Company Quick10K Filing
USA Truck
Price8.81 EPS1
Shares9 P/E14
MCap75 P/FCF3
Net Debt88 EBIT10
TEV164 TEV/EBIT16
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-04-30
10-K 2020-12-31 Filed 2021-02-24
10-Q 2020-09-30 Filed 2020-10-30
10-Q 2020-06-30 Filed 2020-07-28
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-02-19
10-Q 2019-09-30 Filed 2019-11-04
10-Q 2019-06-30 Filed 2019-07-30
10-Q 2019-03-31 Filed 2019-05-02
10-K 2018-12-31 Filed 2019-02-27
10-Q 2018-09-30 Filed 2018-10-26
10-Q 2018-06-30 Filed 2018-07-27
10-Q 2018-03-31 Filed 2018-04-30
10-K 2017-12-31 Filed 2018-02-28
10-Q 2017-09-30 Filed 2017-11-03
10-Q 2017-06-30 Filed 2017-08-03
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-03-03
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-05
10-K 2015-12-31 Filed 2016-02-23
10-Q 2015-09-30 Filed 2015-11-04
10-Q 2015-06-30 Filed 2015-08-04
10-Q 2015-03-31 Filed 2015-05-08
10-K 2014-12-31 Filed 2015-03-06
10-Q 2014-09-30 Filed 2014-11-03
10-Q 2014-06-30 Filed 2014-08-12
10-Q 2014-03-31 Filed 2014-05-14
10-K 2014-03-17 Filed 2014-03-21
10-Q 2013-10-16 Filed 2013-10-25
10-Q 2013-08-12 Filed 2013-08-14
10-Q 2013-03-31 Filed 2013-05-08
10-K 2012-12-31 Filed 2013-03-22
10-Q 2012-09-30 Filed 2012-11-09
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-10
10-K 2011-12-31 Filed 2012-03-14
10-Q 2011-09-30 Filed 2011-11-04
10-Q 2011-06-30 Filed 2011-08-08
10-Q 2011-03-31 Filed 2011-05-06
10-K 2010-12-31 Filed 2011-03-07
10-Q 2010-09-30 Filed 2010-11-01
10-Q 2010-06-30 Filed 2010-07-30
10-Q 2010-03-31 Filed 2010-04-30
10-K 2009-12-31 Filed 2010-03-16
8-K 2020-10-29
8-K 2020-07-27
8-K 2020-06-03
8-K 2020-05-26
8-K 2020-05-13
8-K 2020-05-07
8-K 2020-04-22
8-K 2020-04-21
8-K 2020-03-31
8-K 2020-01-30
8-K 2019-10-31
8-K 2019-07-24
8-K 2019-05-21
8-K 2019-05-08
8-K 2019-04-25
8-K 2019-03-07
8-K 2019-02-26
8-K 2019-02-01
8-K 2019-01-31
8-K 2018-10-25
8-K 2018-10-18
8-K 2018-07-26
8-K 2018-05-16
8-K 2018-04-26
8-K 2018-04-24
8-K 2018-03-23
8-K 2018-03-22
8-K 2018-02-01
8-K 2017-12-29

USAK 10Q Quarterly Report

Part I - Financial Information
Item 1.Financial Statements
Note 1 - Basis of Presentation
Note 2 - Revenue Recognition
Note 3 - Segment Reporting
Note 4 - Equity Compensation and Employee Benefit Plans
Note 5 - Accrued Expenses
Note 6 - Debt
Note 7 - Leases
Note 8 - Income Taxes
Note 9 - Earnings (Loss) per Share
Note 10 - Legal Proceedings
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
Part II - Other Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
Item 6.Exhibits
EX-31.1 usak-20210331ex31167a931.htm
EX-31.2 usak-20210331ex312f58be8.htm
EX-32.1 usak-20210331ex321d2d047.htm
EX-32.2 usak-20210331ex3225c3433.htm

USA Truck Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
3602882161447202012201420172020
Assets, Equity
155123915927-42012201420172020
Rev, G Profit, Net Income
20100-10-20-302012201420172020
Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

or

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

Graphic

USA TRUCK INC.

(Exact name of registrant as specified in its charter)

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:

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 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

Non-accelerated filer [ ]

Smaller reporting company

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 23, 2021, was 8,877,905.

Table of Contents

USA TRUCK INC.

TABLE OF CONTENTS

Item No.

    

Caption

    

Page

PART I – FINANCIAL INFORMATION

1.

Financial Statements

Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2021 and December 31, 2020

2

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited) - Three months ended March 31, 2021 and March 31, 2020

3

Condensed Consolidated Statements of Stockholders’ Equity (unaudited) - Three months ended March 31, 2021 and March 31, 2020

4

Condensed Consolidated Statements of Cash Flows (unaudited) - Three months ended March 31, 2021 and March 31, 2020

5

Notes to Condensed Consolidated Financial Statements (unaudited)

6

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

3.

Quantitative and Qualitative Disclosures About Market Risk

25

4.

Controls and Procedures

25

PART II – OTHER INFORMATION

1.

Legal Proceedings

26

1A.

Risk Factors

26

2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

3.

Defaults Upon Senior Securities

26

4.

Mine Safety Disclosures

26

5.

Other Information

26

6.

Exhibits

27

Signatures

28

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

USA TRUCK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

Assets

March 31, 2021

December 31, 2020

Current assets:

(in thousands, except share data)

Cash and restricted cash (restricted cash of $200 and $243, respectively)

$

2,920

$

325

Accounts receivable, net of allowance for doubtful accounts of $609 and $617, respectively

 

81,419

 

63,984

Other receivables

 

3,526

 

2,873

Inventories

 

972

 

975

Assets held for sale

 

25

 

2,635

Prepaid expenses and other current assets

 

8,834

 

8,749

Total current assets

 

97,696

 

79,541

Property and equipment:

 

  

 

  

Land and structures

 

33,593

 

33,488

Revenue equipment

 

297,630

 

305,509

Service, office and other equipment

 

30,564

 

30,331

Property and equipment, at cost

 

361,787

 

369,328

Accumulated depreciation and amortization

 

(153,325)

 

(150,173)

Property and equipment, net

 

208,462

 

219,155

Operating leases - right of use assets

26,668

28,154

Goodwill

5,231

 

5,231

Other intangibles, net

 

14,783

 

15,105

Other assets

 

3,516

 

3,046

Total assets

$

356,356

$

350,232

Liabilities and Stockholders’ Equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

34,574

$

27,045

Current portion of insurance and claims accruals

 

10,634

 

9,846

Accrued expenses

 

15,270

 

10,798

Current finance lease obligations

11,745

11,655

Current operating lease obligations

6,559

6,838

Long-term debt, current maturities

5,098

6,791

Total current liabilities

 

83,880

 

72,973

Other long-term liabilities

 

2,868

 

4,817

Long-term debt, less current maturities

80,026

81,352

Long-term finance lease obligations

51,401

54,482

Long-term operating lease obligations

20,487

21,690

Deferred income taxes

 

22,430

 

23,414

Insurance and claims accruals, less current portion

 

6,803

 

6,803

Total liabilities

 

267,895

 

265,531

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 12,226,782 shares, and 12,037,966 shares, respectively

 

122

 

120

Additional paid-in capital

 

61,655

 

60,692

Retained earnings

 

82,112

 

78,515

Less treasury stock, at cost (3,347,020 shares, and 3,293,223 shares, respectively)

 

(55,428)

 

(54,626)

Total stockholders’ equity

 

88,461

 

84,701

Total liabilities and stockholders’ equity

$

356,356

$

350,232

See accompanying notes to condensed consolidated financial statements.

2

Table of Contents

USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

Three Months Ended

March 31, 

    

2021

    

2020

    

(in thousands, except per share data)

Operating revenue

$

158,505

$

126,773

Operating expenses:

Salaries, wages and employee benefits

 

36,555

 

35,845

Fuel and fuel taxes

 

11,444

 

11,863

Depreciation and amortization

 

9,570

 

10,011

Insurance and claims

 

5,809

 

5,857

Equipment rent

 

1,949

 

2,292

Operations and maintenance

 

7,066

 

8,896

Purchased transportation

 

74,103

 

47,814

Operating taxes and licenses

 

1,272

 

1,159

Communications and utilities

 

804

 

813

(Gain) loss on disposal of assets, net

 

(177)

 

38

Other

 

4,064

 

4,497

Total operating expenses

 

152,459

 

129,085

Operating income (loss)

 

6,046

 

(2,312)

Other expenses:

 

  

 

  

Interest expense, net

 

1,025

1,684

Other, net

 

61

46

Total other expenses, net

 

1,086

 

1,730

Income (loss) before income taxes

 

4,960

 

(4,042)

Income tax expense (benefit)

 

1,363

(1,491)

Consolidated net income (loss) and comprehensive income (loss)

$

3,597

$

(2,551)

Net earnings (loss) per share:

 

  

 

  

Average shares outstanding (basic)

 

8,841

8,633

Basic earnings (loss) per share

$

0.41

$

(0.30)

Average shares outstanding (diluted)

 

9,007

 

8,633

Diluted earnings (loss) per share

$

0.40

$

(0.30)

See accompanying notes to condensed consolidated financial statements.

3

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, 2020

 

12,038

$

120

$

60,692

$

78,515

$

(54,626)

$

84,701

Stock-based compensation

 

 

 

168

 

 

 

168

Restricted stock award grant

 

193

 

2

 

(2)

 

 

 

Forfeited restricted stock

(4)

 

 

 

 

Net share settlement related to vested equity awards

 

 

 

797

 

 

(802)

 

(5)

Net income

 

 

 

 

3,597

 

 

3,597

Balance at March 31, 2021

 

12,227

122

61,655

82,112

(55,428)

88,461

    

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

See accompanying notes to condensed consolidated financial statements.

4

Table of Contents

USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended March 31, 

    

2021

    

2020

Operating activities:

(in thousands)

Net income (loss)

$

3,597

$

(2,551)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

Depreciation and amortization

 

9,570

 

10,011

Deferred income tax (benefit) expense, net

 

(984)

 

1,752

Share-based compensation

 

168

 

471

(Gain) loss on disposal of assets, net

 

(177)

 

38

Other

 

4

 

33

Changes in operating assets and liabilities:

 

 

Accounts and other receivables

 

(18,089)

 

(6,600)

Inventories and prepaid expenses

 

(82)

 

(917)

Accounts payable and accrued expenses

 

14,431

 

109

Insurance and claims accruals

 

878

 

(594)

Other long-term assets and liabilities

 

(3,332)

 

581

Net cash provided by operating activities

$

5,984

$

2,333

Investing activities:

 

  

 

Capital expenditures

(395)

(11,137)

Proceeds from sale of property and equipment

5,451

1,036

Net cash provided by (used in) investing activities

$

5,056

$

(10,101)

Financing activities:

 

  

 

  

Borrowings under long-term debt

 

13,150

 

21,025

Payments on long-term debt

 

(16,169)

 

(10,425)

Principal payments on financing lease obligations

 

(2,992)

 

(4,150)

Net change in bank drafts payable

 

(2,429)

 

1,363

Net payments for tax withholdings for vested stock-based awards

 

(5)

 

(57)

Net cash (used in) provided by financing activities

$

(8,445)

$

7,756

Increase (decrease) in cash and restricted cash

2,595

(12)

Cash and restricted cash:

 

  

 

  

Beginning of period

 

325

 

97

End of period

$

2,920

$

85

Supplemental disclosure of cash flow information:

 

  

 

  

Cash paid during the period for:

 

  

 

  

Interest

$

1,059

$

1,450

Income taxes

 

 

5

Supplemental disclosure of non-cash investing:

 

 

  

Sales of revenue equipment included in other receivables

$

$

1,259

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 2021

NOTE 1 – BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the accounts and operations of USA Truck Inc. and present our financial position as of March 31, 2021 and December 31, 2020 and our results of operations, comprehensive income (loss) and cash flows for the three months ended March 31, 2021 and 2020.

These condensed consolidated financial statements 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 (“GAAP”) of the United States.  Additionally, the 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 notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

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, 2021.

The accompanying condensed consolidated financial statements include USA Truck Inc. and its wholly owned subsidiaries: International Freight Services, Inc. (“IFS”), a Delaware corporation; Skyraider Risk Retention Group Inc. (“SRRG”), a South Carolina corporation; Davis Transfer Company Inc. (“DTC”), a Georgia corporation; Davis Transfer Logistics Inc. (“DTL”), a Georgia corporation; and B & G Leasing, L.L.C. (“B & G”), a Georgia limited liability company.  Collectively, DTC, DTL and B&G comprise “Davis Transfer 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 consolidated financial statements.  Certain amounts reported in prior periods have been reclassified to conform to the current year presentation.

Risks and Uncertainties

In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency.  We continue to monitor the progression of the pandemic, further government responses and development of treatments and vaccines and the resulting 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 preparation of our financial results, including, but not limited to impairment of goodwill, other intangible assets and other long-lived assets, income tax provision, and recoverability of certain receivables.  Should the pandemic continue for an even further 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.

Accounting standards issued but not yet adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 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.  ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for smaller reporting companies.  We continue to evaluate the effect of adopting ASU 2016-13, but believe the effects will be limited to the Company’s trade receivables.

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NOTE 2 – REVENUE RECOGNITION

The following tables set forth revenue disaggregated by revenue type and segment:

Three Months Ended March 31, 

2021

2020

    

Trucking

    

USAT Logistics

    

Eliminations

    

Total

    

Trucking

    

USAT Logistics

    

Eliminations

    

Total

Revenue type

(in thousands)

Freight

$

91,015

$

62,462

$

(12,604)

$

140,873

$

80,903

$

31,667

$

(2,874)

$

109,696

Fuel surcharge

 

10,319

 

4,296

 

(375)

 

14,240

 

11,287

3,077

(172)

 

14,192

Accessorial

 

1,769

 

1,623

 

 

3,392

 

1,804

1,081

 

2,885

Total

$

103,103

$

68,381

$

(12,979)

$

158,505

$

93,994

$

35,825

$

(3,046)

$

126,773

At March 31, 2021 and December 31, 2020, the Company had contract assets, representing our right to consideration for transportation services not yet billed, of $2.6 million and $1.1 million, respectively.

NOTE 3 – SEGMENT REPORTING

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

Trucking.  Trucking is comprised of truckload and dedicated freight service offerings.  Truckload service offerings provide motor carrier services as a medium-haul common and contract carrier, utilizing equipment owned or leased by the Company or independent contractors.  Dedicated freight service offerings provide truckload motor carrier services to specific customers for movement of freight over particular routes at specified times.

USAT Logistics.  USAT 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.  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.

A summary of operating revenue by segment is as follows:

Three Months Ended

March 31, 

    

2021

    

2020

Operating revenue

(in thousands)

Trucking revenue (1)

$

103,103

$

93,994

Trucking intersegment eliminations

 

(327)

 

(994)

Trucking operating revenue

 

102,776

 

93,000

USAT Logistics revenue

 

68,381

 

35,825

USAT Logistics intersegment eliminations

 

(12,652)

 

(2,052)

USAT Logistics operating revenue

 

55,729

 

33,773

Total operating revenue

$

158,505

$

126,773

1)Includes foreign revenue of $8.9 million and $8.6 million for the three months ended March 31, 2021 and 2020, respectively.

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

Three Months Ended

March 31, 

    

2021

    

2020

Operating income (loss)

(in thousands)

Trucking

$

3,520

$

(1,688)

USAT Logistics

 

2,526

 

(624)

Total operating income (loss)

$

6,046

$

(2,312)

A summary of depreciation and amortization by segment is as follows:

Three Months Ended

March 31, 

    

2021

    

2020

Depreciation and amortization

(in thousands)

Trucking

$

9,297

$

9,776

USAT Logistics

 

273

 

235

Total depreciation and amortization

$

9,570

$

10,011

NOTE 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, 2021, 358,387 shares remain available under the Incentive Plan for the issuance of future equity-based compensation awards.

NOTE 5 – ACCRUED EXPENSES

Accrued expenses consist of the following:

March 31, 2021

December 31, 2020

(in thousands)

Salaries, wages and employee benefits

$

8,194

$

6,142

Federal and state tax accruals

 

5,114

 

2,649

Other (1)

 

1,962

 

2,007

Total accrued expenses

$

15,270

$

10,798

1)No single item included within other accrued expenses exceeded 5.0% of our total current liabilities.

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NOTE 6 –DEBT

Long-term debt consisted of the following:

March 31, 2021

December 31, 2020

(in thousands)

Revolving credit agreement

$

71,755

$

73,025

Sale-leaseback finance obligations

9,499

9,913

Insurance premium financing (2020)

3,359

5,064

Other

511

141

85,124

88,143

Less current maturities

(5,098)

(6,791)

Total long-term debt

$

80,026

$

81,352

Credit facility

On January 31, 2019, the Company, entered into a five year, $225.0 million senior secured revolving credit facility (the “Credit Facility”) with a group of lenders and Bank of America, N.A., as agent (the “Agent”) pursuant to the terms of an Amended and Restated Loan and Security Agreement.  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 is now $170.0 million.

The Credit Facility is structured as a $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 adjusted quarterly 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 adjusted quarterly between 1.25% and 1.75% based on the Company’s consolidated fixed charge coverage ratio.  The Credit Facility includes, within its $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) $170.0 million; or (B) the sum of (i) 90.0% of eligible investment grade accounts receivable (reduced to 85.0% in certain situations), plus (ii) 85.0% of eligible non-investment grade accounts receivable, plus (iii) the lesser of (a) 85.0% of eligible unbilled accounts receivable and (b) $10.0 million, plus (iv) the product of 85.0% multiplied by the net orderly liquidation value percentage applied to the net book value of eligible revenue equipment, plus (v)  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 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 10.0% 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 20.0% of the lenders’ total commitments.

The Company had $0.4 million in overnight borrowings under the Swingline as of March 31, 2021.  The average interest rate including all borrowings made under the Credit Facility as of March 31, 2021 was 1.84%.  As debt is repriced on a monthly basis, the borrowings under the Credit Facility approximate fair value.  As of March 31, 2021, the Company had $7.9 million in letters of credit outstanding and had $66.9 million available to borrow under the Credit Facility taking into account borrowing base availability.

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Sale-leaseback transactions

In July 2019, the Company entered into 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 a five year term.  Under the lease agreement, the Company paid an initial monthly payment of approximately $0.03 million.  At the end of the lease, 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 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 therefore treated as a financing obligation.

Insurance premium financing

In October 2020, the Company entered into a short-term agreement to finance approximately $5.1 million with a third-party financing company for a portion of the Company’s annual insurance premiums.

NOTE 7 – LEASES

The components of lease expense for each of the periods presented are as follows:

Three Months Ended

March 31, 

    

2021

    

2020

(in thousands)

Operating lease costs

$

1,934

$

2,166

Finance lease costs:

Amortization of assets

 

4,014

 

4,723

Interest on lease liabilities

 

670

 

790

Total finance lease costs

 

4,684

 

5,513

Variable and short-term lease costs

 

583

 

127

Total lease costs

$

7,201

$

7,806

Supplemental information and balance sheet location related to leases is as follows:

March 31, 2021

December 31, 2020

Operating leases:

(dollars in thousands)

Operating leases - right-of-use assets

$

26,668

 

$

28,154

Current operating lease obligations

 

6,559

 

6,838

Long-term operating lease obligations

 

20,487

 

21,690

Total operating lease liabilities

$

27,046

$

28,528

Finance leases:

 

Property and equipment, at cost

 

86,243

 

86,281

Accumulated amortization

 

(25,434)

 

(22,991)

Property and equipment, net

$

60,809

$

63,290

Current finance lease obligations

 

11,745

 

11,655

Long-term finance lease obligations

 

51,401

 

54,482

$

63,146

$

66,137

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Weighted average remaining lease term:

 

(in months)

 

(in months)

Operating leases

 

58

 

60

Finance leases

 

40

 

43

Weighted average discount rate:

Operating leases

 

4.58

%

 

4.59

%

Finance leases

 

3.73

%

 

3.73

%

Supplemental cash flow information related to leases is as follows for the three months ended:

March 31, 2021

March 31, 2020

Cash paid for amounts included in measurement of liabilities:

(in thousands)

Operating cash flows from operating leases

$

4

$

33

Operating cash flows from finance leases

670

790

Financing cash flows from finance leases

2,992

4,150

ROU assets obtained in exchange for lease liabilities:

Operating leases

$

170

$

Finance leases

1,184

OTHER COMMITMENTS

As of March 31, 2021, the Company had $17.9 million in purchase commitments for the acquisition of revenue equipment, of which none were cancellable.  An additional $10.9 million in revenue equipment purchase commitments was added subsequent to March 31, 2021.  These purchase commitments may be funded through funds provided by operations, borrowings under the Company’s Credit Facility, sales of used revenue equipment, or the use of finance and operating leases.

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 these spaces was approximately $0.04 million for the three months ended March 31, 2021 and 2020.  This expense is included in the “Operations and maintenance” line item in the accompanying condensed consolidated statement of income (loss) and comprehensive income (loss).

NOTE 8 – INCOME TAXES

During the three months ended March 31, 2021 and 2020 the Company’s effective tax rate was 27.5% and 36.9%, 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 their 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.

During the interim periods for the year ended December 31, 2020, the Company used the cut-off method to calculate taxes for the applicable interim periods.  Due to more certainty in their financial forecasts for the current fiscal year, the Company has returned to its historical method for calculating the provision for income taxes during interim reporting periods.  As such, we have calculated taxes for the three months ended March 31, 2021 by applying an estimate of the

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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.  

NOTE 9 – EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted earnings (loss) per share:

Three Months Ended

March 31, 

    

2021

    

2020

Numerator:

(in thousands, except per share amounts)

Net income (loss)

$

3,597

$

(2,551)

Denominator:

 

  

 

  

Denominator for basic earnings (loss) per share – weighted average shares

 

8,841

 

8,633

Effect of dilutive securities:

 

  

 

  

Employee restricted stock and incentive stock options

 

166

 

Denominator for diluted earnings (loss) per share – adjusted weighted average shares and assumed conversion

 

9,007

 

8,633

Basic earnings (loss) per share

$

0.41

$

(0.30)

Diluted earnings (loss) per share

$

0.40

$

(0.30)

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

 

234