P.A.M. Transport losses mount amid higher expenses

P.A.M. Transportation Services Inc. extended its southbound trek in the first quarter of 2013, with a net loss of $456,267. The loss equaled 5 cents per share for the three months ending March 31.

These results compare to net income of $674,193, or 8 cents per share earned in the year-ago period.

Management said expenses relating to a $600,000 increase in workers compensation reserve for a single accident took a toll on overall profitability in the quarter.

Total revenues were $99.981 million in the quarter, up 4% from the same period in 2012.

Tontitown-based P.A.M. Transportation reported earnings well after the market closed on Wednesday (April 24). Company shares last traded at $10.87, down 36 cents earlier in the day on Wednesday. The company is closely held and thinly traded with an average of just 3,000 shares changing hands each day, according to Yahoo! Finance.

Daniel Cushman, president of the company, said the quarter was a tough comparison as the winter of 2012 was mild with very few weather challenges and one less day of business this year, with Good Friday and Easter occurring in the first quarter of 2013. That said, Cushman attributed the revenue growth to a fleet increase of 57 trucks and better efficiencies with a 10% reduction in empty miles, which made for slightly better operating margins over the prior-year period.

"While we have been successful in keeping our trucks manned, costs associated with attracting, training and qualifying enough drivers to outpace turnover are increasing. As the economy recovers, we not only see increasing competition from other transportation providers, but also heightened demand from construction, manufacturing and agriculture, among others,” he said.

P.A.M. ended the quarter with 208 more drivers and 162 additional owner operators than in first quarter 2012.

The Department of Energy says diesel fuel prices ran about 6 cents higher in the first quarter, over the 2012 period. Harsher weather conditions lead to more idling time which increased the number of gallons used, the company noted in the release. Cushman said this negated any potential gains in fuel savings from equipment specifications or driver performance.

"The average age of our tractor fleet reached 1.5 years at the end of the first quarter of 2013, which represents one of the newest fleets in our peer group.” he noted.

Through this year the company plans to maintain this tractor age while also adding approximately 100 trucks. In addition to tractor purchases, management said it will purchase 60 new trailers per month for the remainder of 2013 while retiring 60 old trailers to further reduce maintenance expense, increase fuel efficiency and increase customer and driver satisfaction.

Across the industry, truck tonnage rose 3.8% in March from the same month last year, according to the American Trucking Association. The increase follows February’s 3.1% year-over-year gain and contributed to the 3.9% tonnage increase in the first quarter, over the same period last year.

“Expect freight tonnage will slow in the months ahead as the federal government sequester continues and households finish spending their tax returns,” ATA Chief Economist Bob Costello said. “The good news for tonnage is housing starts are growing and energy production is good – both of which generates heavy freight. However, these two sectors alone won’t be enough to keep the overall index growing at a 3.9% clip in the second quarter."