P.A.M. Transportation posts better profits despite weaker revenue

Tontitown-based P.A.M. Transportation continued its rally during the first quarter of 2014. The truckload company reported net profits of $1.356 million on Wednesday (April 23). The truck carrier reversed the first quarter net losses of $456,267 posted in the year-ago period.

On a per-share basis P.A.M. had net income of 17 cents in the quarter ending March 31, a marked improvement over the nickel per share lost a year ago. Revenues topped $97.82 million in the period, down 2.1% from the same period in 2013. The top line was hindered by challenging winter weather conditions in the first two months of the quarter.

"We are very pleased with our operating profit of $2.8 million, which represents a $3.1 million improvement over the comparable period last year… The ability to post positive results, despite the significant weather related delays and added costs, was satisfying and is an indicator of the success of the profit model we continue to develop,” CEO Daniel Cushman noted in the company release.

He said industry capacity continues to tighten, which was primarily weather related in January and February, but he hasn’t seen any indication that this tightening will be short-lived. 

“Indications from our customers and other shippers point to a growing concern over the long-term availability of capacity and the need to lock-in what capacity remains available,” Cushman added.

In the first quarter P.A.M. reported 51.022 million miles traveled, and 6.92% of them with empty trucks. This compared to 51.74 million miles and 7.97% empty trucks in the same period last year. Total loads rose 5.27% in the quarter compared the year-ago period and revenue per loaded mile decreased by one penny to $1.36 in the year-over-year period.

Cushman said the company continues to convert its truck fleet from one of the oldest in the industry to one of the newest with a goal for an average truck fleet age of 1.5 years.

“We continue to experience increased performance and lower operating costs and plan to continue our three year replacement cycle going forward," he said.

One area of concern for P.A.M. management is driver turnover. The company said driver recruitment was hindered by the weather as new drivers were unable to get training and orientation in a normal timeframe.

“Our goal is to grow this year so adding drivers and reducing driver turnover is imperative to accomplishing that goal. We believe that our ability for growth hinges on our ability to provide our drivers with opportunities that help maximize their earnings and allow for their desired home time. Developing a freight base that attracts drivers and reduces turnover has been a top priority and we are beginning to see positive trends as we continue to secure freight that is driver-friendly,” Cushman said.

P.A.M. has also been working toward diversifying its business model building out divisions in Mexico, expedited freight, dedicated contracts and automotive suppliers.

“All of these divisions are profitable and we are also able to attract and keep drivers in these divisions. The random fleet is shrinking and I don't see that changing anytime soon. If drivers can't utilize their hours and get home they won't continue to perform in that business segment,” Cushman said.

Shares of P.A.M. Transportation (NASDAQ: PTSI) were trading higher on Thursday’s earnings release. Shares had an asking price of $23.16 with a bid sales price of $22.87. The company is thinly traded with average daily volume of 17,000 shares, according to Yahoo! Finance.

Over the past 52 weeks the share price has ranged from a low $8.85 to a high $23.50 set March 11.