Proficient, in midst of huge upheaval for auto carriers, is cautious in analyst earnings call

In timing that couldn’t have been more perfect if it had been scripted, auto carrier Proficient Auto Logistics released its fourth quarter earnings Tuesday and then held a conference call with analysts just a day after one of its biggest competitors shut its doors.

But that did not mean that management of the newly-created publicly traded company rushed to issue optimistic boasts about how much better Proficient’s business would be with Jack Cooper exiting the market. Instead, the statements were cautious with the occasional bullish outlook coming through. 

Even if Proficient (NASDAQ: PAL) management weren’t popping champagne corks during the call, that doesn’t mean investors were required to hold back. Proficient stock, which has been trading only since May, hit a historic high at $11.37 Tuesday before closing at $10.75, a gain of almost 2%. 

More importantly, the stock overall is up from about $8 per share at the start of Monday, when the news of Jack Cooper’s closure began to filter through trucking and financial markets.

Rick O’Dell, Proficient’s CEO, referred to “attention” and “speculation…regarding disruption in the auto hauling landscape,” but he did not mention Jack Cooper by name in his opening remarks. “As a matter of policy and to adhere to confidential reality around OEM carrier relationships, Proficient will not comment about specific competitors or customers,” O’Dell said.

But even with Proficient coming off a quarter that reflected market weakness, O’Dell did express some optimism. “The reported closure of a top five carrier will reduce near-term capacity and likely have widespread impact in the industry,” he said. “We remain confident that with our service capabilities and the related value proposition, we’ll be able to do more for our OEM customers, and expect to benefit over time through market share gains.”

Analysts on the call were more direct in their questioning. One analyst referred back to data provided by Proficient during its “road show” prior to its IPO, when Jack Cooper’s market share for hauling autos was estimated in the “low teens.” The road show, according to the analyst, also estimated that Jack Cooper revenue was, “north of a billion dollars.”

When asked if Proficient was “comfortable” whether the low teens number from the road show was still in place, Amy Rice, the president and chief operating officer of Proficient, said the company, “does not have any updated view of the market relative to what was shared at the investor road show, so that would be a reasonable estimate of our understanding at the time.”

O’Dell said Proficient “doesn’t have visibility” into Jack Cooper’s revenue, but that Proficient’s fleet was not as large as Jack Cooper’s.

Proficient, in its first-ever 10-Q report filed after the second quarter of 2024, said it had utilized 1,130 auto transport vehicles and trailers “on a daily basis,” a number that includes about  645 company-owned transport vehicles and trailers. It also said at the end of April it had 643 dedicated employees.

‘Episodic’ spot market, not ‘pervasive’

As for now, the collapse of Jack Cooper has not provided any quick-hit opportunities for Proficient, Rice said. “We are seeing what I would describe as episodic spot opportunities and not pervasive spot opportunities in general,” she said. 

O’Dell ticked off some statistics that reflected the weak market Proficient was up against in the fourth quarter. Revenue from spot market business was 5% of total revenue, versus 14% a year ago. (Year-ago comparisons are against an aggregate of the various auto carriers that were rolled up to create Proficient). The spot market premium over contract pricing was 16% in the fourth quarter. But in the first two quarters of the year, it was more than 100%.

Market conditions are not likely to return to the heady levels of the post-COVID period, O’Dell said. “While we believe this current spot market to be unusually weak, we also do not expect to return to the levels of a year ago,” he said. 

What is normal?

Rice was asked what constitutes normal these days. Given that post-COVID hangover is a drag on business, and without mentioning it, a market without Jack Cooper in it, she said, “I think we’re  trying to learn what a normal auto haul market looks like.” 

Rice also provided a multi-point answer in response to a question about how Proficient might go after new market share that will presumably open up with the closing of Jack Cooper.

It won’t be just a mad dash, she said. “Volume that fits our existing network is very attractive to us, and we’re bidding on all those opportunities that tie into an existing base of driver assets and terminals,” Rice said. But Proficient is “calculating” before it enters a market that it could secure a, “concentrated, sustainable level of volume…and then we build around that, both organically and through action.”

Given that Proficient was created by several acquisitions all at once, with the legacy Proficient business at the head of the pack, O’Dell was asked about further opportunities in M&A. 

He said the company has a “pipeline of opportunities that will be a nice fit for us, providing synergies and adjacent geographic capacity.” O’Dell said he expects one or two smaller acquisitions to be completed this year. 

Among some key financial metrics at Proficient:

• Company delivery volumes fell to 181,961 vehicles from 190,700 in the fourth quarter of 2023; revenue per unit for company deliveries dropped to $179.22 from $193.53; subhaulers delivered 339,515 vehicles compared to 351,417 vehicles;’ and revenue per unit at the subhaulers fell to $163.49 from $198.59.
• Proficient’s adjusted operating ratio was 98.3%, a slight improvement from 98.8% sequentially but well down from 91.7% a year ago. 
• Total operating revenue was down to $95 million from $113.1 from the fourth quarter a year ago. Adjusted operating income plummeted to $1.63 million from $9.35 million.   

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