P.A.M. reports loss

Quarterly decline third in row; exec says freight rebound too late.

P.A.M. Transportation Services Inc. on Wednesday reported a second quarter loss of $823,000, its thirdconsecutive quarterly profit loss.

Business significantly slowed for P.A.M. when auto manufacturing plants closed temporarily in response to the coronavirus pandemic. That business rebounded to somewhat normal levels in June, when the plants resumed production.

But the “return of automotive freight was too late for us,” Allen West, the company’s chief financial officer, said in the report. Results missed Wall Street expectations.

The loss in the three months that ended June 30 compared with a profit of $8.65 million a year ago.

Revenue was $93 million, down 30% from $133 million last year. Revenue was $85.8 million when excluding fuel surcharges.

After weeks of false starts and return dates being pushed back from its larger customers, P.A.M. changed its strategy during the pandemic and sought replacement jobs to keep drivers active. This required more empty miles between deliveries, reducing the company’s rates and truck productivity while increasing uncompensated miles.

The empty-miles factor increased to 11.8% compared with 6.7% a year ago, according to the report. Total loads declined to 76,338 compared with 103,015 last year.

P.A.M. and others also had loads they couldn’t deliver because several drop-off points were closed because of covid-19.

Analysts predicted P.A.M. would report a profit of 15 cents per share, but the weak environment resulted in a quarterly earnings loss of 14 cents per share, down from the $1.45 per share profit reported a year ago. Revenue also fell short with several expecting it to be $101.6 million, according to a Zacks Consensus Estimate.

The company posted net losses of $1.3 million in the first quarter of 2020 and $13.6 million in the fourth quarter of 2019, when GM workers went on strike for six weeks.

The trucking company said that although not all automotive plants are operating at full capacity, limited reopening allowed P.A.M. to return to its regular custom

er network and revenue rebounded in June. Automotive customers, including General Motors, comprise about half of P.A.M.’s revenue.

The company’s logistics division declined along with trucking, but made a strong recovery in revenue. According to the report, logistics revenue was $15.8 million, down 19% from $19.5 million last year. P.A.M.’s Mexico service,

which is reliant on the automotive sector, also slowed and is expected to make a comeback this year.

The company also enacted cost-cutting measures in April and May across all businesses, including “plans to furlough certain employees in some cases and to permanently reduce our workforce in others,” West said. About 65 workers were temporarily laid off in late March because of a significant loss of business during the pandemic.

Given the current environment, P.A.M. is on track to meet its capital expenditure plans. West said the company finished the quarter with draws of $12.5 million against its $60 million revolving credit facility and about $25.7 million in marketable equity securities holdings.

Despite a second quarter of setbacks, West said with the return of automotive production, the economy reopening and some internal cost-cutting, “we believe that we are well positioned for a strong recovery” in 2020.

The company’s shares fell $2.20 or 6.8%, to close Friday at $30.16. Share prices in the past year have ranged from a high of $71.56 to a low of $22.