FOR IMMEDIATE RELEASE
VAN BUREN, ARKANSAS October 18, 2007
USA Truck, Inc. (NASDAQ: USAK) today announced base revenue of $99.3 million for the third quarter ended September 30, 2007, an increase of 2.7% from $96.7 million for the same quarter of 2006. Net income decreased 99.5% from $3.4 million for the quarter ended September 30, 2006 to $16 thousand for the same quarter of 2007. Diluted earnings per share decreased from $0.30 for the quarter ended September 30, 2006 to $0.00 for the same quarter of 2007.
Base revenue increased 0.8% from $293.1 million for the nine months ended September 30, 2006 to $295.5 million for the same period of 2007. Net income decreased 84.7% from $11.2 million for the nine months ended September 30, 2006 to $1.7 million for the same period of 2007. Diluted earnings per share decreased 83.5% from $0.97 for the nine months ended September 30, 2006 to $0.16 for the same period of 2007.
In comparing the financial results of the three months ended September 30, 2007 to the comparable period of 2006, Cliff Beckham, President and CEO, made the following statement:
“The current freight environment continues as one of the most challenging we have ever seen. For the second consecutive year, we have experienced virtually no fall peak shipping season. That soft freight demand, an adverse jury verdict in a contract dispute and high fuel prices were the dominant influences on our earnings during the quarter.
“Our base revenue increased 2.7%. Trucking revenue increased 2.5% as our average tractor count grew by 2.3% (but actually declined slightly sequentially from the second quarter). Our increased focus on non-asset based services bore fruit as USA Logistics revenue, particularly our Strategic Capacity Solutions division (Freight Brokerage), increased 13.0%.
“Competitive pressures eroded our base revenue for the quarter by almost $0.03 per loaded mile (2.0%), and base revenue per total mile decreased approximately $0.04 (2.9%) as our empty mile factor (historically a strong indicator of freight availability) increased by 0.87 percentage points. We expect pricing and freight availability to remain competitive in the near-term due to the continued over-capacity of tractors in the industry relative to freight demand.
“Despite the current freight conditions, we continue to focus our efforts on the fundamentals of our business with some signs of progress. In particular, our driver turnover improved by nearly 45 percentage points year-over-year. The dramatic improvement in driver turnover over the past year has contributed significantly to fewer unmanned tractors (2.5 percentage point improvement for the quarter) and has translated into more miles per tractor per week (3.4% increase for the quarter). Combined with slower fleet growth, the driver turnover improvements yielded a 27.1% decline in driver recruiting costs, or over 100 basis points in margin.
“While those improvements contributed to the efficiency of our operations, they were offset by the soft freight demand and cost pressures:
| • | Fuel and fuel tax expense, excluding fuel surcharge revenue, increased 130 basis points due largely to a higher national average price for diesel fuel; and |
| • | In early August, a jury returned an unfavorable verdict in a litigated contract dispute. The jury held that USA Truck breached a contract and awarded the plaintiff damages of approximately $3.0 million (300 basis points). During the fourth quarter, we expect the court to determine any additional amounts that we may owe in pre-judgment interest and legal fees. The Company is currently considering all of its available options in regard to the jury’s verdict. This verdict had a negative impact on third quarter diluted earnings per share of approximately $0.17. Without that impact, our operations would have produced improved diluted earnings per share sequentially compared to the second quarter. That is something with which we are pleased given the challenging market conditions. |
“Our restructured safety department’s emphasis on safety awareness, training and accident prevention is showing signs of progress. While our accident frequencies remain elevated year-over-year, we have experienced a sequential reduction in accident frequency each quarter this year. We are executing a detailed, data-driven plan to bring down our accident frequencies long-term. An example of our efforts can be found in the frequency of our rollover accidents. During the first two quarters this year, our fleet of approximately 2,600 tractors experienced 24 of these expensive accidents (one every 7.5 days). During July, we implemented a Company-wide training and awareness campaign targeting rollovers. During the third quarter, with the same approximate number of tractors, we only experienced four rollovers (one every 22.5 days). Our safety effort is much broader than just rollovers, but that performance gives us confidence that our efforts, which we call the “war on accidents” internally, will yield tangible, long-term results.
“We have also made progress toward the long-term strategies that we implemented in the fourth quarter of 2006, which basically shift our focus from revenue growth to improving financial returns. Specifically, we have repurchased approximately 934,000 shares of our common stock year-to-date, we have slowed our fleet growth to essentially flat sequentially compared to the second quarter and 2.3% year-over-year, we have increased our revenue yield (revenue per truck per week) 0.2% year-over-year despite economic conditions, and on a year-over-year basis we have grown our non-asset based service revenue by 13.0% and more than doubled the size of our owner-operator fleet. These signs of progress represent only a small step toward achieving our long-term objectives set forth in our 2006 Annual Report on Form 10-K.
“During the fourth quarter, we will continue to focus on fundamentals, develop our 2008 operating plan and work diligently to remove costs from our system by improving operating efficiency.”
The following table summarizes the earnings information of USA Truck, Inc. (“Company”) and sets forth the percentage relationship of certain items to base revenue for the three-month periods indicated:
(in thousands, except percentage data (1) and per share amounts) | ||||||||||||
| Three Months Ended September 30, | |||||||||||
| 2007 |
| 2006 | |||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Trucking revenue (2) | $ | 96,930 |
|
|
|
| $ | 94,558 |
|
|
|
|
USA Logistics revenue (3) |
| 2,418 |
|
|
|
|
| 2,139 |
|
|
|
|
Base revenue |
| 99,348 |
| 100.0 | % |
|
| 96,697 |
| 100.0 | % |
|
Fuel surcharge revenue |
| 23,395 |
|
|
|
|
| 23,105 |
|
|
|
|
Total revenue |
| 122,743 |
|
|
|
|
| 119,802 |
|
|
|
|
Operating expenses and costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and employee benefits |
| 39,948 |
| 40.3 |
|
|
| 38,804 |
| 40.1 |
|
|
Fuel and fuel taxes (4) |
| 39,366 |
| 16.1 |
|
|
| 37,449 |
| 14.8 |
|
|
Depreciation and amortization |
| 12,464 |
| 12.5 |
|
|
| 11,798 |
| 12.2 |
|
|
Insurance and claims |
| 7,376 |
| 7.5 |
|
|
| 7,266 |
| 7.5 |
|
|
Operations and maintenance |
| 6,579 |
| 6.6 |
|
|
| 5,489 |
| 5.7 |
|
|
Purchased transportation |
| 4,903 |
| 4.9 |
|
|
| 3,447 |
| 3.6 |
|
|
Litigation verdict |
| 2,967 |
| 3.0 |
|
|
| -- |
| -- |
|
|
Operating taxes and licenses |
| 1,522 |
| 1.5 |
|
|
| 1,588 |
| 1.7 |
|
|
Communications and utilities |
| 933 |
| 0.9 |
|
|
| 857 |
| 0.9 |
|
|
Loss (gain) on disposal of property and equipment, net |
| 11 |
| -- |
|
|
| (71) |
| (0.1) |
|
|
Other |
| 4,639 |
| 4.7 |
|
|
| 5,695 |
| 5.9 |
|
|
Total operating expenses |
| 120,708 |
| 98.0 |
|
|
| 112,322 |
| 92.3 |
|
|
Operating income |
| 2,035 |
| 2.0 |
|
|
| 7,480 |
| 7.7 |
|
|
Other expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
| 1,285 |
| 1.2 |
|
|
| 1,065 |
| 1.0 |
|
|
Other, net |
| (35) |
| -- |
|
|
| (30) |
| -- |
|
|
Total other expenses, net |
| 1,250 |
| 1.2 |
|
|
| 1,035 |
| 1.0 |
|
|
Income before income taxes |
| 785 |
| 0.8 |
|
|
| 6,445 |
| 6.7 |
|
|
Income tax expense |
| 769 |
| 0.8 |
|
|
| 3,030 |
| 3.2 |
|
|
Net income | $ | 16 |
| -- | % |
| $ | 3,415 |
| 3.5 | % |
|
Per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding (Basic) |
| 10,429 |
|
|
|
|
| 11,389 |
|
|
|
|
Basic earnings per share | $ | -- |
|
|
|
| $ | 0.30 |
|
|
|
|
Average shares outstanding (Diluted) |
| 10,535 |
|
|
|
|
| 11,558 |
|
|
|
|
Diluted earnings per share | $ | -- |
|
|
|
| $ | 0.30 |
|
|
|
|
Page 2 of 6
The following tables include key operating statistics for the three-month periods indicated:
Trucking Operations
| Three Months Ended September 30, 2007 |
| |||||||||||||||||
| General Freight |
| Regional Freight |
| Dedicated Freight |
| Total Trucking | ||||||||||||
Total miles (in thousands) (5) | 62,283 |
| 8,581 |
| 5,102 |
| 75,966 |
| |||||||||||
Empty mile factor (6) | 10.7 | % |
| 15.2 | % |
| 1.6 | % |
| 10.6 | % | ||||||||
Base Trucking revenue per loaded mile | $ | 1.42 |
| $ | 1.53 |
| $ | 1.36 |
| $ | 1.43 |
| |||||||
Average number of tractors (7) | 2,065 |
| 334 |
| 182 |
| 2,581 |
| |||||||||||
Average miles per tractor per period | 30,161 |
| 25,692 |
| 28,031 |
| 29,433 |
| |||||||||||
Average miles per tractor per week | 2,394 |
| 2,039 |
| 2,225 |
| 2,336 |
| |||||||||||
Average miles per trip (8) | 903 |
| 503 |
| 472 |
| 783 |
| |||||||||||
Average unmanned tractor percentage (9) | 2.5 | % |
| 4.3 | % |
| 2.8 | % |
| 2.8 | % | ||||||||
Base Trucking revenue per truck per week | $ | 3,035 |
| $ | 2,647 |
| $ | 2,977 |
| $ | 2,981 |
| |||||||
| Three Months Ended September 30, 2006 |
| ||||||||||||||||
| General Freight |
| Regional Freight |
| Dedicated Freight |
| Total Trucking | |||||||||||
Total miles (in thousands) (5) | 59,510 |
| 5,886 |
| 6,388 |
| 71,784 |
| ||||||||||
Empty mile factor (6) | 10.0 | % |
| 13.1 | % |
| 3.6 | % |
| 9.7 | % | |||||||
Base Trucking revenue per loaded mile | $ | 1.46 |
| $ | 1.56 |
| $ | 1.41 |
| $ | 1.46 |
| ||||||
Average number of tractors (7) | 2,041 |
| 224 |
| 257 |
| 2,522 |
| ||||||||||
Average miles per tractor per period | 29,157 |
| 26,278 |
| 24,857 |
| 28,463 |
| ||||||||||
Average miles per tractor per week | 2,314 |
| 2,086 |
| 1,973 |
| 2,259 |
| ||||||||||
Average miles per trip (8) | 951 |
| 534 |
| 549 |
| 841 |
| ||||||||||
Average unmanned tractor percentage (9) | 4.9 | % |
| 4.5 | % |
| 9.4 | % |
| 5.3 | % | |||||||
Base Trucking revenue per truck per week | $ | 3,028 |
| $ | 2,832 |
| $ | 2,682 |
| $ | 2,976 |
| ||||||
| (1) | Percentages are presented in relationship to base revenue. |
| (2) | Trucking revenue includes base revenue generated from services using Company-owned or owner-operator tractors. Specifically, it includes base revenue from our General Freight, Regional Freight and Dedicated Freight divisions. |
| (3) | USA Logistics revenue includes base revenue generated from non-asset based services. Specifically, it includes base revenue from our Strategic Capacity Solutions (Freight Brokerage) and Third Party Logistics divisions. |
| (4) | Fuel and fuel taxes as a percentage of base revenue is calculated by subtracting fuel surcharge revenue from fuel and fuel taxes expense and dividing that amount by base revenue. |
| (5) | Total miles include both loaded and empty miles. |
| (6) | The empty mile factor is the number of miles traveled for which we are not typically compensated by any customer as a percentage of total miles traveled. |
| (7) | Average number of tractors includes Company-operated tractors plus owner-operator tractors. |
| (8) | Average miles per trip is based upon loaded miles divided by the number of Trucking shipments. |
| (9) | Average unmanned tractor percentage is the weighted average percentage of Company-operated tractors to which a driver is not assigned. |
Page 3 of 6
The following table summarizes the earnings information of the Company and sets forth the percentage relationship of certain items to base revenue for the nine-month periods indicated:
(in thousands, except percentage data (1) and per share amounts) | ||||||||||||
| Nine Months Ended September 30, | |||||||||||
| 2007 |
| 2006 | |||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Trucking revenue (2) | $ | 288,368 |
|
|
|
| $ | 280,782 |
|
|
|
|
USA Logistics revenue (3) |
| 7,140 |
|
|
|
|
| 12,326 |
|
|
|
|
Base revenue |
| 295,508 |
| 100.0 | % |
|
| 293,108 |
| 100.0 | % |
|
Fuel surcharge revenue |
| 64,075 |
|
|
|
|
| 62,843 |
|
|
|
|
Total revenue |
| 359,583 |
|
|
|
|
| 355,951 |
|
|
|
|
Operating expenses and costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and employee benefits |
| 122,269 |
| 41.4 |
|
|
| 114,793 |
| 39.2 |
|
|
Fuel and fuel taxes (4) |
| 110,612 |
| 15.7 |
|
|
| 106,752 |
| 15.0 |
|
|
Depreciation and amortization |
| 36,572 |
| 12.4 |
|
|
| 34,611 |
| 11.8 |
|
|
Insurance and claims |
| 23,584 |
| 8.0 |
|
|
| 19,885 |
| 6.8 |
|
|
Operations and maintenance |
| 19,127 |
| 6.5 |
|
|
| 16,296 |
| 5.5 |
|
|
Purchased transportation |
| 13,528 |
| 4.5 |
|
|
| 16,234 |
| 5.5 |
|
|
Litigation verdict |
| 2,967 |
| 1.0 |
|
|
| -- |
| -- |
|
|
Operating taxes and licenses |
| 4,768 |
| 1.6 |
|
|
| 4,901 |
| 1.7 |
|
|
Communications and utilities |
| 2,824 |
| 1.0 |
|
|
| 2,523 |
| 0.9 |
|
|
Gain on disposal of property and equipment, net |
| (303) |
| (0.1) |
|
|
| (498) |
| (0.2) |
|
|
Other |
| 14,678 |
| 5.0 |
|
|
| 16,558 |
| 5.6 |
|
|
Total operating expenses |
| 350,626 |
| 97.0 |
|
|
| 332,055 |
| 91.8 |
|
|
Operating income |
| 8,957 |
| 3.0 |
|
|
| 23,896 |
| 8.2 |
|
|
Other expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
| 3,886 |
| 1.3 |
|
|
| 3,093 |
| 1.1 |
|
|
Other, net |
| 22 |
| -- |
|
|
| (92) |
| -- |
|
|
Total other expenses, net |
| 3,908 |
| 1.3 |
|
|
| 3,001 |
| 1.1 |
|
|
Income before income taxes |
| 5,049 |
| 1.7 |
|
|
| 20,895 |
| 7.1 |
|
|
Income tax expense |
| 3,333 |
| 1.1 |
|
|
| 9,673 |
| 3.3 |
|
|
Net income | $ | 1,716 |
| 0.6 | % |
| $ | 11,222 |
| 3.8 | % |
|
Per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding (Basic) |
| 10,690 |
|
|
|
|
| 11,373 |
|
|
|
|
Basic earnings per share | $ | 0.16 |
|
|
|
| $ | 0.99 |
|
|
|
|
Average shares outstanding (Diluted) |
| 10,804 |
|
|
|
|
| 11,595 |
|
|
|
|
Diluted earnings per share | $ | 0.16 |
|
|
|
| $ | 0.97 |
|
|
|
|
The following tables include key operating statistics for the nine-month periods indicated:
Trucking Operations
| Nine Months Ended September 30, 2007 |
| |||||||||||||||||
| General Freight |
| Regional Freight |
| Dedicated Freight |
| Total Trucking | ||||||||||||
Total miles (in thousands) (5) | 184,227 |
| 24,818 |
| 17,421 |
| 226,466 |
| |||||||||||
Empty mile factor (6) | 11.2 | % |
| 15.6 | % |
| 2.3 | % |
| 11.0 | % | ||||||||
Base Trucking revenue per loaded mile | $ | 1.42 |
| $ | 1.55 |
| $ | 1.35 |
| $ | 1.43 |
| |||||||
Average number of tractors (7) | 2,048 |
| 325 |
| 201 |
| 2,574 |
| |||||||||||
Average miles per tractor per period | 89,955 |
| 76,363 |
| 86,670 |
| 87,982 |
| |||||||||||
Average miles per tractor per week | 2,367 |
| 2,010 |
| 2,281 |
| 2,315 |
| |||||||||||
Average miles per trip (8) | 911 |
| 496 |
| 496 |
| 787 |
| |||||||||||
Average unmanned tractor percentage (9) | 2.7 | % |
| 4.4 | % |
| 3.5 | % |
| 3.0 | % | ||||||||
Base Trucking revenue per truck per week | $ | 2,992 |
| $ | 2,629 |
| $ | 3,016 |
| $ | 2,948 |
| |||||||
Page 4 of 6
| Nine Months Ended September 30, 2006 |
| ||||||||||||||||
| General Freight |
| Regional Freight |
| Dedicated Freight |
| Total Trucking | |||||||||||
Total miles (in thousands) (5) | 180,671 |
| 16,607 |
| 19,173 |
| 216,451 |
| ||||||||||
Empty mile factor (6) | 10.1 | % |
| 13.0 | % |
| 3.9 | % |
| 9.7 | % | |||||||
Base Trucking revenue per loaded mile | $ | 1.44 |
| $ | 1.54 |
| $ | 1.36 |
| $ | 1.44 |
| ||||||
Average number of tractors (7) | 2,052 |
| 212 |
| 229 |
| 2,493 |
| ||||||||||
Average miles per tractor per period | 88,046 |
| 78,336 |
| 83,725 |
| 86,823 |
| ||||||||||
Average miles per tractor per week | 2,317 |
| 2,061 |
| 2,203 |
| 2,285 |
| ||||||||||
Average miles per trip (8) | 941 |
| 544 |
| 578 |
| 845 |
| ||||||||||
Average unmanned tractor percentage (9) | 3.9 | % |
| 6.2 | % |
| 9.7 | % |
| 4.6 | % | |||||||
Base Trucking revenue per truck per week | $ | 2,994 |
| $ | 2,761 |
| $ | 2,886 |
| $ | 2,964 |
| ||||||
| (1) | Percentages are presented in relationship to base revenue. |
| (2) | Trucking revenue includes base revenue generated from services using Company-owned or owner-operator tractors. Specifically, it includes base revenue from our General Freight, Regional Freight and Dedicated Freight divisions. |
| (3) | USA Logistics revenue includes base revenue generated from non-asset based services. Specifically, it includes base revenue from our Strategic Capacity Solutions (Freight Brokerage) and Third Party Logistics divisions. |
| (4) | Fuel and fuel taxes as a percentage of base revenue is calculated by subtracting fuel surcharge revenue from fuel and fuel taxes expense and dividing that amount by base revenue. |
| (5) | Total miles include both loaded and empty miles. |
| (6) | The empty mile factor is the number of miles traveled for which we are not typically compensated by any customer as a percentage of total miles traveled. |
| (7) | Average number of tractors includes Company-operated tractors plus owner-operator tractors. |
| (8) | Average miles per trip is based upon loaded miles divided by the number of Trucking shipments. |
| (9) | Average unmanned tractor percentage is the weighted average percentage of Company-operated tractors to which a driver is not assigned. |
Selected Balance Sheet Data: |
|
|
|
|
|
| |||||
|
| (in thousands, except percentage data) | |||||||||
|
| September 30, |
|
| December 31, | ||||||
|
| 2007 |
|
| 2006 | ||||||
Total assets | $ | 333,132 |
| $ | 339,494 |
| |||||
Total equity |
| 146,982 |
|
| 159,558 |
| |||||
Total debt, including current maturities |
| 87,783 |
|
| 95,406 |
| |||||
Debt to total capitalization ratio (1) |
| 37.4 | % |
|
| 37.4 | % |
| |||
| (1) | Total capitalization equals total equity plus total debt, including current maturities. |
This press release contains forward-looking statements and information that are based on our current beliefs and expectations and assumptions we have made based upon information currently available. Forward-looking statements include statements relating to our plans, strategies, objectives, expectations, intentions and adequacy of resources, and may be identified by words such as “will,” “could,” “should,” “may,” “believe,” “expect,” “intend,” “plan,” “schedule,” “estimate,” “project” and similar expressions. These statements are based on current expectations and are subject to uncertainty and change. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such expectations will be realized. If one or more of the risks or uncertainties underlying such expectations materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected. Among other things, we cannot assure you that we will be able to continue the recent positive trends identified in this press release such as the improvements in our driver turnover, miles per tractor per week or safety performance. Among the key factors that are not within our control and that have a direct bearing on operating results are increases in fuel prices, adverse weather conditions, increased regulatory burdens and the impact of increased rate competition. Our results have also been, and will continue to be, significantly affected by fluctuations in general economic conditions, as our tractor utilization is directly related to the business levels of our customers in a variety of industries. In addition, shortages of qualified drivers and intense or increased competition for drivers have adversely impacted our operating results and our ability to grow and will continue to do so. Results for any specific period could also be affected by various unforeseen events, such as unusual levels of equipment failure or vehicle
Page 5 of 6
accident claims. Additional risks associated with our operations are discussed in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2006, and our quarterly reports on Form 10-Q.
All forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by this cautionary statement.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this press release might not occur.
References to the “Company,” “we,” “us,” “our” and words of similar import refer to USA Truck, Inc. and its subsidiary.
USA Truck is a dry van truckload carrier transporting general commodities via our General, Regional and Dedicated Freight divisions. We transport commodities throughout the continental United States and into and out of portions of Canada. We also transport general commodities into and out of Mexico by allowing through-trailer service from our terminal in Laredo, Texas. Our Third Party Logistics and Strategic Capacity Solutions (Freight Brokerage) divisions provide customized transportation solutions using our technology and multiple modes of transportation including our assets and the assets of our partner carriers.
This press release and related information will be available to interested parties at our web site, http://www.usa-truck.com under the “Financial Data” tab of the “Investor Relations” page.
-- --
Contact: CLIFF BECKHAM, President and Chief Executive Officer - (479) 471-2633
Page 6 of 6
