Proficient Auto Logistics, Inc.

Joining me on today's call are Rick O'Dell, Proficient's Chairman and Chief Executive Officer, and Amy Rice, our President and Chief Operating Officer. We will provide a company update as well as an overview of the company's combined results for the fourth quarter. After our prepared remarks, we will open the call to questions. During the Q&A, please limit yourself to one question plus one follow-up. You may get back into the queue if you have additional questions. Now, I would like to introduce Rick Odell, who will provide the company update.

Thank you, Brad, and good afternoon, everyone. I'll start out with an overview of our operations during the fourth quarter and some trends that provide insight into our expectations as we enter 2025. The macro auto industry environment in the fourth quarter was largely a continuation of the weakness we described in the third quarter. October unit volumes were relatively strong, up approximately 6% versus the same month in 2023. But by mid-November, the pace of volume slowed, ending down 4% for the quarter versus the fourth quarter of 2023. As in the third quarter, the larger issue was unit prices as slack transportation capacity and relatively high dealer inventory resulted in ongoing limited spot opportunities. persistent downward pressure on spot pricing when opportunities present, and a weak demand for dedicated fleet services. Our dedicated fleet service generated revenue of $3.7 million during the fourth quarter compared to $14.2 million in the fourth quarter of 2023. Our revenue from spot buy opportunities during the quarter comprised 5% of total revenue versus 14% a year ago. The revenue per unit from spot buys fell by 57% year-over-year, and the spot premium over contract pricing was 16% in the fourth quarter, compared to over 100% during the first two quarters of this past year. While we believe the current spot market to be unusually weak, we also do not expect to return to the levels a year ago. as the post-COVID through early 2024 time period was marked by unique industry supply chain dislocation that drove transportation premiums well above a typical market. Seasonally adjusted annual sales rates, or SAR, increased over the course of the fourth quarter with industry estimates for all three months above 16 million units, peaking at 16.8 million in December. The increased sales, particularly in the second half of the quarter, however, came through a combination of reduction in dealer inventories and new shipments into dealer lots. Average day sales in dealer inventory ended 2024 at approximately 46 days, down from 58 days at the end of November and between 60 and 90 days throughout the third quarter. While the lower level of year-end inventory would be more promising for replenishment, demand with sustained sales momentum in January saw a decline to 15.6 million units. In spite of these various industry headwinds, Perficient achieved approximately 4% growth in both units delivered and total revenue during the fourth quarter versus the third quarter of 2024. We also continue to strengthen the foundations that will set the stage for future growth and profitability at Perficient, improving adjusted operating ratio by 50 basis points during a period of persistent weak revenues. There's recently been a significant amount of media attention regarding disruption in the auto hauling landscape and speculation about the impact to Perficient and others in our industry. As a matter of policy and to adhere to confidentiality around OEM carrier relationships, Proficient will not comment about specific competitors or customers. That being said, the weak external environment has been challenging for our industry segment. The reported closure of a top five carrier will reduce near-term capacity and likely have widespread impact in the industry. We remain confident that with our service capabilities and the related value proposition, we'll be able to do more for our OEM customers and expect to benefit over time through market share gains. Also, we should note that in addition to some of the reported auto haul disruption in the media, there are several OEMs in the midst of scheduled regional or national bid processes. such that a meaningful amount of new vehicle volume transportation is being decision across the OEM landscape this year. Perficient is positioning itself and competing for incremental market share that should be sustainable and accreted to our portfolio over the long term. With regard to major integration and strategic initiatives, we continue to progress nicely. On the technology front, all of our operating companies are now using Magnus Technologies transportation management system. The data captured in this common system is providing key insights into our customer base, operational efficiency, and profitability metrics. We continue to advance integration efforts to back office systems and tools, including a common accounting platform, a cohesive HRS platform, and cost accounting methodology. For example, particularly in a weaker market, though consistent with our strategic objective We've prioritized company driver efficiency and mix and have a pipeline of backhaul target pursuits identified and being worked in both new vehicle and the secondary market to capture these opportunities. National procurement efforts continue with signed contracts being fully implemented and a broader set of smaller target areas identified to drive ongoing incremental cost savings. That said, we have some inflationary and structural headwinds to offset this as well. with item sets of insurance costs and expanded coverage driving some unfavorable near-term variance in that cost line. I'll now turn it back to Brad to cover some key financial highlights.

Thank you, Rick. I'll start with a few summary statistics. All prior year comparisons are for the combined companies. Operating revenue of $95.1 million in the quarter was up 4% from last quarter but down 15.9% from the prior year. Units delivered of 521,476 represents a 4% increase over the third quarter, but a 4% decline from the fourth quarter of 2023. Revenue per unit excluding fuel surcharge was approximately $169, unchanged from the third quarter, but down approximately 14% from 197 in the fourth quarter of last year. Company deliveries were 37% of revenue in Q4 versus 39% in the third quarter. Sub-haul deliveries, therefore, were 63% of revenue in Q4 versus 61% in the prior quarter. The company had approximately 15.8 million of cash and equivalents on December 31st, 2024. Aggregate debt balances at quarter end were approximately 82.4 million, or net debt of 66.6 million. The increase in net debt from last quarter reflects our financing of fleet growth during the quarter. Total common shares outstanding ended the quarter at 27 million, which is unchanged from that disclosed in our third quarter form 10Q. Looking ahead to the first quarter of 2025, January was challenged by not only a weak SAR month and the typical post-year end seasonal volume weakness, but also significant weather events in many areas of the country, such as the Northeast, New Mexico and Oklahoma, Texas and the Gulf Coast that shut down local operations for days at a time. Wildfires in Southern California also delayed loading and delivery intermittently over a period of a few weeks. As a result, quarter-to-date unit volumes and revenue are lower by 17.5% versus the comparable period of last year. However, We expect to recover much of this shortfall through the end of the quarter based on visibility to the near-term pipeline, such that full quarter revenue and profitability are likely to be similar to the fourth quarter of 2024. Full-year outlook for 2025 remains marked by some large uncertainties in the macro environment, though we do expect sequential momentum as we move into the second quarter and the second half of the year, with expectation of improved full-year 2025 results over 2024. Operator will now take questions.