P.A.M. Transportation Services (NASDAQ: PTSI) has over time “defied the performance of the market,” as noted by FreightWaves CEO Craig Fuller.
Dan Cushman, president and CEO of P.A.M., shared with Fuller the efforts he’s made in diversifying the carrier’s focus as part of the FreightWavesTV show “Fuller Speed Ahead.”
“I think we have clearly identified who we are, what we want to be, and being the best at what we do in every division that we participate in and we do that extremely well. When I first got there I really focused on establishing a sustainable profit model, and I feel like we’ve done it and we’re true to ourselves,” said Cushman.
Cushman joined P.A.M. in 2009 during the early months of recovery following the 2008 financial crisis, in which American automobile manufacturers saw major declines in production and sales. With P.A.M. operating mainly as an auto-carrier, Cushman had to think long and hard about readjusting his company’s strategy.
“I was told during the interview process that 63% of our [P.A.M.’s] business was automotive. What they left out was that was one customer; It was all at General Motors [GM]…That client happened to go through bankruptcy,” Cushman said.
Cushman knew he had to diversify P.A.M.’s services to avoid losing millions. He even thought of pulling the company out of the automotive industry altogether.
“Based on my background, I was never really involved in automotive. So I had the chance to do that, but I realized we were great at it; I think maybe the best in our sector at it. So I wasn’t going to abandon it, but I needed to grow up in it.”
He continued, “I don’t think now there’s an original equipment manufacturer [OEM] that we don’t do business with.”
Cushman noted that GM is still the company’s largest customer, but due to his efforts to diversify, it makes up less than 20% of P.A.M.’s business today.
P.A.M. has proven it could overcome hard times in the past, but recently saw decline in earnings this quarter that the carrier attributes to the United Auto Workers (UAW) labor strike against GM.
P.A.M. Transportation Services announced third quarter 2019 earnings of $0.79, well below last year’s $1.52 performance and the consensus estimate of $1.25, as reported earlier by FreightWaves.
Even though he referred to it as a “gut punch,” Cushman said that P.A.M. has done everything to generate more business to keep its drivers.
“During that difficult five-week strike, we actually grew our fleet by 10 drivers. We’ve got 400 drivers dedicated to GM; I was worried that our fleet could shrink by 100 or more,” Cushman said.
Cushman added that despite the slow growth this year, P.A.M. saw “great growth” last year of 20%. He attributed much of P.A.M.’s success to its great effort to recruit drivers. Cushman tells potential drivers that they can be on a dedicated run most likely three months after training.
“I think we’ve got the best jobs to offer in the industry,” Cushman said.