usa truck, inc. (nasdaq: usak) september 2015...7 measurable results of turnaround plan 141.8 153.6...
TRANSCRIPT
USA Truck, Inc. (NASDAQ: USAK)Investor Presentation
September 2015
2
This presentation and accompanying comments may contain 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. Forward-looking statements are usually identified by words such as
anticipates, believes, estimates, plans, projects, expects, hopes, intends, will, could, may or similar
expressions, which speak only as of the date the statement was made. Such forward-looking statements
are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are inherently uncertain, are based upon the current beliefs, assumptions
and expectations of our management and current market conditions, all of which are subject to significant
risks and uncertainties as set forth in the Risk Factor section of our most recent annual report Form 10-K as
those risk factors may be updated from time to time. As a result of these and other factors, actual results
may differ materially from those set forth in the forward-looking statements. The company makes no
commitment and disclaims any obligation to update or revise any forward-looking statements to reflect
actual results or changes in the factors affecting the forward-looking information.
DISCLOSURE STATEMENT
3
INVESTMENT HIGHLIGHTS
Early innings of USA’s transformation with substantial opportunity to realize operating and asset leverage and drive increased return on invested capital
– Plan calls for realization of ~$50 million in Trucking operating income improvements and earnings leverage through High Leverage Activities (“HLAs”)
Large and growing asset-light business diversifies revenue streams while enhancing capital returns
Since 2012 execution of turnaround plan has restored profitability and strengthened the balance sheet
– $2.76 of adjusted EPS(1) improvement from 2012 to LTM 2Q15
– Consolidated operating ratio improved 1040 basis points from 2012 to LTM 2Q15
– Total debt reduced by $52.5 million
FY 2015 focused on turnaround reset to create sustainable growth platform
– Accelerating pace of Truckload improvements
– Restoring pace of growth and improving profitability of asset-light business
(1) Adjusted EPS and Adjusted Operating Ratio excludes unusual items, see Appendix for GAAP Reconciliation / Adjusted Operating Ratio.
4
Headquarters: Van Buren, AR
~2,800 employees (2)
Truckload Dedicated
Brokerage Intermodal
(1) Operating revenue is defined as revenue less intersegment eliminations. See Appendix for GAAP reconciliation.(2) Source: USA Truck 2014 10-K.
Trucking Segment
SCSSegment
CAPACITY SOLUTIONS PROVIDER
Trucking403.8
SCS 170.4
Trucking 7.0
SCS 15.9
($/M) ($/M)
5
297.6326.3 336.3
163.4161.9
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
2012 2013 2014 1H14 1H15
TRUCKING PLATFORM
(1) Source: USA Truck 2014 10-K.(2) Base Revenue excludes fuel surcharge revenue. See Appendix for GAAP reconciliation.(3) Adjusted Operating Ratio is net of fuel surcharge revenue and adjusted for unusual items. See Appendix for GAAP Reconciliation / Adjusted Operating Ratio.
1,987 tractors / 6,216 trailers (1)
Focus on medium-haul routes east of the Great Plains
– Renewed focus on Mexico
Broad and diverse blue-chip customer base serving end markets including Food & Beverage, Health & Cosmetics, Industrials, Packaging, Auto and Retailer
110.0
103.6
101.1
104.8
98.4
92.0
94.0
96.0
98.0
100.0
102.0
104.0
106.0
108.0
110.0
112.0
2012 2013 2014 1H14 1H15
($/M) (%)
6
6.6
9.0
20.8
11.1
6.2
0.0
5.0
10.0
15.0
20.0
25.0
2012 2013 2014 1H14 1H15
111.1117.6
158.0
79.270.8
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
2012 2013 2014 1H14 1H15
FREIGHT BROKERAGE PLATFORM
(1) Base Revenue excludes fuel surcharge revenue. See Appendix for GAAP reconciliation.(2) Net of fuel surcharge revenue.
Highly strategic complement to asset-based trucking operation
Enhances customer service while gaining a larger wallet share
Portfolio of customized transportation solutions including dry van, intermodal, refrigerated, flatbed, expedited and LTL
($/M) ($/M)
7
MEASURABLE RESULTS OF TURNAROUND PLAN
141.8
153.6
141.4
150.1
145.5
132.9
153.3
133.6
120.0
125.0
130.0
135.0
140.0
145.0
150.0
155.0
160.0
3Q13 3Q14 4Q13 4Q14 1Q14 1Q15 2Q14 2Q15
12.0
16.1
12.8
19.0
10.3
13.3
15.5 15.3
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
3Q13 3Q14 4Q13 4Q14 1Q14 1Q15 2Q14 2Q15
($/M)
($/M)
-1.71
-0.44
-0.33
0.01
0.49
0.74
1.02 1.05
-1.9
-1.4
-0.9
-0.4
0.1
0.6
1.1
2012 2013 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
($)
105.7
100.6101.5
100.399.2
96.595.6 95.3
90.0
92.0
94.0
96.0
98.0
100.0
102.0
104.0
106.0
108.0
2012 2013 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
(%)
(1) Excludes unusual items, see Appendix for GAAP Reconciliation / Adjusted Operating Ratio.(2) See Appendix for GAAP Reconciliation.(3) Excludes unusual items. See Appendix for GAAP Reconciliation.
8
HIGH LEVERAGE ACTIVITIES: DRIVING FINANCIAL IMPROVEMENTS
In 2013, management identified 27 HLAs expected to drive both operational and financial improvements, many of which are not dependent on freight market conditions
HLAs are organized under profitable revenue growth, cost effectiveness and operational execution
In 2014, management narrowed HLAs down to 14 levers, representing ~$70 million in annualized cost savings opportunity
HLAs can be grouped into the following categories:
Improving yield management
Focused asset productivity and network efficiency
Reducing maintenance cost expense
Further improving fuel efficiency
Safety / lower insurance & claims expense
Focus on experienced drivers to improve retention
~$50 million remaining potential opportunity on cost-side HLAs
(1) Assumes a 44% incremental tax rate and FY14 diluted average shares outstanding of 10.5 mm.
9
HLA: IMPROVE YIELD MANAGEMENT
(1) Base revenue excludes fuel surcharge revenue.(2) Assumes a 44% incremental tax rate and FY14 diluted average shares outstanding of 10.5 mm.(3) Assumes all else equal as of FY14. Assumes 2,039 weekly miles per seated truck, 2,047 average seated truck count, a 44% incremental tax rate and a FY14 diluted average shares
outstanding of 10.5 mm .
1% Change in Revenue per Load Mile = $0.18 in Annual EPS(2)
1.7
1.8
1.7
1.9
1.7
1.8
1.7
1.9
1.5
1.7
1.8
2.0
3Q13 3Q14 4Q13 4Q14 1Q14 1Q15 2Q14 2Q15
Focus on reducing deadhead, length of haul “sweet spot”, greater density in major routes / lanes
Upgrade profitability of customers at the lane level
Adhere to pricing and operational standards
Prioritize ROIC and network density over size of operations
Focus on loads per truck per week to drive increase in miles
Move non-network lanes over to SCS to capture revenue / profit / customer needs
Specific region-to-region fleets (power fleets)2,001
2,0112,030
1,959
2,023
1,979
2,088
2,008
1,860
1,920
1,980
2,040
2,100
3Q13 3Q14 4Q13 4Q14 1Q14 1Q15 2Q14 2Q151% Change in Weekly Miles per Seated
Truck = $0.04 in Annual EPS(3)
($/M)
10
HLA: REDUCE MAINTENANCE EXPENSE
(1) Assumes all else equal as of FY14. Assumes $0.15 maintenance cost / total mile, a 44% incremental tax rate and FY14 diluted average shares outstanding of 10.5 mm.
Every 1% Change in Maintenance Cost / Total Mile = $0.02 in Annual EPS
(1)
Fleet reinvestment plan
– FY 2015: disposing of 800 high-cost tractors, purchasing 400 for a net 400 tractor reduction
– Fiscal 2016: plan to dispose of additional 500 high-cost tractors, purchase 500 new tractors
– Improve average age of fleet to ~2.5 years
Complete review of maintenance facilities and preventative maintenance approach
Enhancing technology to manage maintenance
0
50
100
150
200
250
300
350
400
450
2011 2012 2013 2014 2015 2016
($/Mile)
0.116
0.144
0.103
0.088
0.048
0.018
0.000
0.040
0.080
0.120
0.160
2011 2012 2013 2014 2015 2016
11
TRUCKING OPERATING AND ASSET LEVERAGE POTENTIAL
Metric 2014 Target1%
Impact
Operating Ratio
Impact
EPSImpact(1)
Weekly Miles per Seated Truck
2,019 2,200 20 miles 24 bps $0.04
Base Revenue per Loaded Mile
$1.788 $1.890 $0.018 101 bps $0.18
Miles per Gallon(2) 6.67 7.00 0.07 23 bps $0.06
Maintenance Cost/Mile $0.156 $0.100 $0.002 7 bps $0.02
(1) Assumes all else equal as of FY14. Assumes a 44% incremental tax rate and FY14 diluted average shares outstanding of 10.5 mm.(2) Assumed fuel price per gallon based on average 2014 USAK fuel price.
12
CAPITALIZING ON FREIGHT BROKERAGE PLATFORM
Further centralize customer service
Roll out technology to increase load volume and enhance customer experience
Expanding capacity solution offerings and value-added services
– Intermodal– Refrigerated– Flatbed– Expedited– LTL
Expand network through both organic investment and acquisitions
4
9
1211 11 11
14
0
2
4
6
8
10
12
14
16
2009 2010 2011 2012 2013 2014 2015
(1) Base revenue excludes fuel surcharge revenue.
0.6
0.80.9
1.1
1.3
1.6
0.7
41
61
97
105
91
101108
20
30
40
50
60
70
80
90
100
110
120
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2009 2010 2011 2012 2013 2014 1H15
# o
f em
plo
yees
$ B
ase R
even
ue//
Em
plo
yee
13
STRONG FINANCIAL CONDITION
(in millions)
140.9
114.4
128.9
117.5124.5
106.2
125.1
85.8
0.9
20.9
40.9
60.9
80.9
100.9
120.9
140.9
160.9
3Q13 3Q14 4Q13 4Q14 1Q14 1Q15 2Q14 2Q15
3.7x
2.1x
3.0x
1.9x
2.8x
1.6x
2.5x
1.3x
0.9
1.4
1.9
2.4
2.9
3.4
3.9
3Q13 3Q14 4Q13 4Q14 1Q14 1Q15 2Q14 2Q15
7.8
19.5
9.1
11.7
5.8
19.7
12.9
19.8
0.0
5.0
10.0
15.0
20.0
25.0
3Q13 3Q14 4Q13 4Q14 1Q14 1Q15 2Q14 2Q15
Significantly improved credit profile since 2012
$170 million credit facility with accordion feature up to $250 million
Increases in cash flow from operations reflect improved working capital management and profitability
Board of Directors authorized 1 million share repurchase program (announced 8/4/15)
(1) See Appendix for GAAP reconciliation and calculation of adjusted EBITDA.
($/M)
($/M) ($/M)
14
ENERGIZING THE TURNAROUND PLAN
Leverage network planning tools
Adhere to pricing and operational standards; prioritize ROIC and network density over size of operations
Optimize scheduling and dispatch protocol
Streamline tractor fleet size by 400 -- retire 800 high-cost tractors while maintaining purchases of 400 new tractors
Rationalize fixed costs and SG&A to better align overhead with net 400-unit reduction in tractor fleet
Complete review of maintenance facilities and preventative maintenance approach
Further centralize customer service and roll out technology to increase load volume
Introduce additional capacity solutions and value-added services -- intermodal, refrigerated, flatbed, expedited, LTL
Expand branch office network through both organic investment and acquisitions
Grow base revenue, operating income and EPS
Profitable Trucking segment
Increased wallet share of customers’ transportation spend
Grow dedicated freight business
Increase SCS load count, maintain strong gross margin
15
APPENDIX
16
LEADING NORTH AMERICA TRANSPORTATION AND LOGISTICS PROVIDER
Strong Position East of the Great Plains
17
QUARTERLY FINANCIAL TRENDS
(in millions, except per share)
113.9
125.9
113.6
125.8
104.9
117.6 115.5111.5
125.0
117.2
80.0
90.0
100.0
110.0
120.0
130.0
140.0
3Q13 3Q14 4Q13 4Q14 1Q13 1Q14 1Q15 2Q13 2Q14 2Q15
12.0
16.1
12.8
19.0
8.1
10.5
14.3
10.0
15.515.3
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
3Q13 3Q14 4Q13 4Q14 1Q13 1Q14 1Q15 2Q13 2Q14 2Q15
-0.06
0.26
0.00
0.41
-0.24
-0.13
0.15
-0.14
0.20 0.23
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
0.50
3Q13 3Q14 4Q13 4Q14 1Q13 1Q14 1Q15 2Q13 2Q14 2Q15
100.2
95.7
98.9
93.2
102.7
100.9
96.9
100.8
96.6
95.5
88
90
92
94
96
98
100
102
104
3Q13 3Q14 4Q13 4Q14 1Q13 1Q14 1Q15 2Q13 2Q14 2Q15
%
(1) Base revenue excludes fuel surcharge revenue. (2) Excludes unusual items, See Appendix for GAAP Reconciliation / Adjusted Operating Ratio.(3) Excludes unusual items. See Appendix for GAAP Reconciliation..
($/M)($/M)
($/Sh)
18
ANNUAL FINANCIAL TRENDS
(1) Base revenue excludes fuel surcharge revenue. (2) Excludes unusual items, See Appendix for GAAP Reconciliation / Adjusted Operating Ratio.(3) Excludes unusual items. See Appendix for GAAP Reconciliation.
(in millions, except per share)
411.0 408.7443.9
494.3
200.0
250.0
300.0
350.0
400.0
450.0
500.0
550.0
2011 2012 2013 2014
36.9
21.9
43.0
60.8
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
2011 2012 2013 2014
-1.05
-1.71
-0.44
0.74
-2.00
-1.50
-1.00
-0.50
0.00
0.50
1.00
2011 2012 2013 2014
103.1
105.7
100.6
96.5
90
92
94
96
98
100
102
104
106
108
2011 2012 2013 2014
(%)
($/M) ($/M)
($/Sh)
19
CONSOLIDATED GAAP RECONCILIATION
(1) Operating Ratio defined as (i) operating expenses minus fuel surcharge revenue, divided by (ii) total revenue excluding fuel surcharge revenue.(2) Adjusted Operating Ratio excludes the LT Claims Liability Reserve Adjustment.
FYE 12/31 xx For the Quarter Ended xx FYE 12/31 xx For the Quarter Ended xx FYE 12/31
2011 3/31/12 6/30/12 9/30/12 12/31/12 2012 3/31/13 6/30/13 9/30/13 12/31/13 2013
GAAP Net Income (Loss) (10.8)$ (4.9)$ (3.5)$ (6.1)$ (3.2)$ (17.7)$ (2.5)$ (1.4)$ (0.6)$ (4.6)$ (9.1)$
Add:
Interest, Net 3.3 1.0 1.0 1.0 1.0 4.1 0.8 0.9 1.0 0.9 3.7
Income Tax Expense (Benefit) (5.0) (2.7) (1.8) (3.5) (1.6) (9.6) (1.1) (0.4) 0.0 (2.4) (4.0)
Depreciation & Amortization 49.3 11.2 11.2 11.2 11.5 45.1 10.9 10.9 11.6 11.5 44.9
EBITDA 36.9$ 4.6$ 6.9$ 2.7$ 7.6$ 21.9$ 8.1$ 10.0$ 12.0$ 5.4$ 35.5$
Add:
LT Claims Liabil ity Reserve Adjustment, Pretax - - - - - - - - - 6.0 6.0
Loss on Debt Extinguishment, Pretax - - - - - - - - - - -
Legal and Related Defense Costs, Pretax - - - - - - - - - 1.5 1.5
Adjusted EBITDA 36.9$ 4.6$ 6.9$ 2.7$ 7.6$ 21.9$ 8.1$ 10.0$ 12.0$ 12.8$ 43.0$
(-) Depreciation & Amortization (49.3) (11.2) (11.2) (11.2) (11.5) (45.1) (10.9) (10.9) (11.6) (11.5) (44.9)
Adjusted EBIT (12.4)$ (6.6)$ (4.3)$ (8.5)$ (3.9)$ (23.2)$ (2.8)$ (0.9)$ 0.4$ 1.3$ (2.0)$
Additional Below EBIT Adjustments
Tax Effect from Charges - - - - - - - - - 2.8 2.8
Adjusted Net Income (Loss) (10.8)$ (4.9)$ (3.5)$ (6.1)$ (3.2)$ (17.7)$ (2.5)$ (1.4)$ (0.6)$ (0.0)$ (4.5)$
Diluted Shares Outstanding 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3
Adjusted EPS (1.05)$ (0.47)$ (0.34)$ (0.59)$ (0.31)$ (1.71)$ (0.24)$ (0.14)$ (0.06)$ (0.00)$ (0.44)$
Operating Expenses 532.1$ 130.3$ 133.9$ 132.9$ 138.6$ 535.7$ 134.9$ 140.7$ 142.0$ 146.1$ 563.7$
Fuel Surcharge Revenue 108.4 25.9 26.0 24.1 27.7 103.7 27.1 28.3 28.0 27.8 111.2
Total Revenue 519.4 123.7 129.6 124.4 134.8 512.4 132.0 139.7 141.8 141.4 555.0
Operating Ratio(1)
103.1% 106.8% 104.2% 108.5% 103.5% 105.7% 102.7% 100.8% 100.2% 104.1% 102.0%
Adjusted Operating Ratio(2)
103.1% 106.8% 104.2% 108.5% 103.5% 105.7% 102.7% 100.8% 100.2% 98.9% 100.6%
20
CONSOLIDATED GAAP RECONCILIATION (CONT’D)
(1) Operating Ratio defined as (i) operating expenses minus fuel surcharge revenue, divided by (ii) total revenue excluding fuel surcharge revenue.(2) Adjusted Operating Ratio excludes the LT Claims Liability Reserve Adjustment.
x For the Quarter Ended xx FYE 12/31 xx FQE, xx FQE,
3/31/14 6/30/14 9/30/14 12/31/14 2014 3/31/15 6/30/15
GAAP Net Income (Loss) (1.6)$ 0.7$ 2.7$ 4.2$ 6.0$ 1.1$ 2.5$
Add:
Interest, Net 0.7 0.7 0.8 0.7 3.0 0.6 0.5
Income Tax Expense (Benefit) (0.6) 0.6 1.8 3.3 5.2 0.9 1.9
Depreciation & Amortization 11.5 11.1 10.7 10.6 43.8 10.7 10.3
EBITDA 10.0$ 13.3$ 16.0$ 18.8$ 58.1$ 13.3$ 15.2$
Add:
Non-cash Stock-based Compensation 0.1 0.1 - 0.1 0.3 0.2 0.1
LT Claims Liability Reserve Adjustment, Pretax - - - - - - -
Loss on Debt Extinguishment, Pretax - - - - - 0.7 -
Legal and Related Defense Costs, Pretax 0.4 2.2 0.1 0.2 2.8 - -
Adjusted EBITDA 10.5$ 15.5$ 16.1$ 19.1$ 61.2$ 14.3$ 15.3$
(-) Depreciation & Amortization (11.5) (11.1) (10.7) (10.6) (43.8) (10.7) (10.3)
Adjusted EBIT (1.0)$ 4.4$ 5.4$ 8.5$ 17.4$ 3.6$ 5.0$
Additional Below EBIT Adjustments
Tax Effect from Charges 0.1 0.8 0.0 0.1 1.1 0.3 -
Adjusted Net Income (Loss) (1.4)$ 2.1$ 2.8$ 4.3$ 7.7$ 1.6$ 2.6$
Diluted Shares Outstanding 10.3 10.3 10.5 10.5 10.4 10.5 10.5
Adjusted EPS (0.13)$ 0.20$ 0.26$ 0.41$ 0.74$ 0.15$ 0.23$
Operating Expenses 146.5$ 149.0$ 148.2$ 141.5$ 585.2$ 129.3$ 128.3$
Fuel Surcharge Revenue 27.9 28.3 27.7 24.3 108.1 17.4 16.4
Total Revenue 145.5 153.3 153.6 150.1 602.5 132.9 133.6
Operating Ratio(1)
100.9% 96.6% 95.7% 93.2% 96.5% 96.9% 95.5%
Adjusted Operating Ratio(2)
100.9% 96.6% 95.7% 93.2% 96.5% 96.9% 95.5%
21
(1) Operating Ratio defined as (i) operating expenses minus fuel surcharge revenue and intersegment eliminations, divided by (ii) total revenue excluding fuel surcharge revenue andintersegment eliminations.
(2) Adjusted Operating Ratio excludes the LT Claims Liability Reserve Adjustment.
TRUCKING GAAP RECONCILIATION
For the Year Ended December 31, For the Six Months Ended,
2012A 2013A 2014A 6/30/2014 6/30/2015
Revenue 381.6$ 418.6$ 424.1$ 209.2$ 190.2$
Less: Intersegment Eliminations 0.0 0.5 0.6 0.3 1.0
Operating Revenue 381.5 418.1 423.5 208.9 189.2
Less: Fuel Surcharge Revenue 83.9 91.8 87.2 45.5 27.3
Base Revenue 297.6 326.3 336.3 163.4 161.9
Operating Expense 411.4$ 436.3$ 427.6$ 216.8$ 186.6$
Adjusted for:
Fuel Surcharge Revenue (83.9) (91.8) (87.2) (45.5) (27.3)
Intersegment Eliminations (0.0) (0.5) (0.6) - -
Adjusted Operating Expense 327.5 343.9 339.8 171.3 159.3
LT Claims Liability - (6.0) - - -
Adjusted Operating Expense, Net LT Claims 327.5$ 337.9$ 339.8$ 171.3$ 159.3$
Operating Income (29.8)$ (17.7)$ (3.5)$ 7.9$ 2.6$
Adjusted Operating Income (29.8) (11.7) (3.5) (7.9) 2.6
Operating Ratio (1)
110.0% 105.4% 101.1% 104.8% 98.4%
Adjusted Operating Ratio (2) 110.0% 103.6% 101.1% 104.8% 98.4%
22
SCS GAAP RECONCILIATION
(1) Operating Ratio defined as operating expenses divided by total revenue.(2) Adjusted Operating Ratio defined as (i) operating expenses minus fuel surcharge revenue and intersegment eliminations divided by (ii) total revenue excluding fuel
surcharge revenue and intersegment eliminations.
For the Year Ended December 31, For the Six Months Ended,
2012A 2013A 2014A 6/30/2014 6/30/2015
Revenue 156.3$ 146.5$ 192.9$ 95.2$ 80.3$
Less: Intersegment Eliminations 25.5 9.6 13.9 5.3 3.0
Operating Revenue 130.9 136.9 179.0 89.9 77.3
Less: Fuel Surcharge Revenue 19.8 19.3 20.9 10.7 6.5
Base Revenue 111.1 117.6 158.0 79.2 70.8
Operating Expense 149.8$ 137.5$ 172.1$ 78.8$ 71.0$
Adjusted for:
Fuel Surcharge Revenue (19.8) (19.3) (20.9) (10.7) (6.5)
Intersegment Eliminations (25.5) (9.6) (13.9) - -
Adjusted Operating Expense 104.5$ 108.6$ 137.3$ 68.1$ 64.6$
Operating Income 6.6$ 9.0$ 20.8$ 11.1$ 6.2$
Adjusted Operating Income 6.6 9.0 20.8 11.1 6.2
Operating Ratio (1) 95.8% 93.9% 89.2% 86.0% 91.2%
Adjusted Operating Ratio (2) 94.1% 92.3% 86.9% 86.0% 91.2%