Proficient strikes deal for No. 3 hauler Hansen & Adkins
Key takeaways
- Proficient plans to acquire Hansen & Adkins for $130 million, creating a larger North American auto hauler.
- The deal will expand Proficient's fleet to more than 1,350 tractors and add Canadian market access.
- Improving auto-hauling conditions faces ongoing pricing pressure as carriers work to close the gap with rising costs.
Proficient Auto Logistics executives have struck a $130 million deal to buy California-based peer Hansen & Adkins to create the market leader in automotive hauling.
Together, Proficient and Hansen & Adkins—the No. 2 and 3 players in vehicle transportation and logistics—will own more than 1,350 tractors and employ nearly 1,700 people working from more than 90 locations. The deal also will give Proficient entry into the Canadian market, where Hansen & Adkins gets about 13% of its revenues. The merged companies will command nearly a quarter of the auto hauling market and have revenues of about $830 million.
“Our respective customer bases are complementary, providing natural diversification, both in the context of geographies served and in customer concentration,” President and COO Amy Rice told analysts and investors on an August 10 conference call.
Once the companies join forces, which executives expect will happen later this month, about half the combined entity’s business will come from both company trucks and subhaulers because Hansen & Adkins does more of its business using company assets. By contrast, subhauler owner-operators handled 61% of Proficient’s sales in the first six months of this year.
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sndr_trucks_1Hansen & Adkins was founded in 1994, is based in Orange County, and has over the years grown its footprint to include parts of the Midwest, Southwest, and Pacific Northwest, as well as Canada. Co-founders Steve Hansen and Louie Adkins will advise Proficient on the transition until the end of this year. The company’s owners are in line to receive up to another $22.1 million in earnout payments if they can meet certain short-term profit targets
Proficient’s plan to buy Hansen & Adkins comes as the auto hauler market appears to be, in CEO Rick O’Dell’s words, “moving toward a more balanced and sustainable operating environment” thanks to a tightening due to the same regulatory initiatives and recent court rulings that O’Dell’s peers in the truckload and less-than-truckload markets have regularly cited since early last year. Case in point for Proficient: The company’s margins improved each month during the second quarter, with June coming in at 95.7%.
But there’s work left to do on that front, Rice told analysts after a second quarter in which Proficient’s price hikes didn’t keep up with higher costs.
“We have certainly come off of the bottom of the market in terms of low-rate pressure,” Rice said. “There have been some failures in the ability to service traffic at very low rates, and that’s helpful to re-establishing sustainable rates going forward. […] To the extent that there is a supply-demand imbalance, it’s incumbent on both us and our partner customers to figure out how we close [the price] gap.”
That price gap contributed to lower-than-expected earnings in the second quarter, when Proficient produced a net loss of $3.9 million on total revenues of $109 million and adjusted EBITDA was almost $7.7 million, down from $11.3 million in the same period of last year.
Those numbers explain why Proficient shares (Ticker: PAL) tumbled nearly 30% to $5.10 on Aug.11, which cut the company’s market capitalization to just $142 million. Bruce Chan, an analyst at Stifel, said the Hansen & Adkins acquisition should excite investors because of the size it will create, its timing in an improving market, and the ability to quickly squeeze out some costs. The big question, he added, is just how quickly O’Dell and his team can take advantage of their greater market muscle.
“It’s always easier to [be an] armchair quarterback, but we believe Proficient shouldn’t be bashful about being paid commensurately in such a tight environment,” Chan wrote to clients on Aug.11. “The opportunity is there, but investors are understandably waiting for proof.”
About the Author
Geert De LombaerdeGeert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of experience in business journalism. Since 2021, he has written 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. He 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 and many of its publicly traded companies.