story by Kim Souza
ksouza@thecitywire.com
Despite a somewhat challenging climate amid driver shortages and smaller margins, P.A.M. Transportation Services posted third quarter profits of $5.794 million, according to the earnings release mid-day on Monday (Oct. 26). Net income for the quarter ending Sept. 30, rose 14.6% over the $5.056 million reported in the same period of 2014.
On a per-share earnings basis the Tontitown-based carrier hit 80 cents per share, up 27% on the 63 cents in the third quarter of 2014.
“Although the third quarter offered its fair share of challenges, we are extremely satisfied with our results. The second quarter of this year was our best earnings quarter on record and this quarter represents our second best earnings quarter to date,” President and CEO Daniel Cushman said in the earnings sttaement
“Our goal this year was to grow while continuing to operate at the same or better profitability levels as those established in 2014. Growth has been difficult with the challenging driver market, but we have had some success,” he added.
While net profits rose, overall revenue took a hit with lower fuel prices impacting top line growth. Total revenue with fuel surcharges for the three months ending Sept. 30, totaled $107.109 million, relatively flat against the $107.058 million reported a year ago. The company’s total fuel surcharges were $15.033 million in the third quarter, falling 39.6% from the $24.900 million collected in the same period last year. Cushman said revenue growth did not live up to company’s expectations, but he was proud of the 12.1% growth in revenue, excluding the impact of fuel surcharges.
Through three quarters of 2015, P.A.M. Transportation’s net income is up more than 60% to $18.203 million. In the same period of 2014 net income was $11.358 million. Earnings per share to date has been $2.46, a gain of 74.4% from the $1.14 earned at this time last year.
Even though P.A.M. has mounted a turnaround year, Wall Street investors did not hear enough good news to suit them. Shares of P.A.M. Transportation (NASDAQ: PTSI) declined 11.5% to $38.23, plunging $4.98 in active trading. For the past 52-weeks the share price has ranged from from a $67.61 high to a $30.33 low.
Cushion commended the company’s efforts to improve the operating ratio in its trucking division and continue to grow business in its brokerage/logistics segment at a respectable level. That said, he also notes there has been some downward margin pressure in the logistics business which relates to softer demand from shippers.
EXPANSION MOVES
In an effort to grow its network, P.A.M. management announced plans to expand the number of terminal locations beyond its existing footprint.
“We recently purchased a terminal in Ohio and are also exploring terminal locations on the West Coast. We continue to be open to growth by acquisitions and believe our model allows us the ability to be selective in that regard,” Cushman said.
P.A.M. expanded their truck count to 1,832 in the quarter, up from 1,767 trucks a year ago. The numbers include more owner/operated rigs which were responsible for the overall uptick. The average weekly revenue per truck was $3,420, up compared to $3,365 earned a year ago. The actual revenue per mile, before fuel surcharges also ticked upward to $1.43 which was 2 cents higher than last year.
“We continue to focus on growth in those divisions that allow us better opportunities to recruit and retain drivers. We feel those opportunities exist within our Automotive, Dedicated, Mexico and Expedited Divisions,” Cushman said. “Our recruiting and retention efforts continue to be a primary focus, and we are doing everything we can to nurture our relationships with our driving schools, our recruiters, and most importantly our driving professionals.”
The American Trucking Association recently reported a driver shortage expectation of 48,000 empty truck seats by the end of 2015, largely led by a retiring workforce.
“The ability to find enough qualified drivers is one of our industry’s biggest challenges,” ATA President and CEO Bill Graves said in recent industry report. “This latest report plainly lays out the problem – as well as some possible solutions – to the driver shortage.”
Graves said there is no short-term solution to the driver shortage issues, which are expected worsen. Over the next decade trucking industry will need to hire 890,000 new drivers or 89,000 per year. About 45% of those will replace retiring drivers, with industry growth also fueling the demand.