Proficient Auto Logistics, Inc. Common Stock (PAL) Earnings

Management highlights

- Strategic Acquisition Announcement • Proficient announced a definitive agreement to acquire Hanson & Atkins, a 30-year old respected North American finished vehicle logistics provider with strong OEM customer relationships and a shared culture focused on safety and operational excellence. • The acquisition is valued at an enterprise value of $130 million, including assumption of $75 million in existing equipment financing and $55 million paid to sellers (with $3 million in Proficient common stock and $52 million in cash at closing, plus a potential 2027 earn-out tied to H&A 2026 EBITDA targets at the same purchase multiple). • Post-closing, the combined entity will be the largest auto hauler in North America with a fully national U.S. footprint and entry into the Canadian market (H&A contributes 13% of its revenue from Canada, one of the largest Canadian players). The combined business will have ~$835 million in TTM revenue and ~$60-65 million in TTM adjusted EBITDA, covering roughly 25% of the addressable North American new vehicle transportation market. • The acquisition is expected to deliver synergies from network optimization, reduced empty miles, improved backhaul utilization, consolidated repair and maintenance networks (enabling higher cost-efficient insourced maintenance), G&A optimization, and greater procurement purchasing power. • Concurrent financing includes a $120 million syndicated equipment facility, a $75 million 7-year convertible bond with a capped call to mitigate equity dilution for existing shareholders, and a combined expanded revolving credit facility to replace the two companies' separate lines. - Q2 2026 Operational Performance • Industry conditions improved sequentially from Q1 2026, with stabilizing shipment volumes, but depressed prior rates, industry-wide driver shortages, constrained carrier capacity, and rising fuel and maintenance costs pressured quarterly results. • Margins improved sequentially each month during Q2, with June posting a 95.7 operating ratio, the best monthly result of 2026 to date, as the company secured improved fuel surcharge coverage and incremental rate adjustments from customers. • Recovering automotive production, normalized dealer inventories, and improved inventory turnover are supporting higher shipment volumes, while regulatory changes and driver recertification have tightened capacity, supporting improving spot and contract rates. • Equipment capital expenditure remained light in 2026, at less than $5 million year-to-date through Q2; future CapEx will be assessed after the acquisition based on combined fleet needs.

Guidance

- For the full second half of 2026 (pro forma including Hanson & Atkins, which closes mid-Q3), management projects total combined revenue between $350 million and $370 million, an operating ratio of approximately 97%, and EBITDA margins between 8% and 9%. No material synergies are baked into these projections, with synergies expected to begin realization in 2027. - Q3 2026 standalone Proficient revenue is projected to be flattish to slightly up sequentially from Q2, with improving operating ratios and profitability consistent with June's positive trends. - Management expects typical seasonal volume trends: a pullback in July and August (driven by seasonal OEM plant shutdowns) followed by rising volumes through the fall, with improving revenue yields on stable volumes as capacity constraints push market pricing away from unsustainably low rates. - Pricing outpacing cost inflation is expected to be fully realized in 2027 on the combined basis, with the acquisition's greater scale helping offset ongoing cost pressure from fuel, maintenance, and insurance. - Management projects that operating ratios will fall below 95% as synergies are realized, with a target of sustainably lower operating ratios (mid-90s or below) achievable by 2027 or 2028.

Segment performance

Proficient Auto Logistics had only one core business segment (finished vehicle logistics and transportation) in Q2 2026: Total operating revenue of $109.4 million, a 5.3% decrease year-over-year (YoY). 580,962 total units delivered, an 8% decrease YoY, while revenue per unit increased 2.9% YoY. Adjusted EBITDA was $7.6 million, down from $11.3 million in Q2 2025. After the planned acquisition of Hanson & Atkins (H&A), H&A contributes ~$400 million in trailing 12-month (TTM) revenue, with 60% of revenue from company-owned fleet deliveries and 40% from the sub-hauler/brokerage segment. The combined company will have roughly a 50/50 split between company-owned fleet revenue and sub-hauler/brokerage revenue, with H&A representing ~47% of combined TTM revenue.

Risks & headwinds

- Ongoing cost volatility, particularly for fuel, maintenance, and insurance, has pressured margins and creates uncertainty around the timing of margin recovery. - Industry-wide driver shortages and constrained third-party carrier capacity, worsened by regulatory changes and exits of marginal operators, have limited near-term volume growth and pressured costs ahead of customer rate adjustments. - The Montgomery Supreme Court ruling increases broker liability exposure for brokered/third-party loads; while Proficient already maintains strict screening, safety, and insurance requirements, broker liability insurance costs are rising, though this currently represents a small portion of overall insurance expenses. - Integration risks for the Hanson & Atkins acquisition, including the timeline for synergy realization, which is not expected to meaningfully impact 2026 results, and uncertainty around the magnitude of achievable cost savings.

Analyst Q&A

• Q: Analyst asks for a timeline for when pricing will outpace cost inflation, whether out-of-cycle price increases are possible, and if this will be achieved by end of 2026 or in 2027. /

  A: Management notes that short-term rate adjustments are already being implemented in strained geographies, with higher rates enabling increased capacity that has improved customer service, creating momentum for broader rate conversations. Fuel costs remain volatile, and other costs (maintenance, insurance) also face upward pressure, but the combined company's greater scale and maintenance footprint will help offset these costs. Management expects 2027 to set the table for pricing to outpace inflation on a combined basis.

• Q: Analyst asks what implications the Supreme Court's Montgomery ruling on broker liability has for Proficient, given the company's high mix of subcontracted capacity. /

  A: Management explains that 20% of Proficient's legacy subcontracted volume is owner-operators under Proficient's DOT authority, so additional Montgomery liability only applies to third-party carriers. The company already has stricter safety, insurance, and screening requirements than most industry peers, so incremental risk is limited. Broker liability insurance is more expensive, but this line makes up a very small portion of Proficient's overall insurance portfolio. The ruling is contributing to industry capacity tightening by pushing out marginal operators, which benefits larger, established providers like Proficient.

• Q: Analyst asks whether the acquisition is immediately accretive, what the combined pro forma margin profile is, and if the 97% 2026 H2 operating ratio guidance includes synergies. /

  A: Management confirms the deal is accretive from closing, as H&A has a similar financial and margin profile to Proficient. The 97% operating ratio guidance does not include meaningful synergies, as cost savings will be implemented between closing and the start of 2027. Upside to guidance is expected in 2027 as synergies are realized.

• Q: Analyst asks how the H&A sub-hauler mix changes the combined company's overall revenue split, and whether the larger fleet will allow a shift to more company-owned volume. /

  A: H&A has an inverse mix to legacy Proficient: 60% company-owned volume, 40% sub-haul, with more of its sub-haul volume from owner-operators and traditional brokerage. The combined company will end up with a roughly 50/50 split between company-owned assets and sub-hauler/third-party volume, creating a diversified, reliable service model that leverages the strengths of both channel types.