NASDAQ:PAL Proficient Auto Logistics Q3 2024 Earnings Report $9.16 +0.04 (+0.44%) Closing price 04:00 PM EasternExtended Trading$9.15 -0.01 (-0.11%) As of 04:59 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Proficient Auto Logistics EPS ResultsActual EPS$0.07Consensus EPS $0.06Beat/MissBeat by +$0.01One Year Ago EPSN/AProficient Auto Logistics Revenue ResultsActual Revenue$91.50 millionExpected Revenue$89.54 millionBeat/MissBeat by +$1.96 millionYoY Revenue Growth-12.50%Proficient Auto Logistics Announcement DetailsQuarterQ3 2024Date11/8/2024TimeBefore Market OpensConference Call DateFriday, November 8, 2024Conference Call Time9:00AM ETUpcoming EarningsProficient Auto Logistics' Q1 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled at 5:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Proficient Auto Logistics Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 8, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to the Proficient Auto Logistics Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. Operator00:00:27I would now like to hand the conference over to your speaker, Brad Wright, Chief Financial Officer. Please go ahead. Speaker 100:00:34Good morning, everyone. I'm Brad Wright, Chief Financial Officer of Proficient Auto Logistics. Thank you for joining us on Perficient's Q3 2024 earnings call. Under SEC rules, our Form 10 Q, which we expect to file next week, covering the 3 9 month periods ending September 30, 2024, includes financial statements for both the predecessor accounting entity, Proficient Auto Transport and the successor entity, Proficient Auto Logistics Inc. We are not required to provide and the Form 10 Q will not contain pro form a financial data for the combined companies. Speaker 100:01:11However, our earnings release provided comparative summary unaudited combined financial information for the Q3 9 months ended September 30 for the combined companies. Our earnings release can be found under the Investor Relations section of our website at proficientautologistics.com. Our 10 Q, once filed, can also be found under the Investor Relations section of our website. During this call, we will be discussing certain forward looking information. This information is based on our current expectations and is not a guarantee of future performance. Speaker 100:01:46I encourage you to review the cautionary statement in our earnings release describing factors that could cause actual results to differ from those expressed by the forward looking statements. Further information can be found in our SEC filings. During this call, we may also be referring to measures that include adjusted operating income, EBITDA and adjusted EBITDA. Please refer to the portions of our earnings release that provide reconciliations of those profitability measures to GAAP measures such as operating earnings, earnings before income taxes or net income. Joining me on today's call are Rick O'Dell, Perficient's Chairman and Chief Executive Officer and Amy Rice, our President and Chief Operating Officer. Speaker 100:02:33We will provide a company update as well as an overview of the company's combined results for the Q3. After our prepared remarks, we will open the call to questions. During the Q and A, please limit yourself to 1 question plus one follow-up. You may get back into the queue if you have additional questions. Now I'd like to introduce Rick O'Dell, who will provide the company update. Speaker 200:02:55Thank you, Brad, and good morning, everyone. I'll start out with an overview of our operations during the Q3 some trends that provide insight into our expectations for the remainder of this year. As we discussed in our last earnings call, July unit volumes were up by 2.1% versus the same month in 2023. However, revenue was down by 11% in July of 2024 versus the comparable month of 2023. This disparity between unit volume and revenue comparisons continued for the duration of the 3rd quarter with a full quarter volume decline of 0.4% versus the comparable quarter, but total revenue was down by 12.5%. Speaker 200:03:39The macro auto industry environment exhibited weakness in the 3rd quarter. The seasonal plant shutdowns in July followed by an even weaker August and only a modest acceleration in September towards the quarter close. Slack demand resulted in an outsized impact to certain of our premium price services. For example, our dedicated fleet service generated revenue of $4,700,000 during the Q3 compared to $16,200,000 in the Q3 of 2023. Our revenue from spot buy opportunities during the quarter comprised only 4% of total revenue in the recent quarter versus 10% a year ago. Speaker 200:04:21The revenue per unit from spot buys fell by 40% year over year. There was both a significant reduction in the spot buy opportunity made available to the market as well as much less spot pricing power due to significant available capacity to address limited demand. Seasonally adjusted annual sales rates were lower by 1.9% in the 3rd quarter compared to a year ago, hitting a low of $15,100,000 in August before recovering to $15,800,000 in September. In recent earnings releases, major auto manufacturers have continued to reference high inventories at dealership lots, declining profitability, reduced full year outlooks and related cost cutting initiatives. While the 4th quarter typically exhibits stronger seasonal volume relative to the Q3, an early feedback from the OEMs called for this seasonal uptick. Speaker 200:05:17Cautionary language from several carriers recently indicates that the lift in 2024 might not be as pronounced as in the recent past. There are some positive takeaways from October. So our top $16,000,000 and we saw increases in our unit deliveries year over year versus the 1st month of Q3. However, the pressure on revenue per unit persists and we have mixed signals on the expectations for the remainder of the quarter. As such, we remain cautious in our outlook for this quarter and into early 2025. Speaker 200:05:52Brad will speak to this in more detail in a moment. We continue to be positive on our relative market position and see opportunities for 2025 and beyond that gives us confidence in the business and investment thesis for Perficient Auto Logistics. We've noted in previous calls the addition of new contracts in 2024, 14 net new through our call in August and another 3 since that time. The 3rd quarter also included increased renewal activity with a total of 7 meaningful contracts renewed, most of the 3 year most with 3 year terms and one with a 5 year term. We're pleased with the level of ongoing conversations with customers about ways that we can work more closely together across the entire footprint of our expanded operation and provide solutions that enhance our partnership with these customers further. Speaker 200:06:48We continue to progress with our key operating initiatives. Cost synergies have been identified in the areas of fuel, tires and parts with national contracts now in place or in the late stages of negotiation. Additional opportunities are being pursued with travel, lodging and employee benefit programs. We continue to target $8,000,000 to $10,000,000 in annualized savings from this initiative. The shift to company deliveries has been further enabled through the addition of 66 truck and trailer units since the initial mergers, an increase to the owned fleet of approximately 10%. Speaker 200:07:25Although partly driven by revenue mix during the quarter, we note that the company deliveries in the most recent quarter were 39% of the total, which is an increase from 34% in the same quarter a year ago. Technology investments are 75% complete with respect to the transportation management system with full completion to be accomplished this quarter. Cost allocation technology continues to evolve, but requires further customization to recognize the unique nature of auto hauling compared to the truckload and the LTL users. Utilization improvements are primarily focused on load sharing between the merged companies to fill empty lanes. During the Q3, approximately 3% of units and revenue were generated through the load sharing opportunities identified across our network. Speaker 200:08:17And finally, the acquisition of Auto Transport Group was completed during the Q3 as planned, and they're rapidly integrating into the Perficient umbrella of companies. They continue to exhibit the performance and profitability characteristics that we anticipated and they should contribute approximately 10% of the company's revenue in the current quarter. I'll now turn it back to Brad to cover key financial highlights. Speaker 100:08:43Thank you, Rick. I'll start with a few summary statistics. All prior year comparisons are for the combined companies. Operating revenue of $91,500,000 in the quarter was a decrease of 12.5%. Units delivered of 499,311 represented a 0.4% decrease from prior year. Speaker 100:09:07Revenue per unit, excluding fuel surcharge was approximately $169 versus $190 in the same quarter last year. Company deliveries were 39% of revenue in Q3, up from 34% in 2023. Sub haul deliveries were therefore 61% of revenue in Q3, down from 66% in 2023. Of note, with respect to the mix of company versus sub haul deliveries, this past quarter shows how the latter is an effective flex to counter volatility in volumes from period to period. The corollary effect can be seen in the respective revenue per unit with unit revenue increasing by just under 1% for company deliveries, predominantly contract business, while the revenue per unit for sub haulers declined by 17.5% year on year, reflecting primarily the impact of lack of spot buy business and lower price premiums as Rick mentioned earlier. Speaker 100:10:09Expanding on the current environment, October units delivered were up 6.2% compared to October of 2023. Revenue per unit was nonetheless down 15.2% resulting in a year over year transportation revenue excluding fuel surcharge off 10% from the prior year. Comparing October of 2024 to July 2024, the 1st month of the last quarter, units delivered were up 10.4%. Revenue per unit was lower by 4.1 percent with a net result of transportation revenue, again excluding fuel surcharge, up by 5.8%. So while we are seeing early evidence of the expected seasonal uptick in volume, the ongoing pressure on revenue per unit in this environment and the fact that November to date is not showing meaningful acceleration keeps us cautious on 4th quarter guidance. Speaker 100:11:06Based on our activity quarter to date and having the benefit of a full quarter from our ATG addition, we are expecting sequential quarterly revenue to increase by low to single mid digits. At that level of revenue, there should be modest improvement in the adjusted operating ratio, but not a return to the low 90s that we experienced earlier this year. As it relates to the balance sheet, the company had approximately $16,800,000 of cash and equivalents on September 30, 2024. Aggregate debt balance at quarter end were approximately $73,500,000 for net debt of $56,700,000 The increase in net debt from last quarter reflects our use of cash in the acquisition of ATG and financing of fleet growth during the quarter. Total common shares outstanding ended the quarter at 27,000,000 an increase of just over 1,000,000 shares from the end of the 2nd quarter as a result of the purchase of ATG disclosed previously. Speaker 100:12:07As Rick mentioned, we remain confident in our market position and investment thesis. We're hopeful that with the election uncertainty now behind us and another interest rate reduction this week, stronger consumer demand for new vehicles will emerge and enable us to demonstrate our performance capabilities more fully in the future. Speaker 200:12:26Rick? Well, in conclusion, the 3rd quarter backdrop was very weak and unanticipated. Perficient continued to advance foundational initiatives in spite of the environment that position our company to gain market share, provide enhanced value proposition and improve our efficiencies going forward. We're committed to capturing these opportunities for all of our shareholders. Operator, we'll now take your questions. Operator00:12:55Thank you. Our first question comes from the line of Tyler Brown with Raymond James. Your line is now open. Speaker 300:13:16Hey, good morning guys. Speaker 200:13:17Good morning, Tyler. Good morning, Tyler. Speaker 300:13:19Hey, Brad, can we just start with spot? So maybe first off, do you have what the spot mix was in Q1 and Q2 on a pro form a basis? Speaker 100:13:33In terms of what, in terms of revenue or you mean percentage of revenue? Speaker 300:13:39However you said the 4% and the 10%, keep it on average. Speaker 100:13:43Good. Thank you. So that in the Q1 was close to 15% and in the second quarter was just over 12%. Speaker 300:13:55Okay. So I think you alluded to it, but what is the ARPU differential between a spot move and a contract move just to help everybody understand? Speaker 400:14:06Hi, Tyler. It's Amy. So there's a revenue mix component and there's also a pricing component. Length of haul is a major determiner on the revenue mix component. So say your contract business length of haul is an average of 200 to 2 50 miles and a spot opportunity that comes to the market is 500 miles, you would see roughly a 2x factor just for longer length of haul. Speaker 400:14:37In addition to which, you would see pricing premium relative to contract pricing. And the strength of that pricing premium would be affected by supply demand characteristics in the marketplace. So in a tighter market, you would expect that premium to be higher. And in a weaker marketplace, you'd expect that premium to still be well ahead of contract rates, but not as strong. Speaker 300:15:03Okay, interesting. So there is a cost to serve differential, meaning it's more expensive to serve the spot because it's a longer length of haul? Speaker 400:15:12It's not necessarily a longer length of haul. It is it reflects what traffic needs to be moved quickly, that isn't currently being moved by a contract carrier. So say, in the event of a service disruption at a particular location, the contract carrier is trying to turn as much volume as they can, and they may well focus on the short haul moves to be able to do 2 turns a day. So there may be some longer length of haul traffic that needs to get pushed out to the spot market. That's not in all cases, but you might expect that. Speaker 300:15:47Okay. Basically, I want to just Speaker 100:15:50look at this big picture because there's a Speaker 300:15:51lot of questions. But if there's such a big pricing differential in the spot market, were you driving a disproportionate amount of profits last year in spot? And maybe I'll just ask it bluntly, but is the core business, if you exclude spot and you exclude ProFleet and I'm sure that we'll talk about ProFleet, but is that core business better than 100 OR business? Yes, Speaker 100:16:18absolutely. It's just that total revenue was down so much because of the lower volumes overall, Tyler, that it just it makes it removes a lot of the operating leverage, but the business itself is operates at a healthy margin. Speaker 300:16:36Okay. So hopefully we'll see that into the future. But maybe just quickly on Q4, what is low single mid digit, I think was the word you used on revenue? Just can you say is it 2% to 5% or what are we thinking on Q4? And then you said OR should improve, but I mean, we're talking 5 basis points or 500 basis points, just any finer point would be super helpful. Speaker 300:16:58Thanks guys. Speaker 100:17:01So on the low to mid single digits, I think 2% to 5% is a good range. In terms of OR improvement, I certainly don't think at that level of revenue that you should expect 500 basis points. I think that, again, depending on other cost factors and so on, that we might see 100, 150, maybe as much as 200 basis point improvement, but it's still going to be in the mid probably a little higher than mid-90s, I would expect, if that's the revenue that ends up being generated. Speaker 300:17:42Okay. And if the spot mix stays roughly where it is today? Speaker 100:17:46That's right. And that could definitely be a variable. Speaker 300:17:50Okay. I'll hop back in queue. Thank you. Speaker 100:17:52Thanks, Tyler. Operator00:17:54Thank you. Our next question comes from the line of Bruce Chan with Stifel. Your line is now open. Speaker 500:18:01Thanks, operator. Rick, Brad, Amy, good morning. So appreciate the commentary around the drag from the spot mix and a little bit of the volume headwind here, but I want to maybe focus in on the ProFleet business because when I look at the release and your comments that business seems to account for really almost the entirety of the year over year revenue shortfall and also the gap with our previous model estimates. So maybe you can talk to us about what the issue was there, the nature and status of that contract customer relationship. And then assuming that you're in the process of putting up some guardrails around that business to make it less volatile because I do remember that you got a big that to the upside in the Q1. Speaker 500:18:48What's sort of the status of that negotiation and when do you think you can have this business repaired? Speaker 400:18:54Good morning, Bruce. It's Amy. The Q3 2023 quarter in our dedicated business was the highest level of revenue in the last seven quarters. So the comps were particularly high last year and obviously we are particularly low this year driving the major gap there. That does reflect the market. Speaker 400:19:15So this premium dedicated service plays its greatest utility when there is a need to get new vehicles to dealerships urgently. And therefore, there is a willingness to pay that premium on pricing to do so. As inventories have inflated, that demand component has lessened considerably. What I can tell you is that at current levels, we are running at essentially the minimum contracted level of movement. So we've largely hit the bottom, if you will, in terms of what you can expect there on a go forward basis. Speaker 400:19:57And we started to see decline in November of 2023. So we begin cycling the declines here in Q4, and I would expect less volatility there as we go forward. If there's increased demand, you could see some upside there, but I certainly wouldn't count on that. Speaker 500:20:18Okay. Because I mean, I could be mistaken, but this seems to be the highest operating leverage business, just a cost component. So I guess, do you feel like this contract is good as is? Do you feel like need more pricing or adjustment on Speaker 400:20:36it? I think we share your view that we would like to have better visibility to the volatility and demand in this stream of business. I think we are appropriately resourced against it at the current time such that it continues to be profitable and worthwhile to us. But to your point, it's a large driver in volatility and results, and we'd like to be able to get a better forward look on that. Speaker 500:21:06Okay. All right. Just as a follow-up, maybe a broader question. You've all for the most part, except for you, Amy, maybe been at the company now for about 6 months. As you've kind of gotten into the guts here, is there anything that you see either to maybe the positive or the negative that changes your view of the fundamental earnings potential for the business? Speaker 200:21:30Yes. This is Rick. I would say in terms of the assessment, the market was dramatically more volatile and weaker than we'd anticipated. But absolute confidence and validation of the reception from customers to the enhanced network. And the foundational initiatives that or investments that we've made to advance and control our initiatives going forward are absolutely on track. Speaker 200:22:13We commented on the purchasing savings as being the first thing that would have an impact on margins and we're probably 50% implemented there from a go forward basis that's kind of just taken place. So high degree of confidence in that savings opportunity, which is targeted to be about 2 operating points. And that will occur regardless of the environment. So again, we're absolutely confident that we're putting the framework together to do to have better business analytics and gain efficiencies going forward that we've targeted. Speaker 100:22:56Bruce, I might just add to that. We the one thing too on a real positive note is that we probably feel even better about our competitive position and how we plan to grow through just market share gains than what we did on the road. So I think that's on the upside. Yes. Speaker 200:23:20And on the contract business, which is more stable and we would like to enhance our reliance on that more stable business going forward. Okay, great. Thanks. I'll hop back in queue. Operator00:23:37Thank you. Our next question comes from the line of Ryan Merkel with William Blair. Your line is now open. Thanks, everyone. I had a couple of questions on 4Q. Speaker 600:23:53So it sounds like October, the volumes picked up a little bit. Curious if there was any reason why that was? And sorry if you said it, but did that continue in November? Speaker 200:24:08Yes. I think it's a market rebound obviously. SAAR was back over $16,000,000 in the month of October. So, yes, I mean, the market has bounced off of the bottom. Speaker 400:24:28But to your question, we've not seen that continue in early November. We have seen a little bit of pullback on just daily run rates from where we were in the mid to late October timeframe, which is why we remain cautious on Q4. We do expect some acceleration here as we move towards year end, But we would generally expect sequential acceleration through the quarter. Speaker 600:24:52Got it. Okay. Yes, it's definitely choppy. So it's hard to make conclusions. This question might be hard to answer. Speaker 600:25:00I know the dealers have excess inventory. Do you guys have a take on how long it's going to take for that to whittle down? And won't the auto OEMs use incentives to try to clear that out here into year end? Speaker 400:25:14We hope so. And I think with our rate cut this week, that's certainly conducive. We are starting to see more dealer incentives and we would expect that to move some cars. And obviously, with new 2025 model year cars being released, It should unlock some opportunity, but we are watching that just as you are. Okay. Speaker 300:25:36And Speaker 600:25:39let me slip one more in. You guys mentioned you feel better about share gains in the contract business. I'm curious, are your competitors struggling quite a bit here, which is an opportunity for you? Maybe it's a little early to be seeing that, but do you feel like that's an opportunity as Operator00:25:55we think about, right, the next 12 months? Speaker 400:25:59I think what we are seeing is we have a more expanded offering. We're having really constructive conversations with customers who are looking for nationwide partnership opportunities. And so we're seeing growth opportunities in that regard. I wouldn't comment specifically on competitors per se, but I do think the combined entity has a value prop that the market is responding to. Speaker 600:26:32All right, perfect. Thanks so much. Pass it on. Speaker 300:26:34Thanks, Cory. Operator00:26:36Thank you. Our next question is a follow-up from Bruce Chan with Stifel. Your line is now open. Speaker 500:26:42Yes, thanks for the follow-up here. Brad, maybe just a question on capital allocation. You've made some nice improvements in the fleet. You've got ATG. But just given where the stock is trading right now, it seems like you might have more of an opportunity to invest in your own company than some M and A, especially given your comments about maybe hitting the bottom here. Speaker 500:27:04So just any thoughts on how you're thinking about capital allocation in general, whether buybacks is something that's entered the conversation? Speaker 100:27:13Yes, Bruce, I think, look, we raised what we raised in the IPO with specific corporate uses in mind, and we've used those funds for that purpose, including the ATG acquisition. I don't I think we still have a lot of opportunity. I'm not saying for acquisitions necessarily, but we have a lot of ways to improve the business over the long term that we feel is more efficient for long term holders than just going back into the market and whittling down our cash. So we've certainly discussed it. I just don't think that that's where our priority is right now. Speaker 500:27:53Okay, great. Thank you. Operator00:27:55Thank you. Our next follow-up is from Tyler Brown with Raymond James. Your line is now open. Speaker 300:28:02Hey, appreciate the follow-up here. Hey, I want to actually come back to the question a little bit about the difficulty obviously in the auto markets. And I'm assuming that if you're running call it circa breakeven, there's a lot of small carriers that are also struggling out there. But have you guys heard or seen any anecdotes about capacity coming out of the auto hauling market? Is there any indication that things are tightening up on the supply side? Speaker 200:28:30I mean, we're not seeing anything specific that's occurring, but you would think that would occur with some of the weaker players that aren't as well capitalized. Anytime you go through a significant volatile period that gets negative after a stable period, companies that have leverage, etcetera, you would think that they would be struggling. Speaker 300:28:58Yes. I mean, we have such good information in some of the other modes of trucking, but not this particular mode. So I didn't know if you heard much. Okay. But I kind of want to come back to kind of all of this. Speaker 300:29:10I mean, if you're running at call it a circa 98 OR when Pro Fleet is running at minimums, spots running less than 5%. I mean, this could be a very real reality for some time moving forward. And I know you talked about the $8,000,000 of procurement savings and I totally get that. But what other things can you do from a G and A perspective or just a broader overhead perspective to kind of restabilize the OR if those realities remain the realities? Speaker 100:29:47Well, I'll start and Amy probably has some ideas too, Tyler. I mean, we're looking at all of that, of course, because we can't be complacent on that front. And as we look to a plan for 2025, we're looking at every opportunity to cut where we can, although keeping in mind that we're not going to cut into operating capability. So it's really, are we as efficient as we can be in terms of personnel across the country? We are combining benefit plans where through integration, there will be some costs that come out. Speaker 100:30:28And I'll stop, but we're looking at everything. I don't know. Is there anything else you would add? Yes. Speaker 400:30:34I would punctuate that just to say, we are looking at how we realize the long term investment thesis. And so we certainly don't want to foreclose on that with short term cost cutting measures. So we are keeping operating resources in place to be able to move with a healthier market that we do anticipate resuming at some point. And I would also echo what Brad says there. There's some noise in our cost line currently as we're 6 months post transaction and doing a lot of work to drive integration, to drive towards efficient processes. Speaker 400:31:15So besides just the hard costs that you would see in procurement contracts and those sorts of things, there are also soft costs in the efficiency that will result. Speaker 200:31:27And I would just comment that filling some of these empty mile lanes with backhaul opportunities can be done regardless of the OEM environment. And the data analytics that we're putting together will allow us to manage our mix opportunities better, putting our company assets on the appropriate business and removing suboptimal subhaul expenses. I mean, that is in process and as our analytics improve, we can execute on that much better in the near term regardless of the external environment. Speaker 300:32:14Yes, perfect. All right. Thank you guys. I appreciate the extra time. Speaker 200:32:17Thanks, Noah. Operator00:32:18Thank you. And I'm showing no further questions at this time. I'd like to hand the call back over to Rick O'Dell for closing remarks. Speaker 200:32:26All right. Well, thank you very much for your interest in Perficient Auto Logistics. We again remain very excited about the opportunities we have in the future to demonstrate our ability to generate very good returns for shareholders. Thank you. Operator00:32:43This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallProficient Auto Logistics Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Proficient Auto Logistics Earnings HeadlinesComparing MingZhu Logistics (NASDAQ:YGMZ) and Proficient Auto Logistics (NASDAQ:PAL)April 25 at 2:13 AM | americanbankingnews.comStifel Nicolaus Has Lowered Expectations for Proficient Auto Logistics (NASDAQ:PAL) Stock PriceApril 15, 2025 | americanbankingnews.comWarning: “DOGE Collapse” imminentElon Strikes Back You may already sense that the tide is turning against Elon Musk and DOGE. Just this week, President Trump promised to buy a Tesla to help support Musk in the face of a boycott against his company. But according to one research group, with connections to the Pentagon and the U.S. government, Elon's preparing to strike back in a much bigger way in the days ahead.April 25, 2025 | Altimetry (Ad)Growth Investors: Industry Analysts Just Upgraded Their Proficient Auto Logistics, Inc. (NASDAQ:PAL) Revenue Forecasts By 15%April 9, 2025 | finance.yahoo.comProficient Auto Logistics Sets Date to Report First Quarter 2025 Financial ResultsApril 8, 2025 | financialpost.comProficient Auto Logistics Sets Date to Report First Quarter 2025 Financial ResultsApril 8, 2025 | businesswire.comSee More Proficient Auto Logistics Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Proficient Auto Logistics? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Proficient Auto Logistics and other key companies, straight to your email. Email Address About Proficient Auto LogisticsProficient Auto Logistics (NASDAQ:PAL) focuses on providing auto transportation and logistics services in North America. It primarily focuses on transporting and delivering finished vehicles from automotive production facilities, ports of entry, and rail yards to a network of automotive dealerships. The company operates approximately 1,130 auto transport vehicles and trailers, including 615 company-owned transport vehicles and trailers. It serves auto companies, electric vehicle producers, auto dealers, auto auctions, rental car companies, and auto leasing companies. The company was formerly known as AH Acquisition Corp. and changed its name to Proficient Auto Logistics, Inc. in October 2023. The company was incorporated in 2023 and is based in Jacksonville, Florida.View Proficient Auto Logistics ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step In Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Booking (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 7 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to the Proficient Auto Logistics Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. Operator00:00:27I would now like to hand the conference over to your speaker, Brad Wright, Chief Financial Officer. Please go ahead. Speaker 100:00:34Good morning, everyone. I'm Brad Wright, Chief Financial Officer of Proficient Auto Logistics. Thank you for joining us on Perficient's Q3 2024 earnings call. Under SEC rules, our Form 10 Q, which we expect to file next week, covering the 3 9 month periods ending September 30, 2024, includes financial statements for both the predecessor accounting entity, Proficient Auto Transport and the successor entity, Proficient Auto Logistics Inc. We are not required to provide and the Form 10 Q will not contain pro form a financial data for the combined companies. Speaker 100:01:11However, our earnings release provided comparative summary unaudited combined financial information for the Q3 9 months ended September 30 for the combined companies. Our earnings release can be found under the Investor Relations section of our website at proficientautologistics.com. Our 10 Q, once filed, can also be found under the Investor Relations section of our website. During this call, we will be discussing certain forward looking information. This information is based on our current expectations and is not a guarantee of future performance. Speaker 100:01:46I encourage you to review the cautionary statement in our earnings release describing factors that could cause actual results to differ from those expressed by the forward looking statements. Further information can be found in our SEC filings. During this call, we may also be referring to measures that include adjusted operating income, EBITDA and adjusted EBITDA. Please refer to the portions of our earnings release that provide reconciliations of those profitability measures to GAAP measures such as operating earnings, earnings before income taxes or net income. Joining me on today's call are Rick O'Dell, Perficient's Chairman and Chief Executive Officer and Amy Rice, our President and Chief Operating Officer. Speaker 100:02:33We will provide a company update as well as an overview of the company's combined results for the Q3. After our prepared remarks, we will open the call to questions. During the Q and A, please limit yourself to 1 question plus one follow-up. You may get back into the queue if you have additional questions. Now I'd like to introduce Rick O'Dell, who will provide the company update. Speaker 200:02:55Thank you, Brad, and good morning, everyone. I'll start out with an overview of our operations during the Q3 some trends that provide insight into our expectations for the remainder of this year. As we discussed in our last earnings call, July unit volumes were up by 2.1% versus the same month in 2023. However, revenue was down by 11% in July of 2024 versus the comparable month of 2023. This disparity between unit volume and revenue comparisons continued for the duration of the 3rd quarter with a full quarter volume decline of 0.4% versus the comparable quarter, but total revenue was down by 12.5%. Speaker 200:03:39The macro auto industry environment exhibited weakness in the 3rd quarter. The seasonal plant shutdowns in July followed by an even weaker August and only a modest acceleration in September towards the quarter close. Slack demand resulted in an outsized impact to certain of our premium price services. For example, our dedicated fleet service generated revenue of $4,700,000 during the Q3 compared to $16,200,000 in the Q3 of 2023. Our revenue from spot buy opportunities during the quarter comprised only 4% of total revenue in the recent quarter versus 10% a year ago. Speaker 200:04:21The revenue per unit from spot buys fell by 40% year over year. There was both a significant reduction in the spot buy opportunity made available to the market as well as much less spot pricing power due to significant available capacity to address limited demand. Seasonally adjusted annual sales rates were lower by 1.9% in the 3rd quarter compared to a year ago, hitting a low of $15,100,000 in August before recovering to $15,800,000 in September. In recent earnings releases, major auto manufacturers have continued to reference high inventories at dealership lots, declining profitability, reduced full year outlooks and related cost cutting initiatives. While the 4th quarter typically exhibits stronger seasonal volume relative to the Q3, an early feedback from the OEMs called for this seasonal uptick. Speaker 200:05:17Cautionary language from several carriers recently indicates that the lift in 2024 might not be as pronounced as in the recent past. There are some positive takeaways from October. So our top $16,000,000 and we saw increases in our unit deliveries year over year versus the 1st month of Q3. However, the pressure on revenue per unit persists and we have mixed signals on the expectations for the remainder of the quarter. As such, we remain cautious in our outlook for this quarter and into early 2025. Speaker 200:05:52Brad will speak to this in more detail in a moment. We continue to be positive on our relative market position and see opportunities for 2025 and beyond that gives us confidence in the business and investment thesis for Perficient Auto Logistics. We've noted in previous calls the addition of new contracts in 2024, 14 net new through our call in August and another 3 since that time. The 3rd quarter also included increased renewal activity with a total of 7 meaningful contracts renewed, most of the 3 year most with 3 year terms and one with a 5 year term. We're pleased with the level of ongoing conversations with customers about ways that we can work more closely together across the entire footprint of our expanded operation and provide solutions that enhance our partnership with these customers further. Speaker 200:06:48We continue to progress with our key operating initiatives. Cost synergies have been identified in the areas of fuel, tires and parts with national contracts now in place or in the late stages of negotiation. Additional opportunities are being pursued with travel, lodging and employee benefit programs. We continue to target $8,000,000 to $10,000,000 in annualized savings from this initiative. The shift to company deliveries has been further enabled through the addition of 66 truck and trailer units since the initial mergers, an increase to the owned fleet of approximately 10%. Speaker 200:07:25Although partly driven by revenue mix during the quarter, we note that the company deliveries in the most recent quarter were 39% of the total, which is an increase from 34% in the same quarter a year ago. Technology investments are 75% complete with respect to the transportation management system with full completion to be accomplished this quarter. Cost allocation technology continues to evolve, but requires further customization to recognize the unique nature of auto hauling compared to the truckload and the LTL users. Utilization improvements are primarily focused on load sharing between the merged companies to fill empty lanes. During the Q3, approximately 3% of units and revenue were generated through the load sharing opportunities identified across our network. Speaker 200:08:17And finally, the acquisition of Auto Transport Group was completed during the Q3 as planned, and they're rapidly integrating into the Perficient umbrella of companies. They continue to exhibit the performance and profitability characteristics that we anticipated and they should contribute approximately 10% of the company's revenue in the current quarter. I'll now turn it back to Brad to cover key financial highlights. Speaker 100:08:43Thank you, Rick. I'll start with a few summary statistics. All prior year comparisons are for the combined companies. Operating revenue of $91,500,000 in the quarter was a decrease of 12.5%. Units delivered of 499,311 represented a 0.4% decrease from prior year. Speaker 100:09:07Revenue per unit, excluding fuel surcharge was approximately $169 versus $190 in the same quarter last year. Company deliveries were 39% of revenue in Q3, up from 34% in 2023. Sub haul deliveries were therefore 61% of revenue in Q3, down from 66% in 2023. Of note, with respect to the mix of company versus sub haul deliveries, this past quarter shows how the latter is an effective flex to counter volatility in volumes from period to period. The corollary effect can be seen in the respective revenue per unit with unit revenue increasing by just under 1% for company deliveries, predominantly contract business, while the revenue per unit for sub haulers declined by 17.5% year on year, reflecting primarily the impact of lack of spot buy business and lower price premiums as Rick mentioned earlier. Speaker 100:10:09Expanding on the current environment, October units delivered were up 6.2% compared to October of 2023. Revenue per unit was nonetheless down 15.2% resulting in a year over year transportation revenue excluding fuel surcharge off 10% from the prior year. Comparing October of 2024 to July 2024, the 1st month of the last quarter, units delivered were up 10.4%. Revenue per unit was lower by 4.1 percent with a net result of transportation revenue, again excluding fuel surcharge, up by 5.8%. So while we are seeing early evidence of the expected seasonal uptick in volume, the ongoing pressure on revenue per unit in this environment and the fact that November to date is not showing meaningful acceleration keeps us cautious on 4th quarter guidance. Speaker 100:11:06Based on our activity quarter to date and having the benefit of a full quarter from our ATG addition, we are expecting sequential quarterly revenue to increase by low to single mid digits. At that level of revenue, there should be modest improvement in the adjusted operating ratio, but not a return to the low 90s that we experienced earlier this year. As it relates to the balance sheet, the company had approximately $16,800,000 of cash and equivalents on September 30, 2024. Aggregate debt balance at quarter end were approximately $73,500,000 for net debt of $56,700,000 The increase in net debt from last quarter reflects our use of cash in the acquisition of ATG and financing of fleet growth during the quarter. Total common shares outstanding ended the quarter at 27,000,000 an increase of just over 1,000,000 shares from the end of the 2nd quarter as a result of the purchase of ATG disclosed previously. Speaker 100:12:07As Rick mentioned, we remain confident in our market position and investment thesis. We're hopeful that with the election uncertainty now behind us and another interest rate reduction this week, stronger consumer demand for new vehicles will emerge and enable us to demonstrate our performance capabilities more fully in the future. Speaker 200:12:26Rick? Well, in conclusion, the 3rd quarter backdrop was very weak and unanticipated. Perficient continued to advance foundational initiatives in spite of the environment that position our company to gain market share, provide enhanced value proposition and improve our efficiencies going forward. We're committed to capturing these opportunities for all of our shareholders. Operator, we'll now take your questions. Operator00:12:55Thank you. Our first question comes from the line of Tyler Brown with Raymond James. Your line is now open. Speaker 300:13:16Hey, good morning guys. Speaker 200:13:17Good morning, Tyler. Good morning, Tyler. Speaker 300:13:19Hey, Brad, can we just start with spot? So maybe first off, do you have what the spot mix was in Q1 and Q2 on a pro form a basis? Speaker 100:13:33In terms of what, in terms of revenue or you mean percentage of revenue? Speaker 300:13:39However you said the 4% and the 10%, keep it on average. Speaker 100:13:43Good. Thank you. So that in the Q1 was close to 15% and in the second quarter was just over 12%. Speaker 300:13:55Okay. So I think you alluded to it, but what is the ARPU differential between a spot move and a contract move just to help everybody understand? Speaker 400:14:06Hi, Tyler. It's Amy. So there's a revenue mix component and there's also a pricing component. Length of haul is a major determiner on the revenue mix component. So say your contract business length of haul is an average of 200 to 2 50 miles and a spot opportunity that comes to the market is 500 miles, you would see roughly a 2x factor just for longer length of haul. Speaker 400:14:37In addition to which, you would see pricing premium relative to contract pricing. And the strength of that pricing premium would be affected by supply demand characteristics in the marketplace. So in a tighter market, you would expect that premium to be higher. And in a weaker marketplace, you'd expect that premium to still be well ahead of contract rates, but not as strong. Speaker 300:15:03Okay, interesting. So there is a cost to serve differential, meaning it's more expensive to serve the spot because it's a longer length of haul? Speaker 400:15:12It's not necessarily a longer length of haul. It is it reflects what traffic needs to be moved quickly, that isn't currently being moved by a contract carrier. So say, in the event of a service disruption at a particular location, the contract carrier is trying to turn as much volume as they can, and they may well focus on the short haul moves to be able to do 2 turns a day. So there may be some longer length of haul traffic that needs to get pushed out to the spot market. That's not in all cases, but you might expect that. Speaker 300:15:47Okay. Basically, I want to just Speaker 100:15:50look at this big picture because there's a Speaker 300:15:51lot of questions. But if there's such a big pricing differential in the spot market, were you driving a disproportionate amount of profits last year in spot? And maybe I'll just ask it bluntly, but is the core business, if you exclude spot and you exclude ProFleet and I'm sure that we'll talk about ProFleet, but is that core business better than 100 OR business? Yes, Speaker 100:16:18absolutely. It's just that total revenue was down so much because of the lower volumes overall, Tyler, that it just it makes it removes a lot of the operating leverage, but the business itself is operates at a healthy margin. Speaker 300:16:36Okay. So hopefully we'll see that into the future. But maybe just quickly on Q4, what is low single mid digit, I think was the word you used on revenue? Just can you say is it 2% to 5% or what are we thinking on Q4? And then you said OR should improve, but I mean, we're talking 5 basis points or 500 basis points, just any finer point would be super helpful. Speaker 300:16:58Thanks guys. Speaker 100:17:01So on the low to mid single digits, I think 2% to 5% is a good range. In terms of OR improvement, I certainly don't think at that level of revenue that you should expect 500 basis points. I think that, again, depending on other cost factors and so on, that we might see 100, 150, maybe as much as 200 basis point improvement, but it's still going to be in the mid probably a little higher than mid-90s, I would expect, if that's the revenue that ends up being generated. Speaker 300:17:42Okay. And if the spot mix stays roughly where it is today? Speaker 100:17:46That's right. And that could definitely be a variable. Speaker 300:17:50Okay. I'll hop back in queue. Thank you. Speaker 100:17:52Thanks, Tyler. Operator00:17:54Thank you. Our next question comes from the line of Bruce Chan with Stifel. Your line is now open. Speaker 500:18:01Thanks, operator. Rick, Brad, Amy, good morning. So appreciate the commentary around the drag from the spot mix and a little bit of the volume headwind here, but I want to maybe focus in on the ProFleet business because when I look at the release and your comments that business seems to account for really almost the entirety of the year over year revenue shortfall and also the gap with our previous model estimates. So maybe you can talk to us about what the issue was there, the nature and status of that contract customer relationship. And then assuming that you're in the process of putting up some guardrails around that business to make it less volatile because I do remember that you got a big that to the upside in the Q1. Speaker 500:18:48What's sort of the status of that negotiation and when do you think you can have this business repaired? Speaker 400:18:54Good morning, Bruce. It's Amy. The Q3 2023 quarter in our dedicated business was the highest level of revenue in the last seven quarters. So the comps were particularly high last year and obviously we are particularly low this year driving the major gap there. That does reflect the market. Speaker 400:19:15So this premium dedicated service plays its greatest utility when there is a need to get new vehicles to dealerships urgently. And therefore, there is a willingness to pay that premium on pricing to do so. As inventories have inflated, that demand component has lessened considerably. What I can tell you is that at current levels, we are running at essentially the minimum contracted level of movement. So we've largely hit the bottom, if you will, in terms of what you can expect there on a go forward basis. Speaker 400:19:57And we started to see decline in November of 2023. So we begin cycling the declines here in Q4, and I would expect less volatility there as we go forward. If there's increased demand, you could see some upside there, but I certainly wouldn't count on that. Speaker 500:20:18Okay. Because I mean, I could be mistaken, but this seems to be the highest operating leverage business, just a cost component. So I guess, do you feel like this contract is good as is? Do you feel like need more pricing or adjustment on Speaker 400:20:36it? I think we share your view that we would like to have better visibility to the volatility and demand in this stream of business. I think we are appropriately resourced against it at the current time such that it continues to be profitable and worthwhile to us. But to your point, it's a large driver in volatility and results, and we'd like to be able to get a better forward look on that. Speaker 500:21:06Okay. All right. Just as a follow-up, maybe a broader question. You've all for the most part, except for you, Amy, maybe been at the company now for about 6 months. As you've kind of gotten into the guts here, is there anything that you see either to maybe the positive or the negative that changes your view of the fundamental earnings potential for the business? Speaker 200:21:30Yes. This is Rick. I would say in terms of the assessment, the market was dramatically more volatile and weaker than we'd anticipated. But absolute confidence and validation of the reception from customers to the enhanced network. And the foundational initiatives that or investments that we've made to advance and control our initiatives going forward are absolutely on track. Speaker 200:22:13We commented on the purchasing savings as being the first thing that would have an impact on margins and we're probably 50% implemented there from a go forward basis that's kind of just taken place. So high degree of confidence in that savings opportunity, which is targeted to be about 2 operating points. And that will occur regardless of the environment. So again, we're absolutely confident that we're putting the framework together to do to have better business analytics and gain efficiencies going forward that we've targeted. Speaker 100:22:56Bruce, I might just add to that. We the one thing too on a real positive note is that we probably feel even better about our competitive position and how we plan to grow through just market share gains than what we did on the road. So I think that's on the upside. Yes. Speaker 200:23:20And on the contract business, which is more stable and we would like to enhance our reliance on that more stable business going forward. Okay, great. Thanks. I'll hop back in queue. Operator00:23:37Thank you. Our next question comes from the line of Ryan Merkel with William Blair. Your line is now open. Thanks, everyone. I had a couple of questions on 4Q. Speaker 600:23:53So it sounds like October, the volumes picked up a little bit. Curious if there was any reason why that was? And sorry if you said it, but did that continue in November? Speaker 200:24:08Yes. I think it's a market rebound obviously. SAAR was back over $16,000,000 in the month of October. So, yes, I mean, the market has bounced off of the bottom. Speaker 400:24:28But to your question, we've not seen that continue in early November. We have seen a little bit of pullback on just daily run rates from where we were in the mid to late October timeframe, which is why we remain cautious on Q4. We do expect some acceleration here as we move towards year end, But we would generally expect sequential acceleration through the quarter. Speaker 600:24:52Got it. Okay. Yes, it's definitely choppy. So it's hard to make conclusions. This question might be hard to answer. Speaker 600:25:00I know the dealers have excess inventory. Do you guys have a take on how long it's going to take for that to whittle down? And won't the auto OEMs use incentives to try to clear that out here into year end? Speaker 400:25:14We hope so. And I think with our rate cut this week, that's certainly conducive. We are starting to see more dealer incentives and we would expect that to move some cars. And obviously, with new 2025 model year cars being released, It should unlock some opportunity, but we are watching that just as you are. Okay. Speaker 300:25:36And Speaker 600:25:39let me slip one more in. You guys mentioned you feel better about share gains in the contract business. I'm curious, are your competitors struggling quite a bit here, which is an opportunity for you? Maybe it's a little early to be seeing that, but do you feel like that's an opportunity as Operator00:25:55we think about, right, the next 12 months? Speaker 400:25:59I think what we are seeing is we have a more expanded offering. We're having really constructive conversations with customers who are looking for nationwide partnership opportunities. And so we're seeing growth opportunities in that regard. I wouldn't comment specifically on competitors per se, but I do think the combined entity has a value prop that the market is responding to. Speaker 600:26:32All right, perfect. Thanks so much. Pass it on. Speaker 300:26:34Thanks, Cory. Operator00:26:36Thank you. Our next question is a follow-up from Bruce Chan with Stifel. Your line is now open. Speaker 500:26:42Yes, thanks for the follow-up here. Brad, maybe just a question on capital allocation. You've made some nice improvements in the fleet. You've got ATG. But just given where the stock is trading right now, it seems like you might have more of an opportunity to invest in your own company than some M and A, especially given your comments about maybe hitting the bottom here. Speaker 500:27:04So just any thoughts on how you're thinking about capital allocation in general, whether buybacks is something that's entered the conversation? Speaker 100:27:13Yes, Bruce, I think, look, we raised what we raised in the IPO with specific corporate uses in mind, and we've used those funds for that purpose, including the ATG acquisition. I don't I think we still have a lot of opportunity. I'm not saying for acquisitions necessarily, but we have a lot of ways to improve the business over the long term that we feel is more efficient for long term holders than just going back into the market and whittling down our cash. So we've certainly discussed it. I just don't think that that's where our priority is right now. Speaker 500:27:53Okay, great. Thank you. Operator00:27:55Thank you. Our next follow-up is from Tyler Brown with Raymond James. Your line is now open. Speaker 300:28:02Hey, appreciate the follow-up here. Hey, I want to actually come back to the question a little bit about the difficulty obviously in the auto markets. And I'm assuming that if you're running call it circa breakeven, there's a lot of small carriers that are also struggling out there. But have you guys heard or seen any anecdotes about capacity coming out of the auto hauling market? Is there any indication that things are tightening up on the supply side? Speaker 200:28:30I mean, we're not seeing anything specific that's occurring, but you would think that would occur with some of the weaker players that aren't as well capitalized. Anytime you go through a significant volatile period that gets negative after a stable period, companies that have leverage, etcetera, you would think that they would be struggling. Speaker 300:28:58Yes. I mean, we have such good information in some of the other modes of trucking, but not this particular mode. So I didn't know if you heard much. Okay. But I kind of want to come back to kind of all of this. Speaker 300:29:10I mean, if you're running at call it a circa 98 OR when Pro Fleet is running at minimums, spots running less than 5%. I mean, this could be a very real reality for some time moving forward. And I know you talked about the $8,000,000 of procurement savings and I totally get that. But what other things can you do from a G and A perspective or just a broader overhead perspective to kind of restabilize the OR if those realities remain the realities? Speaker 100:29:47Well, I'll start and Amy probably has some ideas too, Tyler. I mean, we're looking at all of that, of course, because we can't be complacent on that front. And as we look to a plan for 2025, we're looking at every opportunity to cut where we can, although keeping in mind that we're not going to cut into operating capability. So it's really, are we as efficient as we can be in terms of personnel across the country? We are combining benefit plans where through integration, there will be some costs that come out. Speaker 100:30:28And I'll stop, but we're looking at everything. I don't know. Is there anything else you would add? Yes. Speaker 400:30:34I would punctuate that just to say, we are looking at how we realize the long term investment thesis. And so we certainly don't want to foreclose on that with short term cost cutting measures. So we are keeping operating resources in place to be able to move with a healthier market that we do anticipate resuming at some point. And I would also echo what Brad says there. There's some noise in our cost line currently as we're 6 months post transaction and doing a lot of work to drive integration, to drive towards efficient processes. Speaker 400:31:15So besides just the hard costs that you would see in procurement contracts and those sorts of things, there are also soft costs in the efficiency that will result. Speaker 200:31:27And I would just comment that filling some of these empty mile lanes with backhaul opportunities can be done regardless of the OEM environment. And the data analytics that we're putting together will allow us to manage our mix opportunities better, putting our company assets on the appropriate business and removing suboptimal subhaul expenses. I mean, that is in process and as our analytics improve, we can execute on that much better in the near term regardless of the external environment. Speaker 300:32:14Yes, perfect. All right. Thank you guys. I appreciate the extra time. Speaker 200:32:17Thanks, Noah. Operator00:32:18Thank you. And I'm showing no further questions at this time. I'd like to hand the call back over to Rick O'Dell for closing remarks. Speaker 200:32:26All right. Well, thank you very much for your interest in Perficient Auto Logistics. We again remain very excited about the opportunities we have in the future to demonstrate our ability to generate very good returns for shareholders. Thank you. Operator00:32:43This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by