Filing Information 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, 20252 Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :--- | :--- | :--- | | Common stock, par value $0.01 per share | PAL | The Nasdaq Stock Market LLC | Filer Status | | | | :--- | :--- | | Large accelerated filer ☐ | Accelerated filer ☐ | | Non-accelerated filer ☒ | Smaller reporting company ☐ | | | Emerging growth company ☒ | - The registrant had 27,788,985 shares of common stock outstanding at August 12, 20255 Explanatory Note This note clarifies the company's IPO, business acquisitions, and the accounting treatment distinguishing Successor and Predecessor periods for financial reporting - Proficient Auto Logistics, Inc. completed its initial public offering (IPO) and acquired five operating businesses (Founding Companies) on May 13, 202410 - Proficient is designated as the accounting acquirer ('Successor'), and Proficient Transport is the accounting predecessor ('Predecessor'), impacting financial statement comparability11 - The report includes unaudited condensed consolidated financial statements for both Successor and Predecessor periods, along with summary unaudited combined financial information for the three and six months ended June 30, 202411 PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) This item provides the unaudited condensed consolidated financial statements for Proficient Auto Logistics, Inc. and its subsidiaries, covering balance sheets, statements of operations, stockholders' equity, and cash flows, along with comprehensive notes explaining the company's accounting policies, business combinations, and other financial details Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (Successor) | | June 30, 2025 ($) | 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 million1516 - Goodwill increased by $5.03 million to $174.09 million, while intangible assets decreased by $2.65 million to $129.84 million15 Condensed Consolidated Statements of Operations This section outlines the company's revenues, expenses, and net loss for the reported periods, including per-share data Condensed Consolidated Statements of Operations (Unaudited) | | Six months ended June 30, 2025 (Successor) ($) | 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 share18 - For the three months ended June 30, 2025, the company reported an operating income of $125,358, a significant improvement from the operating loss in prior periods18 Condensed Consolidated Statements of Stockholders' Equity (Deficit) This section details changes in the company's equity, including stock-based compensation, business combinations, and net losses Condensed Consolidated Statements of Stockholders' Equity (Deficit) - Successor | | Shares | Amount ($) | 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, 202520 - The increase in equity was primarily due to business combinations ($3.81 million) and stock-based compensation ($2.40 million), partially offset by net losses20 Condensed Consolidated Statements of Cash Flows This section reports the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) | | Six months ended June 30, 2025 (Successor) ($) | 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 period24 - Cash flows used in investing activities for the six months ended June 30, 2025, were $11.11 million, primarily due to equipment purchases and acquisitions24 - Cash and cash equivalents at the end of June 30, 2025, stood at $13.65 million24 Notes to Condensed Consolidated Financial Statements Note 1 — Nature of operations 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 services27 - The company primarily transports finished vehicles from automotive production facilities, marine ports, or regional rail yards to auto dealerships27 - Proficient operates an asset-based 'Company Drivers' service and provides third-party logistics through an asset-light 'Subhaulers' model27 Note 2 — Summary of significant accounting policies 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. GAAP28 - Business combinations are accounted for using the acquisition method (ASC 805), with Proficient identified as the 'Successor' accounting acquirer3135 - Goodwill and intangible assets are reviewed for impairment annually or upon the occurrence of events indicating potential impairment3637 - 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)464748 Note 3 — Business combinations 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 IPO49 - 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 services30 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 $2.89 million in goodwill57 Note 4 — Goodwill This note explains the changes in the carrying amount of goodwill, attributing increases to acquisitions and adjustments Changes in Carrying Amount of Goodwill | | Company Drivers ($) | 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 $174,090,11761 - The increase was attributed to $3.62 million from acquisitions and $1.42 million from adjustments61 Note 5 — Intangible assets, net This note provides details on the company's intangible assets, including customer relationships and trade names, and their amortization Intangible Assets, Net | | Six months ended June 30, 2025 ($) | 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, 202562 - Amortization expense for the six months ended June 30, 2025, was $4,190,050 for customer relationships and $680,421 for trade names62 - The weighted average amortization period for all intangible assets as of June 30, 2025, was 13.46 years63 Note 6 — Property and equipment This note details the company's property and equipment, including transportation assets, and their net carrying amount after depreciation Property and Equipment, Net (Successor) | | June 30, 2025 ($) | 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 equipment64 - Depreciation expense for the six months ended June 30, 2025, was $14,135,55964 Note 7 — Accrued liabilities This note presents the breakdown of accrued liabilities, highlighting increases in deferred leased to purchase payments and salaries Accrued Liabilities (Successor) | | June 30, 2025 ($) | 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 $26.11 million66 - Deferred leased to purchase payments and salaries, wages, and benefits saw notable increases66 Note 8 — Income taxes This note details the company's income tax benefit and the impact of recent tax legislation on future deductions and cash tax obligations Total Income Tax (Benefit) Expense | | Six months ended June 30, 2025 (Successor) ($) | 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 $1,027,94267 - 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, 202469 - This new tax legislation is expected to increase near-term deductions for fleet and facility investments and may reduce future cash tax obligations69 Note 9 — Line of credit 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 credit70 - The revolving line of credit had $5 million outstanding at June 30, 2025, with $15 million available to be drawn70 - The company was in compliance with its debt covenants as of June 30, 202570 Note 10 — Long-term debt This note provides details on the company's long-term debt, including equipment notes and term loans, and their future maturities Long-term Debt | | June 30, 2025 ($) | 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, 20257172 - Future maturities of long-term debt include $11.79 million in 2025 and $20.54 million in 202673 Note 11 — Leases This note outlines the company's lease costs, weighted-average discount rates, and net investment in leases Total Lease Costs (Successor) | | Six months ended June 30, 2025 ($) | 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, 202574 - 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 liabilities7776 Note 12 — Stockholders' Equity 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 share81 - In May 2024, the company completed its IPO, issuing 14,333,333 shares at $15.00 per share for net proceeds of $192,273,59981 - The company issued 6,888,128 shares to Founding Companies and 1,069,346 common shares to ATG Sellers in connection with business combinations82 - In June 2024, the company issued 1,435,000 shares from a partial exercise of an over-allotment option, generating $20,018,250 net proceeds84 Note 13 — Stock-based compensation 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 issuance85 - Total stock-based compensation expense was $2.4 million for the six months ended June 30, 202588 - As of June 30, 2025, there was $14.3 million of unrecognized compensation expense related to restricted stock awards, expected to be recognized over the next four years88 Note 14 — Segment reporting This note presents financial information for the company's two reportable segments: Company Drivers and Subhaulers - The company's business is organized into two reportable segments: Company Drivers (asset-based) and Subhaulers (asset-light)91 Segment Revenue (Six Months Ended June 30, 2025) | | Company Drivers ($) | 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, $3.68 million operating profit)92 Note 15 — Loss per share This note details the calculation of basic and diluted loss per share and the exclusion of anti-dilutive securities Loss Per Share Calculation | | Six months ended June 30, 2025 ($) | 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 - 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 effect112 Note 16 — Commitments and contingencies 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 damage113 - A class action lawsuit against Tribeca Automotive, Inc. alleges misclassification of truck drivers as independent contractors114 - A former employee class action against Deluxe Auto Carriers, Inc. for wage violations resulted in a $400,000 settlement, subject to court approval115 - The company is entitled to indemnification from the sellers of Tribeca and Deluxe for these potential liabilities114115 Note 17 — Subsequent events 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 date117 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 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 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 uncertainties120 - Readers are cautioned not to place undue reliance on forward-looking statements, as actual results, events, or circumstances could differ materially from those projected121 - The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the statement date, except as required by law121 Business Overview 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 services122 - 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, 2025122 - Customers include leading auto OEMs, EV producers, auto dealers, auto auctions, rental car companies, and auto leasing companies, served from 57 strategically located facilities122 Description of the Combinations 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 - 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 - Proficient is designated as the accounting acquirer ('Successor'), and Proficient Transport as the accounting predecessor ('Predecessor'), affecting financial statement comparability124 Financial Statement Components 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 services126 - Fuel surcharge revenue is typically received to mitigate the effect of fuel price increases, though it may not fully protect against all increases128 - Significant operating expenses include fuel and fuel taxes, driver-related expenses, purchased transportation, and fleet maintenance129 Critical Accounting Policies and Estimates 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 taxes130 - 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 impairment131132 - 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 price133134 - 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 realizability136137 Reportable Segments Company Drivers Segment 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 market140 - Contracts generally include a fuel surcharge to account for fluctuating fuel prices142 - Most significant operating expenses include fuel, driver-related expenses (wages, benefits, training), maintenance, and depreciation of revenue equipment143 Subhaulers Segment 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 model145 - The most significant expense is purchased transportation, which varies directly with Subhauler revenue and third-party carrier rates146 - Operating margin is the primary performance indicator, influenced by rates charged to customers and rates paid to third-party carriers147 Non-GAAP Financial Measures 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 decisions148 - EBITDA is defined as net income (loss) adjusted for interest expense, income tax expense (benefit), depreciation expense, and intangible amortization expense149 - Adjusted EBITDA further adjusts EBITDA by adding back share-based compensation expenses150 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 ($) | | :--- | :--- | | Total operating revenue | 210,752,607 | | Total operating expenses | 212,989,755 | | Operating (loss) income | (2,237,148) | | Operating Ratio | 101.1% | | Add Back: Stock-based compensation | 2,404,506 | | Add Back: Intangible amortization | 4,870,471 | | Adjusted Total Operating Expenses | 205,714,778 | | Adjusted Operating Ratio | 97.6% | Results of Operations for the three months ended June 30, 2025 and June 30, 2024 (Predecessor) and period ended April 1 to May 12, 2024 (Successor) This section analyzes the company's financial performance for the three-month period, highlighting significant revenue growth and improved operating income compared to the Predecessor period Key Financial Results (Three Months Ended June 30, 2025 vs. Predecessor Period) | | Three months ended June 30, 2025 (Successor) ($) | 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 entities155 - 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 period155 - Operating ratio decreased by 100.5% to 99.9% for the three months ended June 30, 2025, compared to 272.1% in the Predecessor period177 - Adjusted EBITDA increased by $34.0 million (149.5%) to $11.3 million for the three months ended June 30, 2025, compared to $(22.8) million in the Predecessor period179 Results of Operations for the six months ended June 30, 2025 and June 30, 2024 (Successor) and period ended January 1, to May 12, 2024 (Predecessor) This section analyzes the company's financial performance for the six-month period, showing substantial revenue growth and a reduced operating loss compared to the Predecessor period Key Financial Results (Six Months Ended June 30, 2025 vs. Predecessor Period) | | Six months ended June 30, 2025 (Successor) ($) | 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 entities181 - Operating loss decreased to $(2.24) million for the six months ended June 30, 2025, from $(21.02) million in the Predecessor period181 - Operating ratio decreased by 89.4% to 101.1% for the six months ended June 30, 2025, compared to 151.0% in the Predecessor period200 - 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 period202 Liquidity and Capital Resources 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 payments203 - Capital requirements are financed through operating cash flows, direct equipment financing, and IPO proceeds203 - The company intends to spend $5-$10 million annually on new revenue equipment, funded by operating cash flows and direct equipment financing203 Sources of liquidity 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 acquisitions205 - Anticipated cash flows from operations and available direct equipment financing are expected to provide adequate liquidity for planned capital expenditures in fiscal year 2025205 Pinnacle LOC 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 facility206 - Initial draw of $16 million from term debt, with an additional $9 million drawn in April 2025 to fund the Brothers Auto Transport acquisition210 - As of June 30, 2025, $24.5 million was outstanding under the Loan Agreement, and the company was in compliance with its debt covenants210208 Cash Flows 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 period211 - Cash flows used in investing activities were $11.1 million, mainly for new equipment purchases and acquisitions (Brothers and PVT Truck and Trailer)212 - Cash flows used in financing activities were $3.9 million, an increase of $1.7 million compared to the Predecessor period212 Emerging Growth Company Status 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 Act213 - This status allows for reduced disclosure requirements and an extended transition period for complying with new accounting standards213214 - The company has elected to avail itself of this exemption, meaning its financial statements may not be comparable to other public companies214 Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 reported215 Item 4. Controls and Procedures 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 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, 2025217 - A material weakness was identified in internal controls over financial reporting, specifically related to IT general controls in financial systems and closing processes219220 - 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 GAAP218 - Remediation steps are being taken, including increased controls, oversight, and conversion to a single accounting technology platform for most operating companies by July 31, 2025221 Changes in Internal Control Over Financial Reporting 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 weakness224 PART II - OTHER INFORMATION Item 1. Legal Proceedings 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 business227 - 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 operations227 - Further information regarding legal proceedings is provided in Note 16, Commitments and Contingencies227 Item 1A. Risk Factors 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, 2024228 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities 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, 2025229 - The company did not repurchase any shares of its common stock during the three-month period ended June 30, 2025230 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities were reported231 Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company232 Item 5. Other Information 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 units233 - 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 Retirement233 Item 6. Exhibits 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 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, Inc241
Proficient Auto Logistics, Inc.(PAL) - 2025 Q2 - Quarterly Report