2 markets in 1 quarter: Auto-hauling demand volatile for Proficient

With its business tied to the fate of the U.S. automobile market, it is no surprise that Proficent Auto Logistics, the only publicly-traded auto hauler, had a schizophrenic first four months of the year.

The bottom-line numbers were not positive. Proficient had a significant weakening of its operating ratio in the first quarter. The company recorded an OR of 98.7%, compared to 93.2% a year ago. Sequentially, it improved by 10 basis points to 98.8%.

Proficient (NASDAQ: PAL) reported an operating loss of $2.36 million compared to an operating profit of $6.54 million a year ago. Its operating loss in the fourth quarter of 2024 was $2.4 million.

Earnings before interest, taxes, depreciation and amortization of $7.8 million was down from $10.9 million a year ago but slightly better than the figure of just under $7 million in the fourth quarter of last year.

And Wall Street didn’t like what it heard. Its net income loss of 12 cents per share was 4 cents worse than consensus, according to SeekingAlpha. Revenues of $95.2 million were slightly under consensus.

At approximately 11:10 a.m., Proficient’s stock was down 51 cents a share to $7.61, a drop of 6.3%. But that was an improvement over the day’s low of $7.01.

In the company’s Wednesday earnings call with analysts, CEO Rick O’Dell reviewed Proficient’s performance not just for the three months reported in the earnings, but also into April. In an understatement, O’Dell said of the period, “The first quarter of this year was characterized by two different portions.”

O’Dell said January and the first half of February was “a period of unusually low volume, continuing weak revenue per unit and disruptive weather.” Volume was up just 1% from a year earlier; revenue through mid-February was down more than 17% from a year earlier and about the same sequentially.

Gangbusters in March and April

But O’Dell said March was strong, with unit volume up 17% from March 2024 and revenue up 11%. It was driven by a national annualized sales rate of 17.8 million vehicles sold that month, compared to 15.6 million in January and 16 million in February. The reason for that surge, O’Dell said, was the “pull-forward” of auto sales prior to the imposition of various tariffs.

The discussion on the call went beyond the first quarter and into the second. O’Dell said Proficient had record revenue in April. It was at a level that, if annualized, would be “materially better than our kind of current breakeven type level, more than a 90%-type operating ratio in a normalized environment,” he said.

However, the ability to continue at those rates is questionable. O’Dell said that “industry data seems to indicate a decelerating sales trend through April which carried into May.” The strong April at Proficient has been followed by “moderation in transportation volume, especially from imported vehicles.”

Although O’Dell talked about a slowdown into May, he said Proficient’s current outlook is that the company will have 8% more revenue in the second quarter compared to the first.

“Our OEM customers are dealing with this economic uncertainty and the prospect of significantly increased cost relative to their expectations,” he said. “In real time, they’re making decisions about where their production occurs and whether to curtail imports, both on a near-term and a structural basis. Their decisions on these critical issues will have a significant bearing on the environment that Proficient will navigate over the remainder of 2025.”

Amy Rice, president and COO of Proficient, said the company’s mix was about 60% domestic auto transport and about 40% imported.

She said the strategies of the OEMs Proficient serves have been wide-ranging.

“They have been taking a variety of actions or inactions,” she said. “Certain importers have just continued business as usual and figure that the landscape for tariffs will become clearer in time, and they will continue to adjust in real time as that occurs. Others have chosen to hold cars in the hopes of getting better information on which to make decisions, and therefore they’ve stopped the flow of their cars.”

More acquisitions on hold, unless…

The corporate strategy at Proficient since it became a publicly traded company has been one of acquisition. It began the quarter with an acquisition of Brothers Auto Transport. On the call, O’Dell said Brothers is a “strategic addition [that] increases our presence and density in the Northeast and mid-Atlantic regions and provides new load-sharing opportunities and other efficiencies to our existing operations.”

As far as additional acquisitions, O’Dell said the current “volatile environment” might slow any deals. “That being said, we are starting to see some distressed assets come to market, and we’ll just be smart about the opportunities that we pursue and those that we would want to pass by.”

The demise of major auto hauler Jack Cooper was not mentioned by name on the call, the first focused on a quarter that had occurred since Jack Cooper closed earlier this year. (The most recent call before Wednesday’s was to review fourth-quarter performance, though the Jack Cooper closure occurred in the first quarter.)

On the call, Rice was asked about industry capacity. She noted that “the industry overall had a large player exit.” Rice also said that “most of your players have got some slack capacity.” But referring to the company without mentioning Jack Cooper by name, she said the loss of that capacity means that if “automotive volumes were to return in a sustainable way, I think the industry would feel a crunch on capacity.”

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