P.A.M. has dis­ap­point­ing quar­ter

Ex­ec­u­tives: Auto in­dus­try strug­gles to blame for poor re­sults.

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - DAL­TON LAFERNEY

Sec­ond- quar­ter 2017 did not treat P.A.M. Trans­porta­tion Ser­vices well. Ex­ec­u­tives at­tribute the dis­ap­point­ing re­sults to a strug­gling auto in­dus­try, to which P.A.M. de­votes about half of its busi­ness, as well as low rates per mile.

The com­pany took in fewer dol­lars in the quar­ter, down to $108.6 mil­lion from $ 111.5 mil­lion in sec­ond quar­ter 2016. At the same time, the com­pany had about $1 mil­lion more in op­er­at­ing ex­penses, which left the com­pany with about $2.3 mil­lion less in profit this year com­pared with the same time last year. The profit in the quar­ter came out to about $1.6 mil­lion.

Earn­ings per share slid to 25 cents per share, down from 2016 when in­vestors earned about 62 cents per share.

While the com­pany de­liv­ered about 200 more loads this sec­ond quar­ter com­pared with 2016, P.A.M. earned less rev­enue per mile, fall­ing from about $1.43 per mile to about $1.39 this quar­ter. Economists say this is be­cause of an over-

● ca­pac­ity in freight mar­kets, so cus­tomers aren’t feel­ing the pres­sure to pay ship­pers at higher rates.

Mak­ing mat­ters worse, P.A.M. deals in the auto in­dus­try, a seg­ment of the econ­omy ex­pe­ri­enc­ing about a 3 per­cent de­crease in sales.

“They got hit very heav­ily by their vul­ner­a­bil­ity to a sin­gle in­dus­try,” said Bob Wil­liams, se­nior vice pres­i­dent and man­ag­ing di­rec­tor of Sim­mons First In­vest­ment Group. “There’s not much you can do if you pri­mar­ily op­er­ate in one in­dus­try.”

Daniel Cush­man, pres­i­dent of P.A.M., said the com­pany ex­pects that 2017 will even­tu­ally show im­prove­ments re­gard­ing over­ca­pac­ity among truck­ers and weak prices for freight.

In the com­pany’s earn­ings re­lease, Cush­man cites the im­ple­men­ta­tion of elec­tronic log­ging de­vices as a dif­fer­ence­maker. He said the com­pany be­lieves that the de­vices will force some smaller ship­pers out of busi­ness, caus­ing more truck­ers to leave the field.

P.A.M. has fewer com­pa­ny­owned trucks this year than last but has more con­trac­tors driv­ing, and the com­pany had a re­duc­tion in ex­penses from salar­ies, wages and ben­e­fits. In the sec­ond quar­ter of 2016, the com­pany paid about $27.8 mil­lion, and this quar­ter about $25 mil­lion.

“There has to be some eco­nomic where it’s cheaper to con­tract your help than put them on the clock full time and pro­vide ben­e­fits,” Wil­liams said.

“When there’s ex­cess ca­pac­ity, then that be­comes more ex­pen­sive to you, and when things are more tight, you are will­ing to pay ex­tra. It’s ul­ti­mately in­dica­tive of sup­ply and de­mand.”

Ex­penses from rent and pur­chased trans­porta­tion added up to about $3 mil­lion more this sec­ond quar­ter than in 2016.

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