This I like. Excellent close reading on the management tone flip. Their confidence from the second wave of supply tightening looks very recent like you say: CFO said in February “we never rule out share repurchases, but that’s probably at the lower end of the priority list at this point” then the 10-Q shows they quickly slurped up $500K worth at ~$6.25 in March. It’s a fraction of the authorization but tracks with ‘they know’.
Interesting. My big question is why the industry doesn't have more competition. LTL is very complex and capital intensive. This seems closer to plain TL, with a bit of specialized equipment that is still relatively cheap in the scheme of things.
Long term contracts (~3-5 years) are >90% of PAL revenue. Yes, they will need to be renewed, but I don't see PAL having as much torque as LTL/TL players that are more exposed to the spot market. Also, how much price can PAL realistically take against dominant OEMs (e.g., PAL pricing was weak during the tariff pull fwd due to OEM cost pressures)? Fantastic opportunity & awesome write up, but I'm worried the market can swing back to loose(r) capacity/weak(er) pricing before it meaningfully inflects top line/margins at PAL.
Fair but one thing to know is that about a year or two ago, when things were "normal", spot business was a good chunk of revenue, around 20% if I recall and much higher margin than contract work. This essentially went to 0. If the market keeps inflecting, this will come back right away and be immediatelt accretive. The contracts will have to roll over to benefit (20-30% every year), but I do believe some of them might be multi year frameworks but with yearly negotiates prices.
Good question and not sure. The thing is tho, the CFO bought shares at the same time as CEO sold which makes me think he needed money for some personal reason. Doubt the CFO would be buying shares the same day if there was an issue. As they say many reasons to sell only one to buy
More specifically, do you have any other datapoints on why auto production+ demand are inflecting? Am I correct that those are the key volume drivers? Other macro indicators like PMI look good but are very broad. Really liked the writeup and good work on the supply side.
This I like. Excellent close reading on the management tone flip. Their confidence from the second wave of supply tightening looks very recent like you say: CFO said in February “we never rule out share repurchases, but that’s probably at the lower end of the priority list at this point” then the 10-Q shows they quickly slurped up $500K worth at ~$6.25 in March. It’s a fraction of the authorization but tracks with ‘they know’.
Interesting. My big question is why the industry doesn't have more competition. LTL is very complex and capital intensive. This seems closer to plain TL, with a bit of specialized equipment that is still relatively cheap in the scheme of things.
Long term contracts (~3-5 years) are >90% of PAL revenue. Yes, they will need to be renewed, but I don't see PAL having as much torque as LTL/TL players that are more exposed to the spot market. Also, how much price can PAL realistically take against dominant OEMs (e.g., PAL pricing was weak during the tariff pull fwd due to OEM cost pressures)? Fantastic opportunity & awesome write up, but I'm worried the market can swing back to loose(r) capacity/weak(er) pricing before it meaningfully inflects top line/margins at PAL.
Fair but one thing to know is that about a year or two ago, when things were "normal", spot business was a good chunk of revenue, around 20% if I recall and much higher margin than contract work. This essentially went to 0. If the market keeps inflecting, this will come back right away and be immediatelt accretive. The contracts will have to roll over to benefit (20-30% every year), but I do believe some of them might be multi year frameworks but with yearly negotiates prices.
well, the everyonehatespoetry call is in full effect today I see
Why did the CEO dump $300k though. If a large turnaround is right around the corner, why not borrow against his shares?
Good question and not sure. The thing is tho, the CFO bought shares at the same time as CEO sold which makes me think he needed money for some personal reason. Doubt the CFO would be buying shares the same day if there was an issue. As they say many reasons to sell only one to buy
Nice work but the question for me is, will demand return to normal now?
More specifically, do you have any other datapoints on why auto production+ demand are inflecting? Am I correct that those are the key volume drivers? Other macro indicators like PMI look good but are very broad. Really liked the writeup and good work on the supply side.