P.A.M.'s 1Q net drops 22%; trucker cites shrinking rates

Graphs showing the first quarter finances for P.A.M. Transportation Services Inc.
Graphs showing the first quarter finances for P.A.M. Transportation Services Inc.

P.A.M. Transportation Services Inc. made $2.3 million in its first-quarter, down 22 percent from the same time last year.

President and Chief Executive Dan Cushman blamed the loss on a year of shrinking customer rates, saying in a release that "our average rate per mile has declined to a point well below that of last year at this time."

The 36 cents earnings per share beat analyst expectations of 16 cents for the quarter ending March 31. Total revenue was $109.4 million, up 5.6 percent compared with 2016.

Cushman said higher costs and poor customer rates have taken a toll.

"While we have had some success in implementing cost reduction strategies, we have yet to achieve success in obtaining any significant rate increases from customers. The impact of the continuous downward rate pressure experienced throughout 2016 is evident," he said.

The company saw its operating ratio rise from 94 percent to 97 percent year-over-year, indicating a decrease in efficiency. Operating ratio determines a company's efficiency by comparing operating expenses to net sales. The smaller the ratio, the greater the ability to turn a profit.

Revenue per total mile dropped 5 cents to $1.38 compared with last year. The company has also increased its owner-operator fleet by 120. The use of independent contractors can outsource some of company's overhead related to expenses of company drivers without shrinking capacity.

Cushman said he believes things will look up soon, especially after the electronic logging mandate becomes effective in December. He said that carriers that, like P.A.M., have already adopted the technology will benefit.

"We believe that compliant carriers, including us, are likely to witness better margin opportunities as noncompliant carriers exit the marketplace and capacity becomes less available."

Cushman also said the company is having trouble selling its used equipment at a profit.

"The used equipment market continues to be soft and due to our equipment fleet being one of the newest in the industry, we continued to use our equipment in our operations instead of selling that equipment for little to no gain."

The company's logistics segment brought in $10.7 million in revenue for the quarter, down 7 percent from the same time last year. It represents just under 10 percent of the company's total business. Chief Financial Officer Allen West attributed the revenue drop to fewer brokered loads and lower rates.

The earnings were released after the shares trading on the Nasdaq exchange closed at $16.30.

Business on 04/28/2017

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