USA Truck has expanded its business primarily in the southeast U.S. with the acquisition of Carnesville, Ga-based Davis Transfer Co., a regional carrier with $50 million in annual revenue and more than 250 tractors. Terms of the deal were not disclosed.
According to a statement Thursday (Oct. 18) from Van Buren-based USA Truck, the company was founded by Harry Davis in 1959 and has been a family-owned business since. Davis has been managed as a full truckload carrier for the past 20 years by Gary, Bill and Todd Davis. Todd will join USA Truck as a vice president and will operate independently of USA Truck as a wholly owned subsidiary.
Davis has more than 250 tractors and almost 800 trailers with terminals in Carnesville, Valdosta, Ga., and Lakeland, Fla. The company also has drop yards in Gaffney, S.C., Ellenwood, Ga., Pooler, Ga., and Jacksonville, Fla.
By comparison, USA Truck had an average seated tractor count for the second quarter of 2018 of 1,558.
“Davis represents a unique opportunity to add capacity, loyal customers, and exceptional drivers – all of whom are committed to the continued strong performance of the business,” James Reed, president and CEO of USA Truck, said in a statement.
Reed also said the Davis deal gives USA Truck “three key strategic opportunities” in that it improves access to where drivers live, provides more maintenance facilities, and will deliver “financial synergies.”
“We intend to drive improvements to the maintenance cost structure of both USA Truck and Davis by leveraging Davis’ existing terminal infrastructure. Finally, we anticipate the realization of certain financial synergies, especially in the procurement area. We believe these advantages, coupled with what we expect will be a substantially and immediately accretive business, make this acquisition a great fit,” Reed noted.
The company said its line of credit and cash on hand will finance the deal.
USA Truck is expected to announce third-quarter earnings on Oct. 25. The company has performed better in recent years, with the second quarter of 2018 marking the fourth consecutive quarter of being in the black. Second quarter income was $2.544 million, much better than the $2.846 million loss in the same quarter of 2017. Earnings per share of 31 cents beat the consensus estimate of 28 cents. Revenue during the quarter was $135.381 million, up 26.1% compared to the $107.358 million in the same quarter of 2017.
For the first half of 2018, USA Truck posted net income of $3.574 million, a wide swing from the $7.736 million loss carried in the first half of 2017. Revenue in the first half of the year was $260.394 million, up over the $209.028 million in the same period of 2017.
The consensus of the three analysts who follow USA Truck is that third-quarter earnings per share will be 38 cents.
Company shares (NASDAQ: USAK) closed Thursday at $17.31, down 52 cents. During the past 52 weeks, the share price has ranged between $29.15 and $12.14.