USA TRUCK INC (Form: 10-Q, Received: 07/27/2018 16:09:39)

USA TRUCK , INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington , D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended

June 30 , 201 8

[ ]	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)

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, 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. (Check one):

Large accelerated filer [ ]

Accelerated filer [X]

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 20, 2018, was 8,312,658.

Table of Contents

		USA TRUCK , INC.
		TABLE OF CONTENTS

Item No.	Caption	Page
	PART I – FINANCIAL INFORMATION
1.	Financial Statements
	Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2018 and December 31, 2017	2
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) –Three and six months ended June 30, 2018 and June 30, 2017	3
	Condensed Consolidated Statement of Stockholders’ Equity (unaudited) – Six months ended June 30, 2018	4
	Condensed Consolidated Statements of Cash Flows (unaudited) – Six months ended June 30, 2018 and June 30, 2017	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	26
4.	Controls and Procedures	26
	PART II – OTHER INFORMATION
1.	Legal Proceedings	27
1A.	Risk Factors	27
2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
3.	Defaults Upon Senior Securities	27
4.	Mine Safety Disclosures	27
5.	Other Information	27
6.	Exhibits	28
	Signatures	29

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

USA TRUCK , INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share data)

	June 30 ,			December 31,
	201 8			2017
Assets
Current assets:
Cash	$	29		$	71
Accounts receivable, net of allowance for doubtful accounts of $643 and $639, respectively		61,150			55,138
Other receivables		9,497			2,787
Inventories		415			458
Assets held for sale		2,451			112
Prepaid expenses and other current assets		5,256			6,025
Total current assets		78,798			64,591
Property and equipment:
Land and structures		31,847			31,452
Revenue equipment		227,431			252,484
Service, office and other equipment		26,522			26,209
Property and equipment, at cost		285,800			310,145
Accumulated depreciation and amortization		(115,780	)		(122,329	)
Property and equipment, net		170,020			187,816
Other assets		1,332			1,448
Total assets	$	250,150		$	253,855
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	32,240		$	24,332
Current portion of insurance and claims accruals		17,995			13,552
Accrued expenses		11,498			9,108
Current maturities of capital leases		8,014			12,929
Insurance premium financing		1,330			4,115
Total current liabilities		71,077			64,036
Deferred gain		1,488			480
Long-term debt		54,950			61,225
Capital leases, less current maturities		25,994			29,216
Deferred income taxes		18,274			21,136
Insurance and claims accruals, less current portion		8,242			11,274
Total liabilities		180,025			187,367
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 12,015,174 shares, and 12,142,391 shares, respectively		120			121
Additional paid-in capital		65,738			68,667
Retained earnings		69,039			65,460
Less treasury stock, at cost (3,702,444 shares, and 3,853,064 shares, respectively)		(64,772	)		(67,760	)
Total stockholders’ equity		70,125			66,488
Total liabilities and stockholders’ equity	$	250,150		$	253,855

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

201 8

2017

201 8

2017

Revenue

Operating revenue

135,381

107,358

260,394

209,028

Operating expenses

Salaries, wages and employee benefits

31,645

29,221

63,882

59,860

Fuel and fuel taxes

13,984

10,479

27,463

21,253

Depreciation and amortization

7,477

6,879

14,657

14,523

Insurance and claims

5,341

5,561

10,943

13,893

Equipment rent

2,151

2,633

4,869

4,747

Operations and maintenance

8,913

7,950

16,874

14,521

Purchased transportation

55,817

41,005

104,855

78,408

Operating taxes and licenses

1,262

1,024

1,764

1,974

Communications and utilities

677

598

1,390

1,264

Gain on disposal of assets, net

(395

)

(77

)

(564

)

(337

)

Restructuring, impairment and other costs (reversal)

(639

)

Other

4,198

5,051

8,197

8,287

Total operating expenses

131,070

110,324

253,691

218,393

Operating income (loss)

4,311

(2,966

)

6,703

(9,365

)

Other expenses

Interest expense, net

833

950

1,651

1,953

Other, net

113

128

233

226

Total other expenses, net

946

1,078

1,884

2,179

Income (loss) before income taxes

3,365

(4,044

)

4,819

(11,544

)

Income tax expense (benefit)

821

(1,198

)

1,240

(3,808

)

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

2,544

(2,846

)

3,579

(7,736

)

Net earnings (loss) per share

Average shares outstanding (basic)

8,205

8,028

8,141

8,028

Basic earnings (loss) per share

0.31

(0.35

)

0.44

(0.96

)

Average shares outstanding (diluted)

8,227

8,028

8,167

8,028

Diluted earnings (loss) per share

0.31

(0.35

)

0.44

(0.96

)

See accompanying notes to condensed consolidated financial statements .

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USA TRUCK , INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

	Common
	Stock						Additional
				Par			Paid-in			Retained		Treasury
	Shares			Value			Capital			Earnings		Stock			Total
Balance at December 31, 2017		12,142		$	121		$	68,667		$	65,460	$	(67,760	)	$	66,488
Issuance of treasury stock		--			--			(2,988	)		--		2,988			--
Stock-based compensation		--			--			168			--		--			168
Restricted stock award grant		--			--			--			--		--			--
Forfeited restricted stock		(125	)		(1	)		1			--		--			--
Net share settlement related to restricted stock vesting		(2	)		--			(110	)		--		--			(110	)
Net income		--			--			--			3,579		--			3,579
Balance at June 30, 2018		12,015		$	120		$	65,738		$	69,039	$	(64,772	)	$	70,125

See accompanying notes to condensed consolidated financial statements.

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	Six Months Ended
	June 30,
	2018			2017
Operating activities:
Net income (loss)	$	3,579		$	(7,736	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		14,657			14,523
Deferred income tax, net		(2,862	)		(6,196	)
Share-based compensation		168			152
Gain on disposal of assets, net		(564	)		(337	)
Reversal of previously recorded restructuring, impairment and other costs		(639	)		--
Other		(324	)		(70	)
Changes in operating assets and liabilities:
Accounts receivable		(7,398	)		944
Inventories and prepaid expenses		813			1,660
Accounts payable and accrued liabilities		9,472			3,328
Insurance and claims accruals		1,410			3,075
Other long-term assets and liabilities		116			119
Net cash provided by operating activities		18,428			9,462

Investing activities:
Capital expenditures		(4,288	)		(3,468	)
Proceeds from sale of property and equipment		2,766			9,856
Proceeds from operating sale leaseback		--			10,980
Net cash (used in) provided by investing activities		(1,522	)		17,368

Financing activities:
Borrowings under long-term debt		17,478			11,855
Payments on long-term debt		(26,538	)		(30,996	)
Payments on capitalized lease obligations		(8,137	)		(5,467	)
Net change in bank drafts payable		359			(2,136	)
Net payments for tax withholdings for vested stock-based awards		(110	)		15
Issuance of treasury stock		--			(57	)
Net cash used in financing activities		(16,948	)		(26,786	)

(Decrease) increase in cash		(42	)		44
Cash:
Beginning of period		71			122
End of period	$	29		$	166

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	1,681		$	1,936
Income taxes		2,413			124

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2018

NOTE 1 – BASIS OF PRESENTATION

In the opinion of the management of USA Truck, Inc., the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements required by GAAP have been condensed or omitted. All normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ended December 31, 2018. These financial statements should be read in conjunction with the financial statements, and footnotes thereto, included in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2017.

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

NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014 - 09, Revenue from Contracts with Customers (“ASU 2014 - 09” ), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014 - 09 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014 - 09 defines a five -step process to implement this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. Transportation revenue within our USAT Logistics segment under the new standard changed from recognition of revenue at completion to recognizing revenue proportionately as the transportation services are performed. This change did not materially impact our operations or IT infrastructure. In our Trucking segment, where revenue is recognized as services are provided, revenue recognition remained the same. The Company adopted ASU 2014 - 09 effective January 1, 2018 using the modified retrospective method. The effect of adoption was immaterial to retained earnings at January 1, 2018 and to net income for the three and six month periods ended June 30, 2018.

In February 2016, the FASB issued ASU No. 2016 - 02, Leases, which requires lessees to recognize a right-to-use asset and a lease obligation for all leases. Lessees are permitted to make an accounting policy election to not recognize an asset and liability for leases with a term of twelve months or less. Lessor accounting under the new standard is substantially unchanged. Additional qualitative and quantitative disclosures, including significant judgments made by management, will be required. The new standard, which will become effective for the Company beginning with the first quarter of 2019, requires a modified retrospective transition approach and includes a number of practical expedients. The Company expects the adoption of this standard to have a material impact on our consolidated balance sheets, but not our statement of operations. See Note 9 for further discussion of our lease types and positions.

NOTE 3 – REVENUE RECOGNITION

Revenue is measured based upon consideration specified in a contract with a customer. The Company recognizes revenue when contractual performance obligations are satisfied by transferring the benefit of the service to our customer. The benefit is transferred to the customer as the service is being provided and revenue is recognized accordingly via time based metrics. The Company is entitled to receive payment as it satisfies performance obligations with customers. Our business consists of two reportable segments, Trucking and USAT Logistics. For more detailed information about our reportable segments, see Note 4.

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Disaggregation of revenue

The Company’s revenue types are line haul, fuel surcharge and accessorial. Line haul revenue represents the majority of our revenue and consists of fees earned for freight transportation, excluding fuel surcharge. Fuel surcharge revenue consists of additional fees earned by the Company in connection with the performance of line haul services to partially or completely offset the cost of fuel. Accessorial revenue consists of ancillary services provided by the Company, including but not limited to, stop-off charges, loading and unloading charges, tractor or trailer detention charges, expedited charges, repositioning charges, etc. These accessorial charges are recognized as revenue throughout the service provided. The following tables set forth revenue disaggregated by revenue type (in thousands):

Three Months Ended

June 30,

Revenue type

2018

2017

Trucking

USAT

Logistics

Total

Trucking

USAT

Logistics

Total

Freight

72,925

44,624

117,549

61,667

32,742

94,409

Fuel surcharge

12,123

4,151

16,274

8,828

2,492

11,320

Accessorial

521

1,037

1,558

1,050

579

1,629

Total

85,569

49,812

135,381

71,545

35,813

107,358

Six Months Ended

June 30,

Revenue type

2018

2017

Trucking

USAT

Logistics

Total

Trucking

USAT

Logistics

Total

Freight

139,729

85,102

224,831

121,516

60,844

182,360

Fuel surcharge

23,298

7,710

31,008

18,015

5,147

23,162

Accessorial

1,275

3,280

4,555

2,294

1,212

3,506

Total

164,302

96,092

260,394

141,825

67,203

209,028

NOTE 4 – SEGMENT REPORTING

The Company’s two reportable segments are Trucking and USAT Logistics.

Trucking . Trucking is comprised of one -way truckload and dedicated freight motor carrier services. Truckload provides one -way motor carrier services as a common and contract carrier, 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. USA Truck has provided truckload motor carrier services since its inception, and continues to derive the largest portion of its gross revenue from these services.

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 and provide services that complement the Company’s Trucking operations. The Company provides these services primarily 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 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 operations require the use of Company-owned assets, they are obtained from the Company’s Trucking segment on an as-needed basis. 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.

In determining its reportable segments, the Company’s management focuses on financial information, such as operating revenue, operating expense categories, operating ratios and operating income, as well as on key operating statistics, to make operating decisions.

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A summary of operating revenue by segment is as follows (in thousands):

Three Months Ended

Six Months Ended

June 30,

Operating revenue

201 8

2017

201 8

2017

Trucking revenue (1)

85,685

71,731

164,531

142,202

Trucking intersegment eliminations

(116

)

(186

)

(229

)

(377

)

Trucking operating revenue

85,569

71,545

164,302

141,825

USAT Logistics revenue

50,616

36,878

97,391

69,528

USAT Logistics intersegment eliminations

(804

)

(1,065

)

(1,299

)

(2,325

)

USAT Logistics operating revenue

49,812

35,813

96,092

67,203

Total operating revenue

135,381

107,358

260,394

209,028

( 1 )

Includes foreign revenue of $11.0 million and $20.9 million for the three and six months ended June 30, 2018, respectively, and $9.1 million and $17.9 million for the three and six months ended June 30, 2017, respectively. All foreign revenue is collected in U.S. dollars.

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

Three Months Ended

Six Months Ended

June 30,

Operating income (loss)

201 8

2017

201 8

2017

Trucking

2,153

(4,843

)

1,689

(11,971

)

USAT Logistics

2,158

1,877

5,014

2,606

Total operating income (loss)

4,311

(2,966

)

6,703

(9,365

)

A summary of depreciation and amortization by segment is as follows (in thousands):

Three Months Ended

Six Months Ended

June 30,

Depreciation and amortization

201 8

2017

201 8

2017

Trucking

7,299

6,759

14,325

14,323

USAT Logistics

178

120

332

200

Total depreciation and amortization

7,477

6,879

14,657

14,523

NOTE 5 – EQUITY COMPENSATION AND EMPLOYEE BENEFIT PLANS

The Company adopted the 2014 Omnibus Incentive Plan (the “Incentive Plan”) in May 2014. The Incentive Plan replaced the 2004 Equity Incentive Plan and provided for the granting of up to 500,000 shares of common stock through equity-based awards to directors, officers and other key employees and consultants. The First Amendment to the Incentive Plan was adopted in May 2017, which, among other things, increased the number of shares of common stock available for issuance under the Incentive Plan by an additional 500,000 shares. As of June 30, 2018, 577,028 shares remain available under the Incentive Plan for the issuance of future equity-based compensation awards.

NOTE 6 – ACCRUED EXPENSES

Accrued expenses consisted of the following (in thousands):

	June 30 ,		December 31,
Accrued expenses	2018		2017
Salaries, wages and employee benefits	$	5,569	$	3,604
Federal and state tax accruals		4,995		3,587
Restructuring, impairment and other costs		--		770
Other (1)		934		1,147
Total accrued expenses	$	11,498	$	9,108

( 1 )

As of June 30, 2018 and December 31, 2017, no single item included within other accrued expenses exceeded 5.0% of our total current liabilities.

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NOTE 7 – INSURANCE PREMIUM FINANCING

In October 2017, the Company executed an unsecured note payable for $4.1 million to a third -party financing company for a portion of the Company’s annual insurance premiums. The note, which is payable in installments of principal and interest of approximately $1.4 million, bears interest at 3.0% and matures in October 2018. The balance of the note payable as of June 30, 2018 was $1.3 million.

NOTE 8 – LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):

	June 30 ,		December 31,
	2018		2017
Revolving credit agreement	$	54,950	$	61,225

In February 2015, the Company entered into a new senior secured revolving credit facility (the “Credit Facility”) with a group of lenders and Bank of America, N.A., as agent (“Agent”).

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 $80.0 million, exercisable in increments of $20.0 million. The Credit Facility is a five -year facility scheduled to terminate on February 5, 2020. 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 between 0.25% and 1.00% that is adjusted quarterly 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 between 1.25% and 2.00% that is adjusted two days prior to each 30 -day interest period for a term equivalent to such period 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 $20.0 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% of eligible investment grade accounts receivable (reduced to 85% in certain situations), plus (ii) 85% of eligible non-investment grade accounts receivable, plus (iii) the lesser of (a) 85% of eligible unbilled accounts receivable and (b) $10.0 million, plus (iv) the product of 85% multiplied by the net orderly liquidation value percentage applied to the net book value of eligible revenue equipment, plus (v) 85% multiplied by the net book value of otherwise eligible newly acquired revenue equipment that has not yet been subject to an appraisal. The borrowing base is reduced by an availability reserve, including reserves based on dilution and certain other customary reserves.

The Credit Facility contains a single financial covenant, which requires a consolidated fixed charge coverage ratio of at least 1.0 to 1.0 that is triggered in the event excess availability under the Credit Facility falls below 10% 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. Management believes the Company’s excess availability will not fall below 20%, or $34.0 million, and expects the Company to remain in compliance with all debt covenants during the next twelve months.

The Company had borrowings of $0.7 million under the Swingline as of June 30, 2018. The average interest rate including all borrowings made under the Credit Facility as of June 30, 2018, was 3.62%. As debt is repriced on a monthly basis, the borrowings under the Credit Facility approximate fair value. As of June 30, 2018, the Company had outstanding $5.4 million in letters of credit and had approximately $68.2 million available to borrow under the Credit Facility.

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Note 9 – LEASES AND Commitments

As of June 30, 2018, the future minimum payments, including interest, under capitalized leases with initial terms of one year or more and future rentals under operating leases for certain facilities, office equipment and revenue equipment with initial terms of one year or more were as follows for the years indicated (in thousands):

	2018		2019		2020		2021		2022		Thereafter
Capital leases, including interest component	$	5,228	$	12,317	$	16,050	$	327	$	327	$	1,578
Operating leases		5,894		8,135		4,792		729		235		371

CAPITAL LEASES

The Company leases certain equipment under capital leases with terms ranging from 15 to 60 months. Balances related to these capitalized leases are included in property and equipment in the accompanying condensed consolidated balance sheets and are set forth in the table below for the periods indicated (in thousands):

Capitalized Costs

Accumulated Amortization

Net Book Value

June 30 , 2018

51,429

16,308

35,121

December 31, 2017

66,785

23,254

43,531

The Company has capitalized lease obligations relating to revenue equipment as of June 30, 2018 of $34.0 million, of which $8.0 million represents the current portion. Such leases have various termination dates extending through November 2024 and contain renewal or fixed price purchase options. The effective interest rates on the leases range from nil to 3.11% as of June 30, 2018. The lease agreements require payment of property taxes, maintenance and operating and non-operating expenses. Amortization of capital leases was $1.2 million and $2.7 million for the three and six months ended June 30, 2018, respectively, and $1.7 million and $3.6 million for the three and six months ended June 30, 2017, respectively.

OPERATING LEASES

Rent expense associated with operating leases was $2.6 million and $5.6 million for the three and six months ended June 30, 2018, respectively, and $3.1 million and $5.6 million for the three and six months ended June 30, 2017, respectively. Rent expense relating to tractors, trailers and other operating equipment is included in the “Equipment rent,” line item while rent expense relating to office equipment is included in the “Operations and maintenance” line item in the accompanying condensed consolidated statements of operations and comprehensive income (loss).

During the quarter ended June 30, 2018, the Company completed a sale-leaseback transaction under which it sold certain owned trailers to an unrelated party for proceeds of $5.3 million and entered into an operating lease with the buyer for a term of six months. The $5.3 million was recorded in the “Other receivables” line item in the accompanying condensed consolidated balance sheet at June 30, 2018. Cash was received from the purchaser in early July. The Company recorded a liability of approximately $1.3 million representing the gain on the sale and will amortize such amount to earnings ratably over the lease term. The deferred gain is included in the “Deferred gain” line item in the accompanying condensed consolidated balance sheet.

OTHER COMMITMENTS

As of June 30, 2018, the Company had $54.2 million in commitments for purchases of both revenue and non-revenue equipment, of which none are cancellable. We anticipate funding these commitments with operating and financing cash flows.

NOTE 10 – INCOME tAXES

During the three months ended June 30, 2018 and 2017, the Company’s effective tax rate was 24.4% and 29.6%, respectively. During the six months ended June 30, 2018 and 2017, the Company’s effective tax rate was 25.7% and 33.0%, 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 2018 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 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.

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When the result of the expected annual effective tax rate is not deemed reliable and distorts the income tax provision for an interim period, the Company calculates the income tax provision or benefit using the cut-off method, which results in an income tax provision or benefit based solely on the year-to-date pretax income or loss as adjusted for permanent differences on a pro rata basis.

NOTE 1 1 – EARNINGS ( LOSS ) PER SHARE

Basic earnings (loss) per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by adjusting the weighted average number of shares of common stock outstanding by common stock equivalents attributable to dilutive restricted stock. The computation of diluted earnings (loss) per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on loss per share.

The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share amounts):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
Numerator:	201 8		2017			201 8		2017
Net income (loss)	$	2,544	$	(2,846	)	$	3,579	$	(7,736	)
Denominator:
Denominator for basic earnings (loss) per share – weighted average shares		8,205		8,028			8,141		8,028
Effect of dilutive securities:
Employee restricted stock		22		--			26		--
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion		8,227		8,028			8,167		8,028
Basic earnings (loss) per share	$	0.31	$	(0.35	)	$	0.44	$	(0.96	)
Diluted earnings (loss) per share	$	0.31	$	(0.35	)	$	0.44	$	(0.96	)
Weighted average anti-dilutive employee restricted stock		99		--			61		2

NOTE 1 2 – 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 or results of operations in any given reporting period.

NOTE 1 3 – RESTRUCTURING, IM PAIRMENT AND OTHER COSTS

During first quarter of 2018, the Company’s Trucking maintenance facility in South Holland, Illinois was reopened, after having been closed in the first quarter of 2016. Accrued restructuring, impairment and other costs relating to the closure in the amount of $0.6 million were reversed during the three months ended March 31, 2018.

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The following tables summarize the Company’s liabilities, charges, and cash payments related to the restructuring plan made during the six months ended June 30, 2018 ( in thousands):

Accrued

Balance

December 31,

2017

Costs

Incurred

Payments

Expenses/

Charges

Accrued

Balance

June 30 ,

2018

Compensation and benefits

Facility closing expenses

770

(639

)

(131

)

Total

770

(639

)

(131

)

	Three Months Ended June 30,				Six Months Ended June 30,
Costs incurred	2018		2017		2018			2017
Trucking	$	--	$	--	$	(587	)	$	--
USAT Logistics		--		--		(52	)		--
Total	$	--	$	--	$	(639	)	$	--

On March 26, 2018, the Company announced the retirement of Mr. James A. Craig, the Company’s Executive Vice President, Chief Commercial Officer, and President – USAT Logistics. Effective March 23, 2018, in connection with Mr. Craig’s retirement, the Executive Compensation Committee (the “Committee”) approved a separation agreement (the “Separation Agreement”) with the following terms: (i) salary continuation through May 31, 2018, ( ii) non-compete payments equal to his current salary for a period of twelve months subject to ongoing compliance with certain non-competition, non-solicitation, non-disparagement, and confidentiality covenants in favor of the Company, (iii) a prorated cash payment, if and to the extent earned, under the short-term cash incentive compensation program adopted by the Committee for 2018, and (iv) accelerated vesting of 5,488 shares of time-vested restricted stock of the Company scheduled to vest on July 30, 2018 and 5,488 shares of performance-vested restricted stock of the Company scheduled to vest on July 30, 2018 depending on performance relative to USAT Logistics performance goals. At June 30, 2018, the Company had accrued severance costs associated with the Mr. Craig’s retirement of approximately $0.4 million. Total costs associated with Mr. Craig’s retirement were $0.7 million and were recorded in the “Salaries, wages and employee benefits” line item in the accompanying condensed consolidated statements of operations and comprehensive income (loss).

The following tables summarize the Company’s liabilities, charges, and cash payments related to executive severance agreements made during the six months ended June 30, 2018 ( in thousands):

Accrued

Balance

December 31,

2017

Costs

Incurred

Payments

Expenses/

Charges

Accrued

Balance

June 30 ,

2018

Severance costs included in salaries, wages and employee benefits

711

(318

)

428

	Three Months Ended June 30,				Six Months Ended June 30,
Costs i ncurred	2018		2017		2018		2017
Trucking	$	--	$	56	$	484	$	642
USAT Logistics		--		26		227		257
Total	$	--	$	82	$	711	$	899

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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 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 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:

●

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 C ompany-owned and independent contractors and anticipated gains or losses resulting from dispositions,

●

future safety performance ,

●

future profitability,

●

future industry capacity,

●

future effects of restructuring actions,

●

future pricing rates and freight network ,

●

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

●

future insurance and claims and litigation expense,

●

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 impact on expenses from growth in independent contractors and USAT Logistics ,

●

future use of derivative financial instruments and the impact of increasing interest rates and diesel fuel costs ,

●

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,

●

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

●

future size of our 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,” “intends,” “plans,” “goals,” “may,” “will,” ”would,” “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, 2017 and other filings with the Securities and Exchange Commission (the “SEC”).

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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 subsidiary.

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:

Our Business – 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.

Our Business

USA Truck offers a broad range of truckload motor carrier and freight brokerage and logistics services to a diversified customer base that spans a variety of industries. 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 to provide services to customers and is commonly referred to as “asset-based” trucking. The Company’s USAT Logistics services 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 primarily 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 the rates per mile received from customers, the number of tractors in operation, and the number of revenue-generating miles per tractor. The Company supplements its Trucking operating revenue by charging for fuel surcharge and ancillary services such as stop-off pay, loading and unloading activities, tractor and trailer detention and other similar services.

Operating expenses that have a major impact on the profitability of the Trucking segment fall into two categories: variable and fixed. Variable costs, or mostly variable costs, constitute the majority of the costs associated with transporting freight for customers, and include driver wages and benefits, fuel and fuel taxes, payments to independent contractors for purchased transportation, operating and maintenance expense and insurance and claims expense. These costs 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.

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The most significant fixed costs, or mostly fixed costs, include the capital costs of our assets (depreciation, 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 operating safely.

Fuel and fuel tax expense can fluctuate significantly with changes in diesel fuel prices and is one of our most volatile variable expenses. 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 empty miles, out-of-route miles, fuel inefficiency due to engine idle time and other factors, including the extent to which the surcharge paid by the customer is 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, or DOE, 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 true.

The key statistics used to evaluate Trucking segment performance, net of fuel surcharge revenue, include (i) base Trucking 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 loaded miles per available tractor per week, rate per mile and deadhead percentage are affected by industry-wide freight volumes, industry-wide trucking capacity and the competitive environment, which factors are mostly beyond the Company’s control, as well as by its sales and marketing efforts, service levels and efficiency of its operations, over which the Company has significant control.

Unlike the Trucking segment, the USAT Logistics segment is non-asset based and is instead dependent upon qualified employees, 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 purchased transportation expense) and the gross margin percentage (USAT Logistics operating revenue less purchased transportation expense expressed as a percentage of USAT Logistics operating revenue). The 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 disciplined network management and pricing, 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.

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Results of Operations

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

	Three Months Ended June 30,
	2018								2017
		$	% Operating Revenue			% Adjusted Operating Ratio (1)				$		% Operating Revenue			% Adjusted Operating Ratio (1)			% Change in Dollar Amounts
Base revenue	$	119,107		88.0	%				$	96,038			89.5	%					24.0	%
Fuel surcharge revenue		16,274		12.0						11,320			10.5						43.8
Operating revenue	$	135,381		100.0	%				$	107,358			100.0	%					26.1

Operating expenses		131,070		96.8			96.4	%		110,324			102.8			103.0	%		18.8
Operating income (loss)		4,311		3.2			3.6			(2,966	)		(2.8	)		(3.0	)		245.3

Other expenses:
Interest expense		833		0.6						950			0.9						(12.3	)
Other, net		113		0.1						128			0.1						(11.7	)
Total other expenses, net		946		0.7						1,078			1.0						(12.2	)
Income (loss) before income taxes		3,365		2.5						(4,044	)		(3.8	)					183.2
Income tax expense (benefit)		821		0.6						(1,198	)		(1.1	)					(168.5	)

Consolidated net income (loss)	$	2,544		1.9	%				$	(2,846	)		(2.7	)%					189.4	%

	Six Months Ended June 30,
	2018								2017
		$	% Operating Revenue			% Adjusted Operating Ratio (1)				$		% Operating Revenue			% Adjusted Operating Ratio (1)			% Change in Dollar Amounts
Base revenue	$	229,386		88.1	%				$	185,866			88.9	%					23.4	%
Fuel surcharge revenue		31,008		11.9						23,162			11.1						33.9
Operating revenue	$	260,394		100.0	%				$	209,028			100.0	%					24.6

Operating expenses		253,691		97.4			97.0	%		218,393			104.5			104.6	%		16.2
Operating income		6,703		2.6			3.0			(9,365	)		(4.5	)		(4.6	)		171.6

Other expenses:
Interest expense		1,651		0.6						1,953			0.9						(15.5	)
Other, net		233		0.1						226			0.1						3.1
Total other expenses, net		1,884		0.7						2,179			1.0						(13.5	)
Income before income taxes		4,819		1.9						(11,544	)		(5.5	)					141.7
Income tax expense (benefit)		1,240		0.5						(3,808	)		(1.8	)					(132.6	)

Consolidated net income	$	3,579		1.4	%				$	(7,736	)		(3.7	)%					146.3	%

(1)

Adjusted operating ratio is calculated as operating expenses, less restructuring, impairment and other costs and severance costs included in salaries, wages and employee benefits, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue. 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.

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Use of Non-GAAP Financial Information

The Company uses the terms “adjusted operating ratio” and “adjusted earnings (loss) per diluted share” throughout this Form 10-Q. Adjusted operating ratio and adjusted earnings (loss) per diluted share, as defined here, are non-GAAP financial measures as defined by the SEC. Management uses adjusted operating ratio and adjusted earnings (loss) per diluted share 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 less restructuring, impairment and other costs and severance costs included in salaries, wages and employee benefits, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue. Adjusted earnings (loss) per diluted share is defined as net income (loss) per share plus the per share impact of restructuring, impairment and other, and severance costs included in salaries, wages and employee benefits, less 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.

The Company’s chief operating decision-makers focus on adjusted operating ratio and adjusted earnings (loss) per diluted share 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 and adjusted earnings (loss) per diluted share 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.

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 and adjusted earnings (loss) per diluted share. Although management believes that adjusted operating ratio and adjusted earnings (loss) per diluted share 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 and adjusted earnings (loss) per diluted share differently. As a result, it may be difficult to use adjusted operating ratio, adjusted earnings (loss) per diluted share 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 (dollar amounts in thousands).

Consolidated Reconciliations

Adjusted o perating r atio:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	201 8			2017			201 8			2017
Operating revenue	$	135,381		$	107,358		$	260,394		$	209,028
Less:
Fuel surcharge revenue		16,274			11,320			31,008			23,162
Base revenue		119,107			96,038			229,386			185,866
Operating expense		131,070			110,324			253,691			218,393
Adjusted for:
Severance costs in salaries, wages and employee benefits		--			(82	)		(711	)		(899	)
Restructuring, impairment and other costs (reversal)		--			--			639			--
Fuel surcharge revenue		(16,274	)		(11,320	)		(31,008	)		(23,162	)
Adjusted operating expense	$	114,796		$	98,922		$	222,611		$	194,322
Operating ratio		96.8	%		102.8	%		97.4	%		104.5	%
Adjusted operating ratio		96.4	%		103.0	%		97.0	%		104.6	%

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Adjusted e arnings ( l oss) per diluted s hare:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	201 8		2017			201 8			2017
Earnings (loss) per diluted share	$	0.31	$	(0.35	)	$	0.44		$	(0.96	)
Adjusted for:
Severance costs in salaries, wages and employee benefits		--		0.01			0.09			0.11
Restructuring, impairment and other costs (reversal)		--		--			(0.08	)		--
Income tax expense (benefit) effect of adjustments		--		--			--			(0.04	)
Adjusted earnings (loss) per diluted share	$	0.31	$	(0.34	)	$	0.45		$	(0.89	)

Segment R econciliations

*Trucking* *Segment*	Three Months Ended						Six Months Ended
	June 30,						June 30,
	201 8			2017			201 8			2017
Revenue	$	85,685		$	71,731		$	164,531		$	142,202
Less: intersegment eliminations		116			186			229			377
Operating revenue		85,569			71,545			164,302			141,825
Less: fuel surcharge revenue		12,123			8,828			23,298			18,015
Base revenue		73,446			62,717			141,004			123,810
Operating expense		83,416			76,388			162,613			153,796
Adjusted for:
Severance costs in salaries, wages and employee benefits		--			(56	)		(484	)		(642	)
Restructuring, impairment and other costs (reversal)		--			--			587			--
Fuel surcharge revenue		(12,123	)		(8,828	)		(23,298	)		(18,015	)
Adjusted operating expense	$	71,293		$	67,504		$	139,418		$	135,139
Operating ratio		97.5	%		106.8	%		99.0	%		108.4	%
Adjusted operating ratio		97.1	%		107.6	%		98.9	%		109.2	%

*USAT Logistics Segment*	Three Months Ended						Six Months Ended
	June 30,						June 30,
	201 8			2017			201 8			2017
Revenue	$	50,616		$	36,878		$	97,391		$	69,528
Less: intersegment eliminations		804			1,065			1,299			2,325
Operating revenue		49,812			35,813			96,092			67,203
Less: fuel surcharge revenue		4,151			2,492			7,710			5,147
Base revenue		45,661			33,321			88,382			62,056
Operating expense		47,654			33,936			91,078			64,597
Adjusted for:
Severance costs in salaries, wages and employee benefits		--			(26	)		(227	)		(257	)
Restructuring, impairment and other costs (reversal)		--			--			52			--
Fuel surcharge revenue		(4,151	)		(2,492	)		(7,710	)		(5,147	)
Adjusted operating expense	$	43,503		$	31,418		$	83,193		$	59,193
Operating ratio		95.7	%		94.8	%		94.8	%		96.1	%
Adjusted operating ratio		95.3	%		94.3	%		94.1	%		95.4	%

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Key O perating S tatistics by S egment

	Three Months Ended						Six Months Ended
	June 30,						June 30,
Trucking :	201 8			2017			201 8			2017
Operating revenue (in thousands)	$	85,569		$	71,545		$	164,302		$	141,825
Operating income (loss) (in thousands) (1)	$	2,153		$	(4,843	)	$	1,689		$	(11,971	)
Operating ratio (2)		97.5	%		106.8	%		99.0	%		108.4	%
Adjusted operating ratio (3)		97.1	%		107.6	%		98.9	%		109.2	%
Total miles (in thousands) (4)		39,560			40,833			78,103			81,283
Deadhead percentage (5)		13.5	%		12.8	%		13.1	%		13.0	%
Base revenue per loaded mile	$	2.145		$	1.762		$	2.078		$	1.751
Average number of seated tractors (6)		1,558			1,584			1,546			1,573
Average number of available tractors (7)		1,638			1,672			1,628			1,663
Average number of in-service tractors (8)		1,668			1,722			1,661			1,713
Loaded miles per available tractor per week		1,608			1,637			1,612			1,644
Base revenue per available tractor per week	$	3,449		$	2,885		$	3,350		$	2,879
Average loaded miles per trip		522			560			532			569

USAT Logistics :
Operating revenue (in thousands)	$	49,812		$	35,813		$	96,092		$	67,203
Operating income (in thousands) (1)	$	2,158		$	1,877		$	5,014		$	2,606
Gross margin (in thousands) (9)	$	7,513			6,620			15,397			11,979
Gross margin percentage (10)		15.1	%		18.5	%		16.0	%		17.8	%

(1)	Operating income (loss) is calculated by deducting operating expenses from operating revenue.

(2)	Operating ratio is calculated as operating expenses as a percentage of operating revenue.

(3)	Adjusted operating ratio is calculated as operating expenses less restructuring, impairment and other costs, and severance costs included in salaries, wages and employee benefits, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue.

(4)	Total miles include both loaded and empty miles.

(5)	Deadhead percentage is calculated by dividing empty miles into total miles.

(6)	Seated tractors are those occupied by a driver, both Company-paid and independent contractor.

(7)	Available tractors are all those Company-tractors that are available to be dispatched, including available unseated tractors, and our independent contractor fleet.

(8)	In-service tractors include all of the tractors in the Company fleet, including Company-operated tractors and independent contractors.

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

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

Results of Operations—Segment Review

Trucking operating revenue

During the three months ended June 30, 2018, Trucking operating revenue increased 19.6% to $85.6 million, compared to $71.5 million for the same period in 2017. Trucking base revenue increased 17.1% to $73.4 million, compared to $62.7 million for the second quarter of 2017. The increase in operating revenue was the result of a 21.7% increase in base rate per loaded mile, partially offset by a 3.8% decrease in loaded miles driven by a 1.6% decrease in average seated tractor count and a 70 basis point increase in deadhead percentage.

During the six months ended June 30, 2018, Trucking operating revenue increased 15.8% to $164.3 million, compared to $141.8 million for the same period of 2017. Trucking base revenue increased 13.9% to $141.0 million, from $123.8 million for the same period in 2017. The positive changes in operating revenue and base revenue were primarily attributable to an 18.7% increase in base rate per loaded mile paired with a 2.8% increase in number of Trucking shipments, offset by a 1.7% decrease in the average number of seated tractors and a 10 basis point increase in deadhead percentage. Looking ahead, the Company expects year-over-year improvements in rate per mile when compared to those experienced during the prior year due to the favorable relationship between industry capacity and demand and the implementation of Company initiatives.

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Trucking operating income

For the second quarter of 2018, Trucking reported operating income of $2.2 million compared to an operating loss of $4.8 million for the same period in 2017, primarily resulting from a 19.6% increase in operating revenue caused by a 19.5% increase in base revenue per available tractor per week, offset by 9.2% higher operating expenses.

For the six months ended June 30, 2018, operating income increased 114.1% to $1.7 million from a loss of $12.0 million for the corresponding period in 2017, primarily resulting from the 15.8% increase in operating revenue driven by the increased base revenue per available tracter per week mentioned above and offset by a 5.7% increase operating expenses.

USAT Logistics operating revenue

For the three months ended June 30, 2018, USAT Logistics operating revenue increased 39.1% to $49.8 million compared to $35.8 million for the same period in 2017. The year-over-year change in operating revenue was the result of a 31.7% increase in revenue per load combined with a 5.6% increase in load volume.

For the six months ended June 30, 2018, operating revenue increased 43.0% to $96.1 million from $67.2 million, for the corresponding period in 2017, primarily resulting from a 38.0% increase in revenue per load, paired with a 3.6% increase in load volumes.

USAT Logistics operating income

USAT Logistics generated operating income of $2.2 million in the second quarter of 2018, an increase of $0.3 million, or 15.0%, compared to $1.9 million in the second quarter of 2017. As mentioned above, the 39.1% increase in operating revenue and 5.6% increase in load volume contributed primarily to the growth in operating income, but were offset by a 40.4% increase in operating expenses.

For the six months ended June 30, 2018, operating income increased 92.4% to $5.0 million from $2.6 million for the corresponding period in 2017. This change was the result of the 43.0% increase in operating revenue mentioned above, driven by the increased revenue per load and load volumes, offset by a 41.0% increase in operating expenses.

Consolidated Operating Expenses

The following table summarizes the consolidated operating expenses (dollar amounts in thousands) 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,
	2018									2017									% Change
Operating Expenses:	$			% Operating Revenue			Adjusted Operating Ratio (1)			$			% Operating Revenue			Adjusted Operating Ratio (1)			2018 to 2017
Salaries, wages and employee benefits	$	31,645			23.4	%		26.5	% (1)	$	29,221			27.2	%		30.3	% (1)		8.3	%
Fuel and fuel taxes		13,984			10.3			(1.9	) (2)		10,479			9.8			(0.9	) (2)		33.4
Depreciation and amortization		7,477			5.5			6.3			6,879			6.4			7.2			8.7
Insurance and claims		5,341			4.0			4.5			5,561			5.2			5.8			(4.0	)
Equipment rent		2,151			1.6			1.8			2,633			2.5			2.7			(18.3	)
Operations and maintenance		8,913			6.6			7.5			7,950			7.3			8.3			12.1
Purchased transportation		55,817			41.2			46.9			41,005			38.2			42.7			36.1
Operating taxes and licenses		1,262			0.9			1.0			1,024			1.0			1.1			23.2
Communications and utilities		677			0.5			0.6			598			0.6			0.6			13.2
Gain on disposal of assets, net		(395	)		(0.3	)		(0.3	)		(77	)		(0.1	)		(0.1	)		413.0
Other		4,198			3.1			3.5			5,051			4.6			5.3			(16.9	)
Total operating expenses	$	131,070			96.8	%		96.4	%	$	110,324			102.8	%		103.0	%		18.8	%

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	Six Months Ended June 30,
	2018									2017									% Change
Operating Expenses:	$			% Operating Revenue			Adjusted Operating Ratio (1)			$			% Operating Revenue			Adjusted Operating Ratio (1)			2018 to 2017
Salaries, wages and employee benefits	$	63,882			24.5	%		27.5	% (1)	$	59,860			28.6	%		31.7	% (1)		6.7	%
Fuel and fuel taxes		27,463			10.5			(1.6	) (2)		21,253			10.2			(1.0	) (2)		29.2
Depreciation and amortization		14,657			5.6			6.4			14,523			6.9			7.8			0.9
Insurance and claims		10,943			4.2			4.8			13,893			6.7			7.5			(21.2	)
Equipment rent		4,869			1.9			2.1			4,747			2.3			2.6			2.6
Operations and maintenance		16,874			6.5			7.4			14,521			7.0			7.8			16.2
Purchased transportation		104,855			40.3			45.7			78,408			37.5			42.2			33.7
Operating taxes and licenses		1,764			0.7			0.8			1,974			0.9			1.1			(10.6	)
Communications and utilities		1,390			0.5			0.6			1,264			0.6			0.7			10.0
Gain on disposal of assets, net		(564	)		(0.2	)		(0.3	)		(337	)		(0.2	)		(0.2	)		67.4
Restructuring, impairment and other costs (reversal)		(639	)		(0.2	)		--			--			--			--			--
Other		8,197			3.1			3.6			8,287			4.0			4.4			(1.1	)
Total operating expenses	$	253,691			97.4	%		97.0	%	$	218,393			104.5	%		104.6	%		16.2	%

(1)	Adjusted operating ratio is calculated as the applicable operating expense less restructuring, impairment and other costs and severance costs included in salaries, wages and employee benefits, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue.

(2)	Calculated as fuel and fuel taxes, net of fuel surcharge revenue.

Salaries, w ages and employee benefits

The change in salaries, wages and employee benefits expense during the second quarter of 2018 was primarily due to the accrual of severance benefits related to the retirement of the Company’s Chief Commercial Officer, Mr. James A. Craig, increased employee benefit costs, and the establishment of an employee performance bonus program.

For the six months ended June 30, 2018, salaries, wages and employee benefits expense decreased more than 400 basis points as a percentage of operating revenue while increasing in terms of dollars spent. The decrease as a percentage of operating revenue was due to the 18.9% increase sequentially in the independent contractor fleet. The rate of compensation paid to Company drivers per mile has increased in recent periods and we expect this cost will increase in future periods due to driver pay increases, the most recent of which became effective during the second quarter of 2017. Management believes that the market for drivers will remain tight, and as such, expects driver wages and hiring expenses, which include recruiting and advertising costs, 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 costs 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 increases in fuel and fuel taxes for the three and six month periods ended June 30, 2018 resulted from a 25.3% increase in average diesel fuel prices per gallon year over year, as reported by the DOE, offset by a 3-4% decrease in total revenue miles for both quarter and year to date when compared to the same periods in 2017. The Company has undertaken fuel efficiency initiatives, such as installing trailer skirts, idle control, more fuel-efficient engines and implementing 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 adjust fuel surcharge programs to recover a fair portion of rising fuel costs. Going forward, 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, deadhead percentage, the percentage of revenue generated from independent contractors and the success of fuel efficiency initiatives.

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Depreciation and amortization and equipment rent

Depreciation and amortization of property and equipment consists primarily of depreciation for Company-owned tractors and trailers and amortization of those financed with capital leases. 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 those 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. In addition, the mix of capital and operating leases will cause fluctuations on a line item basis between equipment rent expense and depreciation and amortization expense. For the three month period ended June 30, 2018, equipment rent expense decreased due to an operational rebate on our leased tractors.

The decrease in depreciation and amortization expense as a percentage of both operating and base revenue for the three and six month periods ended June 30, 2018, as compared to the same period in 2017, is primarily attributable to a smaller Company fleet. For the six month period ended June 30, 2018, equipment rent expense increased due to the increased use of operating leases on trailers. The Company intends to continue to focus on improving asset utilization, matching customer demand and strengthening load profitability initiatives. Further, the acquisition costs of new revenue equipment could increase due to the continued implementation of emissions requirements and the inclusion of improved safety and fuel efficiency features. As a result, management expects to see an increase in depreciation and amortization expense from new tractors, and expects equipment rent to increase as the use of operating leases increases.

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 accruals, developments in prior-year claims and insurance premiums and self-insured amounts. For the three months ended June 30, 2018, the decrease in insurance and claims expense year over year was largely attributable to the more normalized expense for the current quarter compared to a large actuarial adjustment made during second quarter 2017.

As mentioned above, the decrease in insurance and claims expense during the six months ended June 30, 2018 is the result of having a more normal insurance expense during the current period when compared to the same period in 2017, in which a $3.0 million actuarial adjustment as recorded stemming from adverse development in our prior year claim layers. The Company expects insurance and claims expense to continue to be volatile over the long-term. In addition, insurance carriers have generally raised premiums for many businesses, including those in the trucking industry, and the Company’s insurance and claims expense could increase if it has a similar experience at renewal or replacement, or the Company could find it necessary to raise its self-insured retention levels or decrease its aggregate coverage limits.

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-owned fleet of 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 increased for the three months ended June 30, 2018, due to heightened maintenance costs on the Company fleet, which is comprised of older, revenue equipment that tends to have higher maintenance costs. Delays in OEM tractor deliveries during the quarter have slowed down the receipt of new tractors that management believes may reduce maintenance costs in the future.

For the six month period ended June 30, 2018, the increase in operations and maintenance expense was primarily the result of increased repair costs on the Company fleet, which is currently comprised of older, revenue equipment that tends to have higher maintenance costs. Delays in OEM tractor deliveries have contributed to the increase in this line item.

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 second quarter of 2018, purchased transportation expense increased primarily due to an increase in USAT Logistics freight volumes when compared to the same period in 2017.

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For the six months ended June 30, 2018, the increase in purchased transportation expense was primarily due to increased freight volumes in USAT Logistics. Moving forward, the Company is continuing to pursue its objective of growing 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 expected regulatory changes. Increasing independent contractor capacity has shifted (and assuming all other factors remain equal, is expected to continue to shift), and growth of USAT Logistics will shift, expenses to the “Purchased transportation” line item with offsetting reductions in employee driver wages and related expenses, net fuel expense (as independent contractors generate fuel surcharge revenue, while the related cost of their fuel is included with their compensation in purchased transportation), maintenance and capital expenditures.

Gain on disposal of assets, net

During the three and six months ended June 30, 2018, gain on disposal of assets, net, increased when compared to the same periods in 2017. Management believes the used equipment market may continue to show volatility in 2018 and beyond.

Other expenses

The decreases in other expenses during the three and six months ended June 30, 2018 were primarily resulting from a decrease in professional services costs and corporate hiring and relocation expenses.

Restructuring, impairment and other costs (reversal)

See Note 13 to the condensed consolidated financial statements for discussion of restructuring, impairment and other costs, which discussion is incorporated herein by reference.

Interest expense

For both the three and six months ended June 30, 2018, interest expense decreased primarily due to reduced outstanding borrowings. As of June 30, 2018, the Company decreased its debt outstanding on the Credit Facility by approximately $6.3 million, as compared to December 31, 2017. See Note 8 to the condensed consolidated financial statements for further discussion of the Company’s Credit Facility.

Income tax expense

During the three months ended June 30, 2018 and 2017, the Company’s effective tax rate was 24.4% and 29.6%, respectively. During the six months ended June 30, 2018 and 2017, the Company’s effective tax rate was 25.7% and 33.0%, respectively. The Company’s effective tax rate for the 2018 periods, when compared to the federal statutory rate of 21%, is primarily affected by state income taxes, net of federal income tax effect, 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 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. Due to the effect of the non-deductible per diem payments, the Company’s tax rate will fluctuate in future periods based on fluctuations in earnings (losses) and in the number of drivers who elect to participate in the per diem program.

When the result of the expected annual effective tax rate is not deemed reliable and distorts the income tax provision for an interim period, the Company calculates the income tax provision or benefit using the cut-off method, which results in an income tax provision or benefit based solely on the year-to-date pretax income or loss as adjusted for permanent differences on a pro rata basis.

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. 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.

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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 our profitability and may continue to do so. The Company 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, average diesel fuel prices per gallon, as reported by the DOE, increased 25.3% and 21.4%, respectively, for the three and six month periods ended June 30, 2018, compared to the same periods in 2017.

As of June 30, 2018, the Company did not have any long-term fuel purchase contracts, and has not entered into any fuel hedging arrangements.

Equity

As of June 30, 2018, the Company had total stockholders’ equity of $70.1 million and total debt and capital leases including current maturities and insurance premium financing, of $90.3 million, resulting in a total debt, less cash, to total capitalization ratio of 56.3% compared to 61.7% as of December 31, 2017.

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.

As of June 30, 2018, the Company had $54.2 million in commitments for the acquisition of both revenue and non-revenue equipment, none of which are cancellable. We anticipate funding these commitments with operating and financing cash flows.

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 new revenue equipment and to a lesser extent, in technology and working capital. In the Company’s USAT Logistics segment, where capital investments are generally more modest, 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 capital and operating leases. Based on expected financial conditions, net capital expenditures, results of 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.

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. Management believes the Company’s excess availability will not fall below 20%, or $34.0 million, and expects the Company to remain in compliance with all debt covenants during the next twelve months.

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Long-term debt, financing notes and capital leases decreased to $90.3 million, a decrease of $17.2 million from $107.5 million at December 31, 2017. As of June 30, 2018, the Company had outstanding $5.4 million in letters of credit and had approximately $68.2 million available to borrow under the Credit Facility. Net of cash, debt represented 56.3% of total capitalization. Fluctuations in the outstanding balance and related availability under the Credit Facility are driven primarily by cash flows from operations and the timing and nature of property and equipment additions that are not funded through other sources of financing, as well as the nature and timing of receipt of proceeds from disposals of property and equipment.

Cash Flows

	Six Months Ended June 30,
(in thousands)	201 8			2017
Net cash provided by operating activities	$	18,428		$	9,462
Net cash (used in) provided by investing activities		(1,522	)		17,368
Net cash used in financing activities		(16,948	)		(26,786	)

Operating Activities – Net cash provided by operating activities increased by approximately $9.0 million in the first six months of 2018, compared to the same period in 2017. This increase was primarily the result of an approximate $11.3 million increase in net income and an approximate $3.3 million decrease in deferred income tax liability, offset by $7.4 million change in receivables and an approximately $9.5 million increase in accounts payable and accrued liabilities.

Investing Activities – For the six months ended June 30, 2018, net cash used in investing activities was $1.5 million, compared to $17.4 million provided by investing activities during the same period in 2017. The $18.9 million decrease in cash provided by investing activities primarily reflects $11.0 million of proceeds from a sale leaseback undertaken in first quarter 2017, combined with an approximately $7.1 million decrease in the proceeds from the sale of property and equipment in the 2018 period compared to the 2017 period, offset by an approximately $0.8 million decrease in capital expenditures for the 2018 period.

Financing Activities – Cash used in financing activities was $16.9 million for the six months ended June 30, 2018, compared to $26.8 million used by financing activities during the same period in 2017. The $9.8 million decrease in cash used in financing activities was primarily attributable to increased borrowings of long-term debt of $5.6 million, a $2.5 million change in bank drafts payable, and approximately $1.8 million decrease in net payments on long-term debt and capital lease obligations. At June 30, 2018, the Company had borrowings of long-term debt, financing notes and capital leases of $90.3 million, down from $107.5 million at December 31, 2017.

Debt and Capitalized Lease Obligations

See Notes 7, 8 and 9 to the condensed consolidated financial statements for further discussion of the Company’s Credit Facility, capital lease obligations and other financing arrangements.

Off-Balance Sheet Arrangements

Operating leases have been an important source of financing for equipment used in operations, office equipment and certain facilities. As of June 30, 2018, the Company leased certain revenue equipment, facilities and information technology software under operating leases. Assets held under operating leases are not carried on the condensed consolidated balance sheets, and lease payments with regard to such assets are reflected in the condensed consolidated statements of operations and comprehensive income (loss) in the “Equipment rent” and, for office equipment, in the “Operations and maintenance” line items. Equipment rent expense related to the Company’s revenue equipment operating leases was $2.2 million and $2.6 million for the three months ended June 30, 2018, and 2017, respectively. Rent expense related to the Company’s revenue equipment operating leases was $4.9 million and $4.7 million for the six months ended June 30, 2018, and 2017, respectively.

Rent expense related to the other equipment and facilities leases was $0.4 million for both the three month periods ended June 30, 2018, and 2017, respectively. Rent expense related to the other equipment and facilities leases was $0.8 million for both the six month periods ended June 30, 2018, and 2017, respectively. Other than such operating leases, the Company has no other off-balance sheet arrangements that have or are reasonably likely to have a material effect on the condensed consolidated financial statements.

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The following table represents outstanding contractual obligations for rent expense under operating leases as of June 30, 2018 (in thousands):

	Payments Due By Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Non-Revenue equipment	$	2,076	$	667	$	872	$	332	$	205
Revenue equipment		18,080		5,227		12,055		632		166
Total rental obligations	$	20,156	$	5,894	$	12,927	$	964	$	371

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 condensed consolidated financial statements are prepared. Actual results could differ from those estimates, and such differences could be material. During the six months ended June 30, 2018, there were no material changes to the Company’s critical accounting policies and estimates, compared to those disclosed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

The Company experiences various market risks, including changes in interest rates and commodity prices. Because the Company’s operations are largely confined to the U.S., the Company is not subject to a material amount of foreign currency risk.

Interest Rate Risk . The Company is exposed to interest rate risk primarily from its Credit Facility. The Company’s Credit Facility bears variable interest based on the type of borrowing and on the Agent’s prime rate or the LIBOR plus, in each case, a certain percentage determined based on a pricing grid that is determined quarterly based on the Company’s consolidated fixed charge coverage ratio. As of June 30, 2018, the Company had $55.0 million outstanding pursuant to its Credit Facility, excluding letters of credit of $5.4 million. Assuming the outstanding balance as of June 30, 2018 remained constant; a hypothetical one-percentage point increase in interest rates applicable to its Credit Facility would increase the Company’s interest expense over a one-year period by approximately $0.6 million.

Commodity Price Risk . The Company is subject to commodity price risk with respect to purchases of fuel. In recent years, fuel prices have fluctuated greatly. In some periods, the Company’s operating performance was adversely affected because it was not able to fully offset the impact of higher diesel fuel prices through increased freight rates and fuel surcharge revenue recoveries. Management cannot predict how fuel price levels will continue to fluctuate in the future or the extent to which fuel surcharge revenue recoveries could be collected to offset any increases. As of June 30, 2018, the Company did not have any derivative financial instruments to reduce its exposure to fuel price fluctuations, but may use such instruments in the future. Accordingly, volatile fuel prices may continue to impact the Company significantly. A significant increase in fuel costs, or a shortage of diesel fuel, could materially and adversely affect the Company’s results of operations. Further, higher fuel costs could contribute to driver shortages in the trucking industry generally by forcing independent contractors to cease operations. Based on the Company’s expected fuel consumption for the remainder of 2018, a 10% increase in the average price per gallon would result in an increase of approximately $1.4 million in fuel expense before taking into account application of the Company’s fuel surcharge program.

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, 2018 the Company’s disclosure controls and procedures are 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 Securities and Exchange Commission’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.

Table of Contents

There has been no change in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2018, 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 procedures and controls 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 or results of operations 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, 2017, 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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I TEM 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 March 31, 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).
10.1*	#		Employment Letter between the Company and Timothy W. Guin
10.2*	#		Executive Severance and Change in Control Agreement between the Company and Timothy W. Guin, dated April 23, 2018
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.
101.SCH			XBRL Taxonomy Extension Schema Document.
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.

References:
*		Management contract or compensatory plan, contract or arrangement.
#		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.
			(Registrant)


Date:	July 27, 2018	By:	/s/ James D. Reed
			(Signature) J ames D. Reed
			President and Chief Executive Officer




Date:	July 27, 2018	By:	/s/ Jason R. Bates
			(Signature) Jason R. Bates
			Executive Vice President and Chief Financial Officer

Exhibit 10.1

April 23, 2018

Mr. Tim Guin

Transmitted via E-mail:

Dear Tim,

On behalf of USA Truck, Inc. (the “Company”), I am pleased to offer you the position of Chief Commercial Officer, reporting to the Chief Executive Officer and President of the Company, with a proposed start date of April 30, 2018. The following outlines the terms of employment, but does not constitute a contract of employment or a guarantee of employment. This offer is approved by the Company’s Board of Directors and your compensation package as outlined is approved by the Executive Compensation Committee of the Company’s Board of Directors (the “Committee”).

Base Salary. Your starting annual base salary will be $300,000, less applicable taxes, deductions, and withholdings, paid in $25,000 monthly increments and subject to annual review. The Company’s regularly scheduled pay days are currently on the last day of every month.

Key Management Incentive Plan. You will participate in the established Key Management Incentive Plan, beginning in 2018 and you will be entitled to:

Cash Incentive. You are eligible for a target cash incentive of 6 0 % of your annualized base salary, pro-rated based on the period of time you are employed at the Company during 2018 and less applicable taxes, deductions and withholdings. Target incentives do not constitute a promise of payment. To qualify for the incentive bonus, you must remain employed with the Company through the date that the incentive bonus is paid (as specified in the Key Management Incentive Plan). Your actual plan payout will depend on the Company’s and your individual performance relative to pre-established goals, subject to and governed by the terms and requirements of the Key Management Incentive Plan as determined by the Committee. The maximum target achievable under the plan is 175% of your target performance.

Equity Incentive. You are eligible for a target equity grant of restricted shares of the Company’s common stock equal to up to 100% of your annualized base salary for 2018 under the 2018 Equity Incentive Plan (the “2018 EIP”) to be established by the Committee. The number of restricted shares awarded will be based upon your annualized base salary and the closing price of the Company’s common stock on the award date. Awards under the 2018 EIP will be 40% time-based and the balance will be performance-based. The time-based portion is expected to have a four (4) year ratable vesting period, and the performance-based portion is expected to vest at the completion of three (3) years, depending upon performance relative to goals established by the Committee. The maximum target achievable under the plan is 175% of your target performance based portion of the EIP program. All incentive compensation (whether cash or equity) for all employees, including you, is subject to the discretion of the Committee.

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Upon the occurrence of a Payment Trigger described in Paragraph (L) of Section 1 of Exhibit A hereto, all unvested shares subject to time-based vesting would become fully vested and any unvested shares subject to performance-based vesting would vest in accordance with the award agreement relating to such shares.

Sign-On Bonus es . You will receive:

●

Cash Bonus of $300,000, less applicable taxes, deductions, and withholdings. The Cash Bonus is payable in two equal installments of $150,000 each. The first payment will be added to your first monthly paycheck, with the second payment being added to your 6 ^th monthly paycheck.

●

Equity Bonus of $100,000. You will receive an additional bonus of $100,000, in the form of an equity grant equivalent to $100,000 worth of restricted shares based on the closing price of the Company’s common stock on your start date with the Company. The restricted shares granted will vest in two (2) equal annual installments with the first installment vesting on the first anniversary of your start date with the Company and the second installment vesting on the second anniversary of your start date with the Company, subject to your continuous employment with the Company as of each vesting date.

If your employment is terminated by the Company for cause or voluntarily by you at any time prior to the expiration of 24 months from your start date, these bonuses will be subject to repayment on a pro-rated basis in relation to the portion of the 24-month period during which you are actually employed by the Company.

Obligations. You may be required to serve as an officer and/or director of one or more subsidiaries of the Company, for which you will receive no additional compensation.

Relocation Assistance . There is none offered, as relocation to Van Buren, Arkansas is not required.

B ene f it s . A significant part of your total compensation at the Company is derived from a competitive benefits package for employees. Eligible Company employees may participate in health insurance benefits (medical, dental, and vision), life insurance, short term and long term disability, the Company’s Employee Stock Purchase Plan, 401(k) Plan, and Flexible Spending Plan. All benefits are subject to the plan documents and eligibility requirements.

You will receive $1,000 per year to be applied towards premium payments on a supplemental term life insurance or you may choose to receive it as wages in your monthly payroll check (at the rate of $83.33 per month) and subject to required withholding of federal, state and local income, excise and employment related taxes.

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The Company will reimburse you the net amount for ninety (90) days COBRA coverage to assist you in continual coverage of your current healthcare plan during the mandatory waiting period. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.

Paid Time Off. You will receive five (5) weeks of paid time off per year.

Business Travel and Expense. You will be expected to travel in connection with your employment. The Company will reimburse you for reasonable business expenses incurred in connection with your employment and in accordance with the Company’s Business Entertainment and Travel Policy.

You will be provided a $700 monthly car allowance stipend, and will be reimbursed at $0.34 per mile for business mileage incurred on your vehicle.

You will be provided a laptop and cellular phone at the Company's expense.

Confidential Information or Trade Secrets . You will observe all rules, regulations, and security requirements of the Company concerning the safety of persons and property. You agree that you will comply with the Company's employee handbook, Code of Business Conduct and Ethics Policy, the Open Door Policy, the Whistleblower Policy, the Stock Ownership and Anti-Hedging and Pledging Policy, the Clawback Policy, and any other policies of the Company as they relate to employees, officers, or directors of the Company.

Executive Severance and Change in Control Agreement . You and the Company will enter into an Executive Severance and Change in Control Agreement in the form of Exhibit A attached hereto and incorporated by reference herein.

Employment At-Will. This letter does not create an express or implied contract of employment or any other contractual commitment. This letter contains the complete, final, and exclusive embodiment of the understanding between you and the Company regarding the terms of your employment and supersedes in all respects any prior or other agreement or understanding, written or oral, between you and the Company with respect to the subject matter of this letter. Your employment relationship with the Company is on an at-will basis, which means that either you or the Company may terminate the employment relationship at any time for any reason or no reason, consistent with applicable law. Notwithstanding the terms of this letter, the Company shall have the right change its compensation, welfare, benefit, incentive, and employment plans, policies, and terms from time to time in its sole discretion.

3 | Page

Background Verification. This offer is contingent on the successful completion of the verification of information provided by you in your job application and drug and background screenings.

Eligibility to Work. You will be required to provide proof of eligibility for employment in the United States no later than three days from the beginning of employment per the Immigration and Control Act of 1986; Form I-9 is mandatory.

You represent and warrant that your signing of this letter and the performance of your obligations under it (including, without limitation, your employment with the Company and your performance of services for the Company) will not breach or be in conflict with any covenant not to compete and/or similar obligations by which you are or may be bound. You also agree that you will not disclose to or use on behalf of the Company any proprietary information of another person or entity without that person's or entity's consent.

We are excited to start working with you and look forward to you joining USA Truck, Inc. Please review and acknowledge your acceptance of the terms of this letter by signing below and faxing or emailing the signed letter to my attention no later than Tuesday, May 2, 2018 at which time this offer of employment expires.

Sincerely,

/s/ Cheryl Stone

Cheryl Stone

Senior Vice President of, Human Resources

I accept this offer of employment with USA Truck, Inc. and agree to the terms and conditions outlined in the letter.

/s/ Timothy W. Guin		04/24/2018
Signature		Date

Timothy W. Guin		04/30/2018
Full Name		Planned Start Date

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Exhibit A

Executive Severance and Change In Control Agreement Attached

5 | Page

Exhibit 10.2

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL AGREEMENT

This Executive Severance and Change in Control Agreement (this “ Agreement ”), dated as of April 23, 2018 is made by and between USA Truck, Inc., a Delaware corporation (as hereinafter defined, the “ Company ”), and Tim Guin, Chief Commercial Officer of the Company (as hereinafter defined, the “ Executive ”).

WHEREAS, the Company and the Executive have entered into that Employment Letter Agreement by and between the Company and the Executive dated April 23, 2018 (the "Employment Letter Agreement"); and

WHEREAS, the Company and the Executive desire to set forth the circumstances under which the Executive may receive payments under this Agreement.

NOW THEREFORE , in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

Defined Terms .

For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A) “Board” shall mean the Board of Directors of the Company, as constituted from time to time.

(B) “Cause” for termination by the Company of the Executive's employment shall mean (i) failure by the Executive to perform the essential functions of the Executive’s position with the Company, other than any failure resulting from the Executive's incapacity due to physical or mental disability; (ii) failure to comply with any lawful directive by the Board; (iii) a material violation by the Executive of the corporate governance guidelines, code of ethics, insider trading policy, governance policy, or other policy of the Company; (iv) a breach of any fiduciary duty to Company; (v) misconduct in the course and scope of employment by the Executive that is injurious to the Company, from a monetary or reputational standpoint; (vi) any attempt to willfully obtain any personal profit from any transaction which is adverse to the interests of the Company or any of its subsidiaries and in which the Company or any of its subsidiaries has an interest or any other act of fraud or embezzlement against the Company, any of its subsidiaries or any of its customers or suppliers; (vii) a breach by the Executive of any of the covenants contained in Sections 14, 15, and 16 of this Agreement; (viii) the repeated use of alcohol by the Executive that interferes with the Executive's duties, the use of illegal drugs by the Executive, or a violation by the Executive of the drug and/or alcohol policies of the Company; (ix) violation of any applicable law, rule or regulation, including without limitation the Sarbanes-Oxley Act of 2002 or other federal or state securities law, rule, or regulation; or (x) the conviction or plea of guilty or nolo contendere to a felony or a misdemeanor involving moral turpitude. With respect to subsections (i), (ii) and (iii) above, the Executive shall be notified in writing (including via email) of any alleged failure, breach or violation, such notice shall specify in reasonable detail the facts and circumstances claimed to constitute Cause under subsections (i), (ii) or (iii) as applicable and the Executive shall be given at least fifteen (15) calendar days to remedy or cure any failure, breach or violation. For purposes of this definition following a Change in Control, the Board’s determination of “Cause” must be made in good faith.

(C) A “Change in Control” shall mean the occurrence of any of the following occurring after the date of this Agreement:

(i) Any “ Person ” as defined in Section 3(a)(9) of the Exchange Act, and as used in Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act (but excluding the Company and any employee benefit plan sponsored or maintained by the Company (including any trustee of such plan acting as trustee)), directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities (other than indirectly as a result of the Company’s redemption of its own securities); or

(ii) The consummation of any merger or other business combination of the Company, a sale of more than 50% of the Company’s assets, the liquidation or dissolution of the Company or any combination of one or more of the foregoing transactions (the “ Transactions ”) other than a Transaction immediately following which either (x) the stockholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own more than 50% of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser of or successor to the Company’s assets; (C) both the surviving corporation and the purchaser in the event of any combination of Transactions; or (D) the parent company owning 100% of such surviving corporation, purchaser or both the surviving corporation and the purchaser, as the case may be ((A), (B), (C) or (D), as applicable, the “ Surviving Entity ”) or (y) the Incumbent Directors, as defined below, shall continue to serve as a majority of the board of directors of the Surviving Entity without an agreement or understanding that such Incumbent Directors will later surrender such majority; or

(iii) Within any twenty-four (24)-month period, the individuals who were directors immediately before the beginning of such period (the “ Incumbent Directors ”) shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to the Company, including any Surviving Entity. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of, or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a Person who commenced or threatened to commence an election contest or proxy solicitation by or on behalf of a Person (other than the Board) or who has entered into an agreement to effect a Change in Control or expressed an intention to cause such a Change in Control).

(D) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(E) “Company” shall mean USA Truck, Inc. and any successor to its business or assets, by operation of law or otherwise.

(F) “ Constructive Termination ” shall mean the occurrence of any of the following, without the Executive’s express written consent, at any time within twelve (12) months following a Change in Control:

(i) material diminution in the overall scope of the Executive’s duties, authorities and responsibilities from those held by the Executive immediately prior to the time of a Change in Control;

(ii) geographic relocation of the Executive’s assigned principal business location to a location greater than forty (40) miles from the place of the Executive’s principal business location immediately prior to the time of a Change in Control; or

(iii) diminution by ten percent (10%) or more of the Executive’s annual base salary or target bonus in effect immediately prior to the time of a Change in Control.

(G) “ Date of Termination” shall have the meaning stated in Paragraph (B) of Section 5 hereof.

(H) “Disability” shall mean a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Executive to be unable to perform the duties of his or her position of employment or any substantially similar position of employment.

(I) “ Executive” shall mean the individual named in the first paragraph of this Agreement.

(J) “Incumbent Directors” shall mean directors who were directors of the Company as of the date hereof or who are appointed, elected or nominated to the Board in accordance with the following sentence. It is understood that any individual becoming a member of the Board subsequent to the date hereof whose appointment was approved by a vote of at least a two-thirds majority of the Continuing Directors remaining in office at the time of appointment or whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a two-thirds majority of the Continuing Directors remaining in office at the time of election or nomination shall be considered, for purposes of this Agreement, as though such individual were a Continuing Director on the date hereof.

(K) “Notice of Termination” shall have the meaning stated in Paragraph (A) of Section 5 hereof.

(L) “ Payment Trigger ” shall mean any of the following that occurs during the term of this Agreement:

(i) termination of the Executive’s employment by the Company without Cause, at any time other than within twelve (12) months following a Change in Control, and other than as a result of the Executive’s Disability; or

(ii) Constructive Termination of the Executive while the Executive remains employed by the Company or its successor, or termination of the Executive’s employment by the Company without Cause within twelve (12) months following a Change in Control occurring during the term of this Agreement.

For the avoidance of doubt, a termination of the Executive by the Company for Disability shall not be deemed a termination of the Executive without Cause.

(M) “Person” shall have the meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to time, as modified and used in Sections 13(d) and 14(d) thereof; except that, a Person shall not include (i) the Company, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (iii) an underwriter temporarily holding securities pursuant to an offering of such securities.

Term of Agreement .

This Agreement shall be effective as of the date set forth in the first paragraph of this Agreement and shall continue in effect until the Date of Termination or the death of the Executive; provided, that all covenants (including, without limitation, the covenants of the Executive contained in Sections 14, 15, and 16 of this Agreement and the covenants of the Company following a Payment Trigger) shall survive in accordance with their terms.

General Provisions .

(A) The Company hereby represents and warrants to the Executive that the execution and delivery of this Agreement and the performance by the Company of the actions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. This Agreement is a legal, valid and legally binding obligation of the Company enforceable in accordance with its terms.

(B) No amount or benefit shall be payable under this Agreement unless there shall have occurred a Payment Trigger during the term of this Agreement.

(C) This Agreement and the Employment Letter Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. Notwithstanding the immediately preceding sentence or any other provision of this Agreement, any purported termination of the Executive’s employment that is not effected in accordance with a Notice of Termination satisfying Paragraph (A) of Section 5 shall not be effective for purposes of this Agreement. The Executive’s continued employment for any period of time after a Payment Trigger, up to the maximum time specified in Paragraph (B) of Section 5, shall not constitute a waiver of the Executive’s rights with respect to any payment obligations of the Company under this Agreement. The waiver by the Executive of any particular event meeting the definition of or constituting a Constructive Termination shall not operate as a waiver by the Executive of any benefits or rights under this Agreement should any subsequent event or circumstance occur that constitutes a Constructive Termination under this Agreement.

Payments Due Upon a Payment Trigger .

(A) The Company shall pay to the Executive the payments described in this Section 4 upon the occurrence of a Payment Trigger during the term of this Agreement.

(B) (i) Upon the occurrence of a Payment Trigger during the term of this Agreement arising by reason of the circumstances described in subparagraph (i) of Paragraph (L) of Section 1:

(a) the Company shall pay the Executive monthly payments, in cash, equal to one-twelfth (1/12) of the Executive's annual base salary in effect immediately prior to the Date of Termination, on or as near as practicable to the same date in each month as monthly installments (each of which shall be considered a separate "payment" for purposes of Code Section 409A, as defined in Section 23) of the annual base salary were made to the Executive prior to the Date of Termination, for a period of twelve (12) months following the Date of Termination or such lesser number of months Executive is employed by the Company (pro-rated for partial months);

(b) the Company shall pay to the Executive a lump sum amount, in cash, if and to the extent earned, under any short term cash incentive compensation plan for the fiscal year in which the Date of Termination occurs, which plan has been adopted by the Executive Compensation Committee of the Board prior to the Date of Termination, pro- rated for the number of days Executive was employed by the Company in the applicable fiscal year through the Date of Termination, and payable at the time and on the same basis as paid to recipients still employed by the Company; and

(c) the Company shall pay the Executive any other amounts (other than any payment of short term cash incentive compensation described in Section 4(B)(i)(b) above or Section 4(C) below) that may be due to the Executive under any employee welfare, benefit, vacation, equity, or long term incentive plan then in effect to the extent the Executive is an eligible participant, subject to and upon the terms and conditions set forth in any such plan.

(ii) Upon the occurrence of a Payment Trigger during the term of this Agreement arising by reason of the circumstances described in subparagraph (ii) of Paragraph (L) of Section 1:

(a) the Company shall pay the Executive a lump sum payment, in cash, equal to the sum of one hundred fifty percent (150%) of the Executive's annual base salary in effect immediately prior to the Date of Termination, provided that if the Change in Control does not constitute a change in control event as defined in Code Section 409A, then the portion of the lump sum payment, if any, that is considered deferred compensation subject to Code Section 409A shall be paid in installments as described in Section 4(B)(i)(a);

(b) to the extent the Executive has established full time residency in the Ft. Smith/Van Buren, Arkansas area for Executive and his family, the Company shall pay to the Executive a lump sum payment, in cash, equal to the amount set forth on the signature page to this Agreement (if any) and identified as relocation services benefit, to defray the Executive's costs of relocation services;

(c) the Company shall pay to the Executive a lump sum amount, in cash, equal to one hundred fifty percent (150%) of the target amount of any short term incentive cash compensation plan for the fiscal year in which the Date of Termination occurs, which plan has been adopted by the Executive Compensation Committee of the Board prior to the Date of Termination, that would have been paid to the Executive for the fiscal year in which the Date of Termination occurs, assuming all performance and other vesting criteria were satisfied for such year; provided, that if no short term cash incentive cash compensation plan has been adopted for the fiscal year in which the Date of Termination occurs, such target amount will be equal to the Executive’s target amount under the short term incentive cash compensation plan adopted by the Executive Compensation Committee of the Board for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs;

(d) the Company shall reimburse, on an after-tax basis, any premiums paid by the Executive pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (" COBRA "), during a period of eighteen (18) months following the Date of Termination; and

(e) the Company shall pay the Executive any other amounts (other than any payment of short term cash incentive compensation described in Section 4(B)(ii)(c) or Section 4(C)) that may be due the Executive under any employee welfare, benefit, vacation, equity, or long term incentive plan then in effect to the extent the Executive is an eligible participant, subject to and upon the terms and conditions set forth in any such plan.

(C) Notwithstanding any provision of any incentive compensation plan adopted by the Executive Compensation Committee of the Board prior to the Date of Termination, and in addition to any payments under Paragraph (B) hereof, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount of any cash incentive compensation that has been awarded to and earned by the Executive under any cash incentive compensation plan adopted by the Executive Compensation Committee of the Board for a completed fiscal year preceding the occurrence of the Date of Termination but that has not yet been paid to the Executive.

(D) The payments provided for in subparagraph (ii)(a) of Paragraph (B) and, if applicable and due upon the occurrence of a Payment Trigger during the term of this Agreement by reason of the circumstances described in subparagraph (ii) of Paragraph (L) of Section 1, Paragraph (C) of this Section 4 shall be made within a reasonable time following the expiration of the applicable waiting periods following execution and delivery of the General Release (as hereinafter defined).

(E) As a condition to the receipt of the severance and other payment benefits described in this Agreement, the Executive shall execute and comply with the terms of a general release of all claims (the “ General Release ”) against the Company, its affiliates and representatives, in the form attached hereto as Exhibit A, as updated by the Company for any change in laws. The General Release must be signed, and the period provided therein for revocation must have expired, not later than sixty days from the Date of Termination. Notwithstanding anything to the contrary contained herein, no severance benefits or other payments required under this Agreement shall be paid until the General Release is signed and the revocation period has expired, and any amounts that would otherwise have been paid prior to such date shall be paid within a reasonable time after such date, without interest. Notwithstanding the foregoing, if the sixty-day period after the Date of Termination ends in the calendar year following the year that includes the Date of Termination, no such amount that is subject to Code Section 409A shall be paid sooner than the first day of the year following the year that includes the Date of Termination, regardless of when the General Release is signed.

Termination Procedures .

(A) During the term of this Agreement, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by a Notice of Termination from one party hereto to the other party hereto in accordance with this Section 5(A). For purposes of this Agreement, a “Notice of Termination” shall mean, (i) in the case of a termination of the Executive’s employment by the Company without Cause, a written notice of termination, (ii) in the case of a termination of the Executive’s employment by the Company for Cause, a written notice of termination, which will indicate the conduct set forth in the definition of Cause in Paragraph (B) of Section 1 that the Executive was found to have violated, and (iii) in the case of the Executive terminating his or her employment with the Company, a written or verbal notice of termination; provided, that a Notice of Termination by the Executive in the case of a Constructive Termination shall specify in reasonable detail the event or circumstance constituting the Constructive Termination under Paragraph (F) of Section 1 of this Agreement, and such notice of Constructive Termination must be provided by the Executive to the Company within sixty (60) days of the initial existence of the condition giving rise to the Constructive Termination. Notwithstanding anything to the contrary contained herein, if the Executive engages in conduct that is reasonably believed to be imminently harmful to the Company, the Company may terminate the Executive’s employment by giving the Executive a verbal Notice of Termination, which may be effective immediately, and which shall be effective for purposes of this Agreement.

(B) "For purposes of this Agreement, a " Notice of Termination " shall mean a written or verbal notice of termination in accordance with Paragraph (A) of Section 5. In the case of a Notice of Termination for Cause, the Notice of Termination will indicate the conduct set forth in the definition of Cause in Paragraph (B) of Section 1 that the Executive was found to have violated."

(C) “ Date of Termination ” with respect to any purported termination of the Executive’s employment during the term of this Agreement (other than by reason of death) shall mean:

(i) if the Executive’s employment is terminated by the Company for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during that thirty (30) day period);

(ii) if the Executive's employment is terminated by the Company for any other reason except in the case of a termination for Cause, the date specified in the Notice of Termination;

(iii) if the Executive’s employment is terminated by the Company for Cause, the date specified in the Notice of Termination; and

(iv) in the case of termination by the Executive (including a Constructive Termination following a Change in Control), thirty (30) days after the date such Notice of Termination is given; provided , in the case of a Constructive Termination, the Notice of Termination contemplated by Paragraph (A) of this Section 5 shall be deemed cancelled, void and of no further force and effect, and no payment obligation of the Company shall arise therefrom, if the Company rescinds or otherwise eliminates or reverses the action or event that would otherwise constitute grounds for Constructive Termination, and so notifies the Executive in writing within thirty (30) days of its receipt of the notice of Constructive Termination. The rescission, elimination or reversal of any such action or event constituting a Constructive Termination shall not operate to release or discharge the Company from any other liability or obligation under this Agreement, including any liability or obligation arising from any subsequent action or event that constitutes a Constructive Termination.

No Mitigation; No Setoff .

The Executive shall not be required to mitigate the amount of any benefits the Company becomes obligated to provide to the Executive in connection with this Agreement by seeking other employment or otherwise. The benefits to be provided to the Executive in connection with this Agreement may not be reduced, setoff or subject to recovery by the Company by any benefits the Executive may receive from other employment, from retirement benefits or otherwise. Further, the amount of any payment or benefit provided for in this Agreement shall not be setoff against any amount claimed to be owed by the Executive to the Company, or otherwise, except for a violation of Section 14, 15, or 16.

Disputes .

(A) If a dispute or controversy arises out of or in connection with this Agreement, the parties shall first attempt in good faith to settle the dispute or controversy by mediation under the Commercial Mediation Rules of the American Arbitration Association before resorting to arbitration or litigation. Thereafter, any remaining unresolved dispute or controversy arising out of or in connection with this Agreement may be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association in a city located within Crawford County, Arkansas. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Executive shall, however, be entitled to seek specific performance of the Company’s obligations hereunder during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall be entitled, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach of, or to otherwise seek specific performance of the Executive's obligations under, any of the covenants contained in Section 14, 15, or 16 of this Agreement during the pendency of any dispute or controversy arising under or in connection with this Agreement, and the Company shall not be obligated to post bond or other security in seeking such relief.

(B) Any legal action concerning this Agreement, other than a mediation or an arbitration described in Paragraph (A) of this Section 7, whether instituted by the Company or the Executive, shall be brought and resolved only in a state or federal court of competent jurisdiction located in Crawford County, Arkansas or the Fort Smith Division of the Western District of Arkansas. The parties hereby irrevocably consent and submit to and shall take any action necessary to subject themselves to the personal jurisdiction of any such court and hereby irrevocably agree that all claims in respect of the action shall be instituted, heard, and determined in such court. The parties agree that such court is a convenient forum, and hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of the action. Any final judgment in the action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(C) The Company shall pay all costs and expenses, including attorneys’ fees and disbursements, of the Company and the Executive in connection with any legal proceeding (including arbitration), whether or not instituted by the Company or the Executive, relating to the interpretation or enforcement of any provision of this Agreement, that is resolved in favor of the Executive pursuant to a final, unappealable judgment. The Executive shall pay all costs and expenses, including attorneys’ fees and disbursements, of the Company and the Executive in connection with any legal proceeding (including arbitration), whether or not instituted by the Company or the Executive, relating to the interpretation or enforcement of any provision of this Agreement, that is resolved in favor of the Company pursuant to a final, unappealable judgment. The non-prevailing party, as set forth above, shall pay prejudgment interest on any money judgment obtained by the prevailing party as a result of such proceeding, calculated at the rate provided in Section 1274(b)(2)(B) of the Code.

Successors; Binding Agreement.

(A) In addition to any obligations imposed by law upon any successor to the Company, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise, and whether or not such a transaction constitutes a Change in Control) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain the assumption and agreement prior to the effectiveness of any succession shall be a breach of this Agreement for which the Executive shall have any and all of the remedies available to him under this Agreement. The provisions of this Section 8 shall continue to apply to each subsequent employer of the Executive bound by this Agreement in the event of any merger, consolidation, or transfer of all or substantially all of the business or assets of that subsequent employer, whether or not that transaction constitutes a Change in Control.

(B) This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive shall die while any amount would be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, the amount, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives, or administrators of the Executive’s estate.

Effect on Prior Agreements .

This Agreement contains the complete, final, and exclusive embodiment of the agreement and understanding among the parties hereto regarding severance, change in control, or similar payments to the Executive and supersedes in all respects any prior or other agreement or understanding, written or oral, among the parties with respect to the subject matter of this Agreement, including, but not limited to, Change in Control Severance Agreements, the Employment Letter Agreement, employment agreements or company policies, or other agreements or arrangements with respect to severance, change in control, or similar payments.

10.

Exclusive Remedy .

In the event of a Payment Trigger, the provisions of Section 4 are intended to be and are exclusive and in lieu of any other rights or remedies to which the Executive or the Company may otherwise be entitled (including any contrary provisions in any written or oral employment agreement or arrangement the Executive may have with the Company), whether at law, tort or contract, in equity, or under this Agreement. The Executive shall not be entitled to any severance or Change in Control benefits or rights upon a Payment Trigger other than those benefits expressly set forth in Section 4.

11.

Notices .

For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:	USA Truck, Inc.
	3201 Industrial Park Road Van Buren, Arkansas 72956 Attention: Chairman of the Board

To the Executive:	Mr.Tim Guin
	8 Hemingford Circle Simpsonville, SC 29681

12.

Miscellaneous .

No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by the Executive and an officer of the Company specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. All references to sections of the Code shall be deemed also to refer to any successor provisions to such sections.

13.

Governing Law.

The validity, interpretation, construction, and performance of this Agreement shall be governed by the internal, substantive laws of the State of Delaware, without giving effect to the law or principles of conflict of laws of any jurisdiction.

14.

Obligation Not to Solicit and Compete.

The Executive hereby agrees that during his employment with the Company and for a period of twelve (12) months thereafter or, in the event of a Change in Control, eighteen (18) months thereafter (the applicable period being referred to herein as the " Restricted Period "), the Executive will not, directly or indirectly, in any manner (i) attempt to induce or assist others to attempt to induce any officer, employee, driver, independent contractor, customer, or vendor of the Company or its affiliates to terminate its association with or reduce or terminate business with the Company or its affiliates, nor do anything directly or indirectly to interfere with the relationship between the Company or its affiliates and any such persons or concerns, unless part of a management directive, or (ii) engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing or control of, be employed by, serve as an agent, officer, director or consultant to, be associated with or in any manner connected with, lend his name or any similar name to, lend his credit or render services or advice to, any Competitive Business (as hereinafter defined) anywhere in North America; provided, in order to bind the Executive to the provisions of Section 14(ii) when there is no Payment Trigger, the Company must make monthly payments, in cash, equal to one-twelfth (1/12) of the Executive’s annual base salary in effect immediately prior to the Date of Termination, on or as near as practicable to the same date in each month as monthly installments of the annual base salary were made to the Executive prior to the Date of Termination, for such portion of the Restricted Period as the Company determines (the " Non-Compete Payments "), which benefits will commence when the General Release is signed and the revocation period has expired. The Company will give the Executive notice within ten (10) days following the Date of Termination if it elects to not make the Non-Compete Payments and, once Non-Compete Payments commence, the Company will give the Executive thirty (30) days' written notice before discontinuing the Non-Compete Payments. The provisions of Section 14(i)will automatically apply to the Executive regardless of whether there is a Payment Trigger and the provisions of Section 14(ii) will automatically apply to the Executive if there is a Payment Trigger; the Executive acknowledging that he has received sufficient consideration for such covenants. For purposes of this Agreement, Competitive Business will mean the interstate or intrastate transportation of freight by truck (motor carrier), interstate or intrastate transportation freight through the use of a combination of rail and truck (intermodal), arranging for the interstate or intrastate transportation of freight by truck or a combination of rail and truck (brokerage), any business conducted by the Company or the Company's affiliates during Executive's employment, and any business where plans were developed during the Executive's employment to engage in such business. Nothing herein will be deemed to prevent the Executive from acquiring through market purchases and owning, solely as an investment, less than two percent (2%) in the aggregate of the equity securities of any issuer whose shares are registered under Section 12(b) or Section 12(g) of the Exchange Act, as amended, and are listed or admitted for trading on any United States national securities exchange or are quoted on any system of automated dissemination of quotations of securities prices in common use, so long as the Executive is not directly or indirectly a member of any "control group" (within the meaning of the rules and regulations of the SEC).

15.

Confidentiality.

The Executive acknowledges that during his employment with the Company, he may acquire confidential proprietary information of the Company or its affiliates (" Confidential Information ") that is, and remains, the sole property of the Company. Such Confidential Information is a valuable asset of the Company and substantially contributes to the effective and successful conduct of the Company's business. Confidential Information is intended to remain secret and misappropriation by any means is strictly prohibited. The Executive agrees to comply with the policies and procedures of the Company for protecting Confidential Information and agrees not to disclose to any person or use any Confidential Information obtained by the Executive incident to the Executive's employment or other association with the Company or its affiliates, other than as required for the proper performance of the Executive's duties and responsibilities to the Company or as required by applicable law after notice to the Company and a reasonable opportunity for it to protect Confidential Information. This restriction will continue to apply after the Executive's employment terminates, regardless of the reason for such termination, for so long as such Confidential Information remains confidential or, if sooner, until the expiration of the Restricted Period following the date the Executive's employment with the Company terminates. The obligations of confidentiality imposed by this Section 15 will not apply to Confidential Information that becomes generally known to the public hereafter through no act of the Executive's in breach of this Agreement and no act of any other person in breach of an obligation of confidentiality to the Company. Notwithstanding anything to the contrary herein, the Executive acknowledges that the requirements for confidentiality as set forth in the Company handbook continue to apply to the Executive while the Executive is receiving compensation and benefits under this Agreement and during the Restricted Period.

The Executive also acknowledges that the requirements for confidentiality set forth in the Company handbook continue to apply to the Executive for the term provided therein. Notwithstanding anything to the contrary herein or set forth in the Company handbook, nothing herein or therein will (i) limit Executive's ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”), (ii) limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company, or (iii) limit Executive’s right to receive an award for information provided to any Government Agencies.

16.

Non-disparagement.

The Executive agrees that he will not make to any person or entity any false, disparaging, or derogatory comments about the Company or its affiliates, or their business affairs, directors, officers, employees, drivers, independent contractors, customers, or vendors.

17.

Remedies

Upon breach of any of the covenants contained in Section 14, 15, or 16 of this Agreement, (a) the Company can and may take any and all actions available at law and in equity, including obtaining a restraining order or injunctive relief, (b) all compensation and benefits described in this Agreement will immediately cease, (c) the Executive will remain obligated to comply with the covenants in this Agreement, and (d) the periods set forth above in Sections 14 and 15 will be tolled during any period in which the Executive is in violation of such Section(s) so that the Company is provided with the full benefit of the Restricted Period.

18.

Withholding.

All payments provided for hereunder will be subject to required withholding of federal, state and local income, excise, and employment-related taxes. If any such excise taxes would otherwise be imposed, the Company shall determine in good faith whether the Executive will either receive all of the benefits to which he is entitled under this Agreement, subject to the excise tax, or have his benefits under this Agreement reduced to a level at which the excise tax will not apply, depending upon which approach will provide the Executive with the greater net after-tax benefit.

19.

Severability .

If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

20.

Counterparts.

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

21.

Payment; Assignment.

Benefits payable under this Agreement will be paid only from the general assets of the Company. No person has any right to or interest in any specific assets of the Company by reason of this Agreement or the Employment Letter Agreement. To the extent benefits under this Agreement are not paid when due to any individual, he or she is a general unsecured creditor of the Company with respect to any amounts due. Benefits payable pursuant to this Agreement and the right to receive future benefits may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subject to any charge.

22.

Further Assurances.

The parties to this Agreement agree to perform, or cause to be performed, such further acts and deeds and to execute and deliver or cause to be executed and delivered, such additional or supplemental documents or instruments as may be reasonably required by the other party to carry into effect the intent and purpose of this Agreement.

23.

Code Section 409A.

It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Code Section 409A (including the Treasury regulations and other published guidance relating thereto) (“ Code Section 409A ”) so as not to subject the Executive to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted, and if necessary modified or reformed (including any modification or reformation regarding the timing and amount of any payment) to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Executive. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that the Company determines may be considered nonqualified deferred compensation under Code Section 409A upon or following a termination of employment unless such termination is also a "separation from service" within the meaning of Code Section 409A, and, for purposes of any such provision of this Agreement, references to a "termination," "termination of employment" or like term, and the timing thereof, shall mean such a separation from service. Notwithstanding any other provision of this Agreement, in the event the Executive is a “specified employee” as defined in Code Section 409A on the date the Executive incurs a separation from service, as so defined, to the extent required by Code Section 409A, payments and benefits hereunder to which Code Section 409A would apply may not commence to the Executive until the earlier of the first day of the seventh month following the month that includes the Executive’s separation from service (as defined in Code Section 409A) or the date of the Executive’s death and any delayed payments and benefits shall be paid and provided in the aggregate, without interest, no later than ten (10) days following such date. For purposes of Code Section 409A, the Executive's right to receive the payments and benefits hereunder shall be treated as a right to receive a series of separate and distinct payments and benefits. Whenever a payment or benefit hereunder specifies a payment or benefit period with reference to a number of days, the actual date of payment or benefit within the specified period shall be within the sole discretion of the Company. In no event may the Executive, directly or indirectly, designate the calendar year of any payment to be made under this Plan, to the extent such payment is subject to Code Section 409A. The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Code Section 409A, but do not satisfy an exemption from, or the conditions of, Code Section 409A. Any terms of this Agreement that are undefined or ambiguous shall be interpreted by the Company in its discretion in a manner that complies with Code Section 409A to the extent necessary to comply therewith. If for any reason any provision of this Agreement does not accurately reflect its intended establishment of an exemption from or compliance with Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, such provision shall be considered ambiguous as to its exemption from or compliance with Code Section 409A and shall be interpreted by the Company in a manner consistent with such intent, as determined in the discretion of the Company.

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

IN WITNESS WHEREOF , the parties have signed this Agreement as of the date set forth above.

	USA TRUCK, INC.



	By:	James D. Reed

	Name: James Reed

	Title: CEO




	Tim Guin

	/s/ Timothy W. Guin

	Signature

	$0
	Amount of Relocation Services Benefit

Exhibit A

General Release

In exchange for the payments and benefits described in the agreement to which this release is attached (the “Agreement”), Executive, on his own behalf and on behalf of his heirs, executors, administrators, assigns and successors, does hereby covenant not to sue and acknowledges full and complete satisfaction of and hereby releases, absolves and discharges the Company and its Affiliates and their successors and assigns, parents, subsidiaries and affiliates, past and present, as well as their trustees, directors, officers, agents, attorneys, insurers, stockholders and employees, past and present, and each of them (hereinafter collectively referred to as “Releasees”), with respect to and from any and all claims, demands, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, debts, wages, vacation pay, expenses, attorneys’ fees, damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which Executive now owns or holds or has at any time heretofore owned or held as against said Releasees, or any of them, arising out of or in any way connected with his employment or other relationships with the Company or its Affiliates, or his separation from any such employment or other relationships (collectively, “Released Claims”), including specifically, but without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act of 1967, as amended by the Older Worker’s Benefit Protection Act (“ADEA”), the federal Family and Medical Leave Act, the Fair Labor Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act, or any other employment related federal, state or local law, regulation or ordinance; provided, however, that the foregoing release will not include or affect (and the following are expressly excluded from any Released Claims): (i) Executive’s rights under the Agreement; (ii) Executive’s rights to file claims for workers’ compensation or unemployment insurance benefits, (iii) Executive’s regular and usual salary accrued prior to the Separation Date, accrued but unused vacation through the Separation Date, COBRA continuation coverage and life insurance conversion rights, if any, and (iv) Executive’s rights to provide information, assist or participate in any investigation, proceedings, or litigation concerning any administrative claim with any government agency under any applicable law that protects such rights, or to file such a claim. This General Release does not (i) limit Executive's ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”), (ii) limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company, or (iii) limit Executive’s right to receive an award for information provided to any Government Agencies.

Executive acknowledges that the non-disparagement and confidentiality provisions contained in the Agreement infringe on Executive’s rights described in this release, and Executive agrees that he is aware of and has consented to such infringement. Furthermore, notwithstanding the foregoing release, Executive will continue to be entitled to all of his respective statutory rights to indemnification, including, without limitation, indemnification pursuant to the Company’s organizational documents, insurance policies or under applicable law to the same extent Executive would have had the right to be indemnified absent this release.

Executive acknowledges that he is waiving and releasing any rights he may have under the ADEA and that this waiver and release is knowing and voluntary. Executive and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date (as hereinafter defined) of the Agreement. Executive acknowledges that the consideration given for the Agreement is in addition to anything of value to which he was already entitled. Executive further acknowledges that he has been advised by this writing that:

(a) He should consult with an attorney prior to executing the Agreement;

(b) He has at least twenty-one (21) days within which to consider the Agreement, but if he wishes to sign the Agreement earlier, he may do so by signing the Acknowledgment and Waiver of the 21-day consideration period in the form attached as Exhibit B to the Agreement;

(d) This Agreement will not be effective until the eighth day after Executive executes and does not revoke the Agreement (the “ Effective Date ”); and

(e) Nothing in the Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law. Any revocation must be in writing and hand delivered to the Company by close of business on or before the seventh day from the date that Executive signs the Agreement. In the event that Executive exercises his right of revocation, neither Executive nor any member of the Company or its Affiliates will have any further rights or obligations under the Agreement.

Executive represents and warrants that he has no present knowledge of any injury, illness or disease to him that is or might be compensable as a workers’ compensation claim or similar claim for workplace injuries, illnesses or diseases.

Terms used herein and not otherwise defined will have the meanings set forth in the Agreement to which this Release was attached.

[Signature page follows]

Intending to be legally bound, I have signed this General Release as of the date written below.

Signature: __________________________________________________________________________

Tim Guin

	Date Signed:

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

USA TRUCK, INC.

I, James D. Reed, certify that:

I have reviewed this quarterly report on Form 10-Q of USA Truck, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 27, 2018	By:	/s/ James D. Reed
			James D. Reed
			Principal Executive Officer

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

USA TRUCK, INC.

I, Jason R. Bates, certify that:

I have reviewed this quarterly report on Form 10-Q of USA Truck, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 27, 2018	By:	/s/ Jason R. Bates
			Jason R. Bates
			Principal Financial Officer

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with this quarterly report on Form 10-Q of USA Truck, Inc. (the “Company”) for the period ended June 30, 2018 (the “Report”), I, James D. Reed, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 27, 2018	By:	/s/ James D. Reed
			James D. Reed
			Principal Executive Officer

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with this quarterly report on Form 10-Q of USA Truck, Inc. (the “Company”) for the period ended June 30, 2018 (the “Report”), I, Jason R. Bates, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 27, 2018	By:	/s/ Jason R. Bates
			Jason R. Bates
			Principal Financial Officer