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Auto OEMs’ inventory woes sting Proficient

Oct. 21, 2024

The newly public auto hauler says revenues will fall about 15% from the spring, and profits will be “significantly degraded.”

Geert De Lombaerde

The leaders of Proficient Auto Logistics Inc. said that the company’s third-quarter profits will be “significantly degraded” by automotive OEMs’ lackluster production volumes as they look to whittle down their inventories.

Proficient CEO Rick O’Dell and his team in early August called out a slowdown in auto production in the previous two months. They noted some of that was due to traditional summer downtime windows, but a focus on reducing cars on lots also drove the OEM executives’ decisions.

That trend has continued into the fall, Proficient executives said in a statement last week. As a result, third-quarter volumes are set to be flat or slightly down from the same period of 2023. Revenues are expected to be between $90 million and $92 million, down roughly 15% from both Q2 of this year and last year’s Q3.

However, profits for Jacksonville-based Proficient—which gets about a quarter of its revenue from General Motors and another third of its business from the combination of Stellantis, Toyota, BMW, and Mercedes-Benz—have been stung far more.

“Volume underperformance resulted primarily from significantly less dedicated fleet, brokerage, and spot buy opportunities, which are typically at premium pricing,” officials said.

Proficient, which this spring acquired five regional players and a Utah-based hauler, posted operating profits of $7.0 million in the second quarter.

Investors hammered shares of Proficient (Ticker: PAL) on the news, driving them from nearly $14 on October 16 to about $9.50 on the afternoon of October 18. The stock went public in May at $15 apiece and, during the summer, briefly topped $20.

The shares may not bounce back quickly given the OEMs’ inventory indigestion. Analysts at Wells Fargo said late last week that the Big Three of GM, Ford, and Stellantis need to “walk the walk” and cut production more than they have so far to meet their goals of getting inventories below 60 days of sales. Total productions, the analysts wrote, need to be about 15% from the second quarter.

About the Author

Geert De Lombaerde | Senior Editor

A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications FleetOwner, Healthcare Innovation, IndustryWeek, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.