HMA, Murphy report quarterly gains

Four companies based or active in Arkansas and involved in trucking, energy, timber and medicine pushed out earnings reports Wednesday (July 27), with all reporting positive net income for the second quarter.

DELTIC TIMBER
El Dorado-based Deltic Timber Corp. posted second quarter income of $2.055 million, down 63% compared to the 2010 period. Revenue during the quarter was $32.268 million, down 17.1% compared to the 2010 period.

For the first half of 2011, the company posted income of $2.147 million, down from the $7.846 million reported in the first half of 2010. Revenue for the first half of 2011 is $61.663 million, down from the $70.872 million in the 2010 period.

“I am pleased that Deltic Timber reported profitable financial results for a ninth consecutive quarter despite the severe recession that persists in the United States,” Deltic President and CEO Ray Dillon said in the statement released after the markets closed. “While we are in the trough of the business cycle for our core businesses, with near record-low pine sawtimber and lumber sales prices combined with an extremely soft residential real estate market, the Company’s operations are maintaining profitability and are well positioned for recovery when it comes.”

The company’s woodlands segment earned $5.6 million in the second quarter compared to $6.4 million in the 2010 quarter. Reduced demand for timber lowered the average per-ton price of pine timber by $24, the company said.

Deltic’s volatile real estate segment posted operating income of $1.7 million during the quarter, compared to a $500,000 loss in the 2010 period.

“The Company sold 26 acres of commercial property at an average of $101,000 per acre in the second quarter of 2011 while there were no sales of commercial real estate in the prior-year second quarter,” Deltic explained in the earnings report.

Shares of thinly traded Deltic (NYSE: DEL) closed Wednesday at $50.16, down $1.05. During the past 52 weeks, the share price has ranged from a $74.43 high to a $40.04 low.

HMA
Naples, Fla.-based Health Management Associates posted second quarter net income of $48.611 million, up 22.5% compared to the 2010 quarter. Revenue for the quarter reached $1.395 billion, up over the $1.23 billion in the 2010 quarter.

Per share earnings of 20 cents beat the consensus estimate by 1 cent.

The hospital company operates Sparks Health System in Fort Smith and Summit Medical Center in Van Buren. After the completion of the Mercy Health Partners transaction with seven hospitals in east Tennessee, HMA will operate 66 hospitals, with approximately 10,400 licensed beds.

Net income for the first half of 2011 is $104.135 million, up from $86.597 million in the 2010 period. Revenue for the first half reached $2.822 billion, up 13.1% over the 2010 period.

“We are very pleased to report another solid quarter,” Gary Newsome, HMA president and CEO, said in the earnings report. “There are a number of exciting things taking place at Health Management, and we remain focused on the fundamentals – effective cost controls, emergency room operations, physician recruitment and market service development..

Newsome said the company will use its cash position — $90.301 million as of June 30 — for acquisitions and partnerships.

“We continue to believe that over the foreseeable future the acquisition and partnership pipeline represents a tremendous growth opportunity for us. We continue to review partnership opportunities with community hospitals in non-urban and midsize markets, and we will remain disciplined in our acquisition approach,” Newsome said.

The company does have significant debt, with long-term debt reaching $2.984 billion as of June 30, up from $2.983 billion as of Dec. 31.

HMA reported that admissions were up 2.2%, same hospital surgeries were up 0.1% and same hospital net revenue was up 4.2% during the quarter.

HMA shares (NYSE: HMA) closed Wednesday at $9.30, down 40 cents. During the past 52 weeks, the share price has ranged from a $11.74 high to a $6.13 low.

MURPHY OIL
El Dorado-based Murphy Oil Corp. posted second quarter net income of $311.6 million, up 14.4% compared to the 2010 period, thanks to higher oil prices and improved margins at its refinery and retail operations.

However, the per share earnings of $1.60 missed the consensus market estimate of $1.67.

The higher oil prices boosted second quarter revenue to $8.721 billion, higher than the $5.591 billion in the 2010 period — despite the oil production in the second quarter of 2011 being lower than the 2010 period.

The company said forest fires and equipment problems in Canadian operations curtailed oil production.

“In addition, 2011 crude oil production in the Gulf of Mexico was below year ago levels primarily due to the delay in permitting of drilling operations by U.S. government regulators following the Macondo incident in April 2010,” noted the Murphy earnings report.

Murphy’s refining and marketing segment has performed well. Net income in the segment during the first half of 2011 was $122.4 million, considerably higher than the $54.1 million in the 2010 period.

“The 2010 period was unfavorably impacted by downtime for a plant-wide four-week turnaround at Meraux. Refining margins in the U.S. averaged $2.73 per barrel in the 2011 six months compared to a loss of $1.23 per barrel in 2010,” according to the Murphy report.

Murphy President and CEO David Wood predicted third quarter net income will fall in the $1.05 to $1.15 range. The market has been more optimistic, with the consensus estimate on third quarter earnings set at $1.71. However, the estimate is likely to change following Murphy’s second quarter report.

One of the few negatives in the report was a rise in exploration costs.

“Exploration expenses were $218.8 million in 2011 compared to $119.5 million in 2010, with the higher costs in the 2011 period primarily from unsuccessful wildcat drilling offshore Indonesia and Suriname,” the company explained.

Shares of Murphy (NYSE: MUR) closed Wednesday at $66.92, down $1.64. During the past 52 weeks, the share price has ranged from a $78.16 high to a $52.80 low.

P.A.M. TRANSPORTATION
Tontitown-based P.A.M. Transportation Services reported second quarter net income of $692,763, down from the $1.261 million in the 2010 period.

The company, which operated an average of 1,724 trucks during the first six months of 2011, said higher personnel expenses, primarily in the recruitment and retention of drivers, increased costs.

Revenue for the second quarter was $95.89 million, up 12.4% thanks largely to a more than $8 million increase in fuel surcharge revenue.

“When we instituted the 5% across the board pay reduction in June 2009, we committed to give it back when we achieved a profitable quarter. We removed the 5% pay reduction in August 2010, following our profitable second quarter, resulting in an approximate $1 million dollar increase to payroll for the second quarter 2011 compared to the same quarter in 2010,” Daniel Cushman, company president, said in the earnings report. “We have also seen competition for drivers, and the expenses associated with recruiting and retaining them, returning to levels more consistent with pre-recession periods.”

During the second half of 2011, the company has posted a loss of $1.285 million, compared to a $946,134 gain in the 2010 period. A national freight recession that began in the fall of 2006 has resulted in many trucking companies, public and private, struggling to make money.

Revenue during the second half of 2011 totaled $180.916 million, up from the $167.084 million in the 2010 period. Again, increased fuel surcharge revenue of almost $14 million during the 2011 period helped boost the overall revenue figure. However, the company’s fuel expense during the first half of 2011 was $65.4 million, up from $48.99 million in the 2010 period.

“The average price of diesel fuel rose to $4.02 during the second quarter of 2011, up 32.7% compared to $3.03 during the second quarter of 2010, and up 10.7% from $3.63 during the first quarter of 2011. We continue to aggressively manage our fuel consumption and pricing,” Cushman explained.

Cushman said the company has been able to implement price increases that have worked to boost the average per mile rate from $1.23 in the second quarter of 2010 up to $1.37 during 2011 quarter. The company has also added 50 new maintenance workers and bought new trucks to improve efficiency and fleet reliability.

“We have been very pleased with the increased fuel economy, productivity and reduction in maintenance expense we have seen from our new equipment thus far and look forward to the benefit as a larger portion of our aged tractor fleet is replaced,” Cushman said.

P.A.M. shares (NASDAQ: PTSI) closed Wednesday at $9.50, up 12 cents. During the past 52 weeks, the share price has ranged from a $15.36 high to a $9.31 low.