Pam Transportation feels brunt of downcycle in Q3
Pam Transportation Services’ third quarter produced a big reset from the record highs the company posted just one year ago. The result was also a notable step down from the 2023 second quarter.
Third-quarter revenue of $202 million was down 20% year over year (y/y) and operating income and earnings per share were off approximately 75%. The Tontitown, Arkansas-based carrier recorded EPS of 28 cents compared to $1.09 in the same period last year.
Lower gains on sale were a 3 cent hit and a higher tax rate was a 2 cent headwind compared to the 2022 third quarter. However, a $3.5 million y/y swing in the market value of the company’s equity holdings produced a 12 cent tailwind.
Pam’s (NASDAQ: PTSI) consolidated operating income was down 36% from the 2023 second quarter.
“The third quarter of 2022 was one of the best in our company’s history while the third quarter this year was faced with an unprecedented unfavorable truckload market,” said Joe Vitiritto, president at Pam. “Despite market challenges, we did see improvement in factors that we believe will position the Company favorably when truckload market conditions improve.”
Revenue in the company’s TL segment was off 23% y/y as average trucks in service fell 6% and revenue per truck per week was down 16%. Loaded miles declined 10% and a $2.45 rate per loaded mile (excluding fuel surcharges) was down 14%.
The news release didn’t reference the impact strikes in the auto sector were having on its business. Pam has struggled in the past during production shutdowns. Last year, 31% of its revenue was tied to the sector.
Operating expenses as a percentage of revenue were up y/y across all cost buckets. Salaries, wages and benefits (up 270 basis points), operating supplies (up 200 bps) and rent and purchased transportation (up 200 bps) were the most impacted.
Pam generated a 95.8% operating ratio in its TL segment, which was 1,320 bps worse y/y.
The company’s logistics unit reported a 13% y/y decline in revenue to $62 million. Pam doesn’t provide gross profit margins for the unit or operating metrics like load counts and revenue per load. The unit recorded a 93.3% OR, which was 760 bps worse y/y.
Across most brokerage platforms, both volumes and rates are depressed. J.B. Hunt (NASDAQ: JBHT) reported Tuesday a 48% y/y revenue decline in its brokerage unit during the third quarter, which resulted in a fourth straight operating loss for the division.
Pam generated $94 million in operating cash flow during the first nine months of the year. Liquidity increased $4.7 million from the second quarter to $204 million and outstanding debt continued to step lower, down $2.4 million sequentially to $228 million.
“Looking ahead, we will continue to stay focused on investing in the areas of our business that will help us to consistently grow, increase efficiencies and deliver value to our customers, shareholders and employees,” Vitiritto said.
Shares of PTSI were down 9% at 11:38 a.m. Thursday compared to the S&P 500, which was flat.
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