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P.A.M. Transportation 1Q Earnings Down 22 Percent

2 min read

P.A.M. Transportation Services Inc. of Tontitown on Thursday reported first-quarter net income of $2.28 million, down 22 percent from the same quarter last year.

Its first-quarter diluted earnings per share was 36 cents, down from 41 cents in the same quarter last year.

Operating revenue increased by 5.6 percent to $109.4 million. That figure includes an increase in fuel surcharge revenue to $15.8 million. The company said fuel prices were significantly higher during the first quarter of 2017 compared to the first quarter of 2016.

In a news release, P.A.M. President Daniel Cushman blamed the declines on a continuation of industry trends “where we saw higher costs and downward rate pressure from customers.”

He said, “While we have had some success in implementing cost reduction strategies, we have yet to achieve success in obtaining any significant rate increases from customers … after a full year of monthly customer rate reductions, our average rate per mile has declined to a point well below that of last year at this time.”    

But Cushman also said P.A.M. could benefit from the electronic logging device regulations set to become effective in December.

He said, “We believe that compliant carriers, including us, are likely to witness better margin opportunities as non-compliant carriers exit the marketplace and capacity becomes less available.”

The company said it has also had a tough time selling used equipment at a profit because that market has been soft and P.A.M. has some of the newest equipment in the industry. Much of its equipment is being used in operations.

Cushman said, “Our strategy for the remainder of 2017 includes efforts to continue to reduce operating costs and to seek new business opportunities at higher rates than some of our existing customer’s rates. We have already succeeded in replacing some freight in that endeavor, but it will take time to grow the business with those higher margin customers in order to offset the rate decreases experienced over the last year.”

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