Tax Cut Boon to PAM Transport

Tax Cut Boon to PAM Transport

PAM Transport Inc. of Tontitown reported 2017 fourth-quarter income of $31.5 million on Thursday, a spectacular increase from the $722,842 it reported in the same quarter of 2016.

The Tax Cut & Jobs Act, which President Trump signed into law in December, was the major reason why. PAM reported an income tax benefit of nearly $29 million as a result in the federal cut in the corporate tax rate.

PAM's reported income for 2017 was $38.9 million, up from $11.1 million in 2016. PAM said the tax benefit for fiscal 2017’s bottom line was $24.2 million; in 2016, PAM said it paid $6.6 million in income taxes.

Without the tax break, PAM’s quarterly and year results were improvements over 2016. Revenue for the quarter was $110.9 million, up from $108.3 in the same quarter of 2016; for fiscal year 2017, revenue was $437.8 million, up from $432.8 million.

Earnings per share for the fourth quarter of 2017 was $5.00, which PAM said would have been 28 cents if not for the income tax cut. In the fourth quarter of 2016, EPS was 11 cents.

For fiscal 2017, EPS was $6.08 - it would have been $1.43 without the income tax cut - up from $1.67 in 2016.

PAM announced in January that it would raise pay for its drivers by as much as 40 percent in some cases.

Despite the improved bottom line, PAM CEO Dan Cushman said it was a tough fourth quarter for the company because of automobile plant closures and smaller shipments from some customers. PAM’s truckload business specializes in automobile parts transport.

The tighter market was helped, though, by higher rates that shippers were able to charge. Cushman thinks that trend will continue in 2018 to the benefit of most trucking companies.

“We did not finish 2017 as strong as we would have liked as weaker December results offset significantly improved results achieved during October and November,” Cushman said. “December was particularly difficult due to automotive plant shutdowns and shortfalls in peak freight commitments as some customers fell considerably short of hitting their capacity needs targets. This shortfall left us scrambling to find acceptable replacement freight for that reserved capacity and while freight was plentiful, with such short notice it was difficult to find destinations and rates which were both desirable and network friendly.”

Cushman said the tax cut and the promise of better freight rates in 2018 gave PAM the ability to raise pay for its drivers, something Cushman said the company had been wanting to do for a while. Driver recruiting and retention is a constant worry for many transportation companies because of the high demand and stagnant supply of drivers.

PAM had relied on student-trained drivers heavily in the past but, with heightened demand for any qualified driver, the company began to face competition for those drivers. Cushman said the pay raise has already shown signs of helping PAM retain its drivers.

The company’s Truckload division reported fewer miles but an increase in total loads for both the quarter and fiscal year. Revenue per truck per week for the quarter was $3,637, up from $3,620 in the same quarter of 2016, while revenue per truck per week for the year was $3,473, down from $3,525 in 2016.

The Logistics division reported revenue of $15.2 million for the fourth quarter, up from $10.1 million in the same quarter a year. Revenue for the year was $51.1 million, up from $44.4 million in 2016.