USA TRUCK INC - Quarter Report: 2021 June (Form 10-Q)

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 June 30, 2021

☐	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

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 July 23, 2021, was 8,894,261

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USA TRUCK INC.

TABLE OF CONTENTS


Item No.	Caption		Page
		PART I – FINANCIAL INFORMATION
1.		Financial Statements
		Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2021 and December 31, 2020		2
		Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited) - Three and six months ended June 30, 2021 and June 30, 2020		3
		Condensed Consolidated Statements of Stockholders’ Equity (unaudited) - Three months ended March 31 and June 30, 2021 and March 31 and June 30, 2020		4
		Condensed Consolidated Statements of Cash Flows (unaudited) - Six months ended June 30, 2021 and June 30, 2020		5
		Notes to Condensed Consolidated Financial Statements (unaudited)		6
2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
3.		Quantitative and Qualitative Disclosures About Market Risk		27
4.		Controls and Procedures		28
		PART II – OTHER INFORMATION
1.		Legal Proceedings		28
1A.		Risk Factors		28
2.		Unregistered Sales of Equity Securities and Use of Proceeds		28
3.		Defaults Upon Senior Securities		28
4.		Mine Safety Disclosures		28
5.		Other Information		28
6.		Exhibits		29
		Signatures		30

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PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

USA TRUCK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


Assets	June 30, 2021		December 31, 2020

Current assets:	(in thousands, except share data)
Cash and restricted cash (restricted cash of $117 and $243, respectively)	$	2,014	$	325
Accounts receivable, net of allowance for doubtful accounts of $548 and $617, respectively		80,061		63,984
Other receivables		4,193		2,873
Inventories		1,397		975
Assets held for sale		—		2,635
Prepaid expenses and other current assets		6,475		8,749
Total current assets		94,140		79,541
Property and equipment:
Land and structures		34,120		33,488
Revenue equipment		296,551		305,509
Service, office and other equipment		30,604		30,331
Property and equipment, at cost		361,275		369,328
Accumulated depreciation and amortization		(160,549)		(150,173)
Property and equipment, net		200,726		219,155
Operating leases - right of use assets		25,891		28,154
Goodwill		5,231		5,231
Other intangibles, net		14,460		15,105
Other assets		2,835		3,046
Total assets	$	343,283	$	350,232
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	33,069	$	27,045
Current portion of insurance and claims accruals		8,814		9,846
Accrued expenses		11,630		10,798
Current finance lease obligations		11,852		11,655
Current operating lease obligations		7,127		6,838
Long-term debt, current maturities		3,404		6,791
Total current liabilities		75,896		72,973
Other long-term liabilities		2,837		4,817
Long-term debt, less current maturities		74,342		81,352
Long-term finance lease obligations		48,397		54,482
Long-term operating lease obligations		19,145		21,690
Deferred income taxes		21,435		23,414
Insurance and claims accruals, less current portion		8,003		6,803
Total liabilities		250,055		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 12,252,916 shares, and 12,037,966 shares, respectively		123		120
Additional paid-in capital		62,268		60,692
Retained earnings		86,305		78,515
Less treasury stock, at cost (3,349,720 shares, and 3,293,223 shares, respectively)		(55,468)		(54,626)
Total stockholders’ equity		93,228		84,701
Total liabilities and stockholders’ equity	$	343,283	$	350,232

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

	(in thousands, except per share data)
Operating revenue	$	170,031	$	123,737	$	328,536	$	250,510

Operating expenses:
Salaries, wages and employee benefits		36,488		33,636		73,043		69,481
Fuel and fuel taxes		12,414		8,082		23,858		19,945
Depreciation and amortization		9,163		10,034		18,733		20,045
Insurance and claims		5,181		4,009		10,990		9,866
Equipment rent		2,048		1,880		3,997		3,731
Operations and maintenance		8,783		9,062		15,849		18,399
Purchased transportation		82,938		49,276		157,041		97,090
Operating taxes and licenses		1,323		1,349		2,595		2,508
Communications and utilities		796		906		1,600		1,719
(Gain) loss on disposal of assets, net		(140)		(16)		(317)		22
Asset impairments		—		588		—		588
Other		4,108		3,931		8,172		8,428
Total operating expenses		163,102		122,737		315,561		251,822
Operating income (loss)		6,929		1,000		12,975		(1,312)

Other expenses:
Interest expense, net		1,014		1,235		2,039		2,919
Other, net		49		64		110		110
Total other expenses, net		1,063		1,299		2,149		3,029
Income (loss) before income taxes		5,866		(299)		10,826		(4,341)
Income tax expense (benefit)		1,673		632		3,036		(859)

Consolidated net income (loss) and comprehensive income (loss)	$	4,193	$	(931)	$	7,790	$	(3,482)

Net earnings (loss) per share:
Average shares outstanding (basic)		8,806		8,820		8,826		8,737
Basic earnings (loss) per share	$	0.48	$	(0.11)	$	0.88	$	(0.40)

Average shares outstanding (diluted)		8,947		8,820		8,976		8,737
Diluted earnings (loss) per share	$	0.47	$	(0.11)	$	0.87	$	(0.40)

See accompanying notes to condensed consolidated financial statements.

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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
Stock-based compensation	—		—		577		—		—		577
Restricted stock award grant	26		1		—		—		—		1
Net share settlement related to vested equity awards	—		—		36		—		(40)		(4)
Net income	—		—		—		4,193		—		4,193
Balance at June 30, 2021	12,253	$	123	$	62,268	$	86,305	$	(55,468)	$	93,228


	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 vested equity awards	(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
Issuance of treasury stock	—		—		(123)		—		123		—
Stock-based compensation	—		—		363		—		—		363
Restricted stock award grant	74		—		—		—		—		—
Net loss	—		—		—		(931)		—		(931)
Balance at June 30, 2020	12,036	$	120	$	59,565	$	70,287	$	(54,466)	$	75,506

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended June 30,
	2021		2020

Operating activities:	(in thousands)
Net income (loss)	$	7,790	$	(3,482)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		18,733		20,045
Bad debt expense		(102)		478
Deferred income tax (benefit) expense, net		(1,979)		807
Share-based compensation		745		834
(Gain) loss on disposal of assets, net		(317)		22
Asset impairments		—		588
Other		71		40
Changes in operating assets and liabilities:
Accounts and other receivables		(18,174)		(5,797)
Inventories and prepaid expenses		1,852		1,172
Accounts payable and accrued expenses		6,213		1,594
Insurance and claims accruals		357		(2,745)
Other long-term assets and liabilities		503		850
Net cash provided by operating activities	$	15,692	$	14,406
Investing activities:
Capital expenditures		(1,066)		(9,809)
Proceeds from sale of property and equipment		6,141		1,459
Net cash provided by (used in) investing activities	$	5,075	$	(8,350)
Financing activities:
Borrowings under long-term debt		28,760		33,200
Payments on long-term debt		(39,156)		(27,492)
Principal payments on financing lease obligations		(5,888)		(11,366)
Net change in bank drafts payable		(2,785)		(346)
Net payments for tax withholdings for vested stock-based awards		(9)		(57)
Net cash used in financing activities	$	(19,078)	$	(6,061)
Increase (decrease) in cash and restricted cash		1,689		(5)
Cash and restricted cash:
Beginning of period		325		97
End of period	$	2,014	$	92
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	2,106	$	2,704
Income taxes, net of refunds		6,623		29
Supplemental disclosure of non-cash investing:
Sales of revenue equipment included in other receivables	$	—	$	730
Purchase of revenue equipment included in accounts payable		1,021		—

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

June 30, 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 June 30, 2021 and December 31, 2020 and our results of operations and comprehensive income (loss) for the three and six months ended June 30, 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

We continue to monitor the progression of the COVID-19 pandemic including the outbreak of new strains of the virus, 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 current recovery from the pandemic deteriorate or stall, 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 June 30,
	2021								2020
	Trucking		USAT Logistics		Eliminations		Total		Trucking		USAT Logistics		Eliminations		Total

Revenue type	(in thousands)
Freight	$	90,712	$	72,204	$	(13,545)	$	149,371	$	78,514	$	35,040	$	(3,461)	$	110,093
Fuel surcharge		12,038		5,569		(534)		17,073		8,083		2,618		(167)		10,534
Accessorial		2,611		976		—		3,587		2,030		1,080		—		3,110
Total	$	105,361	$	78,749	$	(14,079)	$	170,031	$	88,627	$	38,738	$	(3,628)	$	123,737


	Six Months Ended June 30,
	2021								2020
	Trucking		USAT Logistics		Eliminations		Total		Trucking		USAT Logistics		Eliminations		Total

Revenue type	(in thousands)
Freight	$	181,727	$	134,666	$	(26,149)	$	290,244	$	159,417	$	66,707	$	(6,154)	$	219,970
Fuel surcharge		22,358		9,866		(909)		31,315		19,371		5,695		(520)		24,546
Accessorial		4,379		2,598		—		6,977		3,834		2,160		—		5,994
Total	$	208,464	$	147,130	$	(27,058)	$	328,536	$	182,622	$	74,562	$	(6,674)	$	250,510

At June 30, 2021 and December 31, 2020, the Company had contract assets, representing our right to consideration for transportation services not yet billed, of $2.2 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.

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A summary of operating revenue by segment is as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

Operating revenue	(in thousands)
Trucking revenue (1)	$	105,361	$	88,627	$	208,464	$	182,622
Trucking intersegment eliminations		(259)		(707)		(586)		(1,701)
Trucking operating revenue		105,102		87,920		207,878		180,921
USAT Logistics revenue		78,749		38,738		147,130		74,562
USAT Logistics intersegment eliminations		(13,820)		(2,921)		(26,472)		(4,973)
USAT Logistics operating revenue		64,929		35,817		120,658		69,589
Total operating revenue	$	170,031	$	123,737	$	328,536	$	250,510

Includes foreign revenue of $10.0 million and $7.5 million for the three months ended June 30, 2021 and 2020, respectively, and $18.9 million and $16.1 million for the six months ended June 30, 2021 and 2020, respectively.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

Operating income (loss)	(in thousands)
Trucking	$	3,057	$	1,176	$	6,577	$	(511)
USAT Logistics		3,872		(176)		6,398		(801)
Total operating income (loss)	$	6,929	$	1,000	$	12,975	$	(1,312)

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

Depreciation and amortization	(in thousands)
Trucking	$	8,901	$	9,697	$	18,197	$	19,473
USAT Logistics		262		337		536		572
Total depreciation and amortization	$	9,163	$	10,034	$	18,733	$	20,045

NOTE 4 – EQUITY COMPENSATION AND EMPLOYEE BENEFIT PLANS

The Company adopted the 2014 Omnibus Incentive Plan (the “Incentive Plan”) in May 2014, which 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 June 30, 2021, 331,935 shares remain available under the Incentive Plan for the issuance of future equity-based compensation awards.

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NOTE 5 – ACCRUED EXPENSES

Accrued expenses consist of the following:


	June 30, 2021		December 31, 2020
	(in thousands)
Salaries, wages and employee benefits	$	8,523	$	6,142
Federal and state tax accruals		1,215		2,649
Other (1)		1,892		2,007
Total accrued expenses	$	11,630	$	10,798

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

NOTE 6 – DEBT

Long-term debt consisted of the following:


	June 30, 2021		December 31, 2020
	(in thousands)
Revolving credit agreement	$	66,900	$	73,025
Sale-leaseback finance obligations		9,082		9,913
Insurance premium financing (2020)		1,654		5,064
Other		110		141
		77,746		88,143
Less current maturities		(3,404)		(6,791)
Total long-term debt	$	74,342	$	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.

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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 no overnight borrowings under the Swingline as of June 30, 2021. The average interest rate including all borrowings made under the Credit Facility as of June 30, 2021 was 1.49%. As debt is repriced on a monthly basis, the borrowings under the Credit Facility approximate fair value. As of June 30, 2021, the Company had $7.9 million in letters of credit outstanding and had $86.6 million available to borrow under the Credit Facility taking into account borrowing base availability.

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				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

	(in thousands)
Operating lease costs	$	1,908	$	2,052	$	3,842	$	4,218
Finance lease costs:
Amortization of assets		2,782		4,784		6,796		9,507
Interest on lease liabilities		639		763		1,309		1,553
Total finance lease costs		3,421		5,547		8,105		11,060
Variable and short-term lease costs		703		284		1,286		411
Total lease costs	$	6,032	$	7,883	$	13,233	$	15,689

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


	June 30, 2021			December 31, 2020

Operating leases:	(dollars in thousands)
Operating leases - right-of-use assets	$	25,891		$	28,154

Current operating lease obligations		7,127			6,838
Long-term operating lease obligations		19,145			21,690
Total operating lease liabilities	$	26,272		$	28,528

Finance leases:
Property and equipment, at cost		86,114			86,281
Accumulated amortization		(28,595)			(22,991)
Property and equipment, net	$	57,519		$	63,290

Current finance lease obligations		11,852			11,655
Long-term finance lease obligations		48,397			54,482
	$	60,249		$	66,137

Weighted average remaining lease term:		(in months)			(in months)
Operating leases		54			60
Finance leases		37			43

Weighted average discount rate:
Operating leases		4.53	%		4.59	%
Finance leases		3.73	%		3.73	%

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


	June 30, 2021		June 30, 2020

Cash paid for amounts included in measurement of liabilities:	(in thousands)
Operating cash flows from operating leases	$	71	$	42
Operating cash flows from finance leases		1,309		1,553
Financing cash flows from finance leases		5,888		11,366

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	170	$	—
Finance leases		—		8,481

OTHER COMMITMENTS

As of June 30, 2021, the Company had $27.8 million in purchase commitments for the acquisition of revenue equipment, of which none were cancellable. It is anticipated that these purchase commitments will be funded primarily through the use of operating leases, with down payments being funded first through cash provided by operations and proceeds from the sale of used revenue equipment and secondarily from borrowings under the Company’s Credit Facility.

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 June 30, 2021 and 2020 and $0.08 million for the six months ended June 30, 2021 and 2020. This expense is included in the “Operations and maintenance” line item in the accompanying condensed consolidated statements of income (loss) and comprehensive income (loss).

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NOTE 8 – INCOME TAXES

During the three months ended June 30, 2021 and 2020 the Company’s effective tax rate was 28.5% and 211.4%, respectively. During the six months ended June 30, 2021 and 2020, the Company’s effective tax rate was 28.0% and 19.8%, 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 six months ended June 30, 2021 by applying an estimate of the 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) adjusted for 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				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

Numerator:	(in thousands, except per share amounts)
Net income (loss)	$	4,193	$	(931)	$	7,790	$	(3,482)
Denominator:
Denominator for basic earnings (loss) per share – weighted average shares		8,806		8,820		8,826		8,737
Effect of dilutive securities:
Employee restricted stock and incentive stock options		141		—		150		—
Denominator for diluted earnings (loss) per share – adjusted weighted average shares and assumed conversion		8,947		8,820		8,976		8,737
Basic earnings (loss) per share	$	0.48	$	(0.11)	$	0.88	$	(0.40)
Diluted earnings (loss) per share	$	0.47	$	(0.11)	$	0.87	$	(0.40)
Weighted average anti-dilutive employee restricted stock and incentive stock options		114		348		126		393

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NOTE 10 – LEGAL PROCEEDINGS

The Company is party to routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. The Company maintains insurance to cover liabilities in excess of certain self-insured retention levels. Though management believes these claims to be immaterial to the Company’s long-term financial position, adverse results of one or more of these claims could have a material adverse effect on the Company’s financial position, results of operations or cash flows in any given reporting period.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report 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, (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. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation:

●

any statement about the expected impact, evolution, duration or severity of the novel coronavirus (“COVID-19”) global pandemic, including our anticipated actions and responses thereto and the potential impact on our business, operations, customers, employees, financial results and financial condition.

●

any projections of earnings, revenue, costs, or other financial items;

●

any statement of projected future operations or processes;

●

any statement of plans, strategies, goals, and objectives of management for future operations;

●

any statement concerning acquisitions, or proposed new services or developments;

●

any statement regarding future economic conditions or performance; and

●

any statement of belief and any statement of assumptions underlying any of the foregoing.

In this Quarterly Report on Form 10-Q, statements relating to:

●

the impact of public health crises, including COVID-19,

●

future driver market,

●

future ability to grow market share,

●

future driver and customer-facing employee compensation,

●

future ability and cost to recruit and retain drivers,

●

future asset utilization,

●

the amount, timing and price of future acquisitions and dispositions of revenue equipment, size and age of the Company’s fleet, mix of fleet between Company-owned and independent contractors and anticipated gains or losses resulting from dispositions,

●

future depreciation and amortization expense, including useful lives and salvage values of equipment and intangible assets,

●

future safety performance,

●

future profitability,

●

future industry capacity,

●

future deployment of technology,

●

future pricing rates and freight network,

●

future fuel prices and surcharges, fuel efficiency and hedging arrangements,

●

future insurance and claims and litigation expense, including trends in cost, coverage and retention levels,

●

future salaries, wages and employee benefits costs,

●

future purchased transportation use and expense,

●

future operations and maintenance costs,

●

future USAT Logistics growth and profitability,

●

future trends in operating expenses expected to result from growing our USAT Logistics business and increasing

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independent contractors,

●

future asset sales of non-revenue assets,

●

future impact of regulations,

●

future use of derivative financial instruments,

●

our strategy,

●

our intention about the payment of dividends,

●

inflation,

●

future indebtedness,

●

future liquidity and borrowing availability and capacity,

●

the impact of pending and future litigation and claims,

●

future availability and compliance with covenants under our revolving credit facility,

●

expected amount and timing of capital expenditures,

●

future equipment market,

●

expected liquidity and sources of capital resources, including the mix of financing and operating leases,

●

future size of the independent contractor fleet, and

●

future income tax rates

among others, are forward-looking statements. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “focus,” “intends,” “plans,” “goals,” “may,” “if,” “will,” “should,” “could,” “potential,” “continue,” “future” and similar terms and phrases. Forward-looking statements are based on currently available operating, financial, and competitive information. Forward-looking statements 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. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Item 1.A, Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and other filings with the Securities and Exchange Commission (the “SEC”).

All such forward-looking statements speak only as of the date of this report. You are cautioned not to place undue reliance on such forward-looking statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in management’s expectations with regard thereto or any change in the events, conditions or circumstances on which any such information is based, except as required by law.

All forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by this cautionary statement.

References to the “Company,” “we,” “us,” “our” or similar terms refer to USA Truck Inc. and its subsidiaries.

Overview

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader more fully understand the operations and present business environment of USA Truck Inc. MD&A is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and notes thereto and other financial information that appears elsewhere in this report. This overview summarizes the MD&A, which includes the following sections:

Business Overview – a general description of our business, the organization of our operations and the service offerings that comprise our operations.

Results of Operations – an analysis of the consolidated results of operations for the periods presented in the condensed consolidated financial statements included in this filing and a discussion of seasonality, the potential impact of inflation and fuel availability and cost.

Liquidity and Capital Resources – an analysis of cash flows, sources and uses of cash, debt, equity and contractual obligations.

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Business Overview

The Company has two reportable segments: (i) Trucking, consisting of one-way truckload motor carrier services, in which volumes typically are not contractually committed, and dedicated contract motor carrier services, in which a combination of equipment and drivers is contractually committed to a particular customer, typically for a duration of at least one year, subject to certain cancellation rights, and (ii) USAT Logistics, consisting of freight brokerage, logistics, and rail intermodal service offerings.

The Trucking segment provides one-way truckload transportation, including dedicated services, of various products, goods and materials. The Trucking segment primarily uses its own purchased or leased tractors and trailers or capacity provided by independent contractors to provide services to customers and is commonly referred to as “asset-based” trucking. The Company’s USAT Logistics segment provides services that match customer shipments with available equipment of authorized third-party motor carriers and other service providers and provide services that complement the Company’s Trucking operations. USAT Logistics provides these services to 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 for the Company’s Trucking segment is substantially generated by transporting freight for customers, and is predominantly affected by rates per mile, the number of tractors in operation, and the number of revenue-generating miles per tractor. The Company also generates revenue through fuel surcharge and ancillary services such as stop-off pay, loading and unloading activities, tractor and trailer detention, expediting charges, repositioning charges and other similar services.

Operating expenses fall into two categories: variable and fixed. Variable expenses, or mostly variable expenses, constitute the majority of the expenses associated with transporting freight for customers, and include driver wages and benefits, fuel and fuel taxes, payments to independent contractors (also referred to as purchased transportation), operating and maintenance expense and insurance and accident claims expense. These expenses vary primarily according to miles operated, but also have controllable components based on percentage of compensated miles, shop and dispatch efficiency, and safety and claims experience.

Fixed expenses, or mostly fixed expenses, include the capital costs of our assets (depreciation, amortization, rent and interest), compensation of non-driving employees and portions of insurance and maintenance expenses. These expenses are partially controllable through management of fleet size and facilities infrastructure, headcount efficiency, and safety.

Fuel and fuel tax expense can fluctuate significantly with diesel fuel prices. To mitigate the Company’s exposure to fuel price increases, it recovers from its customers fuel surcharges that historically have recouped a majority of the increased fuel costs; however, the Company cannot assure the recovery levels experienced in the past will continue in future periods. Although the Company’s fuel surcharge program mitigates some exposure to rising fuel costs, the Company continues to have exposure to increasing fuel costs related to deadhead miles, out of route miles, fuel inefficiency due to engine idle time and other factors, including the extent to which the surcharges paid by customers are insufficient to compensate for higher fuel costs, particularly in times of rapidly increasing fuel prices. The main factors that affect fuel surcharge revenue are the price of diesel fuel and the number of loaded miles. The fuel surcharge is billed on a lagging basis, meaning the Company typically bills customers in the current week based on the previous week’s applicable United States Department of Energy (the “DOE”) Diesel Fuel index. Therefore, in times of increasing fuel prices, the Company does not recover as much in fuel surcharge revenue as it pays for fuel. In periods of declining prices, the opposite is experienced.

The key statistics used to evaluate Trucking segment performance, in each case net of fuel surcharge revenue, include (i) base revenue per available tractor per week, (ii) base revenue per loaded mile, (iii) loaded miles per available tractor per week, (iv) deadhead percentage, (v) average loaded miles per trip, (vi) average number of available tractors and (vii) adjusted operating ratio. In general, the Company’s average miles per available tractor per week, rate per mile and deadhead percentages are affected by industry-wide freight volumes and industry-wide trucking capacity, which are mostly beyond the Company’s control. Factors over which the Company has significant control are its sales and marketing efforts, service levels and operational efficiency.

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Unlike the Trucking segment, the USAT Logistics segment is non-asset based and is dependent upon skilled employees, reliable information systems and qualified third-party capacity providers. The largest expense related to the USAT Logistics segment is purchased transportation expense. Other operating expenses consist primarily of salaries, wages and employee benefits. The Company evaluates the financial performance of the USAT Logistics segment by reviewing gross margin (USAT Logistics operating revenue less USAT Logistics purchased transportation expense) and the gross margin percentage (USAT Logistics operating revenue less USAT Logistics purchased transportation expense expressed as a percentage of USAT Logistics operating revenue). Gross margin can be impacted by the rates charged to customers and the costs of securing third-party capacity. USAT Logistics often achieves better gross margins during periods of imbalance between supply and demand than times of balanced supply and demand, although periods of transition to tight capacity also can compress margins. We plan to continue our focus on improving results through network engineering initiatives, pricing discipline, enhanced partnerships with customers, and improved execution in our day-to-day operations, as well as our ongoing safety initiatives. By focusing on these key objectives, management believes it will make progress on its goals of improving the Company’s operating performance and increasing stockholder value.

COVID-19

We continue to monitor the COVID-19 situation and regularly review announcements and recommendations of various government authorities and implement precautions as needed. We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate should current conditions deteriorate. The overall impact of COVID-19 on our consolidated results of operations for the year ended December 31, 2020 and the three and six months ended June 30, 2021 was not significant, however the impact that COVID-19 will have on our consolidated results of operations in future periods remains uncertain. We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources.

Results of Operations

The following tables summarize the condensed consolidated statements of income (loss) and comprehensive income (loss) in dollars and percentage of consolidated operating revenue and the percentage increase or decrease in the dollar amounts of those items compared to the prior year.


	Three Months Ended June 30,
	2021					2020
					Adjusted					Adjusted	Change
			Operating		Operating			Operating		Operating	in Dollar
			Revenue		Ratio (1)			Revenue		Ratio (1)	Amounts
	$		%		%	$		%		%	%

	(dollars in thousands)
Base revenue	$	152,958	90.0	%		$	113,203	91.5	%		35.1	%
Fuel surcharge revenue		17,073	10.0				10,534	8.5			62.1
Operating revenue		170,031	100.0				123,737	100.0			37.4

Total operating expenses		163,102	95.9		95.3		122,737	99.2		98.6	32.9
Operating income (loss)		6,929	4.1				1,000	0.8			—	(2)

Other expenses:
Interest expense		1,014	0.6				1,235	1.0			(17.9)
Other, net		49	0.0				64	0.1			(23.4)
Total other expenses, net		1,063	0.6				1,299	1.0			(18.2)	%
Income (loss) before income taxes		5,866	3.4				(299)	(0.2)			—	(2)
Income tax expense (benefit)		1,673	1.0				632	0.5			—	(2)

Consolidated net income (loss)	$	4,193	2.5	%		$	(931)	(0.8)	%		—	(2)

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	Six Months Ended June 30,
	2021					2020
					Adjusted					Adjusted	Change
			Operating		Operating			Operating		Operating	in Dollar
			Revenue		Ratio (1)			Revenue		Ratio (1)	Amounts
	$		%		%	$		%		%	%

	(dollars in thousands)
Base revenue	$	297,221	90.5	%		$	225,964	90.2	%		31.5	%
Fuel surcharge revenue		31,315	9.5				24,546	9.8			27.6
Operating revenue		328,536	100.0				250,510	100.0			31.1

Total operating expenses		315,561	96.1		95.4		251,822	100.5		100.1	25.3
Operating income (loss)		12,975	3.9				(1,312)	(0.5)			—	(2)

Other expenses:
Interest expense		2,039	0.6				2,919	1.2			(30.1)
Other, net		110	0.0				110	0.0			—
Total other expenses, net		2,149	0.7				3,029	1.2			(29.1)	%
Income (loss) before income taxes		10,826	3.3				(4,341)	(1.7)			—	(2)
Income tax expense (benefit)		3,036	0.9				(859)	(0.3)			—	(2)

Consolidated net income (loss)	$	7,790	2.4	%		$	(3,482)	(1.4)	%		—	(2)

Adjusted operating ratio is a non-GAAP financial measure. See “Use of Non-GAAP Financial Information”, “Consolidated Reconciliations” and “Segment Reconciliations” below for the uses and limitations associated with adjusted operating ratio and other non-GAAP financial measures.

Percentage change not meaningful.

Use of Non-GAAP Financial Information

The Company uses the terms “adjusted operating ratio” and “adjusted operating income (loss)” throughout this MD&A. Adjusted operating ratio, adjusted earnings (loss) per diluted share, and adjusted operating income (loss), as defined here, are non-GAAP financial measures as defined by the SEC. Management uses adjusted operating ratio, adjusted earnings (loss) per diluted share, and adjusted operating income (loss) as supplements to the Company’s GAAP results in evaluating certain aspects of its business, as discussed below.

Adjusted operating ratio is calculated as operating expenses excluding severance costs included in salaries, wages and employee benefits, certain asset impairments, and amortization of acquisition related intangibles, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue. Adjusted earnings (loss) per diluted share is defined as earnings (loss) per diluted share plus the per share impact of severance costs included in salaries, wages and employee benefits, certain asset impairments, and amortization of acquisition related intangibles, plus or minus the per share tax impact of those adjustments using a statutory income tax rate. The per share impact of each item is determined by dividing it by the weighted average diluted shares outstanding. Adjusted operating income (loss) is defined as operating income (loss) excluding severance costs included in salaries, wages and employee benefits, certain asset impairments, and amortization of acquisition related intangibles.

The Company’s chief operating decision-maker focuses on adjusted operating ratio, adjusted earnings (loss) per diluted share and adjusted operating income (loss) as indicators of the Company’s performance from period to period.

Management believes removing the impact of the above described items from the Company’s operating results affords a more consistent basis for comparing results of operations. Management believes its presentation of adjusted operating ratio, adjusted earnings (loss) per diluted share and adjusted operating income (loss) is useful to investors and other users because it provides them the same information that we use internally for purposes of assessing our core operating performance.

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Adjusted operating ratio and adjusted earnings (loss) per diluted share are not substitutes for operating margin or any other measure derived solely from GAAP measures. There are limitations to using non-GAAP measures such as adjusted operating ratio, adjusted earnings (loss) per diluted share and adjusted operating income (loss). Although management believes that adjusted operating ratio, adjusted earnings (loss) per diluted share and adjusted operating income (loss) can make an evaluation of the Company’s operating performance more consistent because these measures remove items that, in management’s opinion, do not reflect its core operating performance, other companies in the transportation industry may define adjusted operating ratio, adjusted earnings (loss) per diluted share and adjusted operating income (loss) differently. As a result, it may be difficult to use adjusted operating ratio, adjusted earnings (loss) per diluted share and adjusted operating income (loss) or similarly named non-GAAP measures that other companies may use, to compare the performance of those companies to USA Truck’s performance.

Pursuant to the requirements of Regulation S-K, reconciliations of non-GAAP financial measures to GAAP financial measures have been provided in the tables below.

Consolidated Reconciliations


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020

	(in thousands)
Operating revenue	$	170,031		$	123,737		$	328,536		$	250,510
Less: Fuel surcharge revenue		(17,073)			(10,534)			(31,315)			(24,546)
Base revenue	$	152,958		$	113,203		$	297,221		$	225,964
Operating expense	$	163,102		$	122,737		$	315,561		$	251,822
Adjusted for:
Severance costs included in salaries, wages and employee benefits		—			(84)			(34)			(176)
Asset impairment - land		—			(137)			—			(137)
Amortization of acquisition related intangibles		(323)			(340)			(645)			(680)
Fuel surcharge revenue		(17,073)			(10,534)			(31,315)			(24,546)
Adjusted operating expense	$	145,706		$	111,642		$	283,567		$	226,283
Operating income (loss)	$	6,929		$	1,000		$	12,975		$	(1,312)
Adjusted operating income (loss)	$	7,252		$	1,561		$	13,654		$	(319)
Operating ratio		95.9	%		99.2	%		96.1	%		100.5	%
Adjusted operating ratio		95.3	%		98.6	%		95.4	%		100.1	%

Adjusted earnings (loss) per diluted share


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Earnings (loss) per diluted share	$	0.47	$	(0.11)	$	0.87	$	(0.40)
Adjusted for:
Severance costs included in salaries, wages and employee benefits		—		0.01		0.00		0.02
Asset impairment - land		—		0.02		—		0.02
Amortization of acquisition related intangibles		0.04		0.04		0.07		0.08
Income tax effect of adjustments		(0.01)		(0.02)		(0.02)		(0.03)
Adjusted earnings (loss) per diluted share	$	0.50	$	(0.06)	$	0.92	$	(0.31)

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Segment Reconciliations


	Three Months Ended						Six Months Ended
Trucking Segment	June 30,						June 30,
	2021			2020			2021			2020

	(in thousands)
Operating revenue	$	105,102		$	87,920		$	207,878		$	180,921
Intersegment activity		259			707			586			1,701
Operating revenue (before intersegment eliminations)		105,361			88,627			208,464			182,622
Less: fuel surcharge revenue (before intersegment eliminations)		(12,038)			(8,083)			(22,358)			(19,371)
Base revenue	$	93,323		$	80,544		$	186,106		$	163,251
Operating expense (before intersegment eliminations)	$	102,304		$	87,451		$	201,887		$	183,133
Adjusted for:
Severance costs included in salaries, wages and employee benefits		—			(80)			(32)			(172)
Asset impairment - land		—			(137)			—			(137)
Amortization of acquisition related intangibles		(323)			(340)			(645)			(680)
Fuel surcharge revenue		(12,038)			(8,083)			(22,358)			(19,371)
Adjusted operating expense	$	89,943		$	78,811		$	178,852		$	162,773
Operating income (loss)	$	3,057		$	1,176		$	6,577		$	(511)
Adjusted operating income	$	3,380		$	1,733		$	7,254		$	478
Operating ratio		97.1	%		98.7	%		96.8	%		100.3	%
Adjusted operating ratio		96.4	%		97.8	%		96.1	%		99.7	%


	Three Months Ended						Six Months Ended
USAT Logistics Segment	June 30,						June 30,
	2021			2020			2021			2020

	(in thousands)
Operating revenue	$	64,929		$	35,817		$	120,658		$	69,589
Intersegment activity		13,820			2,921			26,472			4,973
Operating revenue (before intersegment eliminations)		78,749			38,738			147,130			74,562
Less: fuel surcharge revenue (before intersegment eliminations)		(5,569)			(2,618)			(9,866)			(5,695)
Base revenue	$	73,180		$	36,120		$	137,264		$	68,867
Operating expense (before intersegment eliminations)	$	74,877		$	38,914		$	140,732		$	75,363
Adjusted for:
Severance costs included in salaries, wages and employee benefits		—			(4)			(2)			(4)
Fuel surcharge revenue		(5,569)			(2,618)			(9,866)			(5,695)
Adjusted operating expense	$	69,308		$	36,292		$	130,864		$	69,664
Operating income (loss)	$	3,872		$	(176)		$	6,398		$	(801)
Adjusted operating income (loss)	$	3,872		$	(172)		$	6,400		$	(797)
Operating ratio		95.1	%		100.5	%		95.7	%		101.1	%
Adjusted operating ratio		94.7	%		100.5	%		95.3	%		101.2	%

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Key Operating Statistics by Segment


	Three Months Ended						Six Months Ended
	June 30,						June 30,
Trucking:	2021			2020			2021			2020
Operating revenue (before intersegment eliminations) (in thousands)	$	105,361		$	88,627		$	208,464		$	182,622
Operating income (loss) (1) (in thousands)	$	3,057		$	1,176		$	6,577		$	(511)
Adjusted operating income (2) (in thousands)	$	3,380		$	1,733		$	7,254		$	478
Operating ratio (3)		97.1	%		98.7	%		96.8	%		100.3	%
Adjusted operating ratio (4)		96.4	%		97.8	%		96.1	%		99.7	%
Total miles (5) (in thousands)		42,700			45,961			84,848			91,680
Deadhead percentage (6)		11.2	%		13.1	%		11.4	%		13.2	%
Base revenue per loaded mile	$	2.461		$	2.017		$	2.475		$	2.051
Average number of seated tractors		1,787			1,943			1,784			1,907
Average number of available tractors (7)		1,922			2,063			1,907			2,018
Average number of in-service tractors (8)		1,949			2,075			1,936			2,039
Loaded miles per available tractor per week		1,518			1,489			1,525			1,517
Base revenue per available tractor per week	$	3,735		$	3,003		$	3,774		$	3,111
Average loaded miles per trip		509			501			515			498

USAT Logistics:
Operating revenue (before intersegment eliminations) (in thousands)	$	78,749		$	38,738		$	147,130		$	74,562
Operating income (loss) (1) (in thousands)	$	3,872		$	(176)		$	6,398		$	(801)
Adjusted operating income (loss) (2) (in thousands)	$	3,872		$	(172)		$	6,400		$	(797)
Gross margin (9) (in thousands)	$	9,733		$	4,712		$	17,958		$	8,681
Gross margin percentage (10)		12.4	%		12.2	%		12.2	%		11.6	%
Load count (in thousands)		37.1			33.4			70.2			60.6

Operating income (loss) is calculated by deducting operating expenses (before intersegment eliminations) from operating revenue (before intersegment eliminations).

Adjusted operating income (loss) is calculated by deducting operating expenses (before intersegment eliminations) excluding severance costs included in salaries, wages and employee benefits, certain asset impairments, and amortization of acquisition related intangibles, net of fuel surcharge revenue from operating revenue (before intersegment eliminations), net of fuel surcharge revenue.

Operating ratio is calculated as operating expenses (before intersegment eliminations) as a percentage of operating revenue (before intersegment eliminations).

Adjusted operating ratio is calculated as operating expenses (before intersegment eliminations) excluding severance costs included in salaries, wages and employee benefits, certain asset impairments, and amortization of acquisition related intangibles, net of fuel surcharge revenue, as a percentage of operating revenue (before intersegment eliminations) excluding fuel surcharge revenue.

Total miles include both loaded and empty miles.

Deadhead percentage is calculated by dividing empty miles by total miles.

Available tractors are a) all Company tractors that are available to be dispatched, including available unseated tractors, and b) all tractors in the independent contractor fleet.

In-service tractors include all of the tractors in the Company fleet (Company-operated tractors) and all the tractors in the independent contractor fleet.

Gross margin is calculated by deducting USAT Logistics purchased transportation expense from USAT Logistics operating revenue (before intersegment eliminations).

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10)Gross margin percentage is calculated as USAT Logistics gross margin divided by USAT Logistics operating revenue (before intersegment eliminations).

Results of Operations—Segment Review

Trucking operating revenue

During the three months ended June 30, 2021, Trucking operating revenue (before intersegment eliminations) increased 18.9% to $105.4 million, compared to $88.6 million for the same period in 2020. Trucking base revenue (before intersegment eliminations) increased 15.9% to $93.3 million compared to $80.5 million for the second quarter of 2020. The increase in operating revenue (before intersegment eliminations) resulted primarily from a 22.0% increase in base revenue per loaded mile and a 1.9% increase in loaded miles per available tractor per week.

During the six months ended June 30, 2021, Trucking operating revenue (before intersegment eliminations) increased 14.2% to $208.5 million, compared to $182.6 million for the same period in 2020. Trucking base revenue (before intersegment eliminations) increased 14.0% to $186.1 million compared to $163.3 million for the second quarter of 2020. The increase in operating revenue (before intersegment eliminations) resulted primarily from a 20.7% increase in base revenue per loaded mile and a 0.5% increase in loaded miles per available tractor per week.

Trucking operating income (loss)

For the three months ended June 30, 2021, Trucking reported operating income of $3.1 million compared to operating income of $1.2 million for the same period in 2020. This improvement was primarily driven by the 18.9% increase in operating revenue (before intersegment eliminations) discussed above.

For the six months ended June 30, 2021, Trucking reported an operating income of $6.6 million compared to an operating loss of $0.5 million for the same period in 2020. This change was largely driven by the 14.2% increase in operating revenue (before intersegment eliminations) discussed above.

USAT Logistics operating revenue

For the three months ended June 30, 2021, USAT Logistics operating revenue (before intersegment eliminations) increased 103.3% to $78.7 million compared to $38.7 million for the same period in 2020. The year-over-year increase in operating revenue (before intersegment eliminations) was the result of an 82.9% increase in revenue per load and a 11.2% increase in load volume.

For the six months ended June 30, 2021, USAT Logistics operating revenue (before intersegment eliminations) increased 97.3% to $147.1 million compared to $74.6 million for the same period in 2020. The year-over-year change in operating revenue (before intersegment eliminations) was the result of a 70.3% increase in revenue per load, and a 15.8% increase in load volume.

USAT Logistics operating income (loss)

USAT Logistics reported operating income of $3.9 million for the three months ended June 30, 2021, an increase of $4.0 million, compared to an operating loss of $0.2 million for the comparable quarter in 2020. This increase was driven largely by 103.3% increase in operating revenue (before intersegment eliminations) and a 20 basis point improvement in gross margin.

For the six months ended June 30, 2021, USAT Logistics reported operating income of $6.4 million, an increase of $7.2 million, compared to an operating loss of $0.8 million for the comparable period in 2020. This increase was driven primarily by an 97.3% increase in operating revenue (before intersegment eliminations) and a 60 basis point improvement in gross margin.

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Consolidated Operating Expenses

The following table summarizes the consolidated operating expenses and percentage of consolidated operating revenue, consolidated base revenue and the percentage increase or decrease in the dollar amounts of those items compared to the prior year.


	Three Months Ended June 30,
	2021						2020						% change
					Adjusted						Adjusted
					Operating						Operating		2021 to
	Operating Revenue				Ratio (1)		Operating Revenue				Ratio (1)		2020
	$		%		%		$		%		%		%

Operating Expenses:	(dollars in thousands)
Salaries, wages and employee benefits	$	36,488	21.4	%	23.9	%	$	33,636	27.2	%	29.6	% (1)	8.5	%
Fuel and fuel taxes		12,414	7.3		(3.0)	(1)(2)		8,082	6.5		(2.2)	(1)(2)	53.6
Depreciation and amortization		9,163	5.4		5.8	(1)		10,034	8.1		8.6	(1)	(8.7)
Insurance and claims		5,181	3.0		3.4			4,009	3.2		3.5		29.2
Equipment rent		2,048	1.2		1.3			1,880	1.5		1.7		8.9
Operations and maintenance		8,783	5.2		5.7			9,062	7.4		8.0		(3.1)
Purchased transportation		82,938	48.8		54.2			49,276	39.8		43.5		68.3
Operating taxes and licenses		1,323	0.8		0.9			1,349	1.1		1.2		(1.9)
Communications and utilities		796	0.5		0.5			906	0.7		0.8		(12.1)
(Gain) loss on disposal of assets, net		(140)	(0.1)		(0.1)			(16)	0.0		0.0		—	(3)
Asset impairments		—	—		—			588	0.5		0.4	(1)	—	(3)
Other		4,108	2.4		2.7			3,931	3.2		3.5		4.5
Total operating expenses	$	163,102	95.9	%	95.3	%	$	122,737	99.2	%	98.6	%	32.9	%


	Six Months Ended June 30,												%
	2021						2020						change
					Adjusted						Adjusted
					Operating						Operating		2021 to
	Operating Revenue				Ratio (1)		Operating Revenue				Ratio (1)		2020
	$		%		%		$		%		%		%

Operating Expenses:	(dollars in thousands)
Salaries, wages and employee benefits	$	73,043	22.2	%	24.6	% (1)	$	69,481	27.7	%	30.7	% (1)	5.1	%
Fuel and fuel taxes		23,858	7.3		(2.5)	(1)(2)		19,945	8.0		(2.0)	(1)(2)	19.6
Depreciation and amortization		18,733	5.7		6.1	(1)		20,045	8.0		8.6	(1)	(6.5)
Insurance and claims		10,990	3.4		3.7			9,866	3.9		4.4		11.4
Equipment rent		3,997	1.2		1.4			3,731	1.5		1.7		7.1
Operations and maintenance		15,849	4.8		5.3			18,399	7.3		8.0		(13.9)
Purchased transportation		157,041	47.8		52.8			97,090	38.8		43.0		61.7
Operating taxes and licenses		2,595	0.8		0.9			2,508	1.0		1.1		3.5
Communications and utilities		1,600	0.5		0.5			1,719	0.7		0.7		(6.9)
Loss (gain) on disposal of assets, net		(317)	(0.1)		(0.1)			22	0.0		—		—	(3)
Asset impairments		—	—		—			588	0.2		0.2	(1)	—	(3)
Other		8,172	2.5		2.7			8,428	3.4		3.7		(3.0)
Total operating expenses	$	315,561	96.1	%	95.4	%	$	251,822	100.5	%	100.1	%	25.3	%

Adjusted operating ratio is calculated as the applicable operating expense excluding severance costs included in salaries, wages, and employee benefits, certain asset impairments, and amortization of acquisition related intangibles, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue.

Calculated as fuel and fuel taxes, net of fuel surcharge revenue.

Percentage change not meaningful.

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Salaries, wages and employee benefits

Salaries, wages and employee benefits consist primarily of compensation for all employees and are primarily affected by the total number of miles driven by Company drivers, the rate per mile paid to Company drivers, employee benefits (including, but not limited to, healthcare and workers’ compensation), and compensation and benefits paid to non-driver employees.

Salaries, wages and employee benefits expense increased for the three and six months ended June 30, 2021, when compared to the same periods in 2020, primarily due to increases in performance-based compensation.

During the second quarter of 2021 the Company announced driver pay increases; however, management believes the market for drivers will remain tight, and as such, expects driver wages to continue to increase in order to attract and retain sufficient numbers of qualified drivers to operate the Company’s fleet. This expense item will also be affected by the percentage of Trucking miles operated by independent contractors instead of Company employed drivers and the percentage of revenue generated by USAT Logistics, for which payments are reflected in purchased transportation.

Fuel and fuel taxes

Fuel and fuel taxes consist primarily of diesel fuel expense for Company-owned tractors and fuel taxes. The primary factors affecting the Company’s fuel expense are the cost of diesel fuel, the fuel economy of Company equipment and the number of miles driven by Company drivers. The increase in fuel and fuel taxes for the three and six months ended June 30, 2021 is primarily due to increases in the price per gallon of diesel fuel compared to the same periods in 2020. For the three and six months ended June 30, 2021, the average diesel fuel prices per gallon as reported by the DOE, increased 32.1% and 14.6%, respectively, when compared to the same periods in 2020. This increase was offset by a 12.1% and 12.7% decrease in total miles driven by company drivers for the three and six months ended June 30, 2021, respectively.

The Company continues to pursue fuel efficiency initiatives, acquiring newer, more fuel-efficient revenue equipment and implementing focused driver training programs, which have contributed to improvements in our fuel expense on a cost per Company tractor mile basis. The Company expects to continue managing its idle time and truck speeds and partnering with customers to align fuel surcharge programs to recover a fair portion of rising fuel costs. Looking ahead, the Company’s net fuel expense is expected to fluctuate as a percentage of revenue based on factors such as diesel fuel prices, percentage recovered from fuel surcharge programs, empty mile percentage, the percentage of revenue generated from independent contractors and the success of fuel efficiency initiatives.

Depreciation and amortization and equipment rent

Depreciation and amortization of property and equipment consists primarily of depreciation for Company-owned tractors and trailers, amortization of revenue equipment financed with finance leases, and amortization of intangible assets. The primary factors affecting this expense include the number and age of Company tractors and trailers, the acquisition cost of new equipment and the salvage values and useful lives assigned to the equipment. Equipment rent expenses are related to revenue equipment under operating leases. These largely fixed costs fluctuate as a percentage of base revenue primarily with increases and decreases in average base revenue per tractor and the percentage of base revenue contributed by Trucking versus USAT Logistics. For the three and six months ended June 30, 2021, equipment rent expense increased when compared to the 2020 periods due to an increase in the number of tractors in the Company’s fleet acquired under operating leases.

Depreciation and amortization expense decreased for the three and six months ended June 30, 2021, when compared to the same periods in 2020 due to a decrease in fleet size and more tractors being acquired through operating leases.

The Company intends to continue its focus on improving asset utilization, matching customer demand, growing its independent contractor fleet and strengthening load profitability initiatives. Further, the acquisition costs of new revenue equipment could increase due to the inclusion of improved safety and fuel efficiency features.

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Insurance and claims

Insurance and claims expense consists of insurance premiums and the accruals the Company makes for estimated payments and expenses for claims for third-party bodily injury, property damage, cargo damage and other casualty events. The primary factors affecting the Company’s insurance and claims expense are the number of miles driven by its Company drivers and independent contractors, the frequency and severity of accidents, trends in the development factors used in the Company’s actuarial accrual, developments in prior-year claims and insurance premiums and self-insured amounts. For the three and six months ended June 30, 2021, insurance and claims expense increased due to less favorable claim experience compared to the prior year periods.

The Company expects insurance and claims expense to continue to be volatile over the long-term. Recently, the trucking industry has experienced a decline in the number of carriers and underwriters that write insurance policies or that are willing to provide insurance for trucking companies. These factors caused the Company’s insurance premiums to increase during the October 2020 renewal. The Company also opted to increase its self-insured retention level from $1 million to $2 million and decrease aggregate coverage limits to offset the increased premium costs during the current premium year. As a result, the Company looked at alternatives to traditional insurance programs, and formed a captive insurance company, SRRG, in an effort to mitigate a portion of the increased insurance costs.

Operations and maintenance

Operations and maintenance expense consists primarily of vehicle repairs and maintenance, general and administrative expenses and other costs. Operating and maintenance expenses are primarily affected by the age of the Company-operated tractors and trailers, the number of miles driven in a period and, to a lesser extent, by efficiency measures in the Company’s maintenance facilities. Operations and maintenance expense decreased for both the three and six months ended June 30, 2021, compared to the same periods in 2020. While the decrease in the three month period was marginal, the decrease for six months was primarily due to lower tolls and maintenance expenses. The decrease in maintenance expense was primarily due to decreases in the cost of maintaining our fleet due to such internal initiatives as decreasing the average age of Company-owned tractors, limiting outside repairs and adding an additional maintenance terminal in Waxahachie, Texas.

Purchased transportation

Purchased transportation consists of the payments the Company makes to independent contractors, railroads and third-party carriers that haul loads brokered to them by the Company, including fuel surcharge reimbursement paid to such parties. For the three and six months ended June 30, 2021, purchased transportation expense increased significantly when compared to the 2020 periods, primarily due to an increase in the volume of brokered loads through our USAT Logistics segment and the use of independent contractors by our Trucking segment.

The Company is endeavoring to grow its independent contractor fleet as a percentage of its total fleet and growing USAT Logistics, which if successful, could further increase purchased transportation expense, particularly if the Company needs to pay independent contractors more to stay with the Company in light of regulatory changes. In periods of increasing independent contractor capacity, increases in driver wages are shifted from employee driver wages and related expenses to the “Purchased transportation” line item, net of their fuel expense, maintenance and capital expenditures.

Interest expense, net

For the three and six months ended June 30, 2021, interest expense, net decreased primarily due to the decreased interest rate on our outstanding borrowing and decreases in the outstanding borrowings. See Note 6 to the condensed consolidated financial statements for further discussion of the Company’s Credit Facility.

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Income tax expense (benefit)

During the the three months ended June 30, 2021 and 2020, the Company’s effective tax rate was 28.5% and 211.4%, respectively. During the six months ended June 30, 2021 and 2020, the Company’s effective tax rate was 28.0% and 19.8%, 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.

Seasonality

In the trucking industry, revenue typically follows a seasonal pattern for various commodities and customer businesses. Peak freight demand has historically occurred in the months of September, October and November, however no assurance can be provided that our current or future year experience will reflect this. After the December holiday season and during the remaining winter months, freight volumes are typically lower as many customers reduce shipment levels. Operating expenses have historically been higher in the winter months due primarily to decreased fuel efficiency, increased cold weather-related maintenance costs of revenue equipment and increased insurance and claims costs attributed to adverse winter driving conditions. Revenue can also be impacted by weather, holidays and the number of business days that occur during a given period, as revenue is directly related to the available working days of shippers.

Inflation

Most of the Company’s operating expenses are inflation sensitive, and as such, are not always able to be offset through increases in revenue per mile and cost control efforts. The effect of inflation-driven cost increases on overall operating costs is not expected to be greater for the Company than for its competitors.

Fuel Availability and Cost

The trucking industry is dependent upon the availability of fuel. In the past, fuel shortages or increases in fuel taxes or fuel costs have adversely affected profitability and may continue to do so. USA Truck has not experienced difficulty in maintaining necessary fuel supplies, and in the past has generally been able to partially offset increases in fuel costs and fuel taxes through increased freight rates and through a fuel surcharge that increases incrementally as the average price of fuel increases above an agreed upon baseline price per gallon. Typically, the Company is not able to fully recover increases in fuel prices through freight rate increases and fuel surcharges, primarily because those items are not available with respect to empty and out-of-route miles and idling time, for which the Company generally does not receive compensation from customers. Additionally, most fuel surcharges are based on the average fuel price as published by the DOE for the week prior to the shipment, meaning the Company typically bills customers in the current week based on the previous week’s applicable index. Accordingly, in times of increasing fuel prices, the Company does not recover as much as it is currently paying for fuel. In periods of declining prices, for a short period of time the inverse is true. Overall, for the three and six months ended June 30, 2021, the average diesel fuel prices per gallon as reported by the DOE, increased 32.1% and 14.6%, respectively, when compared to the same periods in 2020.

As of June 30, 2021, the Company did not have any long-term fuel purchase contracts, and has not entered into any fuel hedging arrangements.

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Equity

As of June 30, 2021, the Company had total stockholders’ equity of $93.2 million and total debt and financing lease liabilities of $138.0 million, resulting in a total debt, less cash (excluding restricted cash), to total capitalization ratio of 59.3% compared to 64.5% as of December 31, 2020.

Purchases and Commitments

The Company routinely monitors equipment acquisition needs and adjusts purchase schedules from time to time based on analysis of factors such as new equipment prices, the condition of the used equipment market, demand for freight services, prevailing interest rates, technological improvements, fuel efficiency, equipment durability, equipment specifications, operating performance and the availability of qualified drivers.

Liquidity and Capital Resources

USA Truck’s business has required, and will continue to require, significant capital investments. In the Company’s Trucking segment, where capital investments are the most substantial, the primary investments are in revenue equipment and to a lesser extent, in technology and working capital. In the Company’s USAT Logistics segment, the primary investments are in technology and working capital. USA Truck’s primary sources of liquidity have been funds provided by operations, borrowings under the Company’s Credit Facility, sales of used revenue equipment, and the use of finance and operating leases. Based on expected financial conditions, net capital expenditures, forecasted operations and related net cash flows and other sources of financing, management believes the Company’s sources of liquidity to be adequate to meet current and projected needs for the foreseeable future.

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% 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% of the lenders’ total commitments.

As of June 30, 2021, the Company had $7.9 million in letters of credit outstanding and had $86.6 million available to borrow under the Credit Facility, taking into account borrowing base availability. Fluctuations in the outstanding balance and related availability under the Credit Facility are driven primarily by cash flows from operations, bi-annual appraisals of revenue equipment, the timing and nature of property and equipment additions that are not funded through other sources of financing, and the nature, timing and receipt of proceeds from disposals of property and equipment.

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Cash Flows

The following table summarizes the sources (uses) of cash for each of the periods presented:


	Cash Flow	Six Months Ended June 30,
	Category	2021		2020

Sources of cash:		(in thousands)
Operating activities - net	Operating	$	15,692	$	14,406
Proceeds from sale of property and equipment	Investing		6,141		1,459
Borrowings under long-term debt	Financing		28,760		33,200

Uses of cash:
Capital expenditures	Investing		(1,066)		(9,809)
Payments of long-term debt	Financing		(39,156)		(27,492)
Principal payments on financing lease obligations	Financing		(5,888)		(11,366)
Net change in bank drafts payable	Financing		(2,785)		(346)

Other uses - net	Financing		(9)		(57)
Increase (decrease) in cash and restricted cash		$	1,689	$	(5)

Operating activities

Our net cash provided by operating activities in the six months ended June 30, 2021 increased from the comparable 2020 period primarily due to an increase in net income and an increase to accounts payable and accrued expenses, offset by an increase in accounts and other receivables.

Debt and Lease Obligations

See Notes 6 and 7 to the condensed consolidated financial statements for further discussion of the Company’s Credit Facility, insurance financing, and lease obligations.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time its financial statements are prepared. Actual results could differ from those estimates, and such differences could be material.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

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ITEM 4.

CONTROLS AND PROCEDURES

The Company has established disclosure controls and procedures that are designed to ensure that relevant material information, including information pertaining to any consolidated subsidiaries, is made known to the officers who certify the financial reports and to other members of senior management and the board of directors. Management, with the participation of the Principal Executive Officer (the “PEO”) and the Principal Financial Officer (the “PFO”) conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the PEO and PFO have concluded that as of June 30, 2021 the Company’s disclosure controls and procedures were effective at a reasonable assurance level to ensure that the information required to be disclosed in the reports filed or submitted by the Company under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including the PEO and PFO, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management has confidence in the Company’s internal controls and procedures. Nevertheless, management, including the PEO and PFO, understand that the Company’s disclosure controls and procedures and its internal controls cannot prevent all errors or intentional fraud. An internal controls system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal controls system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all internal controls systems, no evaluation of controls can provide absolute assurance that all controls issues and instances of fraud, if any, have been, or will be, detected.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

The Company is party to routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. The Company maintains liability insurance to cover liabilities in excess of certain self-insured retention levels. Though management believes these claims to be immaterial to the Company’s long-term financial position, adverse results of one or more of these claims could have a material adverse effect on the Company’s financial position, results of operations or cash flows in any given reporting period.

ITEM 1A.

RISK FACTORS

While the Company attempts to identify, manage and mitigate risks and uncertainties associated with its business, some level of risk and uncertainty will always be present. The section entitled “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 describes some of the risks and uncertainties associated with the Company’s business. These risks and uncertainties have the potential to materially affect the Company’s business, financial condition, results of operations, cash flows, projected results and future prospects.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

None.

ITEM 5.

OTHER INFORMATION

None.

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ITEM 6.

EXHIBITS


Exhibit Number		Exhibit
3.1		Restated and Amended Certificate of Incorporation of the Company as currently in effect, including all Certificates of Amendment thereto (incorporated by reference to Exhibit 3.1 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2013).
3.2		Bylaws of USA Truck Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on March 24, 2017).
4.1		Specimen certificate evidencing shares of the common stock, $.01 par value, of USA Truck Inc. (incorporated by reference to Exhibit 4.1 of the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2017).
31.1	#	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	#	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	##	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	##	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline	XBRL Taxonomy Extension Schema Document.
101.CAL	Inline	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline	XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover page Interactive Data File formatted as Inline XBRL (contained in Exhibit 101)

References:



#		Filed herewith.
##		Furnished herewith.

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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 thereunto duly authorized.


			USA Truck Inc.


Date:	July 30, 2021	By:	/s/ James D. Reed
			(Signature)
			James D. Reed
			President and Chief Executive Officer


Date:	July 30, 2021	By:	/s/ Zachary B. King
			(Signature)
			Zachary B. King
			Senior Vice President and Chief Financial Officer