Quarter Steers P.A.M. Ahead of Arkansas Convoy

Arkansas’ publicly traded trucking companies fared well overall during the quarter ended June 30. Dan Moore, an analyst with Stephens Inc. of Little Rock, says P.A.M. Transportation Services Inc. was chief among the winners.

Larry J. Goddard, chief financial officer of P.A.M., says the Tontitown company set second-quarter and six-month records for revenue, net income and earnings per share. Compared with second-quarter numbers from 1998, P.A.M.’s revenue climbed 49 percent to $53.7 million, its net income rose 38 percent to $3.3 million and its earnings per share were up 67 percent to 40 cents.

The truckload carrier’s respective six-month figures are up 47 percent to $105 million in revenue, 40 percent to $6.1 million in net earnings and 38 percent to 72 cents earnings per share.

“P.A.M.’s success is mostly due to their January acquisition of [Decker Transport of Riverdale, N.J.], which had $50 million in annual revenue,” Moore says. “That acquisition has been a seamless integration. We expect continued earnings’ momentum going forward and wouldn’t be surprised by another acquisition.”

Two less-than-truckload carriers, Arkansas Best Corp. of Fort Smith and American Freightways of Harrison, showed the largest year-over-year, top-line improvements. Moore says that’s due to the strong rate environment and inherent operating leverage of their business.

Arkansas Best’s long-haul subsidiary, ABF Freight System Inc., helped the company reach a record earning per share of 47 cents, up 46 percent from the second quarter of 1998. ABF’s efficient performance included a 40 percent increase over 1998 second-quarter operating income to $23.3 million.

Moore says Stephens is optimistic that American Freightways will “meet or beat” its 1999 annual earnings per share estimate of $1.40. That is, if the company continues to expand its regional network and a strong rate environment remains.

J.B. Hunt Transport Services Inc. of Lowell said earlier it would miss its second-quarter earnings projections. It was down 31 percent to $10.8 million in earnings, or 30 cents per diluted share from 1998, despite an 8 percent in revenue to $497.6 million.

“J.B. Hunt has had difficulties due to rail service problems,” Moore says. “We’re confident, however, that management is addressing investors’ concerns in that area and that the problem should begin to alleviate itself going forward.”

U.S.A. Truck Inc. struggled, too. The Van Buren company has been experiencing difficulties recruiting and retaining drivers. But, Moore says, Stephens expects U.S.A. Truck’s top line growth to accelerate over the next several quarters.

“The driver labor market continues to be tight and without a doubt the biggest barrier to growth for the industry,” Moore says. “But the biggest effect on the industry during the third quarter is likely to be fuel prices. Highway diesel fuel is around 12 percent higher than what it was a year ago. But at some point that should be offset by surcharges.”

Cannon Express Inc. of Springdale continued its downward spiral through its fiscal third quarter, which ended March 31. Its operating revenues decreased 16 percent for the nine months ended that day due to a reduction in business from Wal-Mart Stores Inc. of Bentonville.

“For the remainder year, we expect the [Arkansas trucking] group to benefit some as shippers try to cover their bases and build their inventories for possible Y2K disruptions,” Moore says. “Freight demand continues to be very strong going into the peak season, and we don’t see that changing over the near term.