Proficient Auto Logistics has two quarters in the books – at least in terms of financial reports – giving investors a better look at the auto carrier, which is also getting bigger.
The company, essentially a rollup of several auto carriers under the Proficient banner that went public in May, posted an operating ratio of 91.8% for the quarter. A year ago, the components of the current company posted a unified OR of 92.7%.
Proficient (NASDAQ: PAL) , in order to comply with Securities and Exchange Commission regulations, did post earnings for the first quarter as well. It reported an OR for the first quarter of 93.2% and a first-quarter 2023 OR of 94.1%.
The improved OR in the second quarter was cited by the company as evidence that Proficient “continues to make progress on key operating priorities.”
“Implementation of best practices across the Founding Companies and coordination of operations, including load-sharing opportunities and other integrations, have started to show up in the combined operating ratio during the second quarter,” the company said.
A sixth company brought into the fold
Proficient used the occasion of the quarterly earnings to announce its first acquisition since it went public. It is acquiring Auto Transport Group (ATG) of Ogden, Utah, with closing expected this month. The price was not disclosed.
ATG is being brought into Proficient soon enough after the company’s launch that in the prepared statement announcing the company’s earnings, CEO Rick O’Dell described ATG as “essentially a sixth founding company.” The other five are Delta Automotive Services, Deluxe Auto Carriers, Sierra Mountain Group, Tribeca Automotive and the legacy Proficient Auto Transport, the Jacksonville, Florida-based company that put together the roll-up.
“This strategic acquisition enhances the density of our coverage in the West,” O’Dell said in the earnings announcement. “ATG is led by its CEO, Brent Larsen, and will maintain its strong brand within the Proficient Auto Logistics umbrella of companies.”
In that statement, Larsen noted that ATG was founded 25 years ago.
ATG, according to O’Dell, controls a fleet of more than 100 vehicles, about 80% of them company-owned, with an average equipment age of five and a half years. He said that was consistent with the numbers for Proficient’s existing fleet.
Its annual delivery rate has been about 200,000 vehicles, O’Dell added. It has about 80 employees, and 75% are drivers.
“They operate at margins consistent with the best of our founding companies, and are expected to be immediately accretive to earnings per share,” O’Dell said. As the earnings call was coming to an end, he said the earnings boost from ATG will be about 25 cents per share.
Proficient’s non-GAAP earnings per share of 28 cents beat consensus forecasts by 8 cents, according to SeekingAlpha. Revenue of $106.61 million was ahead of forecasts by about $4.9 million.
Adjusted earnings before interest, taxes, depreciation and amortization at Proficient was $12.4 million for the quarter, compared to $12 million a year earlier. Adjusted EBITDA margin was 11.6% in the second quarter of 2024 and 11.9% a year earlier.
Another key metric: Proficient said it had delivered 507,712 units in the quarter. That was 10.5% more than a year earlier.
A slower summer
However, on the call with analysts, O’Dell said there was a noted slowdown in volume as the quarter progressed.
In April and May, year-over-year revenue and unit volumes were both up approximately 11%, O’Dell said. But unit volume in June was negative on a year-on-year comparison, and revenue was down about 8%. Conditions did not improve in July, according to O’Dell, with unit volumes flat and revenue down about 11%.
CFO Brad Wright said on the call that Proficient had assumed about 8% revenue growth for the year, with half coming from volume growth and the other from price increases. But the company has dialed back on that.
“The recent trends experienced in June and July have prompted us to reassess the outlook for the second half of 2024. We’re now expecting sequential quarter revenue growth in the mid single digits for the third quarter with adjusted operating ratio that is consistent with last quarter,” Wright said.
O’Dell, responding to an analyst question, said four of the five initial companies are fully integrated into unified systems such as accounting, with the fifth “very much on track.”
One immediate benefit to more unified operations: fewer deadhead miles. O’Dell said that in the prior four weeks, the company had 352 backhauls carrying freight that might otherwise have been empty miles.
How its size ranks with other carriers
For perspective on the size of Proficient, its revenue of $106.6 million, including fuel, contrasts with second-quarter revenue at Marten Transport (NASDAQ: MRTN) of $246.2 million, $274.9 million at Heartland Express (NASDAQ: HTLD) and $182.9 million at Pam Transport (NASDAQ: PTSI).
Proficient has had a strong run as a publicly traded company. It went public at $15 per share in May. It has trended higher since then, and at about 10:15 a.m. Friday, after the earnings release, the stock was at $19.47, up 1.78%. It hit its post-IPO high of $21.01 on July 31.
It repeatedly stresses in its communications that it is nonunion, an apparent contrast with Jack Cooper, one of the leading auto haulers in the industry. Jack Cooper drivers are organized by the Teamsters.
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