PAM TRANSPORTATION SERVICES INC

Previous wording

For both operations, substantially all of our revenue is generated by transporting freight for customers and is predominantly affected by the rates per mile received from our customers, equipment utilization, and our percentage of non-compensated miles. These aspects of our business are carefully managed, and efforts are continuously underway to achieve favorable results. Truckload services revenues, excluding fuel surcharges, represented 66.5% and 66.0% of total revenues, excluding fuel surcharges, for the quarters ended June 30, 2024, and 2023, respectively. The remaining revenues, excluding fuel surcharges, were generated from brokerage and logistics services.

Current wording

For both operations, substantially all of our revenue is generated by transporting freight for customers and is predominantly affected by the rates per mile received from our customers, equipment utilization, and our percentage of non-compensated miles. These aspects of our business are carefully managed, and efforts are continuously underway to achieve favorable results. Truckload services revenues, excluding fuel surcharges, represented 68.8% and 64.4% of total revenues, excluding fuel surcharges, for the quarters ended September 30, 2024, and 2023, respectively. The remaining revenues, excluding fuel surcharges, were generated from brokerage and logistics services.

Previous wording

In discussing our results of operations, we use revenue, before fuel surcharge (and fuel expense, net of fuel surcharge), because management believes that eliminating the impact of this sometimes volatile source of revenue allows a more consistent basis for comparing our results of operations from period to period. During the three months ended June 30, 2024 and 2023, approximately $22.7 million and $25.3 million, respectively, of the Company’s total revenue was generated from fuel surcharges. During the six months ended June 30, 2024 and 2023, approximately $44.4 million and $53.6 million, respectively, of the Company’s total revenue was generated from fuel surcharges. We may also discuss certain changes in our expenses as a percentage of revenue, before fuel surcharge, rather than absolute dollar changes. We do this because we believe the variable cost nature of certain expenses makes a comparison of changes in expenses as a percentage of revenue more meaningful than absolute dollar changes.

Current wording

In discussing our results of operations, we use revenue before fuel surcharge (and fuel expense, net of fuel surcharge), because management believes that eliminating the impact of this often-volatile source of revenue allows a more consistent basis for comparing our results of operations from period to period. During the three months ended September 30, 2024 and 2023, approximately $21.8 million and $27.2 million, respectively, of the Company’s total revenue was generated from fuel surcharges. During the nine months ended September 30, 2024 and 2023, approximately $66.1 million and $80.8 million, respectively, of the Company’s total revenue was generated from fuel surcharges. We may also discuss certain changes in our expenses as a percentage of revenue, before fuel surcharge, rather than absolute dollar changes. We do this because we believe the variable cost nature of certain expenses makes a comparison of changes in expenses as a percentage of revenue more meaningful than absolute dollar changes.

Previous wording

During the second quarter of 2024, truckload services revenue, before fuel surcharges, decreased 11.4% to $106.6 million as compared to $120.2 million during the second quarter of 2023. The decrease relates primarily to a 9.3% decrease in total miles travelled from 50.5 million for the second quarter of 2023 to 45.8 million for the second quarter of 2024 and to a 3.7% decrease in our rate per mile, from $2.17 for the second quarter of 2023 to $2.09 for the second quarter of 2024. The reduction in total miles was primarily driven by a 4.0% reduction in the average number of trucks operated combined with a 5.5% reduction in average miles driven by each truck for the second quarter of 2024 compared to the second quarter of 2023. The reduction in truck count and miles resulted from a less favorable freight market year over year, characterized by an oversupply of available trucks in the market compared to available freight.

Current wording

During the third quarter of 2024, truckload services revenue, before fuel surcharges, decreased 1.5% to $110.6 million as compared to $112.3 million during the third quarter of 2023. The decrease relates primarily to a 1.5% decrease in total miles travelled from 47.2 million for the third quarter of 2023 to 46.5 million for the third quarter of 2024 and to a 2.0% decrease in our rate per mile, from $2.14 for the third quarter of 2023 to $2.10 for the third quarter of 2024. The reduction in total miles was primarily driven by a 1.6% reduction in average miles driven by each truck combined with a 1.4% reduction in the average number of trucks operated during the third quarter of 2024 compared to the third quarter of 2023.

Previous wording

Rent and purchased transportation increased from 21.7% of revenues, before fuel surcharges, during the second quarter of 2023 to 26.7% of revenues, before fuel surcharges, during the second quarter of 2024. The increase was primarily attributable to an increase in the proportion of miles driven by third-party carriers quarter over quarter, as the average number of third-party trucks increased from 367 during the second quarter of 2023 to 413 during the second quarter of 2024, while the average number of company trucks decreased from 2,061 to 1,920 during that same period.

Current wording

Rent and purchased transportation increased from 22.6% of revenues, before fuel surcharges, during the third quarter of 2023 to 26.7% of revenues, before fuel surcharges, during the third quarter of 2024. The increase was primarily attributable to an increase in the proportion of miles driven by third-party carriers quarter over quarter, as the average number of third-party trucks increased from 326 during the third quarter of 2023 to 481 during the third quarter of 2024, while the average number of company trucks decreased from 2,007 to 1,820 during that same period.

Previous wording

Depreciation increased from 12.8% of revenues, before fuel surcharges, during the second quarter of 2023 to 17.3% of revenues, before fuel surcharges, during the second quarter of 2024. The increase relates primarily to an increase in cost for replacement revenue equipment compared to the cost of retired equipment and to the interaction of a decrease in operating revenues with the fixed-cost nature of depreciation expense.

Current wording

Depreciation increased from 13.6% of revenues, before fuel surcharges, during the third quarter of 2023 to 15.8% of revenues, before fuel surcharges, during the third quarter of 2024. The increase relates primarily to an increase in cost for replacement revenue equipment compared to the cost of retired equipment and to the interaction of a decrease in operating revenues with the fixed-cost nature of depreciation expense.

Previous wording

Interest expense increased from 1.4% of revenues, before fuel surcharges, during the second quarter of 2023 to 2.9% of revenues, before fuel surcharges, during the second quarter of 2024. This increase is attributed to an increase in equipment note debt and to an increase in average borrowing rates from 3.49% during the second quarter of 2023 to 4.55% during the second quarter of 2024.

Current wording

Interest expense increased from 1.4% of revenues, before fuel surcharges, during the third quarter of 2023 to 2.5% of revenues, before fuel surcharges, during the third quarter of 2024. This increase is attributed to an increase in equipment note debt and to an increase in average borrowing rates from 3.66% during the third quarter of 2023 to 4.73% during the third quarter of 2024.

Previous wording

For the six months ended June 30, 2024, truckload services revenue, before fuel surcharges, decreased 15.0% to $208.8 million as compared to $245.4 million for the six months ended June 30, 2023. The decrease relates primarily to a 11.1% decrease in total miles travelled from 101.1 million during the first six months of 2023 to 89.9 million for the first six months of 2024 and to a 4.1% decrease in our rate per mile, from $2.19 for the first six months of 2023 to $2.10 for the first six months of 2024. The reduction in total miles was primarily driven by a 5.9% reduction in the average number of trucks operated combined with a 5.5% reduction in average miles driven by each truck for the first half of 2024 compared to the second half of 2023. The reduction in truck count and miles resulted from a less favorable freight market year over year, characterized by an oversupply of available trucks in the market compared to available freight.

Current wording

For the nine months ended September 30, 2024, truckload services revenue, before fuel surcharges, decreased 10.7% to $319.4 million as compared to $357.7 million for the nine months ended September 30, 2023. The decrease relates primarily to an 8.0% decrease in total miles travelled from 148.3 million during the first nine months of 2023 to 136.4 million for the first nine months of 2024 and to a 3.4% decrease in our rate per mile, from $2.17 for the first nine months of 2023 to $2.10 for the first nine months of 2024. The reduction in total miles was primarily driven by a 4.2% reduction in the average number of trucks operated combined with a 4.5% reduction in average miles driven by each truck during the first nine month of 2024 compared to the first nine months of 2023. The reduction in truck count and miles resulted from a less favorable freight market year over year, characterized by an oversupply of available trucks in the market compared to available freight.

Previous wording

Salaries, wages and benefits increased from 36.6% of revenues, before fuel surcharges, in the first six months of 2023 to 39.5% of revenues, before fuel surcharges, during the first six months of 2024. This year to year percentage-based increase is explained by the interaction of salaries and wages with fixed-cost characteristics combined with the year to year reduction in revenue recognized during the first half of the year.

Current wording

Salaries, wages and benefits increased from 37.2% of revenues, before fuel surcharges, in the first nine months of 2023 to 39.0% of revenues, before fuel surcharges, during the first nine months of 2024. This year to year percentage-based increase is explained by the interaction of salaries and wages with fixed-cost characteristics combined with the year to year reduction in revenue recognized during the first nine months of the year.

Previous wording

Depreciation increased from 12.9% of revenues, before fuel surcharges, during the first six months of 2023 to 17.8% of revenues, before fuel surcharges, during the first six months of 2024. The increase relates primarily to an increase in cost for replacement revenue equipment compared to the cost of retired equipment and to the interaction of a decrease in operating revenues with the fixed-cost nature of depreciation expense.

Current wording

Depreciation increased from 13.1% of revenues, before fuel surcharges, during the first nine months of 2023 to 17.1% of revenues, before fuel surcharges, during the first nine months of 2024. The increase relates primarily to an increase in cost for replacement revenue equipment compared to the cost of retired equipment and to the interaction of a decrease in operating revenues with the fixed-cost nature of depreciation expense.

Previous wording

Insurance and claims expense decreased from 8.2% of revenues, before fuel surcharges, during the first six months of 2023 to 4.9% of revenues before fuel surcharges, during the first six months of 2024. This decrease relates primarily to specific auto liability claims being settled in the latter half of 2023. This decrease was partially offset by a 12.8% increase in auto liability premiums year over year.

Current wording

Insurance and claims expense decreased from 7.0% of revenues, before fuel surcharges, during the first nine months of 2023 to 4.7% of revenues before fuel surcharges, during the first nine months of 2024. This decrease relates primarily to specific auto liability claims being settled in the latter half of 2023. This decrease was partially offset by a 12.8% increase in auto liability premiums year over year.

Previous wording

Non-operating income increased from 0.7% of revenues, before fuel surcharges, during the first six months of 2023 to 1.8% of revenues, before fuel surcharges, during the first six months of 2024. This increase resulted primarily from an increase in the market value of our marketable equity securities portfolio as of June 30, 2024 as compared to June 30, 2023.

Current wording

Non-operating income increased from 0.8% of revenues, before fuel surcharges, during the first nine months of 2023 to 2.3% of revenues, before fuel surcharges, during the first nine months of 2024. This increase resulted primarily from an increase in the market value of our marketable equity securities portfolio as of September 30, 2024 as compared to September 30, 2023.

Previous wording

Interest expense increased from 1.5% of revenues, before fuel surcharges, during the first six months of 2023 to 2.7% of revenues, before fuel surcharges, during the first six months of 2024. This increase is attributed to an increase in equipment note debt and to an increase in average borrowing rates from 3.49% as of June 30, 2023 to 4.55% as of June 30, 2024.

Current wording

Interest expense increased from 1.5% of revenues, before fuel surcharges, during the first nine months of 2023 to 2.6% of revenues, before fuel surcharges, during the first nine months of 2024. This increase is attributed to an increase in equipment note debt and to an increase in average borrowing rates from 3.66% as of September 30, 2023 to 4.73% as of September 30, 2024.

Previous wording

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased from 96.1% for the first six months of 2023 to 103.9% for the first six months of 2024.

Current wording

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased from 96.0% for the first nine months of 2023 to 102.8% for the first nine months of 2024.

Previous wording

During the second quarter of 2024, logistics and brokerage services revenue, before fuel surcharges, decreased 13.3% to $53.7 million as compared to $61.9 million during the second quarter of 2023. The decrease relates to a decrease in the average rates charged to customers, partially offset by an increase in the number of loads serviced during the second quarter of 2024 as compared to the second quarter of 2023.

Current wording

During the third quarter of 2024, logistics and brokerage services revenue, before fuel surcharges, decreased 19.2% to $50.2 million as compared to $62.1 million during the third quarter of 2023. The decrease relates to a reduction in the average rates charged to customers year to year, as the truckload market continues to be negatively impacted by downward rate pressure driven by the challenging truckload rate environment.

Previous wording

Rents and purchased transportation increased from 84.4% of revenues, before fuel surcharges, during the second quarter of 2023 to 86.4% of revenues, before fuel surcharges, during the second quarter of 2024. The increase resulted from paying third-party carriers a larger percentage of customer revenue.

Current wording

Rents and purchased transportation increased from 85.7% of revenues, before fuel surcharges, during the third quarter of 2023 to 86.8% of revenues, before fuel surcharges, during the third quarter of 2024. The increase resulted from paying third-party carriers a larger percentage of customer revenue.

Previous wording

The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased from 91.8% for the second quarter of 2023 to 93.9% for the second quarter of 2024.

Current wording

The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased from 93.3% for the third quarter of 2023 to 94.3% for the third quarter of 2024.

Previous wording

During the first six months of 2024, logistics and brokerage services revenue, before fuel surcharges, decreased 13.6% to $112.4 million as compared to $130.1 million during the first six months of 2023. The decrease relates to a decrease in the average rates charged to customers, partially offset by an increase in the number of loads serviced during the first six months of 2024 as compared to the first six months of 2023.

Current wording

During the first nine months of 2024, logistics and brokerage services revenue, before fuel surcharges, decreased 15.4% to $162.6 million as compared to $192.2 million during the first nine months of 2023. The decrease relates to a reduction in the average rates charged to customers year to year, as the truckload market continues to be negatively impacted by downward rate pressure driven by the challenging truckload rate environment.

Previous wording

Rents and purchased transportation increased from 83.4% of revenues, before fuel surcharges, during the first six months of 2023 to 86.2% of revenues, before fuel surcharges, during the first six months of 2024. The increase resulted from paying third-party carriers a larger percentage of customer revenue.

Current wording

Rents and purchased transportation increased from 84.1% of revenues, before fuel surcharges, during the first nine months of 2023 to 86.4% of revenues, before fuel surcharges, during the first nine months of 2024. The increase resulted from paying third-party carriers a larger percentage of customer revenue.

Previous wording

The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased from 90.2% for the first six months of 2023 to 93.9% for the first six months of 2024.

Current wording

The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased from 91.2% for the first nine months of 2023 to 94.0% for the first nine months of 2024.

Previous wording

In the second quarter of 2024, all divisions recognized a combined net loss of approximately $2.9 million, or 1.8% in excess of revenues, before fuel surcharges as compared to net income of $9.3 million, or 5.1% of revenues, before fuel surcharges for the second quarter of 2023. The decrease in net income resulted in diluted loss per share of $(0.13) for the second quarter of 2024 as compared to diluted earnings per share of $0.42 for the second quarter of 2023.

Current wording

Net income for all divisions was approximately $2.4 million, or 1.5% of revenues, before fuel surcharges for the third quarter of 2024 as compared to net income of $6.1 million, or 3.5% of revenues, before fuel surcharges for the third quarter of 2023. The decrease in net income resulted in diluted earnings per share of $0.11 for the third quarter of 2024 as compared to diluted earnings per share of $0.28 for the third quarter of 2023.

Previous wording

For the first six months of 2024, all divisions recognized a combined net loss of approximately $2.6 million, or 0.8% in excess of revenues, before fuel surcharges as compared to net income of $14.6 million, or 3.8% of revenues, before fuel surcharges for the first six months of 2024. The decrease in net income resulted in a diluted loss per share of $(0.12) for the first six months of 2024 as compared to diluted earnings per share of $0.65 for the first six months of 2023.

Current wording

For the first nine months of 2024, all divisions recognized a combined net loss of approximately $0.2 million, or 0.1% in excess of revenues, before fuel surcharges as compared to net income of $20.6 million, or 3.8% of revenues, before fuel surcharges for the first nine months of 2024. The decrease in net income resulted in a diluted loss per share of $(0.01) for the first nine months of 2024 as compared to diluted earnings per share of $0.93 for the first nine months of 2023.

Previous wording

During the first six months of 2024, we generated $28.3 million in cash from operating activities. Investing activities used $16.1 million in cash in the first six months of 2024. Financing activities used $40.8 million in cash in the first six months of 2024.

Current wording

During the first nine months of 2024, we generated $43.8 million in cash from operating activities. Investing activities used $54.9 million in cash in the first nine months of 2024. Financing activities used $41.4 million in cash in the first nine months of 2024.

Previous wording

Our primary use of funds is for the purchase of revenue equipment. We typically use installment notes with fixed interest rates and terms ranging from 36 to 84 months, our existing line of credit on an interim basis, proceeds from the sale or trade of equipment, and cash flows from operations to finance capital expenditures and repay long-term debt. During the first six months of 2024, we utilized cash on hand, our line of credit and long-term debt to finance purchases of revenue equipment and other assets of approximately $36.4 million.

Current wording

Our primary use of funds is for the purchase of revenue equipment. We typically use installment notes with fixed interest rates and terms ranging from 36 to 84 months, our existing line of credit on an interim basis, proceeds from the sale or trade of equipment, and cash flows from operations to finance capital expenditures and repay long-term debt. During the first nine months of 2024, we utilized cash on hand, installment notes, and our line of credit to finance purchases of revenue equipment and other assets of approximately $124.4 million.

Previous wording

During the remainder of 2024, we expect to purchase approximately 430 trucks and 1,000 trailers while continuing to sell or trade older equipment, which we expect to result in net capital expenditures of approximately $66.5 million.

Current wording

During the remainder of 2024, we expect to purchase approximately 232 trucks and 400 trailers while continuing to sell or trade older equipment, which we expect to result in net capital expenditures of approximately $18.9 million.

Previous wording

During the first six months of 2024, we maintained a revolving line of credit. Amounts outstanding under the line bear interest at Term SOFR plus 1.35% (6.68% at June 30, 2024), are secured by our trade accounts receivable and mature on July 1, 2026. An “unused fee” of 0.25% is charged if average borrowings are less than $18.0 million. At June 30, 2024 outstanding advances on the line of credit were approximately $0.1 million, consisting of letters of credit, with availability to borrow $59.9 million.

Current wording

During the first nine months of 2024, we maintained a revolving line of credit. Amounts outstanding under the line bear interest at Term SOFR plus 1.85% (7.18% at September 30, 2024), are secured by our trade accounts receivable and mature on July 1, 2027. An “unused fee” of 0.25% is charged if average borrowings are less than $18.0 million. At September 30, 2024 we had no outstanding borrowings against the line of credit and approximately $0.1 million of outstanding letters of credit, with availability to borrow $59.9 million.

Previous wording

Trade accounts receivable increased from $80.6 million at December 31, 2023 to $92.3 million at June 30, 2024. The increase was a result of an increase in revenues, which flow through accounts receivable, during the final month of the quarter ending June 30, 2024 compared to the final month of the year ending December 31, 2023. Additionally, the company’s cash suspense decreased during the first six months of 2024 as compared to the fourth quarter of 2023.

Current wording

Trade accounts receivable increased from $80.6 million at December 31, 2023 to $93.7 million at September 30, 2024. The increase was a result of an increase in revenues, which flow through accounts receivable, during the final month of the quarter ending September 30, 2024 compared to the final month of the year ending December 31, 2023. Additionally, the company’s cash suspense decreased during the first nine months of 2024 as compared to the fourth quarter of 2023.

Previous wording

Prepaid expenses and deposits decreased from $13.2 million at December 31, 2023 to $9.4 million at June 30, 2024. The decrease relates to the normal amortization of items prepaid as of December 31, 2023.

Current wording

Prepaid expenses and deposits decreased from $13.2 million at December 31, 2023 to $9.5 million at September 30, 2024. The decrease relates to the normal amortization of items prepaid as of December 31, 2023.

Previous wording

Revenue equipment decreased from $689.2 million at December 31, 2023 to $682.1 million at June 30, 2024. The decrease is primarily due to the disposition of aging trucks and trailers during the first six months of 2024, partially offset by purchases of new trucks and trailers during the first six months of 2024.

Current wording

Revenue equipment increased from $689.2 million at December 31, 2023 to $726.2 million at September 30, 2024. The increase is primarily due to the purchase of new trucks and trailers during the first nine months of 2024, partially offset by the disposition of aging trucks and trailers during the first nine months of 2024.

Previous wording

Accounts payable decreased from $62.7 million at December 31, 2023 to $40.0 million at June 30, 2024. This decrease was primarily attributable to payments made in the first six months of 2024 on contracts for revenue equipment placed in service, but not yet paid for at December 31, 2023. As of June 30, 2024, our accounts payable includes outstanding invoices for revenue equipment totaling $1.4 million.

Current wording

Accounts payable decreased from $62.7 million at December 31, 2023 to $37.9 million at September 30, 2024. This decrease was primarily attributable to payments made in the first nine months of 2024 on contracts for revenue equipment placed in service, but not yet paid for at December 31, 2023. As of September 30, 2024, our accounts payable includes outstanding invoices for revenue equipment totaling $0.9 million.

Previous wording

Long-term debt and current maturities of long term-debt are reviewed on an aggregate basis, as the classification of amounts in each category are typically affected merely by the passage of time. Long-term debt and current maturities of long-term debt, on an aggregate basis, increased from $261.7 million at December 31, 2023 to $266.0 million at June 30, 2024. The increase was primarily related to the financing of additional revenue equipment during the first six months of 2024.

Current wording

Long-term debt and current maturities of long term-debt are reviewed on an aggregate basis, as the classification of amounts in each category are typically affected merely by the passage of time. Long-term debt and current maturities of long-term debt, on an aggregate basis, increased from $261.7 million at December 31, 2023 to $288.7 million at September 30, 2024. The increase was primarily related to the financing of additional revenue equipment during the first nine months of 2024.