Analysts positive on Proficient Auto Logistics

The Jacksonville-based car transport company went public in May.

  • By Mark Basch
  • | 12:00 a.m. June 6, 2024
  • | 4 Free Articles Remaining!
Proficient Auto Logistics was created by joining five companies that focus on vehicle transportation.
Proficient Auto Logistics was created by joining five companies that focus on vehicle transportation.
Photo by Proficient Auto Logistics
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Proficient Auto Logistics Inc. has been in business for less than a month, but analysts already see some advantages that give the Jacksonville-based company a positive outlook.

Proficient was created to merge five companies together that transport automobiles from manufacturers to dealers.

The company went public May 8 and then completed the acquisition of the five companies May 13. It had no operations before that.

Analysts weighed in June 3 with their first ratings on Proficient following the initial public offering, with one rating it as a “buy” and two at “outperform.”

“We believe Proficient has the ability to take share in an auto hauling industry characterized by declining union market shares, a post covid recovering domestic auto market, and utilizing enhanced scale through the combination of its five operating companies,” Raymond James analyst Patrick Tyler Brown said in his initiation report.

“Further, significant backhaul, subhaul, and procurement synergies all represent upside to the Proficient story,” Brown said.

“Finally, the inability to flow capacity in and out of the market easily creates higher barriers to entry and what we believe to be a sticky growth engine leading to superior pricing power and margin expansion in time,” he said.

Basically, a company that wants to get into the auto transport business needs a dedicated fleet of trucks that can handle it.

“While supply in the truckload sector (think dry van, refrigerated, and flatbed) can easily flow in and out of the market given low barriers to entry, the auto-hauling market is more insulated from rapid supply changes given the physical combination of the tractor (truck) to the car hauler (trailer),” Brown said.

“Simply, while it is easy for a standard Class 8 tractor to change trailer type and bounce from one market to another (dry, refrigerated, flatbed, etc.), this is not the case for auto haulers given the difficulty surrounding detaching its specialized trailer from its tractor.”

As a publicly traded company dedicated to transporting automobiles, Proficient is unique, the analysts said.

Proficient’s IPO filings with the Securities and Exchange Commission said it is the third-largest company in its field with 1,130 auto transport vehicles, ranking behind Plymouth, Michigan-based United Road Services, with 1,978 vehicles, and Kansas City, Missouri-based Jack Cooper Investments, with 1,286.

“PAL is the third-largest auto hauler based on fleet size, but we see an opportunity for PAL to be No. 1 in five years via share gains and M&A activity. Today, it has 3% share of the $11 billion U.S. new and remarketed auto hauling market,” William Blair analyst Ryan Merkel said in his report.

The top two competitors are privately owned, leaving Proficient without a peer group in the stock market. That may make it difficult for investors to assess its value.

“While it has no pure-play, public comparables, we believe that competitive dynamics, secular market growth opportunities, and idiosyncratic margin improvement potential support a valuation that sits between truckload (TL) and less-than-truckload (LTL) on the multiple continuum,” Stifel analyst J. Bruce Chan said in his report.

“Over time, we believe Proficient should continue to rate toward the LTL group. The company is well-managed and well-governed, in our view, and has ample market opportunities from increasingly service focused customers, recovering SAAR (seasonally adjusted annual rate of auto sales), industry consolidation, nearshoring, and de-unionization trends,” he said. 

“Meanwhile, route densification, asset utilization, and fleet insourcing opportunities should continue to drive operating margins into double-digit territory in the near-term, in our view.”

Proficient sold its stock at $15 a share in the IPO, and the stock has remained close to that price in its first month of trading.

Brown set an $18 price target for the stock and Chan set it at $19.

“We think PAL is a compelling story at an attractive valuation,” Chan said.

CFPB launches inquiry into title fees

After agency officials expressed concern about the issue in recent months, the Consumer Financial Protection Bureau launched a public inquiry into mortgage closing costs May 30, including title insurance fees.

The federal agency did not indicate any specific action that could be taken to limit those costs, which could impact Jacksonville-based Fidelity National Financial Inc., one of the largest U.S. title insurance firms.

“Junk fees and excessive closing costs can drain down payments and push up monthly mortgage costs,” CFPB Director Rohit Chopra said in a news release.

“The CFPB is looking for ways to reduce anticompetitive fees that harm both homebuyers and lenders.”

The agency posted background information saying title fees are the second largest type of closing costs paid by consumers, after origination fees paid to the lender.

“Title insurance is meant to protect against someone else laying claim to a borrower’s property. In the current market, consumers are forced to pay for the lender’s insurance premiums in a one-time payment at closing,” it said.

The CFPB said title fees are typically 0.5% to 1% of the purchase price of a home. 

Fidelity’s annual report said the company controlled 30.7% of the U.S. title market through the third quarter of 2023. It also said total operating income for the U.S. title insurance industry grew from $15.9 billion in 2018 to $23.4 billion in 2022.

The company did not respond to an email request for comment after the CFPB announced its inquiry, but CEO Mike Nolan addressed the issue in Fidelity’s quarterly earnings conference call last month.

“While we strongly support the broader effort to make homeownership more affordable, we believe the recent comments from the FHFA (Federal Housing Finance Agency) and the CFPB relative to title insurance are misguided and display a misunderstanding of the vital role in value that title insurance provides consumers and the broader economy and the critical role it plays in helping to make the American dream of homeownership a reality,” he said.

“The title industry not only protects consumers property ownership rights, but also the critical integrity of land records,” he said. 

“We welcome the opportunity to continue conversations with the FHFA and CFPB and will continue to actively engage with all stakeholders in discussing the fundamental value that title insurance and settlement services deliver to America’s homebuyers and sellers, lenders and other participants in what for many is their most important real estate transaction.”

The American Land Title Association issued a news release after the CFPB announced its inquiry saying it hopes to work with federal agencies to help them understand the need for title insurance.

“Importantly, fees for title insurance and other closing costs must be provided and disclosed to consumers under a federally mandated rule that the CFPB itself developed in 2015,” it said.

“Lumping title insurance and settlement services into the category of ‘junk fees’ conflicts with the White House’s own definition, which cites the lack of disclosure of the fee being charged.”

Waste Management announces largest acquisition

Waste Management Inc. announced a $7.2 billion agreement June 3 to acquire Stericycle, a company that provides medical waste and compliance services. 

This deal surpasses Houston-based Waste Management’s $4.6 billion acquisition of Ponte Vedra-based Advanced Disposal Services Inc. in 2020 as the company’s largest deal.

The Advanced Disposal deal took 18 months to complete after it was first announced, with the U.S. Justice Department expressing antitrust concerns about some overlapping operations of the two solid waste disposal companies.

Waste Management was able to complete the deal after agreeing to divest certain assets.

The company said it hopes to complete the Stericycle deal in the fourth quarter of 2024.

“We have a proven track record of integrating and optimizing acquired businesses that benefit our customers and employees and deliver a strong return on investment for our shareholders. We look forward to working with the Stericycle team to capture the strategic, customer service, environmental, and financial benefits of this acquisition,” Waste Management CEO Jim Fish said in a news release.

Vulcan rejects offer from Mexican president

As Mexico elected a new president June 2, Vulcan Materials Co. remained embroiled in a dispute over a Mexican quarry with the outgoing president.

The Mexican government closed Birmingham, Alabama-based Vulcan’s quarry in the Yucatan Peninsula in May 2022. In July 2023, President Andrés Manuel López Obrador offered to buy the property for about $391 million, according to a report by Reuters news service.

Vulcan on May 27 rejected the offer, saying it undervalues the property.

The Associated Press reported that court filings show Vulcan values the 6,000-acre property at $1.9 billion.

Vulcan’s annual report stated Mexico “unexpectedly and arbitrarily shut down” its operations in May 2022.

“We strongly believe that the actions taken by Mexico are arbitrary and illegal, and we intend to vigorously pursue all lawful avenues available to us in order to protect our rights, under both Mexican and international law,” it said.

Reuters reported Lopez Obrador said the site would remain closed until he leaves office in October.

“The truth is that at no time have we received a ‘generous offer’ to buy our property,” Vulcan said in a

May 27 statement, Reuters said.

“We were given an informal appraisal, without signatures and without details, that substantially undervalues our assets, including the limestone reserves of which we own under Mexican law, as well as the only deep draft port in the region,” it said.

Vulcan’s top two executives previously worked for the company in its Jacksonville office. CEO Tom Hill was formerly president of Vulcan’s Florida division and President Tom Baker joined the company after Vulcan bought Jacksonville-based Florida Rock Industries Inc. in 2007.

Baker’s family founded Florida Rock and had a controlling interest in the company before the sale.



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