Proficient Auto Logistics, Inc. Common Stock (PAL) 8 Nov 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Proficient Auto Logistics Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Brad Wright, Chief Financial Officer.

Good morning, everyone. I'm Brad Wright, Chief Financial Officer of Proficient Auto Logistics. X us our third expect financial Form next entity, covering Logistics, joining call. Under XXXX to Auto statements for ending Proficient Transport week, rules, periods and predecessor SEC XX-Q, the Proficient for you both on XXXX, accounting quarter Proficient's earnings file September the Thank XX, X-month entity, includes Auto and Inc. which successor we the

data contain for to required and Form pro provide forma not financial combined We are not the XX-Q the companies. will

However, comparative information our months unaudited for the summary the XX X combined September release the earnings provided combined companies. third financial quarter ended for and

Our the proficientautologistics.com. Investor earnings website under at found our can release Relations section be of

of our once website. can Our found XX-Q, under section filed, be also the Relations Investor

we review forward-looking is filings. certain in Further call, cautionary this by SEC differ guarantee information. expectations is from discussing the to be be those on expressed our based release cause future factors statements. not will you the found to information of encourage and information in that results a current forward-looking could our describing actual statement can earnings our I This performance. During

or such measures During operating portions release and also this may referring include income. as before reconciliations of to net be provide taxes EBITDA to that call, operating measures adjusted earnings, of measures income, adjusted to GAAP refer we Please earnings EBITDA. that the our profitability income those earnings

President Executive Chief me and Joining Operating are call our O'Dell, and on today's and Officer; Chairman Rick Amy Rice, Proficient's Chief Officer.

prepared the to the company third well open the company's for call results overview remarks, a an will as of provide will update we We quarter. After our questions. combined as

follow-up. question limit Q&A, the yourself please During plus one one to

if You may get into queue you have questions. the additional back

the I'd to who Rick like provide update. will introduce company O'Dell, Now

of the Thank into operations I'll trends expectations the for provide an and our insight that morning, year. good our of and this during start quarter you, remainder everyone. with overview out third some Brad,

month in by As unit call, were discussed in XXXX. last our earnings July volumes same up we the versus X.X%

down industry our comparable month plant of in for in with comparisons macro Slack followed acceleration shutdowns was quarter, of of and X.X% revenue between versus XXXX seasonal weakness by XX.X%. The volume revenue by demand of July continued full decline premium-priced However, a and by even but XX% quarter revenue August third to quarter third XXXX. an with the auto disparity impact volume unit quarter the the was weaker the This environment quarter towards in versus total services. close. of comparable outsized the duration the July resulted certain exhibited a an only in modest September in down

For of service third generated example, the in our compared the fleet million XXXX. during of $XX.X $X.X to third quarter revenue quarter dedicated million

well related initiatives. earnings of million capacity of in to spot available the There compared before year high continued manufacturers reduced buy less revenue from a revenue made the to quarter power opportunity ago, in from X% In Our have buy year-over-year. only both reduction quarter XX% to per third releases, inventories a much as full revenue opportunities ago. The available in comprised spot the as to and sales adjusted in X.X% quarter total spot August the auto recent rates fell lots, a during to significant the profitability, by hitting cost-cutting outlooks to $XX.X address pricing were reference recovering XX% major lower market limited year buys dealership by a demand. Seasonally due low year was spot unit million at annual versus September. significant declining $XX.X recent in

October. cautionary language OEMs While the relative third topped and as from the month feedback the not positive some seasonal pronounced our carriers and indicates quarter of takeaways past. There be in million several as the year-over-year from recent called to quarter volume seasonal from we early uptick, stronger $XX the X. unit recently saw XXXX quarter first the fourth deliveries are lift for SAAR typically versus that exhibits in might the increases in

However, the revenue mixed on have unit expectations persists the and pressure we of for the signals the remainder per on quarter.

XXXX. remain speak will detail moment. for in and our a more As outlook we quarter such, in this Brad in cautious this to into early

addition opportunities beyond the business in our thesis see in XX We investment confidence continue noted August that that in and contracts relative us new XXXX, on Logistics. calls time. position net to X positive and and gives market in since We've previous be our for for through call the of and XXXX Auto another Proficient new

quarter entire level The of increased solutions and with contracts provide total closely with with the our We're partnership of renewed, we that these X-year further. -- the meaningful X activity ongoing expanded pleased conversations included of most X customers our across a and ways third a together the term. footprint with more of also customers with X with about can that operation most renewal X-year enhance terms work

We late initiatives. progress contracts Cost of in in or with in continue of areas parts to place tires fuel, with been stages now identified the national the synergies our have and operating key negotiation.

continue of employee been in shift increase mergers, to to to addition initiative. The $XX savings lodging and being approximately units pursued programs, the deliveries and fleet since enabled $X annualized and XX initial the million further with target truck this from of million an trailer through to are opportunities the we company Additional owned benefit travel, has XX%.

ago. Technology the company primarily respect companies load to the quarter but note XX% is an recent between empty total, users. be the full the which customization during mix further most year of driven on were with in increase the the with compared this from and XX% LTL to same investments quarter deliveries the evolve, to improvements quarter. a partly the of to system we lanes. Although by merged truckload technology the allocation are fill cost transportation nature quarter, XX% continues complete hauling management that completion sharing unique the in accomplished auto recognize are Utilization The revenue to requires to focused

X% quarter. I'll companies. the quarter, our the company's was third of the umbrella financial During finally, through of the of performance the XX% cover as They to in anticipated profitability it load the and now to across they're Transport approximately generated completed sharing highlights. we acquisition exhibit the units during planned that network. And and integrating Group key the turn quarter Proficient continue third were opportunities Auto revenue and identified should back into of characteristics rapidly approximately to contribute they Brad revenue current and

the XX% corollary mix in the effective from volumes deliveries, Subhaul mentioned of down respect transportation the increasing XX% transportation volatility be subhaul with XXXX. down Units to reflecting unit of XXXX. Of revenue of fuel for revenue, The a under from earlier. Expanding a price again, of $XXX statistics. respective XX% $XX.X prior prior were, excluding Rick XX% X.X%. lower result in spot fuel of Operating to predominantly year-over-year lack $XXX XX.X%. surcharge, decrease per surcharge, in primarily effects All are on million in X.X% can in to of comparisons summary to of July therefore, unit shows was XX.X% 'XX latter per contract Revenue XXXX. were unit this XX.X%, month subhaulers excluding October per Comparing up impact for surcharge, as by with in while in represented by revenue first a year. Rick. a up deliveries, of versus year. the current last for I'll business, just same last year. X.X% revenue the unit from quarter unit QX, excluding quarter, per company delivered the quarter year-on-year, combined to start XXXX, company a counter revenue revenue the seen business were flex the Revenue the year was how delivered decrease Company resulting you, from from period X% deliveries compared companies. prior is fuel revenue, XXX,XXX per XX.X%. lower environment, delivered up off units in few was XX% by approximately period. unit, with net of October was October Thank revenue up quarter X.X% with an units buy deliveries the versus of and of past the QX, in Revenue the by declined of nonetheless premiums, were note,

increase revenue environment expected ongoing return quarter to revenue, showing per the Based unit cautious keeps that is So meaningful and be uptick mid-digits. while in on this operating fact that earlier year. by early activity and full quarterly addition, we the a we the quarter-to-date that on ATG of sequential improvement pressure quarter to evidence level benefit November-to-date there expecting of guidance. are experienced on fourth revenue are our but in volume, seeing our we this in ratio, At the seasonal from us should not not a having the modest adjusted low-XXs acceleration, of the low-to-single

approximately just debt $XX.X to outstanding disclosed a quarter quarter. net end balance Total $XX.X relates acquisition million, at of as net quarter the the quarter of during of for debt the of of it and increase result debt ATG company As equivalents were XXXX. purchase in September the our the shares second last of reflects cash XX million in end the cash X of previously. over on quarter balance use million. increase from of sheet, at million financing million The $XX.X the approximately an of growth shares had fleet common and XX, from ended Aggregate the ATG

we fully with enable uncertainty this We're the vehicles market and thesis. mentioned, that for interest new the stronger position remain us in demand consumer future. confident to reduction Rick? emerge another Rick us rate investment now our election As demonstrate performance will more capabilities week, and our behind and in hopeful

of enhanced share, all improve going unanticipated. continued we'll for in was initiatives market company backdrop very our spite to take to value efficiencies of the and these to foundational opportunities forward. environment to your now proposition Well, our quarter shareholders. Operator, third advance the gain capturing in weak our questions. provide and committed Proficient position We're conclusion,

Our first of from line Tyler question Raymond comes the with Instructions] [Operator Brown James.

can the Brad, mix QX was spot do what So maybe you start basis? just forma QX in off, on pro a have spot? we first and with

mean you terms terms percentage or revenue of of of In what? revenue? In

However, target. XX%, the X% and ] the keep it [ on you said actual

in was in just close first to quarter So that second quarter XX%. XX%. was the And over the

Okay.

is think So what alluded the to contract a understand. to move? you spot everybody ARPU help but I between a differential it, and Just move

Amy. it's Tyler,

So of major also a Length the revenue mix a there's on haul and component. is determinant component. a revenue pricing component there's mix

miles, XXX an of roughly just your opportunity is in spot be pricing XXX is pricing contract factor for length you XXX by addition that of which contract a length see to average haul in would the business would comes Xx So to to premium pricing. And a and you of miles say, the the affected of supply-demand haul, characteristics would longer see to relative premium market marketplace. that strength

in a expect not tighter you but be as well would higher. strong. to market, premium contract be of premium to that expect still So rates, marketplace, that weaker in you'd And ahead a

Okay, interesting.

more differential? So longer to it's there Meaning, it's is a because the of a serve length spot cost to haul? serve expensive

by moved a carrier. not being -- is to what be moved currently contract haul. necessarily that longer It isn't quickly traffic it length It's of needs reflects a

can as in much particular location, do able day. carrier on well contract a a focus they the moves a at to volume say, and be of the short-haul turn to X turns they trying service is event the as disruption to So may

of you So in out there may all pushed not get the to length be but that might traffic haul to some spot expect longer that. market. cases, That's needs

at than the we'll and you XXX I'll Okay. were And want spot of just OR that questions. because lot talk but driving disproportionate it But year ask the business? Pro and business big you this core I'm Fleet, to bluntly. maybe is a about Pro that such Basically, a if differential business, if But spot is pricing amount a core there's picture just there's profits I better last in look of big Fleet, sure exclude spot? you exclude in market,

leverage. volumes Yes, the makes operates is just it absolutely. at of the that Tyler, operating -- just much a itself it total overall, down healthy a -- lower margin. that lot It's is revenue of it the removes -- But business so because

Okay.

we talking Just point OR said we But any QX, word be So the what or helpful. mean, I you hopefully, is say to on super then the points into quickly basis low-single points? you I think thinking maybe QX? see on Just mid-digit, XXX X X% But And what used basis revenue? should are we'll would on can future. that just you it finer are was is X% improve. -- or

range. So on digits, the to is think X% low-to-mid good X% I a single

that In terms that basis expect improvement, don't revenue I points. certainly OR XXX should you level of think at of

again, I think mid depending mid-XXs, see that much XXX, other if it's little on, a the higher up that ends improvement, cost basis to -- XXX revenue might as expect, point than generated. on going we the XXX, factors probably that's that, in I and maybe so but be would as being still

stays if And mix roughly today? Okay. the it spot where is

definitely a be could that And variable. right. That's

comes line Stifel. with of next the Our from Chan question Bruce

Fleet here, because business and I account bit with the shortfall also almost So comments, want I from appreciate but at the model in the estimates. when the previous business, a focus I our the Pro drag around spot your entirety that mix the the maybe and the year-over-year of volume commentary to to seems little revenue really headwind of gap the look for release and on

it can a that So the some what to you're process business you do was up have What's that less in putting you the you I to the around there, customer assuming sort guardrails the of do you maybe status business talk of negotiation? think when in contracted got because then make status And nature volatile, bet quarter. the that us remember And that that the repaired? first big relationship? can and issue of of about upside this to

quarter business was the dedicated revenue in in X highest XXXX Amy. our the quarters. The of QX it's level Bruce, last

were market. comps there. last the low gap high particularly So And we are the particularly year, the driving does year. obviously, major this reflect That

so. to its dealerships premium utility pricing vehicles to there greatest willingness And dedicated on premium need to pay there's to plays a therefore, urgently. that So is do get this when service a new

at inflated, considerably. What contracted levels, we movement. minimum current As component level of can are has essentially demand that inventories tell you lessened running have at that I is the

expect largely started we've can you in So see go-forward you hit there decline terms bottom, of November the on in will, XXXX. we And a if to of what basis.

as increased begin there certainly cycling QX. could expect that. less declines I volatility we we in would there's upside forward. but you I wouldn't And the So see demand, go on there, here some If count

this be operating seems I cost the could be mean, component. I business -- mistaken, Okay. Because but highest to leverage

this So good you contract I Do need on feel guess, as like do more you is? feel adjustment like or is pricing you it?

in that share to I and better think visibility we your have view business. demand we would like volatility to stream of the the

be it's are I time it continues forward be large that volatility get in at your and think we us. like a point, worthwhile such But resourced and in to profitable that. to results against it on a we'd to to driver appropriately to able the look current better

right. all Okay,

Just as a follow-up, maybe a broader question.

Amy, for maybe company for months. all you, except X part, most been about for now the You've the in

there potential that of is the to negative the maybe fundamental that business? view for the positive or you've changes here, the you anything guts As of your earnings into either gotten the kind see

kind track. on the that We margins, thing savings that's taken on control terms Rick. we an and the XX% advance market go-forward there. From This are I -- in the being have validation investments place. probably reception customers purchasing and that network the had that just the of as was volatile initiatives weaker first is and a to would dramatically commented foundational and from initiatives forward But the confidence say, we've of to absolute we're implemented absolutely our impact or more going and made enhanced on the basis, than anticipated. assessment, of would

is of savings about that opportunity, occur be points. which operating And So targeted to of environment. degree confidence regardless X the that high will in

gain confident again, to that the to that So going we're do absolutely have we're -- and better putting framework together forward we've analytics business targeted. efficiencies

feel that than even I through We we too to gains add how the the market note plan on is grow on what probably share real our we that. we one just just road. Bruce, to competitive did might position -- about positive thing better and a

the on that's think upside. I So

more the more on forward. contract reliance business, which like business stable going that our And And we on to enhance would Yes. is stable.

Merkel Instructions] the Blair. Ryan line Our of [Operator next from with comes question William

I a had of XQ. on questions couple

the sounds up Curious any And was? why picked reason that continue that if October, So did little if it said like you bit. was volumes a November? in there sorry it, but

the I month SAAR of $XX think Obviously, back over it's million a in market rebound. October. was

off has of the I So mean, bottom. market bounced a yes,

your to question, not in early But that we've seen continue November.

seen cautious little is would do we on from year-end, were of but which remain some rates we where October as through a pullback mid-to-late the QX. acceleration expect run quarter. have why the timeframe, in We move sequential just We here daily acceleration we bit generally on expect towards we

it. Got

Yes, Okay. choppy. definitely it's

conclusions. So know have hard excess long how out here down? take whittle clear for a incentives it's going year-end? I be question hard on And inventory. to make might guys auto This won't to to the that to answer. use take Do to the into that it's try OEMs have you to dealers

And hope rate certainly We I so. that's with conducive. this think our week, cut

just to are And we we to see opportunity, that it and being expect dealer released, cars. more but obviously, XXXX year with should some move unlock as model some cars starting you are incentives would watching new are. that We

And let me one Okay. slip more in.

XX in feel it's opportunity here, mentioned that, seeing months? opportunity a you but share curious, think feel as an the that's about business. Maybe be you do next which you? contract like quite early for your are is struggling You about bit an to gains little I'm better guys the competitors a we

opportunities. seeing offering. looking who having have partnership think with We're more for are constructive really conversations what customers expanded I we we a nationwide is are

specifically the I comment we're do that a in competitors prop so on I per is that regard. the combined think seeing market responding entity has to. se, opportunities but growth wouldn't value And

question Stifel. Bruce follow-up next Our Chan with from a is

just a on question capital maybe Brad, allocation.

You've fleet. made some nice improvements the in

But it your given the You've have given like where just to might than right hitting now, opportunity M&A, invest of in comments here. the bottom maybe more got own stock seems you ATG. your about some especially trading is an company

thinking thoughts general? something in about So is how you're the on allocation any entered Whether that's just capital conversation? buybacks

used Yes. and I in Bruce, a those purpose, we that acquisition. have raised uses I in for -- I ATG IPO we still we opportunity. necessarily, into raised don't ways with of to I'm what we've have whittling not down funds a feel specific think think lot corporate look, long-term the the that including is the the saying for we holders lot back we the and market over cash. acquisitions than going just of our business but for more long-term efficient mind improve

So it. think is where our right discussed we've that just I certainly don't that's priority now.

Our is James. from with next follow-up Raymond Brown Tyler

struggling back come the anecdotes the bit a any any that appreciate you're heard guys that side? are I about things obviously, I capacity a actually breakeven, circa indication up And you the want in auto tightening hauling supply the it, or that seen here. carriers market? of a question there's difficulty, lot to small call out have if follow-up markets. auto on there there. But little also to assuming of about running, coming the Is I'm are out

a players companies well et as we're occur you gets stable they have think Any with but mean, go leverage, you negative not that would after you seeing weaker that that's struggling. think volatile significant be period, the would that anything and would of capitalized. cetera, I some aren't would that through that period a specific occurring, time

good of some we have modes this other not information the mode. trucking, Yes. but I on mean, such particular of

don't know I if you much. heard So

real this. X%, G&A you totally the running to perspective back mean, of come mean, realities? minimums, at, than all this XX% or I to it, you kind savings, from of And know I spot OR kind just call less at forward. broader what things kind realities But want of is a if and the about of to is if reality running remain that. you're time million do for other Pro a be could circa talked some when OR, Okay. But I a of restabilize the perspective I Fleet very a running moving overhead get $X I procurement those can

because ideas plan into Well, we at I'll of we capability. look operating complacent all front. we and Amy although for that Tyler. we're cut And be looking to as we're can't to mind opportunity some going of a not keeping looking I at to on start where has in too, probably every mean, that XXXX, that, can, we're cut course,

we across that There personnel looking efficient are So where be combining stop add? there some -- we're in you plans else country? as would don't it's know. Is kind can of terms out. at the integration. be And costs really through as We we will are everything, of I benefit anything I'll with come

punctuate Yes. at that I just say we looking thesis. the realize how to would are we long-term investment

certainly want measures. we foreclose so on short-term And that cost-cutting don't with to

do drive to resources healthier of towards would keeping echo and to So months that in work I with a some to some resuming doing market in integration, anticipate our we're we as place drive be Brad noise X processes. there, move what says line we post transaction also And are currently there's efficient cost operating point. lot to able at a

hard and just that besides the things, those will sorts efficiency are So also the there soft costs of procurement in that result. see contracts costs you in would

improve, analytics be business near-term, company the lanes that that can we're would done our the external And in removing will as allow much and expenses. And appropriate analytics the OEM better, regardless I that better in regardless of comment assets us on empty filling suboptimal And on subhaul that execute the we is some putting I of process. mean, to our putting just our environment. opportunities can backhaul environment. of with opportunities mile manage the mix these data together

back questions over the further And to no I'd closing remarks. showing hand Rick for I'm this call at time. to O'Dell like

in Proficient remain to we again Auto your ability opportunities to thank the in demonstrate excited you our Well, about returns All you. very Logistics. generate very interest good much shareholders. have future for very for the Thank We right.

today's Thank participation. call. conference concludes This you your for

disconnect. may You now