P.A.M. Transportation Services, Inc. Announces Results for the Second Quarter Ended June 30, 2017
July 27 2017 - 3:30PM
P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) today reported
net income of $1,608,799, or diluted and basic earnings per share
of $0.25 for the quarter ended June 30, 2017, and net income of
$3,891,963, or diluted and basic earnings per share of $0.61 for
the six month period then ended. These results compare to net
income of $3,992,224, or diluted and basic earnings per share of
$0.61, and net income of $6,926,876, or diluted and basic earnings
per share of $1.01, respectively, for the three and six months
ended June 30, 2016.
Operating revenues decreased 2.6% to
$108,645,798 for the second quarter of 2017 compared to
$111,515,584 for the second quarter of 2016. The decrease in
operating revenues includes an increase in fuel surcharge revenue
from $12,594,737 for the second quarter of 2016 to $15,548,705 for
the second quarter of 2017 as fuel prices were higher during the
second quarter of 2017 compared to the second quarter of 2016. For
the six months ended June 30, 2017, operating revenues increased
1.4% to $218,050,328 compared to $215,104,805 during the six months
ended June 30, 2016. The increase in operating revenues includes an
increase in fuel surcharge revenue from $22,535,011 for the first
six months of 2016 to $31,350,520 for the first six months of 2017
as fuel prices were higher during the first six months of 2017
compared to the first six months of 2016.
Daniel H. Cushman, President of the Company,
commented, “The second quarter of this year proved to be as
challenging as the first quarter in regards to freight rates. In
the automotive sector, which represents 50% of our revenue base,
downward rate pressure continued throughout most of the second
quarter as some carriers operating in this sector were accepting
lower long-term contractual rates which we believe are
unsustainable. As a result, we had no choice but to begin to deploy
increased capacity into other sectors to which we had gained entry
during our 2016 strategic expansion plan. During 2016, we reported
that we were going to focus on revenue growth by expanding our
service presence within non-automotive sectors which resulted in
over 8% revenue growth during 2016. This growth did not come
without a price as the overcapacity within the marketplace at that
time required us to make certain rate concessions in order to gain
access to this freight. Those rate concessions made throughout 2016
have continued to impact our financial performance during 2017 and
will continue to do so until we have the opportunity to re-bid that
freight. While we are proud to be recognized as a premier
automotive carrier supplier, the capacity required to service this
sector has diminished as a result of falling vehicle sales and the
resulting automotive plant downtime which can occur without
sufficient warning. These volume swings are often difficult to
predict and can result in asset underutilization if replacement
freight isn’t readily available.
“Also, negatively impacting our revenue for the
quarter was the loss of asset utilization as a result of two major
weather events occurring during the quarter. These two events were
the late winter storm Ursa, which occurred in late April, and the
southern border tornado which occurred in late May. The winter
storm produced blizzard like conditions in certain of our service
areas, and the tornado closed the primary international crossing
into Mexico at our Laredo gateway. Approximately 40% of our
business involves cross-border activities, and the delays and
congestion caused as a result of these storms resulted in a loss of
revenue for the quarter.
“While downward rate pressure was constant
throughout the latter half of 2016 and most of the first half of
2017, beginning late in the second quarter we started to see some
relief as certain customers began to agree to requested rate
increases. As we progress through the remainder of 2017, we believe
that truck capacity will begin to tighten and that freight rates
will further rebound as carriers who are not compliant with the
pending implementation of the electronic logging device mandate
either exit the industry voluntarily or become forced out of the
industry due to difficulty in obtaining insurance coverage as a
result of their non-compliant status.
“In response to the prolonged rate pressure
experienced, we have implemented various cost reduction strategies
over the last year which has resulted in a reduction in costs in
certain targeted areas such as driver acquisition, group medical
insurance, equipment rental and employee wages. While we have
successfully reduced expenses in most categories, we have not met
our cost reduction goals as they relate to ongoing equipment
maintenance costs. We continue to operate one of the newest
equipment fleets in the industry and believe we have significant
additional cost savings opportunities related to equipment
maintenance programs. This is an area which will receive additional
focus as we progress through the remainder of the year.
“While not as significant as the impact of lower
freight rates, another unfavorable impact in our year-over-year
financial operating performance relates to the difference in the
reported gains on the sale of company-owned equipment. During the
first half of 2016, we reported $3.0 million in pre-tax gains from
the sale of used equipment, which compares to a $0.1 million loss
reported during the first half of 2017. While there seems to be
increased interest and activity in the used equipment market, sale
prices remain at levels that do not provide an adequate return.
While the used equipment market has remained soft, the stock market
has continued its upward trend and certain of our investments in
marketable equity securities reached price points which prompted us
to sell. During the first half of 2017, we recognized non-operating
pre-tax gains of $2.1 million related to the sale of these
investments, which compares to a $0.6 million non-operating pre-tax
loss on marketable equity security sales recognized during the
first half of 2016.
“Our strategy for the remainder of 2017
continues with our effort to seek new business opportunities at
higher rates than some of our existing customers’ rates and to
refine our cost reduction programs.”
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, and
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 June 30, |
|
Six Months Ended June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Revenue, before fuel surcharge |
$ |
93,097,093 |
|
|
$ |
98,920,847 |
|
|
$ |
186,699,808 |
|
|
$ |
192,569,794 |
|
Fuel
surcharge |
|
15,548,705 |
|
|
|
12,594,737 |
|
|
|
31,350,520 |
|
|
|
22,535,011 |
|
|
|
108,645,798 |
|
|
|
111,515,584 |
|
|
|
218,050,328 |
|
|
|
215,104,805 |
|
|
|
|
|
|
|
|
|
Operating expenses and costs: |
|
|
|
|
|
|
|
Salaries, wages and benefits |
|
25,262,505 |
|
|
|
27,841,137 |
|
|
|
51,166,719 |
|
|
|
55,323,467 |
|
Operating supplies and expenses |
|
19,410,185 |
|
|
|
21,041,769 |
|
|
|
39,642,257 |
|
|
|
40,160,433 |
|
Rent and purchased transportation |
|
43,716,716 |
|
|
|
40,717,839 |
|
|
|
86,839,498 |
|
|
|
78,104,879 |
|
Depreciation |
|
10,484,614 |
|
|
|
9,668,445 |
|
|
|
21,156,005 |
|
|
|
18,845,181 |
|
Insurance and claims |
|
4,438,887 |
|
|
|
4,490,548 |
|
|
|
9,135,148 |
|
|
|
8,548,983 |
|
Other |
|
2,304,033 |
|
|
|
2,014,179 |
|
|
|
4,420,635 |
|
|
|
4,183,793 |
|
Loss (gain) on disposition of equipment |
|
130,443 |
|
|
|
(1,612,392 |
) |
|
|
129,814 |
|
|
|
(3,002,226 |
) |
Total
operating expenses and costs |
|
105,747,383 |
|
|
|
104,161,525 |
|
|
|
212,490,076 |
|
|
|
202,164,510 |
|
|
|
|
|
|
|
|
|
Operating income |
|
2,898,415 |
|
|
|
7,354,059 |
|
|
|
5,560,252 |
|
|
|
12,940,295 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
(935,060 |
) |
|
|
(909,522 |
) |
|
|
(1,911,679 |
) |
|
|
(1,731,843 |
) |
Non-operating (loss) income |
|
649,346 |
|
|
|
(10,195 |
) |
|
|
2,701,506 |
|
|
|
(32,461 |
) |
|
|
|
|
|
|
|
|
Income before income taxes |
|
2,612,701 |
|
|
|
6,434,342 |
|
|
|
6,350,079 |
|
|
|
11,175,991 |
|
Income tax expense |
|
1,003,902 |
|
|
|
2,442,118 |
|
|
|
2,458,116 |
|
|
|
4,249,115 |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
1,608,799 |
|
|
$ |
3,992,224 |
|
|
$ |
3,891,963 |
|
|
$ |
6,926,876 |
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
$ |
0.25 |
|
|
$ |
0.61 |
|
|
$ |
0.61 |
|
|
$ |
1.01 |
|
|
|
|
|
|
|
|
|
Average shares outstanding – Diluted |
|
6,430,005 |
|
|
|
6,571,527 |
|
|
|
6,412,346 |
|
|
|
6,858,333 |
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
Truckload
Operations |
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Total
miles |
|
58,721,872 |
|
|
|
60,682,053 |
|
|
|
118,846,481 |
|
|
|
118,044,732 |
|
Operating ratio (1) |
|
96.82 |
% |
|
|
91.98 |
% |
|
|
97.03 |
% |
|
|
92.82 |
% |
Empty
miles factor |
|
6.78 |
% |
|
|
6.28 |
% |
|
|
6.79 |
% |
|
|
6.41 |
% |
Revenue per total mile, before fuel surcharge |
$ |
1.39 |
|
|
$ |
1.43 |
|
|
$ |
1.39 |
|
|
$ |
1.43 |
|
Total
loads |
|
84,726 |
|
|
|
84,540 |
|
|
|
168,477 |
|
|
|
164,232 |
|
Revenue per truck per work day |
$ |
674 |
|
|
$ |
708 |
|
|
$ |
677 |
|
|
$ |
694 |
|
Revenue per truck per week |
$ |
3,370 |
|
|
$ |
3,540 |
|
|
$ |
3,385 |
|
|
$ |
3,470 |
|
Average company-driver trucks |
|
1,219 |
|
|
|
1,357 |
|
|
|
1,250 |
|
|
|
1,368 |
|
Average owner operator trucks |
|
673 |
|
|
|
559 |
|
|
|
650 |
|
|
|
535 |
|
|
|
|
|
|
|
|
|
Logistics
Operations |
|
|
|
|
|
|
|
Total
revenue |
$ |
11,440,763 |
|
|
$ |
12,051,294 |
|
|
$ |
22,125,344 |
|
|
$ |
23,593,133 |
|
Operating ratio |
|
97.38 |
% |
|
|
96.84 |
% |
|
|
96.99 |
% |
|
|
96.55 |
% |
_______________________________________
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. |
Allen W. West
(479) 361-9111
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