Diesel Costs Destroying P.A.M.

Despite dismal second-quarter profits for Tonitown’s transporation services provider P.A.M, industry analysts see a turnaround for the trucking industry segment.

P.A.M. showed a net income loss of $1.33 million in the second fiscal quarter, compared to a $2.19 million net gain in the same period last year.

The $0.14 per share loss beat analysts’ predictions. Indeed, Thomson Financial had predicted a $0.19 per share loss for the quarter.

Soaring fuel costs had the deepest impact on the company’s expenses during the quarter, which represented $0.06 more per mile, net of fuel surcharges, said P.A.M. CEO Robert Weaver in a corporate news release.

P.A.M. collected $26.24 million in fuel surcharges during the quarter, while it recorded $43.12 million in fuel expenses. These figures compare to $14.15 million in fuel surcharges and fuel expenses of $29.01 million during the same quarter last year.

Added fuel costs inflated operating expenses 9.6% during the same quarter.

Trucking industry analysts say more carriers with trucks sitting idle have driven the demand for services higher. This is having an impact on potential trucking jobs.

Weaver said P.A.M. was expecting this higher demand and increased its pricing in June.

Tom Albrecht, transportation analyst at Stephens Inc., said the current recovery cycle is just beginning and is thus far not showing a profit. He noted in a recent report to investors that profitability indicators are moving upward and should continue this trend through the end of 2008.

He predicts that P.A.M. will break even if it raises its rates $0.03 per mile.

P.A.M. is growing its customer base and is expanding both retail and consumer goods capacity beyond its customary reliance on the automotive industry. Weaver observed that the company’s non-auto business increased 13.4 percent in June alone.

P.A.M. showed a total revenue of $110.92 million in the fiscal quarter ended June 30, 2008, which includes fuel surcharges. Total revenue was up 4 percent over last year.

Additionally, on a weekly basis, revenue per truck was $2,890, an 8.5 percent decrease from the $3,160 earned per truck per week a year ago.

For the past 52 weeks, the share price of P.A.M. (found on NASDAQ as PTSI) has varied from a high of $19.31 per share to a low of $9.22 per share.