Earnings call transcript: Proficient Auto Logistics sees Q2 2025 revenue surge

Proficient Auto Logistics (PAL) reported a robust financial performance for the second quarter of 2025, with a notable increase in operating revenue and positive market reactions. The company’s revenue grew by 21.4% quarter-over-quarter and 8.4% year-over-year, reaching $115.5 million. Despite a decline in revenue per unit, the stock saw a 3.8% premarket increase, closing the regular session at $6.05. According to InvestingPro analysis, PAL appears undervalued at current levels, with analysts projecting profitability this year.

Key Takeaways

• Revenue increased by 21.4% quarter-over-quarter and 8.4% year-over-year.
• Stock price rose 3.8% in premarket trading following the earnings release.
• Integration of Brothers Auto Transport completed, enhancing operational efficiency.
• Recognition with the Toyota Logistics Services 2025 Quality Award.
• Sequential revenue decline of 25% expected in Q3 due to seasonality.

Company Performance

Proficient Auto Logistics demonstrated strong performance in Q2 2025, with significant growth in operating revenue. The company delivered 631,426 units, marking increases of 28% quarter-over-quarter and 24% year-over-year. This growth reflects the successful integration of Brothers Auto Transport and operational improvements.

Financial Highlights

• Operating Revenue: $115.5 million (↑ 21.4% QoQ, ↑ 8.4% YoY)
• Units Delivered: 631,426 (↑ 28% QoQ, ↑ 24% YoY)
• Revenue per Unit: ~$171 (↓ 3% QoQ, ↓ 13% YoY)
• Cash and Equivalents: $13.6 million (↑ from $10.9 million last quarter)
• Total Debt: $90.2 million

Market Reaction

The stock price of Proficient Auto Logistics experienced a 3.8% increase in premarket trading, reaching $6.28, following the earnings announcement. This positive reaction likely stems from the revenue growth and operational achievements reported, despite the regular session’s 2.15% decline.

Outlook & Guidance

Looking ahead, Proficient Auto Logistics anticipates a sequential revenue decline of 25% in Q3 due to seasonal factors. However, the company remains focused on maintaining its adjusted operating ratio and achieving margin improvements through cost reduction and synergy realization.

Executive Commentary

CEO Rick O’Dell highlighted the company’s commitment to improving its cost structure in a volatile market, stating, "We’re not satisfied with the cost structure that we currently have." He also emphasized the potential for margin improvements, noting, "We have meaningful opportunity for margin improvements."

Risks and Challenges

• Revenue per unit decline may impact profitability.
• High total debt of $90.2 million poses financial risks.
• Seasonal revenue decline expected in Q3.
• Market volatility and economic uncertainties could affect operations.
• Dependence on OEM contracts, which constitute 93% of transportation revenue.

Q&A

During the earnings call, analysts inquired about the potential for market share gains in OEM bid processes and fluctuations in revenue per unit. The company confirmed its strong free cash flow potential of $30-35 million annually post-CapEx, addressing concerns about financial stability.

Full transcript - Proficient Auto Logistics Inc (PAL) Q2 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Proficient Auto Logistics Second Quarter Financial Information Conference Call. At this time, participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Brad Wright, Chief Financial Officer. Please go ahead.

Brad Wright, Chief Financial Officer, Perficient Auto Logistics: Good afternoon, everyone. I’m Brad Wright, chief financial officer of Perficient Auto Logistics. Thank you for joining us on Perficient’s second quarter twenty twenty five earnings call. Under SEC rules, our Form 10 Q covering the three and six month periods ending 06/30/2025 and 2024 will include financial statements for both the predecessor accounting entity, Proficient Auto Transport, and the successor entity, Proficient Auto Logistics Inc. We are not required to provide, and the Form 10 Q will not contain, pro form a financial data for the combined companies.

However, our earnings release provided comparative summary combined financial information for the second quarter twenty twenty five to the three month periods ending 03/31/2025, and 06/30/2024 for the combined companies. Our earnings release can be found under the Investor Relations section of our website at proficientautologistics.com. Our 10 Q when filed can also be found under the Investor Relations section of our website. During this call, we’ll 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 the 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 EBITDA. 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 O’Dell, Proficient’s 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 company’s combined results for the second quarter. After our prepared remarks, we’ll open the call to questions. During the Q and A, please limit yourself to one question plus one follow-up. Then you can get back into the queue if you have additional questions. Now, I would like to introduce Rick O’Dell, who will provide the company update.

Rick O’Dell, Chairman and Chief Executive Officer, Perficient Auto Logistics: Thank you, Brad, and good afternoon, everyone. I’ll start with an overview of our operations during the second quarter and some trends that provide insight into our expectations for the 2025. First, as it relates to the second quarter, as we discussed in our last earnings call, the market strength we experienced at the end of Q1 continued into April, producing a record revenue month for the company, with revenue and unit volumes in the month up 1325%, respectively, year over year. While the market decelerated in May and June with auto SAAR slowing to an average around 15,500,000 units and our expectations had been for sequentially decelerating performance in each month of the quarter, our unit volumes were bolstered by market share gains and the Brothers acquisition, such that June did not decelerate from May and revenue performance finished above our expectations. For the combined May and June months, volume finished up 24% year over year, while revenue was up nearly 14% versus the same period of 2024.

The combined results produced a record revenue quarter for the company and improved profitability sequentially. Notably, the adjusted operating income for the second quarter was greater than the prior three quarters combined, demonstrating operational improvements and strategic execution in what has been an uncertain environment. July auto sales and deliveries were stronger than expected, which was reflected in July SAR of 16,400,000 as compared to industry forecasted expectations that were similar to what we saw in May and June of this year. While there’s typically a seasonal aspect to July in which many OEMs elect to close plants for one or two weeks, many domestic plants have continued to operate to meet the higher demand for US based production. We’re again pleased with PAL’s July volume and revenue performance relative to expected levels.

SAAR forecasts remain cautious for the balance of the year, however, the economic impacts of tariffs and policy changes both to our customers and the ultimate consumer are becoming clearer with the announcement of trade agreements. We view both removal of policy uncertainty and averted worst case high cost outcomes as a relative positive for the near term go forward. Prior OEM shipping holes and delays in bid processes have returned to a more normal cadence with tariff policy resolution, which provides a more stable environment for us to go to market and benefits our ability to execute our strategy and achieve further meaningful margin improvements. Additionally, favorable tax policy for qualifying car loan interest deductions, a higher likelihood of interest rate reductions over the balance of the year, healthy dealer inventory levels and an average age above historical norms for replacement represent factors that should support stable consumer demand. Perficient remains focused on our long term objectives, including continued increases in our market share and the effective integration of our merged operating companies, driving improved efficiency and profitability.

From a commercial perspective, there are several OEMs in the midst of scheduled regional or national bid processes with a meaningful amount of new vehicle volume to be decisioned across the OEM landscape over the remainder of this year, giving line of sight to revenue levels that will allow for ongoing margin expansion efforts. In the quarter, we successfully retained a number of important OEM contracts at flat to up pricing levels. The precise impact on the revenue of these additions is dependent on the volume ultimately generated by the respective OEMs, but our coverage network and quality service is being further validated in the market place. While automotive OEMs face cost pressure as widely reported in their Q2 earnings releases, Powell is an important component in the transportation supply chain and we will continue to partner with customers to serve their needs with industry leading quality. Our commitment to service excellence was recently recognized by Toyota Logistics Services with their 2025 Quality Award for finished vehicle logistics.

I’d like to thank our team and channel partners for their efforts in achieving this award, even as we continue to integrate our companies and further strengthen our capabilities. The integration of Brothers acquired at the beginning of Q2 has gone smoothly and is now largely complete with seamless service for our customers throughout. All operating companies, including Brothers, are now using our common accounting platform and transportation management system, providing key visibility and actionable insights into our customer base, operating efficiency opportunities and profitability. In the second quarter, shifted a higher portion of our volume onto company trucks, which will continue to aid profitability, as the majority of fixed costs support our asset based business. Sister hauls or load sharing between the merged companies grew to 9% of revenue in the quarter from 8% in the prior quarter, reducing empty miles and further improving our asset utilization.

As we look ahead, we have more work to do to control costs in a base market that continues to be weaker than expected coming into 2025. We’ll further optimize new business added to the network as we move beyond the startup phase. While we evaluate our business on a composite and regional basis, we do have three of our seven operating companies already operating at a 90 adjusted OR or better. We’re in the process of advancing targeted cost savings initiatives and operating efficiencies that will bring the blended operation to that level over time, while preserving the ability to scale up via share gains and acquisitions. I’ll now turn it back to Brad to cover key financial highlights.

Brad Wright, Chief Financial Officer, Perficient Auto Logistics: Thank you, Rick. I’ll start with a few summary statistics. Prior year comparisons reflect the combined results of the five founding companies, but do not include amounts for ATG or Brothers, which were acquired later. Operating revenue of $115,500,000 in the second quarter was up 21.4 percent from last quarter and 8.4% higher than the second quarter of last year. Units delivered of 631,426 represented a 28% increase compared to last quarter and a 24% increase from the 2024.

Revenue per unit, excluding fuel surcharge, was approximately $171 down approximately 3% from the previous quarter due to customer mix and down approximately 13% from Q2 of last year, reflecting the reduced proportion of spot and dedicated traffic in the quarters beginning in Q3 of last year and after. Company deliveries were 37% of revenue in the quarter, up from 35% last quarter and 32% in the second quarter of last year, consistent with our stated objective to increase the volume we deliver on company assets. Our OEM contract business generated approximately 93% of total transportation revenue in the quarter, up from 91% last quarter. Our dedicated fleet service generated revenue of $3,800,000 this quarter compared to $4,300,000 during the first quarter and $7,300,000 in the 2024. The Dedicated fleet business should continue to generate approximately $4,000,000 per quarter in the second half of this year.

Revenue from spot opportunities during the quarter comprised only 2.7 of total revenue, continuing a trend that has persisted now for the last four quarters. We expect spot and secondary revenue to remain a relatively small portion of our overall business through the second half of this year. The trend toward a higher percentage of deliveries on company assets continued during the quarter through a combination of moving available assets to geographic regions with higher demand and the addition of Brothers Auto Transport at the beginning of the second quarter, which operates predominantly through company deliveries. Utilization improvement was evidenced by a 7% increase in average weekly revenue per company driver in the second quarter compared to the 2025. Approximately $13,600,000 in cash and equivalents on June 3025, up from $10,900,000 at the end of last quarter.

Aggregate debt balances at quarter end were approximately $90,200,000 with net debt of $76,600,000 The increase from last quarter reflects our draw on the remainder of our term debt facility when the Brothers acquisition closed April 1, though we did use free cash flow to reduce the balance on our revolving credit line later in the quarter. Our expected equipment CapEx for the full year 2025 is approximately $10,000,000 most of which was incurred during the first half of the year. Our current annualized run rate for free cash flow from operations will be between 30,000,000 and $35,000,000 after CapEx, which would represent an approximately 20% cash return on our current market cap. Additional CapEx spending could be required in the event of large share gains awarded in the back half of the year, which would, of course, come with commensurate profitable revenue. The strength of our balance sheet, which will allow us to invest with growth is a differentiator in our industry.

Total common shares outstanding ended the quarter at 27,700,000.0, up from 27,100,000.0 at the end of last quarter. The increased share count was a combined result of some shares issued in the Brothers acquisition and vesting of RSU grants made in connection with our IPO in May 2020 next quarter, the third fiscal quarter is typically characterized by seasonal softness. Despite a stronger July than originally expected, August is showing the seasonality expected the seasonally expected slowdown in revenue, and we expect a sequential revenue decline of between 25% compared to the quarter just ended. We expect to maintain adjusted operating ratio even on this lower projected revenue. For the full year, we now expect top line growth year over year between 510%.

Operator, we’ll now take questions.

Conference Operator: Thank you. Our first question comes from the line of Bruce Chan with Stifel. Your line is now open.

Bruce Chan, Analyst, Stifel: Hey, thanks for the question and good evening, I suppose, everyone. Looks like a really good fundamental execution this quarter despite, you know, the still soft auto market. And I think you alluded to this, Rick, in your prepared remarks about, you know, controlling costs in the base market. I I guess, you know, my question here is how much cost have you taken out? How much more can you take out, you know, kind of exclusive of a market?

And what levers, you know, do you have to pull? I know you talked about the sister loads and and the opportunity there. You talked about the company truck and sourcing and the unified tech platform, but maybe some kind of detail around how much you expect to be able to pull out even if things kind of remain soft here.

Rick O’Dell, Chairman and Chief Executive Officer, Perficient Auto Logistics: Yeah, we have some incremental opportunities that are targeted and quite frankly in process, and they’re really focused around procurement, consolidation of facilities, some personnel synergies, and then of course, know, empty miles over time as well.

Bruce Chan, Analyst, Stifel: Okay. That’s great. Super helpful. I imagine that sets you up, you know, pretty well for when the market, you know, does turn as does, you know, Jack Cooper. So maybe just for my follow-up, you know, now that you have a full quarter, close to a full quarter of that Jack Cooper, business under your belt, you know, share shifting still a little bit maybe.

How do you think about what, you know, these volumes could mean for you and then some of these cost savings could mean for you, especially as the market normalizes?

Rick O’Dell, Chairman and Chief Executive Officer, Perficient Auto Logistics: We think there’s still meaningful opportunity for margin improvements and again it’ll be a combination of share gains from organic growth as well as cost reduction opportunities and synergies from our empty mile initiative. And I guess I would just comment, know, with three of our operating companies currently operating at much better margins, you know the markets, the regional markets where you know there wasn’t a concentration of port type business and imported traffic, we saw more stability in the marketplace and our execution and operating margins is much better there and I think that validates the know the magnitude of the opportunity to still be able to operate in the 80s.

Bruce Chan, Analyst, Stifel: That’s another

Amy Rice, President and Chief Operating Officer, Perficient Auto Logistics: comment to your your question there. We entered two new markets this year, which had some start up cost and some, you know, field overhead to go into new markets. We have the opportunity to continue optimizing in those new markets as we now build around those new sort of anchor points. And we’ll pursue business that tie into those new markets that will continue to improve their efficiency and their profitability over time, so that we can get more incremental margins on incremental business that come into those new markets as well.

Bruce Chan, Analyst, Stifel: To clarify

Rick O’Dell, Chairman and Chief Executive Officer, Perficient Auto Logistics: And to the extent we could grow business in our legacy markets you know we won’t be opening new facilities and hiring new supervisors we’ll be able to leverage the resources that we have in our network.

Bruce Chan, Analyst, Stifel: Okay. Yeah. That makes a lot of sense. And then just to put a finer point on that, and then I’ll turn it over. You know, around the road show, you all have talked about, I think, a kind of target midterm OR number, you know, somewhere in the high eighties.

You know, obviously, there have been some developments in in the, you know, OEM auto market that, you know, probably pushed those out. But, you know, if I were to think about a midterm number, however long it takes for the market to normalize and layer on some of these additional cost saves and some of these additional levers that you’ve just laid out, do you think that you could now be getting a number better than that?

Amy Rice, President and Chief Operating Officer, Perficient Auto Logistics: No. I think our long term or our midterm objective remains to get to a 90 or better OR to kind of move into the high eighties, and we need to be more aggressive and assertive near term on cost control actions to start that step down in light of the market we’re operating in.

Bruce Chan, Analyst, Stifel: Okay, great. I’ll hop back in queue. Thank you.

Conference Operator: Thank you. Our next question comes from the line of Tyler Brown with Raymond James. Your line is now open.

Tyler Brown, Analyst, Raymond James: Hey, good afternoon. Hey, Tyler. Hey. Maybe Brad, Amy, just the volume looked really good, but I am curious about the sequential deterioration in the yields per VIN. Can you just kind of parse out how much of that was core rate weakness versus maybe Brothers?

Because I have a feeling maybe Brothers put some pressure on ARPU. And then should we think about yields hanging around here for the rest of the year?

Amy Rice, President and Chief Operating Officer, Perficient Auto Logistics: Yes. I wouldn’t read it that way, Tyler. It really is just portfolio mix of which customers moved more traffic in the quarter. And if a given customer has a more locally concentrated traffic base, they would have a lower RPU, but maybe just as profitable versus a different customer that may have a higher average length of haul. So we did see, just a a shift in the the top 10 customers in the quarter and the proportion of who was moving.

So it’s a customer mix issue.

Tyler Brown, Analyst, Raymond James: Ah, okay. So length of haul can have a huge influence there. Okay. That’s helpful. And then so, Rick, I wanna unpack the the bid market.

So it sounds like it’s strong. It’s improving maybe, but it but I just wanna be clear. So the majority of those OEM contracts that you’re talking about, that is volume that you currently don’t move. So that sounds like a possible market share opportunity. And I don’t know if this is the right way to look at it, but given everything, just kind of the craziness that’s been going on out there, has the bid market been not so normal?

And maybe there’s gonna be more go to go to bid in the market. I’m just curious about what what’s going on out there. Sorry. That’s probably not a very good question, but hopefully, can get it what I’m getting at.

Amy Rice, President and Chief Operating Officer, Perficient Auto Logistics: Yep. I’ll take that one. So in a given bid, we typically have, you know, both incumbent traffic that we’re seeking to renew as well as the opportunity to bid on new traffic. And, you know, what is changing a little bit is the degree to which OEMs are either gravitating towards their incumbent carriers for, you know, for the the bid activity versus more open mindedness to share shifts and new carriers in their bid processes. And the the current environment is one where our OEM partners, you know, are looking to optimize their transportation supply chain against a changing sort of production plan, and, you know, they’re looking to optimize cost and service.

So while we, you know, have got to defend on the incumbent side, you’re right that there is a lot of of market share potential opportunity to be gained, and we’re going after that business. So, you know we do see opportunity in this market even though there is pressure in the OEM space.

Rick O’Dell, Chairman and Chief Executive Officer, Perficient Auto Logistics: Yeah and I would would make one further comment on that just to express confidence in our analytical ability to mine those bid opportunities for for you know network business that’s a fit for us and we’ll and we’ll meet our contribution margins.

Tyler Brown, Analyst, Raymond James: Okay. Okay. Sounds like good opportunity out there. We’ll wait and see. Brad, really quickly, if I can squeeze one in.

So I just wanna be clear on the free cash flow comments. So you’re saying that you think that today, based on current EBITDA levels, you could generate somewhere around 40 to 45,000,000 of operating cash flow. Right? I mean, you’re you’re probably a limited cash taxpayer and a limited cash interest payer. So that’s how we get from EBITDA to operating cash.

Brad Wright, Chief Financial Officer, Perficient Auto Logistics: Yeah. So that was pre CapEx. So when I take the 10,000,000 out, that’s where you get to that number. But you’re right.

Tyler Brown, Analyst, Raymond James: Okay. Just wanted to make sure I understood that. Okay. Thank you, guys.

Conference Operator: Thank you. Our next question comes from the line of Ryan Merkel with William Blair. Your line is now open.

Ryan Merkel, Analyst, William Blair: Hey, everyone. Thanks for the question. I wanted to follow-up on the price question. So I had it down kind of 16% for price in 2Q. Can you help us with what you’re thinking for 3Q and 4Q?

Are we going to stay in this range? Or do you think it might get a little better from here?

Amy Rice, President and Chief Operating Officer, Perficient Auto Logistics: So I think on a relative basis, if you’re looking year over year, we should start to see that delta compress. And the reason being, you’ll remember when we reported our third quarter earnings last year, that was really when we started to see the softness in the spot market. And the dedicated business, you know, came down pretty precipitously, and that had a, you know, a large impact on RPU. We’ve seen stabilizing since then, and so I think you’ll continue to see the RPU stabilize.

Ryan Merkel, Analyst, William Blair: Got it. Okay. And then, yeah, the unit growth, I think it was up 24% year over year. That’s a pretty good number. I mean, you must be taking a lot of market share.

Can you put that 20% plus type unit growth in some context for us?

Amy Rice, President and Chief Operating Officer, Perficient Auto Logistics: Yes. So there are really three buckets that comprise, you know, our volume growth in the quarter. A large portion of it is Brothers. Brothers has performed well in its first quarter in the portfolio, roughly in line with and or slightly ahead of our expectations. So we’re really pleased to have them as part of the footprint and the team.

The second large component is a full quarter of the new market share gains, and we’ve continued to see performance there that’s in line with the expectations that we guided. And then the third component there to somewhat of a lesser extent would just be, you know, organic and or share growth in the base markets. And that’s where, you know, we’d like to see additional growth, coming from the market. We’ve not seen as much as we were hoping for coming into 2025, but there is some lift there, particularly quarter over quarter.

Ryan Merkel, Analyst, William Blair: That’s helpful. Okay. And then, just a cleanup here. Did you say that you expect the OR in March to be in the same range as February?

Conference Operator: Yes.

Ryan Merkel, Analyst, William Blair: Okay. Alright. Thanks all. Pass it on. Thanks, Ryan.

Conference Operator: Thank you. Our next question is a follow-up from Bruce Chan with Stifel. Your line is now open.

Bruce Chan, Analyst, Stifel: Yeah. Thanks for the follow-up here. Brett, you talked about the cash position being pretty strong. Balance sheet is within range of your target. You’ve had some nice incremental deals in the last year.

I know you mentioned the potential for some CapEx acceleration later this year if new bids pan out, but maybe you could just kind of give us an update on how you’re thinking about additional M and A philosophically. Is that something that you’re still keeping your eye on?

Brad Wright, Chief Financial Officer, Perficient Auto Logistics: Well, I think as we’ve said in the past, Bruce, I mean, we’re we’ll always have conversations ongoing, you know, and that’s something that will that will be kind of a constant. But, you know, I I don’t know that I would say there’s anything imminent. You know we’re looking at you know basically the cash flow is coming from just organic operations. CapEx would only happen if we had big bid gains and so you’re going to see you know debt balances coming down over the second half of the year and there’s nothing in the you know in the immediate future that would would impact that.

Rick O’Dell, Chairman and Chief Executive Officer, Perficient Auto Logistics: But we do tend we are continuing to mine for the right opportunities in the pipeline.

Bruce Chan, Analyst, Stifel: Okay, great. That’s helpful. Thank you.

Conference Operator: Thank you. And I’m currently showing no further questions at this time. I’d like to hand the call back over to Rick O’Dell for closing remarks.

Rick O’Dell, Chairman and Chief Executive Officer, Perficient Auto Logistics: All right. Again, we’re pleased with certainly with the revenue growth and the market share gains that we were able to achieve, and obviously some improving execution. You know, we’re not satisfied with the cost structure that we currently have in the in the somewhat volatile market and we’re continuing to to advance those initiatives aggressively. Continue to improve margins kind of regardless of the external environment. Thanks for your interest.

Conference Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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