What changed in this filing

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Item 1A. Risk Factors

2025-03-12 compared with 2024-03-13 · 28 added, 15 removed, 209 unchanged (17% of the section changed)

9 unchanged sentences

Deterioration in the United States and/or world economies could exacerbate any difficulties experienced by our customers and suppliers in obtaining financing, which, in turn, could materially and adversely impact our business, financial condition, results of operations and cash flows.

The imposition of new tariffs on Mexico and Canada, and any retaliatory actions by such countries, may have a negative impact on our operations and profitability.

The United States has recently initiated implementation of significant new tariffs on imports from Canada, Mexico and China, including 25% tariffs on goods imported from Mexico and Canada.

While the tariffs on Mexico and Canada have been suspended on more than one occasion, the outlook remains uncertain as to whether such tariffs, and any resulting retaliatory tariffs on U.S.

exports by those countries, will ultimately be implemented and how long they may be in effect.

The imposition and enforcement of new tariffs on goods imported from Mexico or Canada, or vice versa, could adversely affect our business operations and financial results.

A significant portion of our business is dependent on the automotive manufacturing industry and its suppliers, which have substantial operations in Mexico.

Any increase in tariffs could lead to higher costs and reduced consumer demand for automotive products sold by our customers that are imported or exported to or from the United States.

This, in turn, may result in reduced demand for our transportation services, particularly our cross-border and Mexico freight business, as customers seek to mitigate increased expenses by reducing production, sourcing components from alternative locations, or modifying their supply chain strategies.

This could reduce the volume of goods transported by us, thereby affecting our operational efficiency and financial performance.

In addition to the direct impact on our customers, the broader economic implications of tariffs could lead to further fluctuations in cross-border or general freight volumes and affect our operations and our ability to maintain consistent service levels.

Any such disruptions could necessitate adjustments in our operational strategies, increase our costs and negatively impact our revenue and profitability.

We may be adversely impacted by fluctuations in the price and availability of diesel fuel.

29 unchanged sentences

In August 2016, the EPA and NHTSA finalized the second phase of these standards which will further reduce greenhouse gas emissions and fuel consumption for heavy duty trucks through model year 2027.

In December of 2022, the EPA finalized an additional phase of standards which is intended to reduce nitrous oxide (NOx) emissions to 0.035 grams per horsepower-hour during normal operation, 0.05 grams at low load and 10.0 grams at idle for vehicles with model years 2027 and above.

In December 2022, the EPA finalized an additional phase of standards which is intended to reduce nitrous oxide (NOx) emissions to 0.035 grams per horsepower-hour during normal operation, 0.05 grams at low load and 10.0 grams at idle for vehicles with model years 2027 and above.

In March 2024, the EPA finalized the third phase of standards, which aim to reduce greenhouse gas emissions from heavy duty vehicles with model years 2028 to 2032, including tractor-trailers.

Compliance with these federal and state requirements has increased the cost of our equipment and may further increase the cost of replacement equipment in the future.

3 unchanged sentences

Recently issued rulemaking by the U.S.

Department of Labor, which is effective March 11, 2024, and the laws of several states, including California, apply stricter tests for determining whether an independent contractor should be classified as an employee.

Department of Labor, effective March 11, 2024, and the laws of several states, including California, apply stricter tests for determining whether an independent contractor should be classified as an employee.

We believe we are in compliance with all applicable independent contractor classification requirements.

5 unchanged sentences

As issues related to climate change become more prevalent, federal, state and local governments, as well as some of our customers, have made efforts to respond to these issues.

This increased focus on sustainability may result in new legislation or regulations and customer requirements that could negatively affect us as we may incur additional costs or be required to make changes to our operations in order to comply with any new regulations or customer requirements.

Legislation or regulations that potentially impose restrictions, caps, taxes, or other controls on emissions of greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels such as those used in the Company’s trucks, could adversely affect our operations and financial results.

This increased focus on sustainability has prompted newly enacted and proposed legislation and regulations and customer requirements that could negatively affect us as we may incur additional costs or be required to make changes to our operations in order to comply with any new regulations or customer requirements.

Current or future legislation or regulations that potentially impose restrictions, caps, taxes, new disclosure requirements or other controls on emissions of greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels such as those used in the Company’s trucks, could adversely affect our operations and financial results.

More specifically, legislative or regulatory actions relating to climate change could adversely impact the Company by increasing our fuel costs and reducing fuel efficiency and could result in the creation of substantial additional capital expenditures and operating costs in the form of taxes, emissions allowances, or required equipment upgrades.

22 unchanged sentences

Any sustained or future reduction in or termination of our services by our major customers could have a further material adverse effect on our business and operating results.

Ongoing effects from recent labor disputes involving several of our customers or the impact of any future significant labor dispute involving one or more of our customers, or that could otherwise affect our operations, could reduce our revenues and harm our profitability.

The impact of any future significant labor dispute involving one or more of our customers, or that could otherwise affect our operations, could reduce our revenues and harm our profitability.

A substantial number of the employees of our largest customers are members of industrial trade unions and are employed under the terms of collective bargaining agreements.

1 unchanged sentence

The strike targeted select plants at each of these automotive companies, causing prolonged plant shutdowns for these customers and ripple effects on plants and workers for other customers and automotive suppliers.

The effects of these shutdowns adversely impacted our business and financial performance during the third and fourth quarters of 2023 and have continued into the first quarter of 2024.

While operations at the affected customer and supplier plants have resumed, some of these customer facilities have yet to return to fully operational status, and we continue to experience reduced freight volumes as a result of the recent labor disruptions.

Any sustained slowdown in operations for these customers and any future labor disputes involving our customers could further affect our operations.

If our automotive customers and their suppliers are unable to return to full operations in the near future or if these customers are unable to negotiate new contracts in the future and our customers’ plants experience slowdowns or closures as a result, our revenue and profitability could be negatively impacted.

A labor dispute involving another supplier to our customers that results in a slowdown or closure of our customers’ plants to which we provide services could also have a material adverse effect on our business.

The effects of the shutdowns adversely impacted our business and financial performance during the third and fourth quarters of 2023 and the first quarter of 2024.

Any future labor dispute involving our customers or their suppliers that results in a slowdown or closure of our customers’ plants to which we provide services could have a material adverse effect on our business.

Ongoing insurance and claims expenses could significantly reduce our earnings.

29 unchanged sentences

We are subject to certain risks arising from doing business in Mexico.

As we continue to grow our business in Mexico, we are subject to greater risks of doing business internationally, including fluctuations in foreign currencies, changes in the economic strength of Mexico, difficulties in enforcing contractual obligations and intellectual property rights, burdens of complying with a wide variety of international and U.S.

As we continue to grow our business in Mexico, we are subject to greater risks of doing business internationally, including changes in U.S.

and Mexican trade policies and relations, immigration policies, fluctuations in foreign currencies, changes in the economic strength of Mexico, difficulties in enforcing contractual obligations and intellectual property rights, burdens of complying with a wide variety of international and U.S.

export and import laws, and social, political, and economic instability.

We also face additional risks associated with our Mexico business, including potential restrictive trade policies and imposition of any import or export taxes, duties, fees, etc.

If we are unable to address business concerns related to our international operations in a timely and cost efficient manner, our financial position, results of operations or cash flows could be adversely affected.

37 unchanged sentences

data protection regulations or other data protection standards may expose us to litigation, fines, sanctions or other penalties, which could harm our reputation and adversely impact our business, results of operations and financial condition.

With the rapid advancement in artificial intelligence (“AI”) technology, cyber-attacks have become increasingly sophisticated.

While we have modified our security policy both to educate and to place appropriate guardrails around our users’ ability to use such technology in order to safeguard our system, we cannot guarantee that these efforts will be successful in preventing a successful cyber-attack or the exposure of our proprietary information.

In addition, we rely on our third-party business partners who provide security services to continually enhance their detection and mitigation capabilities to better support our operation, and we conduct analysis regarding third party systems and their use of AI technology to limit potential exposures to security risks.

However, we cannot guarantee that our third-party business partners will not experience security issues due to AI that could have an impact on our operations.

A breach in our security systems, whether due to the use of AI technology or not, could harm our reputation and adversely impact our business, results of operations and financial condition.

We have substantial fixed costs and, as a result, our operating income fluctuates disproportionately with changes in our net sales.

15 unchanged sentences

Future public health crises could negatively impact our financial condition, liquidity, results of operations, and cash flows.

The rapid spread of the COVID-19 pandemic during 2020 resulted in governmental authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, increased border and port controls and closures, and shutdowns.

These measures and the public health concerns resulting from the outbreak severely disrupted economic and commercial activity.

Measures and the public health concerns resulting from the outbreak of a future public health crisis may severely disrupt economic and commercial activity.

The resulting impact on domestic and global supply chains caused slowdowns and reduced freight demand for transportation companies such as ours.

Because we have a significant concentration of customers within the automotive industry, our freight volumes and revenues were significantly affected by the temporary closure of North American automotive manufacturing facilities during the spring of 2020 as a result of the pandemic.

Any future delays or interruptions of automotive production and other consumer activity affecting our customers that could result from any future public health crises could further adversely affect our business.

39 unchanged sentences

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 1A. Risk Factors