U.S. Xpress (NYSE: USX) announced that it has amended its credit facility to ease financial covenants with its lenders.
The Chattanooga, Tennessee-based truckload (TL) carrier said it approached its lenders to provide the company with a little more flexibility on its leverage ratio and interest coverage requirements as an act of prudence.
“Given the persistently soft truckload market conditions that we have experienced this year, we proactively approached our lenders to amend the financial covenants under our primary credit facility. Although an amendment may not have been required at this time, we believe it was prudent to gain additional flexibility to operate our business in the normal course and continue to invest in the future. We are pleased to have the ongoing support of our lenders, and we remain confident in our strategy and business initiatives,” said U.S. Xpress’ chief financial officer Eric Peterson.
The amendment will increase the company’s debt leverage ratio requirement to 3.25 times (from 3x) in the third quarter ended today, September 30, 2019. The ratio will be 0.5x higher in the fourth quarter 2019 and the first quarter 2020 at 3.5x and .25x higher in the second quarter of 2020 at 3.25x. The interest coverage ratio requirement, traditionally a company’s ability to pay the interest on its debt represented as a multiple of operating income, declines to 1.2x (from 2x) in fourth quarter 2019 and first quarter 2020, increasing to 1.75x in second quarter 2020.
The company lists its total funded debt and finance leases as 68.5 percent of its total capitalization in its September 2019 investor presentation.
U.S. Xpress’ president and CEO Eric Fuller noted general improvement in recent TL trends at an investor conference earlier this month. Fuller said that the company is expecting “a little more of a normal peak this year” and that nothing from customer conversations suggests a looming recession even though some macroeconomic data suggests otherwise.
