Earnings Call Transcript - PAL Q1 FY2026

Operator

Hello and thank you so much for standing by. My name is AP and I will be your conference operator today. At this time, I would like to welcome everyone to the Proficient Auto Logistics First Quarter Financial Information. All lines have been placed on mute to prevent any background noise. After the speaker's remark, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again, and we can only do one question and one follow-up. Thank you. And I would like now to turn the call over to Brad Wright, Chief Financial Officer. Please go ahead.

Bradley Wright, CFO

First quarter of 2020, it can be found under the Investor Relations section of our website. Our 10Q, when filed, will also be found under the... During this call, we will 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 that 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 first quarter of 2026. After our prepared remarks, we will open the call to questions. During the Q&A, please limit yourself to one question and one follow-up. You can get back into the queue if you have additional questions. Now, I'll turn the call over to Rick O'Dell, who will provide the company update.

Richard O'Dell, CEO

Thank you, Brad, and good afternoon, everyone. I'll start with an overview of our operations during the first quarter and some trends that provide insight into our expectations for future quarters. As we announced in early March, the first two months of the quarter were affected by extended automotive plant shutdowns, weaker than expected industry saw.

Bradley Wright, CFO

These factors constricted EBITDAB for the first quarter. We mentioned in our earnings regarding the second quarter of 2026, we are now forecasting total operating revenue between $105 million and $110 million, which reflects a meaningful sequential increase. However, it reflects a decline versus the second quarter. The second quarter of last year included our highest revenue month to date, reflecting last April's elevated sales. Adjusted operating ratio is expected to be similar to last year's second quarter, despite a low revenue base. Adjusted EBITDA margin for Q2 of this year should be similar to last year's reported results between 8 and 10%. Given the year-over-year softness in market conditions and available capacity within our existing fleet, we expect equipment CapEx spending for 2026 to be less than $10 million compared to $10.2 million for the full year 2020. This evaluation will be ongoing as the year progresses and the revenue opportunity becomes better defined and compared against our available capacity total common shares outstanding on March 31st were twenty seven point eight million down less than one percent from year-end 2025 as previously disclosed we repurchased eighty two thousand eight hundred seventy seven shares at an average price of six dollars twenty five cents during the first quarter under a buyback program authorized by our board of directors on March 2nd 2026 operator

Operator

we're now ready to take questions at this time I would like to remind everyone in order to ask a question press star 1 so press star then the number one on

Operator

your telephone keypad we will pause for just a moment to compile the Q&A roster

Operator

your first question comes from the line of Bruce Chan with Stifo

J. Bruce Chan, Analyst — Stifo

please go ahead. Thank you, operator, and good afternoon, Rick and Brad. I want to focus in first on some of what you mentioned in the opening remarks around the supply pressure. Certainly welcome news, but wanted to see how, you know, you're thinking about that in terms of, you know, spot, what you're seeing in terms of, you know, spot pricing pressure in the market right now, you know, and then, you know, maybe also how that's affecting the population and auto hauling? I mean, is this more, you know, driver attrition? Is this regulatory impact? Any ideas on, you know, how much direct regulatory impact there might be? So, I would love to hear

Amy Rice, COO

any color on any of that. But still, in the terms of what you currently are, again, pushed a lot of those carriers out of the market. So, I think some of it is attrition-based in the third-party carrier space. We are seeing attrition in the company driver space. Again, the volume levels of January and February made it very challenging for drivers to make a good living. And as pricing has recovered very quickly in the general trucking market, it has compressed the premium of race in auto haul to race in general trucking in a way that causes some drivers to trade down or trade into other segments. Lastly, from a regular quarter perspective, just a lot of comments, the non-dominal cycle just went in ongoing in the driver's space broadly and in the auto

J. Bruce Chan, Analyst — Stifo

market as well. Great. Yeah, super helpful, Amy. You know, just to follow up quickly, you know, as you think about all of that, you know, maybe where is your spot mix today? And then as you move into second quarter and second half, you know, how are you thinking about, you know, those spot opportunities and spot pricing trends for the rest of the year.

Amy Rice, COO

If we get in the spot market, against it, we will certainly be opportunistic and pay fair, but not to the...

Operator

Okay. Thank you.

Operator

Thank you.

Operator

Your next question comes from the line of Ryan Merkel with William Blair. Please go ahead.

Ryan Merkel, Analyst — William Blair

Hey, everyone. Thanks for the question. First topic is the fuel impact. Can you talk about how much fuel hurt your profit in 1Q,

Bradley Wright, CFO

and then how should we think about 2Q? The index will catch up to in that quarter.

Ryan Merkel, Analyst — William Blair

Got it. Okay. Good to hear. And then I just wanted to ask about volume trends. So in the first quarter, volume is down about 4%. How did it look in March and April in terms of volumes? I'm just trying to understand if underlying demand is stabilizing at this point.

Amy Rice, COO

this year, got a half-quarter benefit in the first quarter, but the benefit of that on a year-over-year basis was gone for March and for April. The Brothers acquisition closed on April 1st last year, so we had the full year-over-year benefit of Brothers in the quarter in March and not in the comparable prior quarter or prior period. Again, in April, we've cycled that. So what we now see is truly kind of what the underlying year-over-year market looks like, and we are consistently seeing the underlying market is down, which tracks with SAR. Again, we are down less than the SAR level, which seems to indicate that from a relative share perspective, we are holding and or gaining, but in a weak market.

Operator

That's helpful. Thanks. Pass it on.

Operator

Thank you. Your next question comes from the line of David Hicks with Raymond James. Please go ahead.

David Hicks, Analyst — Raymond James

Great. Thanks, guys. Thanks for taking the questions. Maybe just – could you just talk about kind of the sharp kind of divergence in your company deliveries in the quarter versus last quarter in a kind of plattish unit environment? Is that something that we should kind of extrapolate out in the future or more just kind of a 1Q issue?

Bradley Wright, CFO

To subhaul?

David Hicks, Analyst — Raymond James

Yes, yes, especially just because you pretty much printed flattish volumes overall, but the company really shot up relative to subhaul. I'm just wondering if you can continue to expect that going forward.

Bradley Wright, CFO

There's a lot going on there, actually. volume natural company driver areas as opposed to subhaul or not and so there are several factors but certainly overall volume as it declines is going to fail gotcha gotcha it makes sense and

David Hicks, Analyst — Raymond James

then now that we just have all the operate all seven operating companies on a single tms unified accounting um is there specific kind of kpis that you guys are targeting to improve first kind of Like, what's the order that you're targeting and kind of what financial returns should we see from those initiatives down the road?

Bradley Wright, CFO

Well, I think first and foremost, you know, we're, again, to the same point, utilize our company driver segment to its fullest extent. And so we track very closely the revenue, the average revenue generated by a given driver. And we continue to push that number higher. Likewise, we're looking at a number of cost factors, capturing the expense, the procurement efforts that we've made across cost, and then also, you know, bringing down truck expenses as we've, you know, since the merger, we have continued to work through the fleet and to upgrade where need be, and those are also areas. key among those KPI.

Amy Rice, COO

Being able to capture as much volume as is available in times of larger inventories is our best path to larger revenue. We can only move what is available to us and what we tend to see in the automotive space is we saw some very low lows in January and February and then some pretty big peaking in March and April. And so to the extent that we can be very productive, very flexible with drivers across geographies to meet varying demand levels and varying locations, it helps us put up the best top line that we can in a market that is down year over year.

Operator

All right. Perfect. Thanks, Amy and Brad. I'll pass it on.

Operator

Thank you. Again, if you would like to ask a question, that will conclude our question and answer session. And I will now turn the call back to Rick O'Dell for closing remarks. Please go ahead. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.