P.A.M. Transportation Services Inc. earnings plummeted 78% in the fourth quarter compared with the prior year, falling short of the consensus forecast of industry analysts.
The Tontitown, Arkansas, motor carrier reported $722,842 in net income for the quarter, or 11 cents per share. Industry analysts had forecast $1.1 million or 17 cents, according to Bloomberg News. One year ago, P.A.M earned $3.23 million or 45 cents.
Revenue increased 5.8% to $108.4 million in the quarter, but expenses grew 8.6% to $106.7 million. As a result, operating income, or the difference between revenue and expenses, dropped 66% to $1.7 million versus the 2015 fourth quarter.
“2016 was a very challenging year. Overcapacity in the industry resulted in sustained downward rate pressure while cost increases in our operating costs, particularly in the areas of employee health insurance and driver acquisition costs, continued to plague us throughout the year,” company CEO Daniel Cushman said. “The increase in operating costs and our inability to pass these cost increases on through rate increases played a large part in our miss of profitability goals for the year.”
Within the company, the truckload division bested the 2015 fourth-quarter performance on revenue. While empty miles grew to 7.44% from 7.1%, loads grew 1.7% and revenue per truck per week increased to $3,620 from $3,345. However, the operating ratio, or operating expenses as a percentage of revenue, before fuel surcharges, deteriorated 4.19 percentage points to 98.2%.
The logistics division, which represents less than 10% of the business, generated $10.2 million in revenue, slightly down from $10.6 million in the 2015 fourth quarter. However, logistics revenue for the full year was relatively flat. The logistics operating ratio deteriorated 77 basis points to 98.7% in the fourth quarter but improved 7 basis points to 97.6% for the full year.
P.A.M. Transportation ranks No. 64 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.