What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-28 · 152 added, 140 removed, 306 unchanged (49% of the section changed)

10 unchanged sentences

Our four reportable segments are Expedited, Dedicated, Managed Freight, and Warehousing, each as described under “Reportable Segments and Service Offerings” in Part I, Item 1 of this Annual Report on Form 10-K.

For 2024, despite a challenging general freight environment, we achieved our third highest adjusted annual earnings per diluted share in our history.

Within our Expedited reportable segment, both total revenue and margins declined year over year primarily as a result of an approximately 4% reduction in average total tractors, partially offset by an approximately 2% increase in both freight revenue per total mile and utilization year-over-year.

Within our Dedicated reportable segment, we have worked hard over the last three years to improve the profitability within this segment by exiting unprofitable business and adding profitable business and while we are pleased with the improvement to adjusted operating income compared to 2023, we believe that if we are successful in providing best in class service and controlling costs, growth and improved profitability will result.

Managed Freight experienced reduced revenue but improved operating income with increased volumes of high-margin overflow freight from both Expedited and Dedicated truckload operations and focusing on cost control.

Going forward, we seek to grow Managed Freight with profitable revenue from new customers, work closely with our asset-based segment to capitalize on overflow opportunities when available, and optimize costs to yield longer term margin goals in the mid-single digits, which will generate an acceptable return on capital given the asset light nature of the business.

Warehousing was able to grow revenue and operating income through improvements to direct labor costs and improved margins with contractual pricing increases put into place during the year.

We are continuing to work towards increasing the operating income and related margins in each of these segments by executing on both our pipeline of new business and focused cost savings initiatives.

During 2025, the Company operated in a challenging freight and logistics environment characterized by prolonged industry overcapacity, muted demand, episodic weather-related disruptions, and elevated cost pressures, including elevated insurance expense, impairment of goodwill, and additional equipment related expenses.

Within our Expedited reportable segment, both total revenue and margins declined year over year primarily as a result of an approximately 4.7% reduction in average total tractors and a 3.7% increase in utilization year over year.

Within our Dedicated reportable segment, total revenue increased while margins declined year over year primarily as a result of an approximately 11.5% increase in average total tractors along with a 8.0% decrease in utilization year over year.

Managed Freight experienced increased revenue with the fourth quarter integration of assets acquired that are now operating as Star (the "Star Acquisition") helping to offset the July 2025 loss of a key customer, but heightened costs associated with securing capacity during peak season compressed margins.

Warehousing operating income declined compared to 2024 primarily as the result of onboarding a significant new customer during the fourth quarter of 2025 resulting in associated startup expenses and operational inefficiencies that more than offset the incremental revenue.

The table below reflects the total revenue trends in each of these reportable segments:

10 unchanged sentences

With available borrowing capacity of $53.3 million under our Credit Facility as of December 31, 2025, we do not expect to be required to test our fixed charge covenant in the foreseeable future;

Our equity investment in TEL provided $14.7 million of pre-tax earnings in 2024, compared to $21.4 million for 2023;

Since December 31, 2023, total indebtedness, comprised of total debt and finance leases, net of cash, decreased by $28.7 million to $219.6 million;

Our equity investment in TEL provided $14.7 million of pre-tax earnings in each 2025 and 2024;

Since December 31, 2024, total indebtedness, comprised of total debt and finance leases, net of cash, increased by $76.7 million to $296.3 million;

Leverage ratio (average total indebtedness, net of cash, divided by the sum of operating income (loss, depreciation and amortization, gain on disposition of property and equipment, net, and impairment of long lived property and equipment) was 2.89 at December 31, 2025, compared to 1.65 at December 31, 2024;

Stockholders' equity at December 31, 2025 was $404.0 million, compared to $438.3 million at December 31, 2024;

Tangible book value per end-of-quarter basic share at December 31, 2024 was $10.17, compared to $8.72 at December 31, 2023.

The Company’s consistently good performance in a weak freight market is evidence that our strategic plan continues to work.

Over the past three years, we reallocated a significant amount of fixed assets away from underperforming and highly cyclical legacy operations toward acquiring three high-performing, more steady businesses.

The result has been better margins, more stable earnings, and improved returns on capital compared with our legacy operations during previous downturns.

While we are pleased with our results, we are also optimistic about our ability to make incremental improvements by continuing to invest in our team, identifying and mitigating risk, providing customers with superior service, and rigorously allocating capital across the enterprise.

With continued diligence and accountability, we expect to grow our market share organically and through acquisitions, continue to improve our operations, and be a stronger, more profitable, and more predictable business with the opportunity for significant and sustained value creation.

Based on our anticipated cash flow generation profile, we expect to be able to continue our cash dividend program and evaluate a full range of capital allocation alternatives, including maintaining a lower leveraged balance sheet compared to 2020, organic growth, acquisition and disposition opportunities, and stock repurchases.

For the first quarter of 2025, the general freight market appears to be incrementally improving as capacity and demand are better balanced than they have been for approximately two years, and customers are acknowledging this during rate and volume allocation discussions.

However, in our dedicated markets, customers continue to experience greater than expected temporary customer shutdowns and volume pressure.

Additionally, bad weather has hampered operations and increased our costs limiting any benefit of general market uplift.

Beyond the first quarter, we are focusing on positioning the Company to execute quickly and gain operating leverage as conditions improve, continuing to capture new dedicated contracts to expand the fleet organically, and evaluating multiple acquisition and investment opportunities.

Our goal remains to grow profitably and generate meaningful returns for our stockholders while providing world-class career opportunities for our team members.

Tangible book value at December 31, 2025 was $217.9 million, compared to $269.3 million at December 31, 2024.

Our plan for 2026 includes continued reallocation of capital to better returning operations while positioning for an expected improvement in freight fundamentals.

During the first half of the year, we expect to exit unprofitable business relationships, moderately reduce our total truckload fleet (while growing the most profitable components), improve free cash flow and deleverage our balance sheet.

We will be opportunistic in investing in areas that differentiate us from other carriers, focusing on high value and high service requirement freight.

Our truckload business requires substantial capital and carries significant risks, and we need to seek and execute on business where the returns justify continued reinvestment.

We remain optimistic about improving freight fundamentals, as well as our ability to be more efficient with our equipment and capture operating leverage and improve financial results in 2026.

The improvements are likely to come later in the year, with the first quarter being impacted by seasonality, extreme weather, a still-developing freight market situation, and a potential margin squeeze in Managed Freight.

The last few years have been characterized by acquisitions, dispositions, and share buybacks as we have revamped the Company.

We believe we have a stronger, more stable business with greater upside leverage in a future market recovery.

We believe 2026 is all about execution, and we are hard at work to get that done.

RESULTS OF CONSOLIDATED OPERATIONS

7 unchanged sentences

Total revenue

The increase in total revenue resulted from a $44.1 million and $1.0 million increase in Dedicated and Warehouse freight revenue, respectively, partially offset by a $10.0 million and $7.4 million decrease in freight revenue from our Managed Freight and Expedited reportable segments, respectively.

The increase in total revenue resulted from a $37.9 million and $36.8 million increase in Managed Freight and Dedicated freight revenue, respectively, partially offset by a $29.5 million and $0.5 million decrease in freight revenue from our Expedited and Warehousing reportable segments, respectively.

See results of reportable segment operations section for discussion of fluctuations.

7 unchanged sentences

% of freight revenue

The increase in salaries, wages, and related expenses on a dollars basis is primarily the result of averaging more drivers and tractors resulting in higher driver salaries, wages, and benefits as a result of growth in Dedicated, along with increased shop technician salaries and benefits, workers compensation and group health costs, partially offset by contract labor reductions.

The increase in salaries, wages, and related expenses on a dollars basis is primarily the result of pay increases due to the expanded scale of our Dedicated agriculture supply chain operations and the strategic reduction in commoditized freight across the Expedited and Dedicated fleets since the prior period, as well as averaging more drivers and tractors resulting in higher driver salaries, wages, and benefits as a result of growth in Dedicated.

As a percentage of freight revenue salaries, wages, and related expenses decreased as the foregoing factors increasing these expenses were offset by a lower percentage of revenue from Expedited, where we have driver pay, and a higher percentage of revenue from Managed Freight, where we don't have driver pay.

We believe driver and non-driver, including shop technicians, pay and benefits will continue to increase as the result of wage inflation, higher healthcare costs, and, in certain periods, increased incentive compensation due to better performance.

2 unchanged sentences

If freight market rates increase, we would expect to, as we have historically, pass a portion of those rate increases on to our professional drivers.

Salaries, wages, and related expenses will fluctuate to some extent based on the percentage of revenue generated by independent contractors and our Managed Freight reportable segment, for which payments are reflected in the purchased transportation line item.

Year ended December 31,

28 unchanged sentences

% of freight revenue

Net fuel expense decreased $2.5 million, or 25.1%, for the year ended December 31, 2024, compared to 2023.

As a percentage of freight revenue, net fuel expense decreased 0.3% for the year ended December 31, 2024, compared to 2023, primarily due to decreased fuel surcharge recovery partially offset by lower fuel prices.

There were no diesel fuel hedge gains or loss for the years ended December 31, 2024 or 2023.

As of December 31, 2024, we had no remaining fuel hedge contracts.

Net fuel expense increased $6.5 million, or 87.3%, for the year ended December 31, 2025, compared to 2024.

As a percentage of freight revenue, net fuel expense increased 0.6% for the year ended December 31, 2025, compared to 2024, primarily due to decreased fuel surcharge recovery partially offset by lower fuel prices.

We expect to continue managing our idle time and tractor speeds, investing in more fuel-efficient tractors and auxiliary power units to improve our miles per gallon, locking in fuel hedges when deemed appropriate, partnering with customers to adjust fuel surcharge programs that are inadequate to recover a fair portion of fuel costs, and testing the latest technologies that reduce fuel consumption.

6 unchanged sentences

% of freight revenue

The decrease in operations and maintenance expense was primarily related to the reduced maintenance costs as a result of the Company's strategic efforts to purchase newer equipment and replace older equipment that was more costly to maintain.

Going forward, we believe this category will fluctuate based on several factors, including the condition of the driver market and our ability to hire and retain drivers, our continued ability to maintain a relatively young fleet, accident severity and frequency, weather, the reliability of new and untested revenue equipment models, and the global disruption of the supply chain.

The increase in operations and maintenance expense was primarily the result of high demands on equipment as we grow our fleet into specialty freight areas, as well as more equipment damage than was experienced in the prior year.

Additionally, operations and maintenance costs may increase if we experience wage and parts inflation.

5 unchanged sentences

% of freight revenue

The decrease in revenue equipment rentals and purchased transportation was primarily the result of a reduction in purchased transportation costs in our Managed Freight reportable segment as a result of the softening freight market, the reduction in leased revenue equipment as the result of largely transitioning from tractors held under operating leases to owned tractors in 2023.

These decreases were partially offset by a slight increase in the percentage of the total miles run by independent contractors from 7.5% for 2023 to 7.8% for 2024.

The increase in revenue equipment rentals and purchased transportation was primarily the result of an increase in purchased transportation costs related to new business awarded to the Managed Freight reportable segment during the year, partially offset by a slight decrease in the percentage of the total miles run by independent contractors from 7.8% for 2024 to 7.3% for 2025 and a first quarter $7.6 million decrease in purchased transportation costs due to the decline in the spot market that primarily affected the Managed Freight reportable segment.

We expect purchased transportation to fluctuate as volumes in our Managed Freight reportable segment may be volatile.

In addition, if fuel prices increase, it would result in a further increase in what we pay third-party carriers and independent contractors.

In addition, if fuel prices increase, it would result in a further increase in what we pay third-party providers and independent contractors.

However, this expense category will fluctuate with the number and percentage of loads hauled by independent contractors, loads handled by Managed Freight, and tractors, trailers, and other assets financed with operating leases.

In addition, factors such as the cost to obtain third-party transportation services and the amount of fuel surcharge revenue passed through to the third-party carriers and independent contractors will affect this expense category.

If industry-wide trucking capacity tightens in relation to freight demand, we may need to increase the amounts we pay to third-party transportation providers and independent contractors, which could increase this expense category on an absolute basis and as a percentage of freight revenue absent an offsetting increase in revenue.

In addition, factors such as the cost to obtain third-party transportation services and the amount of fuel surcharge revenue passed through to the third-party providers and independent contractors will affect this expense category.

If industry-wide trucking capacity tightens in relation to freight demand, we may need to increase the amounts we pay to third-party providers and independent contractors, which could increase this expense category on an absolute basis and as a percentage of freight revenue absent an offsetting increase in revenue.

If we were to recruit more independent contractors we would expect this line item to increase as a percentage of revenue.

13 unchanged sentences

Insurance and claims per mile cost increased to 26.6 cents per mile for 2025 from 21.7 cents per mile in 2024.

The increase is primarily the result of an increase in current period claims expense including a large current year claim incurred partially offset by a decrease in insurance premiums compared to 2023.

The increase is primarily the result of an increase in claims and premium expense, including the settlement of a large auto liability claim during 2025, being spread over decreased miles compared to the prior year.

Our insurance program includes multi-year policies with specific insurance limits that may be eroded over the course of the policy term.

If that occurs, we will be operating with less liability insurance coverage at various levels of our insurance tower.

If that occurs, we will be operating with less liability insurance coverage at various levels of our insurance tower and may incur additional premiums.

For the policy period that ran from April 1, 2018 to March 31, 2021, the aggregate limits available in the coverage layer $9.0 million in excess of $1.0 million were fully eroded based on claims expense.

We replaced our $9.0 million in excess of $1.0 million layer with a new $7.0 million in excess of $3.0 million policy effective starting January 28, 2021 that we continue to maintain.

We replaced our $9.0 million in excess of $1.0 million layer with a new $7.0 million in excess of $3.0 million policy that we continue to maintain.

Due to the erosion of the $9.0 million in excess of $1.0 million layer, any adverse developments in claims filed between April 1, 2018 and March 31, 2021, could result in additional expense accruals.

As of December 31, 2025, there were no outstanding claims in this layer.

We have maintained our retention and limits set in place during the prior renewal cycle.

1 unchanged sentence

We expect insurance and claims expense to continue to be volatile over the long-term.

Recently the trucking industry has experienced a decline in the number of carriers and underwriters that write insurance policies or that are willing to provide insurance for trucking companies.

To the extent damages awarded against us for any claims exceed our coverage limits, involve significant aggregate use of our self-insured retention amounts, or cause increases in our insurance premiums, our insurance and claims expense would be volatile and increase.

Any resulting increases in such expenses could have a materially adverse effect on our business, results of operations, financial condition, or liquidity.

For additional details regarding our claims accruals, see Note 16, "Commitment and Contingencies" of the accompanying consolidated financial statements.

Communications and utilities

4 unchanged sentences

% of freight revenue

For the period presented, the change in communications and utilities are insignificant both as a percentage of total revenue and freight revenue.

For the period presented, the change in communications and utilities is insignificant both as a percentage of total revenue and freight revenue.

General supplies and expenses

4 unchanged sentences

% of freight revenue

The increase in general supplies and expenses was primarily the result of a $15.8 million increase in the contingent consideration liability since the 2023 period related to the acquisition of LTST.

The decrease in general supplies and expenses was primarily the result of a $2.8 million increase in the contingent consideration liability recognized in 2025 compared to a $16.0 million increase recognized in 2024, partially offset by additional costs related to investments in technology and the Star Acquisition.

Depreciation and amortization

5 unchanged sentences

Depreciation and amortization consists primarily of depreciation of tractors, trailers and other capital assets (including those under finance leases), as well as amortization of intangible assets.

Depreciation increased $14.6 million in 2024 to $77.0 million compared to 2023, primarily as a result of the increased cost of new equipment purchased as part of our strategic initiative to support growth in our Dedicated segment and replace older equipment.

Amortization of intangible assets increased $2.0 million in 2024 to $9.5 million compared to 2023, primarily due to the amortization of the intangible assets related to the LTST and Sims acquisitions.

We expect depreciation and amortization to increase going forward as the cost of new equipment increases and we see the effect of our equipment investment and replacement plan.

Additionally, changes in the used tractor market could cause us to adjust residual values, increase depreciation, hold assets longer than planned, or experience increased losses on sale.

Successfully executing our 2025 growth plan could also increase depreciation and amortization going forward.

Loss (gain) on disposition of property and equipment, net

Depreciation increased $4.9 million in 2025 to $81.9 million compared to 2024, primarily as a result of the increased cost of new equipment and an additional $2.2 million of depreciation expense as a result of an increased rate of depreciation during the quarter ended December 31, 2025.

Amortization of intangible assets increased $1.3 million in 2025 to $10.8 million compared to 2024, primarily due to the amortization of the intangible assets related to the 2025 acquisitions.

Subsequent to our January 29, 2026 earnings release, we reclassified $6.5 million of depreciation for 2025 from depreciation and amortization to write-down of held-for-sale assets.

This reclassification did not change our total operating expenses for 2025.

We expect depreciation and amortization to increase going forward as the cost of new equipment increases.

Additionally, changes in the used tractor market have caused us to adjust residual values and increase depreciation, and further adjustments may be necessary in the future.

These changes may also cause us to hold assets longer than planned, or experience increased losses on sale.

If we were to grow our Expedited or Dedicated reportable segments we may face additional increases in depreciation and amortization.

Write-down of held-for-sale assets

Year ended December 31,

(dollars in thousands)

Loss (gain) on disposition of property and equipment, net

Write-down of held-for-sale assets

% of total revenue

% of freight revenue

The decrease in gain on disposition of property and equipment, net is primarily the result of the declining equipment values as a result of economic headwinds in the freight market and excess capacity challenges that continued in 2024.

For 2025 we expect gains on disposition of property and equipment to be more than those of 2024 as a result of a freight market that we expect to incrementally improve due to excess capacity that has exited the business.

Write-down of held-for-sale assets represents the expense recognized to adjust the assets moved to held-for-sale to their current fair market value less costs to sell during 2025.

Loss on disposition of property and equipment, net

Year ended December 31,

(dollars in thousands)

Loss on disposition of property and equipment, net

% of total revenue

% of freight revenue

For the period presented, the change in disposition of property and equipment, net is insignificant both as a percentage of total revenue and freight revenue.

Impairment of goodwill

Year ended December 31,

(dollars in thousands)

Impairment of goodwill

% of total revenue

% of freight revenue

Impairment of goodwill represents the goodwill impairment recognized on the Dedicated reportable segment during 2025, primarily related to a reduction of projected future cash flows within our legacy dedicated reporting unit.

Interest expense, net

4 unchanged sentences

% of freight revenue

For the period presented, the increase in interest expense, net is primarily the result of an increase in revenue equipment installment notes as we implemented our 2024 revenue equipment replacement plan.

For the period presented, the change in interest expense, net is insignificant both as a percentage of total revenue and freight revenue.

This line item will fluctuate based on our decision with respect to purchasing revenue equipment with balance sheet debt versus operating leases, our revenue equipment replacement plan, and changing interest rates.

4 unchanged sentences

We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income.

For the year ended December 31, 2024, our earnings resulting from our investment in TEL decreased to $14.7 million.

The decrease in 2024 as compared to 2023 is the result of a reduction of gain on sale of revenue equipment.

Our earnings resulting from our investment in TEL were $14.7 million for both 2025 and 2024.

Due to TEL's business model, gains and losses on sale of equipment is a normal part of the business and can cause earnings to fluctuate from period to period and therefore our income from investment to similarly fluctuate.

We expect TEL's results for 2025 to remain similar to those of 2024.

We currently expect TEL's results for 2026 to remain similar to those of 2025.

Income tax expense

4 unchanged sentences

% of freight revenue

The decrease in tax expense primarily relates to the decrease in operating income and earnings on investment in TEL as described above.

The decrease in tax expense primarily relates to the decrease in operating income as described above.

The effective tax rate is different from the expected combined tax rate due primarily to state tax expense and permanent differences.

7 unchanged sentences

Total revenues

Operating Income:

Segment Operating Income (1) :

Managed Freight

Total operating income

Segment operating income excludes indirect costs not directly attributable to any one reportable segment, amortization of intangible assets, impairment of goodwill, and contingent consideration liability adjustments to match the information our chief operating decision maker ("CODM") uses to evaluate the operating results of our reportable segments.

Comparison of Year Ended December 31, 2025 to Year Ended December 31, 2024

Our Expedited total revenue decreased $7.4 million, as fuel surcharge revenue decreased $10.3 million and freight revenue increased $2.9 million.

The increase in Expedited freight revenue relates to a 15 (or 1.7%) average tractor increase compared to 2023, partially offset by a decrease in average freight revenue per tractor per week of 1.1%.

The decrease in average freight revenue per tractor per week is the result of a 1.7%, or 3.7 cents per mile, decrease in average rate per total mile partially offset by an approximately 0.9% increase in average miles per tractor when compared to 2023.

Seated team driven tractors increased approximately 1.8% to an average of 829 teams in 2024 from 815 teams in 2023.

Our Dedicated total revenue increased $44.1 million, as freight revenue increased $49.3 million and fuel surcharge revenue decreased $5.2 million.

Our Expedited total revenue decreased $43.2 million, as fuel surcharge revenue decreased $13.7 million and freight revenue decreased $29.5 million.

The decrease in Expedited freight revenue relates to a 42 (or 4.7%) average tractor decrease compared to 2024, and a decrease in average freight revenue per tractor per week of 3.7%.

The decrease in average freight revenue per tractor per week is the result of an approximately 4.4% decrease in average miles per tractor partially offset by a 0.5%, or 1.1 cents per mile, increase in average rate per total mile when compared to 2024.

Seated team driven tractors decreased approximately 4.9% to an average of 788 teams in 2025 from 829 teams in 2024.

Our Dedicated total revenue increased $38.8 million, as freight revenue increased $36.8 million and fuel surcharge revenue increased $1.9 million.

The increase in Dedicated freight revenue relates to a 157 (or 11.5%) average tractor increase and an increase in average freight revenue per tractor per week of 0.4%, compared to 2024.

The increase in average freight revenue per tractor per week is the result of a 8.0%, or 21.3 cents per mile, increase in average rate per total mile, as well as 1.0% fewer miles per tractor.

Managed Freight total revenue decreased $10.0 million in 2024, compared to 2023 as a result of reduced volumes of high-margin overflow freight from both Expedited and Dedicated truckload operations and excess capacity in the marketplace impacting freight rates and volumes.

The increase in average freight revenue per tractor per week is the result of a 8.9%, or 25.5 cents per mile, increase in average rate per total mile, partially offset by 8.0% fewer miles per tractor.

Managed Freight total revenue increased $37.9 million in 2025, compared to 2024 as a result of new business awarded during 2025, the October 2025 Star Acquisition, and the team's effort to identify and execute on overflow capacity from our Expedited reportable segment.

During the fourth quarter of 2025, some new business awarded during 2025 was discontinued.

Revenue in this reportable segment is expected to fluctuate with changes in the freight market and our percentage of contracted versus non-contracted freight.

The $1.1 million increase in Warehousing total revenue is a result of period-over-period new customer business as well as rate increases with existing customers in 2024.

Total operating income was $44.8 million in 2024, compared to operating income of $58.8 million in 2023.

In addition to the changes in revenue described above, the change was impacted by a $59.4 million increase in Dedicated operating expenses, partially offset by a $12.9 million, $4.0 million, and $0.7 million decrease in Managed Freight, Warehouse and Expedited operating expenses, respectively.

The decrease in Expedited operating expenses was primarily due to decreases in driver and non-driver pay, resulting from averaging fewer drivers and tractors compared to 2023, and lower fuel, maintenance, and parts costs.

These decreases were partially offset by increased depreciation expense as a result of our equipment trade cycle.

The increase in Dedicated operating expenses was primarily the result of averaging more drivers and tractors as a result of growth within LTST, resulting in higher driver and non-driver salaries, wages, and benefits, depreciation expense from equipment purchases to support the growth, and increases in the contingent consideration liability related to LTST since 2023.

These increases were partially offset by decreased fuel expense as a result of declining fuel prices.

The decrease in Managed Freight operating expenses is the result of the changes in revenue driving changes in variable expenses, primarily purchased transportation.

The decrease in Warehousing operating expenses is primarily the result of a reduction in outsourced labor since 2023.

In our asset-light reportable segments, we are prioritizing long-term growth, as well as focusing on talent acquisition and technology enhancements.

The Warehousing total revenue remained relatively even compared to 2024.

Other includes support services provided to our customers and third party carriers primarily including equipment maintenance and equipment leasing.

The decrease in Expedited operating income was the result of the aforementioned decrease in total revenue partially offset by a decrease in Expedited operating expenses.

The decrease in Expedited operating expenses was primarily due to decreases in salaries, wages, and benefits for our professional drivers and fuel expense as compared to 2024 as a result of fewer average miles per unit and a decrease in the average number of Expedited team-driven tractors.

Going forward, our focus in Expedited will be on improving margins through rate increases, exiting less profitable business, and adding more profitable business.

The decrease in Dedicated operating income was the result of an increase in Dedicated operating expenses partially offset by the aforementioned increase in total revenue.

The increase in Dedicated operating expenses was primarily the result of increased salaries, wages, and benefits for our professional drivers, operations and maintenance costs, purchase transportation, insurance costs, and depreciation expense as a result of growth and increased equipment costs, since 2024.

Going forward, we remain focused on our strategy of growing our dedicated fleet, specifically in areas that provide value-added services for customers.

We believe that if we are successful in providing best in class service and controlling our costs, growth and improved profitability will result.

The decrease in Managed Freight operating income is the result of an increase in Managed Freight operating expenses, partially offset by an increase in total revenue.

The increase in Managed Freight operating expenses is the result of the increase in revenue driving increases in variable expenses, primarily heightened purchased transportation, particularly during the fourth quarter peak season.

Going forward, we seek to grow Managed Freight with profitable revenue from new customers from organic initiatives and the Star Acquisition, work closely with our asset-based segments to capitalize on overflow opportunities when available, and optimize costs to yield longer-term margin goals in the mid-single digits, which would generate an acceptable return on capital given the asset light nature of the business.

The decrease in Warehousing operating income is primarily the result of an increase in Warehousing operating expenses.

The increase in Warehousing operating expenses is the combination of facility related cost increases for which we have not yet negotiated rate increases with our customers and startup-related costs and inefficiencies related to new business, including the onboarding of a significant new customer during the fourth quarter of 2025 whereby the associated startup expenses and operational inefficiencies more than offset the additional revenue.

Going forward, we intend to improve upon the margin within this segment through a combination of rate increases and cost reductions.

Liquidity and Capital Resources

9 unchanged sentences

As of December 31, 2025 and December 31, 2024 we had $338.7 million and $296.9 million in debt and lease obligations, respectively, consisting of the following:

No outstanding borrowings under the Credit Facility;

No outstanding borrowings under the Draw Note;

$30.0 million and no outstanding borrowings under the Credit Facility;

$251.7 million and $233.5 million in revenue equipment installment notes, respectively;

$16.3 million and $17.8 million in real estate notes, respectively;

$3.9 million and $6.1 million of the principal portion of financing lease obligations, respectively, and;

$3.2 million and $3.9 million of the principal portion of financing lease obligations, respectively;

$37.5 million and $41.7 million of the operating lease obligations, respectively.

The increase in our revenue equipment installment notes was primarily due to equipment acquisition to support growth in our Dedicated reportable segment.

The increase in our revenue equipment installment notes was primarily due to additional borrowings related to our trade cycle.

The decrease in operating and finance lease obligations was primarily due to amortization of the respective lease liability.

As of December 31, 2024, we had no borrowings outstanding, undrawn letters of credit outstanding of approximately $19.8 million, and available borrowing capacity of $90.2 million under the Credit Facility.

Additionally, we had availability of a $45.0 million line of credit from Triumph Bank ("Triumph") which is available solely to fund any indemnification owed to Triumph in relation to the sale of TFS.

Fluctuations in the outstanding balance and related availability under our Credit Facility are driven primarily by cash flows from operations and the timing and nature of property and equipment additions that are not funded through notes payable and leases, as well as the nature and timing of collection of accounts receivable, payments of accrued expenses, and receipt of proceeds from disposals of property and equipment.

As of December 31, 2025, we had $30.0 million borrowings outstanding, undrawn letters of credit outstanding of approximately $19.9 million, and available borrowing capacity of $53.3 million under the Credit Facility.

Fluctuations in the outstanding balance and related availability under our Credit Facility were driven primarily by the Star Acquisition, cash flows from operations and the timing and nature of property and equipment additions that are not funded through notes payable and leases, as well as the nature and timing of collection of accounts receivable, payments of accrued expenses, and receipt of proceeds from disposals of property and equipment.

Refer to Note 10, “Debt” of the accompanying consolidated financial statements for further information about material debt agreements.

Our net capital expenditures for the year ended December 31, 2025 totaled $112.1 million of expenditures as compared to $80.8 million of expenditures for the prior year.

Our 2023 net capital investment included approximately $91 million invested in the fourth quarter to acquire new tractors and trailers, of which approximately $30 million was originally planned to be acquired in 2024.

However, due to early availability and the ability to take advantage of certain tax incentives not available to us in 2024, we opportunistically elected to bring these purchases forward.

Our baseline expectation for 2025 fleet net capital expenditures is a range of $70 million to $80 million and reflects our priorities of growing our Dedicated footprint, maintaining the average age of our fleet in a manner that allows us to optimize operational uptime and related operating costs, and offering a fleet of equipment that our professional drivers are proud to operate.

Our baseline expectation for 2026 fleet net capital expenditures is a range of $40 million to $50 million which is a significant reduction compared to 2025 due to purchasing fewer new tractors in the year than we are selling.

These assumptions are subject to risk.

For example, global supply chain disruptions similar to 2021 and 2022 could impact the availability of tractors and trailers and lead to increased pricing on new and used equipment.

Net losses on disposal of equipment and real estate for December 31, 2024 were $1.6 million compared to a net gain of $12.6 million in 2023, which was primarily due to a $7.6 million gain on the sale of a Tennessee terminal during 2023.

Net losses on disposal of equipment and real estate in 2025 were $0.3 million compared to $1.6 million in 2024.

We had commitments outstanding at December 31, 2025, to acquire revenue equipment totaling approximately $100.8 million in 2025 versus commitments at December 31, 2024 of approximately $114.0 million.

These commitments are cancelable, subject to certain adjustments in the underlying obligations and benefits.

We distributed a total of $5.8 million to stockholders through dividends during the years ended December 31, 2024 and 2023, respectively.

We distributed a total of $7.2 million and $5.8 million to stockholders through dividends during the years ended December 31, 2025 and 2024, respectively.

We believe we have sufficient liquidity to satisfy our cash needs and will continue to evaluate the nature and extent of the potential short-term and long-term impacts to our business.

Net cash flows provided by operating activities increased to $122.9 million in 2024, compared with $84.8 million in 2023, primarily due to increases in non-cash expenses such as depreciation and amortization and reductions to non-cash gains on sale of property and equipment compared to 2023.

Changes in operating assets and liabilities such as receivables and driver advances and insurance and claims accruals provided improved cash flow partially offset by a $19.3 million decrease in net income.

Net cash flows provided by operating activities decreased to $113.7 million in 2025, compared with $122.9 million in 2024, primarily due a $28.7 million decrease in net income partially offset by increases in non-cash expenses such as the impairment of goodwill, write-down of held-for-sale assets, and depreciation and amortization compared to 2024.

Net cash flows used by investing activities were $140.1 million in 2025, compared with $107.6 million used in 2024.

The decrease in net cash flows used by investing activities was primarily due to the April 2023 and the August 2023 acquisitions of LTST and Sims, respectively, for $107.9 million, net of cash acquired, partially offset by the $4.6 million payment related to the acquisition of LTST and our Section 338(h)(10) election during the 2024 period, and the timing of our trade cycle whereby we took delivery of approximately 747 new tractors and 791 new trailers, while disposing of approximately 1,051 used tractors and 444 used trailers during 2024 compared to delivery of 1,242 new tractors and 1,111 new trailers, while disposing of approximately 1,235 used tractors and 634 used trailers in 2023.

Additionally, the 2023 period provided $12.5 million of proceeds related to the sale of a Tennessee terminal.

Net cash flows provided by financing activities were approximately $18.1 million in 2024, compared to $84.7 million used in 2023.

The change in net cash flows from financing activities was primarily the result of net proceeds relating to notes payable and our Credit Facility of $30.0 million compared to net proceeds of $129.7 million in 2023 and the repurchase of $25.4 million of shares of our Class A common stock during 2023 compared to none during 2024.

Net cash flows provided by operating activities and provided by financing activities in the 2024 period also included payment of $3.0 million and $7.0 million, respectively, of contingent consideration liabilities related to the acquisition of AAT.

The increase in net cash flows used by investing activities was primarily due to the October 2025 Star Acquisition for $27.1 million, compared to the $4.6 million payment related to the acquisition of LTST and our Section 338(h)(10) election during the 2024 period, and the timing of our trade cycle whereby we took delivery of approximately 511 new tractors and 1012 new trailers, while disposing of approximately 465 used tractors and 310 used trailers during 2025 compared to delivery of 747 new tractors and 791 new trailers, while disposing of approximately 1,051 used tractors and 444 used trailers in 2024.

Net cash flows used by financing activities were approximately $4.3 million in 2025, compared to $18.1 million provided by financing activities in 2024.

The change in net cash flows from financing activities was primarily the result of the repurchase of $36.6 million of shares of our Class A common stock during 2025 compared to none during 2024, partially offset by net proceeds relating to notes payable and our Credit Facility of $45.8 million during 2025, compared to net proceeds of $30 million in 2024.

Net cash flows provided by operating activities and used by financing activities in the 2025 period also included payment of $8.0 million and $5.3 million, respectively, of contingent consideration liabilities related to the acquisition of LTST.

On May 18, 2022 our Board approved a stock repurchase authorization of up to $75.0 million of our Class A common stock, with any remaining amount available under prior authorizations being excluded and no longer available.

Under such authorization, we repurchased 2.0 million shares of our Class A common stock for $54.7 million during 2022.

On January 30, 2023, the Board approved an amendment to the Company's stock repurchase program authorizing the purchase of up to an aggregate $55.0 million of our Class A common stock.

The amendment added an incremental approximately $37.5 million to the approximately $17.5 million that was then-remaining under the program.

Between May 2022 and April 2023, we repurchased a total of 2.7 million shares of our Class A common stock.

The program expired on January 31, 2024.

Our cash flows may fluctuate depending on capital expenditures, future stock repurchases, dividends, strategic investments or divestitures, any indemnification calls related to the TFS settlement, and the extent of future income tax obligations and refunds.

On April 23, 2025, the Board approved a stock repurchase program authorizing the purchase of up to $50 million of the Company's Class A common stock from time-to-time based upon market conditions and other factors.

The stock may be repurchased on the open market, in privately negotiated transactions, or other legally permissible means, including pursuant to Rule 10b5-1 trading plans.

The Company did not place a limit on the duration of the repurchase program.

The stock repurchase program does not obligate the Company to repurchase any specific number of shares, and the Company may suspend or terminate the program at any time without prior notice.

During the year ended December 31, 2025, we repurchased approximately 1.6 million shares of our Class A common stock for $36.2 million (excluding excise tax).

Our cash flows may fluctuate depending on capital expenditures, future stock repurchases, dividends, strategic investments or divestitures, and the extent of future income tax obligations and refunds.

Non-GAAP Financial Measures

2 unchanged sentences

(Dollars in thousands)

For the twelve months ended December 31, 2024

GAAP Operating Ratio:

Managed Freight

Year Ended December 31,

GAAP Presentation

Total revenue

2 unchanged sentences

Operating ratio

(dollars in thousands)

For the twelve months ended December 31, 2024

Adjusted Operating Ratio:

Managed Freight

Non-GAAP Presentation

Total revenue

1 unchanged sentence

Freight revenue (total revenue, excluding fuel surcharge)

Total operating expenses

Adjusted for:

Fuel surcharge revenue

Total operating income

Amortization of intangibles (1)

Contingent consideration liability adjustment

Adjusted operating expenses

Transaction costs

Employee separation costs

Lease abandonment and customer exit costs

Abandonment of long-lived software

Impairment of goodwill

One-time insurance expenses

Impairment of revenue equipment and related charges

Adjustments to operating income

Adjusted operating income

2 unchanged sentences

(dollars in thousands)

For the twelve months ended December 31, 2023

GAAP Operating Ratio:

Year Ended December 31,

GAAP Presentation

Managed Freight

Total revenue

Total operating expenses

Operating income

Operating ratio

(dollars in thousands)

For the twelve months ended December 31, 2023

Adjusted Operating Ratio:

Managed Freight

Total revenue

Total segment operating expenses (1)

Segment operating income (1)

Segment operating ratio (1)

Non-GAAP Presentation

Total revenue

Fuel surcharge revenue

Freight revenue (total revenue, excluding fuel surcharge)

Total operating expenses

Adjusted for:

Fuel surcharge revenue

Amortization of intangibles (1)

Bad debt expense associated with customer bankruptcy and high credit risk customers

Strategic restructuring adjusting items:

Insurance policy erosion

Gain on disposal of terminals, net

Contingent consideration liability adjustment

Transaction and executive retirement

Adjusted operating expenses

Adjusted operating income

Adjusted operating ratio

(1) "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets.

Total segment operating income (1)

Transaction costs

Employee separation costs

Lease abandonment and customer exit costs

Abandonment of long-lived software

Adjusted segment operating income

Adjusted segment operating ratio

(1) Segment operating expenses, segment operating income, and segment operating ratio exclude indirect costs not directly attributable to any one reportable segment, amortization of intangible assets, impairment of goodwill, and contingent consideration liability adjustments to match the information our Chief Operating Decision Maker uses to evaluate the operating results of our reportable segments.

The prior year periods have been conformed to this presentation.

(2) Represents indirect costs not directly attributable to any one reportable segment.

In addition to operating ratio, we use "adjusted operating ratio" as a key measure of profitability.

Adjusted operating ratio means operating expenses, net of fuel surcharge revenue and intangibles amortization, expressed as a percentage of revenue, excluding fuel surcharge revenue.

Adjusted operating ratio means operating expenses, net of fuel surcharge revenue, intangibles amortization, and certain other costs and expenses specified in the tables above, expressed as a percentage of revenue, excluding fuel surcharge revenue.

Adjusted operating ratio is not a substitute for operating ratio measured in accordance with GAAP.

17 unchanged sentences

We generally depreciate new trailers over seven years for refrigerated trailers and ten years for dry van trailers to salvage values of approximately 20% and 25% of their cost, respectively.

During the quarter ended December 31, 2025, we made the decision to sell certain subsets of our revenue equipment and classified such equipment as available for sale.

As such, we recognized an asset held-for-sale write-down of $6.5 million, which is included in write-down of held-for-sale assets in the consolidated statements of operations reducing assets to their current fair market value less costs to sell.

We also increased the rate of depreciation on certain units during the quarter ended December 31, 2025, in anticipation of exiting unprofitable business relationships and moderately reducing our total truckload fleet (while growing the most profitable components) which resulted in an additional $2.2 million of depreciation expense.

We performed a review of our estimates for certain subsets of revenue equipment during the quarter ended June 30, 2024 and, due to a weak used revenue equipment market, we increased the rate of depreciation on these units in the period.

15 unchanged sentences

We may also engage independent valuation specialists to assist in the fair value calculations.

During 2023 we engaged valuation specialists to assist us in determining the fair value of intangible assets and revenue equipment acquired through our acquisitions of LTST and Sims.

During 2025 we engaged valuation specialists to assist us in determining the fair value of intangible assets and revenue equipment acquired through the Star Acquisition.

Goodwill is not amortized, but is subject to impairment testing on at least an annual basis and its valuation is directly impacted by the valuation estimates of the other acquired long-lived assets.

17 unchanged sentences

The primary assumptions used in these various models include earnings multiples of acquisitions in a comparable industry, future cash flow estimates of each of the reporting units, weighted average cost of capital, working capital and capital expenditure requirements.

We completed our annual goodwill impairment test, using the qualitative test, as of October 1, 2024, for each of our reporting units.

As a result of the most recent goodwill impairment analysis performed (October 1, 2024), no impairment was indicated.

We completed our annual goodwill impairment test, using the quantitative test, as of October 1, 2025, for each of our reporting units.

As a result of the goodwill impairment analysis performed, the Company determined that there was no goodwill impairment.

However, subsequent to such quantitative test, we experienced changes to market conditions and capital expenditure expectations that contributed to a reduction in projected future cash flows within our legacy Dedicated reporting unit.

As a result of these factors, we performed an interim quantitative goodwill impairment test which resulted in a partial impairment of goodwill of $10.7 million within the Dedicated reportable segment for the legacy Dedicated reporting unit.

We test intangible assets with finite lives for impairment if conditions exist that indicate the carrying value may not be recoverable.

5 unchanged sentences

Self-Insurance Accruals

We record a liability for the estimated cost of the uninsured portion of pending claims and the estimated allocated loss adjustment expenses including legal and other direct costs associated with a claim.

We record a liability for the estimated cost of the uninsured portion of pending claims and the estimated allocated loss adjustment expenses, including legal and other direct costs associated with a claim, when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated.

Estimates require, among other things, judgments concerning the nature and severity of the claim, historical trends, advice from third-party administrators and insurers, the size of any potential damage award based on factors such as the specific facts of individual cases, the jurisdictions involved, the prospect of punitive damages, future medical costs, and inflation estimates of future claims development, and the legal and other costs to settle or defend the claims.

4 unchanged sentences

New emissions control regulations and increases in wages of manufacturing workers and other items have resulted in higher tractor prices, while the market value of used equipment fluctuated significantly.

The cost of fuel has been volatile over the last several years, with costs increasing in 2022 but decreasing in 2023 and 2024.

The cost of fuel has historically been volatile.

Health care prices have increased faster than general inflation, primarily due to the rapid increase in prescription drug costs and more people on our health plan.

18 unchanged sentences

These events may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, destroy our assets, or adversely affect the business or financial condition of our customers, any of which could have a materially adverse effect on our results of operations or make our results of operations more volatile.

In addition to such potential disruptions, any such disasters may present opportunities for additional business in our Managed Freight reportable segment as Star operates in the disaster recovery market.

Weather and other seasonal events could adversely affect our operating results.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis