Group 1 - The analyst team has a proven track record of outperforming across all market conditions, achieving an annualized return of almost 40% over the past decade with a long-only model portfolio return of over 23x [1] - The focus is on providing income-oriented investment options for those preferring lower-risk firms with steady dividend payouts [1] - The company specializes in research related to the energy, shipping, and offshore markets, indicating a strong expertise in these sectors [1] Group 2 - Proficient Auto Logistics, Inc. (PAL) has been previously covered, and this article serves as an update to earlier analyses [2] - The analyst has expanded coverage to include the offshore drilling and supply industry, as well as the shipping industry, which encompasses tankers, containers, and dry bulk [3] - The analyst has a background in auditing with PricewaterhouseCoopers and has experience navigating significant market events, such as the dotcom bubble and the subprime crisis [3]

Company Overview - Proficient Auto Logistics operates one of the largest auto transportation fleets in North America with over 800 owned assets and 804 dedicated employees as of September 30, 2025[116]. - The company has strategically located 57 facilities across the United States, focusing on transporting finished vehicles from production facilities to dealerships[116]. Revenue Generation - Revenue is generated through OEM contract and spot arrangements, secondary market auto moves, and long-term contract services[120]. - The Company Drivers segment generates revenue through transporting autos under fixed contracts, focusing on high-service and high-priority freight[134]. Acquisitions and Growth - The company completed multiple acquisitions, including Delta, Deluxe, Sierra, Proficient Transport, and Tribeca, enhancing its geographic presence and service offerings[117]. Financial Performance - Total operating revenue for the three months ended September 30, 2025, was $114,294,804, compared to $91,505,501 for the same period in 2024, representing a 25% increase[147]. - The Company reported a net loss of $3,019,686 for the three months ended September 30, 2025, compared to a net loss of $1,365,476 for the same period in 2024[147]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $31,003,907, with an adjusted EBITDA margin of 9.5%[145]. - The operating ratio for the three months ended September 30, 2025, was 100.1%, compared to 102.4% for the same period in 2024, indicating improved operational efficiency[146]. - Total operating revenue for the nine months ended September 30, 2025, was $325.0 million, compared to $147.4 million for the same period last year[171]. Segment Performance - Company Drivers segment revenue for the three months ended September 30, 2025, was $41,717,289, up from $33,329,336 in 2024, reflecting a 25% increase[148]. - Subhaulers segment revenue for the three months ended September 30, 2025, was $66,492,924, compared to $53,384,131 in 2024, marking a 24.5% increase[148]. - Operating revenues in the Company Driver segment increased by $8.4 million, or 25.2%, to $41.7 million for the three months ended September 30, 2025, compared to $33.3 million for the same period last year[150]. - In the Subhaulers segment, operating revenues increased by $14.4 million, or 24.8%, to $42.6 million for the three months ended September 30, 2025, compared to $58.2 million for the same period last year[151]. - Operating revenues in the Subhaulers segment increased by $113.5 million, or 118.5%, to $209.2 million for the nine months ended September 30, 2025, compared to $95.7 million for the same period last year[173]. Expenses and Costs - Operating expenses are significantly influenced by fuel costs, driver-related expenses, and maintenance of the fleet[123]. - Total operating expenses for the three months ended September 30, 2025, were $114,395,552, compared to $93,691,006 in 2024, representing a 22% increase[147]. - Salaries, wages, and benefits increased by $5.0 million, or 28.6%, to $22.3 million for the three months ended September 30, 2025, compared to $17.4 million for the same period last year[153]. - Purchased transportation expenses increased by $11.9 million, or 26.3%, to $56.9 million for the three months ended September 30, 2025, compared to $45.0 million for the same period last year[157]. - Fuel and fuel taxes increased by $9.9 million, or 104.8%, to $19.3 million for the nine months ended September 30, 2025, compared to $9.4 million for the same period last year[179]. - Purchased transportation expenses increased by $89.9 million, or 123.0%, to $163.0 million for the nine months ended September 30, 2025, compared to $73.1 million for the same period last year[180]. EBITDA and Adjusted EBITDA - EBITDA decreased by $308,000, or 3.6%, to $8.2 million for the three months ended September 30, 2025, compared to $8.5 million for the same period last year[169]. - Adjusted EBITDA increased by $2.4 million, or 25%, to $12.0 million for the three months ended September 30, 2025, compared to $9.6 million for the same period last year[170]. - EBITDA increased by $14.6 million, or 142.4%, to $24.8 million for the nine months ended September 30, 2025, compared to $10.2 million for the same period last year[191]. - Adjusted EBITDA increased by $13.0 million, or 72.3%, to $31.0 million for the nine months ended September 30, 2025, compared to $18.0 million for the same period last year[192]. Cash Flow - Cash flows from operating activities were $25.7 million, representing a $17.9 million increase compared to the same period in 2024[202]. - Cash flows used in investing activities decreased significantly by $190.6 million to $11.2 million for the nine months ended September 30, 2025, compared to $201.8 million for the same period in 2024[203]. Interest and Expenses - Interest expense increased by $275,000, or 19.6%, to $1.7 million for the three months ended September 30, 2025, compared to $1.4 million for the same period last year[166]. - Interest expense, net increased by $3.1 million, or 148.7%, to $5.1 million for the nine months ended September 30, 2025, compared to $2.0 million for the same period last year[187]. Risks and Accounting - The company is subject to risks related to economic conditions, market dynamics, and geopolitical developments that may affect its operations[114]. - Proficient Auto Logistics has identified itself as the accounting acquirer in its business combinations, impacting financial reporting and comparability[118]. - The company may take advantage of exemptions for up to five years as an emerging growth company[206]. - The company will cease to be an emerging growth company if total annual gross revenues exceed $1.235 billion[206]. - The company has elected to delay the adoption of certain accounting standards while classified as an emerging growth company[206]. - Financial statements may not be comparable to those of other public companies due to the election to avail of exemptions[206]. - No quantitative or qualitative disclosures about market risk were provided[207].

Core Insights - Proficient Auto Logistics has faced challenges in achieving profitability since its public listing in spring 2024, but it has received positive feedback for its strong cash flow generation [1][2]. Financial Performance - The company reported free cash flow of $11.5 million in the third quarter, which is significantly higher than its peers in the trucking sector [3]. - With a market capitalization of approximately $182 million, the projected full-year free cash flow of $30 million to $40 million would yield a cash flow return of over 20% [3]. - The closest competitor in the trucking sector has a cash flow yield of only 5% to 6% [4]. Stock Performance - Following the earnings report, Proficient's stock price increased by nearly 30%, closing at $8.55, marking a rise of $1.97 [4]. - Over the past month, the stock has risen by more than 46.2% and by 14.8% over the last three months, although it remains down about 8% over the past year and 25.3% from its 52-week high [5]. Management Insights - The CFO noted that investors recognize the company's strong cash flow returns, and there is optimism that future improvements in depreciation and amortization will enhance earnings visibility [6]. - Despite positive operating income at times, the company has reported a net loss of $8.5 million for the past 12 months [6].

PROFICIENT AUTO LOGISTICS REPORTS THIRD QUARTER 2025 FINANCIAL RESULTS JACKSONVILLE, FLORIDA – November 11, 2025 — Proficient Auto Logistics, Inc. (NASDAQ: PAL) (the "Company" or "Proficient") today reported its financial results for the three months ended September 30, 2025. Third Quarter Summary Total Operating Revenue of $114.3 million, increased 24.9% from Q3 2024 Total Operating Loss of ($0.1) million, versus ($2.2) million in Q3 2024 Adjusted Operating Income of $4.2 million, versus $1.1 million in Q3 ...

Financial Data and Key Metrics Changes - Operating revenue for Q3 2025 was $114.3 million, a 24.9% increase compared to Q3 2024 [11] - Adjusted operating ratio improved to 96.3%, up 250 basis points from 98.8% in Q3 2024 [11] - Units delivered totaled 605,341, representing a 21% increase year-over-year [11] - Free cash flow from operations was approximately $11.5 million during the quarter, contributing to a reduction in debt [13] Business Line Data and Key Metrics Changes - OEM contract business generated approximately 93% of total transportation revenue, consistent with previous quarters [12] - Dedicated fleet business revenue was $4.2 million, aligning with the expected run rate for 2025 [12] - Sister hauls or load sharing increased to 11% of revenue from 9% in the prior quarter, enhancing asset utilization [9] Market Data and Key Metrics Changes - July auto sales and deliveries were stronger than expected, with SAR finishing at 16.4 million units [5] - October SAR slowed to 15.3 million, with forecasts for the remainder of the year in the high 15 to low 16 million range [7] - The pricing environment remains weak, with excess supply impacting revenue per unit [33] Company Strategy and Development Direction - The company aims for sustainable profitability and reinvestment while pursuing new business opportunities [6] - Focus on controlling costs and advancing targeted cost savings initiatives to produce sustainable benefits [8] - Plans to continue strategic objectives for margin expansion, market share gains, and acquisitions [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth and margin expansion despite market complexities [6] - Anticipated a modestly lower revenue outcome for Q4 compared to Q3, but similar adjusted operating ratio and cash flow [8] - The company is well-positioned to operate profitably with strong cash flow and respond quickly to market improvements [10] Other Important Information - A restructuring charge of $1.9 million was recognized, expected to yield over $3 million in annual savings starting in 2026 [8] - Cash and equivalents increased to $14.5 million, while aggregate debt decreased to approximately $79.2 million [12] Q&A Session Summary Question: Clarification on revenue growth for the full year - Revenue growth for the full year is expected to be 10-12% based on a pro forma base of $388.8 million [19] Question: Update on systems transition - The company has fully transitioned to a unified operating platform across all operating companies [21] Question: Update on OEM contracts - Several OEM contracts are still awaiting awards, with no material results impacting overall revenues yet [26] Question: Expectations for CapEx and cash flow - CapEx is expected to increase in 2026, with a target of $15 million to $20 million as the fleet expands [50] Question: Impact of regulatory changes on capacity - Regulatory changes are not expected to materially impact Proficient, but may affect smaller carriers [53] Question: EV demand impact on quarterly results - The company does not track EV versus internal combustion engine volumes, but EVs may affect load factors [56]

Core Insights - Proficient Auto Logistics, Inc. reported strong revenue growth and improved profitability in Q3 2025, despite a slower seasonal period, indicating effective market share gains and operational improvements [2][6][9] Financial Performance - Total Operating Revenue for Q3 2025 was $114.3 million, a 24.9% increase from $91.5 million in Q3 2024 [5][6] - Total Operating Loss decreased to $0.1 million from a loss of $2.2 million in Q3 2024 [5][6] - Adjusted Operating Income rose to $4.2 million compared to $1.1 million in Q3 2024 [5][6] - Adjusted Operating Ratio improved to 96.3% from 98.8% year-over-year [5][6] - Total Units delivered increased by 21% year-over-year, with company deliveries up 24.8% and subhauler deliveries up 19.4% [6][8] Revenue and Profitability Metrics - Revenue per unit for company deliveries decreased by 1.5% to $181.42, while revenue per unit for subhaulers increased by 4.3% to $167.97 [8] - The dedicated fleet revenue was $4.2 million in Q3 2025, down from $4.7 million in the same quarter last year [9] Restructuring and Operational Efficiency - The third quarter included $1.9 million in restructuring charges aimed at improving operational efficiency, expected to yield annual savings exceeding $3 million starting in 2026 [10] - The adjusted operating ratio, excluding restructuring charges, improved by 250 basis points year-over-year [10] Balance Sheet Overview - As of September 30, 2025, the company had $14.5 million in cash and $79.2 million in debt, reflecting an $11 million reduction in total debt during the quarter [12] - The net leverage ratio was approximately 1.7x compared to adjusted EBITDA of $38 million for the trailing twelve months [12] Company Background - Proficient Auto Logistics is a leading specialized freight company focused on auto transportation and logistics services, operating one of the largest auto transportation fleets in North America [14]

Core Points - Proficient Auto Logistics, Inc. will host an investor conference call on November 11, 2025, to discuss its financial results for the three months ended September 30, 2025 [1] - A press release detailing the financial results will be issued at approximately 4:00 p.m. EST on the same day [1] - Investors can join the conference call by registering through a provided link [1] Company Overview - Proficient Auto Logistics is a leading specialized freight company focused on auto transportation and logistics services [2] - The company operates one of the largest auto transportation fleets in North America, formed by the combination of seven industry-leading operating companies [2] - Services primarily include transporting finished vehicles from production facilities, marine ports, or rail yards to dealerships across the country [2]

Group 1 - Proficient Auto Logistics (PAL) is experiencing significant attention from investors due to high implied volatility in its options market, particularly the Oct 17, 2025 $2.50 Call option [1] - Implied volatility indicates market expectations for future stock movement, suggesting potential upcoming events that could lead to substantial price changes [2] - Currently, Proficient Auto Logistics holds a Zacks Rank of 4 (Sell) in the Transportation - Services industry, which is in the bottom 20% of the Zacks Industry Rank [3] Group 2 - Over the past 60 days, one analyst has raised their earnings estimate for the current quarter, while three have lowered theirs, resulting in a decrease in the Zacks Consensus Estimate from 12 cents per share to 8 cents [3] - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay [4]

Group 1 - The focus has shifted towards offshore drilling, supply industry, and shipping, including tankers, containers, and dry bulk [1] - The fuel cell industry is being monitored as it is still in its early stages of development [1] Group 2 - The individual has extensive experience in auditing and trading, having navigated significant market events such as the dotcom bubble and the subprime crisis [2] - The research provided aims to maintain high quality despite language barriers [2]

[Filing Information](index=1&type=section&id=Filing%20Information) This section details the company's quarterly report filing, registered securities, filer status, and outstanding common stock shares - The document is a Quarterly Report on Form 10-Q for Proficient Auto Logistics, Inc. for the period ended June 30, 2025[2](index=2&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :--- | :--- | :--- | | Common stock, par value $0.01 per share | PAL | The Nasdaq Stock Market LLC | Filer Status | | | | :--- | :--- | | Large accelerated filer ☐ | Accelerated filer ☐ | | Non-accelerated filer ☒ | Smaller reporting company ☐ | | | Emerging growth company ☒ | - The registrant had **27,788,985 shares of common stock** outstanding at August 12, 2025[5](index=5&type=chunk) [Explanatory Note](index=4&type=section&id=EXPLANATORY%20NOTE) This note clarifies the company's IPO, business acquisitions, and the accounting treatment distinguishing Successor and Predecessor periods for financial reporting - Proficient Auto Logistics, Inc. completed its initial public offering (IPO) and acquired five operating businesses (Founding Companies) on **May 13, 2024**[10](index=10&type=chunk) - Proficient is designated as the accounting acquirer ('Successor'), and Proficient Transport is the accounting predecessor ('Predecessor'), impacting financial statement comparability[11](index=11&type=chunk) - The report includes unaudited condensed consolidated financial statements for both Successor and Predecessor periods, along with summary unaudited combined financial information for the three and six months ended June 30, 2024[11](index=11&type=chunk) [PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This item provides the unaudited condensed consolidated financial statements for Proficient Auto Logistics, Inc. and its subsidiaries, covering balance sheets, statements of operations, stockholders' equity, and cash flows, along with comprehensive notes explaining the company's accounting policies, business combinations, and other financial details [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (Successor) | | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **ASSETS** | | | | Total current assets | 71,946,946 | 67,687,442 | | Property and equipment, net | 127,655,334 | 122,636,636 | | Goodwill | 174,090,117 | 169,056,675 | | Intangible assets, net | 129,840,169 | 132,490,640 | | Total assets | 520,458,060 | 508,086,944 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | 62,170,001 | 52,623,931 | | Total liabilities | 180,929,753 | 170,107,421 | | Total stockholders' equity | 339,528,307 | 337,979,523 | | Total liabilities and stockholders' equity | 520,458,060 | 508,086,944 | - Total assets increased by **$12.37 million** from December 31, 2024, to June 30, 2025, reaching **$520.46 million**[15](index=15&type=chunk)[16](index=16&type=chunk) - Goodwill increased by **$5.03 million** to **$174.09 million**, while intangible assets decreased by **$2.65 million** to **$129.84 million**[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net loss for the reported periods, including per-share data Condensed Consolidated Statements of Operations (Unaudited) | | Six months ended June 30, 2025 (Successor) ($) | Six months ended June 30, 2024 (Successor) ($) | Three months ended June 30, 2025 (Successor) ($) | Three months ended June 30, 2024 (Successor) ($) | Period January 1 to May 12, 2024 (Predecessor) ($) | Period April 1 to May 12, 2024 (Predecessor) ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total operating revenue | 210,752,607 | 55,908,597 | 115,546,586 | 55,908,597 | 41,217,688 | 13,391,096 | | Total Operating Expenses | 212,989,755 | 58,826,808 | 115,421,228 | 58,516,930 | 62,237,653 | 36,436,961 | | Operating (loss) income | (2,237,148) | (2,918,211) | 125,358 | (2,608,333) | (21,019,965) | (23,045,865) | | Loss before income taxes | (5,776,460) | (3,390,937) | (1,882,154) | (3,081,059) | (21,735,318) | (23,308,828) | | Net loss | (4,748,518) | (3,861,773) | (1,556,833) | (3,551,895) | (15,384,676) | (16,569,308) | | Basic & Diluted Loss Per Share | (0.17) | (0.43) | (0.06) | (0.24) | N/A | N/A | | Weighted Average Shares Basic & Diluted | 27,341,813 | 8,965,933 | 27,611,515 | 14,992,736 | N/A | N/A | - For the six months ended June 30, 2025, total operating revenue was **$210.75 million**, resulting in a net loss of **$4.75 million**, or **$0.17 per share**[18](index=18&type=chunk) - For the three months ended June 30, 2025, the company reported an operating income of **$125,358**, a significant improvement from the operating loss in prior periods[18](index=18&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This section details changes in the company's equity, including stock-based compensation, business combinations, and net losses Condensed Consolidated Statements of Stockholders' Equity (Deficit) - Successor | | Shares | Amount ($) | Additional Paid in Capital ($) | Accumulated Deficit ($) | Total Equity ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance, December 31, 2024 | 27,069,114 | 270,691 | 346,756,929 | (9,048,097) | 337,979,523 | | Stock-based compensation | — | — | 1,183,009 | — | 1,183,009 | | Net loss | — | — | — | (3,191,685) | (3,191,685) | | Balance, March 31, 2025 | 27,069,114 | 270,691 | 347,939,938 | (12,239,782) | 335,970,847 | | Business Combination | 395,322 | 3,953 | 3,810,911 | — | 3,814,864 | | Stock-based compensation | 274,549 | 2,745 | 1,218,752 | — | 1,221,497 | | Other | — | — | 77,932 | — | 77,932 | | Net loss | — | — | — | (1,556,833) | (1,556,833) | | Balance, June 30, 2025 | 27,738,985 | 277,389 | 353,047,533 | (13,796,615) | 339,528,307 | - Total stockholders' equity increased from **$337.98 million** at December 31, 2024, to **$339.53 million** at June 30, 2025[20](index=20&type=chunk) - The increase in equity was primarily due to business combinations (**$3.81 million**) and stock-based compensation (**$2.40 million**), partially offset by net losses[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) | | Six months ended June 30, 2025 (Successor) ($) | Six months ended June 30, 2024 (Successor) ($) | Period January 1, 2024 to May 12, 2024 (Predecessor) ($) | | :--- | :--- | :--- | :--- | | Net cash flows provided by operating activities | 13,218,385 | 4,364,579 | 7,996,542 | | Net cash flows used in investing activities | (11,107,150) | (177,747,538) | (51,093) | | Net cash flows (used) in provided by financing activities | (3,863,697) | 209,217,539 | (5,597,522) | | Net change in cash | (1,752,462) | 35,834,580 | 2,347,927 | | Cash and cash equivalents, end of period | 13,646,252 | 36,292,813 | 2,352,200 | - Net cash flows from operating activities for the six months ended June 30, 2025, were **$13.22 million**, an increase from the Predecessor period[24](index=24&type=chunk) - Cash flows used in investing activities for the six months ended June 30, 2025, were **$11.11 million**, primarily due to equipment purchases and acquisitions[24](index=24&type=chunk) - Cash and cash equivalents at the end of June 30, 2025, stood at **$13.65 million**[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1 — Nature of operations](index=10&type=section&id=Note%201%20%E2%80%94%20Nature%20of%20operations) This note describes Proficient Auto Logistics, Inc. as a specialized freight company providing auto transportation and logistics services - Proficient Auto Logistics, Inc. is an industry-leading specialized freight company focused on auto transportation and logistics services[27](index=27&type=chunk) - The company primarily transports finished vehicles from automotive production facilities, marine ports, or regional rail yards to auto dealerships[27](index=27&type=chunk) - Proficient operates an asset-based 'Company Drivers' service and provides third-party logistics through an asset-light 'Subhaulers' model[27](index=27&type=chunk) [Note 2 — Summary of significant accounting policies](index=10&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20significant%20accounting%20policies) This note outlines the key accounting principles and estimates used in preparing the financial statements, including business combinations and impairment reviews - The condensed consolidated financial statements are prepared in conformity with U.S. GAAP[28](index=28&type=chunk) - Business combinations are accounted for using the acquisition method (ASC 805), with Proficient identified as the 'Successor' accounting acquirer[31](index=31&type=chunk)[35](index=35&type=chunk) - Goodwill and intangible assets are reviewed for impairment annually or upon the occurrence of events indicating potential impairment[36](index=36&type=chunk)[37](index=37&type=chunk) - The company will adopt ASU 2023-09 (Income Tax Disclosures) in 2025 and is assessing the impact of SEC climate-related disclosures and ASU 2024-03 (Disaggregation of Income Statement Expenses)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) [Note 3 — Business combinations](index=13&type=section&id=Note%203%20%E2%80%94%20Business%20combinations) This note details the company's acquisitions, including the Founding Companies and subsequent purchases, and their impact on goodwill and intangible assets - Proficient acquired five Founding Companies (Delta, Deluxe, Sierra, Proficient Transport, and Tribeca) on **May 13, 2024**, concurrent with its IPO[49](index=49&type=chunk) - Subsequent acquisitions include Auto Transport Group (August 2024), Utah Truck & Trailer Repair (November 2024), Brothers Auto Transport (April 2025), and PVT Truck & Trailer Repair (May 2025), expanding geographic presence and services[30](index=30&type=chunk) Total Acquisition Date Amounts Recognized as of June 30, 2025 (Founding Companies) | | Delta ($) | Deluxe ($) | Proficient Transport ($) | Sierra ($) | Tribeca ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total purchase price | 64,469,739 | 59,600,341 | 108,761,111 | 31,391,436 | 19,685,554 | 283,908,181 | | Fair value of net assets acquired | 36,911,739 | 25,470,641 | 50,428,659 | 20,321,662 | 9,255,115 | 142,387,816 | | Goodwill | 27,558,000 | 34,129,700 | 58,332,452 | 11,069,774 | 10,430,439 | 141,520,365 | Intangible Assets Recognized from Founding Companies Acquisitions | | Useful Life | Delta ($) | Deluxe ($) | Proficient Transport ($) | Sierra ($) | Tribeca ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Customer relationships | 15 years | 34,200,000 | 16,700,000 | 32,600,000 | 16,800,000 | 2,200,000 | 102,500,000 | | Trade names | 10 years | 1,800,000 | 2,600,000 | 4,300,000 | 2,400,000 | 1,300,000 | 12,400,000 | | Total | | 36,000,000 | 19,300,000 | 36,900,000 | 19,200,000 | 3,500,000 | 114,900,000 | - The acquisition of Brothers Auto Transport on April 1, 2025, for **$12.75 million**, recognized **$7.63 million** in net tangible assets, **$2.22 million** in intangible assets, and **$2.89 million** in goodwill[57](index=57&type=chunk) [Note 4 — Goodwill](index=17&type=section&id=Note%204%20%E2%80%94%20Goodwill) This note explains the changes in the carrying amount of goodwill, attributing increases to acquisitions and adjustments Changes in Carrying Amount of Goodwill | | Company Drivers ($) | Brokered ($) | Consolidated ($) | | :--- | :--- | :--- | :--- | | Balance – December 31, 2024 | 87,434,455 | 81,622,220 | 169,056,675 | | Acquisitions | 2,832,450 | 783,824 | 3,616,274 | | Adjustments | 513,414 | 903,754 | 1,417,168 | | Balance – June 30, 2025 | 90,780,319 | 83,309,798 | 174,090,117 | - Consolidated goodwill increased by **$5,033,442** from December 31, 2024, to June 30, 2025, reaching **$174,090,117**[61](index=61&type=chunk) - The increase was attributed to **$3.62 million** from acquisitions and **$1.42 million** from adjustments[61](index=61&type=chunk) [Note 5 — Intangible assets, net](index=17&type=section&id=Note%205%20%E2%80%94%20Intangible%20assets,%20net) This note provides details on the company's intangible assets, including customer relationships and trade names, and their amortization Intangible Assets, Net | | Six months ended June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Gross carrying amount** | | | | Customer relationships | 126,703,000 | 124,700,000 | | Trade names | 13,717,000 | 13,500,000 | | Total | 140,420,000 | 138,200,000 | | **Accumulated amortization** | | | | Customer relationships | (9,072,828) | (4,882,778) | | Trade names | (1,507,003) | (826,582) | | Total | (10,579,831) | (5,709,360) | | **Net carrying amount** | | | | Customer relationships | 117,630,172 | 119,817,222 | | Trade names | 12,209,997 | 12,673,418 | | Total | 129,840,169 | 132,490,640 | - Net intangible assets decreased from **$132.49 million** at December 31, 2024, to **$129.84 million** at June 30, 2025[62](index=62&type=chunk) - Amortization expense for the six months ended June 30, 2025, was **$4,190,050** for customer relationships and **$680,421** for trade names[62](index=62&type=chunk) - The weighted average amortization period for all intangible assets as of June 30, 2025, was **13.46 years**[63](index=63&type=chunk) [Note 6 — Property and equipment](index=18&type=section&id=Note%206%20%E2%80%94%20Property%20and%20equipment) This note details the company's property and equipment, including transportation assets, and their net carrying amount after depreciation Property and Equipment, Net (Successor) | | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Transportation equipment | 149,648,757 | 131,870,528 | | Total gross cost | 156,005,966 | 138,178,208 | | Less accumulated depreciation | (28,350,632) | (15,541,572) | | Property and equipment, net | 127,655,334 | 122,636,636 | - Net property and equipment increased by **$5.02 million** from December 31, 2024, to June 30, 2025, primarily driven by an increase in transportation equipment[64](index=64&type=chunk) - Depreciation expense for the six months ended June 30, 2025, was **$14,135,559**[64](index=64&type=chunk) [Note 7 — Accrued liabilities](index=18&type=section&id=Note%207%20%E2%80%94%20Accrued%20liabilities) This note presents the breakdown of accrued liabilities, highlighting increases in deferred leased to purchase payments and salaries Accrued Liabilities (Successor) | | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Deferred leased to purchase payments | 6,906,427 | 4,578,301 | | Salaries, wages and benefits | 4,590,320 | 2,888,204 | | Accrued purchased transportation | 3,979,897 | 3,149,849 | | Claims, insurance and litigation reserves | 3,595,076 | 5,721,891 | | Owner Operator Deposits | 2,234,842 | 2,315,214 | | Acquisition escrow | 1,600,513 | 506,500 | | Other accrued expenses | 3,201,410 | 2,666,560 | | Accrued liabilities | 26,108,485 | 21,826,519 | - Total accrued liabilities increased by **$4.28 million** from December 31, 2024, to June 30, 2025, reaching **$26.11 million**[66](index=66&type=chunk) - Deferred leased to purchase payments and salaries, wages, and benefits saw notable increases[66](index=66&type=chunk) [Note 8 — Income taxes](index=19&type=section&id=Note%208%20%E2%80%94%20Income%20taxes) This note details the company's income tax benefit and the impact of recent tax legislation on future deductions and cash tax obligations Total Income Tax (Benefit) Expense | | Six months ended June 30, 2025 (Successor) ($) | Six months ended June 30, 2024 (Successor) ($) | Three months ended June 30, 2025 (Successor) ($) | Three months ended June 30, 2024 (Successor) ($) | Period January 1 to May 12, 2024 (Predecessor) ($) | Period April 1 to May 12, 2024 (Predecessor) ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total income tax (benefit) expense | (1,027,942) | 470,836 | (325,321) | 470,836 | (6,350,642) | (6,739,520) | - For the six months ended June 30, 2025, the company recognized an income tax benefit of **$1,027,942**[67](index=67&type=chunk) - The federal government enacted the 'One Big Beautiful Bill Act' (OBBBA) in July 2025, restoring **100% bonus depreciation** and reinstating EBITDA-based interest deductibility for tax years beginning after December 31, 2024[69](index=69&type=chunk) - This new tax legislation is expected to increase near-term deductions for fleet and facility investments and may reduce future cash tax obligations[69](index=69&type=chunk) [Note 9 — Line of credit](index=19&type=section&id=Note%209%20%E2%80%94%20Line%20of%20credit) This note describes the company's credit facility, including its term debt and revolving line of credit, and compliance with covenants - On November 8, 2024, Proficient entered into a credit facility with a commercial bank, including a **$25 million term debt** and a **$20 million revolving line of credit**[70](index=70&type=chunk) - The revolving line of credit had **$5 million outstanding** at June 30, 2025, with **$15 million available** to be drawn[70](index=70&type=chunk) - The company was in compliance with its debt covenants as of June 30, 2025[70](index=70&type=chunk) [Note 10 — Long-term debt](index=19&type=section&id=Note%2010%20%E2%80%94%20Long-term%20debt) This note provides details on the company's long-term debt, including equipment notes and term loans, and their future maturities Long-term Debt | | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Equipment and vehicle notes payable | 61,018,867 | 59,740,532 | | Term Loan payable to Pinnacle Bank | 24,503,066 | 16,000,000 | | Total gross long-term debt | 85,521,933 | 75,740,532 | | Less: unamortized debt issuance costs | (312,832) | (350,718) | | Less: current maturities | (22,555,270) | (19,052,903) | | Total long-term debt | 62,653,831 | 56,336,911 | - Total long-term debt (less current portion) increased by **$6.32 million** from December 31, 2024, to June 30, 2025[71](index=71&type=chunk)[72](index=72&type=chunk) - Future maturities of long-term debt include **$11.79 million in 2025** and **$20.54 million in 2026**[73](index=73&type=chunk) [Note 11 — Leases](index=21&type=section&id=Note%2011%20%E2%80%94%20Leases) This note outlines the company's lease costs, weighted-average discount rates, and net investment in leases Total Lease Costs (Successor) | | Six months ended June 30, 2025 ($) | Three months ended June 30, 2025 ($) | | :--- | :--- | :--- | | Operating lease cost | 1,364,902 | 695,410 | | Finance lease costs (amortization & interest) | 39,156 | 19,253 | | Short-term lease costs | 600,582 | 340,198 | | Total lease costs | 2,004,640 | 1,054,861 | - Weighted-average discount rate for operating leases was **6.88%** and for finance leases was **12.08%** as of June 30, 2025[74](index=74&type=chunk) - Net investment in leases (receivables) was **$326,016** as of June 30, 2025, with deferred lease to purchase payments of **$6,906,427** reported in accrued liabilities[77](index=77&type=chunk)[76](index=76&type=chunk) [Note 12 — Stockholders' Equity](index=23&type=section&id=Note%2012%20%E2%80%94%20Stockholders'%20Equity) This note details the company's common stock authorization, IPO proceeds, and shares issued in connection with business combinations - The company is authorized to issue **50,000,000 shares of common stock** with a par value of **$0.01 per share**[81](index=81&type=chunk) - In May 2024, the company completed its IPO, issuing **14,333,333 shares at $15.00 per share** for net proceeds of **$192,273,599**[81](index=81&type=chunk) - The company issued **6,888,128 shares** to Founding Companies and **1,069,346 common shares** to ATG Sellers in connection with business combinations[82](index=82&type=chunk) - In June 2024, the company issued **1,435,000 shares** from a partial exercise of an over-allotment option, generating **$20,018,250 net proceeds**[84](index=84&type=chunk) [Note 13 — Stock-based compensation](index=23&type=section&id=Note%2013%20%E2%80%94%20Stock-based%20compensation) This note describes the company's long-term incentive plan, total stock-based compensation expense, and unrecognized compensation - The 2024 Long-Term Incentive Plan provides for various stock awards, with **3,260,000 shares** available for issuance[85](index=85&type=chunk) - Total stock-based compensation expense was **$2.4 million** for the six months ended June 30, 2025[88](index=88&type=chunk) - As of June 30, 2025, there was **$14.3 million of unrecognized compensation expense** related to restricted stock awards, expected to be recognized over the next four years[88](index=88&type=chunk) [Note 14 — Segment reporting](index=25&type=section&id=Note%2014%20%E2%80%94%20Segment%20reporting) This note presents financial information for the company's two reportable segments: Company Drivers and Subhaulers - The company's business is organized into two reportable segments: **Company Drivers** (asset-based) and **Subhaulers** (asset-light)[91](index=91&type=chunk) Segment Revenue (Six Months Ended June 30, 2025) | | Company Drivers ($) | Subhaulers ($) | Total ($) | | :--- | :--- | :--- | :--- | | Revenue, before fuel surcharge | 69,095,538 | 125,891,949 | 194,987,487 | | Fuel surcharge and other reimbursements | 4,070,760 | 8,159,335 | 12,230,095 | | Other Revenue | 961,188 | 1,032,679 | 1,993,867 | | Lease Revenue | - | 1,541,158 | 1,541,158 | | Segment Revenue | 74,127,486 | 136,625,121 | 210,752,607 | Segment Operating Profit (Six Months Ended June 30, 2025) | | Company Drivers ($) | Subhaulers ($) | Total ($) | | :--- | :--- | :--- | :--- | | Segment Operating profit | 3,677,709 | 7,603,950 | 11,281,659 | - For the six months ended June 30, 2025, the Subhaulers segment generated higher revenue (**$136.63 million**) and operating profit (**$7.60 million**) compared to the Company Drivers segment (**$74.13 million revenue, $3.68 million operating profit**)[92](index=92&type=chunk) [Note 15 — Loss per share](index=30&type=section&id=Note%2015%20%E2%80%94%20Loss%20per%20share) This note details the calculation of basic and diluted loss per share and the exclusion of anti-dilutive securities Loss Per Share Calculation | | Six months ended June 30, 2025 ($) | Three months ended June 30, 2025 ($) | | :--- | :--- | :--- | | Net Loss | (4,748,518) | (1,556,833) | | Weighted-Average Number of Shares of Common Stock | 27,341,813 | 27,611,515 | | Basic Loss per Share | (0.17) | (0.06) | - Basic and diluted loss per share for the six months ended June 30, 2025, was **$(0.17)**[112](index=112&type=chunk) - **1,151,952 restricted stock units** were excluded from diluted EPS computation for the six months ended June 30, 2025, due to their anti-dilutive effect[112](index=112&type=chunk) [Note 16 — Commitments and contingencies](index=31&type=section&id=Note%2016%20%E2%80%94%20Commitments%20and%20contingencies) This note describes the company's involvement in various legal claims and litigation, including class action lawsuits and settlements - The company is involved in various claims and pending litigation, primarily related to workers' compensation, auto collision, liability, and physical/cargo damage[113](index=113&type=chunk) - A class action lawsuit against Tribeca Automotive, Inc. alleges misclassification of truck drivers as independent contractors[114](index=114&type=chunk) - A former employee class action against Deluxe Auto Carriers, Inc. for wage violations resulted in a **$400,000 settlement**, subject to court approval[115](index=115&type=chunk) - The company is entitled to indemnification from the sellers of Tribeca and Deluxe for these potential liabilities[114](index=114&type=chunk)[115](index=115&type=chunk) [Note 17 — Subsequent events](index=31&type=section&id=Note%2017%20%E2%80%94%20Subsequent%20events) This note confirms no subsequent events requiring adjustments or additional disclosures were identified after the reporting period - No subsequent events requiring adjustments or additional disclosures were identified after June 30, 2025, through the report issuance date[117](index=117&type=chunk) [Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Results%20of%20Operations%20and%20Financial%20Condition) This section provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025. It discusses revenue generation, operating expenses, critical accounting policies, segment performance, non-GAAP financial measures, and liquidity and capital resources, taking into account the impact of recent business combinations [Special Note Regarding Forward-Looking Statements](index=32&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This note cautions readers about forward-looking statements, emphasizing inherent risks and uncertainties and the company's non-obligation to update them - The report contains forward-looking statements regarding future business results, financial condition, and operations, which are subject to substantial risks and uncertainties[120](index=120&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, as actual results, events, or circumstances could differ materially from those projected[121](index=121&type=chunk) - The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the statement date, except as required by law[121](index=121&type=chunk) [Business Overview](index=33&type=section&id=Business%20Overview) This section describes Proficient Auto Logistics, Inc. as a leading specialized freight company with a large auto transportation fleet serving diverse customers - Proficient Auto Logistics, Inc. is a leading specialized freight company focused on auto transportation and logistics services[122](index=122&type=chunk) - The company operates one of the largest auto transportation fleets in North America, utilizing roughly **1,350 vehicles and trailers** and employing **785 dedicated employees** as of June 30, 2025[122](index=122&type=chunk) - Customers include leading auto OEMs, EV producers, auto dealers, auto auctions, rental car companies, and auto leasing companies, served from **57 strategically located facilities**[122](index=122&type=chunk) [Description of the Combinations](index=33&type=section&id=Description%20of%20the%20Combinations) This section details the company's initial public offering and subsequent acquisitions, clarifying the Successor and Predecessor accounting periods - On May 13, 2024, the company completed its IPO and concurrently acquired five Founding Companies (Delta, Deluxe, Sierra, Proficient Transport, and Tribeca)[123](index=123&type=chunk) - Subsequent acquisitions include Auto Transport Group (August 2024), Utah Truck & Trailer Repair (November 2024), Brothers Auto Transport (April 2025), and PVT Truck & Trailer Repair (May 2025)[123](index=123&type=chunk) - Proficient is designated as the accounting acquirer ('Successor'), and Proficient Transport as the accounting predecessor ('Predecessor'), affecting financial statement comparability[124](index=124&type=chunk) [Financial Statement Components](index=34&type=section&id=Financial%20Statement%20Components) This section explains the company's revenue generation from auto transportation and contract services, along with significant operating expenses - Revenue is generated by transporting autos for customers in OEM contract and spot arrangements, secondary market auto moves, and contract services[126](index=126&type=chunk) - Fuel surcharge revenue is typically received to mitigate the effect of fuel price increases, though it may not fully protect against all increases[128](index=128&type=chunk) - Significant operating expenses include fuel and fuel taxes, driver-related expenses, purchased transportation, and fleet maintenance[129](index=129&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section outlines key accounting policies and estimates, including those for property and equipment, business combinations, goodwill, and income taxes - Critical accounting policies involve significant management judgment and estimation, particularly for property and equipment, business combinations, goodwill, and income taxes[130](index=130&type=chunk) - Property and equipment are depreciated using the straight-line method over estimated useful lives (e.g., **5-10 years for trucks and trailers**) and are reviewed for impairment[131](index=131&type=chunk)[132](index=132&type=chunk) - Business combinations are accounted for using the acquisition method (ASC 805), recognizing acquired assets and assumed liabilities at fair value, with goodwill recorded for any excess purchase price[133](index=133&type=chunk)[134](index=134&type=chunk) - Income taxes are accounted for under the asset-and-liability method, recognizing deferred tax assets and liabilities for temporary differences, with a valuation allowance assessed for realizability[136](index=136&type=chunk)[137](index=137&type=chunk) [Reportable Segments](index=36&type=section&id=Reportable%20Segments) [Company Drivers Segment](index=36&type=section&id=Company%20Drivers%20Segment) This section describes the asset-based Company Drivers segment, its revenue sources, and significant operating expenses - The Company Drivers segment generates revenue from asset-based auto transportation and contract services for OEMs and the secondary market[140](index=140&type=chunk) - Contracts generally include a fuel surcharge to account for fluctuating fuel prices[142](index=142&type=chunk) - Most significant operating expenses include fuel, driver-related expenses (wages, benefits, training), maintenance, and depreciation of revenue equipment[143](index=143&type=chunk) [Subhaulers Segment](index=37&type=section&id=Subhaulers%20Segment) This section describes the asset-light Subhaulers segment, its revenue generation through independent owner-operators, and key performance indicators - The Subhaulers segment generates revenue by outsourcing auto transportation to independent owner-operators and third-party carriers, operating under an asset-light model[145](index=145&type=chunk) - The most significant expense is purchased transportation, which varies directly with Subhauler revenue and third-party carrier rates[146](index=146&type=chunk) - Operating margin is the primary performance indicator, influenced by rates charged to customers and rates paid to third-party carriers[147](index=147&type=chunk) [Non-GAAP Financial Measures](index=37&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures like EBITDA and Operating Ratio used by management to assess performance - Management uses non-GAAP measures like EBITDA and Operating Ratio to assess operating performance and make strategic decisions[148](index=148&type=chunk) - EBITDA is defined as net income (loss) adjusted for interest expense, income tax expense (benefit), depreciation expense, and intangible amortization expense[149](index=149&type=chunk) - Adjusted EBITDA further adjusts EBITDA by adding back share-based compensation expenses[150](index=150&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (Six Months Ended June 30, 2025) | | Six months ended June 30, 2025 ($) | | :--- | :--- | | Net loss | (4,748,518) | | Add Back: Interest expense | 3,408,796 | | Add Back: Income tax (benefit) expense | (1,027,942) | | Add Back: Depreciation | 14,135,559 | | Add Back: Intangible amortization | 4,870,471 | | EBITDA | 16,638,366 | | EBITDA Margin | 7.9% | | Add Back: Stock-based compensation | 2,404,506 | | Adjusted EBITDA | 19,042,872 | | Adjusted EBITDA Margin | 9.0% | Operating Ratio and Adjusted Operating Ratio Reconciliation (Six Months Ended June 30, 2025) | | Six months ended June 30, 2025 ($) | | :--- | :--- | | Total operating revenue | 210,752,607 | | Total operating expenses | 212,989,755 | | Operating (loss) income | (2,237,148) | | Operating Ratio | 101.1% | | Add Back: Stock-based compensation | 2,404,506 | | Add Back: Intangible amortization | 4,870,471 | | Adjusted Total Operating Expenses | 205,714,778 | | Adjusted Operating Ratio | 97.6% | [Results of Operations for the three months ended June 30, 2025 and June 30, 2024 (Predecessor) and period ended April 1 to May 12, 2024 (Successor)](index=39&type=section&id=Results%20of%20Operations%20for%20the%20three%20months%20ended%20June%2030,%202025%20and%20June%2030,%202024%20(Predecessor)%20and%20period%20ended%20April%201%20to%20May%2012,%202024%20(Successor)) This section analyzes the company's financial performance for the three-month period, highlighting significant revenue growth and improved operating income compared to the Predecessor period Key Financial Results (Three Months Ended June 30, 2025 vs. Predecessor Period) | | Three months ended June 30, 2025 (Successor) ($) | Period April 1 to May 12, 2024 (Predecessor) ($) | | :--- | :--- | :--- | | Total operating revenue | 115,546,586 | 13,391,096 | | Total Operating Expenses | 115,421,228 | 36,436,961 | | Operating income (loss) | 125,358 | (23,045,865) | | Net loss | (1,556,833) | (16,569,308) | - Total operating revenue for the three months ended June 30, 2025, increased by **$102.16 million (762.9%)** to **$115.55 million** compared to the Predecessor period, primarily due to the inclusion of acquired entities[155](index=155&type=chunk) - Operating income improved to **$125,358** for the three months ended June 30, 2025, from an operating loss of **$(23.05) million** in the Predecessor period[155](index=155&type=chunk) - Operating ratio decreased by **100.5%** to **99.9%** for the three months ended June 30, 2025, compared to **272.1%** in the Predecessor period[177](index=177&type=chunk) - Adjusted EBITDA increased by **$34.0 million (149.5%)** to **$11.3 million** for the three months ended June 30, 2025, compared to **$(22.8) million** in the Predecessor period[179](index=179&type=chunk) [Results of Operations for the six months ended June 30, 2025 and June 30, 2024 (Successor) and period ended January 1, to May 12, 2024 (Predecessor)](index=43&type=section&id=Results%20of%20Operations%20for%20the%20six%20months%20ended%20June%2030,%202025%20and%20June%2030,%202024%20(Successor)%20and%20period%20ended%20January%201,%20to%20May%2012,%202024%20(Predecessor)) This section analyzes the company's financial performance for the six-month period, showing substantial revenue growth and a reduced operating loss compared to the Predecessor period Key Financial Results (Six Months Ended June 30, 2025 vs. Predecessor Period) | | Six months ended June 30, 2025 (Successor) ($) | Period January 1 to May 12, 2024 (Predecessor) ($) | | :--- | :--- | :--- | | Total operating revenue | 210,752,607 | 41,217,688 | | Total Operating Expenses | 212,989,755 | 62,237,653 | | Operating loss | (2,237,148) | (21,019,965) | | Net loss | (4,748,518) | (15,384,676) | - Total operating revenue for the six months ended June 30, 2025, increased by **$169.53 million (411.3%)** to **$210.75 million** compared to the Predecessor period, driven by the inclusion of acquired entities[181](index=181&type=chunk) - Operating loss decreased to **$(2.24) million** for the six months ended June 30, 2025, from **$(21.02) million** in the Predecessor period[181](index=181&type=chunk) - Operating ratio decreased by **89.4%** to **101.1%** for the six months ended June 30, 2025, compared to **151.0%** in the Predecessor period[200](index=200&type=chunk) - Adjusted EBITDA increased by **$39.2 million (194.8%)** to **$19.0 million** for the six months ended June 30, 2025, compared to **$(20.1) million** in the Predecessor period[202](index=202&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) [Overview](index=46&type=section&id=Overview) This section outlines the company's cash requirements for operations, capital expenditures, and debt, and how these are financed - The business requires substantial cash for operating expenses, capital expenditures, debt obligations, lease payments, and tax payments[203](index=203&type=chunk) - Capital requirements are financed through operating cash flows, direct equipment financing, and IPO proceeds[203](index=203&type=chunk) - The company intends to spend **$5-$10 million annually** on new revenue equipment, funded by operating cash flows and direct equipment financing[203](index=203&type=chunk) [Sources of liquidity](index=47&type=section&id=Sources%20of%20liquidity) This section identifies the company's liquidity sources, including IPO proceeds and anticipated operating cash flows, for funding operations and capital expenditures - Liquidity sources include proceeds from the May 2024 IPO and subsequent over-allotment option, used to support operations and fund strategic acquisitions[205](index=205&type=chunk) - Anticipated cash flows from operations and available direct equipment financing are expected to provide adequate liquidity for planned capital expenditures in fiscal year 2025[205](index=205&type=chunk) [Pinnacle LOC](index=47&type=section&id=Pinnacle%20LOC) This section details the company's credit facility with Pinnacle Bank, including term loan draws and compliance with debt covenants - On November 8, 2024, the company entered into a Loan and Security Agreement with Pinnacle Bank, providing a **$25 million term loan facility** and a **$20 million revolving credit facility**[206](index=206&type=chunk) - Initial draw of **$16 million** from term debt, with an additional **$9 million** drawn in April 2025 to fund the Brothers Auto Transport acquisition[210](index=210&type=chunk) - As of June 30, 2025, **$24.5 million** was outstanding under the Loan Agreement, and the company was in compliance with its debt covenants[210](index=210&type=chunk)[208](index=208&type=chunk) [Cash Flows](index=47&type=section&id=Cash%20Flows) This section summarizes the company's cash flows from operating, investing, and financing activities for the reported period - Cash flows from operating activities for the six months ended June 30, 2025, were **$13.2 million**, a **$5.2 million increase** compared to the Predecessor period[211](index=211&type=chunk) - Cash flows used in investing activities were **$11.1 million**, mainly for new equipment purchases and acquisitions (Brothers and PVT Truck and Trailer)[212](index=212&type=chunk) - Cash flows used in financing activities were **$3.9 million**, an increase of **$1.7 million** compared to the Predecessor period[212](index=212&type=chunk) [Emerging Growth Company Status](index=48&type=section&id=Emerging%20Growth%20Company%20Status) This section explains the company's status as an 'emerging growth company' and its election to use reduced disclosure requirements - The company qualifies as an 'emerging growth company' under the JOBS Act[213](index=213&type=chunk) - This status allows for reduced disclosure requirements and an extended transition period for complying with new accounting standards[213](index=213&type=chunk)[214](index=214&type=chunk) - The company has elected to avail itself of this exemption, meaning its financial statements may not be comparable to other public companies[214](index=214&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there are no quantitative and qualitative disclosures about market risk to report - No quantitative and qualitative disclosures about market risk are reported[215](index=215&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in IT general controls and closing processes. Remediation steps are underway, including increased controls, oversight, and conversion to a single accounting platform, with completion anticipated by year-end [Disclosure Controls and Procedures](index=48&type=section&id=Disclosure%20Controls%20and%20Procedures) This section addresses the effectiveness of disclosure controls and procedures, noting a material weakness in IT general controls and ongoing remediation efforts - Management concluded that disclosure controls and procedures were **not effective** as of June 30, 2025[217](index=217&type=chunk) - A material weakness was identified in internal controls over financial reporting, specifically related to IT general controls in financial systems and closing processes[219](index=219&type=chunk)[220](index=220&type=chunk) - Despite the material weakness, the CEO and CFO concluded that the Condensed Consolidated Financial Statements fairly present the company's financial position, results of operations, and cash flows in accordance with GAAP[218](index=218&type=chunk) - Remediation steps are being taken, including increased controls, oversight, and conversion to a single accounting technology platform for most operating companies by July 31, 2025[221](index=221&type=chunk) [Changes in Internal Control Over Financial Reporting](index=49&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section confirms no material changes to internal control over financial reporting, apart from enhancements to address identified weaknesses - No material changes to internal control over financial reporting occurred during the three months ended June 30, 2025, other than enhancements to address the identified material weakness[224](index=224&type=chunk) [PART II - OTHER INFORMATION](index=50&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, as detailed in Note 16. Management does not believe these will have a material adverse impact on the company's financial position or results of operations - The company is involved in various legal and governmental proceedings that arise in the ordinary course of business[227](index=227&type=chunk) - Management does not believe that such litigation, claims, and administrative proceedings will have a material adverse impact on the company's financial position or results of operations[227](index=227&type=chunk) - Further information regarding legal proceedings is provided in Note 16, Commitments and Contingencies[227](index=227&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to Item 1A of the company's Annual Report on Form 10-K for a detailed review of various risks and uncertainties affecting the business - Readers should review and consider carefully the risks and uncertainties described in Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2024[228](index=228&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20and%20Issuer%20Repurchases%20of%20Equity%20Securities) The company did not sell any unregistered equity securities or repurchase any shares of its common stock during the three-month period ended June 30, 2025 - The company did not sell any unregistered equity securities during the three-month period ended June 30, 2025[229](index=229&type=chunk) - The company did not repurchase any shares of its common stock during the three-month period ended June 30, 2025[230](index=230&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[231](index=231&type=chunk) [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[232](index=232&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) This section discloses an amendment to the employment agreement with CEO Rick O'Dell on August 14, 2025, clarifying the conditions for 'Qualifying Retirement' that would accelerate the vesting of his restricted stock units - On August 14, 2025, an amendment to CEO Rick O'Dell's employment agreement clarified the conditions for 'Qualifying Retirement' to accelerate the vesting of his restricted stock units[233](index=233&type=chunk) - A 'Qualifying Retirement' shall occur upon Mr. O'Dell's retirement and upon determination by the Compensation Committee to treat such retirement as a Qualifying Retirement[233](index=233&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including an amendment to the CEO's employment agreement, certifications by executive officers, and XBRL-related documents List of Exhibits | Exhibit Number | Description | | :--- | :--- | | 10.1 | Amendment No. 1 to the Executive Employment Agreement, dated as of August 14, 2025, by and between Richard O'Dell and the Company. | | 31.1 | Certification by principal executive officer pursuant to Rule 13A-14(a) or 15D-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 31.2 | Certification by principal financial officer pursuant to Rule 13A-14(a) or 15D-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 32.1 | Certification by principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 32.2 | Certification by principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 101.INS | Inline XBRL Instance Document - the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | [SIGNATURE](index=52&type=section&id=SIGNATURE) This section provides the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report - The report was signed on August 14, 2025, by Richard O'Dell, Chief Executive Officer, and Brad Wright, Chief Financial Officer and Secretary, on behalf of Proficient Auto Logistics, Inc[241](index=241&type=chunk)