P.A.M. Transportation Services Inc. reported net income of $2.39 million in the third quarter of this year. Profits surged 171% from the $880,907 pocketed a year ago.
Revenue also rose 6.4% to $101.87 million in the quarter ending Sept. 30.
The Tontitown-based trucking firm achieved earnings per share of 28 cents, nearly three times the dime it returned one year ago. Analysts expected the firm to earn 20 cents a share in the quarter, which sent the thinly traded stock price up 2% to $17.32 on Friday afternoon, Oct. 25.
For the nine-month period of 2013, P.A.M. socked away $4.619 million in net profits, a healthy improvement over the $2.489 million profits recorded for the same nine month period in 2012.
CEO Daniel Cushman noted in the release that the company's efforts to diversify is customer base and run a more sustainable operation are paying off with higher overall profits, but he acknowledged ongoing headwinds with driver shortage issues. He said the the company continues to grow its Mexico division and look for expansion opportunities among automotive, dedicated services and supply chain brokerage, continuing to reduce random freight business.
“Due to the non-repetitive nature of the customers, routes, pickup and transit times, we incur considerably more cost and driver dissatisfaction with this random freight business,” Cushman said.
He said the goal is to reduce the company’s overall random freight to 30% of the total business.
P.A.M was able to grow its topline revenue in the quarter due to improved tractor utilization while also shaving 1.5% from its empty miles ratio. The company reports strong demand through out the quarter with each month outperforming the year-ago period.
As previously noted, Cushman said driver retention and recruiting is a problem for the entire industry and P.A.M. is not immune. According to American Trucking Association figures, the trucking industry needs to find an average of roughly 96,000 new drivers annually to keep pace with demand. If freight demand grows as projected, the driver shortage could balloon to nearly 240,000 drivers by 2022.
Cushman said the firm will continue to try and bridge the gap by offering “driving professionals a steady, predictable income, consistent and predictable home time and quality equipment.”
P.A.M. continues to upgrade its fleet and the average age of trucks was 1.3 years at the end of the quarter. The company said a newer fleet generally contributes to lower repair costs, fuel savings, unit utilization and driver satisfaction.
“I continue to be pleasantly surprised on the strength of truck tonnage,” ATA Chief Economist Bob Costello said Oct. 22. “I attribute a part of tonnage’s robustness to the sectors of the economy that are growing fastest, like housing construction, auto production, and energy output. These industries produce heavier than average freight, which leads to faster growth in tonnage versus a load or shipment measure."
P.A.M. continues to serve the auto manufacturing sector, one of the segments booming this entire year. In 2012, P.A.M. noted in a federal filing that its top five customers comprised 39% of the firm's overall business. The largest customer, General Motors accounted for 17% of the company's total revenue last year. Some 37% of P.A.M.'s total revenue in 2012 was derived from transportation services provided to the automotive industry.
Looking ahead, Costello said overall tonnage is expected to outpace U.S. economic growth in the fourth quarter, despite a slight hiccup at the start from the U.S. government shutdown.