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P.A.M. Transportation sees margin deterioration in no-peak Q4

Truckload carrier P.A.M. Transportation Services didn’t provide an outlook for 2023 in its fourth-quarter report issued Monday after the market closed.

The company reported adjusted earnings per share of $1.08, ahead of one analyst’s estimate of 80 cents but 34 cents lower than the year-ago number.

The number excluded an $8 million charge, or 27 cents per share, from an increase in legal reserves for a claim “anticipated to settle in excess of insurance policy limits.”

Revenue in Pam’s (NASDAQ: PTSI) TL segment increased 14% year over year (y/y) to $170 million, up 4% excluding fuel surcharges. The company grew the fleet by 28% y/y, or 535 units. The growth included the June acquisition of Metropolitan Trucking and its fleet of 320 trucks in June.

Revenue per truck per week was down 17% y/y to $4,466 as loaded miles per truck were down 7% and revenue per loaded mile excluding fuel was down 12%. The company noted a lack of a peak shipping season in the period.

“We did not see a traditional peak in the fourth quarter as we anticipated, but our entire team stepped up to the challenge and navigated a challenging environment well,” President Joe Vitiritto stated in a news release. “We continue to remain focused on continually improving and delivering value to our customers, our team members and our shareholders in 2023.”

Table: Pam’s key performance indicators

Higher costs also weighed on results as the TL unit posted a 91% operating ratio (the inverse of operating margin), 1,180 basis points worse y/y.

Pam experienced an increase in repairs and maintenance costs as it delayed trading in some equipment during the year to accommodate fleet growth. Its average truck age increased from 1.8 years at the close of 2021 to 2.1 years at the end of ’22. Trailer trades were held for the same reason, resulting in a little more than a one-year increase in average age.

As a percentage of revenue, operating supplies were 500 bps higher y/y, with salaries, wages and benefits increasing 240 bps.

Pam ended the quarter with $176 million in cash, equity securities and availability on its revolver compared to outstanding debt of $264 million.

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