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Done deal: USA Truck now part of DB Schenker

Mergers and acquisitions of big fleets roll along

Arkansas-based truckload carrier USA Truck announced Thursday the completion of its sale to German 3PL DB Schenker. The transaction was settled at $31.72 per share, a 118% premium to the carrier’s share price ahead of the June deal announcement.

A deal price of approximately $435 million included consideration of $290 million paid by DB Schenker in addition to the assumption of USA Truck’s (NASDAQ: USAK) cash and debt. The enterprise value implies the transaction was executed at roughly 5x trailing 12 months’ adjusted earnings before interest, taxes, depreciation and amortization.

Shares of USAK stopped trading on the Nasdaq ahead of the Thursday market open and will be delisted from the exchange.

The deal caps a turnaround initiative at USA Truck, which was designed to transition it into a regional TL operation with margins in line with industry peers. The changes included rationalizing trucks, improving utilization and renegotiating the portion of its customer book priced below market.

During part of the 2019 freight recession and into 2020, USA Truck was operating at a loss as it was forced to rely more heavily on the spot market to keep its trucks full. However, an improving freight market and the operational changes pushed the company into the black in second-half 2020 and allowed it to grow earnings in the two years since.

Its most recent quarterly report (first-quarter 2022) showed the company’s TL fleet performing at an 87% adjusted operating ratio, on a tractor fleet that was more than 200 units smaller compared to the stretch when it was racking up the losses. The turnaround also reduced the company’s debt leverage from more than 4x adjusted EBITDA to 1.7x at the end of the first quarter.

The deal recently faced pushback from potential suitors, alleging “inadequacy of disclosure regarding confidentiality agreements,” prompting management to voluntarily defend the methods and terms of the transaction publicly.

“We are happy to complete this transaction,” James Reed, president and CEO of USA Truck, stated in a news release. “We have worked together for a long time to put the company in position to deliver significant value for USA Truck’s stockholders.”

The deal is part of DB Schenker’s efforts to expand its North American transportation and logistics footprint. It provides the company the ability to market TL services directly in the Eastern half of the U.S. now that it operates USA Truck’s 1,900 trucks and terminal network, which generated 2021 revenue of $440 million. It also complements DB Schenker’s logistics offering with the addition of a brokerage platform that produced more than $320 million last year.

DB Schenker intends to expand USA Truck’s presence and will cross-sell its international air and ocean logistics capabilities to USA Truck’s customer base.

A subsidiary of German rail operator Deutsche Bahn, DB Schenker has more than 76,000 employees in over 130 countries offering land, air and ocean services as well as logistics and supply chain capabilities.

This transaction is the latest in big trucking deals, which show little sign of slowing. Since June, Heartland Express (NASDAQ: HTLD) has acquired two large fleets, and Schneider National (NYSE: SNDR) continued its 2022 M&A campaign by adding dedicated assets.

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The FREIGHTWAVES TOP 500 For-Hire Carriers list includes Schneider (No. 7), Heartland Express (No. 35), Forward Air (No. 37) and USA Truck (No. 51).

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.