Add
PTSI to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| PTSI > SEC Filings for PTSI > Form 10-Q on 3-Nov-2008 | All Recent SEC Filings |
3-Nov-2008
Quarterly Report
FORWARD-LOOKING INFORMATION
Certain information included in this Quarterly Report on Form 10-Q constitutes
"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, 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; a significant reduction in or termination of the Company's trucking
service by a key customer; and other factors, including risk factors, included
from time to time in filings made by the Company with the SEC. The Company
undertakes no obligation to update or clarify forward-looking statements,
whether as a result of new information, future events or otherwise.
CRITICAL ACCOUNTING POLICIES
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, 2007.
BUSINESS OVERVIEW
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 Canada. The operations of
these subsidiaries can generally be classified into either truckload services or
brokerage and logistics services. Truckload services include those
transportation services in which we utilize company owned trucks or
owner-operator owned trucks. Brokerage and logistics services consist of
services such as transportation scheduling, routing, mode selection,
transloading and other value added services related to the transportation of
freight which may or may not involve the usage of company owned or
owner-operator owned equipment. Both our truckload operations and our
brokerage/logistics operations have similar economic characteristics and are
impacted by virtually the same economic factors as discussed elsewhere in this
Report. All of the Company's operations are in the motor carrier segment.
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. For the three and nine month periods ended September 30, 2008, truckload services revenues, excluding fuel surcharges, represented 89.7% of total revenues, excluding fuel surcharges, with remaining revenues, excluding fuel surcharges, being generated from brokerage and logistics services. For the three and nine month periods ended September 30, 2007, truckload services revenues, excluding fuel surcharges, represented 90.5% and 90.3% of total revenues, excluding fuel surcharges, with remaining revenues, excluding fuel surcharges, being generated from brokerage and logistics services.
The main factors that impact our profitability on the expense side are costs incurred in transporting freight for our customers. Currently our most challenging costs include fuel, driver recruitment, training, wage and benefit costs, independent broker costs (which we record as purchased transportation), insurance, and maintenance and capital equipment costs.
In discussing our results of operations we use revenue, before fuel surcharge, (and fuel expense, net of 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 and nine months ending September 30, 2008, approximately $24.3 million and $69.9 million, respectively, of the Company's total revenue was generated from fuel surcharges. During the three and nine months ending September 30, 2007 approximately $14.5 million and $40.0 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 high variable cost nature of certain expenses makes a comparison of changes in expenses as a percentage of revenue more meaningful than absolute dollar changes.
Table of Contents
RESULTS OF OPERATIONS - TRUCKLOAD SERVICES
The following table sets forth, for truckload services, the percentage
relationship of expense items to operating revenues, before fuel surcharges, for
the periods indicated. Fuel costs are shown net of fuel surcharges.
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
(percentages)
Operating revenues, before fuel surcharge 100.0 100.0 100.0 100.0
Operating expenses:
Salaries, wages and benefits 41.4 42.2 42.1 41.4
Fuel expense, net of fuel surcharge 20.0 18.1 22.0 17.8
Rent and purchased transportation 3.5 2.6 3.1 2.4
Depreciation 12.7 12.9 12.2 12.3
Operating supplies and expenses 10.2 10.2 10.1 9.7
Operating taxes and license 5.4 5.4 5.5 5.5
Insurance and claims 5.2 5.2 5.5 5.5
Communications and utilities 0.9 1.0 0.9 0.9
Other 1.5 2.0 1.5 1.9
Loss on sale or disposal of property 1.0 (0.1 ) 0.4 0.0
Total operating expenses 101.8 99.5 103.3 97.4
Operating (loss) income (1.8 ) 0.5 (3.3 ) 2.6
Non-operating income (expense) (4.6 ) 0.3 (1.6 ) 0.3
Interest expense (0.8 ) (0.8 ) (0.7 ) (0.7 )
Income (loss) before income taxes (7.2 ) 0.0 (5.6 ) 2.2
|
THREE MONTHS ENDED SEPTEMBER 30, 2008 VS. THREE MONTHS ENDED SEPTEMBER 30, 2007
For the quarter ended September 30, 2008, truckload services revenue, before fuel surcharges, decreased 6.5% to $73.3 million as compared to $78.4 million for the quarter ended September 30, 2007. The decrease relates primarily to a decrease in the number of trucks utilized during the third quarter of 2008 as compared to the third quarter of 2007 and to a decrease in equipment utilization for the periods compared. During the third quarter of 2008 the number of trucks utilized decreased to an average count of 1,971 compared to 2,097 during the third quarter of 2007 as the Company reduced its fleet size in response to current freight demand. Based on unit averages, the reduction in fleet size contributed approximately $4.7 million to the decrease in revenue for the periods compared. During the third quarter of 2008, the Company also experienced a decrease in the average number of miles traveled per unit each work day from 493 miles during the third quarter of 2007 to 460 miles during the third quarter of 2008 and based on unit averages, the decrease in the miles traveled per work day contributed approximately $5.2 million to the decrease in revenue for the periods compared. Partially offsetting these decreases in revenue was an increase in the average rate charged per total mile of $0.06 during the third quarter of 2008 as compared to the average rate charged during the third quarter of 2007.
Salaries, wages and benefits decreased from 42.2% of revenues, before fuel surcharges, in the third quarter of 2007 to 41.4% of revenue, before fuel charges, in the third quarter of 2008 and represented a decrease from $33.1 million during the third quarter of 2007 to $30.4 million during the third quarter of 2008. The decrease relates primarily to a decrease in driver compensated miles as the number of miles traveled decreased from 61.0 million miles during the third quarter of 2007 to 54.3 million miles during the third quarter of 2008. Also contributing to the decrease was a decrease in amounts paid for driver lease expense, which is a component of salaries, wages and benefits, as the average number of owner operators under contract decreased from 61 during the third quarter of 2007 to 40 during the third quarter of 2008.
Fuel expense, net of fuel surcharge, increased from 18.1% of revenues, before fuel surcharges, during the third quarter of 2007 to 20.0% of revenues, before fuel surcharges, during the third quarter of 2008 and represented an increase from $14.2 million during the third quarter of 2007 to $14.6 million during the third quarter of 2008. The increase was related to an increase in the average price paid per gallon of diesel fuel from $2.77 during the third quarter of 2007 to $4.03 during the third quarter of 2008. Partially offsetting the increase related to the increase in average price paid per gallon of diesel fuel was an increase in amounts collected from customers in the form of fuel surcharges from an average of $1.27 per gallon during the third quarter of 2007 to $2.36 during the third quarter of 2008. Fuel surcharge collections vary 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 declining fuel prices.
Rent and purchased transportation increased from 2.6% of revenues, before fuel surcharges, during the third quarter of 2007 to 3.5% of revenues, before fuel surcharges, during the third quarter of 2008. The increase relates to an increase in amounts paid to third party transportation companies for intermodal services.
Table of Contents
Depreciation decreased from 12.9% of revenues, before fuel surcharges, during the third quarter of 2007 to 12.7% of revenues, before fuel surcharges, during the third quarter of 2008 and represented a decrease from $10.1 million during the third quarter of 2007 to $9.3 million during the third quarter of 2008. The decrease was related to a decrease in the number of company-owned trucks being depreciated as part of the Company's fleet size reduction strategy in response to weak demand in the truckload freight market.
Other expenses decreased from 2.0% of revenues, before fuel surcharges, during the third quarter of 2007 to 1.5% of revenues, before fuel surcharges, during the third quarter of 2008. The decrease relates primarily to a decrease in various expenses such as advertising, miscellaneous operating supplies, and rents.
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 99.5% for the third quarter 2007 to 101.8% for the third quarter of 2008.
Non-operating income and expenses increased from income of 0.3% of revenues, before fuel surcharges, during the third quarter of 2007 to expense of 4.6% of revenues, before fuel surcharges, during the third quarter of 2008. During the third quarter of 2008, certain of the Company's investments in marketable equity securities were determined by management to be other-than-temporarily impaired and were therefore written down to fair market value. The amount of the write-down approximated $3.2 million and was determined based on the difference between recorded cost and quoted market prices at the end of the period.
NINE MONTHS ENDED SEPTEMBER 30, 2008 VS. NINE MONTHS ENDED SEPTEMBER 30, 2007
For the nine months ended September 30, 2008, truckload services revenue, before fuel surcharges, decreased 5.8% to $226.8 million as compared to $240.8 million for the nine months ended September 30, 2007. The decrease relates primarily to a decrease in the number of trucks utilized during the first nine months of 2008 as compared to the first nine months of 2007 and to a decrease in equipment utilization for the periods compared. During the first nine months of 2008 the number of trucks utilized decreased to an average count of 2,019 compared to 2,093 during the first nine months of 2007 as the Company has reduced its fleet size in response to current freight demand. Based on unit averages, the reduction in fleet size contributed approximately $8.6 million to the decrease in revenue for the periods compared. During the first nine months of 2008, the Company also experienced a decrease in the average number of miles traveled per unit each work day from 479 miles during the first nine months of 2007 to 458 miles during the first nine months of 2008 and based on unit averages, the decrease in the miles traveled per work day contributed approximately $10.4 million to the decrease in revenue for the periods compared. Partially offsetting these decreases in revenue was an increase in the average rate charged per total mile and an increase in the number of revenue days during the first nine months of 2008 as compared to the first nine months of 2007. During the first nine months of 2008, the average rate charged to customers per total mile increased by $0.01 as compared to average rate charged during the first nine months of 2007. Revenue days, which typically represent weekdays (excluding major holidays), increased from 186 days during the first nine months of 2007 to 188 days during the first nine months of 2008, and based on average truckload services revenue of $1.3 million per revenue day, helped offset the decrease in revenue between the periods compared by approximately $2.6 million.
Salaries, wages and benefits increased from 41.4% of revenues, before fuel surcharges, during the first nine months of 2007 to 42.1% of revenues, before fuel surcharges, during the first nine months of 2008, however, based on a dollar comparison, salaries, wages and benefits decreased from $99.7 million during the first nine months of 2007 to $95.4 million during the first nine months of 2008 as the number of driver compensated miles decreased from 186.5 million miles during the first nine months of 2007 to 174.0 million miles during the first nine months of 2008. The increase, as a percentage of revenues, resulted primarily from an increase in amounts expensed for employee workers' compensation benefits for the periods compared and the fixed cost characteristics of wages which do not fluctuate with changes in revenue, such as general and administrative, maintenance, and operations wages.
Fuel expense, net of fuel surcharge, increased from 17.8% of revenues, before fuel surcharges, during the first nine months of 2007 to 22.0% of revenues, before fuel surcharges, during the first nine months of 2008 and represented an increase from $42.7 million during the first nine months of 2007 to $49.8 million during the first nine months of 2008. The increase was related to an increase in the average price paid per gallon of diesel fuel from $2.61 during the first nine months of 2007 to an average cost of $3.86 during the first nine months of 2008. Partially offsetting the increase related to the increase in average price paid per gallon of diesel fuel was an increase in amounts collected from customers in the form of fuel surcharges from an average of $1.13 per gallon during the first nine months of 2007 to $2.11 during the first nine months of 2008. Fuel surcharge collections vary 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 declining fuel prices.
Rent and purchased transportation increased from 2.4% of revenues, before fuel surcharges, during the first nine months of 2007 to 3.1% of revenues, before fuel surcharges, during the first nine months of 2008. The increase relates to an increase in amounts paid to third party transportation companies for intermodal services.
Table of Contents
Depreciation decreased from 12.3% of revenues, before fuel surcharges, during the first nine months of 2007 to 12.2% of revenues, before fuel surcharges, during the first nine months of 2008 and represented a decrease from $29.6 million during the first nine months of 2007 to $27.6 million during the first nine months of 2008. The decrease was related to a decrease in the number of company-owned trucks being depreciated as part of the Company's fleet size reduction strategy in response to weak demand in the truckload freight market.
Operating supplies and expenses increased from 9.7% of revenues, before fuel surcharges, during the first nine months of 2007 to 10.1% of revenues, before fuel surcharges, during the first nine months of 2008. The increase relates primarily to an increase in amounts paid for tolls, new tire amortization, and miscellaneous operations expense. The increase was partially offset by a decrease in amounts paid for truck repairs and maintenance as the Company had an average of 63 fewer company-owned trucks in-service during the first nine months of 2008 as compared to trucks in-service during the first nine months of 2007.
Other expenses decreased from 1.9% of revenues, before fuel surcharges, during the first nine months of 2007 to 1.5% of revenues, before fuel surcharges, during the first nine months of 2008. The decrease relates primarily to a decrease in various expenses such as advertising, miscellaneous operating supplies, and rents.
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 97.4% for the first nine months 2007 to 103.3% for the first nine months of 2008.
Non-operating income and expenses increased from income of 0.3% of revenues, before fuel surcharges, during the first nine months of 2007 to expense of 1.6% of revenues, before fuel surcharges, during the first nine months of 2008. During the first nine months of 2008, certain of the Company's investments in marketable equity securities were determined by management to be other-than-temporarily impaired and were therefore written down to fair market value. The amount of the year-to-date write-downs approximated $3.8 million and was determined based on the difference between recorded cost and quoted market prices at the end of the period.
RESULTS OF OPERATIONS - LOGISTICS AND BROKERAGE SERVICES
The following table sets forth, for logistics and brokerage services, the
percentage relationship of expense items to operating revenues, before fuel
surcharges, for the periods indicated. Brokerage service operations occur
specifically in certain divisions; however, brokerage operations occur
throughout the Company in similar operations having substantially similar
economic characteristics. Rent and purchased transportation, which includes
costs paid to third party carriers, are shown net of fuel surcharges.
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
(percentages)
Operating revenues, before fuel surcharge 100.0 100.0 100.0 100.0
Operating expenses:
Salaries, wages and benefits 6.6 6.3 6.1 6.1
Fuel expense, net of fuel surcharge 0.0 0.0 0.0 0.0
Rent and purchased transportation 91.3 89.9 89.7 88.7
Depreciation 0.0 0.0 0.0 0.0
Operating supplies and expenses 0.0 0.0 0.0 0.0
Operating taxes and license 0.0 0.0 0.0 0.0
Insurance and claims 0.1 0.1 0.1 0.1
Communications and utilities 0.2 0.3 0.3 0.3
Other 1.2 2.1 1.0 2.1
Loss on sale or disposal of property 0.0 0.0 0.0 0.0
Total operating expenses 99.4 98.7 97.2 97.3
Operating (loss) income 0.6 1.3 2.8 2.7
Non-operating income (expense) 0.0 0.0 0.0 0.0
Interest expense (0.2 ) (0.4 ) (0.2 ) (0.4 )
Income (loss) before income taxes 0.4 0.9 2.6 2.3
|
THREE MONTHS ENDED SEPTEMBER 30, 2008 VS. THREE MONTHS ENDED SEPTEMBER 30, 2007
For the quarter ended September 30, 2008, logistics and brokerage services revenue, before fuel surcharges, increased 1.7% to $8.4 million as compared to $8.3 million for the quarter ended September 30, 2007. The increase was the result of a 1.7% increase in the number of loads brokered during the third quarter of 2008 as compared to the third quarter of 2007.
Table of Contents
Rent and purchased transportation increased from 89.9% of revenues, before fuel surcharges, during the third quarter of 2007 to 91.3% of revenues, before fuel surcharges during the third quarter of 2008. The increase relates to an increase in amounts charged by third party logistics and brokerage service providers.
Other expenses decreased from 2.1% of revenues, before fuel surcharges, during the third quarter of 2007 to 1.2% of revenues, before fuel surcharges during the third quarter of 2008. The decrease relates to a decrease in non-compete amortization expense as the non-compete agreement with the former owner of East Coast Transport, LLC expired in January 2008.
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 98.7% for the third quarter of 2007 to 99.4% for the third quarter of 2008.
NINE MONTHS ENDED SEPTEMBER 30, 2008 VS. NINE MONTHS ENDED SEPTEMBER 30, 2007
For the nine months ended September 30, 2008, logistics and brokerage services revenue, before fuel surcharges, increased 0.5% to $26.1 million as compared to $25.9 million for the nine months ended September 30, 2007. The increase was the result of a slight increase in the revenue generated per load during the first nine months of 2008 as compared to the first nine months of 2007.
Rent and purchased transportation increased from 88.7% of revenues, before fuel surcharges, during the first nine months of 2007 to 89.7% of revenues, before fuel surcharges during the first nine months of 2008. The increase relates to an increase in amounts charged by third party logistics and brokerage service providers.
Other expenses decreased from 2.1% of revenues, before fuel surcharges, during the first nine months of 2007 to 1.0% of revenues, before fuel surcharges during the first nine months of 2008. The decrease relates to a decrease in non-compete amortization expense as the non-compete agreement with the former owner of East Coast Transport, LLC expired in January 2008.
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, decreased from 97.3% for the first nine months of 2007 to 97.2% for the first nine months of 2008.
RESULTS OF OPERATIONS - COMBINED SERVICES
THREE MONTHS ENDED SEPTEMBER 30, 2008 VS. THREE MONTHS ENDED SEPTEMBER 30, 2007
The combined net loss for all divisions was $3.2 million, or 3.9% of revenues, before fuel surcharge for the third quarter of 2008 as compared to combined net income of $36,000 for the third quarter of 2007. The decrease in income resulted in a decrease in diluted earnings per share from $0.00 for the third quarter of 2007 to a diluted loss per share of $0.33 for the third quarter of 2008.
NINE MONTHS ENDED SEPTEMBER 30, 2008 VS. NINE MONTHS ENDED SEPTEMBER 30, 2007
The combined net loss for all divisions was $7.3 million, or 2.9% of revenues, before fuel surcharge for the first nine months of 2008 as compared to combined net income of $3.5 million or 1.3% of revenues, before fuel surcharge for the first nine months of 2007. The decrease in income resulted in a decrease in diluted earnings per share from $0.34 for the first nine months of 2007 to a diluted loss per share of $0.76 for the first nine months of 2007.
Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
The growth of our business has required, and will continue to require, a
significant investment in new revenue equipment. Our primary sources of
liquidity have been funds provided by operations, proceeds from the sales of
revenue equipment, issuances of equity securities, borrowings under our lines of
credit, installment note agreements, and borrowings under our investment margin
account.
During the first nine months of 2008, we generated $18.9 million in cash from operating activities. Investing activities used $34.6 million in cash in the first nine months of 2008. Financing activities provided $27.5 million in cash in the first nine months of 2008.
Our primary use of funds is for the purchase of revenue equipment. We typically use installment notes, our existing lines 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 2008, we utilized cash on hand, installment notes, and our lines of . . .
|
|