Item 1A. Risk Factors
ITEM 1A: RISK FACTORS
Risks Related to Our Business
We have identified a material weakness in our internal control over financial reporting. If we fail to remediate this material weakness or otherwise maintain effective internal control over financial reporting, our ability to accurately report our financial results could be adversely affected.
As described elsewhere in this Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2025 (this “Amendment”), the Company has restated its previously issued condensed consolidated financial statements for the quarter ended September 27, 2025. The restatement relates to an error identified in the goodwill impairment analysis for the Company’s intermodal reporting unit. Specifically, certain deferred tax liabilities attributable to intercompany allocations were included in the carrying value used in the impairment analysis when they should not have been included.
Management has previously identified a material weakness in the Company’s internal control over financial reporting related to the accounting for complex and non-routine transactions and the preparation and review of financial statements and related disclosures. Management concluded that the error that resulted in the restatement described in this Amendment is consistent with this previously identified material weakness.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Because of this material weakness, management concluded that the Company’s disclosure controls and procedures were not effective as of September 27, 2025, as described in Item 4, “Controls and Procedures,” of this Amendment.
Management has begun implementing remediation measures designed to address this material weakness, including enhancing the Company’s internal technical accounting expertise and strengthening review procedures relating to complex and non-routine accounting matters, including goodwill impairment analyses. However, these remediation efforts are ongoing, and management cannot provide assurance that these measures will fully remediate the material weakness or prevent future deficiencies in internal control over financial reporting. Management continues to evaluate the effectiveness of these remediation measures and may determine that additional steps are necessary to address the material weakness. In addition, management may identify additional deficiencies or material weaknesses in internal control over financial reporting in the future as remediation efforts continue and controls are tested.
If the Company is unable to successfully remediate the material weakness, or if additional material weaknesses or significant deficiencies are identified in the future, the Company’s ability to accurately record, process, summarize and report financial information could be adversely affected. In addition, the Company could become subject to increased regulatory scrutiny, incur additional costs related to remediation and external audit procedures, or experience reduced investor confidence in the reliability of its financial statements. The error that resulted in the restatement described in this Amendment related to the Company’s goodwill impairment analysis for its intermodal reporting unit. See “— We may be required to record additional impairment charges in future periods .”
We may be required to record additional impairment charges, which could materially affect our results of operations.
We review the carrying value of goodwill and indefinite lived intangible assets for impairment at least annually or more frequently if events or changes in circumstances indicate that their carrying amounts may not be recoverable. We also evaluate the recoverability of other long-lived assets whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These evaluations require management to make significant judgments and estimates, including projections of expected growth rates, discount rates, and market multiples. These assumptions are inherently uncertain may change based on general economic conditions, industry trends, interest rate levels, competitive dynamics, and the operating performance of our reporting units. The estimates and assumptions used in our impairment analyses reflect management’s judgments based on information available at the time the analyses are performed, and future events or changes in circumstances may differ from those assumptions.
As discussed elsewhere in this Amendment, during the quarter ended September 27, 2025 the Company recorded a non-cash impairment charge of approximately $124.4 million related to goodwill and certain customer-relationship intangible assets associated with our intermodal reporting unit. As a result of this impairment charge, the Company has fully impaired the goodwill associated with the intermodal reporting unit and no goodwill remains attributable to that reporting unit.
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Our remaining reporting units continue to include goodwill and other intangible assets that are subject to impairment testing. If the operating performance of these reporting units does not meet our current expectations, if macroeconomic conditions deteriorate, if interest rates increase, if discount rates used in our valuations increase, or if our market capitalization declines below the carrying value of our net assets, we could be required to record additional impairment charges in future periods. Any such charges would reduce reported earnings and could adversely affect investor perceptions of our financial condition or the market price of our common stock, even though such charges would not affect our cash flows.
Our use of non-GAAP financial measures could lead to investor confusion and may be subject to increased regulatory scrutiny .
We present certain non-GAAP financial measures in our earnings releases and other investor communications, including adjusted income from operations, adjusted operating margin, adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), and adjusted EBITDA margin. These measures are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and should not be considered in isolation or as a substitute for GAAP results. While management believes these measures provide useful supplemental information for evaluating our operating performance and liquidity, they may exclude significant expenses or income items that are required to be recognized under GAAP. As a result, our non-GAAP measures may differ from similarly titled measures used by other companies and may not be comparable.
There is a risk that investors could misinterpret our non-GAAP measures, place undue reliance on them, or fail to understand their limitations. In addition, the Securities and Exchange Commission and other regulators have increased their focus on the use of non-GAAP financial measures, and changes in the interpretation of related rules or additional guidance could require us to modify, supplement, or discontinue the use of these measures. Any such developments, or any perception that our non-GAAP disclosures are misleading, could adversely affect investor confidence in our reported results, our stock price, or our reputation for financial transparency.
There have been no other material changes to our risk factors as previously disclosed in Item 1A to Part 1 of our Form 10-K for the fiscal year ended December 31, 2024.
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4: MINE SAFETY DISCLOSURES
Not applicable.
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