Good day, and thank you for standing by. Welcome to the Proficient Auto Logistics Fourth Quarter Financial Information Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brett Wright, Chief Financial Officer. Please go ahead.

Good afternoon, everyone. I'm Brett Wright, Chief Financial Officer of Proficient Auto Logistics. Thanks for joining us on Proficient's fourth quarter 2025 earnings call. Under SEC rules, our Form 10-K, covering the 3 and 12 will include financial savings. Please refer to the...

Star-1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star-1-1 again. Our first question comes from the line of Tyler Brown with Raina James. Your line is now open.

Hey, good afternoon.

Good afternoon, Tyler.

Hey, Brad, you threw out a few numbers there. On Q1, I just want to make sure I have it. You're expecting revenues to be down sequentially and the OR to improve sequentially or year over year?

We expect modest improvements sequentially, Tyler.

Okay, sequentially. Okay, perfect. Very helpful. Okay. And then, Rick, there's been a lot of talk out there about tightening capacity, obviously, across the whole space. But I'm just curious what you guys are seeing in the auto hauling market specifically. Do you think that auto hauling has any unique exposure to non-domiciled CDLs? Is it more or less of an issue than the broader complex. Just curious if you have any thoughts anecdotally.

Sure. You know, I think the non-domicile issue is becoming a current issue. The final rule, the inner final rule is now sitting with the OMB. And that is...

That's helpful. So from a company-owned perspective, it's not an issue. But are you seeing a decline in motor carrier numbers in your active sub-haul population? Because there's There's been a number of out-of-service placements, I'm just curious if you're seeing that at a deeper level.

We wouldn't see it as actively, because what happens in a down market, you know, the third-party carriers that we're using are those who choose to participate in our freight very regularly. The folks who choose to participate in our freight more episodically, you know, wouldn't have opportunities for dispatch in this volume environment. So to the extent that some of those bridge players may be not only for us, but in general in the Idaho and a need for capacity.

And maybe this is a question for all three of you, but do you think that rates will be up in 26xFUEL?

So you're asking in our...

Okay. And then my last one, just real quick. You know, Brad, obviously, it sounds like cash flow should still be good into 26. How should we think about prioritizing capital allocation between M&A, debt, pay down, and even repurchases? Is that even a possibility? Thank you.

Yeah, Tyler, I think.

Okay.

All right.

Thank you very much.

Thank you. Our next question comes from the line of Bruce Chan with Stiefel. Your line is now open.

Hey, good afternoon, everyone, and thanks for the question here. Maybe just to focus a little bit more on the revenue mix and the pricing, you know, you all mentioned a couple things that work there with, you know, the absence of spot opportunity and competitive market. You know, I guess first on the spot side, you know, Rick, you mentioned a few of the kind of points of optimism this year just around the age of the consumer fleet, you know, any kind of tax rebates, you know, refunds. How do those, you know, kind of factors play out through the spot versus, you know, contract opportunity? How much are you kind of embedding in your outlook for flat, you know, revenue per unit? And then, you know, maybe on the competitive front, just to address that, I guess I'm a little surprised that given the cost trajectory in the business, you know, carriers are still pricing so aggressively. So, you know, maybe any more detail on what you're seeing in that competitive environment there.

Yeah, so vehicles, you know, that get maybe pre-skill get low, you know, then you see.

And he would represent, you know, taking a return and they would like to.

Yeah, that's super helpful. And then maybe just, you know, for a final question here, you mentioned, you know, the insourcing and the cost control programs. I think we're, you know, a little more than a year and a half or so post-IPO. You know, any updates that you can share with us on progress there or any new opportunities that you may have identified?

Well, you know, some of the big ones that have now, you know, gotten a lot of traction or that will kick in in the first quarter, the consolidation of all will kick in or did kick in. Consolidation, I think it's the...

Transitional and integration cost.

Yeah, and again, the other thing that I failed to mention is, you know, we did some restructuring.

Our next question comes from the line of Alex Paris with Barrington Research. Alex, your line is open.

Hi, thank you. Thanks for taking my question, guys. So I have just a couple of questions. First, I think a point of clarification. The market share gains and the Brothers acquisition, we still have one more quarter of a benefit before it's cycled through. Did I get that right?

For Brothers, yes. On the market share gains, that was during the first quarter, so less of an impact there.

Okay, got you. And then on the organic front, and I'm going to finish with M&A, on the organic front, you had said last quarter that there were still a number of OEM contracts that were awaiting awards. And at that time, just like this time, you said that some contracts you walked away from due to pricing and so on. I was just wondering if we can get a little update. on the color of contract awards, either during the fourth quarter or prospectively?

We did see to the awards stage with respect to an opportunity.

Great, that's helpful. Then, too, anecdotally and without mentioning the OEM, I had heard a fairly large contract was awarded last year. You stepped away due to pricing. But I've heard that that same OEM is coming back and rebidding some lanes because of some of these smaller carriers that bid real low are having service issues. Have we been seeing those kind of things this year? I know you said earlier that it will usually end up in spot, but the absolute, you know, rebidding of certain lanes seems to have happened much sooner than they typically do.

So, you know, you bring up an interesting point, and it's one that we think about, right? So as we get into the late stages of a negotiation, you ask yourself in terms of our choices.

That's helpful. And then my final question, I'll finish on M&A, as I said I would. You know, given the weak market, given the weak SAR, given pricing pressures and service delivery challenges, would you – maybe you can give us this little update on the M&A pipeline. And do you expect to make acquisitions in 2026?

I do, too.

Great, which is in line with what you had said at the IPO time, and it's actually what you've delivered over the last 12 months or so. All right, well, thank you. I'll get back in the queue.

Thank you. As a reminder, to ask a question at this time, please press star 11 on your touchstone telephone. Our next question comes from the line of Ryan Merkel with William Blair. Your line is now open.

Hey, everyone. Thanks for the question. I want to start on 4Q. The OR missed, I think, your expectations, and I just want to be clear on why that happened. It sounds like it was the core revenue was a little bit weaker than you thought. What was the core revenue in 4Q, and was the weakness just the November and December seasonality didn't come back as you thought?

You know, when we guided at the last quarter, we kind of gave a range of where we thought 4Q would end up. In the end, it ended up a few million shy of what we had anticipated. that reflect in November and December that didn't come to fruition the way seasonally it typically does. So, yes, we saw some weaker volume and general revenue there that would have been contributory.

How big was that, Brad?

The full retention that we have on our liability is a half million dollars.

And then the 26 guide, let's start with revenue, just wanna make sure I heard it right. So I think you said you don't expect any help from the market. So talk about what do you expect from the market. I think you'll have one point of M&A that will carry over, you said, flat pricing. So you're thinking a couple points of volume. Am I understanding that right?

You're kind of breaking up. The point is.

Okay. So it sounds like mid-single-digit revenue in 26 is in the ballpark.

Well, just from the organic market, I would say, you know.

And then on the OR improvement, 150 basis points, is that just all cost saves? And can you tell us how much in dollars you have for cost saves in 26?

Yeah. So I think most of that would be, most of it is cost saving.

Revenue based from the company driver segment. We get that. And we think that.

This concludes the question and answer session. I would now like to hand a call back over to Rick O'Dell for closing remarks.

Well, obviously the market environment was challenging in 2025. Like I said in my opening comments, it was actually challenging. You know, I think what we did demonstrate, you know, our collective network is revenue at our network and focus on our cost initiatives. We've got a high level of confidence in our ability to improve our... In the meantime, cash...

This concludes today's conference. Thank you for your participation. you may now disconnect.