P.A.M. Transportation Services has struggled with low freight rates and high operating costs, leading to a 40% decrease in third-quarter earnings.
Reporting before the market closed Wednesday (Oct. 26), the Tontitown-based carrier posted net income of $3.45 million, or 53 cents per share, for the quarter that ended Sept. 30, compared to earnings of $5.79 million, or 80 cents per share, in the same period a year ago.
Revenue, including fuel surcharges, rose 2% to $109.39 million.
The company missed estimated earnings per share of 63 cents, based on one analyst surveyed by Thomson Reuters.
“As the economy remained somewhat sluggish and overcapacity existed throughout the quarter, our freight rates continued to be pressured lower,” P.A.M. President Daniel Cushman said in a news release. “This trend of declining rates is the polar opposite to that of operating costs, which continue to rise.”
Operating costs have increased for equipment, insurance and employee wages and benefits. Health care costs have increased 53% or $2.1 million in the first nine months of the year. Costs have also increased for driver recruitment, training and retention programs.
“Through the first nine months of 2016, we have incurred $3.6 million in additional costs related to the program improvements,” Cushman added.
In the same period, earnings have declined 42% to $10.38 million.
Meanwhile, in the third quarter, trucking revenue increased 6%, and the company’s Mexico division “continues to flourish.”
“We continue to stand by our decision to push for revenue growth in what we knew would be a very challenging year,” Cushman said in the release. “Rather than hold our fleet size, or even downsize, we chose to grow our fleet.”
P.A.M. trucks logged 60.78 million miles in the quarter, up from 56.26 million miles. Revenue per mile fell 3 cents to $1.40. Total loads rose 1% to 81,006, from 79,864.
Average number of company trucks declined to 1,315, from 1,410, while the average number of owner-operator trucks increased to 567, from 422.
In the company’s logistics operations, revenue fell 10% to $10.64 million, from $11.86 million.
Shares (NASDAQ: PTSI) closed Wednesday at $19.63, down 20 cents or 1%. In the past 52 weeks, shares have traded between $14.75 and $42.58.