P.A.M. Transportation Services, Inc. (NASDAQ: PTSI) (“the Company”) today reported net income of $5.2 million, or diluted earnings per share of $0.23 ($0.24 basic), for the quarter ended March 31, 2023. These results compare to net income of $23.9 million, or diluted earnings per share of $1.06 ($1.07 basic), for the quarter ended March 31, 2022. Net income and diluted earnings per share for both the first quarter ended March 31, 2023, and the first quarter ended March 31, 2022, include the negative impact of loss estimates for claims anticipated to settle in excess of insurance policy limits. Excluding the negative impact of these litigation charges, adjusted (non-GAAP) net income for the quarter ended March 31, 2023, was $12.7 million, or adjusted (non-GAAP) diluted and basic earnings per share of $0.57 compared to adjusted (non-GAAP) net income for the quarter ended March 31, 2022, of $26.5 million, or adjusted (non-GAAP) diluted earnings per share of $1.18 ($1.19 basic).
Operating revenues increased 1.0% to $221.7 million for the first quarter of 2023 compared to $219.4 million for the first quarter of 2022.
Liquidity, Capitalization, and Cash Flow
As of March 31, 2023, we had an aggregate of $193.8 million of cash, marketable equity securities, and available liquidity under our line of credit and $302.1 million of stockholders’ equity. Outstanding debt was $251.3 million as of March 31, 2023, which represents a $13.0 million decrease from December 31, 2022. During the first quarter of 2023, we generated $34.2 million in operating cash flow.
Non-GAAP Financial Measures
In addition to our results under United States generally accepted accounting principles (GAAP), this press release also includes non-GAAP financial measures termed adjusted operating income, adjusted operating ratio, adjusted net income and adjusted diluted earnings per share. The Company defines adjusted operating income, adjusted operating ratio, adjusted net income and adjusted diluted earnings per share as GAAP operating income, GAAP operating ratio, GAAP net income and GAAP diluted earnings per share, respectively, excluding certain significant items, such as certain litigation-related charges, and any tax impact associated with such items. Management believes that reporting adjusted operating income, adjusted operating ratio, adjusted net income and adjusted diluted earnings per share more clearly reflects the Company’s current operating results and provides investors with a better understanding of the Company’s overall financial performance. Management also believes that adjusted operating ratio is more representative of our operations when excluding the volatility of fuel prices, which we cannot control. In addition, the adjusted results, although not a financial measure under GAAP, may facilitate the ability to analyze the Company’s financial results in relation to those of its competitors and to the Company’s prior financial performance by excluding items which otherwise would distort the comparison. However, because not all companies use identical calculations, the Company's presentation of these measures may not be comparable to similarly titled measures of other companies. Adjusted operating income, adjusted operating ratio, adjusted net income and adjusted diluted earnings per share are not recognized terms under GAAP, do not purport to be alternatives to, and should be considered in addition to, and not as a substitute for or superior to, operating income, operating ratio, net income and diluted earnings per share, respectively, as defined under GAAP.
Pursuant to the requirements of Regulation G, we have provided a tabular reconciliation of GAAP operating income to adjusted operating income and adjusted operating ratio, GAAP net income to adjusted net income and GAAP diluted earnings per share to adjusted diluted earnings per share in this press release.
About P.A.M. Transportation Services, Inc.
P.A.M. Transportation Services, Inc. is a holding company that owns subsidiaries engaged in providing truckload dry van carrier services transporting general commodities throughout the continental United States, as well as in the Canadian provinces of Ontario and Quebec. The Company’s consolidated operating subsidiaries also provide transportation services in Mexico through its gateways in Laredo and El Paso, Texas, under agreements with Mexican carriers.
Forward-Looking Statements
Certain information included in this document contains or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may relate to expected future financial and operating results, prospects, plans or events, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, excess capacity in the trucking industry; surplus inventories; general inflation, recessionary economic cycles and downturns in customers' business cycles; increases or rapid fluctuations in fuel prices, interest rates, fuel taxes, tolls, and license and registration fees; potential economic, business or operational disruptions or uncertainties that may result from any future outbreaks of the COVID-19 pandemic or other public health crises; the resale value of the Company's used equipment and the price of new equipment; increases in compensation for and difficulty in attracting and retaining qualified drivers and owner-operators; increases in insurance premiums and deductible amounts relating to accident, cargo, workers' compensation, health, and other claims; increases in the number or amount of claims for which the Company is self-insured; inability of the Company to continue to secure acceptable financing arrangements; seasonal factors such as harsh weather conditions that increase operating costs; competition from trucking, rail, and intermodal competitors including reductions in rates resulting from competitive bidding; the ability to identify acceptable acquisition candidates, consummate acquisitions, and integrate acquired operations; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; the impact of pending or future litigation; general risks associated with doing business in Mexico, including, without limitation, exchange rate fluctuations, inflation, import duties, tariffs, quotas, political and economic instability and terrorism; the potential impact of new laws, regulations or policy, including, without limitation, tariffs, import/export, trade and immigration regulations or policies; a significant reduction in or termination of the Company's trucking service by a key customer; and other factors, including risk factors, included from time to time in filings made by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise forward-looking statements, whether due to new information, future events or otherwise. Considering these risks and uncertainties, the forward-looking events and circumstances discussed above and in company filings might not transpire.
P.A.M. Transportation Services, Inc. and Subsidiaries | |||
| Quarter ended March 31, | ||
| 2023 |
| 2022 |
| (in thousands, except per share amounts) | ||
|
|
|
|
Revenue, before fuel surcharge | $ 193,454 |
| $196,089 |
Fuel surcharge | 28,270 |
| 23,359 |
Operating revenue | 221,724 |
| 219,448 |
|
|
|
|
Operating expenses and costs: |
|
|
|
Salaries, wages and benefits | 48,278 |
| 39,275 |
Operating supplies and expenses | 41,073 |
| 31,647 |
Rent and purchased transportation | 87,096 |
| 91,376 |
Depreciation | 16,497 |
| 14,877 |
Insurance and claims | 15,435 |
| 6,863 |
Other | 5,423 |
| 4,213 |
Gain on disposition of equipment | (577) |
| (147) |
Total operating expenses and costs | 213,225 |
| 188,104 |
|
|
|
|
Operating income | 8,499 |
| 31,344 |
|
|
|
|
Interest expense | (2,356) |
| (1,667) |
Non-operating income | 899 |
| 1,929 |
|
|
|
|
Income before income taxes | 7,042 |
| 31,606 |
Income tax expense | 1,811 |
| 7,664 |
|
|
|
|
Net income | $5,231 |
| $23,942 |
|
|
|
|
Diluted earnings per share | $0.23 |
| $1.06 |
|
|
|
|
Average shares outstanding – Diluted | 22,317 |
| 22,483 |
|
|
|
|
| Quarter ended March 31, | ||
Truckload Operations | 2023 |
| 2022 |
Total miles | 53,729 |
| 45,256 |
Operating ratio (1) | 99.3% |
| 81.4% |
Empty miles factor | 8.96% |
| 9.16% |
Revenue per total mile, before fuel surcharge | $2.33 |
| $2.76 |
Total loads | 102,430 |
| 91,555 |
Revenue per truck per work day | $802 |
| $947 |
Revenue per truck per week | $4,010 |
| $4,736 |
Average company-driver trucks | 2,051 |
| 1,675 |
Average owner operator trucks | 389 |
| 388 |
|
|
|
|
Logistics Operations |
|
|
|
Total revenue (in thousands) | $68,256 |
| $71,111 |
Operating ratio | 88.8% |
| 88.6% |
P.A.M. Transportation Services, Inc. and Subsidiaries | |||
| |||
| March 31, |
| December 31, |
| 2023 |
| 2022 |
| (in thousands) | ||
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents | $92,473 |
| $74,087 |
Trade accounts receivable, net | 131,431 |
| 134,739 |
Other receivables | 7,443 |
| 6,263 |
Inventories | 2,624 |
| 2,570 |
Prepaid expenses and deposits | 14,136 |
| 15,729 |
Marketable equity securities | 41,440 |
| 41,728 |
Income taxes refundable | 3,280 |
| 5,650 |
Total current assets | 292,827 |
| 280,766 |
|
|
|
|
Property and equipment | 691,121 |
| 705,919 |
Less: accumulated depreciation | 244,436 |
| 242,324 |
Total property and equipment, net | 446,685 |
| 463,595 |
|
|
|
|
Other non-current assets | 4,329 |
| 4,801 |
Total Assets | $743,841 |
| $749,162 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable | $46,229 |
| $48,917 |
Accrued expenses and other liabilities | 43,342 |
| 34,233 |
Current portion of long-term debt | 58,735 |
| 58,815 |
Total current liabilities | 148,306 |
| 141,965 |
|
|
|
|
Long-term debt, net of current portion | 192,522 |
| 205,466 |
Deferred income taxes | 100,885 |
| 101,445 |
Other long-term liabilities | 22 |
| 103 |
Total liabilities | 441,735 |
| 448,979 |
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
Common stock | 223 |
| 223 |
Additional paid-in capital | 40,680 |
| 40,472 |
Treasury stock, at cost | (7,516) |
| (4,000) |
Retained earnings | 268,719 |
| 263,488 |
Total stockholders’ equity | 302,106 |
| 300,183 |
Total liabilities and stockholders’ equity | $743,841 |
| $749,162 |
|
|
|
|
|
|
|
|
P.A.M. Transportation Services, Inc. and Subsidiaries | |||
| Quarter ended March 31, | ||
| 2023 |
| 2022 |
| (Dollars in thousands) | ||
GAAP Presentation |
|
|
|
Total operating revenue | $221,724 |
| $219,448 |
Total operating expenses | (213,225) |
| (188,104) |
Operating income | $8,499 |
| $31,344 |
Operating ratio | 96.2% |
| 85.7% |
|
|
|
|
Non-GAAP Presentation |
|
|
|
Total operating revenue | $221,724 |
| $219,448 |
Fuel surcharge | (28,270) |
| (23,359) |
Revenue, excluding fuel surcharge | 193,454 |
| 196,089 |
|
|
|
|
Total operating expenses | 213,225 |
| 188,104 |
Less: fuel surcharge | (28,270) |
| (23,359) |
Less: specific legal reserve increase | (9,998) |
| (3,335) |
Adjusted operating expenses | 174,957 |
| 161,410 |
Adjusted Operating income | $18,497 |
| $34,679 |
Adjusted Operating ratio | 90.4% |
| 82.3% |
|
|
|
|
P.A.M. Transportation Services, Inc. and Subsidiaries | |||
| Quarter ended March 31, | ||
| 2023 |
| 2022 |
| (in thousands) | ||
|
|
|
|
Net income (GAAP) | $5,231 |
| $23,942 |
|
|
|
|
Additions: |
|
|
|
Specific legal reserve increase | 9,998 |
| 3,335 |
|
|
|
|
Reductions: |
|
|
|
Tax benefit of specific legal reserve increase (2) | (2,570) |
| (809) |
|
|
|
|
Adjusted Net income (non-GAAP) | $12,659 |
| $26,468 |
|
|
|
|
P.A.M. Transportation Services, Inc. and Subsidiaries | |||
| Quarter ended March 31, | ||
| 2023 |
| 2022 |
|
|
|
|
Diluted earnings per share (GAAP) | $0.23 |
| $1.06 |
|
|
|
|
Additions: |
|
|
|
Specific legal reserve increase | 0.45 |
| 0.15 |
|
|
|
|
Reductions: |
|
|
|
Tax benefit of specific legal reserve increase (2) | (0.11) |
| (0.03) |
|
|
|
|
Adjusted Diluted earnings per share (non-GAAP) | $0.57 |
| $1.18 |
|
|
|
|
_______________________________________
- The Truckload Operations operating ratio has been calculated based upon total operating expenses, net of fuel surcharge, as a percentage of revenue, before fuel surcharge. We used revenue, before fuel surcharge, and operating expenses, net of fuel surcharge, because we believe that eliminating this sometimes volatile source of revenue affords a more consistent basis for comparing our results of operations from period to period.
- The tax benefit is calculated using the effective tax rates for each respective period prior to any adjustments for non-GAAP amounts.
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