A Florida-based auto hauler, Proficient Auto Transport, is the lead company in the process of rolling up several other auto haulers with plans to take itself public in an initial public offering.
In a prospectus filed with the Securities and Exchange Commission and made public last week, Proficient Auto Logistics was introduced as the name of the company that will acquire five auto haulers at the time the IPO goes through: Delta Automotive Services, Deluxe Auto Carriers, Sierra Mountain Group, Tribeca Automotive and Proficient Auto Transport, whose Jacksonville-based management is behind the roll-up plan and whose name is the basis for the name of the new publicly traded entity.
The IPO, when complete, will add a publicly traded trucking company to the investment community after several truckload or trucking-related companies have disappeared in recent years due to acquisitions: USA Truck, U.S. Xpress, Echo Global Logistics, Daseke and Travel Centers of America.
Proficient Auto Logistics will be listed on Nasdaq: (NASDAQ: PAL).
An attorney named on the prospectus filed with the SEC told FreightWaves that Proficient executives cannot speak about the IPO as the company is in a so-called “silent period” during SEC registration and leading up to the actual sale offering.
Proficient Auto Transport CEO Randy Beggs appears to be the leading force for the roll-up and IPO. “Mr. Beggs will be supported by a highly talented group of tenured auto transportation and logistics veterans, who have an average of 25 years of experience operating within the auto transportation and logistics subsector and broader trucking industry,” the prospectus stated.
Among those executives are two board of directors members with backgrounds at less-than-truckload carrier Saia (NASDAQ: SAIA). One is Richard O’Dell, the former CEO, who stepped down from that role in 2020. The other is Douglas Col, who is with Saia now as an executive vice president and CFO.
One of the philosophies of Proficient Auto Logistics — the name of the parent company — is to “maintain local expertise.” That description in the prospectus echoes the way that TFI International (NASDAQ: TFII) operates and Daseke did as well: Make an acquisition and let it operate on its own. “We anticipate that members of management of the [companies in the initial roll-up] and companies to be acquired in the future will continue to maintain local control of their daily operations,” the prospectus states. “We believe this approach will enable us to take advantage of the local and regional market knowledge, name recognition, and customer relationships possessed by each acquired company while still allowing us to bring greater operating efficiency to the larger platform.”
The new parent will acquire the five “Founding Companies” for approximately $180.4 million. That figure includes Proficient Auto Transport. The companies will be acquired for a mix of cash and stock in Proficient Auto Logistics.
Additionally, the IPO plan foresees all five companies being vital to the overall deal and that the roll-up won’t be executed unless the entire quintet can be acquired.
The prospectus said the combined companies will have access to approximately 1,130 trucks including 615 company-owned tractors and trailers as of November 30, 2023.
The prospectus, as is customary, lacks certain financial details, such as the anticipated price of the shares or the size of the offering.
However, it does contain some revenue and earnings figures for the five companies that will serve as the basis for Proficient Auto Logistics. Among the highlights, Proficient Auto Transport had revenues in 2022 of $130.1 million, net income of $10.4 million and earnings before interest, taxes, depreciation and amortization of $17 million.
The other companies and their revenue/EBITDA/net income for 2022 (in millions of dollars):
- Delta, $44.6/$10.35/$3.6
- Deluxe, $79.9/$12.8/$5.9
- Sierra Mountain, $73.8/$3/$1.4
- Tribeca Automotive, $50.1/$7/$0.7
Proficient Auto Logistics does not plan on paying dividends “in the foreseeable future,” according to the prospectus.
In the prospectus, the company describes the auto-hauling business as “highly fragmented.” Proficient Auto Logistics does not say in the document how many companies are in the database of members of the Auto Haulers Association — the figure is left blank, common in a prospectus — but does say the association is “primarily comprised of one-truck owner operators or sub-haulers focused on used vehicle transport.”
Touting its lack of unions
“We are one of the largest non-union auto transportation and logistics companies, in terms of size and breadth, of roughly 100 companies competing in the new auto transportation and logistics market and among a few scaled competitors in the industry,” the prospectus states.
The reference to the new company being nonunion could possibly be directed at auto hauler Jack Cooper, one of the biggest in the business. It is unionized.
Proficient Auto Logistics doesn’t stop there with trumpeting its nonunion status. According to the prospectus, “the Company believes that unionized carriers historically dominated a significant majority of the industry and that today, unionized carriers hold substantially less of the new car market.” It does not cite a source for that statement.
But it adds that “union drivers are typically subject to workplace restrictions that not only limit their service capabilities to customers, but also limit their potential earnings as drivers. Union drivers may face tougher restrictions on not only total hours worked, but also which hours they can work specifically, leading many to haul during peak traffic hours, which is less profitable for drivers working on a per mile basis, as well as the carrier.”
The new company will also compete with rail transportation, according to the prospectus. “However, trucking remains the preferred mode of transportation and continues to gain market share from rail transport due to several factors including faster delivery times, door-to-door delivery capabilities and ever-increasing service standards demanded from customers.”
More acquisitions planned
Although there are five companies to kick off the launch of Proficient Auto Logistics, the prospectus discusses the strategy of growth through acquisition.
Referring again to the “fragmented” nature of auto hauling, Proficient Auto Logistics said there is an “opportunity with regional providers that overlap with existing geographic footprints” of the five founding companies. “We believe there will be significant opportunities to acquire and integrate these smaller acquisition candidates into our existing infrastructure, providing opportunities for cost synergies and cross-selling.”
The four other companies are in Bound Brook, New Jersey (Delta Automotive), Jurupa Valley, California (Deluxe Auto Carriers), El Dorado, California (Sierra Mountain), and Monmouth Junction, New Jersey (Tribeca Automotive).
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