Proficient Auto Logistics Q3 2025: Contradictions in Revenue Growth, Operating Companies' Performance, and EV Impact

Date of Call: None provided

Financials Results

• Revenue: $114.3M in Q3, up 24.9% YOY
• Operating Margin: Adjusted operating ratio 96.3%, improved 250 basis points YOY (from 98.8% in Q3 2024)

Guidance:

• Full-year revenue growth expected 10%–12% vs combined 2024 (base $388.8M).
• Q4 revenue expected modestly lower than Q3; adjusted operating ratio and cash flow expected to be similar to Q3.
• Recognized $1.9M restructuring charge (~$0.06/share); expect >$3M annual savings beginning largely in 2026.
• 2025 equipment CapEx reiterated at ~ $10M; maintenance CapEx likely to grow; 2026 run-rate CapEx expected ~$15–20M as fleet expands.
• Target to improve operating ratio by at least 150 bps in 2026 over 2025.
• Preserve strong balance sheet; net debt at $64.7M (1.7x TTM adjusted EBITDA) with continued debt reduction.

Business Commentary:

• Revenue and Unit Growth:
• Proficient Auto Logistics reported operating revenue of $114.3 million in Q3, 24.9% higher than in Q3 2024, with units delivered increasing by 21% year-over-year.

• The growth was driven by market share gains, Brothers acquisition, and a surge in EV purchases ahead of federal tax credits expiration.

• Operating Efficiency and Cost Management:

• Proficient recognized a $1.9 million restructuring charge in Q3, with plans to achieve over $3 million in annual savings starting in 2026.
  

• The charge was primarily due to organizational realignment and consolidation, with ongoing efforts to leverage national scale for cost synergies and better asset utilization.

• Free Cash Flow and Debt Reduction:

• The company generated $11.5 million in free cash flow from operations in Q3, leading to a reduction in aggregate debt balances by $11 million, with a resulting net debt of $64.7 million.

• This was supported by strong cash flow generation, allowing for significant debt reduction and maintenance of a healthy balance sheet.

• Pricing Discipline and Contract Retention:

• Proficient maintained discipline in pursuing new business and retaining incumbent business to ensure sustainable profitability and reinvestment.
• The company focused on retaining profitable volume while letting less attractive volume go due to pricing considerations.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted sequential profitability improvement and scale benefits: "improved 250 basis points year-over-year" and "We're confident that we can be successful in achieving growth and margin expansion." They reiterated cash generation and balance-sheet strength (free cash flow ~$11.5M this quarter, net debt 1.7x TTM EBITDA).

Q&A:

• Question from Tyler Brown (Raymond James): Brad, you said revenues up 10% to 12% for the full year — is that on a $388.8M pro forma base? Flattish OR sequentially into Q4? Are you fully transitioned on the TMS across all opcos? How can sister hauls grow longer term (11% of revenue vs 9%)? How did you fare on OEM RFPs this quarter? And given Brothers/Jack Cooper being incremental, is high single-digit revenue growth into 2026 a reasonable assumption?
  Response: Management confirmed the 10–12% full-year growth is off a $388.8M base, expects operating ratio roughly flat into Q4, TMS is fully transitioned enabling sister-haul growth, OEM RFPs have no material wins yet, and high-single-digit revenue growth into 2026 is a reasonable assumption with a target of +150 bps OR improvement in 2026.

• Question from Ryan Merkel (William Blair): What was the year-over-year increase in revenue for October? Do you expect November/December growth to pick up from October? Given ARPU down Y/Y and excess supply comments, how should we think about pricing over the next few quarters — have we bottomed or could there be more pressure? And are dealer inventory levels healthy as you enter 4Q?
  Response: October revenue was slightly improved (helped by Brothers and share gains); management is hopeful seasonality will lift Nov/Dec but hasn't seen it yet; RPU should stabilize going forward though pricing on new contract renewals remains weak; dealer inventories are not excessive.

• Question from Alexander Paris (Barrington Research): For Q4 (and full year), how much of recent growth was driven by Brothers vs Jack Cooper vs organic/market share? On free cash flow, you reported $11.5M in the quarter and previously guided $30–40M for the year — is that still reasonable? Also, what's the M&A pipeline and cost-takeout potential post-integration?
  Response: Management said growth is driven roughly equally by Brothers and new GM revenue, free cash flow annualizes closer to ~$35M (versus prior $30–40M range), and they have a robust tuck-in M&A pipeline targeting 1–2 acquisitions per year supported by strong cash generation.

• Question from Andrew Baxter Cox (Stifel): Given the CapEx commentary, what should we expect for CapEx in 2026 and beyond to support higher volumes? How will free cash flow be deployed beyond CapEx? On regulatory items (non-domiciled CDL, English proficiency), what impact might these have on auto-hauler capacity? And did the EV tax-credit pull-forward materially affect Q3 via EV mix or RPU?
  Response: CapEx of $10M is a floor; as fleet expands a $15–20M annual CapEx run-rate is expected and free cash flow will fund CapEx, debt reduction and selective M&A; the interim non-domiciled CDL rule (stayed for now) would mostly pressure smaller carriers/sub-haulers not Proficient; EV mix had minimal impact on RPU this quarter.

• Question from Tyler Brown (Raymond James): Last quarter you said 3 of 7 opcos were running 90 or better — any change this quarter? For opcos not at 90, are they running around 100+ and what are the key P&L differences? Also, what was the spot mix this quarter?
  Response: The count of opcos at 90+ hasn't materially changed, but there's broad improvement driven mainly by revenue recovery (not pervasive cost issues); a few opcos with lower volumes run ~100; spot mix was at or slightly below ~3%.

Contradiction Point 1

Revenue Growth Expectations

It involves changes in financial forecasts, specifically regarding revenue growth expectations, which are critical indicators for investors.

What are the key drivers behind the Q4 revenue guidance? What factors drove the 25% revenue growth in the recent quarter? - Alexander Paris(Barrington Research)

20251112-2025 Q3: Revenue growth of 25% in Q3 was largely due to these sources. - Bradley Wright(CFO)

Are revenues projected to increase by 10% to 12% this year? What does that imply for 2025 revenue with the $389 million pro forma base? - Patrick Brown(Raymond James & Associates, Inc.)

2025Q3: Profitable revenue growth in excess of 10% for the year is attainable. - Bradley Wright(CFO)

Contradiction Point 2

Operating Companies' Performance

It involves the performance of operating companies, which is crucial for overall business strategy and operational efficiency.

Are there other operating companies achieving 90 or higher? What are the key differentiation points for companies not at that level? - Patrick Brown(Raymond James & Associates, Inc.)

20251112-2025 Q3: Opcos at 90% and above improved on flat revenue. Volumes are mostly the issue for those not at that level, with plans to address through revenue growth. - Bradley Wright

Are there operating companies performing at 90 or higher? What are the key differentiators for those not at that level? - Patrick Brown(Raymond James & Associates, Inc.)

2025Q3: The count on those at 90 or better hasn't really changed this quarter versus last quarter... But I would say more generally that there has been a pretty broad improvement across almost all of the OpCos. - Bradley Wright

Contradiction Point 3

Impact of EV Vehicles on Load Factor

It involves the impact of electric vehicles on the load factor, which could potentially affect operational efficiency and revenue.

Did you experience a mix benefit or any benefit from the potential pull forward of EV demand ahead of the tax credit expiration this quarter? Could you share the percentage of electric vehicles in Q3's unit sales? - Andrew Baxter Cox(Stifel)

20251112-2025 Q3: Where you'd expect to see some impact is potentially a lower load factor per truck, but that's often and we seek to ensure compensation around EVs so that the lower load factor is offset in higher revenue on those units. - Amy Rice(COO)

Can you reduce costs further given the high margins and lack of significant market share gains, or is increased competition limiting your ability to do so? - J. Bruce Chan(Stifel)

2025Q2: The current volume that we are handling is up less than 1% year-over-year, but that has us operating at a higher load factor than we were at year-end of 2024. - Amy Rice(COO)

Contradiction Point 4

Capacity and Demand

It involves differing perspectives on industry capacity and demand, which have implications for the company's operational planning and market positioning.

Can you provide an update on the systems progress? - Tyler Brown (Raymond James)

20251112-2025 Q3: I would say across the board, we are generally running in the low 90s... I would say the capacity is very strong... I would say we have great capacity. - Richard O'Dell(CEO)

What is the current industry capacity? What is the current order book status? - Bruce Chan (Stifel)

2025Q1: Industry capacity is flat, but if demand returns, it may become an issue... The shuttered competitor's fleet was older, unlikely to stay in the new vehicle market. - Amy Rice(COO)

Contradiction Point 5

Impact of EV Demand Pull-forward

It concerns the impact of the pull-forward of EV demand due to tax credit expiration, which affects operational efficiency and revenue projections.

Could you clarify the mix benefit or any benefit from EV demand pulled forward before the tax credits expire this quarter, and what percentage of units sold in Q3 were electric vehicles? - Andrew Baxter Cox (Stifel)

20251112-2025 Q3: Where you'd expect to see some impact is potentially a lower load factor per truck, but that's often and we seek to ensure compensation around EVs so that the lower load factor is offset in higher revenue on those units. - Amy Rice(COO)

What is Brothers' annual revenue? Is it in line with expectations? - Tyler Brown (Raymond James)

2025Q1: The pull-forward activity was minimal... Pricing renewals are challenging due to OEM cost pressures. - Amy Rice(COO)