P.A.M. Records A Big Jump In Net Income, And Investors Take Note

P.A.M. Transportation Services Inc. PTSI turned in a strong second quarter performance in a Wednesday announcement, sending its stock up by more than 26 percent at one point.

The truckload and logistics company reported a jump in net income of more than 400 percent, up to $7.2 million from $1.6 million in the second quarter of last year. Net of fuel, revenue was $112.8 million. Logistics revenue was $23.7 million, more than double the second quarter of 2017. While the numbers are small compared to other truckload carriers—Werner's revenue for the quarter was $619 million—it led to trading volumes at 2 p.m. of more than 78,000 shares, compared to average daily volume near 19,000 shares. At 2 p.m., the price of P.A.M. stock was up almost $9 to $53, a jump of more than 20 percent.

P.A.M. does not hold a conference call with analysts. In the earnings release, P.A.M. president Daniel Cushman said the company's target is to get back to the earnings of the second quarter of 2015. It fell short, but Cushman in his statement said the 2015 numbers benefitted from sales of surplus equipment, a revenue stream not present this year. "This difference ended up being the primary difference between falling short of the targeted 2015 financial results and matching those results," he said. In June, the final month of the quarter, P.A.M. recorded record high operating income, "regardless of the level of equipment gains recognized."

Arkansas-based P.A.M. would have done better but it chose to honor committed business that had been booked at rates less than the company could have gotten in spot market. "A significant portion of our business fell into this category with rates that did not expire until June and July of this year," Cushman said. "We continued to see rate improvement as we addressed these expiring rates, and as a result, our financial results became progressively better during each month of the second quarter."

In the standard nod of every earnings statement to the tight driver market, Cushman noted that P.A.M. implemented a "significant" driver pay increase at the end of last year. "We anticipate that market rates will continue to drive our total driver costs higher throughout the remainder of the year," he said. He also said that despite the driver squeeze, P.A.M. has increased its manned truck count by 7 percent compared to the first quarter of this year.

Other metrics were stronger. The P.A.M. operating ratio of 90.26 percent was near the 89.2 percent that Werner reported for the quarter. It also marked an improvement of about 650 basis points from a year earlier. The empty miles factor was 6.08 percent--Werner's was more than 12 percent--and the revenue per truck per week was $3,716, compared to $3,370 a year earlier. Revenue per total mile before fuel surcharge was $1.56, compared to $1.39 a year earlier.

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