8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 15, 2019

P.A.M. TRANSPORTATION SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-15057	71-0633135
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

297 West Henri De Tonti, Tontitown, Arkansas 72770

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (479) 361-9111

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	PTSI	NASDAQ Global Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company     ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

Item 2.02 Results of Operations and Financial Condition.

On July 15, 2019, P.A.M. Transportation Services, Inc. issued a news release announcing its financial results for the second quarter ending June 30, 2019. A copy of the news release is attached hereto as Exhibit 99.1.

The information contained in this report and the exhibit hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

The information herein (including the exhibit hereto) may contain "forward-looking statements" that are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995 and otherwise may be protected. Such statements are made based on the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results may differ from those anticipated by forward-looking statements.

Please refer to the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission for information concerning risks, uncertainties and other factors that may affect future results.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are furnished with this Report:

99.1 News release issued by the Registrant on July 15, 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		P.A.M. TRANSPORTATION SERVICES, INC.
		(Registrant)
Date: July 15, 2019	By:	/s/ Allen W. West
		Allen W. West Vice President of Finance, Chief Financial Officer, Secretary and Treasurer

EXHIBIT INDEX

Exhibit Number	Exhibit Description
99.1	News release issued by the Registrant on July 15, 2019

EX-99.1

Exhibit 99.1

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

P.O. BOX 188

Tontitown, AR 72770

Allen W. West

(479) 361-9111

P.A.M. TRANSPORTATION SERVICES, INC.

ANNOUNCES RESULTS FOR THE SECOND QUARTER

ENDED JUNE 30, 2019

Tontitown, Arkansas, July 15, 2019......P.A.M. Transportation Services, Inc. (NASDAQ: PTSI) today reported net income of $8.7 million, or diluted earnings per share of $1.45, for the quarter ended June 30, 2019, and net income of $17.0 million, or diluted earnings per share of $2.84, for the six-month period then ended. These results include non-cash, non-operating losses associated with our investments in marketable equity securities which decreased diluted earnings per share by $0.10 for the second quarter of 2019. These results compare to net income of $7.3 million, or diluted earnings per share of $1.17, and net income of $8.7 million, or diluted earnings per share of $1.39, respectively, for the three and six months ended June 30, 2018. These results include non-cash, non-operating gains associated with our investments in marketable equity securities which increased diluted earnings per share by $0.04 for the second quarter of 2018.

Revenue, before fuel surcharge, decreased 0.5% to $112.4 million for the second quarter of 2019 compared to $112.9 million for the second quarter of 2018. Fuel surcharge revenue decreased 7.9% to $20.6 million for the second quarter of 2019 compared to $22.4 million for the second quarter of 2018. Total operating revenue decreased 1.7% to $133.0 million for the second quarter of 2019 compared to $135.3 million for the second quarter of 2018. Revenue, before fuel surcharge, increased 5.1% to $222.7 million for the first six months of 2019 compared to $212.0 million for the first six months of 2018. Fuel surcharge revenue decreased 8.9% to $39.0 million for the first six months of 2019 compared to $42.8 million for the first six months of 2018. Total operating revenue increased 2.7% to $261.7 million for the first six months of 2019 compared to $254.8 million for the first six months of 2018.

Daniel H. Cushman, President of the Company, commented, “We are very pleased with our financial performance for the second quarter 2019, which resulted in our best second quarter operating income on record, and the second best quarterly operating income in the Company’s history. Eleven of our last thirteen months have each set records for operating income for their respective month, and the two months that did not set a record were the second best for their respective month.

“This streak of success in operating income growth was achieved largely through fleet growth while modestly improving our operating margin to more acceptable levels. Fleet growth was facilitated by rate increases granted by customers over this time period, which allowed us to increase driver and contractor rates to make ourselves more attractive in an increasingly competitive driver market while also decreasing turnover. Other than driver compensation, margin improvement was also offset to some degree by increasing costs for items such as replacement equipment, recruiting and insurance, among others.

“As the year has progressed, we have experienced a more balanced market than comparative periods during 2018 and have been increasingly challenged to hold customer rates at levels that cover the new ‘normal’ increased driver and owner operator rates, and that cover various other increased costs while maintaining acceptable margins. While we have not conceded to pressure to decrease rates on existing lanes, the market has not allowed the addition of new business at similar margins that were achieved during the comparative periods in 2018.

“Many shippers have expressed intentions of returning rates to levels seen prior to the 2018 increases. However, these increases were, in large part, passed through by many carriers, including us, to drivers and owner operators in an effort to increase the competiveness of the truck driving profession with other career opportunities and to increase the pool of available driver capacity. This increase combined with increases in other operating costs means that rate decreases can only be granted through giving up margin.

“It’s been said that 2019 has been a bad year in terms of freight demand, but this has not been our experience. While demand has not been as strong as comparative periods in 2018, it has been much better for us than 2016 and 2017 when we last experienced downward rate pressure. Despite driver rate increases, driver recruiting and retention continues to be one of the greatest challenges to our industry, and we do not believe that the rate increases granted to date have resolved the driver shortage issue. We also do not expect to experience significant price decreases in any material operating costs in the near term. In the event that demand strengthens, we believe that the current trend of downward rate pressure will reverse.

“Mexico continues to be an area where we see growth, both from asset and non-asset service offering. Northbound demand currently exceeds our asset availability, so we are growing through various alternative capacity offerings, including brokerage and in our B1 driver solution.

“We have also seen demand for dedicated service offerings on par with 2018 levels. Some of our success in growing dedicated business has come from an automotive customer with which we recently secured a significant piece of business for a three-year term. As in the past, we continue to be a major service provider to the automotive industry and our success in this area of our business continues to be strong. Our expertise in the automotive sector has made us a ‘go to’ carrier for many OEM’s and continues to provide additional growth opportunities. Although the automotive industry in general is considered to be going through a down year, opportunities continue to present themselves due to new models and some reengineering on the part of our customers.

“Our Logistics division continues to perform well despite a decrease in spot market rates. The decrease in spot rates did negatively impact revenue for the periods compared; however, this division is superbly managed and our current margins are superior to the 2018 margins.”

About P.A.M. Transportation Services, Inc.

P.A.M. Transportation Services, Inc. is a leading truckload dry van carrier transporting general commodities throughout the continental United States, as well as in the Canadian provinces of Ontario and Quebec. The Company also provides 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 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; 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; 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; unanticipated 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; litigation, including litigation related to alleged violations under the Fair Labor Standards Act and the Arkansas Minimum Wage Law; 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; losses or fluctuations in the value of our marketable equity securities portfolio; 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 as a result of new information, future events or otherwise. In light of 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)

(in thousands, except earnings per share)

	Quarter Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue, before fuel surcharge	$	112,352		$	112,881		$	222,696		$	211,985
Fuel surcharge		20,648			22,421			38,990			42,776
Operating Revenue		133,000			135,302			261,686			254,761
Operating expenses and costs:
Salaries, wages and benefits		30,603			29,971			61,667			58,610
Operating supplies and expenses		24,520			23,506			48,032			46,176
Rent and purchased transportation		43,353			52,075			87,907			97,992
Depreciation		13,614			12,734			26,801			24,358
Insurance and claims		4,061			4,451			8,175			8,719
Other		3,539			3,067			6,533			5,648
Loss (gain) on disposition of equipment		99			(519	)		(327	)		(515	)
Total operating expenses and costs		119,789			125,285			238,788			240,988
Operating income		13,211			10,017			22,898			13,773
Interest expense		(2,059	)		(1,355	)		(4,099	)		(2,515	)
Non-operating (loss) income		(197	)		632			3,275			(247	)
Income before income taxes		10,955			9,294			22,074			11,011
Income tax expense		2,301			2,005			5,119			2,335
Net income	$	8,654		$	7,289		$	16,955		$	8,676
Diluted earnings per share	$	1.45		$	1.17		$	2.84		$	1.39
Average shares outstanding – Diluted		5,949			6,229			5,962			6,257

	Quarter Ended June 30,						Six Months Ended June 30,
Truckload Operations	2019			2018			2019			2018
Total miles (in thousands)		54,414			57,183			108,606			112,749
Operating ratio (1)		87.06	%		90.26	%		88.97	%		93.16	%
Empty miles factor		6.77	%		6.08	%		7.15	%		6.25	%
Revenue per total mile, before fuel surcharge	$	1.71		$	1.56		$	1.68		$	1.51
Total loads		103,015			103,511			202,540			198,486
Revenue per truck per work day	$	703		$	743		$	702		$	725
Revenue per truck per week	$	3,515		$	3,716		$	3,510		$	3,625
Average company-driver trucks		1,520			1,324			1,489			1,279
Average owner operator trucks		545			550			563			550
Logistics Operations
Total revenue (in thousands)	$	19,485		$	23,750		$	39,817		$	42,330
Operating ratio		93.87	%		94.39	%		93.13	%		94.88	%

1) 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.