P.A.M. Transportation Services was on course for record earnings to end 2014, but a recent $5.6 million lawsuit and anticipated settlement over minimum wage violations reduced profits for the fourth quarter. However, adjusted gross net income still rose 128% for the full year.
The Tontitown-based carrier reported annual net income of $13.491 million for the 2014, a steady bump up from the $5.914 million reported a year ago. On a per-share basis annual earnings were $1.68 per share, compared to 68 cents for the full year in 2013.
Excluding the impact from a lawsuit settlement, adjusted net income and adjusted diluted earnings per share for the year ended Dec. 31, were $15.958 million and $1.99, respectively.
"We are very proud of the fact that the results for 2014 would have been the best in the Company's 35 year history were it not for the negative impact of the reserve for the lawsuit settlement. The continued strong demand for our services and favorable fuel prices are certainly encouraging as we set our sights on the remainder of 2015 for which we intend to focus on growth and continuous profitability improvements," CEO Daniel Cushman noted in the release.
Total revenue for fiscal 2014 was $410.937 million, up 2% from $402.813 million posted in the prior year.
"We have had an extremely satisfying year. Beginning with second quarter, we had very consistent operating profits which averaged in the $8 million range for each quarter when excluding the fourth quarter lawsuit settlement reserve. Our model, which consists of our Automotive Division, Expedited Division, Dedicated Division, Mexico Division and random Van Division, has been very consistent,” Cushman said.
Total miles in the truckload division rose slightly year-over-year to 209.99 million. Revenue per loaded mile also rose slightly to $1.39, from $1.38 a year ago. P.A.M. increased its total loads by 8.2% to 282,446 during 2014. The weekly revenue generated by truck averaged $3,250, compared to $3,165 during 2013.
"All of our key performance indicators, from an operating standpoint, have improved quarter over quarter as well as year over year. Empty miles improved 1.3% and revenue per truck each week improved 7.4% in the fourth quarter. For the year, empty miles improved 7.2% and revenue per truck each week improved 2.7%. We continue to see an increase in our base rate per mile although the increase is skewed lower due to our largest customer switching to a different rate structure. Under this new rate structure, a portion of the base rate has been pushed into the fuel surcharge category which reduces the per mile base rate reported,” Cushman said.
FOURTH QUARTER
P.A.M. reported total fourth quarter revenue of $101.714 million, up 5.3% from the same period in 2013. Net income totaled $2.132 million, offset sharply by the $5.6 million expected settlement which was set aside in the quarter.
Net earnings per share totaled 27 cents a share, up 8% from the 15 cents reported a year ago.
"We have continued to diversify our customer base in each division. One thing that we were not able to do, that we have done in the past, is take advantage of seasonal opportunities in the fourth quarter. This type of opportunity is generally a result of utilizing a large random freight fleet, and according to our own goals, we have reduced our random fleet in exchange for more driver friendly freight and routes,” Cushman notes.
He said the company’s random fleet is now right-sized for their immediate needs. The major use of the random fleet is to support the backhaul needs of other divisions as well as servicing the customer base that only has one-way freight.
“We have also started to focus more efforts into our brokerage division which has seen considerable growth in the most recent 60 days and is gaining great momentum,” he added.
DRIVER CAPACITY
Cushman said driver capacity remains tight, which is the greatest concern among truckers according to logistics analysts John Larkin, of Stifel Nicolaus. Larkin said the shortage of drivers continues to worsen amid retirements and a better economy that leads younger people to take other jobs.
"We have increased driver pay by varying amounts in certain divisions and continue to invest in and grow our student driver solution. While the driver market remains very challenging, we feel we offer driving professionals a great opportunity to make a good living, experience some of the most driver friendly routes available, and drive a newer model truck,” Cushman said.
Few Wall Street analysts follow the thinly traded stock but shares have been trending higher in recent days ahead of Tuesday’s (Feb. 10) earnings’ release.
P.A.M. shares (NASDAQ: PTSI) rose 1.65% to $57.19 in light trading on Tuesday afternoon, following the earnings release. The share price has ranged from a high of $63.70 to a $17.83 low during the past 52 weeks. The share price has risen 8% in 2015.