Q3 2025 Proficient Auto Logistics Inc Earnings Call
Good day, everyone, and welcome to Proficient Auto Logistics' third quarter financial information. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate, you will need to press *1,1 on your telephone. You will then hear a message advising that your hand is raised. To withdraw your question, simply press *11. Again, please note that this conference is being recorded. Now, it is my pleasure to turn the call over to the Chief Financial Officer, Bradley Wright. Please proceed.
Good afternoon, everyone. I'm Bradley Wright, Chief Financial Officer of Proficient Auto Logistics. Thank you for joining us for Proficient's third quarter 2025 earnings call.
under SEC rules are formed 10 Q covering the 3 and 9 month periods. Ending September 30th 2025 and 2024 will include financial statements for both the predecessor and accounting, entity proficient, Auto Transport, and the successor entity proficient Auto Logistics Inc. We are not required to provide in the form. 10 Q will not contain for a form of financial data for the combined companies.
Our earnings release provides comparative summary financial information for the third quarter of 2025, to the third quarter of 2024 for the company.
It can be found under the Investor Relations section of our website at ProficientAutoLogistics.com.
Our 10 Q when files can also be found under the investor relations section of our website.
During this call, we will be discussing certain forward-looking information. This information is based on our current expectations.
and is not a guarantee of future performance. I encourage you to review the cautionary statement in our earnings release describing factors that could cause actual results to differ from those expressed by our forward-looking statements further, information can be found in our SEC filings
During this call, we may also refer to non-GAAP measures that include adjusted operating income, adjusted operating ratio, EBITDA, and adjusted EVA.
Please refer to the portions of our earnings release that provide reconciliations of those profitability measures to gaap measures, such as operating earnings and earnings before income taxes.
Joining me on today's call are Rick Odell proficiency, chairman and chief executive officer, and Amy Rice, our president and Chief Operating Officer.
We will provide a company update as well as an overview of the companies combined results for the third quarter. After our prepared remarks, we'll open the call to questions during the Q&A. Please limit yourself to 1 question plus 1 follow-up. You may then get back into the queue if you have additional questions. Now, I would like to introduce Rick Odell, who will provide the company update.
Well, thank you, Brad and good afternoon everyone.
I'll start with an overview of our operations during the third quarter and some trends that provide insight into our expectations for the remainder of this year.
First, as it relates to the third quarter, as we discussed in our last earnings call, July auto sales and deliveries were stronger than had been expected, finishing at 16.4 million units. While sequentially lower, consistent with seasonality, August and September saw stronger year-over-year numbers at an average of 16.3 million units, driven in part by a surge in EV purchases ahead of the expiration of federal tax credits.
Company revenue and unit volumes in the quarter largely followed these trends and were further bolstered by market share gains. The Brothers acquisition finished up 21% and 25%, respectively, year-over-year for the quarter. The combined results nearly matched the revenue produced in the second quarter of this year and again improved profitability sequentially.
And improved 250 basis, points, year-over-year demonstrating continued momentum and operational improvements and strategic execution.
from a market perspective, volatility in the automotive manufacturing and purchase levels, continues reflecting production, disruption due to supply chain issues and economic impacts of the expiring EV tax credit interest rate, adjustments, and tariffs,
I need as they make necessary shifts.
The pricing environment is not as strong as we'd like to see. However, we continue to show discipline in our pursuit of new business and retention of incumbent business to ensure that our portfolio allows for sustainable profitability and reinvestment.
We're confident that we can be successful in achieving growth and margin expansion, despite complexities in the market.
Looking to the fourth quarter, October starts slow at 15.3 million, and we are feeling this softness in volume.
SAR forecasts are for high 15 to low, 16 million range for the balance of this year. And into next year with dealer inventory, levels healthy. Along with favorable, tax policy for qualifying car loan. Interest, deductions a high likelihood of continued interest rate reductions and average vehicle age above historical norms for replacement and a typical seasonal increase in buying at the end of the year. We're hopeful that volume strengthened through the balance of the fourth quarter.
But we expect a modestly lower revenue outcome than the third quarter, and we expect to achieve a similar adjusted operating ratio and cash flow.
With regard to profitability, as I referenced in the second quarter earnings call, we remain focused on controlling costs and advancing targeted cost savings initiatives and operating efficiencies that produce sustainable benefits.
In the third quarter, we recognized a $1.9 million restructuring charge, representing approximately $0.06 per share. This charge is primarily composed of one-time headcount and facility consolidation resulting from organizational realignment.
As well as those associated with the consolidation of casualty insurance coverage for all operating companies.
In total, we expect to realize over $3 million in annual savings from the combined restructuring actions going forward. Much of this begins in 2026.
Note that under our new insurance program, we have a larger retention consistent with the company of our size, and there may be greater quarter to quarter volatility in the insurance and claims expense line going forward reflecting frequency and severity of any accidents and injuries that do occur.
That being said we do uh, anticipate annual Savings in our annual Insurance expense.
In addition to these items, we continue to leverage our national scale to drive cost synergies through our procurement efforts.
While our now unified accounting and transportation management systems are increasingly, providing visibility and actionable insights into our customer base.
Operational efficiency opportunities and profitability.
As evidence of this continued progress, system halls or load sharing between the merged companies increased to 11% of revenue in the quarter, up from 9% in the prior quarter. This reduction in empty miles is contributing to improved asset utilization.
As we look ahead, we're well positioned to operate profitably with strong cash flow in the current environment, and to respond quickly and efficiently. When the market improves, the company will continue to protect its strong balance sheet position and advance. Our strategic objectives for continued margin expansion, market share gains, and acquisitions.
I'll now turn it back over to Brad to cover key financial highlights.
Thank you. Rick. First a few summary statistics and note that the contributions from atg and brothers are only reflected in periods since their acquisition by proficient.
Operating revenue of $114.3 million in the third quarter was 24.9% higher than in the third quarter of 2024.
The adjusted operating ratio of the third quarter was 96.3% and Improvement of 250 basis points from the comparable quarter in 2024, which was 98.8%
Units delivered during the third quarter total 605,341, which is an increase of 21% compared to the third quarter of 2024.
Revenue per unit, excluding fuel, was approximately $173, up approximately 3% from the third quarter of 2024.
Company deliveries were 36% of revenue, down slightly from 37% in the same quarter last year, when revenue was much lower, which diminished the volume available for allocation to sub-haulers.
It reflects a continued lack of spot volume opportunities.
Likewise, our dedicated Fleet business generated $4.2 million of third quarter revenue, consistent with our expected run rate for the full year 2025.
Building on rates of comments about our expectations for fourth quarter revenue, we now foresee full year topline growth in the range of 10% to 12%, compared to the combined companies' 2024 toe.
The company had approximately $14.5 million in cash and equivalents on September 30, 2025, up from $13.6 million at the end of last quarter.
Aggregate debt balances decreased to approximately $79.2 million, down $11 million from $90.2 million at the end of the second quarter.
The resulting net debt of $64.7 million on September 30th of this year equates to 1.7 times trailing 12-month adjusted EBITDA versus 2.2 times at the end of last quarter.
Free cash flow from operations, represented by adjusted EBITDA, was approximately $11.5 million during the quarter, which allowed for this meaningful reduction in our debt balances.
While capex was consistent during the past quarter, we can reiterate our expectations stated in the last quarters' earnings call that full-year equipment capex will be approximately $10 million for 2025.
Maintenance capex will likely grow from this level as our fleet expands. However, even with expected capex increases, we expect free cash flow yields of mid-teens to 20% return against our current market capitalization.
Total common shares outstanding is the quarter of 27.8 million, up slightly from 27.7 million last quarter. As a result of vesting share grants.
Operator: We will now take questions.
Thank you, and I'm sorry. A reminder to ask a question: simply press *1, 1, 1 to get in the queue and wait for your name to be announced. To withdraw your questions, simply press *1, 1, 1 again.
Our first question is from Tyler Brown with Raymond James. Please proceed.
Hey, good afternoon.
Good afternoon, Tyler. Hey Rick uh hey Brad just uh some clarification. Just real quick. So you said revenues up 10 to 12 for the full year. Brad is that on a 389 million pro. Forma base. Basically, is it about 4 a little over 4:30
for um, using the midpoint for 2025
38.8. Okay, perfect. And then flattish, o r is that what you said?
Rick sequentially.
Yes.
In Q4. Okay, okay, perfect. And then I was hoping.
we get a quick update on where we are on.
I think that you guys had made the full conversion on the accounting system, but are we fully transitioned on the TMS across all the 7 op codes?
And then, how is that unified operating platform? Can you talk about how that visibility is helping with those sister halls? I think you said it was 11% of Revenue up from 9 but just big picture. Amy, I mean, where can that number? Go longer term.
We see that number continuing to Rise. Um, in the early stages, we're using that largely as a proxy for filling empty miles, but as our assets become more fluid and flexible across the network, um, I would expect that Sister Hall volume to rise, uh, whether it's representing filling, empty miles or not. So the, the additional visibility in the system is is very helpful to being able to, um, act more quickly. And there's opportunity for additional technology overlay or dispatch optimization and some of those capabilities as we look forward.
Okay. And then just real quick here, just sorry, just a couple other ones. But just Rick, you mentioned last quarter that there were a number of OEM contracts that were coming up this quarter. I'm just curious how you fared in those RFPs.
Yeah. Go ahead, Amy. Yeah, we still have a number of OEM contracts that are, um, you know, awaiting awards, um, and sort of in the process of being resolved. We've not had any results that are material to, you know, overall revenues. And we commit to share anything that is, you know, of a materiality threshold.
Uh, there is, you know, as we've shared with pricing.
For our portfolio, we have had some experience of letting some volume go to price points that are not attractive to us. We are, however, continuing to pick up some new lanes and new opportunities instead of these contracts, which have been smaller more recently.
okay, and just my last and I promised but um and I know 26 is a ways away but
There are a few moving pieces that role into 26. I mean I think you've got some old Jack Cooper business, that kind of is still incremental.
Brothers, I believe it is incremental, but Brad, is there a reason that assuming that SAR is flat?
In the Q3 that revenue couldn't be up, maybe high single digits. Is that a crazy assumption?
No, I don't think that's a crazy assumption, Tyler. You know we will pick up, as you point out, some incremental revenue for a full year of Brothers.
And so that that helps um, you know, it's we're still in the process of doing our 2026 plan and we'll give you some more specifics on our next call. But I think that um, um, that's not a crazy assumption.
Okay. All right. Well, thank you guys so much. I appreciate the time.
and,
While uh, again we're still in our 26 planning progress.
We do, uh, we have kind of a status of Target to improve our operating ratio by at least 150 basis points, uh, in 2026, over the 2025 results.
Thank you so much. Our next question comes from Ryan Merkel with William Blair please proceed.
Everyone, I wanted to ask about October just to get a little more specific. What was the year-over-year increase in revenue for October? And then just to clarify, it sounded like you thought that in November and December the growth could pick up a bit from October. Did I hear that right?
Yeah. So
um,
In there, we had Brothers this year, and we had the incremental market share gains this year, neither of which were in the comps from last year. Um, and then on just the base market, I would say it was slightly improved from where October was last year.
In terms of November and December, you know, typically there is a seasonal end-of-year purchase pattern and pushing up inventory to clear out the 2025 model and bring in 2026 inventory.
We're seeing a bit of sluggishness in the current market you know as it stands in early November. So we are still as we said hopeful that we see that uptick seasonally but we are um we are not experiencing it in the current market.
Got it. Okay. Um, and then the RPU was still down year-over-year for the company deliveries. Um, so in the press release, you mentioned there's still excess supply. I realize that's a near-term problem, but how should we think about price in the next couple of quarters? Do you think we've bottomed here, or might there still be a little more pressure?
So I'll take that in two ways, Ryan. One is how we are experiencing pricing on bids that are coming up for renewal. The other is really the RPU trend, Porter to order, and how that may change.
As we share, pricing dynamics on new contracts are pretty weak right now. We would like to see a more constructive market for pricing, with supply and demand a bit more in balance.
From an RPU perspective, though, we would expect largely stable RPU. The big changes that we saw in some of the Porters previously were cycling. The declines in the dedicated product and cycling the decline in the spot market. So those two things had a really material impact on RPU year over year; however, we are stable.
Now, you should expect to see more consistent RPG year-over-year, just with any impact from mixed change within the portfolio.
Got it. Okay, that's helpful, and I'll slip in one more. Um, Rick, you said that the dealer inventory was healthy. So should I take that to mean that they're fairly lean levels? You feel comfortable? Um, and I realize it's a moving target, but you know, is that something you feel good about as you enter Q4?
Yes. Yeah. We don't perceive the inventories to be in excess.
Okay, just want to make sure. All right, thank you. Strong.
Appreciate it.
Sure.
Tongue research, please proceed.
Hi, guys. Uh, thanks for, uh, taking my questions. Congrats on a strong quarter. Um, just to be clear on...
The Q4 guide, so to speak, uh, you said 10 to 12%? Brad, I think for the full year, that would suggest Q4 revenues of somewhere between $103 million and $110 million or so. Um, um, still strong growth year-over-year, like the, uh, um, maybe not quite as high as, uh.
Uh, Q3 year-over-year, uh, but I'm wondering where the strength is coming from. I think last quarter you talked about several buckets: the uh, the acquisitions of Brothers, um, Jack Cooper, market share gains, organic growth. Uh, how would you allocate those?
Importance of those buckets to the revenue growth of 25% in the quarter just ended and the unit growth of 21%.
Well, I think it's not unlike the second quarter. We still are having the same benefit.
Roughly the same amount of revenue from both of those two components, the Brothers and the, um, the new GM Revenue. Um, with revenue essentially flat quarter over quarter, I think you could apply the same metrics.
Gotcha. And then, uh, just a, quite a follow-up question on free cash flow. You said it was, uh, just at EBITDA minus CAPEX, uh, $11.5 million in the quarter. And I think you said on the last call, uh, $30 to $40 million of free cash flow for the full year.
Is that still a reasonable target? Or does it seem like it's running a little hotter than that right now?
It is, if you, and you know, I was using kind of a run rate last quarter. Um, certainly annualizing this one gets you a little, uh, gets you a higher probably closer to 35.
Okay. And, and then on that basis, um, you, you know, by far you, you generate on a free cash flow, yield basis more than any other company in the group whether truckload or LTL, um, and, uh, uh, a free cash flow yield approaching 20%. When the next closest is 5 or 6%, which would support a significantly higher stock price.
um,
...and that's enabling you to reduce net at a pretty aggressive rate. Um,
um,
Is it just a matter of your renewed company? You're a small company. What's it going to take to get the market to recognize this free cash flow characteristic?
Well, listen, when we talk to a lot of investors and I think most of them appreciate the fact that um, that this is a kind of an outside, uh, cash flow return. Um, you know, when we start working off some of these other, uh, you know, depreciation levels amortization and that starts coming through, as you know, Gap operating earnings maybe that wakes other people up. But I, I don't know. Alex. It's it's um,
you know, if we're
We're as long as the supply of energy, you are.
And then I, I guess last one um, uh.
M&A pipeline. Uh, it seems that you have the 7 companies fully integrated. Um, is there...
More cost, takeout potential there. Uh, and then, what does the new M&A pipeline look like? Are you still pretty active there, particularly with this free cash flow generation?
Um, yeah. I mean, we're always pursuing incremental efficiencies, and I think, um,
You know, we've demonstrated, or we're in the process of demonstrating, kind of a cadence of, uh, of
Regular improvements, uh, you know, validating our execution and our strategy, and, you know, that strategy does include a combination of organic growth opportunities, supplemented by, uh, selective tuck-in acquisitions.
And, you know, we have a pretty robust.
We have a pipeline of opportunities, and obviously, with our strong cash flow, we have the capability to fund that.
and,
You know, we would expect to continue on our target of, you know, 1 to 2 TUC in type acquisitions a year as we proceed into 2026.
Great. I appreciate the extra color. Thank you.
Our last question comes from the line of Bruce Chan with Stifel. Please proceed.
Hey, good evening team. This is Andrew Cox on for Bruce, uh, building upon the uh, cash generation discussion prior. Just kind of wanted to talk a little bit about capex and cash flow, expectations. Moving through the end of the year and into 2025. Uh, you know, you guys said in the prepared remarks that you do, expect capex to move higher, uh, after this year and and really appreciate the the full year. Reiteration of the capex guide but uh kind of wanted to get an expectation of your capex uh, into 2026 and Beyond is uh, are there any, you know, additional capex needs to to meet higher volumes if they they should come sometime next year and and how do you plan to deploy a free cash flow Beyond capex next year, thanks.
Thanks Andrew. I think, um,
Look, CapEx at $10 million is probably kind of at the bottom of the range. But having said that, you know, we've got fleet capacity that could support this kind of a market absent big gains in contract share. And so, we'll have to kind of adjust as we go through the year, but.
The comment in the in the prepared remarks was just that we do expect that as our Fleet grows. We we intend to keep the average age at around 5 years and that's just going to mean that capex by definition has to go up a little bit and so maybe 15 million a year. Might be more normal or even as high as 20 as we continue to grow. But, um, with the cash flow generation, that we've been talking about that still yields, uh, amid, the High Teens, uh, return on market cap that at least, at at today's market cap.
So, I wouldn't expect, you know, we're still working on the capex plan along with our full budget for 2026, but I wouldn't expect a, uh, a much higher, uh, commitment to capex during 26. Unless, as again, the market changes, and we see, uh, big needs for, uh, addressing some contract Gates
Okay. Thanks, Brad. This is really helpful. I, you know, every uh, Trucking executive team, this, this, uh, this earning season has been asked a question about the, uh, changes to whether it be non-domiciled, uh, CDLs or or the the enforcement of the English language proficiency, just kind of wanted to see. If you guys have any sense on the the impact of maybe these uh, Supply changes could have on the other hauler capacity. Um anything on the regulatory side, we, you know, we would expect that it would have much less impact than drive in but just you know any insight you guys have to to help us try to
Model that in would be really helpful. Thank you.
Sure. So I mean, of course we saw today that the interim rule was stayed, um, for now on the non-dominant file CDL front. So we will continue to watch and and see how that plays out through the Appellate process. But assuming that that the interim rule does go forward in something substantially similar to what has been proposed. Uh, we do think there's a pretty material impact on On Truckin overall. Um, it is not a material impact that we would expect to proficient per se. Um, as our company's driver population is not impacted in in a large way, but we would think for um, for the auto caller segment that would hit more closely for smaller carriers potentially sub haulers. Um, and there are some Niche players in the industry that, um, have a driver composition that is. It's more likely heavily and or majority impacted by the non Bond style. CDL, interim rule.
Proposed. Um, it is certainly more of an impact on that front than the English language proficiency front.
Okay, thank you, Amy, that that's really helpful as well. Okay, if I can sneak 1 more in here, um, just kind of double clicking on the, uh, mix benefit or, or just benefit at all that you had from, you know, the potential pull forward of EV demand prior to the expiration of the tax credits, this quarter. Um, maybe it might be best if you guys have this off hand, or if you guys can help, help us understand like what percentage of the units in 3Q were um, electric vehicles, maybe compare that to to the year prior or the quarter prior, just trying to understand what sort of impact. This pull forward may have had on on the quarterly results. Thanks.
yeah, so I'll
To expect to see some impact, there is potentially a lower low factor per truck. But that's often there, and we seek to ensure compensation around EVS so that the lower...
Uh, the lower lows factor is offset by higher revenue on those units.
Uh,
Right. Okay, I just, I mean, should we? I mean, should we believe that the revenue per unit impacted this quarter? You know, what was it at all impacted by mixed changes to the EV side?
I don't think so. Minimal, like yeah, minimal. Like, okay.
Okay, great, I really appreciate it. Thank you.
Thank you. We have a follow-up from the line of Tyler Brown with Raymond James. Please proceed.
Hey, I appreciate you guys. Actually answered my follow-up on non-domicile that was very helpful Amy but since I've got you real quick, I think Brad you mentioned last quarter that 3 of the 7 op codes were running 90 or better. Can you chalk up 1 or more 1 1 or 2 more this quarter?
Um, and then on the op codes, the other ones that are not running at 90 or better, they've got to be running. Just mathematically, call it 100 or more. And if you were to build the bridge between where they're operating and some of the 90 or better op codes, what are the two or three key things that really differentiate their on the P&L?
Uh, 1.
The the count on those at 90 or better hasn't really changed this quarter. Um and but I would say more generally that um there has been a pretty broad Improvement uh across almost all of the opcos and that
You know, we have seen constant revenue. So, we are seeing incremental gains, even if they are small, but on flat revenue.
In, in terms of your observations, that that others would have to be over 100. We we don't have that in in a pervasive way but we've got a couple of outcomes uh with that are experiencing lower volumes.
That, that are at or a little above 100 and that is mostly a revenue issue. We have dealt with a lot of the cost issues, through this consolidation effort in the reorganization that we, that we talked about. And so I think that will help in the go forward, even for those entities and then, you know, pushing some extra Revenue through, you know, whether that's, um, wins on contracts or whatever. It may be, will take up, take care of the difference.
Okay.
Okay, so it's not a fundamental cost structure issue. It sounds like it's a little bit of price, a little bit of volume; it would go a long way.
Yes. Yeah. Okay. And then, did you give the spot mix? That's my last question.
Um, we I don't know that we did, but similar to the last quarter it was at or a little below 3%.
Yep. Perfect. Okay, thank you. All.
And with that, ladies and gentlemen, we conclude our Q&A session. I will turn it back to Richard O'Dell for final comments.
Well, thank you for your uh, interest in professional Logistics. We're, uh, pleased with the progress that we've made, uh, in the first 18 months of our, uh, Endeavor as a public entity. And uh, most importantly,
You know, we are never satisfied with the absolute result and clearly optimistic about our ability to continue to execute and progress our operating margins.
Thank you again for your interest.
And ladies and gentlemen, this concludes our conference. Thank you for your participation. You may now disconnect.