What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-05 compared with 2022-05-06 · 328 added, 140 removed, 627 unchanged (43% of the section changed)

4 unchanged sentences

(in thousands, except share and per share data)

March 31, 2022

December 31, 2021

Current assets:

8 unchanged sentences

10,962  

Marketable equity securities

57 unchanged sentences

22,269,157 and 34,574,807 shares issued;

22,264,802 and 22,348,022 shares outstanding at March 31, 2022 and December 31, 2021, respectively

22,269,157 and 22,348,022 shares outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

2 unchanged sentences

Treasury stock, at cost;

0 and 12,226,785 shares at March 31, 2022 and December 31, 2021, respectively

0 and 12,226,785 shares at June 30, 2022 and December 31, 2021, respectively

Retained earnings

13 unchanged sentences

(in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

OPERATING REVENUES:

2 unchanged sentences

$ 145,175  

$ 398,828  

$ 280,316  

Fuel surcharge

1 unchanged sentence

16,088  

57,788  

29,806  

Total operating revenues

1 unchanged sentence

161,263  

456,616  

310,122  

OPERATING EXPENSES AND COSTS:

2 unchanged sentences

33,841  

82,222  

67,237  

Operating supplies and expenses

1 unchanged sentence

25,107  

75,101  

48,663  

Rent and purchased transportation

3 unchanged sentences

119,689  

15,481  

14,334  

30,358  

28,686  

Insurance and claims

Gain on sale or disposition of equipment

14,132  

Gain on disposition of equipment

( 1,214 )  

( 602 )  

( 1,361 )  

Total operating expenses and costs

1 unchanged sentence

140,244  

388,589  

275,450  

OPERATING INCOME

1 unchanged sentence

21,019  

NON-OPERATING INCOME

68,027  

34,672  

NON-OPERATING (EXPENSE) INCOME

( 2,872 )  

( 943 )  

INTEREST EXPENSE

( 1,998 )  

( 2,193 )  

( 3,665 )  

INCOME BEFORE INCOME TAXES

1 unchanged sentence

20,943  

63,419  

37,016  

FEDERAL AND STATE INCOME TAX EXPENSE:

2 unchanged sentences

$ 24,182  

$ 15,317  

$ 48,124  

$ 27,266  

INCOME PER COMMON SHARE:

3 unchanged sentences

$ 1.19  

$ 1.08  

$ 0.67  

$ 2.14  

$ 1.18  

AVERAGE COMMON SHARES OUTSTANDING:

3 unchanged sentences

22,903  

22,445  

23,020  

22,474  

23,010  

See notes to condensed consolidated financial statements.

4 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended

OPERATING ACTIVITIES:

7 unchanged sentences

Provision for deferred income taxes

Gain on marketable equity securities

( 1,397 )  

Recognized loss / (gain) on marketable equity securities

Gain on sale or disposition of equipment

6 unchanged sentences

Income taxes payable

( 4,125 )  

Trade accounts payable

Accrued expenses and other liabilities

10,378  

Net cash provided by operating activities

4 unchanged sentences

( 22,341 )  

Acquisition of business, net of cash acquired

(64.317 )  

Proceeds from disposition of equipment

25,197  

Sales of marketable equity securities

Purchases of marketable equity securities, net of return of capital

( 113 )  

Net cash (used in) provided by investing activities

( 81,389 )  

21,508  

FINANCING ACTIVITIES:

14 unchanged sentences

Net cash provided by (used in) financing activities

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

( 1,945 )  

NET INCREASE / (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

22,695  

3 unchanged sentences

$ 16,564  

$ 23,032  

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

2 unchanged sentences

$ 4,514  

$ 9,857  

NONCASH INVESTING AND FINANCING ACTIVITIES:

Purchases of property and equipment included in accounts payable

$ 6,593  

$ 1,657  

See notes to condensed consolidated financial statements.

4 unchanged sentences

Shares / Amount

Additional Paid-In Capital

Treasury Stock

Retained Earnings

Paid-In Capital

Balance at January 1, 2022

21 unchanged sentences

$ 237,189  

24,182  

Exercise of stock awards-shares issued including tax benefits

Stock based compensation

Balance at June 30, 2022

22,269  

$ 40,425  

$ 220,939  

$ 261,587  

Shares / Amount

Additional Paid-In Capital

Treasury Stock

Retained Earnings

Paid-In Capital

Balance at January 1, 2021

17 unchanged sentences

15,317  

Exercise of stock awards-shares issued including tax benefits

Stock based compensation

Balance at June 30, 2021

22,903  

$ 117 (1)  

$ 84,401 (1)  

$ ( 159,262 )  

$ 252,100  

$ 177,356  

See notes to condensed consolidated financial statements.

4 unchanged sentences

Notes to Condensed Consolidated Financial Statements (unaudited)

March 31, 2022

June 30, 2022

BASIS OF PRESENTATION

In accordance with generally accepted accounting principles (“GAAP”) and applicable rules of the Securities and Exchange Commission, the information reported in this Quarterly Report on Form 10 -Q for P.A.M.

Transportation Services, Inc.

and its legally distinct subsidiaries, unless otherwise indicated, is presented on a consolidated basis.

Unless the context otherwise requires, all references in this Quarterly Report on Form 10 -Q to “P.A.M.,”

4 unchanged sentences

Transportation Services, Inc.

and its subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10 -Q and Article 10 of Regulation S- X.

and its consolidated subsidiaries.

The consolidated financial results for the three and six months ended 

June 30, 2022, include the results of our newly formed subsidiaries, Met Express, Inc.

and Costar Equipment, Inc., from June 14, 2022, the date of the acquisition of substantially all of the assets and certain liabilities of Metropolitan Trucking, Inc.

and its related entities, through 

June 30, 2022.

All material intercompany items and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10 -Q and Article 10 of Regulation S- X.

Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

1 unchanged sentence

The consolidated balance sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Operating results for the three -month period ended March 31, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three and six -month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

For further information, refer to the consolidated financial statements and the footnotes thereto included in the Company’s annual report on Form 10 -K for the year ended December 31, 2021.

On March 8, 2022, our Board of Directors authorized a 2 -for- 1 forward stock split of the shares of our common stock, which was effected in the form of a 100% stock dividend.

On March 8, 2022, our Board of Directors declared a 2 -for- 1 forward stock split of the shares of our common stock, which was effected in the form of a 100% stock dividend.

The stock split entitled each shareholder of record at the close of business on March 18, 2022, to receive one additional share of common stock for each share of common stock owned as of that date and was paid on March 29, 2022.

50 unchanged sentences

The fair value of marketable equity securities is determined based on quoted market prices in active markets, as described in Note J.

The following table sets forth market value, cost, and unrealized gains on equity securities as of March 31, 2022 and December 31, 2021.

March 31, 2022

The following table sets forth market value, cost, and unrealized gains on equity securities as of June 30, 2022 and December 31, 2021.

June 30, 2022

December 31, 2021

8 unchanged sentences

$ 10,039  

The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities as of March 31, 2022 and December 31, 2021.

March 31, 2022

The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities as of June 30, 2022 and December 31, 2021.

June 30, 2022

December 31, 2021

7 unchanged sentences

$ 10,039  

The following table shows the Company’s net realized gains during the three months ending on March 31, 2022 and 2021, respectively, on certain marketable equity securities.

The following table shows the Company’s net realized gains during the three and six months ending on June 30, 2022 and 2021, respectively, on certain marketable equity securities.

Three Months Ended

Six Months Ended

(in thousands)

Sales proceeds

$ 1,421  

Cost of securities sold

Realized gain

For the quarter ended March 31, 2022, the Company recognized dividends received of approximately $ 309,000 in non-operating income in its condensed consolidated statements of operations.

For the quarter ended March 31, 2021, the Company recognized dividends received of approximately $ 352,000 in non-operating income in its condensed consolidated statements of operations.

Realized gain / (loss)

For the quarter ended June 30, 2022, the Company recognized dividends received of approximately $ 357,000 in non-operating income in its condensed consolidated statements of operations.

For the quarter ended June 30, 2021, the Company recognized dividends received of approximately $ 309,000 in non-operating income in its condensed consolidated statements of operations.

For the six months ended June 30, 2022, the Company recognized dividends received of approximately $ 666,000 in non-operating income in its condensed consolidated statements of operations.

For the six months ended June 30, 2021, the Company recognized dividends received of approximately $ 660,000 in non-operating income in its condensed consolidated statements of operations.

The Company’s equity securities are periodically used as collateral against any outstanding margin account borrowings.

As of March 31, 2022, and December 31, 2021, the Company had outstanding borrowings of approximately $ 866,000 and $ 1,214,000 , respectively, under its margin account.

Margin account borrowings are used for the purchase of marketable equity securities and as a source of short-term liquidity and are included in accrued expenses and other liabilities on our balance sheets.

Our marketable equity securities portfolio had a net unrealized pre-tax gain in market value of approximately $ 1,397,000 during the first quarter of 2022, and a net unrealized pre-tax gain in market value of approximately $ 4,205,000 during the first quarter of 2021, which were reported as non-operating income for the respective periods.

As of June 30, 2022, and December 31, 2021, the Company had outstanding borrowings of approximately $ 640,000 and $ 1,214,000 , respectively, under its margin account.

Our marketable equity securities portfolio had a net unrealized pre-tax loss in market value of approximately $ 3,349,000 during the second quarter of 2022, and a net unrealized pre-tax gain in market value of approximately $ 1,632,000 during the second quarter of 2021, which were reported as non-operating income in its condensed consolidated statements of operations for the respective periods.

STOCK-BASED COMPENSATION

3 unchanged sentences

The fair market value is determined by the closing price of the Company’s common stock, on its primary exchange, on the same date that the option or award is granted.

During the first three months of 2022, the Company granted 29,120 shares of common stock to certain key employees.

These stock awards have grant date fair values of $ 38.80 per share, based on the closing price of the Company’s stock on the date of grant, and vest in 25 % increments over four years, beginning one year from the anniversary date of the grant.

There were no stock awards that vested during the first three months of 2022.

The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during the first three months of 2022, was approximately $ 137,000 .

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $ 0.01 during the first three months of 2022.

As of March 31, 2022, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $ 2,840,000 , which is being amortized on a straight-line basis over the remaining vesting period.

During February 2022, the Company granted 29,120 shares of common stock to certain key employees.

These stock awards had grant date fair values of $ 38.80 per share, based on the closing price of the Company’s stock on the date of grant, and vest in 25 % increments over four years, beginning one year from the anniversary date of the grant.

During May 2022, the Company granted 1,855 shares of common stock to non-employee directors.

These stock awards had a grant date fair value of $ 29.60 per share, based on the closing price of the Company’s stock on the date of grant, and vested immediately.

During June 2022, the Company granted 3,500 shares of common stock to a key employee.

This stock award had a grant date fair value of $ 27.68 per share, based on the closing price of the Company’s stock on the date of grant, and vests in 25 % increments over four years, beginning one year from the anniversary date of the grant.

The total grant date fair value of stock vested during the first six months of 2022 was approximately $ 93,000 .

The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during the first six months of 2022, was approximately $ 353,000 and includes approximately $ 55,000 recognized as a result of the grant of shares to certain non-employee directors.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $ 0.01 during the first six months of 2022.

As of June 30, 2022, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $ 2,776,000 , which is being amortized on a straight-line basis over the remaining vesting period.

As a result, the Company expects to recognize approximately $ 362,000 in additional compensation expense related to unvested stock awards during the remainder of 2022 and to recognize approximately $ 649,000 , $ 641,000 , $ 670,000 , $ 343,000 , and $ 111,000 in additional compensation expense related to unvested stock awards during the years 2023, 2024, 2025, 2026, and 2027, respectively.

The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during the first three months of 2021, was approximately $ 160,000 and included approximately $ 80,000 recognized as a result of the accrual of 326 shares to each non-employee director during the first three months of 2021.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $ 0.02 during the first three months of 2021.

As of March 31, 2021, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $ 1,977,000 , which was being amortized on a straight-line basis over the remaining vesting period.

A summary of the status of the Company’s non-vested restricted stock as of March 31, 2022 and changes during the three months ended March 31, 2022, is as follows:

The total grant date fair value of stock vested during the first six months of 2021 was approximately $ 80,000 .

The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during the first six months of 2021, was approximately $ 253,000 and includes approximately $ 80,000 recognized as a result of the grant of 326 split-adjusted shares to each non-employee director.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $ 0.03 during the first six months of 2021.

As of June 30, 2021, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $ 2,035,000 , which is being amortized on a straight-line basis over the remaining vesting period.

A summary of the status of the Company’s non-vested restricted stock as of June 30, 2022, and changes during the six months ended June 30, 2022, is as follows:

Restricted Stock

6 unchanged sentences

Canceled/forfeited/expired

Non-vested at March 31, 2022

( 4,355 )  

Non-vested at June 30, 2022

269,332  

$ 12.63  

SEGMENT INFORMATION

3 unchanged sentences

Truckload Services revenues and Brokerage and Logistics Services revenues, each before fuel surcharges, were as follows:

Three Months Ended March 31,

(in thousands, except percentage data)

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Truckload Services revenue

1 unchanged sentence

$ 98,040  

$ 259,676  

$ 188,398  

Brokerage and Logistics Services revenue

1 unchanged sentence

47,135  

139,152  

91,918  

Total revenues

1 unchanged sentence

$ 145,175  

$ 398,828  

$ 280,316  

These segment results include of the results of the truckload services and brokerage operations acquired from Metropolitan Trucking, Inc., and related subsidiaries in the business combination discussed in Note P to the condensed consolidated financial statements.

TREASURY STOCK

The Company’s stock repurchase program has been extended and expanded several times, most recently in November 2021, when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011 authorization.

During the three months ended March 31, 2022, the Company repurchased 83,220 stock-split adjusted shares ( 41,610 shares, prior to the stock-split), of its common stock at an aggregate cost of approximately $ 3,000,000 under this program.

As of March 31, 2022, there remain 458,390 shares of common stock authorized for repurchase under this plan.

As of June 30, 2022, there remain 458,390 shares of common stock authorized for repurchase under this plan.

During the first quarter of 2022, prior to the stock split, we retired 12,268,395 shares of our treasury stock.

3 unchanged sentences

The Company accounts for treasury stock using the cost method.

As of March 31, 2022, there were no shares held in the treasury.

As of June 30, 2022, there were no shares held in the treasury.

EARNINGS PER SHARE

2 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands, except per share data)

1 unchanged sentence

$ 15,317  

$ 48,124  

$ 27,266  

Basic weighted average common shares outstanding

1 unchanged sentence

22,905  

22,283  

22,903  

Dilutive effect of common stock equivalents

2 unchanged sentences

23,020  

22,474  

23,010  

Basic earnings per share

1 unchanged sentence

$ 0.67  

$ 2.16  

$ 1.19  

Diluted earnings per share

1 unchanged sentence

$ 0.67  

$ 2.14  

$ 1.18  

The Company and its subsidiaries are subject to U.S.

3 unchanged sentences

If negative conditions exist which indicate a valuation allowance might be necessary, consideration is then given to what effect the future reversals of existing taxable temporary differences and the availability of tax strategies might have on future taxable income to determine the amount, if any, of the required valuation allowance.

As of March 31, 2022, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.

As of June 30, 2022, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by taxing authorities, based on the technical merits of the position.

As of March 31, 2022, an adjustment to the Company’s condensed consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws.

As of June 30, 2022, an adjustment to the Company’s condensed consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws.

The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense.

During the three months ended March 31, 2022 and 2021, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.

The Company’s effective income tax rates were 24.3 % and 25.7 % for the three months ended March 31, 2022 and 2021, respectively.

Our effective tax rate for the three months ended March 31, 2022 differs from amounts computed by applying the United States federal statutory rates to pre-tax income primarily due to state income taxes and the tax benefits related to stock compensation.

During the six months ended June 30, 2022 and 2021, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.

The Company’s effective income tax rates were 24.1 % and 26.3 % for the six months ended June 30, 2022 and 2021, respectively.

Our effective tax rate for the six months ended June 30, 2022 differs from amounts computed by applying the United States federal statutory rates to pre-tax income primarily due to state income taxes and the tax benefits related to stock compensation.

FAIR VALUE OF FINANCIAL INSTRUMENTS

10 unchanged sentences

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

At March 31, 2022, the following items are measured at fair value on a recurring basis:

At June 30, 2022, the following items are measured at fair value on a recurring basis:

(in thousands)

6 unchanged sentences

For long-term debt other than the lines of credit, the fair values are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

The carrying value and estimated fair value of this other long-term debt at March 31, 2022 was as follows:

The carrying value and estimated fair value of this other long-term debt at June 30, 2022 was as follows:

(in thousands)

4 unchanged sentences

NOTES PAYABLE

During the first three months of 2022, the Company’s subsidiaries entered into installment obligations totaling approximately $ 48.7 million for the purpose of purchasing revenue equipment and financing existing owned real estate.

During the first six months of 2022, the Company’s subsidiaries entered into installment obligations totaling approximately $ 53.8 million for the purpose of purchasing revenue equipment.

These obligations are payable in monthly installments and are recorded in long term debt and current maturities on the condensed consolidated balance sheets.

The terms of these obligations vary from 36 months for trucks to 120 months for real estate.

COMMITMENTS AND CONTINGENCIES

In addition, during June 2022 the Company’s subsidiaries assumed approximately $ 12.3 million of installment obligations as part of a business acquisition.

The terms of these obligations vary from 1 month to 36 months for trucks acquired and from 24 months to 34 months for trailers acquired.

We are involved in certain claims and pending litigation arising from the ordinary conduct of business.

3 unchanged sentences

We currently specifically reserve for claims that are expected to exceed $ 2.0 million when fully developed, based on the facts and circumstances of those claims.

Based on our knowledge of the facts, and in certain cases, opinions of outside counsel, we believe the resolution of such claims and pending litigation will not have a material effect on our financial position, results of operations or cash flows.

However, if we experience claims that are not covered by our insurance or that exceed our estimated claim reserve, it could increase the volatility of our earnings and have a materially adverse effect on our financial condition, results of operations or cash flows.

4 unchanged sentences

The class, if certified, will include any company driver employed from January 1, 2020 through the present and ongoing.

A mediation was held on January 14, 2022 in an attempt to resolve the case but was unsuccessful.

A settlement agreement has been reached and is pending court approval.

Management has determined that any losses under this claim will not be covered by existing insurance policies.

The settlement has been fully reserved as of June 30, 2022.

The Company currently leases shop, office and parking spaces in various locations in the United States and Mexico.

10 unchanged sentences

The Company is party to operating leases which include initial terms ranging from three to five years and which do not include an option for early cancellation.

In accordance with the provisions of ASC Topic 842, these leases resulted in the recognition of right-of-use assets and corresponding operating lease liabilities, respectively, valued at 

$ 0.8 million as of March 31, 2022.

In accordance with the provisions of ASC Topic 842, these leases resulted in the recognition of right-of-use assets and corresponding operating lease liabilities, respectively, valued at $ 0.7 million as of June 30, 2022.

These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using the Company’s incremental borrowing rate as of the respective dates of lease inception, as the rate implicit in each lease is not readily determinable.

2 unchanged sentences

While these lease agreements may contain provisions to extend after the initial term for an additional five years, the Company is not reasonably certain these extension options will be exercised.

Therefore, potential lease payments that might occur under this extension period are not included in amounts recorded in our condensed consolidated balance sheets as of March 31, 2022.

Scheduled amounts and timing of cash flows arising from future right-of-use operating lease payments at March 31, 2022, are:

Therefore, potential lease payments that might occur under this extension period are not included in amounts recorded in our condensed consolidated balance sheets as of June 30, 2022.

Scheduled amounts and timing of cash flows arising from future right-of-use operating lease payments at June 30, 2022, are:

Maturity of Lease Liabilities

11 unchanged sentences

Other Information

Weighted-average remaining lease term for operating leases

Weighted-average remaining lease term for operating leases (in years)

Weighted-average discount rate for operating leases

No new right-of-use assets were recognized as a non-cash asset addition that resulted from new operating lease liabilities during the three months ended March 31, 2022.

Cash paid for amounts included in the present value of operating lease liabilities was $ 0.2 million during the three months ended March 31, 2022, and is included in operating cash flows, within the condensed consolidated statement of cash flows.

No new right-of-use assets were recognized as a non-cash asset addition that resulted from new operating lease liabilities during the three and six months ended June 30, 2022.

Cash paid for amounts included in the present value of operating lease liabilities was $ 0.2 million during the three months ended June 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows.

Cash paid for amounts included in the present value of operating lease liabilities was $ 0.3 million during the six months ended June 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows.

Operating Lease Costs

Three Months Ended March 31,

Three Months Ended

Six Months Ended

(in thousands)

$ 1,415  

$ 1,355  

Lease Revenue

The Company's operating lease revenue is disclosed in the table below.

Three Months Ended March 31,

Three Months Ended

Six Months Ended

(in thousands)

2 unchanged sentences

$ 1,835  

Leased facility space revenue (recorded in non-operating income)

$ 4,291  

$ 3,405  

Leased building space revenue (recorded in non-operating income)

Total lease revenue

1 unchanged sentence

$ 2,004  

$ 4,618  

$ 3,742  

The Company leases trucks to owner-operators under operating leases, which generally have a term of up to five years and include options to purchase the truck at the end of the lease.

In the event that an independent contractor defaults on their lease, the Company generally leases the truck to another independent contractor.

As of March 31, 2022, the gross carrying value of trucks underlying these leases was $ 56.7 million and accumulated depreciation was $ 33.3 million.

As of June 

30, 2022, the gross carrying value of trucks underlying these leases was $ 55.9 million and accumulated depreciation was $ 34.2 million.

Depreciation is calculated on a straight-line basis over the estimated useful life of the equipment, down to an estimated salvage value.

1 unchanged sentence

In other cases, where salvage values are not guaranteed, estimates of salvage value are based on the expected market values of equipment at the time of disposal.

During the quarter ended March 31, 2022, the Company incurred $ 1.9 million of depreciation expense for these assets.

During the quarter ended June 30, 2022, the Company incurred $ 1.9 million of depreciation expense for these assets.

The Company leases dock space to a related party at our Laredo, Texas terminal and warehouse and office space to an unrelated lessee at a second Laredo, Texas terminal.

2 unchanged sentences

Lease Receivables

Future minimum operating lease payments receivable at March 31, 2022:

Future minimum operating lease payments receivable at June 30, 2022:

(in thousands)

1 unchanged sentence

$ 4,141  

2026 and thereafter

Total future minimum lease payments receivable

5 unchanged sentences

Because we have a significant concentration of customers within the automotive industry, our freight volumes and revenues were significantly affected by the closure of North American automotive manufacturing facilities beginning in late March of 2020.

Our automotive customers resumed operations during the second quarter of 2020 and have not been materially disrupted during 2021 or the first three months of 2022.

Our automotive customers resumed operations during the second quarter of 2020 and have not been materially disrupted during 2021 or the first six months of 2022.

Any future delays or interruptions of automotive production and other consumer activity affecting our customers that could result from any future wave of the virus or other similar outbreaks could further adversely affect our business.

1 unchanged sentence

NONCASH INVESTING AND FINANCING ACTIVITIES

The Company financed approximately $ 6.6 million in equipment purchases during the first three months of 2022 utilizing noncash financing.

The Company financed approximately $ 6.6 million in equipment purchases during the first six months of 2022 utilizing noncash financing.

ACQUISITION OF METROPOLITAN TRUCKING

On June 14, 2022, subsidiaries of the Company, Met Express, Inc.

and Costar Equipment, Inc.

(collectively, the “Buyer”), entered into an Asset Purchase Agreement with Metropolitan Trucking, Inc., and related subsidiaries.

Metropolitan Trucking, Inc.

is a truckload carrier headquartered in Saddle Brook, New Jersey, providing asset-based dry van truckload transportation services, including local, regional, and dedicated services.

The acquisition has been determined to be a business combination.

Pursuant to the Asset Purchase Agreement, the Buyer acquired substantially all the assets and certain specified liabilities of Metropolitan Trucking, Inc., and its related entities (the “Transaction”).

The Buyer paid $ 79.9 million of total consideration, including cash and certain assumed indebtedness of Metropolitan Trucking, Inc., and its related entities.

The Transaction closed on June 14, 2022.

Total cash paid of $ 64.3 million was funded out of the Company’s available cash.

The Transaction included the assumption of $ 12.6 million of indebtedness and $ 2.9 million of other current liabilities.

The Asset Purchase Agreement contains customary representations, warranties, covenants, escrow, and indemnification provisions.

The results of the acquired business have been included in the consolidated financial statements since the date of acquisition and represented 12.6 % of consolidated total assets as of June 30, 2022 and represented 2.6 % and 1.3 % of operating revenue for the three and six months ended June 30, 2022, respectively.

Acquisition related expenses of $ 0.4 million are included in the condensed consolidated statements of operations for the three and six months ended June 30, 2022.

The allocation of the purchase price is detailed in the tables below.

The final purchase price allocation remains subject to other purchase accounting adjustments which may be identified, such as the final valuation of intangible assets and working capital adjustments, and therefore may differ materially from that reflected below.

The assets and liabilities associated with the acquisition were recorded at their fair values as of the acquisition date and the amounts are as follows:

(in thousands)

Trade and other accounts receivable

$ 10,821  

Other current assets

Property and equipment

68,722  

79,859  

Accounts payable

Long-term debt

Total cash paid

$ 64,317  

Management ’

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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, ongoing and potential future economic, business and operational disruptions and uncertainties due to the COVID-19 pandemic, including from any future spikes or outbreaks of the virus, or other public health crises, including from the implementation of vaccine mandates and other government actions taken in response to the pandemic;

Potential risks and uncertainties include, but are not limited to, ongoing and potential future economic, business and operational disruptions and uncertainties due to the COVID-19 pandemic, including from any future spikes or outbreaks of the virus, or other public health crises, as well as from the implementation of government actions taken in response to the pandemic;

excess capacity in the trucking industry;

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the ability to identify acceptable acquisition candidates, consummate acquisitions, and integrate acquired operations;

the risk that the benefits from the business combination transaction involving the Company and Metropolitan Trucking, Inc.

and related entities may not be fully realized or may take longer to realize than expected, including as a result of any of the factors described in this paragraph;

the reaction to the transaction of the companies’

customers, employees and counterparties;

diversion of management time on acquisition-related issues;

our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems;

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CRITICAL ACCOUNTING POLICIES

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Management ’

Except as noted below, there have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Management ’

s Discussion and Analysis of Financial Condition and Results of Operations, included in our Form 10-K for the fiscal year ended December 31, 2021.

Business Combinations.

Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition.

The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill.

Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset.

Accounting for business acquisitions requires management to make judgments as to whether a purchase transaction is a multiple element contract, meaning that it includes other transaction components such as a settlement of a preexisting relationship.

This judgment and determination affects the amount of consideration paid that is allocable to assets and liabilities acquired in the business purchase transaction.

BUSINESS OVERVIEW

The Company 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.

Unless the context otherwise requires, this report presents information regarding the Company and its subsidiaries on a consolidated basis.

The Company’s administrative headquarters are in Tontitown, Arkansas.

From this location we manage operations conducted through wholly-owned subsidiaries based in various locations around the United States and in Mexico and Canada.

From this location we manage operations conducted through our wholly-owned subsidiaries based in various locations around the United States and in Mexico and Canada.

The operations of these subsidiaries can generally be classified into either truckload services or brokerage and logistics services.

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These aspects of our business are carefully managed, and efforts are continuously underway to achieve favorable results.

Truckload services revenues, excluding fuel surcharges, represented 63.7% and 66.9% of total revenues, excluding fuel surcharges, for the three months ended March 31, 2022 and 2021, respectively.

Truckload services revenues, excluding fuel surcharges, represented 66.4% and 67.5% of total revenues, excluding fuel surcharges, for the three months ended June 30, 2022 and 2021, respectively.

Truckload services revenues, excluding fuel surcharges, represented 65.1% and 67.2% of total revenues, excluding fuel surcharges, for the six months ended June 30, 2022 and 2021, respectively.

The remaining revenues, excluding fuel surcharges, were generated from brokerage and logistics services.

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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 March 31, 2022 and 2021, approximately $23.4 million and $13.7 million, respectively, of the Company’s total revenue was generated from fuel surcharges.

During the three months ended June 30, 2022 and 2021, approximately $34.4 million and $16.1 million, respectively, of the Company’s total revenue was generated from fuel surcharges.

During the six months ended June 30, 2022 and 2021, approximately $57.8 million and $29.8 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.

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See Note A to the condensed consolidated financial statements for additional information on the stock split.

On June 14, 2022, newly formed subsidiaries of the Company completed the acquisition of substantially all the assets and certain liabilities of Metropolitan Trucking, Inc.

and related entities (“Metropolitan”).

Metropolitan was a 320-truck dry van truckload carrier headquartered near New York City, New York, with the East Coast serving as its primary operating territory.

The purchase price paid at closing included approximately $15.5 million in assumed debt and $64.3 million paid using available cash balances.

The Company is currently operating these assets through its newly formed subsidiary, Met Express, Inc.

See Note P to the condensed consolidated financial statements for more information regarding this acquisition.

IMPACT OF COVID-19

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Fuel costs are reported net of fuel surcharges.

Three Months Ended March 31,

Three Months Ended

Six Months Ended

(percentages)

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Operating income

Non-operating income

Non-operating (expense) income

Interest expense

Income before income taxes

THREE MONTHS ENDED MARCH 31, 2022 VS.

THREE MONTHS ENDED MARCH 31, 2021

During the first quarter of 2022, truckload services revenue, before fuel surcharges, increased 38.3% to $125.0 million as compared to $90.4 million during the first quarter of 2021.

The increase in revenue was primarily the result of increases in the average rate per mile charged to our customers and in the average number of trucks in our fleet during the first quarter of 2022 compared to the first quarter of 2021.

These increases were partially offset by a decrease in the total number of miles driven per truck for the first quarter of 2022 compared to the first quarter of 2021.

Salaries, wages and benefits decreased from 34.7% of revenues, before fuel surcharges, in the first quarter of 2021 to 28.8% of revenues, before fuel surcharges, during the first quarter of 2022.

THREE MONTHS ENDED JUNE 30, 2022 VS.

THREE MONTHS ENDED JUNE 30, 2021

During the second quarter of 2022, truckload services revenue, before fuel surcharges, increased 37.4% to $134.7 million as compared to $98.0 million during the second quarter of 2021.

The increase in revenue was primarily the result of increases in the average rate per mile charged to our customers and in the average number of trucks in our fleet during the second quarter of 2022 compared to the second quarter of 2021.

These increases were partially offset by a decrease in the total number of miles driven per truck for the second quarter of 2022 compared to the second quarter of 2021.

Salaries, wages and benefits decreased from 32.3% of revenues, before fuel surcharges, in the second quarter of 2021 to 29.6% of revenues, before fuel surcharges, during the second quarter of 2022.

This percentage-based decrease is primarily a result of the interaction of expenses with fixed-cost characteristics, such as general and administrative wages, maintenance wages, and operations wages with an increase in revenues for the periods compared.

Operating supplies and expenses decreased from 10.8% of revenues, before fuel surcharges, during the first quarter of 2021 to 6.5% of revenues, before fuel surcharges, during the first quarter of 2022.

Operating supplies and expenses decreased from 9.1% of revenues, before fuel surcharges, during the second quarter of 2021 to 6.6% of revenues, before fuel surcharges, during the second quarter of 2022.

The decrease relates primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel, which was a result of increased fuel surcharge collections from customers.

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These categorizations have the effect of reducing our net operating supplies and expenses while increasing the Rent and purchased transportation category, as discussed below.

Rent and purchased transportation increased from 22.7% of revenues, before fuel surcharges, during the first quarter of 2021 to 26.3% of revenues, before fuel surcharges, during the first quarter of 2022.

The increase was primarily due to an increase in the rates charged by third-party carriers during the first quarter of 2022 compared to the first quarter of 2021.

Also contributing to the increase was an increase in the average number of units in our owner-operator division from 368 during the first quarter of 2021 to 388 during the first quarter of 2022, as well as an increase in the average rate per mile, including fuel surcharges, paid to owner-operators during the respective periods.

Depreciation decreased from 15.8% of revenues, before fuel surcharges, during the first quarter of 2021 to 11.5% of revenues, before fuel surcharges, during the first quarter of 2022.

Rent and purchased transportation increased from 23.1% of revenues, before fuel surcharges, during the second quarter of 2021 to 25.5% of revenues, before fuel surcharges, during the second quarter of 2022.

The increase was primarily due to an increase in the rates charged by third-party carriers during the second quarter of 2022 compared to the second quarter of 2021.

Also contributing to the increase were an increase in the average number of owner-operators under contract from 370 during the second quarter of 2021 to 381 during the second quarter of 2022, as well as an increase in the average rate per mile, including fuel surcharges, paid to owner-operators during the respective periods.

Depreciation decreased from 14.5% of revenues, before fuel surcharges, during the second quarter of 2021 to 11.2% of revenues, before fuel surcharges, during the second quarter of 2022.

This percentage-based decrease is primarily a result of the interaction of an increase in operating revenues with the fixed-cost nature of depreciation expense.

Due to the fixed-cost nature of depreciation, an increase in operating revenues, before fuel surcharge, without a corresponding proportional increase in depreciation, decreases depreciation expense as a percentage of operating revenues.

Insurance and claims increased from 3.6% of revenues, before fuel surcharges, during the first quarter 2021 to 5.5% of revenues, before fuel surcharges, during the first quarter 2022.

This increase related primarily to an increase in accident and legal reserves recognized in the first quarter of 2022, as compared to the first quarter of 2021.

Non-operating income decreased from 4.2% of revenues, before fuel surcharges, during the first quarter of 2021 to 1.2% of revenues, before fuel surcharges, during the first quarter of 2022.

This increase primarily resulted from the change in the market values of our portfolio of marketable equity securities.

The Company recorded a $4.2 million increase in the market values of our marketable equity securities in non-operating income during the first quarter of 2021, compared to a $1.4 million increase in the market value of our marketable equity securities during the first quarter of 2022.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved from 90.1% for the first quarter of 2021 to 81.4% for the first quarter of 2022.

Insurance and claims increased from 3.2% of revenues, before fuel surcharges, during the second quarter 2021 to 5.4% of revenues, before fuel surcharges, during the second quarter 2022.

This increase as a percentage of revenue, before fuel surcharges, is largely attributable to an increase in litigation reserves due to a preliminary settlement agreement regarding the minimum wage lawsuit discussed in Note L to our condensed consolidated financial statements.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved from 84.0% for the second quarter of 2021 to 79.7% for the second quarter of 2022.

Non-operating income (expense) decreased from income of 1.8% of revenues, before fuel surcharges, during the second quarter of 2021 to expense of 1.6% of revenues, before fuel surcharges, during the second quarter of 2022.

This decrease primarily resulted from the change in the market values of our portfolio of marketable equity securities.

The Company recorded a $3.2 million decrease in the market value of our marketable equity securities in non-operating income (expense) during the second quarter of 2022, compared to a $1.6 million increase in the market value of our marketable equity securities during the second quarter of 2021.

SIX MONTHS ENDED JUNE 30, 2022 VS.

SIX MONTHS ENDED JUNE 30, 2021

For the six months ended June 30, 2022, truckload services revenue, before fuel surcharges, increased 37.8% to $259.7 million as compared to $188.4 million for the six months ended June 30, 2021.

The increase in revenue was primarily the result of an increase in the average rate per mile charged to our customers during the first six months of 2022 compared to first six months of 2021.

The increase in rates was partially offset by a decrease in average miles driven per truck for the first six months of 2022 compared to the first six months of 2021.

Salaries, wages and benefits decreased from 33.5% of revenues, before fuel surcharges, in the first six months of 2021 to 29.2% of revenues, before fuel surcharges, during the first six months of 2022.

The percentage-based decrease is primarily a result of the interaction of expenses with fixed-cost characteristics, such as general and administrative wages, maintenance wages, and operations wages with an increase in revenues for the periods compared.

Operating supplies and expenses decreased from 9.9% of revenues, before fuel surcharges, during the first six months of 2021 to 6.5% of revenues, before fuel surcharges, during the first six months of 2022.

The percentage-based decrease relates primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel, which decreased as a result of increased fuel surcharge collections from customers.

Fuel surcharge collections can fluctuate significantly from period to period as they are generally based on changes in fuel prices from period to period so that, during periods of rising fuel prices, fuel surcharge collections increase, while fuel surcharge collections decrease during periods of falling fuel prices.

Fuel surcharge revenue generated from transportation services performed by owner-operators is reflected as a reduction in net operating supplies and expenses, while fuel surcharges paid to owner-operators for their services is reported along with their base rate of pay in the rent and purchased transportation category.

These categorizations have the effect of reducing our net operating supplies and expenses while increasing the rent and purchased transportation category, as discussed below.

Rent and purchased transportation increased from 22.9% of revenues, before fuel surcharges, during the first six months of 2021 to 25.9% of revenues, before fuel surcharges, during the first six months of 2022.

The increase was primarily due an increase in the rates charged by third-party carriers during the first six months of 2022 compared to the first six months of 2021.

Also contributing to the increase were an increase in the average number of owner-operators under contract from 369 during the first six months of 2021 to 385 during the first six months of 2022, as well as an increase in the average rate per mile, including fuel surcharges, paid to owner-operators during the respective periods.

Depreciation decreased from 15.1% of revenues, before fuel surcharges, during the first six months of 2021 to 11.3% of revenues, before fuel surcharges, during the first six months of 2022.

This decrease is primarily a result of the interaction of an increase in operating revenues with the fixed-cost nature of depreciation expense.

Insurance and claims expense increased from 3.4% of revenues, before fuel surcharges, during the first six months of 2021 to 5.4% of revenues before fuel surcharges, during the first six months of 2022.

This increase resulted from an increase in litigation reserves due to a preliminary settlement agreement regarding the minimum wage lawsuit discussed in Note L to our condensed consolidated financial statement and to increases in loss reserves.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved from 86.9% for the first six months of 2021 to 80.5% for the first six months of 2022.

Non-operating income (expense) decreased from income of 2.9% of revenues, before fuel surcharges, during the first six months of 2021 to expense of 0.3% of revenues, before fuel surcharges, during the first six months of 2022.

This decrease primarily resulted from the change in the market values of our portfolio of marketable equity securities.

The Company recorded a $2.0 million decrease in the market value of our marketable equity securities in non-operating income (expense) during the first six months of 2022, compared to a $5.8 million increase in the market value of our marketable equity securities during the first six months of 2021.

RESULTS OF OPERATIONS –

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however, brokerage operations occur throughout the Company in similar operations having substantially similar economic characteristics.

Three Months Ended March 31,

Three Months Ended

Six Months Ended

(percentages)

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Operating income

Non-operating income

Non-operating (expense) income

Interest expense

Income before income taxes

THREE MONTHS ENDED MARCH 31, 2022 VS.

THREE MONTHS ENDED MARCH 31, 2021

During the first quarter of 2022, logistics and brokerage services revenue, before fuel surcharges, increased 58.8% to $71.1 million as compared to $44.8 million during the first quarter of 2021.

The increase relates to a 55% increase in the number of loads serviced and to an increase in the average rates charged to customers during the first quarter of 2022 as compared to the first quarter of 2021.

Rents and purchased transportation decreased from 83.7% of revenues, before fuel surcharges, during the first quarter of 2021 to 82.2% of revenues, before fuel surcharges, during the first quarter of 2022.

THREE MONTHS ENDED JUNE 30, 2022 VS.

THREE MONTHS ENDED JUNE 30, 2021

During the second quarter of 2022, logistics and brokerage services revenue, before fuel surcharges, increased 44.3% to $68.0 million as compared to $47.1 million during the second quarter of 2021.

The increase relates to an increase in the number of loads serviced and to an increase in the average rates charged to customers during the second quarter of 2022 as compared to the second quarter of 2021.

Rents and purchased transportation decreased from 82.7% of revenues, before fuel surcharges, during the second quarter of 2021 to 79.7% of revenues, before fuel surcharges, during the second quarter of 2022.

The decrease resulted from paying third-party carriers a smaller percentage of customer revenue.

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, improved from 89.5% for the first quarter of 2021 to 88.6% for the first quarter of 2022.

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, improved from 88.7% for the second quarter of 2021 to 86.2% for the second quarter of 2022.

SIX MONTHS ENDED JUNE 30, 2022 VS.

SIX MONTHS ENDED JUNE 30, 2021

During the first six months of 2022, logistics and brokerage services revenue, before fuel surcharges, increased 51.4% to $139.2 million as compared to $91.9 million during the first six months of 2021.

The increase relates to an increase in the number of loads serviced and in the average rates charged to customers during the first six months of 2022 as compared to the first six months of 2021.

Rents and purchased transportation decreased from 83.2% of revenues, before fuel surcharges, during the first six months of 2021 to 81.0% of revenues, before fuel surcharges, during the first six months of 2022.

The decrease resulted from paying third-party carriers a smaller percentage of customer revenue.

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, improved from 89.1% for the first six months of 2021 to 87.4% for the first six months of 2022.

RESULTS OF OPERATIONS –

COMBINED SERVICES

THREE MONTHS ENDED MARCH 31, 2022 VS.

THREE MONTHS ENDED MARCH 31, 2021

Net income for all divisions was approximately $23.9 million, or 12.2% of revenues, before fuel surcharges for the first quarter of 2022 as compared to net income of $11.9 million, or 8.8% of revenues, before fuel surcharges for the first quarter of 2021.

The increase in net income resulted in diluted earnings per share of $1.06 for the first quarter of 2022 as compared to diluted earnings per share of $0.52 for the first quarter of 2021.

THREE MONTHS ENDED JUNE 30, 2022 VS.

THREE MONTHS ENDED JUNE 30, 2021

Net income for all divisions was approximately $24.2 million, or 11.9% of revenues, before fuel surcharges for the second quarter of 2022 as compared to net income of $15.3 million, or 10.6% of revenues, before fuel surcharges for the second quarter of 2021.

The increase in net income resulted in diluted earnings per share of $1.08 for the second quarter of 2022 as compared to diluted earnings per share of $0.67 for the second quarter of 2021.

SIX MONTHS ENDED JUNE 30, 2022 VS.

SIX MONTHS ENDED JUNE 30, 2021

Net income for all divisions was approximately $48.1 million, or 12.1% of revenues, before fuel surcharges for the first six months of 2022 as compared to net income of $27.3 million, or 9.7% of revenues, before fuel surcharges for the first six months of 2021.

The increase in net income resulted in a diluted earnings per share of $2.14 for the first six months of 2022 as compared to diluted earnings per share of $1.18 for the first six months of 2021.

LIQUIDITY AND CAPITAL RESOURCES

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Our primary sources of liquidity have been funds provided by operations, proceeds from the sales of revenue equipment, and borrowings under our credit facilities, installment notes, and investment margin account.

During the first three months of 2022, we generated $41.1 million in cash from operating activities.

Investing activities used $9.0 million in cash in the first three months of 2022.

Financing activities provided $27.3 million in cash in the first three months of 2022.

During the first six months of 2022, we generated $74.9 million in cash from operating activities.

Investing activities used $81.4 million in cash in the first six months of 2022.

Financing activities generated $4.6 million in cash in the first six months of 2022.

Our primary use of funds is for the purchase of revenue equipment.

We typically use installment notes, 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 three months of 2022, we utilized cash on hand, installment notes, and our line of credit to finance purchases of revenue equipment and other assets of approximately $16.6 million.

During the first six months of 2022, we utilized cash on hand, installment notes, and our line of credit to finance purchases of revenue equipment and other assets of approximately $86.7 million, including the purchase of assets associated with the Metropolitan business acquisition.

We commonly finance the acquisition of revenue equipment through installment notes with fixed interest rates and terms ranging from 36 to 84 months.

During the first three months of 2022, the Company’s subsidiary, P.A.M.

Transport, Inc., entered into installment obligations totaling approximately $13.2 million for the purpose of purchasing revenue equipment and entered into an installment obligation in the amount of $35.5 million to finance existing owned real estate.

During the first six months of 2022, the Company’s subsidiary, P.A.M.

Transport, Inc., entered into installment obligations totaling approximately $53.8 million, including $35.5 million for the financing of real estate and $18.3 million for the purpose of purchasing revenue equipment and other assets.

These obligations are payable in monthly installments.

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We currently intend to retain our future earnings to finance our growth and do not anticipate paying cash dividends in the foreseeable future.

During the first three months of 2022, we maintained a revolving line of credit.

Amounts outstanding under the line bear interest at LIBOR (determined as of the first day of each month and assuming a floor of 0.50%) plus 1.25% (1.75% at March 31, 2022), are secured by our trade accounts receivable and mature on July 1, 2024.

During the first six months of 2022, we maintained a revolving line of credit.

Amounts outstanding under the line bear interest at LIBOR (determined as of the first day of each month and assuming a floor of 0.50%) plus 1.25% (2.37% at June 30, 2022), are secured by our trade accounts receivable and mature on July 1, 2024.

An “unused fee”

of 0.25% is charged if average borrowings are less than $18.0 million.

At March 31, 2022 outstanding advances on the line of credit were approximately $0.4 million, including approximately $0.3 million in letters of credit and a credit reserve of $0.1 million, with availability to borrow $59.6 million.

In February 2022, we borrowed $35.5 million under a term loan secured by our real estate.

This term loan bears interest at a fixed rate of 3.62%, with principal and interest payable monthly, and matures on March 1, 2032.

The loan is secured by mortgages and assignments of rents on the Company’s principal office and four terminal locations.

Cash increased from $18.5 million at December 31, 2021 to $77.9 million at March 31, 2022.

The increase relates primarily to the $41.1 million in cash provided by operating activities in the first three months of 2022 and is supplemented by $35.5 million in cash obtained by financing existing owned real estate during the first three months of 2022.

Refer to the condensed consolidated statements of cash flows for additional information for more information regarding the increase in cash.

Trade accounts receivable increased from $121.9 million at December 31, 2021 to $137.9 million at March 31, 2022.

The increase resulted from an increase in freight revenues, which flow through accounts receivable, during the first quarter of 2022 as compared to the fourth quarter of 2021.

Prepaid expenses and deposits decreased from $11.0 million at December 31, 2021 to $10.5 million at March 31, 2022.

At June 30, 2022 outstanding advances on the line of credit were approximately $0.4 million, consisting of letters of credit, with availability to borrow $59.6 million.

Trade accounts receivable increased from $121.9 million at December 31, 2021 to $155.9 million at June 30, 2022.

The increase resulted from an increase in freight revenues, which flow through accounts receivable, during the second quarter of 2022 as compared to the fourth quarter of 2021.

Prepaid expenses and deposits decreased from $11.0 million at December 31, 2021 to $9.6 million at June 30, 2022.

The decrease relates to the normal amortization of items prepaid as of December 31, 2021.

Marketable equity securities increased from $39.4 million at December 31, 2021 to $40.8 million at March 31, 2022.

The $1.4 million increase was due to an increase in the market value of held marketable equity securities of $1.4 million during the first three months of 2022.

Accounts payable increased from $43.4 million at December 31, 2021 to $48.6 million at March 31, 2022.

This increase was primarily attributable to an increase in the amount accrued for fixed asset purchases and an increase in the amount due to third-party carriers as of March 31, 2022.

Accrued expenses and other liabilities increased from $14.1 million at December 31, 2021 to $19.7 million at March 31, 2022.

This increase is due to increases in legal reserves and the effect of timing for accrued pay for employees and owner-operators.

Revenue equipment increased from $520.8 million at December 31, 2021 to $608.0 million at June 30, 2022.

The increase is due to the acquisition of trucks and trailers as part of the acquisition of Metropolitan Trucking during the second quarter of 2022.

Marketable equity securities decreased from $39.4 million at December 31, 2021 to $37.6 million at June 30, 2022.

The $1.8 million decrease was due to a decrease in the market value of held marketable equity securities of $1.9 million and the purchase of marketable equity securities with a combined purchase cost of approximately $0.1 million during the first six months of 2022.

Accounts payable increased from $43.3 million at December 31, 2021 to $51.2 million at June 30, 2022.

This increase was primarily attributable to an increase in the amount due to third-party carriers as of June 30, 2022.

Accrued expenses and other liabilities increased from $14.1 million at December 31, 2021 to $23.8 million at June 30, 2022.

The increase is largely due to accruals of legal reserves during the first six months of 2022.

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 $222.3 million at December 31, 2021 to $259.5 million at March 31, 2022.

The increase was primarily related to the financing of certain real estate holdings to generate $35.5 million in available cash during the first three months of 2022.

Long-term debt and current maturities of long-term debt, on an aggregate basis, increased from $222.3 million at December 31, 2021 to $249.3 million at June 30, 2022.

The increase was primarily related to the financing of certain real estate holdings to generate $35.5 million in available cash during the first three months of 2022 and to the assumption of $12.6 million of installment debt associated with the acquisition of Metropolitan Trucking during the second quarter of 2022.

NEW ACCOUNTING PRONOUNCEMENTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements