Trucking company P.A.M Transportation Services reported solid profits and significant revenue growth for its third quarter, and its president said the company will continue to strive to meet or exceed the results seen in its record-breaking year in 2015.
Tontitown-based P.A.M. reported profit of $9.2 million, or earnings per share of $1.52, for the quarter ended Sept. 30, a 170 percent increase when compared with $3.4 million, or 54 cents per share, for the same period a year ago. No analysts currently offer earnings guidance for P.A.M.
Revenue stood at $140.3 million for the third quarter of 2018, up 29 percent compared with $108.9 million for the same period a year ago. That figure included $23 million in fuel surcharges for the third quarter compared with $15.4 million for the same quarter in 2017.
The share price rose Thursday morning but fell in afternoon trading. Shares were $58.49 at the close, down $3.19, or 5 percent, on the Nasdaq exchange. Shares have traded as low as $27.85 and as high as $70 over the past year.
In a statement, Daniel H. Cushman, P.A.M's president, said the company's third quarter was extremely satisfying with each month in the period setting records in operating income. He credited the gains in profits with rate increases along with an 11 percent growth in the company's fleet year to date in the midst of a competitive market to hire and retain drivers.
He said hiring and keeping qualified drivers is a key to the company's continued success. The company increased driver pay across the board in 2017 and that's been followed by raises for drivers on specific routes in many areas, the company said. Cushman noted P.A.M. has been diversifying its customer base moving into shipping in the retail and non-automotive markets.
The driver turnover rate at large truckload fleets -- those with more than $30 million in revenue -- is at its highest level since 2015, according to the American Trucking Association. The annualized turnover rate in the second quarter was 98 percent, up four percentage points from the previous quarter. The association's chief economist said so far this year turnover rate is up 10 percentage points compared with last year.
"The extreme tightening of the driver market -- driven by solid freight demand -- will continue to challenge fleets looking for qualified drivers," said Bob Costello, the association's chief economist, in a statement earlier this month.
In the fourth quarter the company expects to meet its goal of a 20 percent increase in its trucking fleet. It also anticipates it will continue to have to raise rates to offset the cost of fuel, insurance, equipment and driver pay.
Cushman also said the comparisons with the current quarter to the one a year ago, while consistent with typical reporting methods, didn't show the true story since 2017 was a lackluster year for P.A.M. because of depressed freight rates and the driver shortage. Instead, the company was committed to measuring itself against its record-setting performance in 2015.
"Our expectation for 2018 was that a strong economic environment, combined with the necessity of industrywide increases in driver compensation would help drive shipping rates higher," Cushman said. "We expected that higher rates, combined with various internal growth and savings strategies, would allow us to offer driver pay increases to help expand our fleet and in turn, improve overall profitability. What we did not expect was the speed in which we would achieve our goal."
Business on 10/13/2018