Revenue increased 11.3 percent year-over-year (excluding fuel surcharge revenue)
Revenue per total mile (excluding fuel) increased 14.5 percent year-over-year to $1.66
Revenue per truck per week declined 0.7 percent year-over-year
Operating ratio improved 540 basis points to 91 percent, excluding the impact of fuel
P.A.M. Transportation Services, Inc. (NASDAQ: PTSI), a dry van truckload carrier, announced first quarter 2019 earnings of $0.99 per share excluding a $0.40 per share gain on marketable securities.
Pre-tax income increased $5.1 million year-over-year (y/y) as revenue increased 11.3 percent y/y (excluding fuel surcharge revenue) and the company's operating ratio (OR) improved 540 basis points to 91 percent, excluding the impact of fuel.
"We are very pleased with our first quarter results. The first quarter of each year can be very challenging as we sometimes experience plant downtime with some of our customers and face disruptive weather events. This year's first quarter was no exception as some of our largest customers closed certain plants for re-tooling and maintenance, and we had to navigate multiple bad weather events during the first quarter. Despite these challenges, we were able to produce results that now stand as the Company's most profitable first quarter," said Daniel H. Cushman, President.
Revenue per total mile (excluding fuel) increased 14.5 percent y/y to $1.66. The positive benefit of an improved rate per mile was only partially offset by a 110 basis point increase in the empty mile factor and a 0.7 percent y/y decline in truck utilization (revenue per truck per week).
"An obvious component of our success was based on our ability to acquire higher rates from customers. These higher rates were necessary to help offset rising costs experienced by the Company over the past three years, not just to be a straight passthrough to income. While we have recently experienced some pressure from certain customers to reduce our existing rates, we have not done that, and we don't intend to," continued Cushman.
The release called out increases in driver pay, fuel, insurance and equipment as the main reasons for rate increases. Further, the company said that it believes the driver labor market will demand continued wage increases and that the company will use increased pricing as a means to offset these costs in order to achieve acceptable operating margins.
Cushman continued on pricing, "despite some rate pressure, we continue to secure new business at target margins, so that is positive."
PTSI's logistics business saw a 9.4 percent y/y increase in revenue accompanied by a 310 basis point improvement in OR to 92.4 percent.
"Our Logistics division continues to perform at levels that exceed expectations in terms of operating income. We would like to see stronger revenue growth results than what we experienced in the first quarter but feel confident that growth will come," Cushman said.
P.A.M. Transportation announced that it has purchased property adjacent to its headquarters to allow incremental growth within its logistics division. "We are confident that our [logistics division] growth and profitably expectations for the year will be met," stated Cushman.
The company highlighted other areas of its business. It said that its service offering in Mexico remains strong with demand and rates at an all-time high. Additionally, it noted that, "recent border crossing issues didn't have much of an impact on the first quarter, but we did experience some delays in early April. While we have been negatively affected by these delays, the impact has been lessened due to our C-TPAT [Customs Trade Partnership Against Terrorism] clearance designation, which allows many of our northbound moves to cross the border using the FAST [Free and Secure Trade] lanes that have been less impacted than other northbound crossing lanes."
PTSI's expedited business was down in the first quarter 2019 sequentially, but noted that fourth quarter is the peak in demand for this business. The expedited business is seeing increased demand for the offering, primarily by small package companies and by customers wanting driver teams for expedited deliveries. The automotive division was as expected in the first quarter. Seasonality in this business was in-line with management's expectations. Lastly, the dedicated offering saw new business opportunities in the quarter, but didn't elaborate further.
PTSI said that the driver market continues to be difficult, but that its recruiting efforts continued to be positive. The company believes that it will achieve fleet growth in 2019, but not at the more than 20 percent level of growth seen in 2018.
"These record results mark the fourth consecutive quarter of record earnings per share results for their respective periods, excluding the effect of the adoption of the tax reform law enacted in the fourth quarter of 2017," Cushman concluded.
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