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PAM Transport Inc. of Tontitown reported its third consecutive quarterly loss Thursday.
PAM said revenue for the second quarter of fiscal 2020 was $92.9 million, a steep drop from $133 million in the same quarter a year ago. Income was a negative $823,000, down from a profit of $8.7 million in 2019.
Earnings per share was a negative 14 cents, a decrease from $1.45 a year ago.
The COVID-19 pandemic’s effects on the automobile industry was a “significant financial impact,” said PAM CFO Allen West. Longtime CEO Dan Cushman retired in May after 11 years leading the company; Chairman of the Board Matthew Moroun has been named interim CEO until a full-time replacement is hired.
Approximately 45% of PAM’s business is with automobile manufacturers, who were shut down until June. West said the third month of the quarter normalized when manufacturing resumed.
The company tried, as it had in the first quarter, to use its employees and trucks to find loads in the spot market. A glut of companies using the spot market depressed rates and made profits hard to come by, but PAM felt it had no choice when its three main automotive customers stayed closed in April and May.
“[W]e were forced to aggressively redeploy our trucks to secure replacement revenue to keep our drivers engaged and intact,” West said. “Replacement revenue, often from a depressed spot market, offered lower rates and required more empty miles between delivery and subsequent reloading. These factors contributed to reductions in rates and truck productivity while increasing uncompensated miles.”
West also said the company was hurt because many trailers had been loaded with freight that couldn’t be delivered because receiving centers had closed. So the trailers sat parked, loaded and unable to be used for other deliveries.
PAM reported 76,338 loads in the second quarter, well below the 103,015 loads it delivered in the same quarter a year ago. Revenue per truck per week, an important metric in the transportation industry, was $2,700, well below the $3,515 figure of a year ago.
For the first six months of fiscal 2020, PAM reported a loss of income of $2.1 million, down from a profit of $16.95 million a year ago. The company also posted an income loss of $13.6 million in the fourth quarter of 2019 but blamed that not on operations but on a $19.9 million settlement of a minimum-wage lawsuit.
West said the company cut costs in the second quarter with furloughs and layoffs but did not mention specific numbers.
“With the return of automotive production, the increase in general economic activity as we approached the end of the second quarter, and cost reductions recently implemented which have yet to be fully realized, we believe that we are well positioned for a strong recovery as the remainder of the year progresses,” West said.