Proficient Auto Logistics, a newly minted publicly traded auto carrier, has introduced itself with a relatively solid operating ratio for the first quarter and a double-digit EBITDA margin.
The company released its earnings this week for the quarter ended March 31. Its stock began trading May 9 in an IPO priced at $15 per share. The stock closed Thursday at $15.60 and has traded in a range of $14.50 to $16.53 since then.
In an email to FreightWaves, CFO Brad Wright said Securities and Exchange Commission regulations required Proficient to file its first-quarter earnings even though it did not go public until the second quarter.
Those earnings showed that the company, born after the acquisition of several other auto carriers by the legacy Proficient Auto Transport, had a first-quarter operating ratio of 93.2%. That is an improvement from its first-quarter 2023 OR of 94.1%, a 12-month change that occurred even as numerous trucking companies during that period saw deteriorating OR.
Earnings before interest, taxes, depreciation and amortization of $10.86 million was 1.8% more than 2023 first-quarter EBITDA of $10.67 million. The margin in the first quarter was 11.4% compared to 10.4% a year earlier.
Total operating revenue net of fuel declined to $95.56 million from $102.34 million a year earlier. Total operating expenses were down by $7.3 million, a drop of 7.5%.
Focusing on efficiencies
Richard O’Dell, the former Saia (NASDAQ: SAIA) executive who is CEO of Proficient, said on the company’s earnings call that there are several cost synergies Proficient is focused on as it begins its history as a publicly traded company pieced together by the acquisition of five existing auto carriers: Delta Automotive Services, Deluxe Auto Carriers, Sierra Mountain Group, Tribeca Automotive and Proficient Auto Transport.
Proficient Auto Transport is based in Jacksonville, Florida, and its management, including O’Dell, led the drive to acquire other auto carriers and create the much larger — and public — Proficient Auto Logistics (NASDAQ: PAL).
O’Dell said an integrated fuel procurement program for Proficient is already in place and is expected to yield $3 million in annual savings.
The number of empty miles across the network is expected to be reduced by the implementation of a common transportation management system, O’Dell said, with four of the five “founding companies” now using it. All five companies are expected to be on the new TMS by the third quarter.
Other initiatives include greater analysis of high-volume lanes to reduce empty backhaul miles and greater utilization of company trucks versus purchased transportation. Purchasing plans include a 10% increase in new vehicle purchases, O’Dell said, resulting in a further decline in purchased transportation needs.
The decline in first-quarter revenue net of fuel was a result of a drop in demand, O’Dell said. “However, volumes began showing improvement around the middle of February and have continued to strengthen,” he said on the earnings call with a small group of analysts.
Nine new contracts have been signed between the start of the year and the end of May, O’Dell said. There have been 13 renewals of existing contracts during that time.
Stronger delivery numbers
Wright said on the conference call that sequentially, deliveries in February were up about 15% month to month, with deliveries holding steady in March. “As we get into April, much more strength, probably,” he said. “An 11% jump in April led to levels that were maintained in May.”
With the first earnings report of the company now released, the structure of Proficient can get a further look.
Its largest segment is actually brokerage. In the first-ever 10-Q filing of Proficient, the company described its brokerage segment as the place in the company where “we retain the customer relationship, including billing and collection, and we outsource the transportation of the loads to third-party carriers.”
“For this segment, we rely on brokerage employees to procure spot buy arrangement contracts, as well as information systems to match loads and carriers,” the 10-Q report said. “This segment also includes revenue generated by our owner-operators and some third-party carriers who haul freight for our OEM and contract customers.”
The brokerage segment in the first quarter had operating revenue of $27.8 million, down from $34.2 million a year earlier. Operating income was just over $2 million, down from $2.92 million a year earlier.
The truckload segment is where the contracts with OEMs are serviced, according to the 10-Q. Based on O’Dell’s statements on the earnings call, it would be expected to see this segment grow relative to brokerage.
“Improving our operating ratio by shifting more units and revenue to company trucks versus subhaulers is an initiative that not only improves the profitability of existing lanes, it also provides more opportunities to increase our utilization efforts as described previously,” O’Dell said.
In the first quarter, according to the 10-Q, Proficient had truckload revenues of $8.6 million in the first quarter of 2023, down from $11.55 million a year earlier. Operating income was a loss of just under $46,000, compared to operating income of $366,473 a year earlier.
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