Tontitown-based carrier P.A.M. Transportation Services’ net income rose 168.4% and revenue increased 28.9% in the third-quarter as it received rate increases from customers and grew its fleet by 11% fleet.
P.A.M. on Friday (Oct. 12) reported earnings for the quarter that ended Sept. 30 were $9.248 million, or $1.52 per share, up from $3.446 million, or 54 cents per share, in the same period in 2017. Revenue was $140.325 million, up from $108.899 million.
Between January and September, net income has increased 144.3% to $17.924 million, and revenue has risen 20.8% to $395.086 million, from the same period in 2017. Third-quarter revenue in its logistics segment rose 78% to $24.417 million. Over the past three quarters, the revenue has risen 86.2% to $66.747 million, from the same period in 2017.
“The third quarter of 2018 was an extremely satisfying quarter for our team,” President Daniel Cushman said. “Not only did we achieve record quarterly operating income for the company, each month of the quarter individually set a new operating income record for that respective month. The satisfaction comes not only from the end result but also from the consistency in which it was achieved.”
Historically, the company compared its results to the previous year, but as the company viewed 2017 as a lackluster year, it set a goal in early 2018 to perform better than 2015, a record-setting year for the company, Cushman said. (In the third quarter of 2015, net income rose 14.6% to $5.795 million, from the same period in 2014. Revenue was flat at $107.110 million.) The company expected that the strong economy and needed increases in driver pay would lead to increases in shipping rates. The higher rates combined with internal growth and savings strategies would allow the company to offer driver pay increases and expand its fleet. This, in turn, would improve profitability.
“While we acknowledge that favorable market conditions have helped contribute to our rapid success, we also believe that the plans we have put into place over the past few years have allowed us to quickly react to market conditions in order to maximize profitability,” Cushman said. “We also do not discount the support given by our customers and the overall shipping community as they quickly recognized the need to increase pay to our driving professional in order to attract new drivers to the profession so that we may in turn furnish the necessary capacity to support their own growth initiatives.”
In December 2017, the company increased driver pay and has since followed that with increases for specific lanes. It’s also improved recruiting efforts, with positive results, and increased the size of its fleet in driver market that has reached unprecedented levels of competition, Cushman said.
Along with increasing driver pay, carriers are looking to offer innovative packages to attract and retain drivers, according to a third-quarter survey from Driver IQ, a Tulsa-based background screening services provider. Lana Batts, co-president of Driver IQ, said 60% of carriers in the survey “are offering scheduled pay increases, 25% are offering a guaranteed weekly compensation and 30% are offering some type of guaranteed transition pay for new hires to make up for the lost productivity when they change jobs.”
At the end of the third quarter, P.A.M. had 1,351 company trucks, up from 1,160 at the same time in 2017, and has invested into its equipment, with the average truck age in the company fleet at more than 1 year old. The company’s goal for fleet growth was 20% for 2018, and it expects to receive a large amount of truck orders throughout the remainder of 2018 as manufacturers face delivery backlogs. The plan is to increase the fleet size by at least 10% in 2019. The number of owner-operator trucks has fallen 12.8% to 565 trucks, from 648.
Tight capacity has led to growth in the company’s logistics business, and customers are taking advantage of several services offered, including international-Mexico, dedicated fleets and team expedited, Cushman said. Also, the company has added business in the retail and non-automotive industries, and some of this has been year-round dedicated commitments. In 2016, the company decided to pursue opportunities in other markets, such as retail and manufacturing.
Cushman said the company continues to see success in its U.S./Mexico international service. And, the new trade agreement between the United States, Canada and Mexico is not expected to have a negative impact on the company’s cross-border business, which consists of a significant amount of the company’s revenue. According to its annual report, 41% of company revenue is from freight going to or from Mexico or Canada.
Shares of P.A.M. (NASDAQ: PTSI) closed Friday at $58.49, down $3.19. In the past 52 weeks, the stock has ranged between $70 and $27.70.