ParcelPal Logistics (CSE: PKG) is walking away from its largest customer in Canada as it looks to right-size its operations in a push for profitability.
The company this morning revealed that it will be placing a focus on its US operations moving forward while working to shed any money losing business units or contracts immediately. With the latter point in mind, ParcelPal has indicated that it has terminated its largest contract in Canada due to it continuing to sustain substantial losses.
In making the change, ParcelPal commented that its topline revenues in the US have both outgrown and outpaced its Canadian division, with the company believing a focus on the US market will result in a higher return on investment and higher shareholder value. The company however will provide service to boutique and other higher margin customers in Canada.
Segmented information from ParcelPal’s second quarter financial results indicate that a single customer in Canada was responsible for $2.8 million of revenues in the first half of the year, or 47% of revenues year to date, with the remaining revenues coming from the US division.
Canada as a whole meanwhile was responsible for net losses of $1.5 million over the same time frame, demonstrating how unprofitable that major contract was.
Revenues for the first half of 2023 amounted to $5.88 million, with ParcelPal posting a net loss of $1.1 million for the period.
“The Company’s decision to focus substantially all its capital resources and efforts on its profitable operations and additional growth opportunities, puts us in the best position for future success as we are laser focused on high margin and profitable site expansions, as well as in potentially complementary areas to the logistics space. I believe with these changes, the likelihood of getting to annual breakeven or profitability is much more achievable, sooner,” commented CEO Rich Wheeless.
ParcelPal last traded at $0.015 on the CSE.
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