P.A.M. Transportation posts solid profits

This year has been a complete turnaround story for Tontitown-based P.A.M. Transportation Services Inc.

The traditional dry van carrier posted net profits of $880,907, or 10 cents a share in the quarter ending Sept. 30. P.A.M. improved its bottom line from $1.704 million loss in the same period of 2011.

Total revenues, including fuel surcharges, were $94.548 million for the third quarter of 2012, a 6.3% increase compared to $88.937 million a year ago.

After expenses, operating revenue in the quarter improved significantly to $938,939, recovering from an operating loss of $2.695 million a year ago.

Daniel Cushman, president of the company, noted in the release the positive earnings trend continues, “despite significant hurdles faced during the quarter.” Another milestone reached during the quarter was the achievement of operating and net income during the month of July, which we have not done in a decade – even in years like 2006 when we had an operating income of approximately $30 million for the year,” he added.

He credits the solid results to the firm’s continued refinement of its freight network and strategic expense control efforts.

Cushman said the third quarter was not what the company expected going in, as it predicted July and September would be challenging.

“In hindsight, August was the most challenging month of the quarter with an approximate 33-cent increase in the national average price of diesel fuel during the month, coupled with a softening in freight demand,” Cushman said.

Getting down to core fundamentals P.A.M. logged 3.27% more miles in the quarter than a year ago with fewer empty miles dragging down profitability. Revenue per mile was flat at $1.38, (before fuel surcharges) but truck revenue increased by more than $130 per week despite fewer overall loads hauled in the quarter.

Cushman says the company continues to seek more business from new customers as it continues to diversify away from a concentration of business related to auto manufacturers and suppliers.

"Our fleet replenishment cycle is on schedule and we remain very pleased with customer and driver satisfaction, reduced costs, and the contribution towards improving CSA scores achieved by this investment. As of Sept. 30, our average tractor age was 1.9 years old, down from a high of 3.5 years in April 2011. The specifications of our new equipment coupled with various operational fuel saving strategies greatly reduces the effect of severe upside volatility in fuel prices similar to those experienced in August of this year,” Cushman noted.

P.A.M.’s  fleet consisted of 1,782 trucks, 170 of which were owner operators. This compared to a total fleet of 1,775 a year ago, with just 47 owner operators.

"We continue to intensify our focus on our driving professionals and look for ways to improve their satisfaction with the company, as well as, programs to attract drivers from an ever decreasing pool of qualified candidates. We have added approximately 10% more drivers as of Sept. 30, compared to the same time in 2011,” he noted.

The overall trucking, transport sector has been a mixed bag this earning season. with just as many winners as losers.

American Trucking Association chief economist Bob Costello notes the third-quarter seasonally adjusted tonnage across the industry was up just 0.4% from the second quarter and 3.4% over the same quarter last year. Costello says a recent acceleration in housing starts – which is boosting tonnage – is being countered by flattening manufacturing output and elevated inventories throughout the
supply chain.

“Expect year-over-year comparisons to continue shrinking through the rest of the year as tonnage grew nicely during the last three months of 2011,” Costello said.

Avondale Partners reports that while about half the nation’s carriers are making money, the bottom quarter are still struggling. Truck fleet failures rose in the third quarter from a 25-year low but the total remained relatively small, according to the report.

The report shows 115 companies operating 2,020 trucks failed between July and September, up from the record low of 70 carriers and 725 trucks in the second quarter.

In last year’s third quarter, failures calculated by Avondale analyst Donald Broughton totaled 85 companies and 1,470 trucks. Failures are low right now, Broughton said, because freight demand and supply are relatively balanced, and capacity in the industry isn’t growing.

A key reason for that capacity constraint, he said, was the fact that many buyers can’t afford to add equipment and are buying fewer trucks than they trade in.

Through nine months of 2012, P.A.M. has posted total revenue of $284.86 million, up 5.5% from the prior year. Net profits total $2.489 million or 29 cents per share, a long way from the $2.990 million loss and 33-cent per share deficit it was staring at a year ago.

The thinly traded stock closed Wednesday at $9.47, up 1 cent on very light volume. For the past 52-weeks the share price has ranged from a low $8.95 to a high $12.58.

BY THE NUMBERS
Revenue (including fuel charges)
2012: $284.860 million
2011: $269.854 million

Net Income
2012: $2.489 million
2011: -$2.990 million

Earnings Per Share
2012: 29 cents
2011: -33 cents