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PA

Proficient Auto Logistics, Inc (PAL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue of $114.3M grew 24.9% y/y and was roughly flat q/q; adjusted operating ratio improved 250 bps y/y to 96.3% as integration and utilization initiatives took hold .
  • Results beat S&P Global consensus: Revenue $114.3M vs $110.3M estimate; Primary EPS $0.08 vs $0.07 estimate (S&P “Primary EPS”), while GAAP EPS was a loss of $(0.11). Drivers were 21% unit growth (market share gains, Brothers acquisition) and mix; GAAP EPS was impacted by $1.9M restructuring .
  • Balance sheet strengthened: net debt fell ~$12M q/q to ~$64.7M; net leverage declined to 1.7x TTM adjusted EBITDA; free cash flow (Adj. EBITDA – CapEx) was ~$11.5M in Q3 .
  • Guidance tightened higher: management now sees FY25 revenue up 10–12% (prior 5–10%); Q4 revenue modestly below Q3 with similar adjusted OR; 2025 CapEx reiterated at ~$10M; 2026 OR targeted +150 bps vs 2025 .

What Went Well and What Went Wrong

  • What Went Well

    • Material y/y growth with improved profitability: revenue +24.9% and adj. OR 96.3% (vs 98.8% LY), reflecting share gains, Brothers integration, and operating improvements .
    • Operating synergies executing: “sister hauls” reached 11% of revenue (vs 9% in Q2), reducing empty miles and improving asset utilization .
    • Deleveraging and FCF: net debt to TTM adj. EBITDA fell to 1.7x; Q3 free cash flow from operations ≈$11.5M enabling ~$11M debt reduction in the quarter .
    • CEO tone: “delivered strong revenue during a slower seasonal period, and further improved profitability… momentum from market share gains, operational improvements and strategic execution” .

  • What Went Wrong

    • GAAP loss remained: $(3.0)M net loss (GAAP EPS $(0.11)) on interest expense and a $1.9M restructuring charge; pricing environment “not as strong as we’d like” amid excess industry capacity .
    • Volume softness into Q4: October SAAR slowed to 15.3M; company expects Q4 revenue modestly below Q3 despite stable OR .
    • Pricing pressure and limited spot: OEM cost pressure and low-spot market (at/below ~3% of mix) limit rate power; company prioritizing profitable lanes and may let low-price volumes go .

Financial Results

Metric (USD, unless noted)Q1 2025Q2 2025Q3 2025
Revenue ($ Millions)$95.2 $115.5 $114.3
Operating Income (Loss) ($ Millions)$(2.36) $0.13 $(0.10)
Adjusted Operating Income ($ Millions)$1.24 $3.80 $4.22
Adjusted Operating Ratio (%)98.7% 96.7% 96.3%
Net Income (Loss) ($ Millions)$(3.19) $(1.56) $(3.02)
Diluted EPS (GAAP)$(0.12) $(0.06) $(0.11)
Adjusted EBITDA ($ Millions)$7.76 $11.28 $11.96
Adjusted EBITDA Margin (%)8.2% 9.8% 10.5%
Units Delivered (000s)494.5 631.4 605.3

Revenue composition (Q3 yoy):

  • Revenue before fuel surcharge: $104.90M vs $84.29M (Q3’24)
  • Fuel surcharge & other reimbursements: $7.44M vs $6.02M (Q3’24)
  • Other revenue: $1.27M vs $0.38M (Q3’24)
  • Lease revenue: $0.69M vs $0.82M (Q3’24)

Operating KPIs:

KPIQ1 2025Q2 2025Q3 2025
Company Deliveries (Units)163,754 220,578 209,340
Revenue/Unit – Company ($)$185.38 $178.82 $181.42
Subhauler Deliveries (Units)330,755 410,848 396,001
Revenue/Unit – Subhauler ($)$173.14 $166.50 $167.97
% Revenue – Company35% 37% 36%
% Revenue – Subhauler65% 63% 64%
Dedicated Fleet Revenue ($M)$4.3 $3.8 $4.2

Balance sheet and cash flow:

MetricQ1 2025Q2 2025Q3 2025
Cash ($M)$10.9 $13.6 $14.5
Total Debt ($M)$79.3 $90.2 $79.2
Net Debt ($M)$68.4 $76.6 ~$64.7
TTM Adjusted EBITDA ($M)$36.3 $35.2 $38.0
Net Leverage (x)1.9x 2.2x 1.7x
Q3 FCF (Adj. EBITDA – CapEx) ($M)——~$11.5

Versus Estimates (S&P Global):

MetricQ3 2025 ConsensusQ3 2025 Actual
Revenue ($M)110.3*114.3
Primary EPS0.073*0.076*

Values marked with * retrieved from S&P Global. GAAP EPS was $(0.11) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue growth (y/y)FY 20255–10% (Q2 call) 10–12% (Q3 call) Raised
Revenue levelQ4 2025Seasonal softness expected (implied) Modestly below Q3, similar adj. OR and cash flow Clarified/lowered vs Q3
Adjusted Operating RatioQ4 2025Maintain adjusted OR on lower revenue “Flattish” vs Q3 Maintained
Equipment CapExFY 2025≈$10M ≈$10M reiterated; maintenance CapEx to grow with fleet Maintained
Net leverageNear term2.2x at Q2; debt to decline in H2 1.7x at Q3; further balance sheet focus Improved
2026 OR targetFY 2026Mid/hi-80s midterm goal (prior context) ≥150 bps better than 2025 Formalized step-up

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3)Trend
Macro/SAAR, tariffsTariff-driven volatility; SAAR forecasts cut; import mix uncertainty Oct SAAR 15.3M; expect softer Q4 volumes but stable OR/cash flow Slightly softer near term
Pricing/spot mixWeak pricing; spot at 2.7% in Q2; expect stability in RPU Weak bid pricing; RPU expected stable; spot at/below ~3% Stabilizing RPU, low spot
Integration/techAll OpCos moving to common TMS/accounting (Q2 target) Fully transitioned; sister hauls 11% of revenue (vs 9%) Positive synergy momentum
Cost actionsTarget mid-90s OR on rising revenue; cost initiatives underway $1.9M restructuring; >$3M annual savings starting 2026 Near-term costs for future savings
Capacity/industryPost-competitor exit, capacity adequate near term; used/new equipment available Limited impact from non-domiciled CDL rule; more on small carriers Regulatory manageable for PAL
FCF/deleverageH2 debt reduction; FCF run-rate $30–35M after CapEx Q3 FCF ~$11.5M; net leverage 1.7x Stronger FCF and leverage

Management Commentary

  • CEO Rick O’Dell (release): “PAL delivered strong revenue during a slower seasonal period, and further improved profitability, demonstrating continued momentum from market share gains, operational improvements and strategic execution.”
  • On market/pricing: “The pricing environment is not as strong as we’d like… we continue to show discipline in our pursuit of new business and retention of incumbent business to ensure… sustainable profitability” .
  • On restructuring: ~$1.9M charge yields >$3M annual savings, largely beginning 2026 .
  • On synergy/efficiency: Sister hauls/load sharing grew to 11% of revenue, reducing empty miles and improving utilization .
  • On outlook: Q4 revenue modestly lower than Q3 with similar adjusted OR and cash flow . FY25 revenue now +10–12% y/y .

Q&A Highlights

  • Guidance math and mix: FY25 +10–12% growth off ~$388.8M base; Q4 “flattish OR”; dedicated fleet ~$4.2M/qtr; OEM contract ≈93% of transportation revenue .
  • Pricing and RFPs: Bid pricing weak; PAL will “let some volume go” if uneconomic; some new lanes wins but smaller; RPU expected largely stable .
  • Free cash flow and leverage: Q3 FCF ≈$11.5M; net leverage 1.7x; CapEx reiteration ~$10M 2025; maintenance CapEx could trend $15–20M longer term as fleet grows .
  • Regulatory: Non-domiciled CDL rule impact limited for PAL; more pressure on smaller carriers/subhaulers .
  • Operating performance dispersion: Some OpCos at 90 OR or better; others near/above 100 due to revenue softness; actions focused on revenue and recently addressed costs .

Estimates Context

  • Q3 results vs S&P Global consensus: Revenue $114.3M vs $110.3M estimate (beat), Primary EPS $0.076 vs $0.073 estimate (beat)*. GAAP EPS was $(0.11), reflecting restructuring and other items; S&P’s Primary EPS represents a normalized measure differing from GAAP . Values marked with * retrieved from S&P Global.
  • Implications: Raised FY revenue growth to 10–12% suggests Street FY revenue estimates likely move higher; stable adjusted OR despite softer Q4 revenue supports margin expectations; restructuring savings (> $3M annually starting 2026) and deleveraging may boost outer-year earnings power .

Key Takeaways for Investors

  • Beat and raise: Revenue and EPS (normalized) beat, and FY25 growth guide lifted to 10–12%—a constructive setup despite expected Q4 seasonal softness .
  • Profitability trajectory intact: Adj. OR improved 250 bps y/y; management targets ≥150 bps OR improvement in 2026 vs 2025, supported by integration and cost actions .
  • Strong FCF and deleveraging: Q3 FCF ≈$11.5M; net leverage down to 1.7x—capacity to fund tuck-ins (1–2/yr) and fleet, while reducing debt .
  • Mix/pricing risk contained: Pricing remains soft and spot minimal (~≤3%), but RPU expected to stabilize; PAL prioritizes profitable lanes and asset utilization .
  • Near-term trading catalysts: Visibility on Q4 seasonal trend, RFP awards, and any incremental market share wins; continued debt reduction and FCF prints could re-rate shares .
  • Watch regulatory and macro: SAAR trajectory and tariff/policy developments remain key external swing factors; regulatory CDL changes likely affect smaller competitors more than PAL .