UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):        July 28, 2020

U.S. Xpress Enterprises, Inc.
(Exact name of registrant as specified in its charter)

Nevada
001-38528
62-1378182
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)

4080 Jenkins Road
   
Chattanooga, Tennessee
 
37421
(Address of Principal Executive Offices)
 
(Zip Code)

 
(423) 510-3000
 
 
(Registrant’s telephone number, including area code)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

□  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
□  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, $0.01 par value
USX
The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
□  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 standard provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02
Results of Operations and Financial Condition.
   
 
On July 28, 2020, U.S. Xpress Enterprises, Inc., a Nevada corporation (the "Company"), issued a press release announcing its financial and operating results for the second quarter ended June 30, 2020.  A copy of the press release is attached to this report as Exhibit 99.
   
Item 9.01
Financial Statements and Exhibits.
   
 
(d)
Exhibits.
     
 
EXHIBIT
NUMBER
EXHIBIT DESCRIPTION
     
 
U.S. Xpress Enterprises, Inc. press release announcing financial and operating results for the second quarter ended June 30, 2020.
   
 
The information contained in Items 2.02 and 9.01 of this report and the exhibit hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
   
 
The information in Items 2.02 and 9.01 of this report and the exhibit hereto may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended.  Such statements are made based on the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties.  Actual results or events may differ from those anticipated by the forward-looking statements.  Please refer to the italicized paragraph at the end of the attached press release and various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission for information concerning risks, uncertainties, and other factors that may affect future results.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

   
U.S. Xpress Enterprises, Inc.
   
(Registrant)
       
Date: July 28, 2020
By:
/s/ Eric A. Peterson
     
Eric A. Peterson
     
Chief Financial Officer and Treasurer




EXHIBIT INDEX

EXHIBIT
NUMBER
EXHIBIT DESCRIPTION
   
U.S. Xpress Enterprises, Inc. press release announcing its financial and operating results for the second quarter ended June 30, 2020.



Exhibit 99

U.S. Xpress Enterprises Reports Second Quarter 2020 Results

CHATTANOOGA, Tenn.--(BUSINESS WIRE) -- U.S. Xpress Enterprises, Inc. (NYSE: USX) (the “Company”) today announced results for the second quarter of 2020


Second Quarter 2020 Financial Highlights

Operating revenue of $422.5 million compared to $413.9 million in the second quarter of 2019
Operating income of $16.3 million compared to $8.8 million in the second quarter of 2019
Operating ratio of 96.1% compared to 97.9% in the second quarter of 2019
Adjusted operating ratio1, a non-GAAP measure, of 95.9% compared to 97.5% in the second quarter of 2019
Net income attributable to controlling interest of $9.5 million, or $0.18 per diluted share, compared to $2.7 million in the second quarter of 2019, or $0.05 per diluted share

Second Quarter Financial Performance

   
Quarter Ended June 30,
   
Six Months Ended June 30,
 
   
2020
   
2019
   
2020
   
2019
 
Operating revenue
 
$
422,477
   
$
413,862
   
$
855,045
   
$
829,225
 
Revenue, excluding fuel surcharge
 
$
393,964
   
$
371,184
   
$
786,784
   
$
746,496
 
Operating income
 
$
16,277
   
$
8,787
   
$
12,609
   
$
21,425
 
Adjusted operating income1
 
$
16,277
   
$
9,317
   
$
12,609
   
$
25,355
 
Operating ratio
   
96.1
%
   
97.9
%
   
98.5
%
   
97.4
%
Adjusted operating ratio1
   
95.9
%
   
97.5
%
   
98.4
%
   
96.6
%
Net income attributable to controlling interest
 
$
9,498
   
$
2,672
   
$
282
   
$
7,393
 
Adjusted net income attributable to controlling interest1
 
$
9,498
   
$
2,912
   
$
2,282
   
$
10,182
 
Earnings per diluted share
 
$
0.18
   
$
0.05
   
$
(0.00
)
 
$
0.15
 
Adjusted earnings per diluted share1
 
$
0.18
   
$
0.06
   
$
0.04
   
$
0.21
 


Eric Fuller, President and CEO, commented, “I am very pleased with our second quarter results as we are beginning to see the tangible, financial benefits of our strategic initiatives focused on utilizing technology to improve our processes, accelerate the velocity of our business, improve our customers’ and drivers’ satisfaction, and lower our costs.  The approximate 500 basis points of sequential margin improvement we achieved exceeded normal seasonality. The successful launch of our digital fleet, ongoing success in reducing overhead costs, better safety performance, and  lower fuel costs more than offset a sequential decrease in revenue per mile in our Over-the-Road division as there continued to be excess tractor capacity relative to freight demand in the market for a majority of the quarter due in part to COVID-19.”

Mr. Fuller continued, “A major digital initiative that we have been working on over the last two years has been the development, launch, and ramp of our digital fleet. This fleet is largely recruited, planned, dispatched, and managed using artificial intelligence and digital platforms. We developed the concept as a hypothesis in 2018 based in part on the business models of the digital freight brokerages. During 2019, we began building our technology leadership and teams to construct the necessary databases, applications, and processes to launch a pilot fleet with a small number of trucks in the fourth quarter of 2019.  The test was successful and we expanded the pilot fleet to approximately 100 trucks in the first quarter. Given the positive results of the first quarter pilot we moved to a full production model, scaling the business to approximately 400 trucks in the second quarter of 2020. Phase one of our plan is to convert a total of 900 Over-the-Road solo trucks, with the lowest returns, to our digital platform over the next few quarters. Phase two of our plan will be to potentially convert an additional 1,200 trucks over the next couple of years.  While the conversion will not be linear, we expect our margins to expand further.”


Enterprise Update

Operating revenue was $422.5 million, an increase of $8.6 million compared to the second quarter of 2019. The increase was primarily attributable to increased revenues in the Company’s Truckload division of $16.2 million, an increase of $6.6 million in Brokerage revenue, and decreased fuel surcharge revenues of $14.2 million. Excluding the impact of fuel surcharges, second quarter revenue increased $22.8 million to $394.0 million, an increase of 6.1% as compared to the prior year quarter.

Operating income for the second quarter of 2020 was $16.3 million which compares favorably to the $8.8 million in the second quarter of 2019. Operating ratio for the second quarter of 2020 was 96.1% compared to 97.9% in the prior year quarter.

Net income attributable to controlling interest for the second quarter of 2020 was $9.5 million compared to $2.7 million in the prior year quarter.  Adjusted net income attributable to controlling interest1 for the second quarter of 2020 was $9.5 million, compared to $2.9 million in the 2019 quarter. Earnings per diluted share were $0.18 for the second quarter of 2020 and adjusted earnings per diluted share1 were $0.18.
2

Truckload Segment

   
Quarter Ended June 30,
   
Six Months Ended June 30,
 
   
2020
   
2019
   
2020
   
2019
 
Over the road
                       
  Average revenue per tractor per week*
 
$
3,558
   
$
3,625
   
$
3,511
   
$
3,621
 
  Average revenue per mile*
 
$
1.855
   
$
1.956
   
$
1.863
   
$
1.970
 
  Average revenue miles per tractor per week
   
1,918
     
1,853
     
1,884
     
1,838
 
  Average tractors
   
3,825
     
3,611
     
3,830
     
3,614
 
Dedicated
                               
  Average revenue per tractor per week*
 
$
4,122
   
$
4,018
   
$
4,095
   
$
3,990
 
  Average revenue per mile*
 
$
2.351
   
$
2.355
   
$
2.363
   
$
2.346
 
  Average revenue miles per tractor per week
   
1,753
     
1,706
     
1,733
     
1,700
 
  Average tractors
   
2,739
     
2,674
     
2,721
     
2,666
 
Consolidated
                               
  Average revenue per tractor per week*
 
$
3,793
   
$
3,792
   
$
3,753
   
$
3,777
 
  Average revenue per mile*
 
$
2.051
   
$
2.118
   
$
2.061
   
$
2.123
 
  Average revenue miles per tractor per week
   
1,849
     
1,791
     
1,821
     
1,779
 
  Average tractors
   
6,564
     
6,285
     
6,551
     
6,280
 
* Excluding fuel surcharge revenues
                               


The Truckload segment achieved an operating ratio of 94.6% and an adjusted operating ratio1 of 94.1% for the second quarter of 2020, a 340 and 350 basis point improvement, respectively, compared to the operating ratio of 98.0% and the adjusted operating ratio1 of 97.6% achieved in the second quarter of 2019.  This improvement was achieved despite a 3.2% decline in average revenue per mile as the Company continued to execute on its digital initiatives while maintaining a focus on reducing fixed and variable costs.

In the Over-the-Road division, the persistent oversupply of tractors relative to market demand continued to pressure spot pricing lower compared to the 2019 quarter. Contract revenue per mile was down year over year by approximately 5%. Average revenue per tractor per week declined 1.8% compared with the second quarter of 2019. Average revenue per mile decreased 5.2% compared with the 2019 quarter.

Mr. Fuller added, “The Over-the-Road division experienced substantial improvement in the second quarter driven by the conversion of an additional 300 of our lowest performing tractors into our digital fleet.  This conversion helped drive our OTR utilization up by 3.5%, as compared to the first quarter of 2020, while contributing to a reduction in both our fixed and variable costs.”

The Dedicated division’s average revenue per tractor per week increased $104 per tractor per week, or 2.6% compared to the second quarter of 2019 on relatively flat average revenue per mile and higher miles per tractor. The fluctuations in volume in the general freight market and in specific industries related to COVID-19 have not negatively impacted the volumes of the Company’s major Dedicated accounts, which are concentrated in the discount retail and grocery market sectors.
3

Mr. Fuller concluded, “Our Dedicated division continued to perform very well in the second quarter having delivered its fifth consecutive quarter of record productivity.  Average revenue per tractor per week expanded from the first quarter, to $4,122, while we grew the truck count in this division by 1.3%.  I continue to be very pleased with our team’s execution and we remain focused on organically growing the Dedicated division given the stability that we believe this business provides through economic cycles.”


Brokerage Segment

   
Quarter Ended June 30,
   
Six Months Ended June 30,
 
   
2020
   
2019
   
2020
   
2019
 
Brokerage revenue
 
$
46,029
   
$
39,457
   
$
96,505
   
$
85,701
 
Gross margin %
   
8.1
%
   
16.1
%
   
5.8
%
   
16.9
%
Load Count
   
40,933
     
29,701
     
84,426
     
63,520
 

The Brokerage segment continues to provide additional selectivity for the Company’s assets to optimize yield while at the same time offering more capacity solutions to customers. Brokerage segment revenue increased to $46.0 million in the second quarter of 2020 compared to $39.5 million in the second quarter of 2019, primarily as a result of increased load count partially offset by decreased revenue per load.  Brokerage operating loss was $4.2 million in the second quarter of 2020 as compared to operating income of $1.3 million in the year ago quarter.  Management will continue to focus on improving margins in this segment over the next few quarters.

Liquidity and Capital Resources

At the end of the second quarter 2020, the Company had $140.4 million of liquidity (defined as cash plus availability under the Company’s revolving credit facility), an increase of approximately $45 million from the first quarter, $381.6 million of net debt (defined as long-term debt, including current maturities, less cash balances), and $240.2 million of total stockholders' equity.

The Company expects its net capital expenditures to approximate $100 to $120 million for the full year of 2020, which includes an approximate $20 million transaction that carried over from the fourth quarter of 2019. The Company will continue to monitor market conditions and may further reduce its planned capital expenditures as prudent. Through June 30, 2020, net capital expenditures were $65.0 million including the carryover $20 million from 2019.

COVID – 19 Business Update

Continued unwavering focus on employee health and safety for both driving and non-driving team members – over 95% of Company’s corporate office staff continue working from home
The Company’s volumes through the second quarter remained consistent primarily as result of the Company’s customer mix
The Company remains confident in its current liquidity position and does not anticipate material liquidity constraints

4

Outlook

The Company’s baseline assumptions for the balance of 2020 include a general sequential economic recovery that may be volatile nationally or by region at times, a muted increase of capacity, and a relatively benign cost inflation, which should allow for a more favorable rate environment over the next several quarters. Based on these assumptions, we expect our internal initiatives around digitization and cost management, combined with our continued strength in Dedicated and an improving rate outlook have us well positioned to continue improving our margins through 2021.


Conference Call

The Company will hold a conference call to discuss its second quarter results at 5:00 p.m. (Eastern Time) on July 28, 2020.  The conference call can be accessed live over the by phone dialing 1-877-423-9813 or, for international callers, 1-201-689-8573 and requesting to be joined to the U.S. Xpress Second Quarter 2020 Earnings Conference Call. A replay will be available starting at 8:00 p.m. (Eastern Time) on July 28, 2020, and can be accessed by dialing 1-844-512-2921 or, for international callers, 1-412-317-6671. The passcode for the replay is 13706047. The replay will be available until 11:59 p.m. (Eastern Time) on August 4, 2020.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of the Company’s website at investor.usxpress.com. The online replay will remain available for a limited time beginning immediately following the call. Supplementary information for the conference call will also be available on this website.

(1) Non-GAAP Financial Measures

In addition to our net income determined in accordance with U.S. generally accepted accounting principles (‘‘GAAP’’), we evaluate operating performance using certain non-GAAP measures, including Adjusted Operating Ratio, Adjusted Operating Income, Adjusted Net Income Attributable to Controlling Interest, and Adjusted EPS (on a consolidated and, as applicable, segment basis). Management believes the use of non-GAAP measures assists investors and securities analysts in understanding the ongoing operating performance of our business by allowing more effective comparison between periods. Further, management uses non-GAAP Adjusted Operating Ratio, Adjusted Operating Income, Adjusted Net Income Attributable to Controlling Interest, and Adjusted EPS measures on a supplemental basis to remove items that may not be an indicator of performance from period-to-period. The non-GAAP information provided is used by our management and may not be comparable to similar measures disclosed by other companies. The non-GAAP measures used herein have limitations as analytical tools and should not be considered measures of income generated by our business or discretionary cash available to us to invest in the growth of our business. You should not consider the non-GAAP measures used herein in isolation or as substitutes for analysis of our results as reported under GAAP. Management compensates for these limitations by relying primarily on GAAP results and using non-GAAP financial measures on a supplemental basis.
5

Pursuant to the requirements of Regulation G and Regulation S-K, we have provided reconciliations of Adjusted Operating Ratio, Adjusted Operating Income, Adjusted Net Income Attributable to Controlling Interest, and Adjusted EPS to the most comparable GAAP financial measures at the end of this press release.

About U.S. Xpress Enterprises

Founded in 1985, U.S. Xpress Enterprises, Inc. is the nation’s fifth largest asset-based truckload carrier by revenue, providing services primarily throughout the United States. We offer customers a broad portfolio of services using our own truckload fleet and third‐party carriers through our non‐asset‐based truck brokerage network. Our modern fleet of tractors is backed up by a team of committed professionals whose focus lies squarely on meeting the needs of our customers and our drivers.

Forward-Looking Statements

This press release contains certain statements that may be considered 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, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as "expects," "estimates," "projects," "believes," "anticipates," "plans," "intends," “outlook,” “strategy,” “optimistic,” “will,” “could,” “should,” “may,” “focus,” “seek,” “potential,” “continue,” “goal,” “target,” “objective,” derivations thereof, and similar terms and phrases.  In this press release, such statements may include, but are not limited to, statements in the "Outlook" section, statements regarding the freight environment, expected margins, including operating ratio or adjusted operating ratio, the expected impact of our driver, digital fleet, frictionless order and other initiatives, and any other statements concerning: any projections of earnings, revenues, cash flows, capital expenditures, compliance with financial covenants, or other financial items; any statement of plans, strategies, or objectives for future operations; any statements regarding future economic or industry conditions or performance; any statements regarding our responses to COVID-19 and the associated economic conditions; and any statements of belief and any statements of assumptions underlying any of the foregoing. 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. The following factors, among others, could cause actual results to differ materially from those in the forward-looking statements: general economic conditions, including inflation and consumer spending; political conditions and regulations, including future changes thereto; changes in tax laws or in their interpretations and changes in tax rates; future insurance and claims experience, including adverse changes in claims experience and loss development factors, or additional changes in management's estimates of liability based upon such experience and development factors that cause our expectations of insurance and claims expense to be inaccurate or otherwise impacts our results; impact of pending or future legal proceedings; future market for used revenue equipment and real estate; future revenue equipment prices; future capital expenditures, including equipment purchasing and leasing plans and equipment turnover (including expected trade-ins); fleet age; future depreciation and amortization; changes in management’s estimates of the need for new tractors and trailers; future ability to generate sufficient cash from operations and obtain financing on favorable terms to meet our significant ongoing capital requirements; our ability to maintain compliance with the provisions of our credit agreement; freight environment, including freight demand, rates, capacity, and volumes; future asset utilization; loss of one or more of our major customers; our ability to renew dedicated service offering contracts on the terms and schedule we expect; surplus inventories, recessionary economic cycles, and downturns in customers' business cycles; strikes, work slowdowns, or work stoppages at the Company, customers, ports, or other shipping related facilities; increases or rapid fluctuations in fuel prices, as well as fluctuations in surcharge collection, including, but not limited to, changes in customer fuel surcharge policies and increases in fuel surcharge bases by customers; interest rates, fuel taxes, tolls, and license and registration fees; increases in compensation for and difficulty in attracting and retaining qualified professional drivers and independent contractors; seasonal factors such as harsh weather conditions that increase operating costs; competition from trucking, rail, intermodal, and brokerage (including digital brokerage) competitors; regulatory requirements that increase costs, decrease efficiency, or reduce the availability of drivers, including revised hours-of-service requirements for drivers and the Federal Motor Carrier Safety Administration’s Compliance, Safety, Accountability program that implemented new driver standards and modified the methodology for determining a carrier’s Department of Transportation safety rating; future safety performance; our ability to reduce, or control increases in, operating costs; future third-party service provider relationships and availability; execution of the Company’s current business strategy or changes in the Company’s business strategy; the ability of the Company’s infrastructure to support future organic or inorganic growth; our ability to identify acceptable acquisition candidates, consummate acquisitions, and integrate acquired operations; our ability to adapt to changing market conditions and technologies, including the future use of autonomous tractors; disruptions to our information technology; the cost of and our ability to effectively and efficiently implement technology initiatives; costs, diversion of management’s attention, and potential payments made in connection with the multiple class action lawsuits a stockholder derivative lawsuit arising out of our IPO;  changes in methods of determining LIBOR or replacement of LIBOR; credit, reputational and relationship risks of certain of our current and former equity investments; risks arising from our Mexican operations; our ability to maintain effective internal controls without material weaknesses, as well as remediate the existing material weakness; and the impact of the recent coronavirus outbreak or other similar outbreaks Readers should review and consider these factors along with the various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission. 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.


Contact:
U.S. Xpress Enterprises, Inc.
Brian Baubach
Sr. Vice President Corporate Finance and Investor Relations
investors@usxpress.com
Source: U.S. Xpress Enterprises, Inc.
6

Condensed Consolidated Income Statements (unaudited)
                       
   
Quarter Ended June 30,
   
Six Months Ended June 30,
 
(in thousands, except per share data)
 
2020
   
2019
   
2020
   
2019
 
Operating Revenue:
                       
Revenue, excluding fuel surcharge
 
$
393,964
   
$
371,184
   
$
786,784
   
$
746,496
 
Fuel surcharge
   
28,513
     
42,678
     
68,261
     
82,729
 
Total operating revenue
   
422,477
     
413,862
     
855,045
     
829,225
 
Operating Expenses:
                               
Salaries, wages and benefits
   
139,987
     
130,521
     
275,381
     
255,084
 
Fuel and fuel taxes
   
29,874
     
47,374
     
70,197
     
94,278
 
Vehicle rents
   
21,335
     
18,579
     
43,212
     
37,555
 
Depreciation and amortization, net of (gain) loss
   
26,283
     
24,752
     
52,086
     
47,814
 
Purchased transportation
   
117,366
     
112,579
     
247,120
     
226,584
 
Operating expense and supplies
   
28,126
     
29,968
     
57,800
     
57,913
 
Insurance premiums and claims
   
21,283
     
19,266
     
47,306
     
43,619
 
Operating taxes and licenses
   
3,720
     
3,406
     
7,397
     
6,579
 
Communications and utilities
   
2,256
     
2,185
     
4,708
     
4,450
 
Gain on sale of subsidiary
   
-
     
(670
)
   
-
     
(670
)
General and other operating
   
15,970
     
17,115
     
37,229
     
34,594
 
Total operating expenses
   
406,200
     
405,075
     
842,436
     
807,800
 
Operating Income
   
16,277
     
8,787
     
12,609
     
21,425
 
Other Expenses (Income):
                               
Interest Expense, net
   
4,862
     
5,296
     
10,283
     
10,899
 
Equity in loss of affiliated companies
   
-
     
90
     
-
     
179
 
Other, net
   
-
     
-
     
2,000
     
26
 
     
4,862
     
5,386
     
12,283
     
11,104
 
Income Before Income Taxes
   
11,415
     
3,401
     
326
     
10,321
 
Income Tax Provision
   
2,387
     
415
     
530
     
2,316
 
Net Income (Loss)
   
9,028
     
2,986
     
(204
)
   
8,005
 
Net Income (Loss) attributable to non-controlling interest
   
(470
)
   
314
     
(486
)
   
612
 
Net Income attributable to controlling interest
 
$
9,498
   
$
2,672
   
$
282
   
$
7,393
 
                                 
Income Per Share
                               
Basic earnings per share
 
$
0.19
   
$
0.05
   
$
0.01
   
$
0.15
 
Basic weighted average shares outstanding
   
49,499
     
48,742
     
49,358
     
48,569
 
Diluted earnings per share
 
$
0.18
   
$
0.05
   
$
(0.00
)
 
$
0.15
 
Diluted weighted average shares outstanding
   
50,215
     
49,312
     
49,518
     
49,184
 

7

Condensed Consolidated Balance Sheets (unaudited)
           
   
June 30,
   
December 31,
 
(in thousands)
 
2020
   
2019
 
Assets
           
Current assets:
           
Cash and cash equivalents
 
$
1,326
   
$
5,687
 
Customer receivables, net of allowance of $207 and $63, respectively
   
185,035
     
183,706
 
Other receivables
   
16,573
     
15,253
 
Prepaid insurance and licenses
   
9,392
     
11,326
 
Operating supplies
   
7,950
     
7,193
 
Assets held for sale
   
12,715
     
17,732
 
Other current assets
   
14,553
     
15,831
 
Total current assets
   
247,544
     
256,728
 
Property and equipment, at cost
   
912,264
     
880,101
 
Less accumulated depreciation and amortization
   
(400,641
)
   
(388,318
)
Net property and equipment
   
511,623
     
491,783
 
Other assets:
               
Operating lease right-of-use assets
   
277,362
     
276,618
 
Goodwill
   
59,221
     
57,708
 
Intangible assets, net
   
26,364
     
27,214
 
Other
   
31,327
     
30,058
 
Total other assets
   
394,274
     
391,598
 
Total assets
 
$
1,153,441
   
$
1,140,109
 
Liabilities and Stockholders' Equity
               
Current liabilities:
               
Accounts payable
 
$
72,459
   
$
68,918
 
Book overdraft
   
4,945
     
1,313
 
Accrued wages and benefits
   
26,970
     
24,110
 
Claims and insurance accruals
   
48,881
     
51,910
 
Other accrued liabilities
   
6,642
     
9,127
 
Current portion of operating leases
   
70,438
     
69,866
 
Current maturities of long-term debt and finance leases
   
87,106
     
80,247
 
Total current liabilities
   
317,441
     
305,491
 
Long-term debt and finance leases, net of current maturities
   
295,858
     
315,797
 
Less debt issuance costs
   
(335
)
   
(1,223
)
Net long-term debt and finance leases
   
295,523
     
314,574
 
Deferred income taxes
   
20,993
     
20,692
 
Other long-term liabilities
   
12,325
     
5,249
 
Claims and insurance accruals, long-term
   
60,306
     
56,910
 
Noncurrent operating lease liability
   
206,616
     
206,357
 
Commitments and contingencies
   
-
     
-
 
Stockholders' Equity:
               
Common Stock
   
493
     
490
 
Additional paid-in capital
   
258,558
     
250,700
 
Accumulated deficit
   
(20,700
)
   
(20,982
)
Stockholders' equity
   
238,351
     
230,208
 
Noncontrolling interest
   
1,886
     
628
 
Total stockholders' equity
   
240,237
     
230,836
 
Total liabilities and stockholders' equity
 
$
1,153,441
   
$
1,140,109
 

8

Condensed Consolidated Cash Flow Statements (unaudited)
           
   
Six Months Ended June 30,
 
(in thousands)
 
2020
   
2019
 
Operating activities
           
Net income (loss)
 
$
(204
)
 
$
8,005
 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
         
Deferred income tax provision
   
301
     
1,824
 
Depreciation and amortization
   
45,683
     
44,401
 
Losses on sale of property and equipment
   
6,403
     
3,413
 
Share based compensation
   
2,000
     
1,880
 
Other
   
2,967
     
572
 
Gain on sale of subsidiary
   
-
     
(670
)
Changes in operating assets and liabilities
               
Receivables
   
(3,027
)
   
5,320
 
Prepaid insurance and licenses
   
1,933
     
612
 
Operating supplies
   
95
     
72
 
Other assets
   
1,085
     
(3,288
)
Accounts payable and other accrued liabilities
   
11,822
     
(2,167
)
Accrued wages and benefits
   
2,738
     
(2,401
)
Net cash provided by operating activities
   
71,796
     
57,573
 
Investing activities
               
Payments for purchases of property and equipment
   
(87,270
)
   
(105,137
)
Proceeds from sales of property and equipment
   
24,101
     
23,041
 
Other
   
(1,880
)
   
-
 
Proceeds from sale of subsidiary, net of cash
   
-
     
(8,259
)
Net cash used in investing activities
   
(65,049
)
   
(90,355
)
Financing activities
               
Borrowings under lines of credit
   
180,254
     
10,700
 
Payments under lines of credit
   
(180,254
)
   
(9,900
)
Borrowings under long-term debt
   
183,662
     
65,704
 
Payments of long-term debt and finance leases
   
(196,742
)
   
(51,936
)
Payments of financing costs
   
(1,276
)
   
-
 
Net proceeds from issuance of common stock under ESPP
   
420
     
-
 
Tax withholding related to net share settlement of restricted stock awards
   
(93
)
   
(44
)
Purchase of noncontrolling interest
   
-
     
(8,659
)
Payments of long-term consideration for business acquisition
   
(1,000
)
   
(990
)
Proceeds from long-term consideration for sale of subsidiary
   
290
     
-
 
Book overdraft
   
3,631
     
9,791
 
Net cash (used in) provided by financing activities
   
(11,108
)
   
14,666
 
Change in cash balances of assets held for sale
   
-
     
11,784
 
Net change in cash and cash equivalents
   
(4,361
)
   
(6,332
)
Cash and cash equivalents
               
Beginning of year
   
5,687
     
9,892
 
End of period
 
$
1,326
   
$
3,560
 

9

Key Operating Factors & Truckload Statistics (unaudited)
                         
                                     
   
Quarter Ended June 30,
   
%
   
Six Months Ended June 30,
   
%
 
   
2020
   
2019
   
Change
   
2020
   
2019
   
Change
 
Operating Revenue:
                                   
Truckload1
 
$
347,935
   
$
331,727
     
4.9
%
 
$
690,279
   
$
660,795
     
4.5
%
Fuel Surcharge
   
28,513
     
42,678
     
-33.2
%
   
68,261
     
82,729
     
-17.5
%
Brokerage
   
46,029
     
39,457
     
16.7
%
   
96,505
     
85,701
     
12.6
%
Total Operating Revenue
 
$
422,477
   
$
413,862
     
2.1
%
 
$
855,045
   
$
829,225
     
3.1
%
                                                 
Operating Income (Loss):
                                               
Truckload
 
$
20,428
   
$
7,503
     
172.3
%
 
$
21,628
   
$
17,344
     
24.7
%
Brokerage
 
$
(4,151
)
 
$
1,284
     
-423.3
%
 
$
(9,019
)
 
$
4,081
     
-321.0
%
   
$
16,277
   
$
8,787
     
85.2
%
 
$
12,609
   
$
21,425
     
-41.1
%
                                                 
Operating Ratio:
                                               
Operating Ratio
   
96.1
%
   
97.9
%
   
-1.8
%
   
98.5
%
   
97.4
%
   
1.1
%
Adjusted Operating Ratio2
   
95.9
%
   
97.5
%
   
-1.6
%
   
98.4
%
   
96.6
%
   
1.9
%
                                                 
Truckload Operating Ratio
   
94.6
%
   
98.0
%
   
-3.5
%
   
97.1
%
   
97.7
%
   
-0.6
%
Adjusted Truckload Operating Ratio2
   
94.1
%
   
97.6
%
   
-3.6
%
   
96.9
%
   
96.8
%
   
0.1
%
Brokerage Operating Ratio
   
109.0
%
   
96.7
%
   
12.7
%
   
109.3
%
   
95.2
%
   
14.8
%
                                                 
Truckload Statistics:
                                               
Revenue Per Mile1
 
$
2.051
   
$
2.118
     
-3.2
%
 
$
2.061
   
$
2.123
     
-2.9
%
                                                 
Average Tractors -
                                               
Company Owned
   
4,777
     
4,548
     
5.0
%
   
4,762
     
4,613
     
3.2
%
Owner Operators
   
1,787
     
1,738
     
2.8
%
   
1,789
     
1,667
     
7.3
%
Total Average Tractors
   
6,564
     
6,286
     
4.4
%
   
6,551
     
6,280
     
4.3
%
                                                 
Average Revenue Miles Per Tractor
Per Week
   
1,849
     
1,791
     
3.2
%
   
1,821
     
1,779
     
2.4
%
                                                 
Average Revenue Per Tractor
Per Week1
 
$
3,793
   
$
3,792
     
0.0
%
 
$
3,753
   
$
3,777
     
-0.6
%
                                                 
Total Miles
   
175,833
     
162,217
     
8.4
%
   
345,020
     
319,201
     
8.1
%
                                                 
Total Company Miles
   
125,743
     
114,344
     
10.0
%
   
243,869
     
228,125
     
6.9
%
                                                 
Total Independent Contractor Miles
   
50,090
     
47,873
     
4.6
%
   
101,151
     
91,076
     
11.1
%
                                                 
Independent Contractor fuel surcharge
   
7,311
     
12,233
     
-40.2
%
   
18,522
     
22,713
     
-18.5
%
                                                 
1 Excluding fuel surcharge revenues
                                               
2 See GAAP to non-GAAP reconciliation in the schedules following this release
                 

10

Non-GAAP Reconciliation - Adjusted Operating Income and Adjusted Operating Ratio (unaudited)
       
                         
   
Quarter Ended June 30,
   
Six Months Ended June 30,
 
(in thousands)
 
2020
   
2019
   
2020
   
2019
 
GAAP Presentation:
                       
Total revenue
 
$
422,477
   
$
413,862
   
$
855,045
   
$
829,225
 
Total operating expenses
   
(406,200
)
   
(405,075
)
   
(842,436
)
   
(807,800
)
Operating income
 
$
16,277
   
$
8,787
   
$
12,609
   
$
21,425
 
Operating ratio
   
96.1
%
   
97.9
%
   
98.5
%
   
97.4
%
                                 
Non-GAAP Presentation
                               
Total revenue
 
$
422,477
   
$
413,862
   
$
855,045
   
$
829,225
 
Fuel surcharge
   
(28,513
)
   
(42,678
)
   
(68,261
)
   
(82,729
)
Revenue, excluding fuel surcharge
   
393,964
     
371,184
     
786,784
     
746,496
 
                                 
Total operating expenses
   
406,200
     
405,075
     
842,436
     
807,800
 
Adjusted for:
                               
Fuel surcharge
   
(28,513
)
   
(42,678
)
   
(68,261
)
   
(82,729
)
Mexico transition costs1
   
-
     
(1,200
)
   
-
     
(4,600
)
Gain on sale of subsidiary2
   
-
     
670
     
-
     
670
 
Adjusted operating expenses
   
377,687
     
361,867
     
774,175
     
721,141
 
Adjusted Operating Income
 
$
16,277
   
$
9,317
   
$
12,609
   
$
25,355
 
Adjusted operating ratio
   
95.9
%
   
97.5
%
   
98.4
%
   
96.6
%
                                 
1 During the second quarter and six months ended June 30, 2019, we incurred expenses related to the exit of our Mexico business totaling $1,200 and $4,600
 
2During the second quarter of 2019, we recognized a gain on the sale of our Mexico business
 

Non-GAAP Reconciliation - Truckload Adjusted Operating Income and Adjusted Operating Ratio (unaudited)
     
                         
   
Quarter Ended June 30,
   
Six Months Ended June 30,
 
(in thousands)
 
2020
   
2019
   
2020
   
2019
 
Truckload GAAP Presentation:
                       
Total Truckload revenue
 
$
376,448
   
$
374,405
   
$
758,540
   
$
743,524
 
Total Truckload operating expenses
   
(356,020
)
   
(366,902
)
   
(736,912
)
   
(726,180
)
  Truckload operating income
 
$
20,428
   
$
7,503
   
$
21,628
   
$
17,344
 
   Truckload operating ratio
   
94.6
%
   
98.0
%
   
97.1
%
   
97.7
%
                                 
Truckload Non-GAAP Presentation
                               
Total Truckload revenue
 
$
376,448
   
$
374,405
   
$
758,540
   
$
743,524
 
Fuel surcharge
   
(28,513
)
   
(42,678
)
   
(68,261
)
   
(82,729
)
  Revenue, excluding fuel surcharge
   
347,935
     
331,727
     
690,279
     
660,795
 
                                 
Total Truckload operating expenses
   
356,020
     
366,902
     
736,912
     
726,180
 
Adjusted for:
                               
Fuel surcharge
   
(28,513
)
   
(42,678
)
   
(68,261
)
   
(82,729
)
Mexico transition costs1
   
-
     
(1,200
)
   
-
     
(4,600
)
Gain on sale of subsidiary2
   
-
     
670
     
-
     
670
 
  Truckload Adjusted operating expenses
   
327,507
     
323,694
     
668,651
     
639,521
 
  Truckload Adjusted operating income
 
$
20,428
   
$
8,033
   
$
21,628
   
$
21,274
 
  Truckload Adjusted operating ratio
   
94.1
%
   
97.6
%
   
96.9
%
   
96.8
%
                                 
1 During the second quarter and six months ended June 30, 2019, we incurred expenses related to the exit of our Mexico business totaling $1,200 and $4,600
 
2During the second quarter of 2019, we recognized a gain on the sale of our Mexico business
 

11

Non-GAAP Reconciliation - Adjusted Net Income and EPS (unaudited)
                 
                                     
         
Quarter Ended June 30,
   
Six Months Ended June 30,
 
(in thousands, except per share data)
       
2020
         
2019
   
2020
   
2019
 
GAAP: Net income attributable to controlling interest
       
$
9,498
         
$
2,672
   
$
282
   
$
7,393
 
Adjusted for:
                                           
Income tax provision
         
2,387
           
415
     
530
     
2,316
 
Income before income taxes attributable to controlling interest
       
$
11,885
         
$
3,087
   
$
812
   
$
9,709
 
Loss on sale of equity method investments1
   

     
-
     

     
-
     
2,000
     
-
 
Mexico transition costs2
           
-
             
1,200
     
-
     
4,600
 
Gain on sale of subsidiary3
           
-
             
(670
)
   
-
     
(670
)
Adjusted income before income taxes
           
11,885
             
3,617
     
2,812
     
13,639
 
Adjusted income tax provision
           
2,387
             
705
     
530
     
3,457
 
Non-GAAP: Adjusted net income attributable to controlling interest
   
$
9,498
           
$
2,912
   
$
2,282
   
$
10,182
 
                                                 
GAAP: Earnings per diluted share
         
$
0.18
           
$
0.05
   
$
(0.00
)
 
$
0.15
 
Adjusted for:
                                               
Income tax expense attributable to controlling interest
           
0.05
             
0.01
     
0.01
     
0.05
 
Income before income taxes attributable to controlling interest
         
$
0.23
           
$
0.06
   
$
0.01
   
$
0.20
 
Loss on sale of equity method investments1
           
-
             
-
     
0.04
     
-
 
Mexico transition costs2
           
-
             
0.02
     
-
     
0.09
 
Gain on sale of subsidiary3
           
-
             
(0.01
)
   
-
     
(0.01
)
Adjusted income before income taxes
           
0.23
             
0.07
     
0.05
     
0.28
 
Adjusted income tax provision
           
0.05
             
0.01
     
0.01
     
0.07
 
Non-GAAP: Adjusted net income attributable to controlling interest
   
$
0.18
           
$
0.06
   
$
0.04
   
$
0.21
 
                                                 
1During the first quarter of 2020, we incurred loss on sale related to an equity method investment in a former wholly owned subsidiary
 
2 During the second quarter and six months ended June 30, 2019, we incurred expenses related to the exit of our Mexico business totaling $1,200 and $4,600
 
3During the second quarter of 2019, we recognized a gain on the sale of our Mexico business
                 
 
12

Back to Form 8-K