P.A.M. Transportation(PTSI) - 2022 Q2 - Quarterly Report

Part I Item 1. Financial Statements (unaudited) Unaudited financial statements for Q2 2022 reflect substantial growth in revenue and net income, driven by acquisitions and asset investments Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2022, shows increased total assets and stockholders' equity, primarily due to property and equipment growth Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $229,058 | $199,574 | | Net Property and Equipment | $449,326 | $384,179 | | Total Assets | $683,135 | $587,381 | | Total Current Liabilities | $128,218 | $111,403 | | Long-Term Debt | $196,787 | $172,733 | | Total Liabilities | $421,548 | $371,271 | | Total Stockholders' Equity | $261,587 | $216,110 | Condensed Consolidated Statements of Operations Statements of operations reveal substantial year-over-year growth in Q2 and H1 2022 revenues and net income, with improved diluted EPS Key Operating Results (in thousands, except per share data) | Metric | Q2 2022 (in thousands) | Q2 2021 (in thousands) | Six Months 2022 (in thousands) | Six Months 2021 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenues | $237,168 | $161,263 | $456,616 | $310,122 | | Operating Income | $36,683 | $21,019 | $68,027 | $34,672 | | Net Income | $24,182 | $15,317 | $48,124 | $27,266 | | Diluted EPS | $1.08 | $0.67 | $2.14 | $1.18 | Condensed Consolidated Statements of Cash Flows Cash flow statement shows increased operating cash, significant investing cash outflow due to acquisition, and a shift to cash inflow from financing Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $74,868 | $51,308 | | Net cash (used in) provided by investing activities | $(81,389) | $21,508 | | Net cash provided by (used in) financing activities | $4,576 | $(50,121) | | Net (Decrease) Increase in Cash | $(1,945) | $22,695 | Condensed Consolidated Statement of Stockholders' Equity Stockholders' equity increased significantly in H1 2022, driven by net income, a stock split, and treasury share adjustments - Total stockholders' equity increased by $45.5 million in the first six months of 2022, driven by strong net income[20] - The company retired 12,268,395 shares of treasury stock in the first quarter of 2022, which had no effect on the overall equity position[54] Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, the 2-for-1 stock split, the Metropolitan Trucking acquisition, revenue recognition, and a class-action lawsuit settlement - On March 8, 2022, the Board of Directors declared a 2-for-1 forward stock split, effective March 29, 2022. All share and per-share amounts have been retrospectively adjusted[27] - The company acquired substantially all assets of Metropolitan Trucking, Inc. on June 14, 2022, for $79.9 million, including $64.3 million in cash and $12.6 million in assumed debt[86][87][88] - A settlement agreement has been reached in a class-action lawsuit filed by a former driver regarding wage claims. The settlement has been fully reserved as of June 30, 2022[70] Revenue by Service (before fuel surcharge, in thousands) | Service | Q2 2022 (in thousands) | Q2 2021 (in thousands) | Six Months 2022 (in thousands) | Six Months 2021 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Truckload Services | $134,698 | $98,040 | $259,676 | $188,398 | | Brokerage & Logistics | $68,041 | $47,135 | $139,152 | $91,918 | | Total | $202,739 | $145,175 | $398,828 | $280,316 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong H1 2022 performance driven by rate increases and demand, improved operating ratios, and robust liquidity, despite challenges Results of Operations – Truckload Services Truckload services revenue grew significantly in Q2 and H1 2022 due to higher rates and fleet expansion, leading to improved operating ratios - Q2 2022 truckload revenue (ex-fuel) increased 37.4% to $134.7 million, driven by higher rates and a larger fleet[109] - Insurance and claims expense increased to 5.4% of revenue in Q2 2022 from 3.2% in Q2 2021, largely due to an increased litigation reserve for a lawsuit settlement[115] Truckload Services Operating Ratio | Period | 2022 | 2021 | Improvement | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | 79.7% | 84.0% | 4.3 pts | | Six Months Ended June 30 | 80.5% | 86.9% | 6.4 pts | Results of Operations – Logistics and Brokerage Services Logistics and brokerage services saw substantial revenue growth in Q2 and H1 2022, driven by increased loads and rates, improving the operating ratio - Q2 2022 logistics revenue (ex-fuel) increased 44.3% to $68.0 million, driven by more loads and higher customer rates[129] Logistics and Brokerage Services Operating Ratio | Period | 2022 | 2021 | Improvement | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | 86.2% | 88.7% | 2.5 pts | | Six Months Ended June 30 | 87.4% | 89.1% | 1.7 pts | Results of Operations – Combined Services Combined services show significant increases in net income and diluted EPS for both Q2 and H1 2022 compared to prior periods Combined Net Income and Diluted EPS | Period | Net Income (2022) | Diluted EPS (2022) | Net Income (2021) | Diluted EPS (2021) | | :--- | :--- | :--- | :--- | :--- | | Q2 | $24.2M | $1.08 | $15.3M | $0.67 | | H1 | $48.1M | $2.14 | $27.3M | $1.18 | Liquidity and Capital Resources The company maintains strong liquidity from operations, funding significant capital expenditures and acquisitions, with substantial credit availability - Generated $74.9 million in cash from operating activities in the first six months of 2022[138] - Utilized cash on hand, installment notes, and line of credit to finance approximately $86.7 million in purchases, including assets from the Metropolitan acquisition[139] - Expects to purchase approximately 250 new trucks and 200 new trailers during the remainder of 2022, with net capital expenditures of about $44.7 million[141] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company faces market risks from equity prices, interest rates, and diesel fuel costs, with potential impacts quantified, and does not use derivatives - A 10% decrease in the market price of held marketable equity securities would decrease their carrying value by approximately $3.7 million[151] - A 10% increase in the average annual price per gallon of diesel fuel would increase annual fuel expenses by $5.2 million, based on 2021 consumption[153] - A hypothetical 100 basis point increase in LIBOR would result in approximately $10,000 of additional annual interest expense per $1.0 million of outstanding variable rate debt[152] Item 4. Controls and Procedures Management affirmed the effectiveness of disclosure controls and procedures as of June 30, 2022, with no material changes to internal controls - The CEO and CFO concluded that as of June 30, 2022, the company's disclosure controls and procedures are effective at a reasonable assurance level[156] - No changes occurred during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[158] Part II Item 1. Legal Proceedings The company is involved in a class-action lawsuit regarding wage claims, with a settlement reached and fully reserved, pending court approval - A lawsuit filed on August 6, 2021, by a former driver alleges failure to pay minimum wage and other violations, and seeks class certification[162] - A settlement agreement has been reached and is pending court approval. The settlement was fully reserved as of June 30, 2022[70][162] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased under the company's stock repurchase program during Q2 2022, following a November 2021 reauthorization - No shares were purchased during the second quarter of 2022 under the company's stock repurchase program[166] - Since the November 2021 reauthorization, the company has repurchased 83,220 stock-split adjusted shares[165] Item 6. Exhibits This section enumerates exhibits filed with the Form 10-Q, including acquisition agreements, corporate amendments, and officer certifications