Steady demand from the auto industry, Mexican freight and logistics expertise helped to fuel record annual profits of $21.435 million for P.A.M. Transportation Services Inc., making 2015 the best year since 2006, according to CEO Daniel Cushman.
The Tontitown-based trucking company reported earnings around mid-day Tuesday (Feb. 9). Annual profits grew by 58.9% from $13.491 million earned in 2014. Total revenue including fuel surcharges increased 1.48% to $417.505 million, compared to $410.937 million reported in 2014.
Earnings per share for the full year increased 74.4% as the company reported $2.93 cents per diluted share in 2015. This compared to $1.68 cents earned in the year-ago period.
Cushman said the entire year was one to remember and fourth quarter results were particularly strong as net income rose 51.6% to $3.232 million compared to $2.132 million in the year-ago period. On a per-share basis, earnings improved to 45 cents in the fourth quarter. This compared to 27 cents earned in the same quarter of 2014.
“What made 2015 especially satisfying was that we set a new record with significantly fewer assets. We did it by focusing on doing everything better,” Cushman said in his prepared remarks. “At the start of 2015, our goal was to continue to maintain our operating profit margins realized in 2014, but just as importantly, we wanted to grow. Throughout the year we explored multiple growth opportunities, but in the end, only realized growth organically.”
He was particularly pleased with the growth in the company’s logistics division as they were able to provide key customers with better than expected capacity. Cushman said the rest of the business was also stabilized in 2015 accomplishing a base revenue growth of 12.3% in a somewhat challenging climate. Cushman said maintaining margins became harder to do as the year progressed, but said he’s “very satisfied by the overall results.”
Cushman also said the company’s efforts to attract and retain more drivers was paying off as they finished the year with 100 more drivers than they had in December 2014.
“We provide them with one of the newest and innovative fleets on the road as the average age of our truck fleet is 1.3 years old. During 2015, we also made significant investments in new trailers and expect to continue to do so throughout the coming year,” he added.
The thinly traded trucking company is not covered by any Wall Street analysts and mostly held by insiders and institutional traders. Shares of P.A.M. Transportation (NASDAQ: PTSI) was trading lower on Tuesday following the announcement. Share were selling at $25.07, down 59 cents on the day. For the past 52-weeks, PTSI shares have ranged from a low of $22.13 to a $67.61 high.
Cushman noted in the release that 2016 won’t be without a few challenges as he mentioned tighter operating margins amid rising driver-related costs and infrastructure fleet investments.
That caution was also headed by American Trucking Association Chief Economist Bob Costello who recently said tonnage ended 2015 on a strong note, but it was not strong for the year as a whole. With year-over-year industry gains averaging just 1.2% over the last four months, there was a clear deceleration in truck tonnage.
“At the expense of sounding like a broken record, I remain concerned about the high level of inventories throughout the supply chain. The total business inventory-to-sales record is at the highest level in over a decade, excluding the Great Recession period. This will have a negative impact on truck freight volumes over the next few months at least. And, this inventory cycle is overriding any strength from consumer spending and housing at the moment,” he said in a Jan. 19 report.
Cushman said he believes the company’s diverse marketing strategy will allow it to adapt to various conditions.
“We look forward to the coming year,” he said.