P.A.M. Transportation Services Inc. (PTSI) filed Quarterly Report for the period ended 2009-09-30.
P.A.M. Transportation ServicesInc. is an irregular routecommon and contract motor carrier authorized to transport general commodities. The freight consists primarily of automotive partsconsumer goodssuch as general retail store merchandiseand products from the manufacturing sectorsuch as heating and air conditioning units. All freight is transported as truckload quantities. P.a.m. Transportation Services Inc. has a market cap of $75.03 million; its shares were traded at around $7.9715 with and P/S ratio of 0.18. P.a.m. Transportation Services Inc. had an annual average earning growth of 2% over the past 5 years.
Highlight of Business Operations:
In discussing our results of operations we use revenue, before fuel surcharge, (and fuel expense, net of surcharge), because management believes that eliminating the impact of this sometimes volatile source of revenue allows a more consistent basis for comparing our results of operations from period to period. During the three and nine months ending September 30, 2009, approximately $9.1 million and $20.7 million, respectively, of the Company s total revenue was generated from fuel surcharges. During the three and nine months ending September 30, 2008 approximately $24.3 million and $69.9 million, respectively, of the Company s total revenue was generated from fuel surcharges. We may also discuss certain changes in our expenses as a percentage of revenue, before fuel surcharge, rather than absolute dollar changes. We do this because we believe the high variable cost nature of certain expenses makes a comparison of changes in expenses as a percentage of revenue more meaningful than absolute dollar changes.
Fuel expense, net of fuel surcharge, decreased from 20.0% of revenues, before fuel surcharges, during the third quarter of 2008 to 15.9% of revenues, before fuel surcharges, during the third quarter of 2009, which, on a dollar basis, represented a decrease from $14.6 million during the third quarter of 2008 to $9.3 million during the third quarter of 2009. The decrease was related to both a decrease in the number of gallons of fuel purchased resulting from fewer miles traveled and a decrease in the average surcharge-adjusted price paid per gallon of fuel from $1.67 during the third quarter of 2008 to an average price of $1.32 paid during the third quarter of 2009. Fuel surcharge collections vary from period to period as they are generally based on changes in fuel prices from period to period so that during periods of rising fuel prices fuel surcharge collections increase while fuel surcharge collections decrease during periods of falling fuel prices.
Depreciation increased from 12.7% of revenues, before fuel surcharges, during the third quarter of 2008 to 14.3% of revenues, before fuel surcharges, during the third quarter of 2009. The increase, as a percentage of revenue, relates to the interaction of lower revenues during the third quarter of 2009 as compared to the third quarter of 2008 and the fixed-cost nature of depreciation expense. On a dollar basis, depreciation decreased from $9.3 million during the third quarter of 2008 to $8.3 million during the third quarter of 2009 as the Company continues to reduce the size of its truck fleet in response to reduced demand in the truckload freight market.
Salaries, wages and benefits increased from 42.1% of revenues, before fuel surcharges, in the first nine months of 2008 to 44.5% of revenues, before fuel surcharges, during the first nine months of 2009. The increase, as a percentage of revenue, relates to the interaction of expenses with fixed-cost characteristics, such as general and administrative wages, maintenance wages, operations wages, and payroll taxes with a decrease in revenues for the periods compared. Based on a dollar comparison, salaries, wages and benefits decreased from $95.4 million during the first nine months of 2008 to $72.6 million during the first nine months of 2009 as the number of driver compensated miles decreased from 174.0 million miles during the first nine months of 2008 to 130.5 million miles during the first nine months of 2009. Also contributing to the decrease on a dollar basis was a decrease in amounts paid for driver lease expense, a gain related to life insurance proceeds, and a pay rate cut for all employees. Driver lease expense, which is a component of salaries, wages and benefits, decreased as the average number of owner-operators under contract decreased from 46 during the first nine months of 2008 to 33 during the first nine months of 2009. During the first nine months of 2009, the Company recorded a one-time gain related to life insurance proceeds of $1.0 million due to the death of one of its former officers. Also, during June 2009, the Company implemented an across-the-board 5% employee pay rate reduction plan.
Fuel expense, net of fuel surcharge, decreased from 22.0% of revenues, before fuel surcharges, during the first nine months of 2008 to 15.5% of revenues, before fuel surcharges, during the first nine months of 2009 which, on a dollar basis, represented a decrease from $49.8 million during the first nine months of 2008 to $25.3 million during the first nine months of 2009. The decrease was related to both a decrease in the number of gallons of fuel purchased resulting from fewer miles traveled and a decrease in the average surcharge-adjusted price paid per gallon of fuel from $1.75 during the first nine months of 2008 to an average price of $1.29 paid during the first nine months of 2009. Fuel surcharge collections vary from period to period as they are generally based on changes in fuel prices from period to period so that during periods of rising fuel prices fuel surcharge collections increase while fuel surcharge collections decrease during periods of declining fuel prices.
Depreciation increased from 12.2% of revenues, before fuel surcharges, during the first nine months of 2008 to 15.8% of revenues, before fuel surcharges, during the first nine months of 2009. The increase, as a percentage of revenue, relates to the interaction of lower revenues during the first nine months of 2009 as compared to the first nine months of 2008 and the fixed-cost nature of depreciation expense. On a dollar basis, depreciation decreased from $27.6 million during the first nine months of 2008 to $25.7 million during the first nine months of 2009 as the Company continues to reduce the size of its truck fleet in response to the continued weak demand in the truckload freight market.
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