P.A.M. Transportation Services (NASDAQ: PTSI) on Thursday reported a net loss of $823,000, 14 cents per share, which includes investments in equity securities. Excluding the investments, the dry-van truckload (TL) carrier lost 43 cents per share. Analysts’ estimates were for a profit of 15 cents per share.
The Tontitown, Arkansas-based carrier reported a 30% year-over-year decline in total revenue to $93 million as truck loads were down 26% and revenue per mile excluding fuel fell 7%. Revenue per truck per week was 23% lower in the quarter at $2,700. The company’s TL division posted a 104% operating ratio, 1,690 basis points worse year-over-year.
COVID-19-related shutdowns in the auto manufacturing sector, 45% of P.A.M. Transportation’s revenue, were the primary reason for the earnings degradation.
“Our second quarter results reflect the significant financial impact of the temporary winding down of operations by our three largest manufacturing customers in response to COVID-19, with April and May bearing the brunt of that impact with a combined operating loss of $4.6 million during those two months,” stated CFO Allen West.
The company redeployed equipment into the spot market, which it blames for “lower rates” and an increase in empty miles. P.A.M. Transportation’s deadhead percentage increased 500 basis points in the quarter to 11.8%.
The carrier said it saw “normalized levels of profitability” in June as automotive manufacturing came back online, allowing its operating ratio to improve to the low-90% range in June.
“An additional hurdle we faced throughout most of the quarter was that a significant portion of our trailer fleet was loaded with freight that we were unable to deliver due to various receivers being shut down due to COVID-19, essentially removing the trailer from our available pool,” continued West.
The company took further cost actions in April and May, including the furlough and termination of employees.
P.A.M. Transportation ended the quarter with $12.5 million outstanding on its $60 million revolver and $25.7 million in marketable equity securities holdings. The company plans to maintain an average truck fleet age of 1.5 years.
No balance sheet update was provided with the company’s earnings report. The company includes a balance sheet with its quarterly 10-Q filing with the U.S. Securities and Exchange Commission, typically two weeks after its quarterly earnings results are released.
“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 concluded.
Chairman Matthew Moroun stepped in as interim CEO in May when Dan Cushman retired after 11 years in the role. The announcement came as the hauler was struggling to deal with the second auto production shutdown in less than a year as a result of the pandemic; the first being a six-week strike by the United Auto Workers at its largest customer, General Motors (NYSE: GM).
The Moroun family is the largest shareholder of PTSI’s shares, owning 68% of the company’s stock at the close of 2019. The family patriarch, Manuel “Matty” Moroun, died at the age of 93 on July 13.