PAM Transportation Services (PTSI) Completes Acquisition of Substantially All Assets of Metropolitan Trucking

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PAM Transportation Services, Inc. (NASDAQ: PTSI) (the “Company”) announced today that on June 14, 2022, the Company completed the acquisition of substantially all of the assets of Metropolitan Trucking, Inc. and related entities (the “Seller”). The Company expects the current management team to remain in place and continue to operate the business from its existing locations. Driver associates, non-driver associates, and customers should notice little change after the transaction.

Strong points

  • Approximately 320 Dry Van Carriers headquartered near New York, New York, with its primary operations and maintenance facilities located in Bloomsburg, Pennsylvania, will operate as an independent business under the current management team without any planned personnel change other than CEO retirement. The purchasing entity was Met Express, Inc., a new wholly-owned subsidiary of the Company.
  • The highly profitable business generated approximately $83.3 million in total revenue ($75.4 million excluding fuel surcharge), $22.1 million in earnings before interest, taxes, depreciation and amortization (“EBITDA”) and $13.5 million in operating income for the trailing twelve months ending March 31, 2022. EBITDA is a non-GAAP financial measure. See appendix for reconciliation and disclosures.
  • Experienced driving associates focused on safety and customer service, operating a modern fleet of tractors and trailers.
  • Veteran non-driver professional associates focused on a culture of excellent customer service, safety and driver satisfaction are similar to the company’s goal.
  • Enterprise value of approximately $77.4 million, excluding customary adjustments such as working capital adjustment.

Company Feedback

Joe Vitiritto, company president, said, “We at PAM are proud to announce this acquisition, our first in nearly 20 years. We are delighted to add the Metro Drivers, talented office and workshop team, customers and brand to the PAM family. . Metropolitan has operated as a successful family business for nearly 90 years. They have a group of very experienced drivers, long-standing customer relationships and a culture that is very complementary to our existing businesses. As we were looking to make our first acquisition in For some time, Metropolitan ticked all the boxes on what we were looking for in a business. We plan to run it as a separate business, which will allow the experienced management team, drivers and employees to continue to provide the same high level of service and attention that their customers have come to expect. It also allows us to keep the culture of their drivers and employees intact. With our current team at PAM and the addition of the Metropolitan team, we are excited for our future.”

Joe Mangino, President and CEO of Metropolitan Trucking, Inc., said, “For 90 years, Metro has provided superior service to its customers, a wonderful home for our employees and a source of pride for my family. Long term, my goal was to find a partner with similar values, strong financial performance and a desire to invest for growth. PAM truly cared about our drivers and other employees, and their resources will provide more opportunities for our employees and more capacity for our customers. We are proud to continue operating with our historic culture and identity while becoming the North East regional face of PAM, and look forward to a smooth transition and a bright future.

About the operation

This transaction should be immediately accretive to the Company’s earnings per share, excluding transaction costs. The enterprise value at closing was approximately $77.4 million, valued on a cash-free, debt-free basis and subject to customary working capital adjustment. The transaction does not include any earn-out target or payout. Of the closing amount, $5.0 million has been held in escrow to secure indemnification obligations. The Acquisition Agreements contain other customary terms and conditions.

From a financial reporting perspective, the Company expects to record approximately $11.1 million in current operating assets and $68.7 million in capital assets on its consolidated balance sheet, including an estimated fund adjustment net turnover.

From a tax perspective, the Company will benefit from an increase in the tax base of the physical assets of the sellers, with the entire amount allocated to these assets becoming available as a tax deduction in the current year. Actual tax savings in the current fiscal year are estimated to be approximately $14.4 million, but may differ depending on the final purchase price allocation.

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