US Xpress Public Offering Values Carrier at $1.5 Billion

June 04, 2018 by Jerry Hirsch, @Jerryhirsch

U.S. Xpress Enterprises Inc. plans to sell as much as $415 million of stock in a proposed initial public offering, the Chattanooga motor carrier said in a Securities and Exchange Commission filing Monday.

The deal, which would raise about $334 million for the trucking company. It values the business at about $1.5 billion, according to Renaissance Capital, a provider of pre-initial public offering investment research.

Members of the two families that founded U.S. Xpress in 1985 would collect as much as $28 million from the share sale, according to the filing. The stock has a target price of $18 to $20 per share. The offering is for as much as 20.8 million shares, including an option allowing the underwriters to purchase an additional 2.7 million at the offering price.

With $1.6 billion in annual revenue last year, U.S. Xpress is the fifth largest full truckload carrier in the U.S. Its fleet has 6,800 semi-tractors and 16,000 trailers. That includes about 1,300 big rigs operated by independent contractors.

It will trade on the New York Stock Exchange under the symbol USX. BofA Merrill Lynch and Morgan Stanley are the lead managers for the offering.

The company said it estimates its net proceeds from the offering will be about $293 million after expenses. That’s based on a $19 per share sale price. The carrier plans to use $269 million to pay down debt. Another $24 million will be used for general corporate purposes and to purchase the company’s Tunnel Hill, Ga., training and maintenance center from the two families that founded the company.  U.S. Xpress pays about $1 million annually to lease the property.

Max Fuller, the motor carrier’s founder, Eric Fuller, his son and chief executive of US Xpress, and Lisa Quinn Pate, another company executive and daughter of the other co-founder, will retain firm control of the business. The three own 84.4 percent of the voting shares now. They will have 71.5 percent following the offering. With other family members, the group will control about 83 percent of the voting shares.

They are taking the company public at a favorable time for the trucking industry.

The amount of freight hauled by the trucking industry surged 9.5 percent in April compared with the same month a year earlier, according to the American Trucking Associations. This was the largest year-over-year increase since October 2017, the ATA said.

Motor carriers are getting their best rates in years because there are not enough trucks to haul freight. There are about 6.6 loads for every available truck trailer, according to DAT Solutions, which tracks freight and rates. A year ago, there were 3.5 loads per every van. Spot freight rates are up 25 percent to 29 percent over the same time a year ago, depending on whether it is a van, refrigerated or flatbed load, according to DAT.

US Xpress also is on the upswing. The company earned $1.2 million in the first quarter, compared with a loss of $4.4 million in the same period in 2017. It lost $4 million last year and has logged an annual profit only once in the last five years, according to the SEC filing.

But the industry still faces challenges. Drivers are leaving trucking faster than companies can replace them. They are retiring or jumping to other jobs that don’t require constant travel.  The industry is struggling to find younger drivers to replace those who leave the business. There’s also a growing shortage of maintenance technicians.

Additionally, the cost of labor and fuel — the two largest trucking industry expenses — are rising at their fastest rate in years.

Read Next: Shippers, Truckers Deal With Soaring Fuel and Labor Costs

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