5 4 –EQUITY COMPENSATION AND EMPLOYEE BENEFIT PLANS

The Company adopted the 2014 Omnibus Incentive Plan (the “Incentive Plan”) in May 2014. The Incentive Plan replaced the 2004 Equity Incentive Plan and provided for the granting of up to 500,000 shares of common stock through equity-based awards to directors, officers and other key employees and consultants. The First Amendment to the Incentive Plan was adopted in May 2017, which, among other things, increased the number of shares of common stock available for issuance under the Incentive Plan by an additional 500,000 shares. The Second Amendment to the Incentive Plan was adopted in May 2019, which, among other things, increased the number of shares of common stock available for issuance under the Incentive Plan by an additional 500,000 shares. As of March 31, ~~2019, 56,412~~2020, 462,253 shares remain available under the Incentive Plan for the issuance of future equity-based compensation awards.

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~~NOTE 6 – INTANGIBLE ASSETS AND GOODWILL~~

~~The following tables summarizes the intangible assets and amortization expense for the period ended March 31, 2019 (in thousands):~~

March 31, 2019
Amortization period (years) Gross Amount Accumulated Amortization Net intangible assets
Trade name Indefinite $ 5,000
$ —
$ 5,000
Non-compete agreement 2 140
20
120
Customer relationships 10 12,900
546
12,354
Total intangible assets $ 18,040
$ 566
$ 17,474

~~Changes in carrying amount of goodwill by reportable segment is as follows (in thousands):~~

Trucking USAT Logistics
Balance at December 31, 2018 $ 4,926
$ —
Working capital adjustment 305
—
Balance at March 31, 2019 $ 5,231
$ —

The above intangible assets have a weighted average life of 119 months. The expected remaining amortization of these assets for the next five successive years and thereafter is as follows (in thousands):

2019 $ 996
2020 1,346
2021 1,288
2022 1,288
2023 1,288
2024 1,288
Thereafter 4,980
Total $ 12,474

NOTE 75 – ACCRUED EXPENSES

Accrued expenses ~~consisted~~consist of the ~~following (in thousands):~~

Accrued expenses March 31,
2019 December 31,
2018
Salaries, wages and employee benefits $ 4,274
$ 5,775
Federal and state tax accruals 1,679
1,898
Other (1) 1,355
1,693
Total accrued expenses $ 7,308

$ 9,366

following:


	March 31, 2020		December 31, 2019
	(in thousands)
Salaries, wages and employee benefits	$	5,221	$	3,668
Federal and state tax accruals		1,582		1,648
Other (1)		1,179		1,202
Total accrued expenses	$	7,982	$	6,518


~~(1)~~1)	~~As of March 31, 2019 and December 31, 2018, no~~No single item included within other accrued expenses exceeded 5.0% of our total current liabilities.


~~(2)~~	~~See Note 15 for information regarding the revision.~~

~~NOTE~~8–~~INSURANCE PREMIUM FINANCING~~

During October 2018, the Company entered into agreements to pay approximately $4.7 million to third-party financing companies for the Company's annual insurance premiums. The balance of the note payable as of March 31, 2019 was $2.1 million.

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NOTE 9~~– LONG-TERM DEBT~~

6 –DEBT

Long-term debt consisted of the ~~following (in thousands):~~

March 31,
2019 December 31,
2018
Revolving credit agreement $ 92,450
$ 85,300

following:


	March 31, 2020		December 31, 2019
	(in thousands)
Revolving credit agreement	$	86,000	$	73,225
Sale leaseback finance obligations		11,138		11,783
Insurance premium financing (2019)		2,976		4,506
		100,114		89,514
Less current maturities		(4,613)		(6,165)
Total long-term debt	$	95,501	$	83,349

Credit facility

On January 31, 2019, ~~USA Truck, Inc., a Delaware corporation (the "Company"),~~the Company, entered into a five ~~years,~~year, $225.0 million senior secured revolving credit facility (the ~~"New Credit Facility"~~“Credit Facility”) with a group of lenders and ~~the Agent~~Bank of America, N.A., as agent (the “Agent”) pursuant to the terms of an Amended and Restated Loan and Security ~~Agreement that amends and restates~~Agreement. The Credit Facility replaced the ~~terms of the Company's~~Company’s previous five ~~years,~~year, $170.0 million senior secured revolving credit facility dated February 15, 2015.

On April 7, 2020, the Company, in accordance with the terms of the Credit Agreement, provided notice to the Agent that effective as of April 20, 2020, the Company was permanently reducing the revolving credit commitment under the Credit Agreement by $55.0 million such that the revolving credit commitment will be $170.0 million. The reduction in the revolving credit commitment will also reduce the fees paid by the Company in connection with such commitment.

The Credit Facility is structured as a ~~$225.0~~$170.0 million revolving credit facility, with an accordion feature that, so long as no event of default exists, allows the Company to request an increase in the revolving credit facility of up to $75.0 million, exercisable in increments of at least $20.0 million. The Credit Facility is a five year facility scheduled to terminate on January 31, 2024. Borrowings under the Credit Facility are classified as either “base rate loans” or “LIBOR loans”. Base rate loans accrue interest at a base rate equal to the Agent’s prime rate plus an applicable margin ~~set at 0.25% through June 30, 2019, and~~ adjusted quarterly ~~thereafter~~ between 0.25% and 0.75% based on the Company’s consolidated fixed charge coverage ratio. LIBOR loans accrue interest at the London Interbank Offered Rate (“LIBOR”) plus an applicable margin ~~set at 1.25% through June 30, 2019, and~~ adjusted quarterly ~~thereafter~~ between 1.25% and 1.75% based on the Company’s consolidated fixed charge coverage ratio. The Credit Facility includes, within its ~~$225.0~~$170.0 million revolving credit facility, a letter of credit sub-facility in an aggregate amount of $15.0 million and a swingline sub-facility (the “Swingline”) in an aggregate amount of $25.0 million. An unused line fee of 0.25% is applied to the average daily amount by which the lenders’ aggregate revolving commitments exceed the outstanding principal amount of revolver loans and the aggregate undrawn amount of all outstanding letters of credit issued under the Credit Facility. The Credit Facility is secured by a pledge of substantially all of the Company’s assets, except for any real estate or revenue equipment financed outside the Credit Facility.

Borrowings under the Credit Facility are subject to a borrowing base limited to the lesser of (A) ~~$225.0~~$170.0 million; or (B) the sum of (i) ~~90%~~90.0% of eligible investment grade accounts receivable (reduced to ~~85%~~85.0% in certain situations), plus (ii) ~~85%~~85.0% of eligible non-investment grade accounts receivable, plus (iii) the lesser of (a) ~~85%~~85.0% of eligible unbilled accounts receivable and (b) $10.0 million, plus (iv) the product of ~~85%~~85.0% multiplied by the net orderly liquidation value percentage applied to the net book value of eligible revenue equipment, plus (v) ~~85%~~85.0% multiplied by the net book value of otherwise eligible newly acquired revenue equipment that has not yet been subject to an appraisal. The borrowing

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base is reduced by an availability reserve, including reserves based on dilution and certain other customary reserves.

The Credit Facility contains a single financial covenant, which requires a consolidated fixed charge coverage ratio of at least 1.0 to 1.0 that is triggered in the event excess availability under the Credit Facility falls below ~~10%~~10.0% of the lenders’ total commitments. Also, certain restrictions regarding the Company’s ability to pay dividends, make certain investments, prepay certain indebtedness, execute share repurchase programs and enter into certain acquisitions and hedging arrangements are triggered in the event excess availability under the Credit Facility falls below ~~10%~~20.0% of the lenders’ total commitments.

The Company had noapproximately $0.1 million in borrowings under the Swingline as of March 31, ~~2019.~~2020. The average interest rate including all borrowings made under the Credit Facility as of March 31, ~~2019~~2020 was ~~3.88%~~2.99%. As debt is repriced on a monthly basis, the borrowings under the Credit Facility approximate fair value. As of March 31, ~~2019,~~2020, the Company had ~~outstanding $5.4~~$7.4 million in letters of credit outstanding and had approximately ~~$50.0~~$37.9 million available to borrow under the Credit ~~Facility.~~

~~NOTE 10 – LEASES AND RIGHT OF USE ASSETS~~

USA Truck adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019. The standard requires lessees to recognize a right-of-use ("ROU") asset and lease liability for all leases. Some of our leases contain both lease and non-lease components, which we have elected to treat as a single lease component. We have also elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase options, of twelve months or less in our consolidated balance sheets for all classes of underlying assets. Lease costs for short-term leases are recognized on a straight-line basis over the lease term. We elected the package of transition practical expedients for existing contracts, which allowed us to carry forward our historical assessments of whether contracts are or contain leases, lease classification and determination of initial direct costs.

~~USA Truck leases property and equipment under finance and operating leases. The Company has operating and finance~~

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leases for revenue equipment, real estate, information technology equipment (primarily servers and copiers), and various other equipment used in operating our business. Certain leases for revenue equipment and information technology contain options to purchase, extend, guarantee residual value, or terminate the lease. Determining the lease term and amount of lease payments to include in the calculation of the ROU asset and lease liability for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain, and if the optional period and payments should be included in the calculation of the associated ROU asset and liability. Facility taking into account borrowing base availability.

Sale-leaseback transactions

In ~~making this determination, we consider all relevant economic factors that would compel us to exercise or not exercise an option.~~

When available, we use the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of our leases. In such cases, we use an estimate of our incremental borrowing rate to discount lease payments based on information available at lease commencement.

~~As of March 31,~~July 2019, the Company ~~has~~ entered into ~~leases~~a sale-leaseback transaction whereby it sold tractors for approximately $2.3 million and concurrently entered into a finance lease agreement for the sold tractors with ~~lessors who do not participate in~~a five year term. Under the ~~Credit Facility. Currently, such leases do not contain cross-default provisions with the Revolver.~~

~~Revenue Equipment~~

~~In addition to the revenue equipment owned by~~lease agreement, the Company ~~we currently lease 960 additional tractors and 700 trailers. Of~~paid an initial monthly payment of approximately $0.03 million. At the leased revenue equipment, 606 tractors and 651 trailers are classified as finance leases, 354 tractors and 49 trailers are classified as operating leases. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. The lease term for these types of leases is determined by the length of the underlying customer contract or based on the judgment of the business. These leases are treated as short-term as the cumulative right-of-use is less than 12 months over the term of the contract. The Company uses the leased revenue equipment for the same operational purposes as its owned equipment.

~~Real Estate~~

We have operating and finance leases for office space, terminal facilities, and drop yards. Many of our leases contain charges for common area maintenance or other miscellaneous expenses that are updated based on landlord estimates. Due to this variability, the cash flows associated with these charges are not included in the minimum lease payments used in determining the ROU asset and associated lease liability.

~~Some of our real estate leases contain options to renew or extend the lease or terminate the lease before the expiration date. These options are factored into the determination~~end of the lease, ~~term~~the Company has the option to purchase the tractors. This transaction does not qualify for sale-leaseback accounting due to the option to repurchase the tractors and is therefore treated as a financing obligation.

In April 2019, the Company entered into a sale-leaseback transaction whereby it sold tractors for approximately $10.5 million and concurrently entered into a finance lease ~~payments when their exercise~~agreement for the sold tractors with a five year term. Under the lease agreement, the Company paid an initial monthly payment of approximately $0.1 million. At the end of the lease, the Company has the option to purchase the tractors for the greater of fair market value or 32.5% of the original cost. This transaction does not qualify for sale-leaseback accounting due to the option to repurchase the tractors and is ~~considered~~therefore treated as a financing obligation.

Insurance premium financing

In October 2019, the Company entered into a short-term agreement to ~~be reasonably certain.~~

~~Information Technology and Other Equipment~~

~~The Company leases information technology and other equipment, primarily servers and copiers, in~~finance approximately $4.5 million with a third-party financing company for a portion of the ~~course of our operations.~~

Company’s annual insurance premiums.

NOTE 7 – LEASES

The components of lease expense for each of the ~~three months ended March 31, 2019~~periods presented are as ~~follows (in thousands):~~follows:


	March 31, 2020		March 31, 2019
	(in thousands)
Operating lease costs	$	2,166	$	2,159
Finance lease costs:
Amortization of assets		4,723		2,691
Interest on lease liabilities		790		546
Total finance lease costs		5,513		3,237
Variable and short-term lease costs		127		561
Total lease costs	$	7,806	$	5,957

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Three Months Ended
March 31, 2019
Operating lease costs $ 2,159
Finance lease costs:
Amortization of assets 2,691
Interest on lease liabilities 546
Total finance lease costs 3,237
Variable and short-term lease costs 561
Total lease costs $ 5,957

Supplemental information and balance sheet location related to leases is as ~~follows (in thousands, except lease term and discount rate):~~

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Three Months Ended
Operating leases: March 31, 2019
Operating lease right-of-use assets $ 15,433

Current maturities of operating leases 8,423
Non-current operating leases 7,010
Total operating lease liabilities $ 15,433

Finance leases:
Property, plant and equipment, at cost 80,307
Accumulated amortization (18,250 )
Property, plant and equipment, net $ 62,057

Current maturities of long-term debt 17,574
Long-term debt and finance leases 54,396
$ 71,970

Weighted average remaining lease term (in months):
Operating leases 22 months
Finance leases 36 months

Weighted average discount rate:
Operating leases 4.13 %
Finance leases 2.46 %

follows:


	March 31, 2020			December 31, 2019
Operating leases:	(dollars in thousands)
Operating lease right-of-use assets	$	9,830		$	11,775

Current operating lease obligations		4,602			6,050
Long-term operating lease obligations		5,347			5,812
Total operating lease liabilities	$	9,949		$	11,862

Finance leases:
Property and equipment, at cost		121,421			120,236
Accumulated amortization		(35,464)			(30,990)
Property and equipment, net	$	85,957		$	89,246

Current finance lease obligations		29,363			30,779
Long-term finance lease obligations		56,847			58,397
	$	86,210		$	89,176

Weighted average remaining lease term:		(in months)			(in months)
Operating leases		47 months			45 months
Finance leases		41 months			44 months

Weighted average discount rate:
Operating leases		4.02	%		4.03	%
Finance leases		3.34	%		3.34	%

Supplemental cash flow information related to leases is as follows ~~(in thousands):~~

Three Months Ended
Cash paid for amounts included in measurement of liabilities: March 31, 2019
Operating cash flows from operating leases $ 2,067
Operating cash flows from finance leases 546
Financing cash flows from finance leases 3,110

ROU assets obtained in exchange for lease liabilities:

Operating leases 563
Finance leases $ 4,327

~~Maturities of lease liabilities as of March 31, 2019 are as follows (in thousands):~~

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Finance Leases Operating Leases
2019 $ 18,811
$ 5,927
2020 21,629
5,810
2021 7,325
1,493
2022 7,325
1,015
2023 17,133
653
Thereafter 2,451
1,394
Total lease payments 74,674
16,292
Less: Imputed interest (2,704 ) (859 )
Total lease obligations 71,970
15,433
Less: Current obligations (17,574 ) (8,423 )
Long-term lease obligations $ 54,396
$ 7,010

for the three months ended:


	March 31, 2020		March 31, 2019
Cash paid for amounts included in measurement of liabilities:	(in thousands)
Operating cash flows from operating leases	$	33	$	2,067
Operating cash flows from finance leases		790		546
Financing cash flows from finance leases		4,150		3,110

ROU assets obtained in exchange for lease liabilities:
Operating leases		—		563
Finance leases		1,184		4,327

OTHER COMMITMENTS

As of March 31, ~~2019,~~2020, the Company had ~~$27.7~~$7.3 million in noncancellable commitments for ~~purchases~~acquisition of ~~both~~ revenue ~~and non-revenue~~ equipment. We anticipate funding these commitments with cash flows from operating and financing activities.

RELATED PARTY LEASE

In the normal course of business, the Company leases office and shop space from a related party under a monthly operating lease. Rent expense for this space was approximately $0.04 million for the ~~period~~three months ended March 31, ~~2019,~~2020 and 2019. This expense is included in the ~~"Operations~~“Operations and ~~maintenance"~~maintenance” line item in the accompanying condensed consolidated statement of (loss) income and comprehensive (loss) income.

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NOTE11 8 – INCOME TAXES

During the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, the Company’s effective tax rate was ~~26.5%~~36.9% and ~~28.8%~~26.5%, respectively. The Company’s effective tax rate, when compared to the federal statutory rate of 21%, is primarily affected by state income taxes, net of federal income tax effect for the current year periods, and permanent differences, the most significant of which is the effect of the partially non-deductible per diem pay structure for our drivers. Drivers may elect to receive non-taxable per diem pay in lieu of a portion of their taxable wages. This per diem program increases the Company’s drivers’ net pay per mile, after taxes, while decreasing gross pay, before taxes. Per diem pay is partially non-deductible by the Company under current IRS regulations. As a result, salaries, wages and employee benefits costs are slightly lower and effective income tax rates are higher than the statutory rate. Due to the partially non-deductible effect of per diem pay, the Company’s tax rate will change based on fluctuations in earnings (losses) and in the number of drivers who elect to receive this pay structure. Generally, as pretax income or loss increases, the impact of the driver per diem program on the Company’s effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pretax income or loss, while in periods where earnings are at or near breakeven the impact of the per diem program on the Company’s effective tax rate can be significant.

As of March 31, 2020, the Company had an income tax receivable of approximately $5.0 million presented in the “Other receivables” line item in the condensed consolidated balance sheet.

During the three months ended March 31, 2020 our effective tax rate during the period was higher than the statutory rate primarily as a result of changes stemming from the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted during the period, which allows a 5 year federal net operating loss carryback for federal income tax purposes to tax periods where the federal statutory rate was 35%, resulting in an increased tax benefit. During the first quarter of 2019, the Company’s tax rate was negatively affected by vesting of equity-based compensation at a lower stock price than the price at which it was granted, as well as a non-deductible officer compensation, resulting in an increase to tax expense and the effective tax rate.

The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. We determined that since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate. As such, we have used a cut-off method to calculate taxes for the three months ended March 31, 2020.

NOTE12 9 – (LOSS) EARNINGS PER SHARE

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by adjusting the weighted average number of shares of common stock outstanding by common stock equivalents attributable to dilutive restricted stock and incentive stock options. The computation of diluted earnings per share does not assume conversion, exercise or contingent issuance of securities that would have an anti-dilutive effect on loss per share.

The following table sets forth the computation of basic and diluted (loss) earnings per ~~share (in thousands, except per share amounts):~~share:


	Three Months Ended
	March 31,
	2020		2019
Numerator:	(in thousands, except per share amounts)
Net (loss) income	$	(2,551)	$	1,501
Denominator:
Denominator for basic earnings (loss) per share – weighted average shares		8,633		8,375
Effect of dilutive securities:
Employee restricted stock and incentive stock options		—		24
Denominator for diluted earnings (loss) per share – adjusted weighted average shares and assumed conversion		8,633		8,399
Basic (loss) earnings per share	$	(0.30)	$	0.18
Diluted (loss) earnings per share	$	(0.30)	$	0.18
Weighted average anti-dilutive employee restricted stock and incentive stock options		439		260

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Three Months Ended
March 31,
Numerator: 2019 2018
Net income $ 1,501
$ 1,035

Denominator:
Denominator for basic earnings per share – weighted average shares 8,375
8,035

Effect of dilutive securities:
Employee restricted stock and incentive stock options 24
5

Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion 8,399

8,040

Basic earnings per share $ 0.18
$ 0.13

Diluted earnings per share $ 0.18
$ 0.13

Weighted average anti-dilutive employee restricted stock and incentive stock options 260
—

NOTE 1310 – LEGAL PROCEEDINGS

The Company is party to routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. The Company maintains insurance to cover liabilities in excess of certain self-insured retention levels. Though management believes these claims to be immaterial to the Company’s long-term financial position, adverse results of one or more of these claims could have a material adverse effect on the Company’s financial position or results of operations in any given reporting period.

~~NOTE 14– RESTRUCTURING, IMPAIRMENT AND OTHER COSTS~~

On March 7, 2019, Mr. Johannes "Werner" P. Hugo resigned as Senior Vice President - Trucking Operations. Pursuant to Mr. Hugo's resignation, the Executive Compensation Committee approved a separation agreement with Mr. Hugo (the "Hugo Separation Agreement"). Pursuant to the Hugo Separation Agreement, Mr. Hugo received (i) salary continuation through April 6, 2019, (ii) continued vesting of 1,934 shares of restricted stock scheduled to vest on March 22, 2019, (iii) noncompete payments equal to his then-current base salary ($275,000 per year) for a period of twelve months subject to ongoing compliance with certain non-competition, non-solicitation, non-disparagement, and confidentiality covenants in favor of the Company, and (iv) a prorated cash payment, if and to the extent earned, under the short term cash incentive compensation program adopted by the Executive Compensation Committee for 2019. In addition, the Separation Agreement contained a customary release of claims in favor of the Company. Total costs associated with Mr. Hugo’s resignation were $0.3 million and were recorded in the “Salaries, wages and employee benefits” line item in the accompanying condensed statements of income and comprehensive income. At March 31, 2019, the Company had accrued severance costs associated with Mr. Hugo's retirement of approximately $0.3 million.

In March 2018, the Company announced the retirement of Mr. James A. Craig, the Company’s Executive Vice President, Chief Commercial Officer, and President – USAT Logistics. Effective March 23, 2018, in connection with Mr. Craig’s retirement, the Executive Compensation Committee (the “Committee”) approved a separation agreement (the “Separation Agreement”) with the following terms: (i) salary continuation through May 31, 2018, (ii) non-compete payments equal to his current salary for a period of twelve months subject to ongoing compliance with certain non-competition, non-solicitation, non-disparagement, and confidentiality covenants in favor of the Company, (iii) a prorated cash payment, if and to the extent earned, under the short-term cash incentive compensation program adopted by the Committee for 2018, and (iv) accelerated vesting of 5,488 shares of time-vested restricted stock of the Company scheduled to vest on July 30, 2018 and 5,488 shares of performance-vested restricted stock of the Company scheduled to vest on July 30, 2018 depending on performance relative to USAT Logistics performance goals. At March 31, 2019, the Company had accrued severance costs associated with Mr. Craig’s retirement of approximately $0.1 million. Total costs associated with Mr. Craig’s retirement were $0.7 million and were recorded in the “Salaries, wages and employee benefits” line item in the accompanying condensed consolidated statements of income and comprehensive income (loss).

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The following tables summarize the Company’s liabilities, charges, and cash payments related to executive severance agreements made during the three months ended March 31, 2019 and 2018 (in thousands):

Accrued
Balance
December 31,
2018
Costs
Incurred
Payments
Expenses/
Charges
Accrued
Balance
March 31,
2019
Severance costs included in salaries, wages and employee benefits $ 247
$ 319
$ (189 ) $ —
$ 377

Three Months Ended
March 31,
Costs incurred 2019 2018
Trucking $ 319
$ 484
USAT Logistics —
227
Total $ 319
$ 711

~~NOTE 15– CORRECTION OF IMMATERIAL ERRORS~~

In connection with the preparation of our condensed consolidated financial statements for the three months ended March 31, 2019, we identified immaterial errors related to the recognition of certain income and expenses in the prior quarterly and annual periods. In accordance with SAB No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” we evaluated the errors and determined that the related impact was not material to our financial statements for any prior annual or interim period, but that correcting the cumulative impact of the error would be significant to our results of operations for the three months ended March 31, 2019. Accordingly, we have adjusted our consolidated balance sheets at December 31, 2018. The impact of the errors on our three month ended March 31, 2018 consolidated statements of income and comprehensive income, consolidated statement of cash flows, and retained earnings were deemed to be immaterial and will be adjusted in conjunction with our annual filing for the year ended December 31, 2019 on Form 10-K. We will also correct previously reported financial information for such immaterial errors in our future filings, as applicable. The effects of the adjusted on the individual line items within our condensed consolidated balance sheet at December 31, 2018 is as follows (in thousands):

December 31, 2018
As Reported Adjustments As Adjusted
Accounts receivable, net $ 56,003
$ 1,186
$ 57,189
Other receivables 5,104
584
5,688
Prepaid expenses and other current assets 7,224
451
7,675
Accounts payable 22,453
1,029
23,482
Accrued expenses 8,977
389
9,366
Retained earnings 77,664
803
78,467
Total stockholders' equity 80,470
803
81,273


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This reportcontainscertain statements that may be considered 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, (the “Exchange Act”) and such statements are subject to the safe harbor created by those sections, and the Private Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation:

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~~anyprojections of earnings, revenue,costs,or other financial items;~~

~~any statement of projected future operations or processes;~~

~~any statement of plans, strategies, goals, and objectives of management for future operations;~~

~~any statement concerning acquisitions, or proposed new services or developments;~~

~~any statement regarding future economic conditions or performance; and~~

~~any statement of belief and any statement of assumptions underlying any of the foregoing.~~

●

any projections of earnings, revenue, costs, or other financial items;

●

any statement of projected future operations or processes;

●

any statement of plans, strategies, goals, and objectives of management for future operations;

●

any statement concerning acquisitions, or proposed new services or developments;

●

any statement regarding future economic conditions or performance;

●

any statement of belief and any statement of assumptions underlying any of the foregoing; and

●

any statement about the expected impact, evolution, duration or severity of the novel coronavirus (COVID-19) global pandemic, including our anticipated actions and responses thereto and the potential impact on our business, operations, customers, employees, financial results and financial condition.

In this Quarterly Report on Form 10-Q, statements relating to:

~~future driver market,~~

~~future ability to grow market share,~~

●

risks resulting from outbreaks or other public health crises, including COVID-19,

●

future driver market,

●

future ability to grow market share,

●

future driver and customer-facing employee compensation,

●

future ability and cost to recruit and retain drivers and customer-facing employees,

●

future asset utilization,

●

the amount, timing and price of future acquisitions and dispositions of revenue equipment, size and age of the Company’s fleet, mix of fleet between Company-owned and independent contractors and anticipated gains or losses resulting from dispositions,

●

future depreciation and amortization expense, including useful lives and salvage values of equipment and intangible assets,

●

future safety performance,

●

future profitability,

●

future industry capacity,

●

future efforts of restructuring actions,

●

future deployment of technology, including front and inside-facing event recorders,

●

future pricing rates and freight network,

●

future fuel prices and surcharges, fuel efficiency and hedging arrangements,

●

future insurance and claims and litigation expense,

●

future salaries, wages and employee benefits costs,

●

future purchased transportation use and expense,

●

future operations and maintenance costs,

●

future USAT Logistics growth and profitability,

~~future abilityand costto recruit and retaindrivers and customer-facing employees,~~

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~~future asset utilization,~~

~~the amount, timing and price of future acquisitions and dispositions of revenue equipment, size and age of the Company’s fleet, mix of fleet between Company-owned and independent contractorsand anticipated gains or losses resulting from dispositions,~~

~~future depreciation and amortization expense, including useful lives and salvage values of equipment and intangible assets,~~

~~future safety performance,~~

~~future profitability,~~

~~future industry capacity,~~

~~future effects of restructuring actions,~~

~~future deployment of technology, including front and insider-facing event recorders,~~

~~future pricing rates and freight network,~~

~~future fuel prices and surcharges, fuel efficiency and hedging arrangements,~~

~~future insurance and claimsand litigationexpense,~~

~~futuresalaries, wages andemployee benefits costs,~~

~~future purchased transportation use and expense,~~

~~future operations and maintenance costs,~~

~~futureUSAT Logistics growthand profitability,~~

~~future trends in operating expenses expected to result from growing our USAT Logistics business and increasing independent contractors,~~

~~future use of derivative financial instruments and the impact of increasing interest rates and diesel fuel costs,~~

~~future asset sales of non-revenue assets,~~

~~our intention about the payment of dividends,~~

~~inflation,~~

~~future indebtedness,~~

~~future liquidity and borrowing availability and capacity,~~

~~the impact of pending and future litigation and claims,~~

~~future availabilityand compliance with covenantsunder our revolving credit facility,~~

~~expected amount and timing of capital expenditures,~~

~~expected liquidity and sources of capital resources,including the mix of capital and operating leases,~~

~~future size ofour independent contractor fleet,and~~

~~future income tax rates~~

●

future trends in operating expenses expected to result from growing our USAT Logistics business and increasing independent contractors,

●

future asset sales of non-revenue assets,

●

future impact of regulations, including enforcement of the ELD mandate,

●

future use of derivative financial instruments,

●

our strategy,

●

our intention about the payment of dividends,

●

inflation,

●

future indebtedness,

●

future liquidity and borrowing availability and capacity,

●

the impact of pending and future litigation and claims,

●

future availability and compliance with covenants under our revolving credit facility,

●

expected amount and timing of capital expenditures,

●

future equipment market,

●

expected liquidity and sources of capital resources, including the mix of financing and operating leases,

●

future size of the independent contractor fleet, and

●

future income tax rates.

among others, are forward-looking statements. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “focus,” “intends,” “plans,” “goals,” “may,” ~~“will,~~“if,” ~~”would,~~“will,” “should,” “could,” “potential,” “continue,” “future” and similar terms and phrases. Forward-looking statements are based on currently available operating, financial, and competitive information. Forward-looking statements 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. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Item 1.A, Risk Factors,” in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year endedDecember 31, ~~2018,~~2019, and other filings with the Securities and Exchange Commission (the “SEC”).

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All such forward-looking statements speak only as of the date of this report. You are cautioned not to place undue reliance on such forward-looking statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in management’s expectations with regard thereto or any change in the events, conditions or circumstances on which any such information is based, except as required by law.

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” or similar terms refer to USA Truck Inc. and its ~~subsidiary.~~

subsidiaries.

Overview

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“(“MD~~&A”~~&A”) is intended to help the reader more fully understand the operations and present business environment of USA Truck Inc. MD&A is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and notes thereto and other financial information that appears elsewhere in this report. This overview summarizes the MD&A, which includes the following sections:

~~Our~~

Business Overview – a general description of our business, the organization of our operations and the service offerings that comprise our operations.

Results of Operations – an analysis of the consolidated results of operations for the periods presented in the condensed consolidated financial statements included in this filing and a discussion of seasonality, the potential impact of inflation and fuel availability and cost.

Liquidity and Capital Resources – an analysis of cash flows, sources and uses of cash, debt, equity and contractual obligations.

~~Our Business~~

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Business Overview

USA Truck offers a broad range of truckload motor carrier and freight brokerage and logistics services to a diversified customer base that spans a variety of industries. The Company has two reportable segments: (i) Trucking, consisting of one-way truckload motor carrier services, in which volumes typically are not contractually committed, and dedicated contract motor carrier services, in which a combination of equipment and drivers is contractually committed to a particular customer, typically for a duration of at least one year, subject to certain cancellation rights, and (ii) USAT Logistics, consisting of freight brokerage, logistics, and rail intermodal service offerings.

The Trucking segment provides one-way truckload transportation, including dedicated services, of various products, goods and materials. The Trucking segment primarily uses its own purchased or leased tractors and trailers or capacity provided by independent contractors to provide services to customers and is commonly referred to as “asset-based” trucking. The Company’s USAT Logistics services match customer shipments with available equipment of authorized third-party motor carriers and other service providers and provide services that complement the Company’s Trucking operations. USAT Logistics provides these services ~~primarily~~ to many existing Trucking customers, many of whom prefer to rely on a single service provider, or a small group of service providers, to provide all their transportation solutions.

Revenue for the Company’s Trucking segment is substantially generated by transporting freight for customers, and is predominantly affected by ~~the~~ rates per mile, ~~received from customers,~~ the number of tractors in operation, and the number of revenue-generating miles per tractor. The Company ~~supplements its Trucking operating~~also generates revenue ~~by charging for~~through fuel surcharge and ancillary services such as stop-off ~~charges,~~pay, loading and unloading activities, tractor and trailer detention, ~~expedited~~expediting charges, repositioning charges and other similar services.

Operating expenses ~~that have a major impact on the profitability of the Trucking segment~~ fall into two categories: variable and fixed. Variable ~~costs,~~expenses, or mostly variable ~~costs,~~expenses, constitute the majority of the ~~costs~~expenses associated with transporting freight for customers, and include driver wages and benefits, fuel and fuel taxes, payments to independent contractors, ~~for purchased transportation,~~ operating and maintenance expense and insurance and claims expense. These ~~costs~~expenses vary primarily according to miles operated, but also have controllable components based on percentage of compensated miles, shop and dispatch efficiency, and safety and claims experience.

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~~The most significant fixed costs,~~

Fixed expenses, or mostly fixed ~~costs,~~expenses, include the capital costs of our assets (depreciation, amortization, rent and interest), compensation of non-driving employees and portions of insurance and maintenance expenses. These expenses are partially controllable through management of fleet size and facilities infrastructure, headcount efficiency, and ~~operating safely.~~

safety.

Fuel and fuel tax expense can fluctuate significantly with ~~changes in~~ diesel fuel ~~prices and is one of our most volatile variable expenses.~~prices. To mitigate the Company’s exposure to fuel price increases, it recovers from its customers fuel surcharges that historically have recouped a majority of the increased fuel costs; however, the Company cannot assure the recovery levels experienced in the past will continue in future periods. Although the Company’s fuel surcharge program mitigates some exposure to rising fuel costs, the Company continues to have exposure to increasing fuel costs related to ~~empty~~deadhead miles, out-of-route miles, fuel inefficiency due to engine idle time and other factors, including the extent to which the ~~surcharge~~surcharges paid by ~~the customer is~~customers are insufficient to compensate for higher fuel costs, particularly in times of rapidly increasing fuel prices. The main factors that affect fuel surcharge revenue are the price of diesel fuel and the number of loaded miles. The fuel surcharge is billed on a lagging basis, meaning the Company typically bills customers in the current week based on the previous week’s applicable United States Department of Energy ~~or DOE, index.~~(the “DOE”) Diesel Fuel Index. Therefore, in times of increasing fuel prices, the Company does not recover as much in fuel surcharge revenue as it pays for fuel. In periods of declining prices, the opposite is ~~true.~~

experienced.

The key statistics used to evaluate Trucking segment performance, in each case net of fuel surcharge revenue, include (i) base revenue per available tractor per week, (ii) base revenue per loaded mile, (iii) loaded miles per available tractor per week, (iv) deadhead percentage, (v) average loaded miles per trip, (vi) average number of available tractors and (vii) adjusted operating ratio. In general, the Company’s loaded miles per available tractor per week, base revenue per loaded mile and deadhead percentage are affected by industry-wide freight volumes, industry-wide trucking capacity and the competitive environment, which ~~factors~~ are mostly beyond the Company’s control. Factors over which the Company has significant control ~~as well as by~~are its sales and marketing efforts, service levels and operational efficiency of its ~~operations, over which~~operations.

Unlike the ~~Company has significant control.~~

~~The~~Trucking segment, the USAT Logistics segment is non-asset based and is dependent upon skilled employees, reliable information systems and qualified third-party capacity providers. The largest expense related to the USAT Logistics segment is purchased transportation expense. Other operating expenses consist primarily of salaries,

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wages and employee benefits. The Company evaluates the financial performance of the USAT Logistics segment by reviewing gross margin (USAT Logistics operating revenue less USAT Logistics purchased transportation expense) and the gross margin percentage (USAT Logistics operating revenue less USAT Logistics purchased transportation expense expressed as a percentage of USAT Logistics operating revenue). ~~The gross~~Gross margin can be impacted by the rates charged to customers and the costs of securing third-party capacity. USAT Logistics often achieves better gross margins during periods of imbalance between supply and demand than times of balanced supply and demand, although periods of transition to tight capacity also can compress margins.

We plan to continue our focus on improving results through ~~disciplined~~ongoing network ~~management and~~engineering initiatives, pricing discipline, enhanced partnerships with customers, and improved execution in our day-to-day operations, as well as our ongoing safety initiatives. By focusing on these key objectives, management believes it will make progress on its goals of improving the Company’s operating performance and increasing stockholder value.

COVID-19

Local, state and national governments continue to emphasize the importance of transportation and have designated it an essential service. Employee safety is our first priority, and as a result, we put certain measures in place. We have instituted work from home for administrative employees, eliminated business travel, enforced social distancing, distributed personal protective equipment to our employees and increased sanitation.

We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these challenging and uncertain times. The overall impact of COVID-19 on our consolidated results of operations for the three months ended March 31, 2020 was not material and for this period the adverse effects were primarily limited to our bad debt. However, the impact that COVID-19 will have on our consolidated results of operations throughout 2020 remains uncertain. Based on the length and severity of COVID-19, we may experience decreases in the demand for our services. We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources.

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Results of Operations

The following table sets forth the condensed consolidated statements of (loss) income and comprehensive (loss) income in dollars ~~(in thousands)~~ and percentage of consolidated operating revenue and the percentage increase or decrease in the dollar amounts ~~(in thousands)~~ of those items compared to the prior year.


	Three Months Ended March 31,
	2020					2019
					Adjusted					Adjusted	Change
			Operating		Operating			Operating		Operating	in Dollar
			Revenue		Ratio (1)			Revenue		Ratio (1)	Amounts
	$		%		%	$		%		%	%
	(dollars in thousands)
Base revenue	$	112,581	88.8	%		$	118,534	88.5	%		(5.0)	%
Fuel surcharge revenue		14,192	11.2				15,440	11.5			(8.1)
Operating revenue		126,773	100.0				133,974	100.0			(5.4)

Operating expenses		129,085	101.8		101.7		130,053	97.1		96.1	(0.7)
Operating (loss) income		(2,312)	(1.8)				3,921	2.9			(159.0)

Other expenses:
Interest expense		1,684	1.3				1,741	1.3			(3.3)
Other, net		46	0.0				137	0.1			(66.4)
Total other expenses, net		1,730	1.4				1,878	1.4			(7.9)
(Loss) income before income taxes		(4,042)	(3.2)				2,043	1.5			(297.8)
Income tax (benefit) expense		(1,491)	(1.2)				542	0.4			(375.1)

Consolidated net (loss) income	$	(2,551)	(2.0)	%		$	1,501	1.1	%		(270.0)	%

(1)

Adjusted operating ratio is calculated as operating expenses excluding severance costs included in salaries, wages and employee benefits and amortization of acquisition related intangibles, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue. Adjusted operating ratio is a non-GAAP financial measure. See “Use of Non-GAAP Financial Information”, “Consolidated Reconciliations” and “Segment Reconciliations” below for the uses and limitations associated with adjusted operating ratio and other non-GAAP financial measures.

Three Months Ended March 31, 2019
2019 2018
$
%
Operating
Revenue

%
Adjusted
Operating
Ratio (1)
$
%
Operating
Revenue

%
Adjusted
Operating
Ratio (1)

% Change
in Dollar
Amounts
Base revenue $ 118,534
88.5 %
$ 110,279
88.2 %
7.5 %
Fuel surcharge revenue 15,440
11.5

14,734
11.8

4.8 %
Operating revenue $ 133,974

100.0

$ 125,013
100.0

7.2 %

Operating expenses 130,053
97.1 % 96.1 % 122,621
98.1 % 97.8 % 6.1 %
Operating income 3,921
2.9
2,392
1.9
63.9 %

Other expenses:

Interest expense 1,741
1.3

818
0.7

112.8 %
Other, net 137
0.1

120
0.1

14.2 %
Total other expenses, net 1,878
1.4

938
0.8

100.2 %
Income before income taxes 2,043
1.5

1,454
1.2

40.5 %
Income tax expense 542
0.4

419
0.3

29.4 %

Consolidated net income $ 1,501
1.1 %
$ 1,035
0.8 %
45.0 %

(1) Adjusted operating ratio is calculated as operating expenses excluding restructuring, impairment and other costs, severance costs included in salaries, wages and employee benefits, 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 ratio is a non-GAAP financial measure. See “Use of Non-GAAP Financial Information”, “Consolidated Reconciliations” and “Segment Reconciliations” below for the uses and limitations associated with adjusted operating ratio and other non-GAAP financial measures.

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Use of Non-GAAP Financial Information

The Company uses the terms “adjusted operating ratio” and “adjusted earnings (loss) per diluted share”, and “adjusted operating income (loss)” throughout this ~~Form 10-Q.~~MD&A. Adjusted operating ratio, ~~and~~ adjusted earnings (loss) per diluted share, and adjusted operating income (loss), as defined here, are non-GAAP financial measures as defined by the SEC. Management uses adjusted operating ratio, ~~and~~ adjusted earnings (loss) per diluted share, and adjusted operating income (loss) as supplements to the Company’s GAAP results in evaluating certain aspects of its business, as discussed below.

Adjusted operating ratio is calculated as operating expenses excluding ~~restructuring, impairment and other costs,~~ severance costs included in salaries, wages and employee benefits and amortization of acquisition related intangibles, ~~and transaction costs relating to acquisition,~~ net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue. Adjusted earnings (loss) per diluted share is defined as earnings (loss) per diluted share plus the per share impact of ~~restructuring, impairment and other costs,~~ severance costs included in salaries, wages and employee benefits and ~~transaction costs~~amortization of acquisition related ~~to acquisition,~~intangibles, plus or minus the per share tax impact of those adjustments using a statutory income tax rate. The per share impact of each item is determined by dividing it by the weighted average diluted shares outstanding.

Adjusted operating income (loss) is defined as operating income (loss) excluding severance costs included in salaries, wages and employee benefits and amortization of acquisition related intangibles.

The Company’s chief operating ~~decision-makers focus~~decision-maker focuses on adjusted operating ratio, ~~and~~ adjusted earnings (loss) per diluted share and adjusted operating income (loss) as indicators of the Company’s performance from period to period.

Management believes removing the impact of the above described items from the Company’s operating results affords a more consistent basis for comparing results of operations. Management believes its presentation of adjusted operating ratio, ~~and~~ adjusted earnings (loss) per diluted share and adjusted operating income (loss) 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.

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Adjusted operating ratio and adjusted earnings (loss) per diluted share are not substitutes for operating margin or any other measure derived solely from GAAP measures. There are limitations to using non-GAAP measures such as adjusted operating ratio, ~~and~~ adjusted earnings (loss) per diluted ~~share.~~share and adjusted operating income (loss). Although management believes that adjusted operating ratio, ~~and~~ adjusted earnings (loss) per diluted share and adjusted operating income (loss) can make an evaluation of the Company’s operating performance more consistent because these measures remove items that, in management’s opinion, do not reflect its core operating performance, other companies in the transportation industry may define adjusted operating ratio, ~~and~~ adjusted earnings (loss) per diluted share and adjusted operating income (loss) differently. As a result, it may be difficult to use adjusted operating ratio, adjusted earnings (loss) per diluted share and adjusted operating income (loss) or similarly named non-GAAP measures that other companies may use, to compare the performance of those companies to USA Truck’s performance.

Pursuant to the requirements of Regulation S-K, reconciliations of non-GAAP financial measures to GAAP financial measures have been provided in the tables ~~below (dollar amounts in thousands).~~below.

Consolidated Reconciliation


	Three Months Ended
	March 31,
	2020			2019
	(in thousands)
Operating revenue	$	126,773		$	133,974
Less: Fuel surcharge revenue		(14,192)			(15,440)
Base revenue	$	112,581		$	118,534
Operating expense		129,085			130,053
Adjusted for:
Severance costs included in salaries, wages, and employee benefits		(92)			(319)
Amortization of acquisition related intangibles		(340)			(363)
Fuel surcharge revenue		(14,192)			(15,440)
Adjusted operating expense	$	114,461		$	113,931
Operating (loss) income	$	(2,312)		$	3,921
Adjusted operating (loss) income	$	(1,880)		$	4,603
Operating ratio		101.8	%		97.1	%
Adjusted operating ratio		101.7	%		96.1	%

Adjusted (loss) earnings per diluted share


	Three Months Ended
	March 31,
	2020		2019
	(in thousands)
(Loss) earnings per diluted share	$	(0.30)	$	0.18
Adjusted for:
Severance costs included in salaries, wages and employee benefits		0.01		0.04
Amortization of acquisition related intangibles		0.04		0.04
Income tax effect of adjustments		(0.01)		(0.02)
Adjusted (loss) earnings per diluted share	$	(0.26)	$	0.24

~~Consolidated Reconciliations~~

~~Adjustedoperatingratio:~~

Three Months Ended
March 31,
2019 2018
Operating revenue $ 133,974
$ 125,013

Less: Fuel surcharge revenue (15,440 ) (14,734 )
Base revenue 118,534
110,279

Operating expense 130,053
122,621

Adjusted for:

Severance costs included in salaries, wages and employee benefits (319 ) (711 )
Restructuring, impairment and other costs (reversal) —
639

Amortization of acquisition related intangibles (363 ) —

Fuel surcharge revenue (15,440 ) (14,734 )
Adjusted operating expense $ 113,931
$ 107,815

Operating ratio 97.1 % 98.1 %
Adjusted operating ratio 96.1 % 97.8 %

Table of Contents

Segment Reconciliations


	Three Months Ended
Trucking Segment	March 31,
	2020			2019
	(in thousands)
Operating revenue	$	93,000		$	94,561
Intersegment activity		994			341
Operating revenue (before intersegment eliminations)		93,994			94,902
Less: fuel surcharge revenue (before intersegment eliminations)		(11,287)			(11,765)
Base revenue	$	82,707		$	83,137
Operating expense (before intersegment eliminations)	$	95,682		$	93,293
Adjusted for:
Severance costs included in salaries, wages, and employee benefits		(92)			(319)
Amortization of acquisition related intangibles		(340)			(363)
Fuel surcharge revenue		(11,287)			(11,765)
Adjusted operating expense	$	83,963		$	80,846
Operating (loss) income	$	(1,688)		$	1,609
Adjusted operating (loss) income	$	(1,256)		$	2,291
Operating ratio		101.8	%		98.3	%
Adjusted operating ratio		101.5	%		97.2	%


	Three Months Ended
USAT Logistics Segment	March 31,
	2020			2019
	(in thousands)
Operating revenue	$	33,773		$	39,413
Intersegment activity		2,052			2,036
Operating revenue (before intersegment eliminations)		35,825			41,449
Less: fuel surcharge revenue (before intersegment eliminations)		(3,077)			(3,842)
Base revenue	$	32,748		$	37,607
Operating expense (before intersegment eliminations)	$	36,449		$	39,137
Adjusted for:
Severance costs included in salaries, wages, and employee benefits		—			—
Reversal of restructuring, impairment and other costs		—			—
Fuel surcharge revenue		(3,077)			(3,842)
Adjusted operating expense	$	33,372		$	35,295
Operating (loss) income	$	(624)		$	2,312
Adjusted operating (loss) income	$	(624)		$	2,312
Operating ratio		101.7	%		94.4	%
Adjusted operating ratio		101.9	%		93.9	%

~~Adjustedearnings perdiluted share:~~

Three Months Ended
March 31,
2019 2018
Earnings per diluted share $ 0.18
$ 0.13

Adjusted for:

Severance costs in salaries, wages and employee benefits 0.04
0.09

Restructuring, impairment and other costs (reversal) —
(0.08 )
Amortization of acquisition related intangibles 0.04
—

Transaction costs relating to acquisition —
—

Income tax effect of adjustments (0.02 ) —

Adjusted earnings per diluted share $ 0.24
$ 0.14

~~SegmentReconciliations~~

Trucking Segment
Three Months Ended
March 31,
2019 2018
Operating revenue $ 94,561
$ 78,733

Intersegment activity 341
113

Operating revenue (before intersegment eliminations) 94,902
78,846

Less: fuel surcharge revenue (11,765 ) (11,175 )
Base revenue $ 83,137
$ 67,671

Operating expense (before intersegment eliminations) 93,293
79,310

Adjusted for:

Severance included in salaries, wages and employee benefits (319 ) (484 )
Restructuring, impairment and other costs (reversal) —
587

Amortization of acquisition related intangibles (363 ) —

Fuel surcharge revenue (11,765 ) (11,175 )
Adjusted operating expense $ 80,846
$ 68,238

Operating income (loss) $ 1,609
$ (464 )
Adjusted operating income (loss) $ 2,291
$ (567 )
Operating ratio 98.3 % 100.6 %
Adjusted operating ratio 97.2 % 100.8 %

Table of Contents

USAT Logistics Segment Three Months Ended
March 31,
2019 2018
Operating revenue $ 39,413
$ 46,280

Intersegment activity 2,036
495

Operating revenue (before intersegment eliminations) 41,449
46,775

Less: fuel surcharge revenue (3,842 ) (3,559 )
Base revenue $ 37,607
$ 43,216

Operating expense (before intersegment eliminations) 39,137
43,919

Adjusted for:

Severance included in salaries, wages and employee benefits —
(227 )
Restructuring, impairment and other costs (reversal) —
52

Fuel surcharge revenue (3,842 ) (3,559 )
Adjusted operating expense $ 35,295
$ 40,185

Operating income $ 2,312
$ 2,856

Adjusted operating income $ 2,312
$ 3,031

Operating ratio 94.4 % 93.9 %
Adjusted operating ratio 93.9 % 93.0 %

~~Table of Contents~~

KeyOperatingStatistics bySegment

Three Months Ended
March 31,
Trucking: 2019 2018
Operating revenue (before intersegment eliminations) (in thousands) $ 94,902
$ 78,846

Operating income (loss) (in thousands) (1) $ 1,609
$ (464 )
Operating ratio (2) 98.3 % 100.6 %
Adjusted operating ratio (3) 97.2 % 100.8 %
Total miles (in thousands) (4) 42,764
38,542

Deadhead percentage (5) 13.4 % 12.7 %
Base revenue per loaded mile $ 2.244
$ 2.009

Average number of available tractors (6) 1,916
1,619

Average number of in-service tractors (7) 1,954
1,654

Loaded miles per available tractor per week 1,504
1,616

Base revenue per available tractor per week $ 3,375
$ 3,246

Average loaded miles per trip 487
539

USAT Logistics:

Operating revenue (before intersegment eliminations) (in thousands) $ 41,449
$ 46,775

Operating income (in thousands) (1) $ 2,312
$ 2,856

Gross margin (in thousands) (8) $ 7,687
$ 7,884

Gross margin percentage (9) 18.5 % 16.9 %
Load count (in thousands) 27.6

26.5


	Three Months Ended
	March 31,
Trucking:	2020			2019
Operating revenue (before intersegment eliminations) (in thousands)	$	93,994		$	94,902
Operating (loss) income (1) (in thousands)	$	(1,688)		$	1,609
Adjusted operating (loss) income (2) (in thousands)	$	(1,256)		$	2,291
Operating ratio (3)		101.8	%		98.3	%
Adjusted operating ratio (4)		101.5	%		97.2	%
Total miles (5) (in thousands)		45,718			42,764
Deadhead percentage (6)		13.2	%		13.4	%
Base revenue per loaded mile	$	2.085		$	2.244
Average number of seated tractors		1,871			1,767
Average number of available tractors (7)		1,974			1,916
Average number of in-service tractors (8)		2,003			1,954
Loaded miles per available tractor per week		1,546			1,504
Base revenue per available tractor per week	$	3,223		$	3,375
Average loaded miles per trip		495			487

USAT Logistics:
Operating revenue (before intersegment eliminations) (in thousands)	$	35,825		$	41,449
Operating (loss) income (1) (in thousands)	$	(624)		$	2,312
Adjusted operating (loss) income (2) (in thousands)	$	(624)		$	2,312
Gross margin (9) (in thousands)	$	3,969		$	7,687
Gross margin percentage (10)		11.1	%		18.5	%
Load count (in thousands)		27.2			27.6


~~(1)~~1)	Operating income (loss) is calculated by deducting operating expenses (before intersegment eliminations) from operating revenue (before intersegment eliminations).

Adjusted operating income (loss) is calculated by deducting operating expenses (before intersegment eliminations) excluding severance costs included in salaries, wages and employee benefits and amortization of acquisition related intangibles, net of fuel surcharge revenue from operating revenue (before intersegment eliminations), net of fuel surcharge revenue.

~~(2)~~

Operating ratio is calculated as operating expenses (before intersegment eliminations) as a percentage of operating revenue (before intersegment eliminations).


~~(3)~~4)	Adjusted operating ratio is calculated as operating expenses (before intersegment eliminations) excluding ~~restructuring, impairment and other costs,~~ severance costs included in salaries, wages and employee benefits and amortization of acquisition related intangibles, ~~and transaction costs related to acquisition,~~ net of fuel surcharge revenue, as a percentage of operating revenue (before intersegment eliminations) excluding fuel surcharge ~~revenue~~^(a). revenue.


~~(4)~~5)	Total miles include both loaded and empty miles.


~~(5)~~6)	Deadhead percentage is calculated by dividing empty miles by total miles.


~~(6)~~7)	Available tractors are a) all ~~those~~ Company tractors that are available to be dispatched, including available unseated tractors, and ~~our~~b) all tractors in the independent contractor fleet.


~~(7)~~8)	In-service tractors include all of the tractors in the Company fleet ~~including Company-operated~~(Company-operated tractors) and all the tractors ~~and~~in the independent ~~contractors.~~contractor fleet.


~~(8)~~9)	Gross margin is calculated by deducting USAT Logistics purchased transportation expense from USAT Logistics operating revenue (before intersegment eliminations).


~~(9)~~10)	Gross margin percentage is calculated as USAT Logistics gross margin divided by USAT Logistics operating revenue (before intersegment eliminations).

Table of Contents

Results of Operations—Segment Review

Trucking operating revenue

~~Table of Contents~~

During the three months ended March 31, ~~2019,~~2020, Trucking operating revenue (before intersegment eliminations) ~~increased 20.4%~~decreased 1.0% to ~~$94.9~~$94.0 million, compared to ~~$78.8~~$94.9 million for the same period in ~~2018.~~2019. Trucking base revenue ~~increased 22.9%~~(before intersegment eliminations) decreased 0.5% to ~~$83.1~~$82.7 million compared to ~~$67.7~~$83.1 million for the first quarter of ~~2018.~~2019. The ~~increase~~decrease in operating revenue ~~was the result of a 11.7%~~resulted primarily from 5.9% increase in ~~base revenue per loaded mile, partially offset by~~average number of seated tractors and a ~~11.0% decrease~~6.9% increase in total miles ~~driven by a 15.2% increase in average seated tractor count and a 70 basis point negative change in deadhead percentage.~~

driven.

Trucking operating (loss) income

For the first quarter of ~~2019,~~2020, Trucking reported an operating loss of $1.7 million compared to operating income of $1.6 ~~million compared to an operating loss of $0.5~~ million for the same period in ~~2018,~~2019. This decrease was primarily ~~resulting from~~driven by a ~~20.4%~~2.6% increase in operating expenses (before intersegment eliminations) and 1.0% decrease in operating revenue (before intersegment eliminations) ~~caused by a 4.0% increase in base revenue per available tractor per week, offset by 17.6% higher operating expenses, mostly related to a driver wage increase implemented in the first quarter of 2019.~~

discussed above.

USAT Logistics operating revenue

For the three months ended March 31, ~~2019,~~2020, USAT Logistics operating revenue (before intersegment eliminations) decreased ~~11.4%~~13.6% to ~~$41.4~~$35.8 million compared to ~~$46.8~~$41.4 million for the same period in ~~2018.~~2019. The year-over-year change in operating revenue was the result of a ~~14.9%~~12.3% decrease in revenue per load, ~~combined~~paired with a ~~4.1% increase~~1.5% decrease in load volume.

USAT Logistics operating (loss) income

USAT Logistics ~~generated~~reported an operating ~~income~~loss of ~~$2.3~~$0.6 million in the first quarter of ~~2019,~~2020, a decrease of ~~($0.5)~~$2.9 million, or ~~19.0%~~127.0%, compared to ~~$2.9~~operating income of $2.3 million for the comparable quarter in ~~the first quarter of 2018.~~2019. As mentioned above, the ~~11.4%~~13.6% decrease in operating revenue (before intersegment eliminations) ~~and the increase in purchased transportation costs, offset by the 4.1% increase in load volume contributed primarily to the~~, paired with a 740 basis point drop in ~~operating income.~~

gross margin.

Consolidated Operating Expenses

The following table summarizes the consolidated operating expenses ~~(dollar amounts in thousands)~~ and percentage of consolidated operating revenue, consolidated base revenue and the percentage increase or decrease in the dollar amounts of those items compared to the prior year.


	Three Months Ended March 31,
	2020						2019						% change
					Adjusted						Adjusted
					Operating						Operating		2020 to
	Operating Revenue				Ratio (1)		Operating Revenue				Ratio (1)		2019
	$		%		%		$		%		%		%
Operating Expenses:	(dollars in thousands)
Salaries, wages and employee benefits	$	35,845	28.3	%	31.8	% (1)	$	36,090	27.0	%	30.2	% (1)	(0.7)	%
Fuel and fuel taxes		11,863	9.4		(2.1)	(1)(2)		13,631	10.2		(1.5)	(1)(2)	(13.0)
Depreciation and amortization		10,011	7.9		8.6	(1)		8,818	6.6		7.1	(1)	13.5
Insurance and claims		5,857	4.6		5.3			7,280	5.4		6.1		(19.5)
Equipment rent		2,292	1.8		2.0			2,720	2.0		2.3		(15.7)
Operations and maintenance		8,896	7.0		7.9			7,273	5.4		6.1		22.3
Purchased transportation		47,814	37.7		42.5			48,281	36.0		40.7		(1.0)
Operating taxes and licenses		1,159	0.9		1.0			1,117	0.8		0.9		3.8
Communications and utilities		813	0.6		0.7			767	0.6		0.7		6.0
Loss (gain) on disposal of assets, net		38	0.0		0.0			(145)	(0.1)		(0.1)		(126.2)
Other		4,497	3.6		4.0			4,221	3.2		3.6		6.5
Total operating expenses	$	129,085	101.8	%	101.7	%	$	130,053	97.1	%	96.1	%	(0.7)	%

Adjusted operating ratio is calculated as the applicable operating expense excluding severance costs included in salaries, wages, and employee benefits and amortization of acquisition related intangibles, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue.

Calculated as fuel and fuel taxes, net of fuel surcharge revenue.

Three Months Ended March 31,
2019 2018 % Change
Operating Expenses: $
%
Operating
Revenue

Adjusted
Operating
Ratio (1)
$
%
Operating
Revenue

Adjusted
Operating
Ratio (1)

2019 to
2018
Salaries, wages and employee benefits $ 36,090
26.9 % 30.2 % (1) $ 32,237
25.8 % 28.6 % (1) 12.0 %
Fuel and fuel taxes 13,631
10.2
(1.5 ) (2) 13,479
10.8
(1.1 ) (2) 1.1
Depreciation and amortization 8,818
6.6
7.1
7,180
5.7
6.5
(22.8 )
Equipment rent 2,720
2.0
2.3
2,718
2.2
2.5
0.1
Insurance and claims 7,280
5.4
6.1
5,602
4.5
5.1
30.0
Operations and maintenance 7,273
5.4
6.1
7,961
6.4
7.2
(8.6 )
Purchased transportation 48,281
36.0
40.7
49,038
39.2
44.5
(1.5 )
Operating taxes and licenses 1,117
0.8
0.9
502
0.4
0.5
122.5
Communications and utilities 767
0.6
0.6
713
0.6
0.6
7.6
Gain on disposal of assets, net (145 ) (0.1 ) (0.1 ) (169 ) (0.1 ) (0.2 ) (14.2 )
Restructuring, impairment and other costs (reversal) —
—
—
(639 ) (0.5 ) N/A
100.0
Other 4,221
3.2
3.6
3,999
3.2
3.6
5.6
Total operating expenses $ 130,053
97.1 % 96.1 % $ 122,621
98.1 % 97.8 % 6.1 %

(1) Adjusted operating ratio is calculated as the applicable operating expense less restructuring, impairment and other costs, and severance costs included in salaries, wages, amortization of acquisition related intangibles, and transactions costs related to acquisition, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue.

Table of Contents

~~(2) Calculated as fuel and fuel taxes, net of fuel surcharge revenue.~~

Salaries, wages and employee benefits

~~The change in salaries,~~

Salaries, wages and employee benefits consist primarily of compensation for all employees and are primarily affected by the total number of miles driven by Company drivers, the rate per mile paid to Company drivers, employee benefits and compensation and benefits paid to non-driver employees.

Salaries, wages and employee benefits expense ~~during~~decreased in terms of dollars spent, while increasing as a percentage of both operating and base revenue for the ~~first quarter of 2019~~three months ended March 31, 2020, when compared to the same period in 2019. This change was primarily ~~due~~attributable to ~~impact of the driver wage increase given~~changes in ~~third quarter 2018 and an 11.0% increase in total revenue miles and an increase in staff wages primarily related to growth in~~incentive compensation for our USAT Logistics segment.

The rate of compensation paid to Company drivers per mile has increased in recent periods and we expect this cost will ~~increase~~continue to fluctuate in future periods due to driver pay increases, the most recent of which became effective during the third quarter of 2018. Management believes that the market for drivers will remain tight, and as such, expects driver wages and hiring expenses, which include recruiting and advertising costs, to continue to increase in order to attract and retain sufficient numbers of qualified drivers to operate the Company’s fleet. This expense item will also be affectedoffset by the percentage of Trucking miles operated by independent contractors instead of Company employed ~~drivers and the percentage of revenue generated by USAT Logistics, for which costs are reflected in purchased transportation.~~

drivers.

Fuel and fuel taxes

Fuel and fuel taxes consist primarily of diesel fuel expense for Company-owned tractors and fuel taxes. The primary factors affecting the Company’s fuel expense are the cost of diesel fuel, the fuel economy of Company equipment and the number of miles driven by Company drivers. The ~~increases~~decrease in fuel and fuel taxes for the three ~~month periods~~months ended March 31, ~~2019 reflects flat average~~2020 was the result of a 4.0% decrease in the price per gallon of diesel fuel, ~~prices per gallon year over year,~~ offset by ~~an 11.0%~~a 6.9% increase in total ~~revenue~~ miles driven when compared to the same period in ~~2018.~~2019. The Company has undertaken fuel efficiency initiatives, such as installing trailer skirts, idle control, more fuel-efficient engines and implementing driver training programs, which have contributed to improvements in our fuel expense on a cost per Company tractor mile basis.

~~In future periods, management anticipates~~

The Company continues to pursue fuel efficiency initiatives, purchasing newer, more fuel-efficient revenue equipment and implementing focused driver training programs, which have contributed to improvements in our fuel expense on a cost per Company tractor mile basis. The Company expects to continue managing its idle time and truck speeds and partnering with customers to align fuel surcharge programs to recover a fair portion of rising fuel costs. Looking ahead, the Company’s net fuel expense is expected to fluctuate as a percentage of revenue based on factors such as diesel fuel prices, percentage recovered from fuel surcharge programs, ~~deadhead~~empty mile percentage, the percentage of revenue generated from independent contractors and the success of fuel efficiency initiatives. ~~The Company expects to continue managing its idle time and truck speeds and partnering with customers to adjust fuel surcharge programs to recover a fair portion of rising fuel costs.~~

Depreciation and amortization andequipmentrent

Depreciation and amortization of property and equipment consists primarily of depreciation for Company-owned tractors and trailers, amortization of revenue equipment financed with finance leases, and amortization of ~~those financed with capital leases.~~intangible assets. The primary factors affecting this expense include the number and age of Company tractors and trailers, the acquisition cost of new equipment and the salvage values and useful lives assigned to the equipment. Equipment rent expenses are those related to revenue equipment under operating leases. These largely fixed costs fluctuate as a percentage of base revenue primarily with increases and decreases in average base revenue per tractor and the percentage of base revenue contributed by Trucking versus USAT Logistics. ~~In addition, the mix of capital and operating leases will cause fluctuations on a line item basis between equipment rent expense and depreciation and amortization expense.~~ For the three months ended March 31, ~~2019,~~2020 equipment rent expense ~~was flat~~decreased 15.7% compared to the ~~first quarter of 2018.~~

2019 period.

Depreciation and amortization expense increased as a percentage of both operating and base revenue for the three ~~month periods~~months ended March 31, ~~2019, as~~2020, when compared to the same ~~period~~periods in ~~2018, large~~2019, due in part to ~~a smaller~~the lower revenues as discussed previously. During the first quarter of 2020, the Company lowered the salvage value of its tractor fleet ~~as a result~~from 30% to 25% to better reflect current estimates of ~~a tough driver market and decreased utilization year over year.~~ the value of such equipment upon its retirement. The Company believes that these changes more accurately reflect the value of the revenue equipment on the accompanying condensed consolidated balance sheets.

The Company intends to continue toits focus on improving asset utilization, matching customer demand, growing its independent contractor fleet and strengthening load profitability initiatives. Further, the acquisition costs of new revenue equipment could increase due to the ~~continued implementation of emissions requirements and the~~ inclusion of improved safety and fuel efficiency features. ~~As a result, management expects to see an increase in depreciation and amortization expense from new tractors, and expects equipment rent to increase as the use~~

Table of ~~operating leases increases.~~Contents

Insurance and claims

Insurance and claims expense consists of insurance ~~premiums~~premium and the accruals the Company makes for estimated payments and expenses for claims for third-party bodily injury, property damage, cargo damage and other casualty events. The primary factors affecting the Company’s insurance and claims expense are the number of miles driven by its Company drivers and independent contractors, the frequency and severity of accidents, trends in the development factors used in the Company’s actuarial ~~accruals,~~accrual, developments in prior-year claims and insurance premiums and self-insured amounts. For the three months ended March 31, ~~2019,~~2020, insurance and claims expense ~~year over year~~decreased in dollars spent and as a percentage of both operating and base revenue ~~increased to 5.4%~~ compared to ~~4.5% in~~ the prior year ~~quarter,~~period, largely due to the favorable claims loss history and ~~increased approximately 30.0%~~a decrease in ~~terms of dollars spent.~~

litigated claims.

The Company expects insurance and claims expense to continue to be ~~variable~~volatile over the ~~long-term.~~long-term and in its October 2019 annual renewal experienced a significant rate increase. In addition, recently, insurance carriers have generally raised premiums for many businesses, including those in the trucking industry, and the trucking industry is experiencing a decline in the number of carriers and underwriters that write insurance policies or that are willing to provide insurance for trucking companies, and the necessity to go offshore for insurance needs has increased. These factors may cause the Company’s insurance

~~Table of Contents~~

and claims expense ~~could~~to increase if it has a similar experience at renewal or replacement orand the Company could find it necessary to raise its self-insured retention levels or decrease its aggregate coverage limits.

Operations and maintenance

Operations and maintenance expense consists primarily of vehicle repairs and maintenance, general and administrative expenses and other costs. Operating and maintenance expenses are primarily affected by the age of the Company-owned ~~fleet of~~ tractors and trailers, the number of miles driven in a period and, to a lesser extent, by efficiency measures in the Company’s maintenance facilities. ~~The decrease in operations~~Operations and maintenance expense increased for the three months ended March 31, ~~2019,~~2020, when compared to the same period in ~~2018 as a result of maintenance cost savings~~2019 due to ~~the purchase~~increased costs of ~~new revenue equipment, and other cost saving initiatives undertaken.~~

maintaining our fleet.

Purchased transportation

Purchased transportation consists of the payments the Company makes to independent contractors, railroads and third-party carriers that haul loads brokered to them by the Company, including fuel surcharge reimbursement paid to such parties. For the ~~first quarter of 2019,~~three months ended March 31, 2020, purchased transportation expense ~~decreased slightly~~increased as a percentage of both operating and base revenue due to fluctuations in the ~~softening~~ spot ~~market putting pressure on our~~market.

The Company is endeavoring to grow its independent contractor fleet as a percentage of its total fleet and growing USAT Logistics, ~~business.~~

~~Gain~~which if successful, could further increase purchased transportation expense, particularly if the Company needs to pay independent contractors more to stay with the Company in light of regulatory changes. In periods of increasing independent contractor capacity, the expected increases in compensation expense are shifted from employee driver wages and related expenses to the “Purchased transportation” line item, net of their fuel expense, maintenance and capital expenditures.

Loss (gain) on disposal of assets, net

During the three months ended March 31, ~~2019, gain~~2020, the Company experienced a loss on disposal of assets, net ~~decreased slightly when~~ compared to a gain in the same ~~periods~~period in ~~2018,~~2019, primarily ~~resulting from volatility~~due to continued fluctuations in the used equipment ~~market, which management~~market. Management believes ~~may~~this variability will continue ~~to show variability in 2019 and beyond.~~

through the remainder of this year.

Other expenses

The ~~increases~~increase in other expenses ~~during~~for the three months ended March 31, ~~2019 were~~2020 was primarily ~~the result of~~attributable to an increase ~~driver recruiting costs.~~

in bad debt expense attributable in part to the impact from the COVID-19 pandemic.

Interest expense,

net

For the three months ended March 31, ~~2019,~~2020, interest expense, ~~increased~~net decreased primarily due to ~~increased~~decreased outstanding borrowings ~~related to the purchase of new revenue equipment. As of March 31, 2019, the Company increased its debt outstanding~~ on ~~the Credit Facility by approximately $7.2 million, as compared to December 31, 2018.~~our credit facility. See Note 96 to the condensed consolidated financial statements for further discussion of the Company’s Credit Facility.

Table of Contents

Income tax (benefit) expense

During the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, the Company’s effective tax rate was ~~26.5%~~36.9% and ~~28.8%~~26.5%, respectively. The Company’s effective tax rate, when compared to the federal statutory rate of 21%, is primarily affected by state income taxes, net of federal income tax effect, and permanent differences, the most significant of which is the effect of the partially non-deductible per diem pay structure for our drivers. Drivers may elect to receive non-taxable per diem pay in lieu of a portion of their taxable wages. This per diem program increases the Company’s drivers’ net pay per mile, after taxes, while decreasing gross pay, before taxes. Per diem pay is partially non-deductible by the Company under current IRS regulations. As a result, salaries, wages and employee benefits costs are slightly lower and effective income tax rates are higher than the statutory rate. Due to the partially non-deductible effect of per diem pay, the Company’s tax rate will change based on fluctuations in earnings (losses) and in the number of drivers who elect to receive this pay structure. Generally, as pretax income or loss increases, the impact of the driver per diem program on the Company’s effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pretax income or loss, while in periods where earnings are at or near breakeven the impact of the per diem program on the Company’s effective tax rate can be significant. Due to the effect of the non-deductible per diem payments, the Company’s tax rate will fluctuate in future periods based on fluctuations in earnings (losses) and in the number of drivers who elect to participate in the per diem program.

~~When~~

During the three months ended March 31, 2020 our effective tax rate during the period was higher than the statutory rate primarily as a result of changes stemming from the ~~expected~~Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted during the period, which allows a 5 year federal net operating loss carryback for federal income tax purposes to tax periods where the federal statutory rate was 35%, resulting in an increased tax benefit. During the first quarter of 2019, the Company’s tax rate was negatively affected by vesting of equity-based compensation at a lower stock price than the price at which it was granted, as well as a non-deductible officer compensation, resulting in an increase to tax expense and the effective tax rate.

The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate ~~is not deemed reliable and distorts~~for the income tax provision for an interim period, the Company calculates the income tax provision or benefit using the cut-off method, which results in an income tax provision or benefit based solely on the year-to-date pretaxfull fiscal year to “ordinary” income or loss ~~as adjusted~~(pretax income or loss excluding unusual or infrequently occurring discrete items) for ~~permanent differences on~~the reporting period. We determined that since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a ~~pro rata basis.~~

reliable estimate. As such, we have used a cut-off method to calculate taxes for the three months ended March 31, 2020.

Seasonality

In the trucking industry, revenue typically follows a seasonal pattern for various commodities and customer businesses. ~~Peak~~While peak freight demand has historically occurred in the months of September, October and ~~November.~~November, no assurance can be provided that our current year experience will reflect this. After the December holiday season and during the remaining winter months, freight volumes are typically lower as many customers reduce shipment levels. Operating expenses have historically been higher in the winter months due primarily to decreased fuel efficiency, increased cold weather-related maintenance costs of revenue equipment and increased insurance and claims costs attributed to adverse winter driving

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conditions. Revenue can also be impacted by weather, holidays and the number of business days that occur during a given period, as revenue is directly related to the available working days of shippers.

Inflation

Most of the Company’s operating expenses are inflation sensitive, and as such, are not always able to be offset through increases in revenue per mile and cost control efforts. The effect of inflation-driven cost increases on overall operating costs is not expected to be greater for the Company than for its competitors.

Fuel Availability and Cost

The trucking industry is dependent upon the availability of fuel. In the past, fuel shortages or increases in fuel taxes or fuel costs have adversely affected ~~our~~ profitability and may continue to do so. ~~The Company~~USA Truck has not experienced difficulty in maintaining necessary fuel supplies, and in the past has generally been able to partially offset increases in fuel costs and fuel taxes through increased freight rates and through a fuel surcharge that increases incrementally as the average price of fuel increases above an agreed upon baseline price per gallon. Typically, the Company is not able to fully recover increases in fuel prices through freight rate increases and fuel surcharges, primarily because those items are not available with respect to empty and out-of-route miles and idling time, for which the Company generally does not receive

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compensation from customers. Additionally, most fuel surcharges are based on the average fuel price as published by the DOE for the week prior to the shipment, meaning the Company typically bills customers in the current week based on the previous week’s applicable index. Accordingly, in times of increasing fuel prices, the Company does not recover as much as it is currently paying for fuel. In periods of declining prices, for a short period of time the inverse is true. Overall, for the three months ended March 31, 2020, average diesel fuel prices per gallon as reported by the DOE, ~~were stable for the three month period ended March 31, 2019,~~decreased 4.0% compared to the same period in ~~2018.~~

2019.

As of March 31, ~~2019,~~2020, the Company did not have any long-term fuel purchase contracts, and has not entered into any fuel hedging arrangements.

Equity

As of March 31, ~~2019,~~2020, the Company had total stockholders’ equity of ~~$83.3~~$76.1 million and total debt and lease liabilities ~~including current maturities and insurance premium financing,~~ of ~~$182.0~~$196.3 million, resulting in a total debt, less cash, to total capitalization ratio of ~~68.6%~~72.1% compared to ~~66.5%~~70.9% as of December 31, ~~2018.~~

2019.

Purchases and Commitments

The Company routinely monitors equipment acquisition needs and adjusts purchase schedules from time to time based on analysis of factors such as new equipment prices, the condition of the used equipment market, demand for freight services, prevailing interest rates, technological improvements, fuel efficiency, equipment durability, equipment specifications, operating performance and the availability of qualified drivers.

As of March 31, ~~2019,~~2020, the Company had ~~$27.7~~$7.3 million in noncancellable commitments for the acquisition of ~~both~~ revenue ~~and non-revenue~~ equipment. We anticipate funding these commitments with operating and financing cash ~~flows.~~

flows or leases.

Liquidity and Capital Resources

USA Truck’s business has required, and will continue to require, significant capital investments. In the Company’s Trucking segment, where capital investments are the most substantial, the primary investments are in ~~new~~ revenue equipment and to a lesser extent, in technology and working capital. In the Company’s USAT Logistics segment, ~~where capital investments are generally more modest,~~ the primary investments are in technology and working capital. USA Truck’s primary sources of liquidity have been funds provided by operations, borrowings under the Company’s Credit Facility, sales of used revenue equipment, and ~~capital~~proceeds from finance and operating leases. Based on expected financial conditions, net capital expenditures, results of operations and related net cash flows and other sources of financing, management believes the Company’s sources of liquidity to be adequate to meet current and projected needs.

The Credit Facility contains a single financial covenant, which requires a consolidated fixed charge coverage ratio of at least 1.0 to 1.0 that is triggered in the event excess availability under the Credit Facility falls below 10% of the lenders’ total commitments. Also, certain restrictions regarding the Company’s ability to pay dividends, make certain investments, prepay certain indebtedness, execute share repurchase programs and enter into certain acquisitions and hedging arrangements are triggered in the event excess availability under the Credit Facility falls below ~~10%~~20% of the lenders’ total commitments.

~~Long-term debt, financing notes and lease liabilities increased to $182.0 million, an increase of $21.5 million from $160.5 million at December~~ At March 31, ~~2018.~~ 2020, the Company’s excess availability was below the 20% threshold.

As of March 31, ~~2019,~~2020, the Company had ~~outstanding $5.4~~$7.4 million in letters of credit outstanding and had approximately ~~$50.0~~$37.9 million available to borrow under the Credit Facility. Net of cash, debt represented ~~68.6%~~72.1% of total capitalization.

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Fluctuations in the outstanding balance and related availability under the Credit Facility are driven primarily by cash flows from operations and the timing and nature of property and equipment additions that are not funded through other sources of financing, as well as the nature and timing of receipt of proceeds from disposals of property and equipment.

On April 20, 2020, the Company permanently reduced the revolving credit commitment under the Credit Agreement by $55.0 million such that the revolving credit commitment is $170.0 million. The reduction in the revolving credit commitment brought the Company’s excess availability above the 20% threshold for restrictions by lowering the threshold to $34.0 million. This change is anticipated to reduce the fees paid by the Company in connection with such commitment by approximately $0.1 million annually.

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Cash Flows

Three Months Ended
March 31,
(in thousands) 2019 2018
Net cash provided by operating activities $ 7,964
$ 15,607
Net cash (used in) provided by investing activities (11,488 ) 1,001
Net cash provided by (used in) financing activities 3,119
(16,673 )

The following table summarizes the sources (uses) of cash for each of the periods presented:


	Cash Flow	Three Months Ended March 31,
	Category	2020		2019
Sources of cash:		(in thousands)
Operating activities - net	Operating	$	2,333	$	7,964
Proceeds from sale of property and equipment	Investing		1,036		5,858
Borrowings under long-term debt	Financing		21,025		12,050

Uses of cash:
Acquisition of Davis Transfer Company (net of cash)	Investing		—		(305)
Capital expenditures	Investing		(11,137)		(17,041)
Payments of long-term debt	Financing		(10,425)		(6,235)
Principal payments on financing lease obligations	Financing		(4,150)		(3,110)

Other sources - net	Financing		1,306		414
Decrease in cash		$	(12)	$	(405)

Operating ~~Activities~~ ~~– Net~~activities

Our net cash provided by operating activities ~~decreased by approximately $7.6 million~~ in the first ~~three months ended March 31,~~quarter of 2020 decreased from the comparable 2019 ~~compared~~quarter primarily due to ~~the same period~~decreases in ~~2018. This decrease was primarily the result of~~net income and insurance and claims accruals and an ~~approximate $3.7 million~~ increase in ~~the change in~~ accounts ~~receivable resulting from increased revenue for the period,~~ and ~~changes in~~ other ~~operating line~~receivables. These items ~~associated with increased profitability.~~

~~Investing Activities~~ – For the three months ended March 31, 2019, net cash used in investing activities was $11.5 million, compared to $1.0 million provided by investing activities during the same period in 2018. The $12.5 million increase in cash used in investing activities was primarily attributable to a $16.7 million increase in capital expenditures for the 2019 period,were offset by ~~an increase of $4.6 million~~increases in ~~the proceeds from the sale of property~~depreciation and ~~equipment in the 2019 period compared to the 2018 period.~~

~~Financing Activities~~ – Cash provided by financing activities was $3.1 million for the three months ended March 31, 2019, compared to $16.7 million used by financing activities during the same period in 2018. The $19.8 million change was primarily attributable to increased borrowings of long-term debt of $6.2 million, a $0.5 million positive impact of the change in bank drafts payable, offset by an approximately $13.2 million decrease in payments on long-term debtamortization and ~~capital lease obligations. At March 31, 2019, the Company had borrowings of long-term debt, financing notes and lease liabilities of $182.0 million, up from $160.5 million at December 31, 2018.~~

deferred income tax, net.

Debt and Lease Obligations

See Notes ~~8, 9,~~6 and 107 to the condensed consolidated financial statements for further discussion of the ~~Company's~~Company’s Credit Facility, insurance financing, ~~Credit Facility~~ and lease obligations.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time its financial statements are prepared. Actual results could differ from those estimates, and such differences could be material. During the three months ended March 31, ~~2019, there were no material changes~~2020, the only change to the Company’s critical accounting policies and estimates, compared to those disclosed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~

2019 related to the change in salvage value of the Company’s tractor fleet. See Note 1 to the condensed consolidated financial statements for further discussion of the change in estimate.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company experiences various market risks, including changes in interest rates and commodity prices. Because the Company’s operations are largely confined to the U.S., the Company is not subject to a material amount of foreign currency risk.

~~Interest Rate Risk~~. The Company is exposed to interest rate risk primarily from its Credit Facility. The Company’s Credit Facility bears variable interest based on the type of borrowing and on the Agent’s prime rate or the LIBOR plus, in each case, a certain percentage determined based on a pricing grid that is determined quarterly based on the Company’s consolidated fixed charge coverage ratio. As of March 31, 2019, the Company had $92.5 million outstanding pursuant to its Credit Facility, excluding letters of credit of $5.4 million. Assuming the outstanding balance as of March 31, 2019 remained constant; a hypothetical one-

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~~percentage point increase in interest rates applicable to its Credit Facility would increase the Company’s interest expense over a one-year period by approximately $0.9 million.~~

~~Commodity Price Risk~~. The Company is subject to commodity price risk with respect to purchases of fuel. In recent years, fuel prices have fluctuated greatly. In some periods, the Company’s operating performance was adversely affected because it was not able to fully offset the impact of higher diesel fuel prices through increased freight rates and fuel surcharge revenue recoveries. Management cannot predict how fuel price levels will continue to fluctuate in the future or the extent to which fuel surcharge revenue recoveries could be collected to offset any increases. As of March 31, 2019, the Company did not have any derivative financial instruments to reduce its exposure to fuel price fluctuations, but may use such instruments in the future. Accordingly, volatile fuel prices may continue to impact the Company significantly. A significant increase in fuel costs, or a shortage of diesel fuel, could materially and adversely affect the Company’s results of operations. Further, higher fuel costs could contribute to driver shortages in the trucking industry generally by forcing independent contractors to cease operations. Based on the Company’s expected fuel consumption for the remainder of 2019, a 10% increase in the average price per gallon would result in an increase of approximately $4.1 million in fuel expense before taking into account application of the Company’s fuel surcharge program.

Not required.


ITEM 4.	CONTROLS AND PROCEDURES

The Company has established disclosure controls and procedures that are designed to ensure that relevant material information, including information pertaining to any consolidated subsidiaries, is made known to the officers who certify the financial reports and to other members of senior management and the board of directors. Management, with the participation of the Principal Executive Officer (the “PEO”) and the Principal Financial Officer (the “PFO”) conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the PEO and PFO have concluded that as of March 31, ~~2019~~2020 the Company’s disclosure controls and procedures were effective at a reasonable assurance level to ensure that the information required to be disclosed in the reports filed or submitted by the Company under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and forms and

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(ii) accumulated and communicated to management, including the PEO and PFO, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, ~~2019, other than the implementation of ASC 842 and related controls,~~2020 that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management has confidence in the Company’s internal controls and procedures. Nevertheless, management, including the PEO and PFO, understand that the Company’s disclosure procedures and controls and its internal controls cannot prevent all errors or intentional fraud. An internal controls system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal controls system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all internal controls systems, no evaluation of controls can provide absolute assurance that all controls issues and instances of fraud, if any, have been, or will be, detected.

PART II - OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

The Company is party to routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. The Company maintains liability insurance to cover liabilities in excess of certain self-insured retention levels. Though it is the opinion of management ~~believes~~that these claims ~~to be~~are immaterial to the Company’s long-term financial position, adverse results of one or more of these claims could have a material adverse effect on the Company’s consolidated financial ~~position or results of operations~~statements in any given reporting period.


ITEM 1A.	RISK FACTORS

While the Company attempts to identify, manage and mitigate risks and uncertainties associated with its business, some level of risk and uncertainty will always be present. ~~The~~In addition to the information set forth below, the section entitled “Item 1A, Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, describes some of the risks and uncertainties associated with the Company’s business. These risks and uncertainties have the potential to materially affect the Company’s business, financial condition, results of operations, cash flows, projected results and future prospects.

The recent novel coronavirus (COVID-19) global pandemic, or any other future global pandemic, could adversely affect our business operations, financial performance, results of operations and liquidity, the extent of which is uncertain and difficult to predict.

In late 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China, which has since spread globally. In March 2020, the World Health Organization declared COVID-19 a global pandemic. Further, the COVID-19 outbreak has resulted in government authorities in the United States and around the world implementing numerous measures to try to reduce the spread of COVID-19, such as travel bans and restrictions, quarantines, shelter in place or total lock-down orders and business limitations and shutdowns. As a result of the COVID-19 outbreak and the related responses from government authorities, our business operations, financial performance, results of operations and liquidity may be adversely impacted in a number of ways, including, but not limited to, the following:

●

disruptions to our operations, including a shutdown of one or more of our locations; restrictions on certain of our operations; and other important business activities;

●

reduced demand for our services due to disruptions to the businesses and operations of our customers;

●

the ability of our customers to pay for our services;

●

a slowdown or stoppage in the supply chain of our equipment, fuel, supplies and maintenance services;

●

limitations on employee resources and availability, including due to sickness, government restrictions, or the desire of employees to avoid contact with groups of people;

●

a change in the classification of our operations as an essential business or other government orders or restrictions that could limit our movements and shipping operations;

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●

an increase in the cost or the difficulty to obtain debt or equity financing could affect our financial condition or our ability to fund operations or future investment opportunities; and

●

an increase in regulatory restrictions or continued market volatility could hinder our ability to execute strategic business activities, as well as negatively impact our stock price.

The spread of COVID-19 has caused us to modify our business practices (including, employee work locations) and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed.

Additionally, COVID-19 could negatively affect our internal controls over financial reporting as a portion of our work force has been and may continue to be required or determined to work from home and therefore new processes, procedures, and controls could be required to respond to changes in our business environment. Further, should any key employees become ill from COVID-19 and unable to work, the attention of the management team could be diverted.

The potential effects of COVID-19 may also impact many of our other risk factors discussed in in Part I, Item 1A, Risk Factors, in our Annual report on Form 10-K for the year ended December 31, 2019. The degree to which COVID-19 impacts our business operations, financial performance and results of operations will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted, including, but not limited to, the duration and spread of the COVID-19 outbreak, its severity, the actions to contain the virus or treat its impact and how quickly and to what extent normal economic conditions can resume.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

None.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.	MINE SAFETY DISCLOSURES

None.


ITEM 5.	OTHER INFORMATION

None.

~~None.~~

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ITEM 6.

EXHIBITS


~~ITEM 6.~~ Exhibit Number	~~EXHIBITS~~

Exhibit
3.1
~~Exhibit~~ ~~Number~~			~~Exhibit~~
~~3.1~~			Restated and Amended Certificate of Incorporation of the Company as currently in effect, including all Certificates of Amendment thereto (incorporated by reference to Exhibit 3.1 to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2013).
3.2			Bylaws of USA Truck Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on March 24, 2017).
4.1			Specimen certificate evidencing shares of the common stock, $.01 par value, of USA Truck Inc. (incorporated by reference to Exhibit 4.1 of the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2017).
~~10.1~~ 31.1	#		~~Amended and Restated Loan and Security Agreement, dated January 31, 2019 between the Company and Bank of America, N.A., as agent~~
~~31.1~~	#		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	#		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	##		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	##		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			[XBRL Instance ~~Document.~~Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.]
101.SCH	Inline		XBRL Taxonomy Extension Schema Document.
101.CAL	Inline		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline		XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover page Interactive Data File formatted as Inline XBRL (contained in Exhibit 101)

References:


~~References:~~ #		Filed herewith.
# ##	~~Filed herewith.~~
##	Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



				USA Truck Inc.
					(Registrant)

Date:	May ~~2, 2019~~8, 2020		By:	/s/ James D. Reed
				(Signature)
		^(Signature)		James D. Reed
					President and Chief Executive Officer


Date:	May ~~2, 2019~~8, 2020		By:	/s/ ~~Jason R. Bates~~Zachary B. King
					(Signature) ~~Jason R. Bates~~
				Zachary B. King
		~~Executive~~		Senior Vice President and Chief Financial Officer



Item No.	Caption	Page
	PART I – FINANCIAL INFORMATION
1.	Financial Statements
	Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2019 and December 31, 2018	2
	Condensed Consolidated Statements of Income and Comprehensive Income (unaudited) - Three months ended March 31, 2019 and March 31, 2018	3
	Condensed Consolidated Statements of Stockholders' Equity (unaudited) - Three months ended March 31, 2019 and March 31, 2018	4
	Condensed Consolidated Statements of Cash Flows (unaudited) - Three months ended March 31, 2019 and March 31, 2018	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
3.	Quantitative and Qualitative Disclosures About Market Risk	28
4.	Controls and Procedures	29
	PART II – OTHER INFORMATION
1.	Legal Proceedings	29
1A.	Risk Factors	29
2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
3.	Defaults Upon Senior Securities	30
4.	Mine Safety Disclosures	30
5.	Other Information	30
6.	Exhibits	31
	Signatures	32



USA TRUCK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
	(in thousands, except share data)
Assets	March 31, 2019			December 31, 2018
Current assets:
Cash	$	584		$	989
Accounts receivable, net of allowance for doubtful accounts of $484 and $575, respectively	63,345			57,189
Other receivables	4,474			5,688
Inventories	742			722
Assets held for sale	2,296			2,611
Prepaid expenses and other current assets	7,102			7,675
Total current assets	78,543			74,874
Property and equipment:
Land and structures	32,981			32,434
Revenue equipment	290,506			280,623
Service, office and other equipment	28,379			28,094
Property and equipment, at cost	351,866			341,151
Accumulated depreciation and amortization	(115,811		)	(115,766		)
Property and equipment, net	236,055			225,385
Operating leases - right of use assets	15,433			—
Goodwill	5,231			4,926
Other intangibles, net	17,474			17,837
Other assets	1,713			1,003
Total assets	$	354,449		$	324,025
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	29,934		$	23,482
Current portion of insurance and claims accruals	17,270			15,852
Accrued expenses	7,308			9,366
Current maturities of finance leases	17,574			17,292
Current maturities of operating leases	8,423			—
Insurance premium financing	2,144			4,435
Total current liabilities	82,653			70,427
Deferred gain	223			84
Long-term debt	92,450			85,300
Finance leases, less current maturities	54,396			53,460
Operating leases, less current maturities	7,010			—
Deferred income taxes	24,463			23,518
Insurance and claims accruals, less current portion	9,963			9,963
Total liabilities	271,158			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 12,007,077 shares, and 12,011,495 shares, respectively	120			120
Additional paid-in capital	62,392			66,433
Retained earnings	79,968			78,467
Less treasury stock, at cost (3,420,044 shares, and 3,650,060 shares, respectively)	(59,189		)	(63,747		)
Total stockholders’ equity	83,291			81,273
Total liabilities and stockholders’ equity	$	354,449		$	324,025



	Three Months Ended March 31,
	2019			2018

Operating revenue	$	133,974		$	125,013

Operating expenses
Salaries, wages and employee benefits	36,090			32,237
Fuel and fuel taxes	13,631			13,479
Depreciation and amortization	8,818			7,180
Equipment rent	2,720			2,718
Insurance and claims	7,280			5,602
Operations and maintenance	7,273			7,961
Purchased transportation	48,281			49,038
Operating taxes and licenses	1,117			502
Communications and utilities	767			713
Gain on disposal of assets, net	(145		)	(169		)
Restructuring, impairment and other costs (reversal)	—			(639		)
Other	4,221			3,999
Total operating expenses	130,053			122,621
Operating income	3,921			2,392

Other expenses
Interest expense, net	1,741			818
Other, net	137			120
Total other expenses, net	1,878			938
Income before income taxes	2,043			1,454
Income tax expense	542			419

Consolidated net income and comprehensive income	$	1,501		$	1,035

Net earnings per share
Average shares outstanding (basic)	8,375			8,035
Basic earnings per share	$	0.18		$	0.13

Average shares outstanding (diluted)	8,399			8,040
Diluted earnings per share	$	0.18		$	0.13



	Common Stock				Additional Paid-in Capital			Retained Earnings		Treasury Stock			Total
	Shares		Par Value		Additional Paid-in Capital			Retained Earnings		Treasury Stock			Total
Balance at December 31, 2018	12,012		$	120	$	66,433		$	78,467	$	(63,747	)	$	81,273
Issuance of treasury stock	—		—		(4,558		)	—		4,558			—
Stock-based compensation	—		—		589			—		—			589
Net share settlement related to restricted stock vesting	(5	)	—		(72		)	—		—			(72		)
Net income	—		—		—			1,501		—			1,501
Balance at March 31, 2019	12,007		$	120	$	62,392		$	79,968	$	(59,189	)	$	83,291



	Three Months Ended March 31,
Revenue type	2019									2018
	Trucking		USAT Logistics		Eliminations			Total		Trucking		USAT Logistics		Eliminations			Total
Freight	81,423		36,630		(2,210		)	115,843		66,917		40,973		(608		)	107,282
Fuel surcharge	11,765		3,842		(167		)	15,440		11,175		3,559		—			14,734
Accessorial	1,714		977		—			2,691		754		2,243		—			2,997
Total	$	94,902	$	41,449	$	(2,377	)	$	133,974	$	78,846	$	46,775	$	(608	)	$	125,013



	Three Months Ended March 31,
Operating income (loss)	2019		2018
Trucking	$	1,609	$	(464	)
USAT Logistics	2,312		2,856
Total operating income	$	3,921	$	2,392



	March 31, 2019
	Amortization period (years)	Gross Amount		Accumulated Amortization		Net intangible assets
Trade name	Indefinite	$	5,000	$	—	$	5,000
Non-compete agreement	2	140		20		120
Customer relationships	10	12,900		546		12,354
Total intangible assets		$	18,040	$	566	$	17,474



2019	$	996
2020	1,346
2021	1,288
2022	1,288
2023	1,288
2024	1,288
Thereafter	4,980
Total	$	12,474



	Three Months Ended
	March 31, 2019
Operating lease costs	$	2,159
Finance lease costs:
Amortization of assets	2,691
Interest on lease liabilities	546
Total finance lease costs	3,237
Variable and short-term lease costs	561
Total lease costs	$	5,957



	Accrued Balance December 31, 2018		Costs Incurred		Payments			Expenses/ Charges		Accrued Balance March 31, 2019
Severance costs included in salaries, wages and employee benefits	$	247	$	319	$	(189	)	$	—	$	377



	Three Months Ended March 31,
Costs incurred	2019		2018
Trucking	$	319	$	484
USAT Logistics	—		227
Total	$	319	$	711



	December 31, 2018
	As Reported		Adjustments		As Adjusted
Accounts receivable, net	$	56,003	$	1,186	$	57,189
Other receivables	5,104		584		5,688
Prepaid expenses and other current assets	7,224		451		7,675
Accounts payable	22,453		1,029		23,482
Accrued expenses	8,977		389		9,366
Retained earnings	77,664		803		78,467
Total stockholders' equity	80,470		803		81,273



	Three Months Ended March 31, 2019
	2019						2018
	$		% Operating Revenue		% Adjusted Operating Ratio (1)		$		% Operating Revenue		% Adjusted Operating Ratio (1)		% Change in Dollar Amounts
Base revenue	$	118,534	88.5	%			$	110,279	88.2	%			7.5	%
Fuel surcharge revenue	15,440		11.5				14,734		11.8				4.8	%
Operating revenue	$	133,974	100.0				$	125,013	100.0				7.2	%

Operating expenses	130,053		97.1	%	96.1	%	122,621		98.1	%	97.8	%	6.1	%
Operating income	3,921		2.9				2,392		1.9				63.9	%

Other expenses:
Interest expense	1,741		1.3				818		0.7				112.8	%
Other, net	137		0.1				120		0.1				14.2	%
Total other expenses, net	1,878		1.4				938		0.8				100.2	%
Income before income taxes	2,043		1.5				1,454		1.2				40.5	%
Income tax expense	542		0.4				419		0.3				29.4	%

Consolidated net income	$	1,501	1.1	%			$	1,035	0.8	%			45.0	%



	Three Months Ended
	March 31,
	2019			2018
Operating revenue	$	133,974		$	125,013
Less: Fuel surcharge revenue	(15,440		)	(14,734		)
Base revenue	118,534			110,279
Operating expense	130,053			122,621
Adjusted for:
Severance costs included in salaries, wages and employee benefits	(319		)	(711		)
Restructuring, impairment and other costs (reversal)	—			639
Amortization of acquisition related intangibles	(363		)	—
Fuel surcharge revenue	(15,440		)	(14,734		)
Adjusted operating expense	$	113,931		$	107,815
Operating ratio	97.1		%	98.1		%
Adjusted operating ratio	96.1		%	97.8		%



	Three Months Ended
	March 31,
Trucking:	2019			2018
Operating revenue (before intersegment eliminations) (in thousands)	$	94,902		$	78,846
Operating income (loss) (in thousands) (1)	$	1,609		$	(464	)
Operating ratio (2)	98.3		%	100.6		%
Adjusted operating ratio (3)	97.2		%	100.8		%
Total miles (in thousands) (4)	42,764			38,542
Deadhead percentage (5)	13.4		%	12.7		%
Base revenue per loaded mile	$	2.244		$	2.009
Average number of available tractors (6)	1,916			1,619
Average number of in-service tractors (7)	1,954			1,654
Loaded miles per available tractor per week	1,504			1,616
Base revenue per available tractor per week	$	3,375		$	3,246
Average loaded miles per trip	487			539

USAT Logistics:
Operating revenue (before intersegment eliminations) (in thousands)	$	41,449		$	46,775
Operating income (in thousands) (1)	$	2,312		$	2,856
Gross margin (in thousands) (8)	$	7,687		$	7,884
Gross margin percentage (9)	18.5		%	16.9		%
Load count (in thousands)	27.6			26.5



	Three Months Ended March 31,
	2019								2018								% Change
Operating Expenses:	$			% Operating Revenue		Adjusted Operating Ratio (1)			$			% Operating Revenue		Adjusted Operating Ratio (1)			2019 to 2018
Salaries, wages and employee benefits	$	36,090		26.9	%	30.2	%	(1)	$	32,237		25.8	%	28.6	%	(1)	12.0	%
Fuel and fuel taxes	13,631			10.2		(1.5	)	(2)	13,479			10.8		(1.1	)	(2)	1.1
Depreciation and amortization	8,818			6.6		7.1			7,180			5.7		6.5			(22.8	)
Equipment rent	2,720			2.0		2.3			2,718			2.2		2.5			0.1
Insurance and claims	7,280			5.4		6.1			5,602			4.5		5.1			30.0
Operations and maintenance	7,273			5.4		6.1			7,961			6.4		7.2			(8.6	)
Purchased transportation	48,281			36.0		40.7			49,038			39.2		44.5			(1.5	)
Operating taxes and licenses	1,117			0.8		0.9			502			0.4		0.5			122.5
Communications and utilities	767			0.6		0.6			713			0.6		0.6			7.6
Gain on disposal of assets, net	(145		)	(0.1	)	(0.1	)		(169		)	(0.1	)	(0.2	)		(14.2	)
Restructuring, impairment and other costs (reversal)	—			—		—			(639		)	(0.5	)	N/A			100.0
Other	4,221			3.2		3.6			3,999			3.2		3.6			5.6
Total operating expenses	$	130,053		97.1	%	96.1	%		$	122,621		98.1	%	97.8	%		6.1	%