P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) today reported
net income of $3,451,178, or diluted earnings per share of $0.53
($0.54 basic) for the quarter ended September 30, 2016, and net
income of $10,378,057, or diluted earnings per share of $1.54
($1.55 basic) for the nine month period then ended. These results
compare to net income of $5,794,850, or diluted earnings per share
of $0.80 ($0.81 basic), and net income of $18,203,272, or diluted
earnings per share of $2.46 ($2.48 basic), respectively, for the
three and nine months ended September 30, 2015.
Base revenue, which excludes fuel surcharge
revenue, increased 4.2% to $95,926,084 for the third quarter of
2016 compared to $92,076,036 for the third quarter of 2015, while
fuel surcharge revenue decreased 10.4% to $13,467,347 for the third
quarter of 2016 compared to $15,033,696 for the third quarter of
2015. As a result, total operating revenues increased to
$109,393,431 for the third quarter of 2016 compared to $107,109,732
for the third quarter of 2015. For the nine months ended September
30, 2016, base revenue, which excludes fuel surcharge revenue,
increased 8.5% to $288,495,966 compared to $265,813,455 during the
nine months ended September 30, 2015, while fuel surcharge revenue
decreased 26.2% to $36,002,270 for the first nine months of 2016
compared to $48,812,558 for the first nine months of 2015. As a
result, total operating revenues increased 3.1% to $324,498,236 for
the first nine months of 2016 compared to $314,626,013 for the
first nine months of 2015. The decline in fuel surcharge revenue
for each of the periods was due to the decline in retail fuel
prices during the periods compared.
Daniel H. Cushman, President of the Company,
commented, “We continue to be challenged by many of the same
hurdles that others in our industry are currently facing. Our
situation can be summarized as the inability to increase freight
rates to cover increasingly higher operating costs. As the economy
remained somewhat sluggish and overcapacity existed throughout the
quarter, our freight rates continued to be pressured lower. This
trend of declining rates is the polar opposite to that of operating
costs, which continue to rise. Operating costs related to
equipment, insurance, and employee wages and benefits have
continued on an upward trend.
“As we have discussed throughout the year, our
employee health care costs continue to be significantly above our
historical levels and through the first nine months of 2016,
represented a $2.1 million increase, or a 53% increase, over those
costs during the first nine months of 2015. Another area where we
have experienced significantly higher costs relates to our employee
driver recruitment, training, and retention programs. Our efforts
to improve these programs have been successful and higher costs
were anticipated as a part of the improvement process. However, the
current environment does not allow us to recover these additional
costs through rate increases. Through the first nine months of
2016, we have incurred $3.6 million in additional costs related to
these program improvements.
“The used truck market also remains extremely
weak, and gains on the sale of equipment during the quarter
reflected that weakness. When compared to the third quarter of
2015, gains from the sale of equipment decreased by $0.4 million
during the third quarter of this year. Due to the continued
weakness in the used equipment market, we reduced the expected
residual values during the quarter of certain trucks which do not
have a manufacturer guaranteed residual value. These reductions in
residual values increased our depreciation expense by $0.5 million
during the quarter and will continue to increase depreciation
expense in future quarters until each respective truck is sold or
the lowered residual value is reached.
“We continue to stand by our decision to push
for revenue growth in what we knew would be a very challenging
year. Rather than hold our fleet size, or even downsize, we chose
to grow our fleet. For the quarter, trucking revenue growth was
6.3%, which was achieved despite the fact that July revenue was
flat year-over-year as we experienced the negative impact of
automotive downtime returning to more historically normal levels.
While July downtime of a week or two is typical for the automotive
business, we had not experienced this typical level of downtime in
recent years. Since we only had two months of revenue growth during
the quarter, we were unable to meet our desired double-digit level
of growth for the quarter. However, with approximately 50% of our
revenue being derived from automotive industry related customers,
it was encouraging to achieve a significant level of revenue growth
for the quarter and to report earnings per share results for the
quarter representing one of our top three best third quarters on
record.
“While we are pleased with our overall revenue
growth, maintaining revenue within our Expedited Division has been
extremely challenging as this division is in large part supported
by third-party less-than-truckload carriers where we provide
substitute line haul. In many instances, these carriers now have
excess capacity and have decided to haul their own freight instead
of contracting with us to provide our services. However, we have
secured some seasonal opportunities which we believe will have a
positive impact on our results throughout the remainder of the
year. In addition, our Mexico Division continues to flourish.
Cross-border business activity represents between 40% and 45% of
what we do, is one of our more profitable divisions, and is
something our driving professionals desire.
“With the revenue growth achieved thus far for
the year, we continue to successfully expand our customer base. We
continue to develop new customer relations and have managed to
secure five new dedicated fleets with customers that we had not
done business with prior to this year. Developing new customer
relationships is an ongoing goal of ours, and we are pleased to be
experiencing success in that area.
“We have also continued to invest in our truck
and trailer fleets. The average age of our truck fleet is 1.5 years
while the average age of our trailer fleet is 2.8 years. We believe
that these investments help provide us with a competitive advantage
in providing reliable service to our customers, recruiting and
retaining drivers, achieving better fuel economy, and lowering
equipment maintenance costs.
“Finally, as others in the industry have
expressed, we expect that upcoming regulations mandating the use of
electronic logging devices will provide a significant reduction in
capacity as noncompliant carriers are forced to either become
compliant with rules, which could negatively impact their current
equipment utilization, or exit the industry altogether. This
capacity reduction should provide rate pressure relief as shippers
begin to lock-in capacity from a shrinking pool of available
assets.”
P.A.M. Transportation Services, Inc. is a
leading truckload dry van carrier transporting general commodities
throughout the continental United States, as well as in the
Canadian provinces of Ontario and Quebec. The Company also provides
transportation services in Mexico through its gateways in Laredo
and El Paso, Texas under agreements with Mexican carriers.
Certain information included in this document
contains or may contain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements may relate to expected future
financial and operating results or events, and are thus
prospective. Such forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties
include, but are not limited to, excess capacity in the trucking
industry; surplus inventories; recessionary economic cycles and
downturns in customers' business cycles; increases or rapid
fluctuations in fuel prices, interest rates, fuel taxes, tolls,
license and registration fees; the resale value of the Company's
used equipment and the price of new equipment; increases in
compensation for and difficulty in attracting and retaining
qualified drivers and owner-operators; increases in insurance
premiums and deductible amounts relating to accident, cargo,
workers' compensation, health, and other claims; unanticipated
increases in the number or amount of claims for which the Company
is self-insured; inability of the Company to continue to secure
acceptable financing arrangements; seasonal factors such as harsh
weather conditions that increase operating costs; competition from
trucking, rail, and intermodal competitors including reductions in
rates resulting from competitive bidding; the ability to identify
acceptable acquisition candidates, consummate acquisitions, and
integrate acquired operations; a significant reduction in or
termination of the Company's trucking service by a key customer;
and other factors, including risk factors, included from time to
time in filings made by the Company with the Securities and
Exchange Commission. The Company undertakes no obligation to
publicly update or revise forward-looking statements, whether as a
result of new information, future events or otherwise. In
light of these risks and uncertainties, the forward-looking events
and circumstances discussed above and in company filings might not
transpire.
P.A.M.
Transportation Services, Inc. and SubsidiariesKey Financial and
Operating Statistics(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
Revenue,
before fuel surcharge |
$ |
95,926,084 |
|
|
$ |
92,076,036 |
|
|
$ |
288,495,966 |
|
|
$ |
265,813,455 |
|
Fuel
surcharge |
|
13,467,347 |
|
|
|
15,033,696 |
|
|
|
36,002,270 |
|
|
|
48,812,558 |
|
|
|
109,393,431 |
|
|
|
107,109,732 |
|
|
|
324,498,236 |
|
|
|
314,626,013 |
|
|
|
|
|
|
|
|
|
Operating expenses and costs: |
|
|
|
|
|
|
|
Salaries, wages and benefits |
|
28,166,313 |
|
|
|
26,532,551 |
|
|
|
83,489,780 |
|
|
|
79,031,924 |
|
Operating supplies and
expenses |
|
21,154,915 |
|
|
|
21,911,638 |
|
|
|
61,315,348 |
|
|
|
69,202,419 |
|
Rent and purchased
transportation |
|
40,013,802 |
|
|
|
35,255,319 |
|
|
|
118,118,680 |
|
|
|
97,882,536 |
|
Depreciation |
|
10,166,226 |
|
|
|
8,452,146 |
|
|
|
29,011,407 |
|
|
|
23,752,859 |
|
Insurance and claims |
|
3,608,575 |
|
|
|
3,889,503 |
|
|
|
12,157,558 |
|
|
|
11,245,760 |
|
Other |
|
1,937,204 |
|
|
|
2,199,725 |
|
|
|
6,120,997 |
|
|
|
6,867,408 |
|
Gain on disposition of
equipment |
|
(948,574 |
) |
|
|
(1,357,020 |
) |
|
|
(3,950,800 |
) |
|
|
(4,611,380 |
) |
Total
operating expenses and costs |
|
104,098,461 |
|
|
|
96,883,862 |
|
|
|
306,262,970 |
|
|
|
283,371,526 |
|
|
|
|
|
|
|
|
|
Operating income |
|
5,294,970 |
|
|
|
10,225,870 |
|
|
|
18,235,266 |
|
|
|
31,254,487 |
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(927,147 |
) |
|
|
(732,385 |
) |
|
|
(2,658,991 |
) |
|
|
(1,992,838 |
) |
Non-operating income (loss) |
|
1,235,584 |
|
|
|
(131,605 |
) |
|
|
1,203,123 |
|
|
|
385,372 |
|
|
|
|
|
|
|
|
|
Income
before income taxes |
|
5,603,407 |
|
|
|
9,361,880 |
|
|
|
16,779,398 |
|
|
|
29,647,021 |
|
Income
tax expense |
|
2,152,229 |
|
|
|
3,567,030 |
|
|
|
6,401,341 |
|
|
|
11,443,749 |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
3,451,178 |
|
|
$ |
5,794,850 |
|
|
$ |
10,378,057 |
|
|
$ |
18,203,272 |
|
|
|
|
|
|
|
|
|
Diluted
earnings per share |
$ |
0.53 |
|
|
$ |
0.80 |
|
|
$ |
1.54 |
|
|
$ |
2.46 |
|
|
|
|
|
|
|
|
|
Average
shares outstanding – Diluted |
|
6,458,358 |
|
|
|
7,218,813 |
|
|
|
6,724,676 |
|
|
|
7,385,484 |
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
|
Truckload Operations |
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Total
miles |
|
60,779,414 |
|
|
|
56,260,140 |
|
|
|
178,824,146 |
|
|
|
163,700,636 |
|
|
Operating ratio (1) |
|
93.92 |
% |
|
|
87.47 |
% |
|
|
93.19 |
% |
|
|
86.90 |
% |
|
Empty
miles factor |
|
6.93 |
% |
|
|
6.97 |
% |
|
|
6.59 |
% |
|
|
6.68 |
% |
|
Revenue
per total mile, before fuel surcharge |
$ |
1.40 |
|
|
$ |
1.43 |
|
|
$ |
1.42 |
|
|
$ |
1.42 |
|
|
Total
loads |
|
81,006 |
|
|
|
79,864 |
|
|
|
245,238 |
|
|
|
229,903 |
|
|
Revenue
per truck per work day |
$ |
708 |
|
|
$ |
684 |
|
|
$ |
698 |
|
|
$ |
670 |
|
|
Revenue
per truck per week |
$ |
3,540 |
|
|
$ |
3,420 |
|
|
$ |
3,490 |
|
|
$ |
3,350 |
|
|
Average
company-driver trucks |
|
1,315 |
|
|
|
1,410 |
|
|
|
1,350 |
|
|
|
1,418 |
|
|
Average
owner operator trucks |
|
567 |
|
|
|
422 |
|
|
|
546 |
|
|
|
395 |
|
|
|
|
|
|
|
|
|
|
|
Logistics Operations |
|
|
|
|
|
|
|
|
Total
revenue |
$ |
10,640,438 |
|
|
$ |
11,855,964 |
|
|
$ |
34,233,571 |
|
|
$ |
33,552,544 |
|
|
Operating ratio |
|
99.01 |
% |
|
|
98.52 |
% |
|
|
97.31 |
% |
|
|
97.55 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
) |
Operating ratio is calculated based upon total operating
expenses, net of fuel surcharge, as a percentage of revenue, before
fuel surcharge. We use revenue, before fuel surcharge, and
operating expenses, net of fuel surcharge, because we believe that
eliminating this sometimes volatile source of revenue affords a
more consistent basis for comparing our results of operations from
period to period. |
P.A.M. TRANSPORTATION SERVICES, INC.
P.O. BOX 188
Tontitown, AR 72770
Allen W. West
(479) 361-9111
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