USA Truck Inc NASDAQ USAK Investor Presentation February
USA Truck, Inc. (NASDAQ: USAK) Investor Presentation February 2018
Our Vision: USA Truck is driven to be a premier North American transportation solutions provider that improves the lives of team members, customers, industry partners, and our communities. We promote a culture of trust in a safe, fun, and friendly environment where people grow and thrive. 2
Disclosure Statement Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended and Section 21 E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These statements generally may be identified by their use of terms or phrases such as “expects, ” “estimates, ” “anticipates, ” “projects, ” “believes, ” “plans, ” “goals, ” “intends, ” “may, ” “will, ” “should, ” “could, ” “potential, ” “continue, ” “strategy, ” “future” and terms or phrases of similar substance. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Accordingly, actual results may differ materially from those set forth in the forward-looking statements. Readers should review and consider the factors that may affect future results and other disclosures by the Company in its press releases, Annual Report on Form 10 -K and other filings with the Securities and Exchange Commission. Any forwardlooking statement speaks only as of the date on which it is made. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information, except as required by law. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this press release might not occur. All forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by this cautionary statement. Non-GAAP Financial Data This presentation includes the use of EBITDA, Adjusted EBITDA, adjusted operating ratio and Adjusted EPS, financial measures that are not in accordance with generally accepted accounting principles (“GAAP”). Each such measure is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors and lenders. While management believes such measures are useful for investors, they should not be used as a replacement for financial measures that are in accordance with GAAP. Please see the Appendix to this presentation for a reconciliation to the closest GAAP financial measures. The Company defines EBITDA as net loss, plus interest expense net of interest income, provision for income taxes and depreciation and amortization. It defines Adjusted EBITDA as these items plus non-cash equity compensation, restructuring, impairment and other costs, and severance costs included in salaries, wages and employee benefits. Adjusted operating ratio is calculated as operating expenses less restructuring, impairment (excluding impairment of assets held for sale) and other costs, net of fuel surcharges, as a percentage of operating revenue excluding fuel surcharge revenue. Adjusted EPS is defined as earnings or loss before income taxes plus loss on extinguishment of debt, restructuring, impairment and other costs, and severance costs included in salaries, wages and employee benefits reduced by our statutory income tax rate, divided by weighted average diluted shares outstanding. Because not all companies use identical calculations, the Company's presentation of non-GAAP financial measures may not be comparable to similarly titled measures of other companies. All forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by this cautionary statement. References to the “Company, ” “we, ” “us, ” “our” and words of similar import refer to USA Truck, Inc. and its subsidiary. 3
Company Overview CAPACITY SOLUTIONS PROVIDER Logistics 5 regional centers, 2 satellite offices Plus Power – ICs pulling company trailers Portfolio of asset-light services, focused on truckload configurations via dry van, flatbed, refrigerated and intermodal serving all of North America Trucking 1, 681 in-service tractors, includes 265 independent contractors 5, 637 trailers Network concentration east of Interstate 35 ~95 TOP 100 CUSTOMERS UTILIZE MULTIPLE SERVICES 4
Current Business Mix Operating Revenue (1) FY 2017 Consolidated Base Revenue Composition (3) FY 2017 ($/M) Retailers Food/Beverage Logistics 144. 5 Paper/Packaging Trucking 302. 0 Industrials Automotive Parts Appliances 0, 0 20, 0 Trucking 10 8 6 4 2 0 -2 -4 -6 -8 -10 80, 0 100, 0 120, 0 Logistics 1410 1210 7, 9 7, 7 1010 810 -9, 1 Trucking 610 -9 410 210 FY 16 FY 17 10 Co. Owned Tractors (1) (2) (3) 60, 0 Fleet Mix Adjusted Operating Income (2) FY 2017 ($/M) 40, 0 Operating is defined as revenue less intersegment eliminations. See Appendix for GAAP reconciliation. See Appendix for reconciliation of non-GAAP to GAAP and calculation of Adjusted Operating income. Excludes fuel surcharge revenue. See Appendix for non-GAAP to GAAP reconciliation. Ind. Contractors Plus P 5
4 Q 2017 Results Consolidated operating revenue of $123. 3 million, up 19. 5% YOY Operating Revenue by Segment ($/M) Trucking 150 Logistics 123. 3 103. 1 100 50 0 Consolidated operating income of $5. 5 million, net income of $14. 8 million, operating ratio of 95. 5%; all represent YOY improvements 39, 5 33, 2 69, 9 83, 8 4 Q 16 4 Q 17 Operating Income (Loss) by Segment ($/M) 10 (4. 7) Trucking 5 0 -5 -10 1, 5 Logistics Trucking Segment generated operating income of $3. 5 million, improved from $(6. 2) million loss in 4 Q 16, and $(1. 2) million loss in 3 Q 17 5. 5 2, 0 3, 5 (6, 2) 4 Q 16 4 Q 17 Diluted EPS ($/Sh) (0. 48) 1. 84 Adjusted Diluted EPS ($/Sh) (0. 47) 0. 35 (1) See Appendix for non-GAAP to GAAP reconciliation and calculation of adjusted EPS. USAT Logistics Segment generated operating income of $2. 0 million, improved from $1. 5 million in 4 Q 16, but down from $3. 0 million in 3 Q 17 6
Trucking 4 Q Results Base Revenue per Loaded Mile 2, 106 ($) 2, 10 2, 00 1, 90 1, 856 1, 754 1, 740 1, 762 1, 70 1, 60 1, 50 4 Q 16 1 Q 17 2 Q 17 3 Q 17 4 Q 17 Avg. Miles/Seated Truck/Week 2 100 1 986 2 013 1 983 1 920 1 928 Base rate per loaded mile increased $0. 352, or 20. 1%, vs 4 Q 16 and $0. 25, or 13. 5%, sequentially Miles per seated truck per week decreased 58 miles per tractor, or 2. 9%, over 4 Q 16, and increased 8 miles per tractor, or 0. 4% sequentially 1 900 1 700 1 500 1 300 1 100 4 Q 16 1 Q 17 2 Q 17 3 Q 17 4 Q 17 Base Revenue per Seated Tractor per Week ($) 3 500 3 400 3 300 3 200 3 100 3 000 2 900 2 800 2 700 3 505 3 018 3 040 3 046 4 Q 16 1 Q 17 2 Q 17 3 127 3 Q 17 4 Q 17 Unseated tractors at 5. 5% in 4 Q 17, down from 9. 3% in 4 Q 16, and down from 6. 5% sequentially Base revenue per seated tractor per week increased by $487, or 16. 1% over 4 Q 16, and increased $378, or 12. 1% sequentially 7
USAT Logistics 4 Q Results Operating Revenue ($/M) 45, 0 40, 0 35, 0 33, 2 35, 8 37, 8 39, 5 31, 4 $39. 5 million in operating revenue – up $6. 3 million, or 19. 0% YOY, and $1. 7 million, or 4. 5% sequentially 30, 0 25, 0 20, 0 4 Q 16 1 Q 17 2 Q 17 3 Q 17 4 Q 17 Gross Margin(1) ($/M) 8, 0 7, 0 6, 0 5, 0 4, 0 3, 0 2, 0 1, 0 0, 0 7, 6 6, 2 6, 6 7, 1 5, 4 – tightening spot market driving compressed gross margin percentage 24 K loads – down 1. 4 K, or 5. 5% YOY, and 3. 1 K, or 11. 4% sequentially 4 Q 16 1 Q 17 2 Q 17 3 Q 17 4 Q 17 (1) Gross Margin defined as operating revenue less purchased transportation expense. Load Count (000 s) 29, 0 28, 0 27, 0 26, 0 25, 0 24, 0 23, 0 22, 0 21, 0 $7. 1 million in gross margin – up $0. 9 million, or 14. 6% YOY, but down $0. 5 million, or 7. 3% sequentially 28, 5 27, 1 25, 4 26, 1 24, 0 4 Q 16 1 Q 17 2 Q 17 3 Q 17 4 Q 17 Implementation of value-driven marketbased pricing model, designed to: – – increase volume normalize gross margin increase market share strengthening customer relationships 8
Balance Sheet and Liquidity ($/MM) 3/31/17 6/30/17 9/30/17 12/31/17 Total Debt ($) 131. 9 127. 8 120. 7 107. 5 Total Capitalization ($) 185. 6 179. 8 172. 4 174. 0 5. 6 x 6. 4 x 5. 8 x 3. 9 x Net Debt to Adj. EBITDA(1) Total stockholders’ equity of $66. 5 million at December 31, 2017 Approximately $61. 8 million in liquidity available under revolving credit facility as of December 31, 2017 Anticipated 2018 Net Capex of $40 -50 million Reduce leverage ratio over the long-term, targeting Net Debt to Adjusted EBITDA of between 2. 5 x and 3. 0 x (1) See Appendix for non-GAAP to GAAP reconciliation and calculation of adjusted EBITDA. 9
2017 Strategic Action Plan & Performance Targets Assessment Strategic Action Plan Increase rates – Addition of certain short-haul routes Further improve maintenance costs – Leverage outside spend – Continued implementation of extended warranty program Further optimize network – Focus on technology and new processes to continue improvements in utilization Increase percentage of independent contractors to 1525% Performance Targets Increase base revenue per seated tractor per week by ~3 -5% over the 2016 average of $2, 998 – Attained $3, 179 in base revenue per seated tractor per week, a 6. 0% increase Increase seated truck count by ~5 -7% throughout 2017 over the 4 Q 16 average of 1, 547. – Achievement of 1, 592 seated tractors. 2. 9% above the 4 Q 16 average Fixed Controllable Cost Reduction – Reduction of $4. 1 million in fixed controllable costs throughout 2017 10
2018 Strategic Action Plan & Performance Targets Strategic Action Plan Increase Trucking base revenue per seated tractor – Continue evolution of network, customer, market and lane strategies – Drive incremental asset utilization – Minimize unseated truck % Grow IC fleet Decrease expenses through continued cost management – Investment in technology to increase safety and efficiency Implement value-driven customer pricing model for USAT Logistics. – Designed to increase volume, normalize gross margin through transparent, market-based pricing. Performance Targets Increase base revenue per seated tractor per week by ~5 -7% over the 2017 FY average of $3, 179 Maintain unseated tractor percentage at, or below, 5% Increase seated tractor count by ~4 -6% over the 2017 FY average of 1, 592 – Primarily through IC-O/O growth Reduce $3 -5 million of fixed controllable costs in 2018, on a CPM basis Grow USAT Logistics business to ~35% of Total Revenues 11
APPENDIX 12
GAAP to Non-GAAP Reconciliations 13
GAAP to Non-GAAP Reconciliations 14
GAAP to Non-GAAP Reconciliations 15
Trucking GAAP Reconciliation ADJUSTED OPERATING RATIO RECONCILIATION Trucking Segment Three Months Ended Year Ended December 31, 2017 Revenue $ Less: intersegment eliminations 2016 83, 930 $ 2017 70, 377 $ 2016 302, 943 $ 295, 807 153 424 891 1, 281 Operating revenue 83, 777 69, 953 302, 052 294, 526 Less: fuel surcharge revenue 10, 618 8, 591 38, 173 32, 090 Base revenue 73, 159 61, 362 263, 879 262, 436 Operating expense 80, 279 76, 134 311, 719 309, 315 Restructuring, impairment and other costs -- -- -- (4, 848) Severance costs included in salaries, wages and employee benefits -- (142) (665) (839) (10, 618) (8, 591) (38, 173) (32, 090) Adjusted for: Fuel surcharge revenue Adjusted operating expense $ 69, 661 $ 67, 401 $ 272, 881 $ 271, 538 Operating ratio 95. 8 % 108. 8 % 103. 2 % 105. 0 % Adjusted operating ratio 95. 2 % 109. 8 % 103. 4 % 103. 5 % 16
USAT Logistics GAAP Reconciliation ADJUSTED OPERATING RATIO RECONCILIATION USAT Logistics Segment Three Months Ended Year Ended December 31, 2017 Revenue $ Less: intersegment eliminations 40, 702 2016 $ 2017 34, 373 $ 2016 152, 137 $ 140, 847 1, 209 1, 191 7, 656 6, 274 39, 493 33, 182 144, 481 134, 573 2, 587 2, 565 10, 043 8, 839 Base revenue 36, 906 30, 617 134, 438 125, 734 Operating expense 37, 498 31, 639 136, 882 127, 300 Restructuring, impairment and other costs -- -- -- (416) Severance costs included in salaries, wages and employee benefits -- -- (265) -- Operating revenue Less: fuel surcharge revenue Adjusted for: Fuel surcharge revenue Adjusted operating expense (2, 587) $ 34, 911 (2, 565) $ 29, 074 (10, 043) $ 126, 574 (8, 839) $ 118, 045 Operating ratio 94. 9 % 95. 3 % 94. 7 % 94. 6 % Adjusted operating ratio 94. 6 % 95. 0 % 94. 2 % 93. 9 % 17
Trucking 4 Q Results Avg. Miles/Seated Truck/Week 2 100 2 002 1 986 2 013 1 983 1 950 1 928 1 650 1 500 1 350 3 Q 16 4 Q 16 1 Q 17 2 Q 17 3 Q 17 4 Q 17 40, 375 40, 449 40, 833 41, 081 40, 233 Salaries, Wages & Benefits 0. 665 0. 672 0. 623 0. 646 0. 695 Fuel and Fuel Taxes 0. 263 0. 265 0. 256 0. 285 0. 318 Dep. & Amortization 0. 187 0. 166 0. 162 0. 174 Insurance & Claims 0. 130 0. 203 0. 133 0. 127 0. 181 Equipment Rent 0. 046 0. 052 0. 064 0. 065 0. 066 O&M 0. 156 0. 157 0. 187 0. 191 0. 194 Purchased Transportation 0. 255 0. 281 0. 289 0. 301 0. 264 Total miles (000 s) 1 800 1 200 4 Q 16 4 Q 17 Selected Trucking Ops. expense per mile Average weekly miles per seated truck – Decreased 58 miles per week, or ~3% vs. 4 Q 16, improved 8 miles per week, or ~0. 4% vs. 3 Q 17 4 Q 17 salaries, wages and benefits up 4. 3% vs. 4 Q 16; up 7. 6% on a CPM basis 4 Q 17 insurance and claims expense per mile increased both YOY and sequentially 4 Q 17 O&M increased 24. 4% vs. 4 Q 16 and increased 1. 6% vs. 2 Q 17 4 Q 17 purchased transportation/mile 12. 3% lower than 3 Q 17, on 16. 2% decrease in independent contractor fleet 4 Q 17 total operating expenses up $0. 105 per mile compared to 3 Q 17 (1) Base revenue excludes fuel surcharge revenue. 18
Experienced Executive Leadership Team James Reed Jim Craig Jason Bates President and CEO EVP, Chief Commercial Officer and President, USAT Logistics Executive Vice President and CFO Werner Hugo Cheryl Stone Kim Littlejohn Senior Vice President, Trucking Operations Senior Vice President, Human Resources Vice President, Chief Technology Officer Richard Hainlen Jeff Harris Allen Lowry Vice President, Revenue Operations Vice President, Maintenance Vice President, Safety and Risk Management 19
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