P.A.M. Transportation Services, Inc. Announces Results for the Second Quarter Ended June 30, 2024

Rhea-AI Summary

P.A.M. Transportation Services, Inc. (NASDAQ: PTSI) reported a challenging second quarter 2024, with total revenues of $182.9 million, down 11.8% year-over-year. The company experienced an operating loss of $0.7 million and a consolidated net loss of $2.9 million, or diluted loss per share of $0.13. This compares to net income of $9.3 million and earnings per share of $0.42 in Q2 2023.

Despite the downturn, President Joe Vitiritto noted signs of seasonal demand patterns and capacity tightening towards the quarter's end. The company maintains a strong financial position with $173.9 million in cash, marketable securities, and available credit, alongside $306.7 million in stockholders' equity. PTSI generated $28.4 million in operating cash flow during the first half of 2024.

Positive

• Strong liquidity position with $173.9 million in cash, marketable securities, and available credit
• Generated $28.4 million in operating cash flow during the first half of 2024
• Signs of seasonal demand patterns and capacity tightening observed towards the end of Q2

Negative

• Total revenues decreased by 11.8% year-over-year to $182.9 million in Q2 2024
• Reported an operating loss of $0.7 million and a net loss of $2.9 million in Q2 2024
• Diluted loss per share of $0.13 compared to earnings per share of $0.42 in Q2 2023
• Outstanding debt increased by $4.3 million to $266.0 million as of June 30, 2024

Insights

Financial Analyst

P.A.M. Transportation Services' Q2 2024 results paint a challenging picture for the trucking industry. The company reported a consolidated net loss of $2.9 million, or $0.13 per diluted share, a significant downturn from the $9.3 million net income in Q2 2023. This shift from profit to loss is particularly concerning.

The 11.8% year-over-year decrease in operating revenues to $182.9 million reflects a softening demand in the freight market. The operating ratio of 100.4% indicates that the company's operating expenses exceeded its revenues, resulting in an operating loss of $0.7 million.

Despite these challenges, there are some positive signs. The company generated $28.4 million in operating cash flow during the first half of 2024, demonstrating its ability to maintain liquidity. The $173.9 million in cash, marketable securities and available credit provides a financial cushion to weather the current downturn.

However, the increase in outstanding debt by $4.3 million since December 2023 suggests that P.A.M. may be leveraging its balance sheet to navigate the challenging market conditions. This could potentially impact its financial flexibility if market conditions don't improve soon.

The management's commentary about seeing opportunities and potential cycle change is cautiously optimistic, but investors should remain wary given the current financial performance. The focus on cost and efficiency measures is crucial, but it remains to be seen if these efforts can offset the pressures from the unfavorable freight market in the short term.

Market Research Analyst

The Q2 2024 results from P.A.M. Transportation Services offer valuable insights into the broader trucking and logistics sector. The company's performance suggests a cyclical downturn in the freight market, which is likely affecting other players in the industry as well.

The management's observation of seasonal demand patterns returning to pre-COVID norms is particularly noteworthy. This could indicate a stabilization of supply chains and consumer behavior, potentially signaling a more predictable operating environment for logistics companies in the coming quarters.

However, the persistent downward rate pressure mentioned by the CEO is a concern for the entire sector. It suggests that overcapacity might still be an issue in the trucking industry, leading to pricing competition that squeezes margins. This is evident in P.A.M.'s operating ratio exceeding 100%, a situation that's likely mirrored across the industry.

The company's focus on cost and efficiency measures, aiming for a mid-80's operating ratio in the long term, aligns with industry-wide trends. Many trucking companies are investing in technology and operational improvements to enhance profitability in a challenging market.

Investors should monitor how other trucking companies are performing in this environment. If P.A.M.'s results are indicative of a broader trend, we might see a wave of consolidation in the industry as stronger players absorb struggling competitors. This could lead to a more balanced supply-demand dynamic in the long run, potentially improving pricing power for the survivors.

Second Quarter 2024 Summary Results

• Total revenues of $182.9 million, down 11.8% YoY
• Operating loss of $0.7 million
• Operating ratio of 100.4%
• Diluted loss per share of $0.13

TONTITOWN, Ark.--(BUSINESS WIRE)-- P.A.M. Transportation Services, Inc. (NASDAQ: PTSI) (“we” or the “Company”) today reported consolidated net loss of $2.9 million, or diluted and basic loss per share of $0.13, for the quarter ended June 30, 2024. These results compare to consolidated net income of $9.3 million, or diluted and basic earnings per share of $0.42 for the quarter ended June 30, 2023.

Operating revenues decreased 11.8% to $182.9 million for the second quarter of 2024 compared to $207.4 million for the second quarter of 2023.

Joe Vitiritto, President of the Company, commented, “Our consolidated operating results for the second quarter 2024 were very similar to the first quarter of the year. The quarter started off slower than anticipated but began to show signs of seasonal demand patterns that were more consistent with pre-covid periods and we saw capacity tightening some as we moved towards the end of the quarter. We continue to see downward rate pressure, but we are also seeing some opportunities that tell us we may be getting closer to a cycle change. Our continued focus on cost and efficiency measures helps us to mitigate the current unfavorable freight market as well as positioning us to meet our longer-term mid-80’s operating ratio expectation. I am pleased to see our team working together with our professional drivers to negotiate this environment and prepare us for opportunities that will come with an improved freight market.”

Liquidity, Capitalization, and Cash Flow

As of June 30, 2024, we had an aggregate of $173.9 million of cash, marketable equity securities, and available liquidity under our line of credit and $306.7 million of stockholders’ equity. Outstanding debt was $266.0 million as of June 30, 2024, which represents a $4.3 million increase from December 31, 2023. During the first half of 2024, we generated $28.4 million in operating cash flow.

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; a significant reduction in or termination of the Company's trucking service by a key customer, including as a result of future labor disruptions; 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 public health crises; the resale value of the Company's used equipment; the price and availability of new equipment consistent with anticipated acquisitions and replacement plans; 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, rules regarding the classification of independent contractors as employees, tariffs, import/export, trade and immigration regulations or policies; 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 Key Financial and Operating Statistics (unaudited)
	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands, except earnings per share)				(in thousands, except earnings per share)
Revenue, before fuel surcharge	$160,213		$182,082		$321,182		$375,536
Fuel surcharge	22,735		25,330		44,358		53,600
Operating Revenue	182,948		207,412		365,540		429,136
Operating expenses and costs:
Salaries, wages and benefits	43,759		47,828		87,822		96,106
Operating supplies and expenses	35,309		39,716		70,020		81,210
Rent and purchased transportation	74,803		78,329		148,082		165,425
Depreciation	18,705		15,757		37,640		32,254
Insurance and claims	5,464		5,045		10,325		20,059
Other	5,752		7,208		12,931		12,631
Gain/(loss) on disposition of equipment	(139)		(260)		101		(836)
Total operating expenses and costs	183,653		193,623		366,921		406,849
Operating (loss)/income	(705)		13,789		(1,381)		22,287
Interest expense	(3,284)		(2,163)		(6,167)		(4,519)
Non-operating income (expense)	209		1,192		4,147		2,091
(Loss)/income before income taxes	(3,780)		12,818		(3,401)		19,859
Income tax (benefit)/expense	(870)		3,499		(772)		5,309
Net (loss)/income	($2,910)		$9,319		($2,629)		$14,550
Diluted (loss)/earnings per share	($0.13)		$0.42		($0.12)		$0.65
Average shares outstanding – Diluted	21,932		22,182		21,981		22,253
	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Truckload Operations
Total miles (in thousands) (1)	45,829		50,526		89,894		101,095
Operating ratio (2)	103.7%		92.7%		103.9%		96.1%
Empty miles factor	8.95%		8.60%		8.78%		8.78%
Revenue per total mile, before fuel surcharge (1)	$2.09		$2.17		$2.10		$2.19
Total loads	110,511		109,000		212,712		211,430
Revenue per truck per workday	$714		$774		$710		$788
Revenue per truck per week	$3,572		$3,868		$3,552		$3,939
Average company-driver trucks	1,920		2,061		1,912		2,056
Average owner operator trucks	413		367		389		378
Logistics Operations
Total revenue (in thousands)	$53,659		$61,856		$112,428		$130,113
Operating ratio	93.9%		91.8%		93.9%		90.2%

P.A.M. Transportation Services, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (unaudited)
	June 30,		December 31,
	2024		2023
	(in thousands)
ASSETS
Current assets
Cash and cash equivalents	$71,984		$100,614
Trade accounts receivable, net	92,324		80,604
Other receivables	6,444		7,203
Inventories	2,326		2,321
Prepaid expenses and deposits	9,407		13,213
Marketable equity securities	42,005		43,203
Income taxes refundable	4,473		3,883
Total current assets	228,963		251,041
Property and equipment	781,296		771,131
Less: accumulated depreciation	279,527		266,412
Total property and equipment, net	501,769		504,719
Other non-current assets	2,795		4,697
Total assets	$733,527		$760,457
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$40,034		$62,652
Accrued expenses and other liabilities	16,798		16,799
Current portion of long-term debt	54,881		57,645
Total current liabilities	111,713		137,096
Long-term debt, net of current portion	211,140		204,064
Deferred income taxes	103,500		104,331
Other long-term liabilities	500		750
Total liabilities	426,853		446,241
STOCKHOLDERS’ EQUITY
Common stock	223		223
Additional paid-in capital	41,171		40,825
Treasury stock, at cost	(13,995)		(8,736)
Retained earnings	279,275		281,904
Total stockholders’ equity	306,674		314,216
Total liabilities and stockholders’ equity	$733,527		$760,457

_______________________________________

1)		Excludes miles driven by third party power only carriers.
2)		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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240724218715/en/

FROM: P.A.M. TRANSPORTATION SERVICES, INC.

P.O. BOX 188

Tontitown, AR 72770

Lance K. Stewart

(479) 361-9111

Source: P.A.M. Transportation Services, Inc.

FAQ

What were P.A.M. Transportation Services' (PTSI) financial results for Q2 2024?

PTSI reported total revenues of $182.9 million, an operating loss of $0.7 million, and a net loss of $2.9 million, or $0.13 per diluted share, for Q2 2024.

How did PTSI's Q2 2024 results compare to the same period in 2023?

PTSI's Q2 2024 results showed a decline, with revenues down 11.8% and a net loss of $2.9 million compared to net income of $9.3 million in Q2 2023.

What was PTSI's liquidity position as of June 30, 2024?

As of June 30, 2024, PTSI had $173.9 million in cash, marketable equity securities, and available liquidity under its line of credit, with $306.7 million in stockholders' equity.

How much operating cash flow did PTSI generate in the first half of 2024?

PTSI generated $28.4 million in operating cash flow during the first half of 2024.