USA Truck, Inc. (NASDAQ: USAK) Investor Presentation February 2016

Transcription

1 USA Truck, Inc. (NASDAQ: USAK) Investor Presentation February 2016

2 DISCLOSURE STATEMENT 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 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. 2

3 INVESTMENT HIGHLIGHTS Transformation underway with substantial opportunity to: Realize operating and asset leverage Drive increased return on invested capital Strong balance sheet supports transformation Mid-2015 initiated acceleration of Trucking operational improvements to: Reduce fleet size and average age of fleet Rationalize fixed costs and improve productivity Enhance customer service and improve customer profitability High margin asset-light SCS business with attractive growth opportunities enhances total company returns 3

4 CAPACITY SOLUTIONS PROVIDER ($/M) Freight Brokerage Trucking Retailers Food/Beverage Paper/Packaging Industrials Automotive Parts ($/M) Freight Brokerage 12.0 Trucking 11.1 Appliances Other (1) Operating revenue is defined as revenue less intersegment eliminations. See Appendix for GAAP reconciliation. (2) Trucking operating income includes restructuring charge of $2.7 million. (3) Excludes fuel surcharge revenue. See Appendix for non-gaap to GAAP reconciliation. 4

5 TRUCKING PLATFORM 1,970 tractors / 6,100 trailers Expanding geography with focus on lane density Renewed focus on Mexico Broad and diverse customer base, including blue-chip companies ($/M) (%) $381.5 $418.1 $ $ (1) Net of fuel surcharge revenue and adjusted for unusual items including $2.7 million restructuring charge taken in FY See Appendix for non-gaap to GAAP reconciliation and calculation of adjusted operating ratio and adjusted operating expenses. (2) Operating income for periods prior to FY 2015 have been recast to apply the new accounting policy for tires. 5

6 ASSET-LIGHT SCS PLATFORM 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) (1) Net revenue defined as operating revenue less purchased transportation expense. 6

7 IMPROVEMENT PLAN ($/M) (%) Q14 1Q15 2Q14 2Q15 3Q14 3Q15 4Q14 4Q Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2,100 2,000 1,900 2,023 1,979 2,088 2,008 2,011 1,973 1,954 1,894 ($) , ,700 1,600 1Q14 1Q15 2Q14 2Q15 3Q14 3Q15 4Q14 4Q Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 (1) Base revenue excludes fuel surcharge revenue. See Appendix for non-gaap to GAAP reconciliation. (2) Net of fuel surcharge revenue and adjusted for unusual items including $2.7 million restructuring charge taken in FY See Appendix for non-gaap to GAAP reconciliation. (3) Adjusted operating ratio and earnings per share for periods prior to FY 2015 have been recast to apply the new accounting policy for tires. (4) Adjusted operating ratio and adjusted EPS recast to apply new accounting policy for tires. 7

8 ACCLERATION PLAN ANNOUNCED 2Q 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 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 and enhance customer experience Introduce additional capacity solutions and value-added services: Intermodal Refrigerated Flatbed Expedited LTL Expand branch office network through both organic investment and acquisitions Productivity Net revenue growth 8

9 TRUCKING: 2H 2015 RESULTS OF ACCELERATION 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 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 Strengthened leadership Reorganized operations; realigned roles and responsibilities Developed incentive plan to align all operations functions on the same goals Analyzed and started to streamline maintenance cost structure Reduced tractor fleet by net 417 in FY 2015 Developed enhanced customer profitability analysis Implemented training and education program to optimize current technology Implemented processes to compress the network, improving lane density and productivity 9

10 FLEET REPLENISHMENT PLAN ($/Mile) Executing plan to improve average age of fleet to 2.0 years and to 5.0 years for trailers Took 817 high-cost tractors out of service and acquired 400 new for a net 417 tractor reduction Acquired 1,500 trailers 12/31/15: Tractor age 26.5 months Consistent trade cycle Trailer age 68.0 months

11 TRUCKING OPERATING AND ASSET LEVERAGE POTENTIAL Metric FY 2015 Target 1% Impact Operating Ratio Impact EPS Impact (1) Maintenance Cost/Mile ~$0.147 $0.100 $ bps $0.01 Insurance & Claims Expense per Mile Weekly Miles per Seated Truck Base Revenue per Loaded Mile $0.113 $0.059 $ bps $0.01 1,963 2, miles 26 bps $0.06 $1.885 $1.95 $ bps $0.09 Miles per Gallon (2) ~ bps $0.03 (1) Assumes all else equal as of FY Assumes a 45% incremental tax rate and diluted average shares outstanding of 10.5 mm. (2) Fuel price per gallon based on average FY2015 USAK fuel price. 11

12 CAPITALIZING ON ASSET-LIGHT SCS PLATFORM Further centralize customer service Work underway to implement new technology to increase load volume and enhance customer experience Expand capacity solution offerings and value-added services ($/M) $ Net Revenue//Employee # of employees Intermodal Refrigerated Flatbed Expedited LTL Expand network through both organic investment and acquisitions

13 STRONG FINANCIAL CONDITION (in millions) ($/M) Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Significantly improved credit profile since 2012 Total debt and capital lease obligations, net of cash, as of 12/31/15 was $101.3 million. Since 12/31/14: Debt reduction of $16.1 million Operating leases increased $20.9 million ($/M) x 2.5x 2.1x 1.9x 1.6x 1.6x 1.3x 1.1x 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 One million shares repurchased as of January 8 completed program New two million share repurchase program just authorized by Board of Directors (1) See Appendix for non-gaap to GAAP reconciliation and calculation of adjusted EBITDA. (2) Adjusted EBITDA and cash flow from operations for periods prior to 3Q15 have been recast to apply new accounting policy for tires. 13

14 APPENDIX 14

15 LEADING NORTH AMERICA TRANSPORTATION AND LOGISTICS PROVIDER Strong Position East of the Great Plains 15

16 GAAP TO NON-GAAP RECONCILIATIONS (Unaudited) Three Months Ended Year Ended December 31, December 31, (Recast) (Recast) Net income $ 3,937 $ 3,552 $ 11,069 $ 6,285 Add: Depreciation and amortization 7,529 10,676 37,480 44,071 Income tax expense 2,677 2,933 8,272 5,351 Interest, net ,237 3,008 EBITDA $ 14,708 $ 18,235 $ 59,058 $ 58,715 Add: Non-cash equity compensation , Defense costs, pretax ,764 Restructuring, severance and related charges (151) -- 2, Loss on debt extinguishment, pretax Adjusted EBITDA $ 14,848 $ 18,189 $ 63,643 $ 61,845 (1) Operating Ratio defined as (i) operating expenses, divided by (ii) operating revenue. (2) Adjusted Operating Ratio defined as (i) operating expenses minus fuel surcharge revenue, divided by (ii) operating revenue excluding fuel surcharge revenue and long term claims liability reserve adjustment, loss on debt extinguishment and defense costs. 16

17 ADJUSTED EARNINGS PER SHARE RECONCILIATION (Unaudited) Earnings per diluted share Adjusted for: $ Three Months Ended Year Ended December 31, December 31, (Recast) (Recast) 0.39 $ 0.34 $ 1.06 $ 0.60 Loss on debt extinguishment, net of tax Restructuring, severance and related charges, net of tax (0.01) Defense costs, net of tax Adjusted earnings per diluted share $ 0.38 $ 0.35 $ 1.27 $ 0.76 (1) Operating Ratio defined as (i) operating expenses, divided by (ii) operating revenue. (2) Adjusted Operating Ratio defined as (i) operating expenses minus fuel surcharge revenue, divided by (ii) operating revenue excluding fuel surcharge revenue and long term claims liability reserve adjustment, loss on debt extinguishment, defense costs and restructuring, severance and related charges.. 17

18 TRUCKING GAAP RECONCILIATION Trucking Segment Three Months Ended Year Ended December 31, December 31, (Recast) (Recast) Revenue... $ 80,911 $ 106,418 $ 356,528 $ 424,082 Less: intersegment eliminations , Operating revenue... 80, , , ,495 Less: fuel surcharge revenue... 8,846 19,458 46,799 87,198 Base revenue... 71,438 86, , ,297 Operating expense... 75, , , ,617 Adjusted for: Restructuring, severance and related charges (2,742) -- Fuel surcharge revenue... (8,846) (19,458) (46,799) (87,198) Adjusted operating expense... $ 67,066 $ 83,591 $ 293,851 $ 339,419 Operating ratio % 97.0 % 96.9 % % Adjusted operating ratio % 96.3 % 95.5 % % (1) Operating Ratio defined as (i) operating expenses, divided by (ii) operating revenue. (2) Adjusted Operating Ratio defined as (i) operating expenses minus fuel surcharge revenue, divided by (ii) operating revenue excluding fuel surcharge revenue and long term claims liability reserve adjustment, and restructuring, severance and related charges.. 18

19 SCS GAAP RECONCILIATION SCS Segment Three Months Ended Year Ended December 31, December 31, Revenue... $ 38,514 $ 48,417 $ 158,295 $ 192,924 Less: intersegment eliminations ,610 4,841 13,942 Operating revenue... 37,700 43, , ,982 Less: fuel surcharge revenue... 2,629 4,796 12,182 20,935 Base revenue... 35,071 39, , ,047 Operating expense... 34,951 39, , ,207 Adjusted for: Fuel surcharge revenue... (2,629) (4,796) (12,182) (20,935) Adjusted operating expense... $ 32,322 $ 34,641 $ 129,289 $ 137,272 Operating ratio % 90.0 % 92.2 % 88.4 % Adjusted operating ratio % 88.8 % 91.5 % 86.9 % (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. 19