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What changed in HEARTLAND EXPRESS INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HEARTLAND EXPRESS INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+378 added−395 removedSource: 10-K (2026-03-03) vs 10-K (2025-02-18)

Top changes in HEARTLAND EXPRESS INC's 2025 10-K

378 paragraphs added · 395 removed · 310 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

114 edited+30 added−43 removed76 unchanged
Biggest changeSmucker Transportation Award Best On Time National Asset Carrier During 2024, we were also recognized with the following environmental, operational, safety, and community service awards: • SmartWay - High Performer TL/Dry Van Truck Carrier "All Metrics" Category • TCA Fleet Safety Award 2023 - 2nd Place (Division VI, 100+ Million Miles) • Missouri Trucking Association - Safety Award (Over the Road, 15+ Million Miles) • Newsweek's 2024 Most Trustworthy Companies These awards are hard-earned and are a direct reflection upon our outstanding group of employees and our focus on excellence in all areas of our business.
Biggest changeThese awards include: • Pepsico Transportation – Carrier of the Year – WHD West Division • Georgia Pacific – OTR Van National Carrier of the Year • WK Kellogg Co – WKKCC CD&L Supplier Founders Award • Molson Coors – Transportation Supplier of the Year • Shaw Industries – Outbound Class B Carrier of the Year 3 • FedEx Express - Yearly Superior Performance Award FY 25 • Mars Pet Nutrition – Carrier of the Year East • Tractor Supply – Value Award – Accountability During 2025, we were also recognized with the following environmental, operational, safety, and community service awards: • Newsweek's 2025 Most Trustworthy Companies in America • Logistics Management – Quest for Quality Award – Expedited Motor Carriers • Wreaths Across America - Honor Fleet These awards are hard-earned and are a direct reflection upon our outstanding group of employees and our focus on excellence in all areas of our business.
However, the occurrence of unfavorable scores in one or more categories may (i) affect driver recruiting and retention by causing high-quality drivers to seek employment with other carriers, (ii) cause our customers to direct their business away from us and to carriers with higher fleet rankings, (iii) subject us to an increase in compliance reviews and roadside inspections, (iv) cause us to incur greater than expected expenses 8 in our attempts to improve unfavorable scores or (v) increase our insurance costs, any of which could adversely affect our results of operations and profitability.
However, the occurrence of unfavorable scores in one or more categories may (i) affect driver recruiting and retention by causing high-quality drivers to seek employment with other carriers, (ii) cause our customers to direct their business away from us and to carriers with higher fleet rankings, (iii) subject us to an increase in compliance reviews and roadside inspections, (iv) cause us to incur greater than expected expenses in our attempts to improve unfavorable scores or (v) increase our insurance costs, any of which could adversely affect our results of operations and profitability.
We compete with other truckload carriers; primarily those serving the regional, short-to-medium haul market. Logistics providers, railroads, less-than-truckload carriers, and private fleets provide additional competition but to a lesser extent. The industry is highly competitive based primarily upon freight rates, qualified drivers, service, and equipment availability. We specialize in time-sensitive shipments, including "just-in-time" and similar types of freight.
We compete with other truckload carriers; primarily those serving the short-to-medium haul market. Logistics providers, railroads, less-than-truckload carriers, and private fleets provide additional competition but to a lesser extent. The industry is highly competitive based primarily upon freight rates, qualified drivers, service, and equipment availability. We specialize in time-sensitive shipments, including "just-in-time" and similar types of freight.
The petition was generally disfavored by transportation industry participants, citing, among other things, the petition’s failure to address privacy and data security risks. It remains to be seen what rules, if any, may stem from this notice. However, in February 2023, the FMCSA announced a new operational test for monitoring and enforcing driver and motor carrier safety compliance standards.
The petition was generally disfavored by transportation industry participants, citing, among other things, the petition’s failure to address privacy and data security risks. It remains to be seen what rules, if any, may stem from this notice. However, in 2023, the FMCSA announced a new operational test for monitoring and enforcing driver and motor carrier safety compliance standards.
In 2020 CARB also passed the Advanced Clean Trucks (“ACT”) regulation, which became effective in 2021 and generally requires original equipment manufacturers to begin shifting towards greater production and sales of zero-emission heavy duty tractors starting with model year 2024. Under ACT, by 2045, every new tractor sold in California will need to be zero-emission.
In 2020 CARB passed the Advanced Clean Trucks (“ACT”) regulation, which became effective in 2021 and generally requires original equipment manufacturers to begin shifting towards greater production and sales of zero-emission heavy duty tractors starting with model year 2024. Under ACT, by 2045, every new tractor sold in California will need to be zero-emission.
In February 2023, the FMCSA issued a supplemental notice of proposed rulemaking requesting additional information on automated driving systems (“ADS”) and seeking comment on regulatory approaches that would enable it to obtain relevant safety information and the current and anticipated size of the population of carriers operating ADS-equipped CMVs.
In 2023, the FMCSA issued a supplemental notice of proposed rulemaking requesting additional information on automated driving systems (“ADS”) and seeking comment on regulatory approaches that would enable it to obtain relevant safety information and the current and anticipated size of the population of carriers operating ADS-equipped CMVs.
The FMCSA has made changes to the HOS rules in recent years that include greater flexibility to truck drivers regarding their 30-minute rest breaks, an extension of the shorthaul exemption by an additional two hours, and an extension of duty time for drivers encountering adverse weather by up to two hours.
The FMCSA has made changes to the HOS rules in recent years that include greater flexibility to truck drivers regarding their 30-minute rest breaks, an extension of the shorthaul exemption by an additional two hours, and an 7 extension of duty time for drivers encountering adverse weather by up to two hours.
These ten acquisitions have enabled us to solidify our position within existing regions, expand into new operating regions, expand service offerings to address longer length of haul needs from customers, 2 and pursue new customer relationships in new markets, as well as expand business relationships with current customers in new markets.
These ten acquisitions have enabled us to solidify our position within existing regions, expand into new operating regions, expand service offerings to address longer length of haul needs from customers, and pursue new customer relationships in new markets, as well as expand business relationships with current customers in new markets.
In addition to past organic growth through the development of our regional operating areas, we have completed ten acquisitions since 1986 with the most recent and our fifth acquisition since 2013, CFI, occurring on August 31, 2022 following the acquisition of Smith Transport on May 31, 2022.
In addition to past organic growth through the development of our operating areas, we have completed ten acquisitions since 1986 with the most recent and our fifth acquisition since 2013, CFI, occurring on August 31, 2022 following the acquisition of Smith Transport on May 31, 2022.
TAT exists to educate, equip, empower, and mobilize members of the trucking, bus and energy industries to combat human trafficking. 4 Seasonality We operate in a cyclical industry, within any given year there is also seasonality to typical freight patterns.
TAT exists to educate, equip, empower, and mobilize members of the trucking, bus and energy industries to combat human trafficking. Seasonality We operate in a cyclical industry, within any given year there is also seasonality to typical freight patterns.
In response, we continue to evaluate and explore different driving options and offerings for our existing and potential new drivers across our unique mix of driver and equipment offerings across Heartland Express, Millis Transfer, Smith Transport, and CFI.
In response, we continue to evaluate and explore different driving options and offerings for our existing and potential new drivers across our unique mix of driver and equipment offerings across Heartland Express, Millis Transfer and Smith Transport.
Information on our website is not incorporated by reference into this Annual Report. You may also access and read our filings with the SEC without charge through the SEC's website at www.sec.gov.
Information on our 13 website is not incorporated by reference into this Annual Report. You may also access and read our filings with the SEC without charge through the SEC's website at www.sec.gov.
In November 2024, a new rule referred to by the FMCSA as “Clearinghouse II,” a program that relates to drivers with drug and alcohol violations, took effect.
In 2024, a new rule referred to by the FMCSA as “Clearinghouse II,” a program that relates to drivers with drug and alcohol violations, took effect.
The California Air Resources Board ("CARB") also adopted emission control regulations that will be applicable to all heavy-duty tractors that pull 53-foot or longer box-type trailers within the State of California. The tractors and trailers subject to these CARB regulations must be either EPA SmartWay certified or equipped with low-rolling, resistance tires and retrofitted with SmartWay-approved aerodynamic technologies.
The California Air Resources Board ("CARB") also adopted emission control regulations that is applicable to all heavy-duty tractors that pull 53-foot or longer box-type trailers within the State of California. The tractors and trailers subject to these CARB regulations must be either EPA SmartWay certified or equipped with low-rolling, resistance tires and retrofitted with SmartWay-approved aerodynamic technologies.
If enacted, this could have a material adverse effect on our business, financial condition, and results of operations. Environmental Regulations We are subject to various environmental laws and regulations dealing with the hauling and handling of hazardous materials, fuel storage tanks, air emissions from our vehicles and facilities, engine idling, and discharge and retention of storm water.
If enacted, this could have a material adverse effect on our business, financial condition, and results of operations. Environmental Regulations We are subject to various environmental laws and regulations including those dealing with the hauling and handling of hazardous materials, fuel storage tanks, air emissions from our vehicles and facilities, engine idling, and discharge and retention of storm water.
We self-insure a portion of the exposure related to all of the aforementioned risks. Insurance 7 coverage, including self-insurance retention levels, is evaluated on an annual basis. We actively participate in the settlement of each claim incurred. We act as a self-insurer for auto liability, defined as including property damage, personal injury, or cargo.
We self-insure a portion of the exposure related to all of the aforementioned risks. Insurance coverage, including self-insurance retention levels, is evaluated on an annual basis. We actively participate in the settlement of each claim incurred. We act as a self-insurer for auto liability, defined as including property damage, personal injury, or cargo based on defined insurance retention.
Our mobile communication systems allows us to obtain information regarding equipment for better planning and efficient maintenance time as well as information regarding driver performance and efficiency. 6 As of December 31, 2024 the average age of our tractor fleet was 2.5 years compared to 2.2 years at December 31, 2023.
Our mobile communication systems allows us to obtain information regarding equipment for better planning and efficient maintenance time as well as information regarding driver performance and efficiency. As of December 31, 2025 the average age of our tractor fleet was 2.6 years compared to 2.5 years at December 31, 2024.
The NHTSA and the EPA have fuel economy and greenhouse gas standards for medium-and heavy-duty vehicles, including the tractors we use.
The NHTSA and the EPA currently have fuel economy and greenhouse gas standards for medium-and heavy-duty vehicles, including the tractors we use.
At December 31, 2024, all of our over-the-road operating tractor fleet was equipped with event recorders and accident avoidance technology. All over-the-road tractors are equipped with mobile communication systems that comply with the latest electronic log device regulations. These units are the base communication with our drivers.
At December 31, 2025, all of our over-the-road operating tractor fleet was equipped with event recorders and accident avoidance technology. All over-the-road tractors are equipped with mobile communication systems that comply with the latest electronic log device regulations. These units are the base communication with our drivers.
We continue to focus on providing high quality service to targeted customers with a high density of freight in our regional operating areas. We also offer truckload temperature-controlled transportation services and Mexico logistics services, which are not significant to our consolidated operations.
We focus on providing high quality service to targeted customers with a high density of freight in our operating areas. We also offer truckload temperature-controlled transportation services and Mexico logistics services, which are not significant to our consolidated operations.
Demand for our services may be muted during soft freight environments, like we experienced in the last two years. Demand for our freight services has been soft for the last two years as there has been a general imbalance of freight movements that have lagged available truck capacity.
Demand for our services may be muted during soft freight environments, like we experienced in the last three years. Demand for our freight services has been soft for the last three years as there has been a general imbalance of freight movements that have lagged available truck capacity.
The Company’s (or its subsidiaries', as applicable) new tractor purchases in 2024 complied with the emission and fuel consumption reductions required by the standards. Even though the trailer provisions of the standards have been removed, we will still need to ensure the majority of our fleet is compliant with the California standards (described in further detail below).
The Company’s (or its subsidiaries', as applicable) new tractor purchases in 2025 complied with the emission and fuel consumption reductions required by the standards. Even though the trailer provisions of the current standards have been removed, we will still need to ensure the majority of our fleet is compliant with the California standards (described in further detail below).
Certain driver pay packages include minimum pay protection provisions, future pay increases based on years of continued service with us, increased rates for accident-free miles of operation, detention pay, and other pay programs to assist drivers with unproductive time associated with circumstances outside of their control, such as inclement weather, equipment breakdowns, and customer issues.
Certain driver pay packages include future pay increases based on years of continued service with us, increased rates for accident-free miles of operation, detention pay, and other pay programs to assist drivers with unproductive time associated with circumstances outside of their control, such as inclement weather, equipment breakdowns, and customer issues.
In 2023, a final rule that amended DOT’s drug testing program to include oral fluid testing became effective; however, implementation cannot take effect until DHHS approves at least two laboratories to conduct oral fluid testing. Currently, DHHS has not approved any laboratories. Any changes to drug testing programs may reduce the number of available drivers. We currently perform urine testing.
In 2023, a final rule that amended DOT’s drug testing program to include oral fluid testing became effective; however, implementation cannot take effect until DHHS approves at least two laboratories to conduct oral fluid testing. Currently, DHHS has not approved any laboratories. Any changes to drug testing programs may reduce the number of available drivers.
With Clearinghouse II now in effect, states will be required to query the Clearinghouse when issuing, renewing, transferring, or upgrading a commercial driver's license and must revoke a driver's commercial driving privileges if such driver is prohibited from driving a motor vehicle for one or more drug or alcohol violations.
With Clearinghouse II now in effect, states are required to query the Clearinghouse when issuing, renewing, transferring, or upgrading a commercial driver's license and must revoke a driver's commercial driving privileges if such driver is prohibited from driving a motor vehicle for one or more drug or alcohol violations.
In 2022, the EPA adopted a final rule regarding emissions standards of nitrogen oxides for heavy-duty motor vehicles beginning with model year 2027 being more than 80% stronger than current emission standards, with the intent to reduce heavy-duty emissions by almost 50% from 2022 levels by 2045.
In 2022, the EPA adopted a final rule regarding emissions standards of nitrogen oxides for heavy-duty motor vehicles beginning with model year 2027 being more than 80% stronger than current emission standards, with the intent to reduce heavy duty emissions by almost 50% from 2022 levels by 2045 (the “2022 NOx Rule”).
The EPA has indicated that the 2022 rule is the first part of a three-part plan focusing on greenhouse gas emissions, which is commonly referred to as the “Cleaner Trucks Initiative,” or the “Clean Trucks Plan.” In 2023, the EPA released the second and third parts to the Clean Trucks Plan, including a proposed rule relating to greenhouse gas (“GHG”) standards for heavy-duty vehicles known as “Phase 3” to the EPA’s GHG program.
The EPA had indicated that the 2022 NOx Rule is the first part of a three-part plan focusing on greenhouse gas emissions, which is commonly referred to as the “Cleaner Trucks Initiative,” or the “Clean Trucks Plan.” In 2023, the EPA released the second and third parts to the Clean Trucks Plan, including a proposed rule relating to GHG standards for heavy-duty vehicles known as “Phase 3” to the EPA’s GHG program.
We have completed two recent strategic acquisitions to assist with the industry challenges, although we have been further challenged by the weak freight environment and the resulting shortage of profitable freight within the last two years. The profitable freight shortage we anticipate to be a near term challenge whereas we expect the shortage of qualified drivers to be ongoing.
We have completed strategic acquisitions to assist with the industry challenges, although we have been further challenged by the weak freight environment and the resulting shortage of profitable freight within the last three years. The profitable freight shortage we anticipate to be a near term challenge whereas we expect the shortage of qualified drivers to be ongoing.
These factors help minimize waiting time, which increases tractor utilization and promotes driver retention. 3 Customers, Marketing, and Safety We seek to transport freight that will complement traffic in our existing service areas and remain consistent with our focus on short-to-medium haul, regional distribution markets, and cross-border freight to and from Mexico.
These factors help minimize waiting time, which increases tractor utilization and promotes driver retention. Customers, Marketing, and Safety We seek to transport freight that will complement traffic in our existing service areas and remain consistent with our focus on short-to-medium haul and cross-border freight to and from Mexico.
We have historically operated the majority of our tractors while under warranty to minimize repair and maintenance cost and reduce service interruptions caused by breakdowns. The average age of our trailer fleet was 7.4 years at December 31, 2024 compared to 6.4 years at December 31, 2023.
We have historically operated the majority of our tractors while under warranty to minimize repair and maintenance cost and reduce service interruptions caused by breakdowns. The average age of our trailer fleet was 7.3 years at December 31, 2025 compared to 7.4 years at December 31, 2024.
Both of these issues are adversely impacting the Company and the industry as a whole, with respect to the practical application of the laws, thereby resulting in additional cost. As a result, we, along with other companies in the industry, could become subject to an uneven patchwork of laws throughout the United States.
Both of these issues are adversely impacting the Company and the industry as a whole, with respect to the practical application of the laws, thereby resulting in additional cost. As a result, we, along with other companies in the industry, could become subject to an uneven patchwork of laws throughout the U.S.
In March 2024, the FMCSA began proof-of-concept testing to determine whether the technology required for electronic identification systems is sufficient and information and data being provided is secure, reliable, and useful for the FMCSA. In 2022, Senate lawmakers introduced legislation that would set aside grant funds over four years to expand truck parking across the United States.
In 2024, the FMCSA began proof-of-concept testing to determine whether the technology required for electronic identification systems is sufficient and information and data being provided is secure, reliable, and useful for the FMCSA. In 2022, Senate lawmakers introduced legislation that would set aside grant funds over four years to expand truck parking across the U.S.
Serving the short-to-medium haul market permits us to use primarily single rather than team drivers and dispatch most loads directly from origin to destination without an intermediate equipment change other than for driver scheduling purposes. During 2024, approximately 75% of our loads were less than 500 miles in length of haul.
Primarily serving the short-to-medium haul market permits us to use single rather than team drivers on most loads and dispatch most loads directly from origin to destination without an intermediate equipment change other than for driver scheduling purposes. During 2025, approximately 77% of our loads were less than 500 miles in length of haul.
Additionally, in October 2023, California enacted two bills into law, Senate Bill 253 (“SB 253”) and Senate Bill 261 (“SB 261”), which require certain companies doing business in California to disclose greenhouse gas emissions and climate-related financial risks, with reporting beginning in 2026.
Additionally, in October 2023, California enacted two bills into law, Senate Bill 253 (“SB 253”) and Senate Bill 261 (“SB 261”), which require certain companies doing business in California to disclose greenhouse gas emissions and climate-related financial risks.
Substantially all of our revenue is, and for the last three fiscal years has been, generated from within the U.S. with immaterial revenue derived from Mexico and Canada. We operate twenty-eight terminal facilities throughout the contiguous U.S. and one in Mexico following the CFI acquisition, in addition to our terminal and corporate headquarters in North Liberty, Iowa.
Substantially all of our revenue is, and for the last three fiscal years has been, generated from within the U.S. with immaterial revenue derived from Mexico and Canada. We operate twenty-five terminal facilities throughout the contiguous U.S. and one in Mexico, in addition to our terminal and corporate headquarters in North Liberty, Iowa.
We have historically been a debt free organization although with the acquisition of CFI we now have debt, although we significantly lowered our debt balance during 2024. We expect to continue to evaluate acquisition candidates presented to us, however, we do not expect to make any significant acquisitions while we are paying down debt.
We have historically been a debt free organization although with the acquisition of CFI we incurred debt but have significantly lowered our debt balance since the acquisition. We expect to continue to evaluate acquisition candidates presented to us, however, we do not expect to make any significant acquisitions while we are paying down debt.
SB 253 requires companies that exceed $1 billion in annual revenue and that do business in California to publicly disclose their GHG emissions, while SB 261 requires companies doing business in California and earning annual revenue exceeding $500 million to report on their climate-related financial risks and measures taken to mitigate such risks on or before January 2026.
SB 253 requires companies that exceed $1 billion in annual revenue and that do business in California to publicly disclose their GHG emissions with initial reporting due on or before August 10, 2026, while SB 261 requires companies doing business in California and earning annual revenue exceeding $500 million to report on their climate-related financial risks and measures taken to mitigate such risks.
Our broad capacity network and customer base has allowed us to remain appropriately diversified as no customer accounted for more than 10% of our operating revenues in 2024, 2023, or 2022. Environmental and Sustainability We have adopted an "Environmental and Sustainability Mission".
Our broad capacity network and customer base has allowed us to remain appropriately diversified as only one customer accounted for more than 10% of our operating revenues in 2025, while no customers accounted for more than 10% in 2024 or 2023. Environmental and Sustainability We have adopted an "Environmental and Sustainability Mission".
In November 2024, the FMCSA published a notice announcing a revised SMS methodology implementing certain changes proposed in the February 2023 notice, including, among other changes, (i) rebranding BASICs as “Compliance Categories” and revising certain categories, (ii) consolidating existing road violations into simplified and distinct violation groups and simplifying the scale used to measure the severity of violations, (iii) adjusting intervention thresholds, and (iv) revising the SMS methodology to focus more heavily on recent violations.
In 2024, the FMCSA published a notice announcing a revised Safety Management System (“SMS”) methodology, including, among other changes, (i) rebranding BASICs as “Compliance Categories” and revising certain categories, (ii) consolidating existing road violations into simplified and distinct violation groups and simplifying the scale used to measure the severity of violations, (iii) adjusting intervention thresholds, and (iv) revising the SMS methodology to focus more heavily on recent violations.
In 2022, an industry group known as the Trucking Alliance sought an exemption from the FMCSA that would allow positive hair specimen tests to be uploaded to the Clearinghouse. This request was denied by the FMCSA, however, noting they cannot act until the DHHS finalizes these guidelines, which have been delayed by the DHHS until May 2025.
In 2022, an industry group known as the Trucking Alliance sought an exemption from the FMCSA that would allow positive hair specimen tests to be uploaded to the Clearinghouse. This request was denied by the FMCSA, however, noting they cannot act until the DHHS finalizes these guidelines, which have suffered ongoing delays with the DHHS.
These terminal locations are strategically located to concentrate on regional freight movements generally within a 500-mile radius of the terminals.
These terminal locations are owned facilities and strategically located to concentrate on freight movements generally within a 500-mile radius of the terminals.
It is unclear if other jurisdictions will adopt this view, or if any legislation will result from this holding. If so, this could have an adverse effect on the results of operations for our teams. In November 2023, a bill was introduced to Congress that would eliminate an exclusion of truck drivers from receiving overtime pay.
It is unclear if other jurisdictions will adopt this view, or if any legislation will result from this holding. If so, this could have a material adverse effect on our business, financial condition, and results of operations. In 2023, a bill was introduced to Congress that would eliminate an exclusion of truck drivers from receiving overtime pay.
These strategies allow us the flexibility to buy and sell tractors (and trailers) opportunistically to capitalize on new and used equipment markets, size our fleet to the volume of attractive freight, and manage cash tax expense.
Historically, we have paid cash for the acquisition of new revenue equipment. These strategies allow us the flexibility to buy and sell tractors (and trailers) opportunistically to capitalize on new and used equipment markets, size our fleet to the volume of attractive freight, and manage cash tax expense.
A similar bill, the Truck Parking Safety Improvement Act, was introduced into the Senate in March 2023 and if enacted as proposed, would dedicate $755 million in funding over the next three years to expand access to truck parking and rest areas for commercial drivers.
A similar bill, the Truck Parking Safety Improvement Act, was introduced into the Senate in 2023 and reintroduced in February 2025. If enacted, the bill would dedicate $755 million in funding over the following three years to expand access to truck parking and rest areas for commercial drivers.
One of our core operating goals is to maintain a modern fleet of tractor and trailer equipment. The overall performance and reliability of tractor equipment typically has increased with each new model year of tractors that we have acquired in the last 5 years. By maintaining late model year tractors, a low average age, we experience better operating performance.
The overall performance and reliability of tractor equipment typically has increased with each new model year of tractors that we have acquired in the last 5 years. By maintaining late model year tractors, a low average age, we experience better operating performance.
Our primary customers include retailers, manufacturers and parcel carriers. Our 25, 10, and 5 largest customers accounted for approximately 60%, 40%, and 26% of our operating revenues, respectively, in 2024. During 2023, our 25, 10, and 5 largest customers were approximately 56%, 36%, and 22%, of our operating revenues respectively.
Our primary customers include retailers, manufacturers and parcel carriers. Our 25, 10, and 5 largest customers accounted for approximately 63%, 47%, and 32% of our operating revenues, respectively, in 2025. During 2024, our 25, 10, and 5 largest customers were approximately 60%, 40%, and 26%, of our operating revenues respectively.
However, the proposal also requires a second sample using either urine or an oral fluid test if a hair test is positive, if a donor is unable to provide a sufficient amount of hair for faith-based or medical reasons, or due to an insufficient amount or length of hair.
However, the proposal also requires a second sample using either urine or an oral fluid test if a hair test is positive or if a donor is unable to provide a sufficient amount of hair.
We primarily provide nationwide asset-based dry van truckload service for major shippers across the United States, along with cross-border freight and other transportation services offered through third party partnerships in Mexico.
We primarily provide nationwide asset-based dry van truckload service for major shippers across the United States, along with cross-border freight and other transportation services offered through third party partnerships in Mexico. Our consolidated average length of haul is under 400 miles.
The Food Traceability Rule is one aspect of the blueprint and has a compliance date for all parties subject to its recordkeeping requirements of January 20, 2026. In the event the Company becomes subject to any such recordkeeping requirements, compliance costs may increase.
The Food Traceability Rule is one aspect of the blueprint and, for all parties subject to its recordkeeping requirements, had an original compliance date of January 20, 2026 that has since been extended to July 20, 2028. In the event the Company becomes subject to any such recordkeeping requirements, compliance costs may increase.
For the years ended December 31, 2024 and 2023, independent contractors accounted for approximately 3.8% and 5.0% of our total miles, respectively. We also utilize third party carriers to facilitate our Mexico logistics operations, following the CFI acquisition. Independent contractors and third party carriers are presented as rent and purchased transportation costs.
For the years ended December 31, 2025 and 2024, independent contractors accounted for approximately 2.0% and 3.8% of our total miles, respectively. We also utilize third party carriers to facilitate our CFI Mexico logistics operations. Independent contractors and third party carrier costs are presented as rent and purchased transportation within the Consolidated Statements of Comprehensive Income.
During the year ended December 31, 2024, we had an average of approximately 5,700 drivers and non-driving personnel compared to approximately 6,320 during the year ended December 31, 2023. As of the end of January 2025 there were approximately 5,220 drivers and non-driving personnel.
During the year ended December 31, 2025, we had an average of approximately 4,560 drivers and non-driving personnel compared to approximately 5,700 during the year ended December 31, 2024. As of the end of January 2026 there were approximately 3,630 drivers and non-driving personnel.
These effects, combined with the uncertainty as to the operating results that will be produced by the newly designed diesel engines and the residual values of these vehicles, could increase our costs or otherwise adversely affect our business or operations.
Compliance with such regulations could increase the cost of new tractors and trailers, impair equipment productivity, and increase operating expenses. These effects, combined with the uncertainty as to the operating results that will be produced by the newly designed diesel engines and the residual values of these vehicles, could increase our costs or otherwise adversely affect our business or operations.
We also invest a significant amount of capital in our terminal facilities as we strive to offer our driver employees up to date and convenient amenities and safe and secure parking throughout our terminal network across the country while they are away from home.
Currently over 16% of our driver employees, individually, have achieved 1.0 million or more safe miles. We also invest a significant amount of capital in our terminal facilities as we strive to offer our driver employees up to date and convenient amenities and safe and secure parking throughout our terminal network across the country while they are away from home.
These adverse effects, combined with the uncertainty as to the reliability of the newly designed diesel engines and the residual values of our equipment, could materially increase our costs or otherwise adversely affect our business or operations. We cannot predict, however, the extent to which our operations and productivity will be impacted.
These adverse effects, combined with the uncertainty as to whether manufacturers will be required to re-design diesel engines or make other changes affecting the residual values of our equipment, could materially increase our costs or otherwise adversely affect our business or operations. We cannot predict, however, the extent to which our operations and productivity will be impacted.
Our efforts have been recognized by the U.S. EPA SmartWay Excellence Award in seven of the last ten years of award consideration. Furthermore, we have been recognized as a SmartWay High Performer seven times. Human Rights We have adopted a "Human Rights Mission".
Our efforts have been recognized by the U.S. EPA SmartWay Excellence Award seven times. We have also been recognized as a SmartWay High Performer seven times. Human Rights We have adopted a "Human Rights Mission".
We provide premium service at compensatory rates, rather than competing solely on the basis of price. We operate in a cyclical industry. In early 2022, freight demand was initially strong, but demand began to soften in the back half of 2022 and continued to degrade throughout all of 2023 and continued to be weak during 2024.
We provide premium service at compensatory rates, rather than competing solely on the basis of price. We operate in a cyclical industry. Freight demand was degraded throughout all of 2023 and continued to be weak during 2024 and 2025.
Over the thirty-eight years from 1986 to 2024, we have grown our revenues to $1.0 billion from $21.6 million. For the five year period 2020 through 2024 we had the highest revenue, $4.5 billion, of any previous five year period.
Over the thirty-nine years from 1986 to 2025, we have grown our revenues to $805.7 million from $21.6 million. For the five year period 2021 through 2025 we had the highest revenue, $4.6 billion, of any previous five year period.
Operations Our operating motto is "Service For Success". Our operations department focuses on the successful execution of customer expectations and providing consistent opportunities for our drivers, in conjunction with maximizing equipment utilization. These objectives require a combined effort of marketing, regional operations managers, and fleet management.
Operations Our operating motto is "Service For Success". Our operations department focuses on the successful execution of customer expectations and providing consistent opportunities for our drivers, in conjunction with maximizing equipment utilization.
It is still unclear what impact of the Food Traceability Rule will have on the Company and others in the industry, but further regulation in this area could negatively affect our business by increasing our compliance obligations and related expenses going forward.
It is still unclear what impact of the Food Traceability Rule will have on the Company and others in the industry, but further regulation in this area could negatively affect our business by increasing our compliance obligations and related expenses going forward. Executive and Legislative Climate In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law.
However, adoption and implementation could negatively impact our business by increasing our compliance obligations and related expenses. In January 2023, the Safer Highways and Increased Performance for Interstate Trucking Act (the “SHIP IT Act”) was introduced into the U.S. House of Representatives.
It is unclear what other legislative initiatives will be signed into law and what changes they may undergo. However, adoption and implementation could negatively impact our business by increasing our compliance obligations and related expenses. In 2023, the Safer Highways and Increased Performance for Interstate Trucking Act (the “SHIP IT Act”) was introduced into the U.S. House of Representatives.
It is expected that the effects from the rule may further impair the pool of available drivers. 9 In 2020, the Department of Health and Human Services (“DHHS”) announced proposed mandatory guidelines to allow employers to drug test truck drivers and other federal workers for pre-employment and random testing using hair specimens.
In 2020, the Department of Health and Human Services (“DHHS”) announced proposed mandatory guidelines to allow employers to drug test truck drivers and other federal workers for pre-employment and random testing using hair specimens.
Our Chief Operating Decision Maker (“CODM”), our CEO and President, evaluates the operational efficiencies of our transportation services, operating performance and asset allocation on a combined basis based on consolidated operating goals and objectives.
We manage our business based on overall corporate operating goals and objectives that are the same for all of our brands. Our Chief Operating Decision Maker (“CODM”), our CEO and President, evaluates the operational efficiencies of our transportation services, operating performance and asset allocation on a combined basis based on consolidated operating goals and objectives.
Certain industry groups have challenged these rules in court, and while the FMCSA's final rule has been upheld, it remains unclear if industry or other groups will bring additional challenges against the FMCSA's final rule. Any future changes to HOS rules could materially and adversely affect our operations and profitability.
Certain industry groups have challenged these rules in court, and while the FMCSA's final rule has been upheld, it remains unclear if industry or other groups will bring additional challenges against the FMCSA's final rule.
("Heartland Express"), and Midwest Holding Group, LLC and Millis Transfer, LLC ("Millis Transfer"), and Smith Transport, LLC ("Smith Transport"), and CFI entities, Transportation Resources, Inc. and Contract Freighters, Inc. (collectively with certain Mexican entities, "CFI"). Effective December 31, 2024, Franklin Logistics, LLC was merged into Smith Transport, LLC.
(collectively, "Heartland Express"), and Midwest Holding Group, LLC and Millis Transfer, LLC (together, "Millis Transfer"), and Smith Transport, LLC ("Smith Transport"), and certain Mexican entities. Effective December 31, 2025, we integrated and rebranded U.S. operations of Contract Freighters, Inc. ("CFI") into Heartland Express. Effective December 31, 2024, Franklin Logistics, LLC was merged into Smith Transport, LLC.
CARB has also announced its intentions to adopt regulations ensuring that 100% of tractors operating in California are operating with battery or fuel cell-electric engines in the future. Whether these regulations will ultimately be adopted remains unclear.
CARB has also announced its intentions to adopt regulations ensuring that 100% of tractors operating in California are operating with battery or fuel cell-electric engines in the future. Whether these regulations will ultimately be adopted remains unclear. Federal and state lawmakers also have proposed a variety of other regulatory limits on carbon emissions and fuel consumption.
These laws are currently facing litigation, which could result in delays or modifications to the laws. Implementation of these additional reporting requirements would result in increased compliance costs and resource utilization. In order to reduce exhaust emissions, lawmakers, including federal and some states and municipalities have begun to restrict the locations and amount of time where diesel-powered tractors may idle.
Implementation of SB 253 and SB 261 or additional reporting requirements would result in increased compliance costs and resource utilization. In order to reduce exhaust emissions, lawmakers, including federal and some states and municipalities continue to restrict the locations and amount of time where diesel-powered tractors may idle.
Our customer service department is responsible for maintaining the continuity between the customer’s needs and our ability to meet those needs by communicating the customer’s expectations to the fleet management group.
These objectives require a combined effort of marketing, operations managers, and fleet management. 2 Our customer service department is responsible for maintaining the continuity between the customer’s needs and our ability to meet those needs by communicating the customer’s expectations to the fleet management group.
In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as well. Our reporting units operate centralized computer networks within their respective operations and regular communication to achieve enterprise-wide load coordination. We are actively working to better integrate computer networks across reporting units.
In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as well. Our reporting units operate on a centralized computer network which assists with regular communication to achieve enterprise-wide load coordination and other operating efficiencies.
We do not know of any environmental regulations that would have a material effect on our capital expenditures, earnings or competitive position. Additionally, increasing efforts to control emissions of greenhouse gases may have an adverse effect on us.
We do not know of any environmental regulations that would have a material effect on our capital expenditures, earnings or competitive position. Additionally, efforts to control emissions of greenhouse gases may have an adverse effect on us. We aim to maintain a young fleet age of tractors to ensure we are utilizing technological advancements deployed by manufacturers to reduce emissions.
Our comprehensive driver compensation and benefits program rewards drivers for years of service and safe operating mileage benchmarks, which are critical to our operational and financial performance.
We have continued to get more creative in providing better pay, benefits, equipment, and facilities for our drivers. Our comprehensive driver compensation and benefits program rewards drivers for years of service and safe operating mileage benchmarks, which are critical to our operational and financial performance.
Complying with these environmental regulations and any future GHG regulations enacted by CARB, the EPA, the NHTSA and/or any other state or federal governing body has increased and will likely continue to increase the cost of our new tractors, may increase the cost of new trailers, may require us to retrofit certain of our trailers, may increase our maintenance costs, and could impair equipment productivity and increase our operating costs, particularly if such costs are not offset by potential fuel savings.
These restrictions could force us to purchase on-board power units that do not require the engine to idle or to alter our drivers' behavior, which could result in a decrease in productivity or increase in driver turnover. 12 These effects, combined with the uncertainty of any future GHG regulations enacted by CARB, the EPA, the NHTSA and/or any other state or federal governing body has increased and will likely continue to increase the cost of our new tractors, may increase the cost of new trailers, may require us to retrofit certain of our trailers, may increase our maintenance costs, and could impair equipment productivity and increase our operating costs, particularly if such costs are not offset by potential fuel savings.
A final rule with respect to these regulations was issued in March 2024 and establishes new GHG emission standards for heavy-duty motor vehicles which are phased-in starting with model year 2027 and increasing in stringency annually through model year 2032. Compliance with these regulations could increase the cost of new tractors and trailers, impair equipment productivity, and increase operating expenses.
A final rule with respect to these regulations was issued in 2024 and established new GHG emission standards for heavy-duty motor vehicles which are phased-in starting with model year 2027 and increasing in stringency annually through model year 2032 (the “Phase 3 Rule”).
In 2018, the FMCSA granted a petition filed by the American Trucking Associations and in doing so determined that federal law does preempt California’s wage and hour laws, and interstate truck drivers are not subject to such laws.
In 2018, the FMCSA granted a petition filed by the American Trucking Associations and in doing so determined that federal law preempts California’s wage and hour laws, and interstate truck drivers are not subject to such laws. The FMCSA’s decision has been appealed by labor groups and multiple lawsuits have been filed in federal courts seeking to overturn the decision.
More recently, the DOT has provided funding to increase parking in certain heavily congested areas of Nevada, Ohio, and Wisconsin, and Congressional leaders have included a provision in the House funding bill introduced in June 2024 to allocate $200 million for truck parking projects.
Further, the DOT has provided funding to increase parking in certain heavily congested areas of Nevada, Ohio, Wisconsin, and Florida, while certain Congressional leaders have introduced legislation to allocate an additional $200 million for truck parking projects.
In 2020 the FMCSA announced that it would permanently implement the Crash Preventability Demonstration Program (“CPDP”), which does not count crashes when motor carriers are not at fault while calculating a carrier’s safety measurement profile.
Any changes that increase the likelihood of us receiving unfavorable scores could adversely affect our results of operations and profitability. 8 In 2020 the FMCSA announced that it would permanently implement the Crash Preventability Demonstration Program (“CPDP”), which does not count crashes when motor carriers are not at fault while calculating a carrier’s safety measurement profile.
Future rulemaking relating to electronic logging devices (“ELD”) may occur and any final rules could affect our ELD technology, compliance, usage, and compliance efforts. There are two methods of evaluating the safety and fitness of carriers.
Future rulemaking relating to electronic logging devices (“ELD”) may occur and any final rules could affect our ELD technology, compliance, usage, and compliance efforts. The DOT evaluates the safety and fitness of carriers based on onsite investigations or a remote compliance reviews.
Changes to such HOS rules can negatively impact our productivity and affect our operations and profitability by reducing the number of hours per day or week our drivers may operate and/or disrupting our network.
The DOT, through the Federal Motor Carrier Safety Administration (“FMCSA”), imposes safety and fitness regulations on us and our drivers, including rules that restrict driver HOS. Changes to such HOS rules can negatively impact our productivity and affect our operations and profitability by reducing the number of hours per day or week our drivers may operate and/or disrupting our network.
The adoption of such changes is contingent on the results of the new modeling theory and additional public feedback. Therefore, it is unclear if, when and to what extent such changes to the CSA program will occur. In February 2023, the FMCSA published a notice of proposed changes to its Safety Measurement System (“SMS”) methodology, including the BASIC categories.
The adoption of such changes is contingent on the results of the new modeling theory and additional public feedback. Therefore, it is unclear if, when and to what extent such changes to the CSA program will occur.
Department of Energy (“DOE”) average price of fuel decreased 10.8% in 2024 compared to 2023, which decreased our net fuel cost, before the impacts of fleet efficiency, for the year ended December 31, 2024 compared to 2023.
For the years ended December 31, 2025 and 2024, fuel surcharge revenues were $96.6 million and $133.9 million, respectively. Department of Energy (“DOE”) average price of fuel decreased 2.6% in 2025 compared to 2024, which decreased our net fuel cost, before the impacts of fleet efficiency, for the year ended December 31, 2025 compared to 2024.
In order to attract and retain experienced drivers who understand the importance of customer service, we have sought to solidify our position as an industry leader in driver compensation in our operating markets and for the services we provide. We have continued to get more creative in providing better pay, benefits, equipment, and facilities for our drivers.
As discussed below, the Company's driver training programs provide an additional source of future potential professional drivers. In order to attract and retain experienced drivers who understand the importance of customer service, we have sought to solidify our position as an industry leader in driver compensation in our operating markets and for the services we provide.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe acquisition of CFI involves numerous ongoing risks, including: • management’s attention may be diverted from other areas of the Company, especially given the size of CFI and the complexity of integrating CFI into the Company; • prior to the acquisition, our management team had limited experience with temperature-controlled freight and brokerage operations and no experience with Mexican operations and therefore may be challenged in managing the temperature-controlled freight, brokerage operations, and Mexican operations, particularly if there were a loss of the CFI management team; • increased risk of significant deficiencies or material weaknesses in internal controls over financial reporting related to CFI’s internal controls; • the potential continued loss of professional drivers of CFI or our historical operations due to differences in pay, driver hiring standards, policies or culture, or other factors, or an increase in costs of recruiting and retaining professional drivers; • the challenges and unanticipated costs associated with integrating complex organizations, systems, operating procedures, information technology, compliance programs, technology, networks, and other assets; • the inability to successfully combine our respective businesses in a manner and on a timeline that permits us to achieve the cost savings and other anticipated benefits from the acquisition; • the challenges associated with known and unknown legal or financial liabilities associated with the acquisition, for which there is no escrow or representation and warranty insurance under the purchase agreement; • the difficulties in retaining and integrating key management and other key employees; and • the challenge of managing the expanded operations of a larger and more complex company.
Biggest changeThe 18 acquisition of CFI and integration and rebranding of the U.S. operations of CFI into Heartland Express involve numerous ongoing risks, including: • management’s attention may be diverted from other areas of the Company, especially given the size of CFI and the complexity of integrating the U.S. operations of CFI into Heartland Express; • prior to the acquisition, our management team had limited experience with temperature-controlled freight and brokerage operations and no experience with Mexican operations and therefore may be challenged in managing the temperature-controlled freight, brokerage operations, and Mexican operations; • increased risk of significant deficiencies or material weaknesses in internal controls over financial reporting related to integration of CFI into Heartland Express; • the potential continued loss of professional drivers of CFI or our historical operations, including due to the integration of the U.S. operations of CFI into Heartland Express, or an increase in costs of recruiting and retaining professional drivers; • the challenges and unanticipated costs associated with integrating complex organizations, systems, operating procedures, information technology, compliance programs, technology, networks, and other assets; • the inability achieve the cost savings and other anticipated benefits from the integration and rebranding to Heartland Express; • the difficulties in retaining and integrating key management and other key employees; and • the challenge of managing the expanded operations of a larger and more complex company.
Such risks related to system failure, upgrade complication, security breach (including cyberattacks), or other system disruption may also impact our customers, vendors, third party capacity providers, and other counterparties, which could result in declines and volatility in customer demand and unavailability of products and services from vendors and third-party capacity providers, any of which would have a material adverse effect on our business.
Such risks related to system failure, upgrade complication, security breach (including cyberattacks), or other system disruption may also impact our customers, vendors, third party capacity providers, and other counterparties, which could result in declines and volatility in customer demand and unavailability of products and services from vendors and third-party providers, any of which would have a material adverse effect on our business.
Our current indebtedness, as well as any future indebtedness, could, among other things: • require us to dedicate a substantial portion of our cash flow to payments on our debt, reducing our ability to use our cash flow to fund capital expenditures and working capital and other general operational requirements; 25 • expose us to the risk of increased interest rates relating to any of our indebtedness at variable rates; • limit our flexibility to plan for and react to changes in our business and/or changing market conditions; • place us at a competitive disadvantage relative to some of our competitors that have less, or less restrictive, debt than us; • limit our ability to pursue acquisitions or cause us to make non-strategic divestitures; and • increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates or a downturn in our business or the economy.
Our current indebtedness, as well as any future indebtedness, could, among other things: • require us to dedicate a substantial portion of our cash flow to payments on our debt, reducing our ability to use our cash flow to fund capital expenditures and working capital and other general operational requirements; • expose us to the risk of increased interest rates relating to any of our indebtedness at variable rates; • limit our flexibility to plan for and react to changes in our business and/or changing market conditions; 25 • place us at a competitive disadvantage relative to some of our competitors that have less, or less restrictive, debt than us; • limit our ability to pursue acquisitions or cause us to make non-strategic divestitures; and • increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates or a downturn in our business or the economy.
If we succeed in consummating future acquisitions, our business, financial condition and results of operations, may be materially adversely affected because: • some of the acquired businesses may not achieve anticipated revenue, earnings, or cash flows; • we may assume liabilities that were not disclosed to us or otherwise exceed our estimates; • we may be unable to integrate acquired businesses successfully, or at all, and realize anticipated economic, operational and other benefits in a timely manner, which could result in substantial costs and delays or other operational, technical, or financial problems; • acquisitions could disrupt our ongoing business, distract our management, and divert our resources; • we may experience an increase in our customer concentration; • we may experience difficulties operating in markets in which we have had no or only limited direct experience; • we may incur transaction costs and acquisition-related integration costs; • we could lose customers, employees, and drivers of any acquired company; • we may experience potential future impairment charges, write-offs, write-downs, or restructuring charges; and • we may issue dilutive equity securities, incur indebtedness, and/or incur large one-time expenses or charges.
If we succeed in consummating future acquisitions, our business, financial condition and results of operations, may be materially adversely affected because: 16 • some of the acquired businesses may not achieve anticipated revenue, earnings, or cash flows; • we may assume liabilities that were not disclosed to us or otherwise exceed our estimates; • we may be unable to integrate acquired businesses successfully, or at all, and realize anticipated economic, operational and other benefits in a timely manner, which could result in substantial costs and delays or other operational, technical, or financial problems; • acquisitions could disrupt our ongoing business, distract our management, and divert our resources; • we may experience an increase in our customer concentration; • we may experience difficulties operating in markets in which we have had no or only limited direct experience; • we may incur transaction costs and acquisition-related integration costs; • we could lose customers, employees, and drivers of any acquired company; • we may experience potential future impairment charges, write-offs, write-downs, or restructuring charges; and • we may issue dilutive equity securities, incur indebtedness, and/or incur large one-time expenses or charges.
Some of the principal risks during such times are as follows: • we may experience a reduction in overall freight levels, which may impair our asset utilization; • certain of our customers may face credit issues and could experience cash flow problems that may lead to payment delays, increased credit risk, bankruptcies and other financial hardships that could result in even lower freight demand and may require us to increase our allowance for credit losses; • freight patterns may change as supply chains are redesigned, resulting in an imbalance between our capacity and our customers’ freight demand; • customers may solicit bids for freight from multiple trucking companies or select competitors that offer lower rates from among existing choices in an attempt to lower their costs and we might be forced to lower our rates or lose freight; • we may be forced to accept freight from freight brokers, where freight rates are typically lower, or may be forced to incur more non-revenue miles to obtain loads; and • the resale value of our equipment may decline, which could negatively impact our earnings and cash flows.
Some of the principal risks during such times are as follows: 14 • we may experience a reduction in overall freight levels, which may impair our asset utilization; • certain of our customers may face credit issues and could experience cash flow problems that may lead to payment delays, increased credit risk, bankruptcies and other financial hardships that could result in even lower freight demand and may require us to increase our allowance for credit losses; • freight patterns may change as supply chains are redesigned, resulting in an imbalance between our capacity and our customers’ freight demand; • customers may solicit bids for freight from multiple trucking companies or select competitors that offer lower rates from among existing choices in an attempt to lower their costs and we might be forced to lower our rates or lose freight; • we may be forced to accept freight from freight brokers, where freight rates are typically lower, or may be forced to incur more non-revenue miles to obtain loads; and • the resale value of our equipment may decline, which could negatively impact our earnings and cash flows.
These factors include the following: • we compete with many other truckload carriers of varying sizes and, to a lesser extent, with less-than-truckload carriers, railroads, intermodal companies, and other transportation and logistics companies, many of which have access to more equipment and greater capital resources than we do, preferential customer contracts, and other competitive advantages; • many of our competitors periodically reduce their freight rates to gain business, especially during times of reduced growth rates in the economy, which may limit our ability to maintain or increase freight rates or to maintain or expand our business or may require us to reduce our freight rates in order to maintain business and keep our equipment productive; • some of our customers are other transportation companies or also operate their own private trucking fleets, and they may decide to transport more of their own freight; • we may increase the size of our fleet during periods of high freight demand during which our competitors also increase their capacity, and we may experience losses in greater amounts than such competitors during subsequent cycles of softened freight demand if we are required to dispose of assets at a loss to match reduced customer demand; • a significant portion of our business is in the retail industry, which continues to undergo a shift away from the traditional brick and mortar model towards e-commerce, and this shift could impact the manner in which our customers source or utilize our services; • many customers reduce the number of carriers they use by selecting so-called "core carriers" as approved service providers or by engaging dedicated providers, and we may not be selected; 16 • the trend toward consolidation in the trucking industry may create large carriers with greater financial resources and other competitive advantages relating to their size, and we may have difficulty competing with these larger carriers; • the market for qualified drivers is increasingly competitive, and our inability to attract and retain drivers could reduce our equipment utilization or cause us to increase compensation to our drivers, both of which would adversely affect our profitability; • advances in technology may require us to increase investments in order to remain competitive, and our customers may not be willing to accept higher freight rates to cover the cost of these investments; • competition from freight logistics and freight brokerage companies and the proliferation of new brokerage platforms and technologies may adversely affect our customer relationships and freight rates; and • the Heartland, Millis Transfer, Smith Transport, and CFI brand names are valuable assets that are subject to the risk of adverse publicity (whether or not justified) which could result in the loss of value attributable to our brand and reduced demand for our services.
These factors include the following: • we compete with many other truckload carriers of varying sizes and, to a lesser extent, with less-than-truckload carriers, railroads, intermodal companies, and other transportation and logistics companies, many of which have access to more equipment and greater capital resources than we do, preferential customer contracts, and other competitive advantages; • many of our competitors periodically reduce their freight rates to gain business, especially during times of reduced growth rates in the economy, which may limit our ability to maintain or increase freight rates or to maintain or expand our business or may require us to reduce our freight rates in order to maintain business and keep our equipment productive; • some of our customers are other transportation companies or also operate their own private trucking fleets, and they may decide to transport more of their own freight; • we may increase the size of our fleet during periods of high freight demand during which our competitors also increase their capacity, and we may experience losses in greater amounts than such competitors during subsequent cycles of softened freight demand if we are required to dispose of assets at a loss to match reduced customer demand; • a significant portion of our business is in the retail industry, which continues to undergo a shift away from the traditional brick and mortar model towards e-commerce, and this shift could impact the manner in which our customers source or utilize our services; • many customers reduce the number of carriers they use by selecting so-called "core carriers" as approved service providers or by engaging dedicated providers, and we may not be selected; • the trend toward consolidation in the trucking industry may create large carriers with greater financial resources and other competitive advantages relating to their size, and we may have difficulty competing with these larger carriers; • the market for qualified drivers is increasingly competitive, and our inability to attract and retain drivers could reduce our equipment utilization or cause us to increase compensation to our drivers, both of which would adversely affect our profitability; • advances in technology may require us to increase investments in order to remain competitive, and our customers may not be willing to accept higher freight rates to cover the cost of these investments; • competition from freight logistics and freight brokerage companies and the proliferation of new brokerage platforms and technologies may adversely affect our customer relationships and freight rates; and • the Heartland Express, Millis Transfer, and Smith Transport brand names are valuable assets that are subject to the risk of adverse publicity (whether or not justified) which could result in the loss of value attributable to our brand and reduced demand for our services.
Business.” Insofar as any changes in the CSA program increase the likelihood of the Company receiving unfavorable scores or mandate FMCSA to restore public access to the scores, it could adversely affect our results of operation and profitability. Receipt of an unfavorable DOT safety rating could have a materially adverse effect on our operations and profitability.
Business.” Insofar as any changes in the CSA program increase the likelihood of the Company receiving unfavorable scores or mandate FMCSA to restore public access to the scores, it could adversely affect our results of operation and profitability. 23 Receipt of an unfavorable DOT safety rating could have a materially adverse effect on our operations and profitability.
Further, the compensation we offer our drivers is subject to market conditions, and we may find it necessary to increase driver compensation in future periods. In addition, we and many other truckload carriers suffer from a high turnover rate of drivers that is inherent within our industry.
Further, the compensation 17 we offer our drivers is subject to market conditions, and we may find it necessary to increase driver compensation in future periods. In addition, we and many other truckload carriers suffer from a high turnover rate of drivers that is inherent within our industry.
Our business could be harmed if we are unable to continue to obtain an adequate supply of new tractors and trailers for these or other reasons, and the future use of autonomous tractors and alternative fuel could increase the price of new tractors and decrease the value of used, non-autonomous tractors.
Our business could be harmed if we are unable to continue to obtain an adequate supply of new tractors and trailers for these or other reasons, and the future use of autonomous tractors and alternative fuel 26 could increase the price of new tractors and decrease the value of used, non-autonomous tractors.
There is no assurance any of our customers, including those with longer term contracts, will continue to 18 utilize our services, renew our existing contracts, maintain their current rates (including customary rate increases), or continue at the same volume levels.
There is no assurance any of our customers, including those with longer term contracts, will continue to utilize our services, renew our existing contracts, maintain their current rates (including customary rate increases), or continue at the same volume levels.
We may also suffer from natural disasters and weather-related events, such as tornadoes, hurricanes, blizzards, ice 21 storms, floods, and fires, which may increase in frequency and severity due to climate change, as well as other man-made disasters.
We may also suffer from natural disasters and weather-related events, such as tornadoes, hurricanes, blizzards, ice storms, floods, and fires, which may increase in frequency and severity due to climate change, as well as other man-made disasters.
Organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions.
Organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to such matters. Such ratings are used by some investors to inform their investment and voting decisions.
However, we cannot assure you these measures will be effective. 23 For further discussion of the CSA program, please see “Regulation” under “Item 1.
However, we cannot assure you these measures will be effective. For further discussion of the CSA program, please see “Regulation” under “Item 1.
If any claim is not covered by an insurance policy, exceeds our coverage, or falls outside the aggregate coverage limit, we would bear the excess or uncovered amount, in addition to our other self-insured amounts. Certain insurance carriers that provide excess insurance coverage to us currently and for past claim years have encountered financial issues.
If any claim is not covered by an insurance policy, exceeds our coverage, or falls outside the scope or coverage limit, we would bear the excess or uncovered amount, in addition to our other self-insured amounts. Certain insurance carriers that provide excess insurance coverage to us currently and for past claim years have encountered financial issues.
If we are required to reserve or pay additional amounts because our estimates are revised or the claims ultimately prove to be more severe than originally assessed or if our self-insured retention levels change, our financial condition and results of operations may be materially adversely affected.
If we are required to accrue or pay additional amounts because our estimates are revised or the claims ultimately prove to be more severe than originally assessed or if our self-insured retention levels change, our financial condition and results of operations may be materially adversely affected.
There can be no assurance that our business will grow in the future, or at all, or that we can effectively adapt our management, administrative, and operational systems to respond to any future growth. Further, there can be no assurance that we will be able to successfully implement cost controls and improve our operating ratio.
There can be no assurance that our business will grow in the future, or at all, or that we can effectively adapt our management, administrative, and operational systems to respond to any future growth and return to profitability. Further, there can be no assurance that we will be able to successfully implement cost controls and improve our operating ratio.
Higher costs incurred by us or by our suppliers who pass the costs on to us through higher prices could adversely affect our results of operations. Developments in labor and employment law and any unionizing efforts by employees could have a materially adverse effect on our results of operations.
Higher costs incurred by us or by our suppliers who pass the costs on to us through higher prices could adversely affect our results of operations. Developments in labor and employment law and any unionizing efforts by employees or employees of related businesses could have a materially adverse effect on our results of operations.
Prices have increased in the past and may continue to increase, due to, among other reasons, (i) increases in commodity prices, (ii) government regulations applicable to newly manufactured tractors, trailers, and diesel engines, (iii) the pricing discretion of equipment manufacturers, (iv) increased demand for equipment due to a more favorable freight market, and (v) 26 proposed changes in tariffs.
Prices have increased in the past and may continue to increase, due to, among other reasons, (i) increases in commodity prices, (ii) government regulations applicable to newly manufactured tractors, trailers, and diesel engines, (iii) the pricing discretion of equipment manufacturers, (iv) increased demand for equipment due to a more favorable freight market, and (v) proposed changes in tariffs and other trade policies.
"Environmental Regulation" in Part I, Item 1 of this Annual Report, provides a discussion of the environmental laws and regulations applicable to our business and operations. 24 Changes to trade regulation, quotas, duties, or tariffs, caused by the changing U.S. and geopolitical environments or otherwise, may increase our costs and materially adversely affect our business.
"Environmental Regulation" in Part I, Item 1 of this Annual Report, provides a discussion of the environmental laws and regulations applicable to our business and operations. Changes to trade regulation, quotas, duties, export restrictions, or tariffs, caused by the changing U.S. and geopolitical environments or otherwise, may increase our costs and materially adversely affect our business.
The Gerdin family, our directors, and our executive officers, as a group, own or control approximately 44% of our common stock, and their interests may conflict with the interests of our other stockholders.
The Gerdin family, our directors, and our executive officers, as a group, own or control approximately 45% of our common stock, and their interests may conflict with the interests of our other stockholders.
Conflicting views on environmental, social and governance (“ESG”) matters may have a negative impact on our business, impose additional costs on us, and expose us to additional risks. Certain stakeholders have pressured companies on initiatives relating to ESG matters, including environmental stewardship, social responsibility, and corporate governance.
Conflicting views on environmental and societal matters may have a negative impact on our business, impose additional costs on us, and expose us to additional risks. Certain stakeholders have pressured companies on initiatives relating to environmental and societal matters, including environmental stewardship, social responsibility, and corporate governance.
We do not carry a corporate-wide cybersecurity insurance policy.
We do not carry a corporate-wide 20 cybersecurity insurance policy.
If any of these were to occur, our operations, financial condition, liquidity, results of operations, and cash flows could be adversely impacted. COMPLIANCE RISKS We self-insure for a significant portion of our claims exposure, which could significantly increase the volatility of, and decrease the amount of, our earnings.
If any of these were to occur, our operations, financial condition, liquidity, results of operations, and cash flows could be adversely impacted. COMPLIANCE RISKS We self-insure for a significant portion of our claims and have exposure outside of our insurance coverage, which could significantly increase the volatility of, and decrease the amount of, our earnings.
In 2022 through 2024, we experienced a softened used equipment market. We could determine that our goodwill and other intangible assets are impaired, thus recognizing a related loss. As of December 31, 2024, we had goodwill of $322.6 million and other intangible assets of $93.5 million. We evaluate our goodwill and other intangible assets for impairment.
In 2022 through 2025, we experienced a softened used equipment market. We could determine that our goodwill and other intangible assets are impaired, thus recognizing a related loss. As of December 31, 2025, we had goodwill of $322.6 million and other intangible assets of $69.5 million. We evaluate our goodwill and other intangible assets for impairment.
Under the April 2023 renewal, our auto liability retention limit across all operating entities was increased to $3.0 million for any individual claim, subject to a $3.5 22 million corridor for any one accident or combination of accidents that exceed $3.0 million, based on the insured party, accident date, and circumstances of the loss event.
Under the April 2023 renewal, our auto liability retention limit across all operating entities was increased to $3.0 million for any individual claim, subject to a $3.5 million corridor for the first accident or series of accidents that exceed $3.0 million, based on the insured party, accident date, and circumstances of the loss event.
We believe that some of the most significant of these factors are economic changes that affect supply and demand in transportation markets, such as: • recessionary economic cycles, which are characterized by weak demand and downward pressure on freight rates; • downturns in customers’ business cycles, including as a result of declines in consumer spending; • changes in customers’ inventory levels and practices, including shrinking product/package size, and in the availability of funding for their working capital; • excess tractor and trailer capacity in the trucking industry in comparison with shipping demand; • changes in the way our customers choose to source or utilize our services; 14 • the rate of unemployment and availability of and compensation for alternative jobs for truck drivers, which may exacerbate driver shortages and increase driver compensation costs; • the availability and price of new revenue equipment and/or declines in the resale value of used revenue equipment; • the impact of the public health crises, epidemics, pandemics or similar events, such as COVID-19; • activity in key economic indicators such as manufacturing of automobiles and durable goods, and housing construction; • supply chain disruptions due to weather, pandemics, congestion, strikes, work stoppages, or work slowdowns at our facilities, or at a customer, port, border crossing, or other shipping related facilities, including related reductions in demand; • increases in interest rates, inflation, fuel taxes, insurance, tolls, and license and registration fees; • changes in trade policy and tariff rates; and • rising costs of healthcare.
We believe that some of the most significant of these factors are economic changes that affect supply and demand in transportation markets, such as: • recessionary economic cycles, which are characterized by weak demand and downward pressure on freight rates; • downturns in customers’ business cycles, including as a result of declines in consumer spending; • changes in customers’ inventory levels and practices, including shrinking product/package size, and in the availability of funding for their working capital; • excess tractor and trailer capacity in the trucking industry in comparison with shipping demand; • changes in the way our customers choose to source or utilize our services; • the rate of unemployment and availability of and compensation for alternative jobs for truck drivers, which may exacerbate driver shortages and increase driver compensation costs; • the availability and price of new revenue equipment and/or declines in the resale value of used revenue equipment; • the impact of the public health crises, epidemics, pandemics or similar events; • activity in key economic indicators such as manufacturing of automobiles and durable goods, and housing construction; • supply chain disruptions due to weather, pandemics, congestion, strikes, work stoppages, or work slowdowns at our facilities, or at a customer, port, border crossing, or other shipping related facilities, including related reductions in demand; • increases in interest rates, inflation, fuel taxes, insurance, tolls, and license and registration fees; • the expected effects of pending, proposed, or new laws and regulations, including environmental laws and regulations and those directly impacting the transportation industry; • political conditions, including in trade policy, tariff rates and global conflicts; and • rising costs of healthcare.
If a new health epidemic or outbreak were to occur, we could experience broad and varied impacts similar to the impact of COVID-19, including adverse impacts to our workforce, our operations, equipment availability, and financial impacts, such as increased costs, tightening of credit markets, greater risk for collecting amounts owed, market volatility and a weakened freight environment.
If a health epidemic or outbreak were to occur, we could experience broad and varied impacts, including adverse impacts to our workforce, our operations, equipment availability, and financial impacts, such as increased costs, tightening of credit markets, greater risk for collecting amounts owed, market volatility and a weakened freight environment.
We are also responsible for our legal expenses relating to such claims. We reserve currently for anticipated losses and related expenses. We periodically evaluate and adjust our claims reserves to reflect trends in our own experience as well as industry trends.
We are also responsible for our legal expenses relating to such claims. We accrue currently for anticipated losses and related expenses. We periodically evaluate and adjust our claims accruals to reflect trends in our own experience as well as industry trends.
Until any changes are passed into law we will not know if such changes, if any, will have a materially adverse effect on our financial results and financial position. At December 31, 2024, the Company had a total deferred income tax liability of $158.4 million.
Until any changes are passed into law we will not know if such changes, if any, will have a materially adverse effect on our financial results and financial position. At December 31, 2025, the Company had a total deferred income tax liability of $133.6 million.
We self-insure for a portion of our claims, which could increase the volatility of, and decrease the amount of, our earnings, and could have a materially adverse effect on our results of operations. See Note 8 of the consolidated financial statements for more information regarding our self-insured retention amounts.
We self-insure for a portion of our claims and have exposure outside of our insurance coverage, which could increase the volatility of, and decrease the amount of, our earnings, and could have a materially adverse effect on our results of operations. See Note 7 of the consolidated financial statements for more information regarding our self-insured retention amounts.
Further, we may incur greater than expected expenses in our attempts to improve unfavorable scores. We have in the past, and currently, exceeded the FMCSA's established intervention thresholds in certain of the seven CSA safety-related categories among our respective operating authorities.
Further, we may incur greater than expected expenses in our attempts to improve unfavorable scores. We have in the past exceeded the FMCSA's established intervention thresholds in certain of the seven CSA safety-related categories among our respective operating authorities. We currently exceed the threshold in one category under one of our operating authorities.
The effects of a widespread outbreak of an illness or disease, or any other public health crisis, as well as regulatory measures implemented in response to such events, could negatively impact the health and safety of our workforce and/or adversely impact our business, results of operations, financial condition, and cash flows.
Weather, climate change, and other seasonal events could adversely affect our operating results. 21 The effects of a widespread outbreak of an illness or disease, or any other public health crisis, as well as regulatory measures implemented in response to such events, could negatively impact the health and safety of our workforce and/or adversely impact our business, results of operations, financial condition, and cash flows.
Our business depends on the efficient and uninterrupted operation of our information and communications systems and other technology assets, including the data contained therein and our communication system with our fleet of revenue equipment. We currently use centralized computer networks within each operating company and regular communication to achieve system-wide load coordination.
Our business depends on the efficient and uninterrupted operation of our information and communications systems and other technology assets, including the data contained therein and our communication system with our fleet of revenue equipment. We currently use a centralized computer network and regular communication to achieve system-wide load coordination.
We have seen evidence that CSA, the drug and alcohol clearing house, and stricter HOS regulations adopted by the DOT in the past have tightened, and, to the extent new regulations are enacted, may continue to tighten, the market for eligible drivers.
We have seen evidence that CSA, the drug and alcohol clearing house, and stricter enforcement of HOS and English proficiency regulations adopted by the DOT have tightened, and, to the extent new regulations are enacted, may continue to tighten, the market for eligible drivers.
We may not maintain our current level of operations, and any decrease in revenues or profits may impair our ability to implement our business strategy, which could have a materially adverse effect on our results of operations.
We may not maintain our current level of operations, and any decrease in revenues, increase in losses, or inability to improve our profitability may impair our ability to implement our business strategy, which could have a materially adverse effect on our results of operations.
Historically, we have experienced significant growth in revenue and profits, although recently, due in part to our acquisitions of CFI and Smith Transport and related financing, our profitability has decreased compared to periods prior to such acquisitions.
Historically, we have experienced significant growth in revenue and profits, although recently, due in part to our acquisitions of CFI and Smith Transport and related financing, as well as the overall freight environment, our profitability has decreased compared to periods prior to such acquisitions.
To the extent we experience claims that are uninsured, exceed our coverage limits, involve significant aggregate use of our self-insured retention amounts, or cause increases in future premiums, the resulting expenses could have a significant materially adverse effect on our business, results of operations, financial condition, or cash flows.
To the extent we experience claims that are uninsured, exceed our coverage limits, involve significant aggregate use of our self-insured retention amounts, or cause increases in our future insurance premiums, it could lead to increased volatility in our insurance and claims expense and any resulting increases in such expenses could have a significant materially adverse effect on our business, results of operations, financial condition, or cash flows.
We are actively working to further integrate our computer networks. Our operating systems are critical to understanding customer demands, accepting and planning loads, dispatching equipment and drivers, and billing and collecting for our services. Our financial reporting system is critical to producing accurate and timely financial statements and 20 analyzing business information to help us manage effectively.
Our operating systems are critical to understanding customer demands, accepting and planning loads, dispatching equipment and drivers, and billing and collecting for our services. Our financial reporting system is critical to producing accurate and timely financial statements and analyzing business information to help us manage effectively.
A reduction in or termination of our services by one or more of our major customers, including our customers with longer term contracts, could have a material adverse effect on our business, financial condition and results of operations. Our acquisition of CFI presents certain additional risks to our business and operations.
A reduction in or termination of our services by one or more of our major customers, including our customers with longer term contracts, could have a material adverse effect on our business, financial condition and results of operations.
We face a wide variety of risks related to public health crises, epidemics, pandemics, or similar events, such as COVID-19.
We face a wide variety of risks related to public health crises, epidemics, pandemics, or similar events.
During the COVID-19 pandemic, some tractor and trailer manufacturers experienced periodic shortages of certain component parts and supplies, including semiconductor chips, forcing such manufacturers to curtail or suspend their production. This led to a lower supply of tractors and trailers and higher prices.
In recent years some tractor and trailer manufacturers experienced periodic shortages of certain component parts and supplies, including semiconductor chips, forcing such manufacturers to curtail or suspend their production. This led to a lower supply of tractors and trailers and higher prices.
However, ultimate results may differ from our estimates due to a number of uncertainties, including evaluation of severity, legal costs, and claims that have been incurred but not reported, which could result in losses over our reserved amounts. Due to our high retained amounts, we have significant exposure to fluctuations in the number and severity of claims.
However, ultimate results may differ from our estimates due to a number of uncertainties, including evaluation of severity, legal costs, and claims that have been incurred but not reported, which could result in losses over our accrued amounts.
We operate in a highly competitive and fragmented industry, and numerous competitive factors could impair our ability to improve our profitability, limit growth opportunities, and could have a materially adverse effect on our results of operations.
These challenges may negatively impact our growth, which could have a materially adverse effect on our ability to execute our business strategy and our results of operations. 15 We operate in a highly competitive and fragmented industry, and numerous competitive factors could impair our ability to improve our profitability, limit growth opportunities, and could have a materially adverse effect on our results of operations.
In addition, events outside our control, such as deterioration of U.S. transportation infrastructure and reduced investment in such infrastructure, public health crises, epidemics, pandemics or similar events, such as the COVID-19 outbreak, strikes or other work stoppages at our facilities or at customer, vendor, port, border or other shipping locations, armed conflicts, including conflicts in Ukraine and the Middle East or as a result of the rising tensions between China and Taiwan, terrorist attacks, efforts to combat terrorism, military action against a foreign state or group located in a foreign state or heightened security requirements could lead to wear, tear and damage to our equipment, lack of availability of new equipment, driver dissatisfaction, reduced economic demand and freight volumes, reduced availability of credit, increased prices for fuel, or temporary closing of the shipping locations or U.S. borders.
In addition, events outside our control, such as deterioration of U.S. transportation infrastructure and reduced investment in such infrastructure, public health crises, epidemics, pandemics, or similar events, strikes or other work stoppages at our facilities or at customer, port, border or other shipping locations, global conflicts, terrorist attacks, efforts to combat terrorism, military action, or heightened security requirements could lead to wear, tear and damage to our equipment, driver dissatisfaction, reduced economic demand and freight volumes, reduced availability of credit, increased prices for fuel, or temporary closing of the shipping locations or U.S. borders.
The cost to defend litigation may also be significant. Not all claims are covered by our insurance, and there can be no assurance that our coverage limits will be adequate to cover all amounts in dispute.
The cost to defend litigation may also be significant. Not all claims are covered by our insurance, and there can be no assurance that our coverage limits will be adequate to cover all amounts in dispute. Additionally, our premiums for certain insurance layers are subject to upward adjustments based on claims experience.
In addition, any such legislation may require changes in our operating practices, impair equipment productivity, or require additional reporting disclosures, and compliance with any such legislation may increase our risk of litigation or governmental investigations or proceedings. Weather, climate change, and other seasonal events could adversely affect our operating results.
In addition, any such legislation may require changes in our operating practices, impair equipment productivity, or require additional reporting disclosures, and compliance with any such legislation may increase our risk of litigation or governmental investigations or proceedings.
The increased tensions between China and Taiwan, and any resulting hostilities, may have similar consequences. The magnitude of these risks cannot be predicted, including the extent to which the conflict may heighten other risks disclosed herein. Ultimately, these or other factors could materially and adversely affect our results of operations.
The magnitude of these risks cannot be predicted, including the extent to which the conflict may heighten other risks disclosed herein. Ultimately, these or other factors could materially and adversely affect our results of operations.
Foreign Corrupt Practices Act; • changes in trade agreements and U.S.-Mexico relations, including the possible imposition of tariffs on imports from Mexico and related retaliatory tariffs that may be imposed by the Mexican government; • theft or vandalism of our revenue equipment; and • social, political, and economic instability If fuel prices increase significantly, our results of operations could be adversely affected.
Foreign Corrupt Practices Act; • changes in trade agreements and U.S.-Mexico relations, including the possible imposition of tariffs on imports from Mexico and related retaliatory tariffs that may be imposed by the Mexican government; • theft or vandalism of our revenue equipment; • social, political, and economic instability; and 19 • retention of legacy CFI personnel directly associated with Mexican operations.
Even if we are able to pass some increased costs on to customers, fuel surcharge programs generally do not protect us against all of the increases in fuel prices.
Even if we are able to pass some increased costs on to customers, fuel surcharge programs generally do not protect us against all of the increases in fuel prices. Also, we generally do not recoup fuel surcharge on non-billable miles (deadhead) and fuel consumed idling revenue equipment.
Our acquisitions of CFI and Smith Transport have experienced headwinds due to the weakened freight environment in recent years. This has led to internal integration issues with respect to CFI and Smith Transport which has negatively affected our results of operations.
Our acquisitions of CFI and Smith Transport experienced headwinds due to the weakened freight environment in recent years. This has led to internal integration issues with respect to CFI and Smith Transport which has negatively affected our results of operations. On December 31, 2025 we integrated and rebranded the U.S. operations of CFI into Heartland Express.
For further discussion of our cybersecurity programs, please see “Item 1C. Cybersecurity.” In addition, the adoption of artificial intelligence (“AI”) and other emerging technologies may become significant to operating results in the future. While AI and other technologies may offer substantial benefits, they may also introduce additional risk.
For further discussion of our cybersecurity programs, please see “Item 1C. Cybersecurity.” In addition, the adoption of AI and other emerging technologies may become significant to operating results in the future.
Our effective tax rate may be adversely impacted by, among other things, changes in the regulations relating to capital expenditure deductions, or changes in tax laws where we operate, including the uncertainty of future tax rates. President Trump has indicated a desire to amend the federal tax laws.
Our effective tax rate may be adversely impacted by, among other things, changes in the regulations relating to capital expenditure deductions, or changes in tax laws where we operate, including the uncertainty of future tax rates. The OBBBA was signed into law in 2025.
For further discussion of environmental laws and regulations, please see "Regulation" under “Item 1. Business.” Governmental agencies continue to enact more stringent laws and regulations to reduce engine emissions. These laws and regulations are applicable to engines used in our revenue equipment.
For further discussion of environmental laws and regulations, please see "Regulation" under “Item 1. Business.” Governmental agencies continue to revise laws and regulations regarding greenhouse gases and emissions. These laws and regulations are applicable to engines used in our revenue equipment. When these laws and regulations have become more stringent, we have incurred, and continue to incur, increased compliance costs.
These disruptions and difficulties may cause us to fail to realize the cost savings, synergies, revenue enhancements, and other benefits that we expect to result from integrating CFI and may cause material adverse short- and long-term effects on our operating results, financial condition, and liquidity. During 2024, we experienced difficulties in controlling costs and improving profitability at CFI.
These disruptions and difficulties may cause us to fail to realize the cost savings, synergies, revenue enhancements, and other benefits that we expected to achieve from the CFI integration and rebranding to Heartland Express and may cause material adverse short- and long-term effects on our operating results, financial condition, and liquidity.
Also, the cost savings and other benefits from this acquisition may be offset by unexpected costs incurred in integrating CFI, increases in other expenses, or problems in the business unrelated to this acquisition. 19 In addition, CFI’s Mexican operations subject us to general international business risks, including: • foreign currency fluctuation; • changes in Mexico's economic strength; • difficulties in enforcing contractual obligations and intellectual property rights; • burdens of complying with a wide variety of international and U.S. export, import, business procurement, transparency, and corruption laws, including the U.S.
In addition, CFI’s Mexican operations subject us to general international business risks, including: • foreign currency fluctuation; • changes in Mexico's economic strength; • difficulties in enforcing contractual obligations and intellectual property rights; • burdens of complying with a wide variety of international and U.S. export, import, business procurement, transparency, and corruption laws, including the U.S.
Regulatory requirements, including those related to safety ratings, ELDs and HOS changes, drug and alcohol testing national database, government imposed measures related to future outbreaks of contagious diseases, like COVID-19, an improved economy, and aging of the driver workforce, could further reduce the pool of eligible drivers or force us to increase driver compensation to attract and retain drivers.
Government imposed measures related to future outbreaks of contagious diseases, an improved economy, and aging of the driver workforce, could further reduce the pool of eligible drivers or force us to increase driver compensation to attract and retain drivers.
Gerdin may have an outsized ability to influence the operations of the Company, which may result in conflicts with the interests of Mr. Gerdin, the Gerdin Family, and the interests of our other stockholders. 27 Additionally, if Mr. Gerdin were to become unavailable for any reason, there could be a material adverse impact on our operations.
Gerdin may have an outsized ability to influence the operations of the Company, which may result in conflicts with the interests of Mr. Gerdin, the Gerdin Family, and the interests of our other stockholders. Additionally, if Mr.
Such shortage is exacerbated during periods of economic expansion, in which alternative employment opportunities, such as those in the construction and manufacturing industries, are more plentiful and freight demand increases. Furthermore, capacity at driving schools may be limited by future outbreaks of contagious diseases, like COVID-19.
Such shortage is exacerbated during periods of economic expansion, in which alternative employment opportunities, such as those in the construction and manufacturing industries, are more plentiful and freight demand increases.
Should these expenses increase, we become unable to find excess coverage in amounts we deem sufficient, we experience a claim in excess of our coverage limits, we experience a claim for which we do not have coverage, or we have to increase our reserves or collateral, there could be a materially adverse effect on our results of operations and financial condition.
The elevated retention limit and the premium adjustment feature could lead to increased volatility in our insurance and claims expense, depending on the frequency and magnitude of claims, which is exacerbated given significantly increased judgements and settlements of over-the-road accident claims. 22 Should these expenses increase, we become unable to find excess coverage in amounts we deem sufficient, we experience a claim in excess of our coverage limits, we experience a claim for which we do not have coverage, or we have to increase our reserves or collateral, there could be a materially adverse effect on our results of operations and financial condition.
Although we do not have any direct operations in Russia, Belarus, Ukraine, the Middle East, China, or Taiwan we may be affected by the broader consequences of conflicts, or expansion of such conflicts to other areas or countries or similar conflicts elsewhere, such as, increased inflation, supply chain issues (including access to parts for our revenue equipment), embargoes, tariffs, geopolitical shift, access to diesel fuel, higher energy prices, potential retaliatory action by the Russian or other 17 governments, including cyber-attacks, and the extent of the conflict’s effect on the global economy.
Mexico, and Canada, we may be affected by the broader consequences of the global conflicts, such as increased inflation, supply chain issues (including access to parts for our revenue equipment), embargoes, geopolitical shift, access to diesel fuel, higher energy prices, retaliatory actions by other governments, including cyber-attacks, and the extent of the conflict’s effect on the global economy.
We could recognize impairments in the future, and we may never realize the full value of our intangible assets. If these events occur, our profitability and financial condition will suffer.
In 2025, the decision to unify CFI with Heartland Express resulted in $19.0 million of impairment charges related to the CFI trade name. We could recognize additional impairments in the future, and we may never realize the full value of our intangible assets. If these events occur, our profitability and financial condition will suffer.
The market price of our common stock may be volatile. The price of our common stock may fluctuate widely, depending upon a number of factors, many of which are beyond our control.
Gerdin were to become unavailable for any reason, there could be a material adverse impact on our operations. 27 The market price of our common stock may be volatile. The price of our common stock may fluctuate widely, depending upon a number of factors, many of which are beyond our control.
These regional operations require the commitment of additional personnel and revenue equipment, as well as management resources, for future development and establishing terminals and operations in new markets could require more time, resources or a more substantial financial commitment than anticipated. Should the growth in our regional operations stagnate or decline, the results of our operations could be adversely affected.
We have established terminals throughout the contiguous U.S. and one in Mexico in order to serve markets in various regions. These operations require the commitment of additional personnel and revenue equipment, as well as management resources, for future development and establishing terminals and operations in new markets could require more time, resources or a more substantial financial commitment than anticipated.
For further discussion of the labor and employment laws, please see "Regulation" under “Item 1. Business.” The CSA program adopted by the FMCSA could adversely affect our profitability and operations, our ability to maintain or grow our fleet, and our customer relationships. Under CSA, fleets are evaluated and ranked against their peers based on certain safety-related standards.
There can be no guarantee that work stoppages or further disruptions at ports will not occur. The CSA program adopted by the FMCSA could adversely affect our profitability and operations, our ability to maintain or grow our fleet, and our customer relationships. Under CSA, fleets are evaluated and ranked against their peers based on certain safety-related standards.
Unfavorable ESG ratings may lead to negative investor sentiment toward the Company, which could have a negative impact on our stock price.
Unfavorable environmental and societal ratings may lead to negative investor sentiment toward the Company, which could have a negative impact on our stock price. Further, standards for tracking and reporting environmental and societal matters continue to evolve, and our reporting may not match stakeholder expectations.
The imposition of additional tariffs or quotas or changes to certain trade agreements, including tariffs applied to goods traded between the United States and China, and proposed changes to tariffs on various imports from other countries (such as Canada, Mexico, and the E.U.) could, among other things, increase the costs of the materials and decrease the availability of certain materials used by our suppliers to produce new revenue equipment or increase the price of fuel.
The imposition of additional tariffs, import or export controls, or changes to certain trade agreements could, among other things, increase the costs of the materials and decrease the availability of certain materials used by our suppliers to produce new revenue equipment or increase the price of 24 fuel.
Even if we are able to successfully integrate CFI’s operations into our operations, we may not realize the full benefits of the cost savings, synergies, revenue enhancements, or other benefits that we may have expected at the time of acquisition or on the timeframe expected.
Since our acquisition of CFI, we experienced difficulties in controlling costs and improving profitability at CFI. We may not realize the full benefits of the cost savings, synergies, revenue enhancements, or other benefits that we may have expected at the time of acquisition, at the time of integration and rebranding, or on the timeframe expected.
At the same time, operating expenses increase and fuel efficiency declines because of engine idling, while harsh weather creates higher accident frequency, increased claims, and more equipment repairs.
Revenue can also be affected by bad weather, holidays, and the number of business days that occur during a given period, since revenue is directly related to available working days of shippers. At the same time, operating expenses increase and fuel efficiency declines because of engine idling, while harsh weather creates higher accident frequency, increased claims, and more equipment repairs.
More sophisticated and frequent cyberattacks in recent years have also increased security risks associated with information technology systems.
More sophisticated and frequent cyberattacks in recent years have also increased security risks associated with information technology systems and the use of artificial intelligence (“AI”) by bad actors may make cyberattacks more difficult to anticipate or control in the future.
In April 2024, an additional corridor was added, where we retain liability of $5.0 million for any one accident or combination of accidents that exceed $10.0 million. Liabilities in excess of the $3.0 million deductible, the $3.5 million corridor, and the $5.0 million corridor are covered by insurance up to $80.0 million.
Also, in April 2025, an additional corridor was added, where we retain liability of $5.0 million for the first accident or series of accidents that exceed $20.0 million. We maintain limited excess liability coverage, subject to the foregoing limits and corridors, and retain any liability in excess of the coverage.
We are still in the process of integrating CFI into our operations and we have been unable to achieve the operating results we typically see and on the timeframe we typically see with prior acquisitions. Although we anticipate achieving synergies in connection with the acquisition of CFI, we have incurred costs to implement such cost savings measures.
With our acquisition of CFI and integration and rebranding of the U.S. operations of CFI into Heartland Express, we have been unable to achieve the operating results we typically see and on the timeframe we typically see with prior acquisitions.
We have incurred and continue to incur costs related to the implementation of these more rigorous laws and regulations. Additionally, in certain locations governments have banned or may in the future ban internal combustion engines for some types of vehicles.
Legal challenges to the repeal or enactment of such laws and regulations at both the federal and state level could lead to uncertainty regarding our compliance which may negatively affect our results of operations. Additionally, in certain locations governments have banned or may in the future ban internal combustion engines for some types of vehicles.
Our tractor productivity decreases during the winter season because inclement weather impedes operations, and some shippers reduce their shipments after the winter holiday season. Revenue can also be affected by bad weather, holidays, and the number of business days that occur during a given period, since revenue is directly related to available working days of shippers.
Our tractor productivity decreases during the winter season because inclement weather impedes operations, and some shippers reduce their shipments after the winter holiday season. Further, fuel costs may be impacted by increased tractor idling during severe winter weather.
Such trade policies and tariff implementations, and any related 15 retaliatory trade policies and tariff implementations by foreign governments, may result in decreased shipping volumes and have an adverse impact on our revenues and results of operations.
Imposition of additional tariffs or import or export controls, changes to certain trade agreements, and retaliatory trade policies could, among other things, result in decreased shipping volumes and have an adverse impact on our revenues and results of operations.
Such events or enhanced security measures in connection with such events could impair our operating efficiency and productivity and result in higher operating costs. The Trump administration has stated its intention to impose new or increased tariff rates on imported goods from a number of countries, including China, Canada, Mexico, and the E.U.
Such events or enhanced security measures in connection with such events could impair our operating efficiency and productivity and result in higher operating costs. Since April 2025, new, substantial tariffs have been imposed on imports to the U.S.
The acquisition of CFI is the largest acquisition we have made in our history. Given the nature and size of CFI, as well as the structure of the acquisition as a carveout from the seller, the acquisition of CFI presents the following risks.
Given the nature and size of CFI, as well as the structure of the acquisition as a carveout from the seller, and due to general economic conditions, the acquisition of CFI and integration and rebranding of the U.S. operations of CFI into Heartland Express present the following risks.
Additionally, these synergies could be delayed and may not be achieved. Integration costs related to the acquisition of CFI could continue to adversely affect our results of operations.
Although we anticipate achieving synergies in connection with the acquisition of CFI, as well as integration and rebranding of the U.S. operations of CFI into Heartland Express, we have incurred costs to implement cost savings measures. Additionally, these synergies could be delayed and may not be achieved.
We retain any liability in excess of $80.0 million. Furthermore, under the April 2023 renewal, our premiums are subject to upward or downward adjustments based on claims experience in the $3.0 million to $10.0 million policy during the three year program.
Furthermore, our premiums for certain layers are subject to upward or downward adjustments based on claims experience.
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We have established terminals throughout the contiguous U.S. and one in Mexico in order to serve markets in various regions.
Added
Should the growth in our operations stagnate or decline, the results of our operations could be adversely affected.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAlthough such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced potential threats to and incidents related to our data and systems, including malware and phishing attempts.
Biggest changeWe face a number of cybersecurity risks in connection with our business. Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced potential threats to and incidents related to our data and systems, including malware and phishing attempts.
Others on our IT security team have cybersecurity experience or certifications that support these efforts. We view cybersecurity as a shared responsibility, and we periodically perform simulations and tabletop exercises at a management level and incorporate external 28 resources and advisors as needed.
Others on our IT security team have cybersecurity experience or certifications that further support these efforts. We view cybersecurity as a 28 shared responsibility, and we periodically perform simulations and tabletop exercises at a management level and incorporate external resources and advisors as needed.
Removed
For example, the Board has hosted an outside expert to discuss developments in the cybersecurity threat landscape. We face a number of cybersecurity risks in connection with our business.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides information regarding our terminal facilities with shop and maintenance, fueling services or other significant operations: Company Location Office Shop Fuel Owned or Leased Albany, Georgia No Yes No Owned Alvarado, Texas Yes Yes Yes Owned Atlanta, Georgia Yes Yes Yes Owned Black River Falls, Wisconsin Yes Yes No Owned Boise, Idaho Yes Yes No Leased Canonsburg, Pennsylvania Yes No Yes Leased Carlisle, Pennsylvania Yes Yes Yes Owned Cartersville, Georgia Yes Yes Yes Owned Chester, Virginia Yes Yes Yes Owned Columbus, Ohio Yes Yes Yes Owned Eden, North Carolina Yes Yes No Owned Frederick, Colorado Yes Yes Yes Owned Jacksonville, Florida Yes Yes Yes Owned Joplin, Missouri Yes Yes Yes Owned Kingsport, Tennessee Yes Yes Yes Owned Laredo, Texas Yes Yes Yes Owned Lathrop, California Yes Yes Yes Leased Medford, Oregon Yes Yes Yes Owned Mt.
Biggest changeThe following table provides information regarding our terminal facilities with shop and maintenance, fueling services or other significant operations: Company Location Office Shop Fuel Owned or Leased Albany, Georgia No Yes No Owned Alvarado, Texas (2) Yes Yes Yes Owned Atlanta, Georgia Yes Yes Yes Owned Black River Falls, Wisconsin Yes Yes No Owned Carlisle, Pennsylvania Yes Yes Yes Owned Cartersville, Georgia Yes Yes Yes Owned Chester, Virginia Yes Yes Yes Owned Columbus, Ohio Yes Yes Yes Owned Eden, North Carolina Yes Yes No Owned Frederick, Colorado Yes Yes Yes Owned Jacksonville, Florida Yes Yes Yes Owned Joplin, Missouri Yes Yes Yes Owned Kingsport, Tennessee Yes Yes Yes Owned Laredo, Texas Yes Yes Yes Owned Medford, Oregon Yes Yes Yes Owned Mt.
Added
(2) Two separate facilities with one currently occupied.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 30 PART II Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 31 Item 6. [Reserved] 31 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 44 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 30 PART II Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 31 Item 6. [Reserved] 31 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 42 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Repurchase We have a stock repurchase program with 6.0 million shares remaining authorized for repurchase as of December 31, 2024. There were 0.6 million shares repurchased in the open market during the year ended December 31, 2024 while no shares were repurchased in 2023.
Biggest changeStock Repurchase We have a stock repurchase program with 4.8 million shares remaining authorized for repurchase as of December 31, 2025. There were 1.2 million shares repurchased in the open market during the year ended December 31, 2025 while 0.6 million shares were repurchased in 2024.
However, future payments of cash dividends will depend upon our financial condition, results of operations and capital requirements, as well as other factors deemed relevant by the Board of Directors. During 2024, 2023, and 2022 the Company paid regular quarterly dividends totaling $0.08 per share for the year.
However, future payments of cash dividends will depend upon our financial condition, results of operations and capital requirements, as well as other factors deemed relevant by the Board of Directors. During 2025, 2024, and 2023 the Company paid regular quarterly dividends totaling $0.08 per share for the year.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Trading Symbol Our common stock trades on The NASDAQ Global Select Market under the symbol HTLD. As of February 15, 2025, we had 331 stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Trading Symbol Our common stock trades on The NASDAQ Global Select Market under the symbol HTLD. As of February 18, 2026, we had 367 stockholders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe had a loss on assets of 2.1% and a loss on equity of 3.6% over the year ended December 31, 2024, compared to a return on assets of 0.9% and a return on equity of 1.7% respectively, for 2023. 33 (1) GAAP to Non-GAAP Reconciliation Schedule: Operating revenue, operating revenue excluding fuel surcharge revenue, fuel surcharge revenue, operating income, operating ratio, and adjusted operating ratio reconciliation (a) Twelve Months Ended December 31, 2024 2023 (in thousands) Operating revenue $ 1,047,511 $ 1,207,458 Less: Fuel surcharge revenue 133,860 173,817 Operating revenue excluding fuel surcharge revenue 913,651 1,033,641 Operating expenses 1,067,747 1,165,073 Less: Fuel surcharge revenue 133,860 173,817 Less: Amortization of intangibles 5,017 5,164 Adjusted operating expenses 928,870 986,092 Operating income (20,236) 42,385 Adjusted operating income $ (15,219) $ 47,549 Operating ratio 101.9 % 96.5 % Adjusted operating ratio 101.7 % 95.4 % (a) Operating revenue excluding fuel surcharge revenue, as reported in this annual report is based upon operating revenue minus fuel surcharge revenue.
Biggest change(1) GAAP to Non-GAAP Reconciliation Schedule: Operating revenue, operating revenue excluding fuel surcharge revenue, fuel surcharge revenue, operating loss, operating ratio, and adjusted operating ratio reconciliation (a) Twelve Months Ended December 31, 2025 2024 (in thousands) Operating revenue $ 805,709 $ 1,047,511 Less: Fuel surcharge revenue 96,627 133,860 Operating revenue excluding fuel surcharge revenue 709,082 913,651 Operating expenses 863,121 1,067,747 Less: Fuel surcharge revenue 96,627 133,860 Less: Amortization of intangibles 5,017 5,017 Less: Impairment of trade name 18,991 — Adjusted operating expenses 742,486 928,870 Operating loss (57,412) (20,236) Adjusted operating loss $ (33,404) $ (15,219) Operating ratio 107.1 % 101.9 % Adjusted operating ratio 104.7 % 101.7 % (a) Operating revenue excluding fuel surcharge revenue, as reported in this annual report is based upon operating revenue minus fuel surcharge revenue.
Growth History and Capital Allocation In addition to past organic growth through the development of our regional operating areas, we have completed ten acquisitions since 1986 with the most recent and our fifth acquisition since 2013, CFI, occurring on August 31, 2022 following the acquisition of Smith Transport on May 31, 2022.
Growth History and Capital Allocation In addition to past organic growth through the development of our operating areas, we have completed ten acquisitions since 1986 with the most recent and our fifth acquisition since 2013, CFI, occurring on August 31, 2022 following the acquisition of Smith Transport on May 31, 2022.
Although we believe that operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio improve comparability in analyzing our period-to-period performance, they could limit comparability to other companies in our industry if those companies define such measures differently.
Although we believe that operating revenue excluding fuel surcharge revenue, adjusted operating (loss) income, and adjusted operating ratio improve comparability in analyzing our period-to-period performance, they could limit comparability to other companies in our industry if those companies define such measures differently.
Because of these limitations, operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio should not be considered measures of income generated by our business or discretionary cash available to us to invest in the growth of our business.
Because of these limitations, operating revenue excluding fuel surcharge revenue, adjusted operating (loss) income, and adjusted operating ratio should not be considered measures of income generated by our business or discretionary cash available to us to invest in the growth of our business.
Operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio are not substitutes for operating revenue, operating income, or operating ratio measured in accordance with GAAP. There are limitations to using non-GAAP financial measures.
Operating revenue excluding fuel surcharge revenue, adjusted operating (loss) income, and adjusted operating ratio are not substitutes for operating revenue, operating (loss) income, or operating ratio measured in accordance with GAAP. There are limitations to using non-GAAP financial measures.
The Credit 39 Facilities include an uncommitted accordion feature pursuant to which the Company may request up to $275.0 million in incremental revolving or term loans, subject to lender approvals. The indebtedness, obligations, and liabilities under the Credit Facilities are unconditionally guaranteed, jointly and severally, on an unsecured basis by the Company and certain other subsidiaries of the Company.
The Credit Facilities include an uncommitted accordion feature pursuant to which the Company may request up to $275.0 million in incremental revolving or term loans, subject to lender approvals. 38 The indebtedness, obligations, and liabilities under the Credit Facilities are unconditionally guaranteed, jointly and severally, on an unsecured basis by the Company and certain other subsidiaries of the Company.
We continue to focus on providing high quality service to targeted customers with a high density of freight in our regional operating areas. We also offer truckload temperature-controlled transportation services and logistics services in Mexico, which are not significant to our consolidated operations.
We focus on providing high quality service to targeted customers with a high density of freight in our operating areas. We also offer truckload temperature-controlled transportation services and Mexico logistics services, which are not significant to our consolidated operations.
Certain driver pay packages include minimum pay protection provisions, future pay increases based on years of continued service with us, increased rates for accident-free miles of operation, detention pay, and other pay programs to assist drivers with unproductive time associated with circumstances outside of their control, such as inclement weather, equipment breakdowns, and customer issues.
Certain driver pay packages include future pay increases based on years of continued service with us, increased rates for accident-free miles of operation, detention pay, and other pay programs to assist drivers with unproductive time associated with circumstances outside of their control, such as inclement weather, equipment breakdowns, and customer issues.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this document can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this document can be found in “Management’s 32 Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
It is reasonably likely that the ultimate outcome of settling all outstanding claims will be more or less than the estimated claims liability at December 31, 2024. Management believes that the ultimate resolution of these claims will not significantly affect the long-term financial condition of the Company or its ability to fund its continuing operations.
It is reasonably likely that the ultimate outcome of settling all outstanding claims will be more or less than the estimated claims liability at December 31, 2025. Management believes that the ultimate resolution of these claims will not significantly affect the 41 long-term financial condition of the Company or its ability to fund its continuing operations.
Our operating revenues are reviewed regularly by our CODM on a combined basis across our operations, due to the similar nature of our services offerings and related similar base pricing structure.
Our operating revenues are reviewed regularly by our CODM on a combined basis across our operations, due to the similar nature of our service offerings and related similar base pricing structure.
While we are paying down the debt, we do not currently expect to declare special dividends, repurchase a significant volume of shares of our common stock, or make significant acquisitions, however we will remain flexible to ensure the best deployment of our capital. Operating cash flow for 2024 was $144.3 million compared to $165.3 million for 2023.
While we are paying down the debt, we do not currently expect to declare special dividends, repurchase a significant volume of shares of our common stock, or make significant acquisitions, however we will remain flexible to ensure the best deployment of our capital. Operating cash flow for 2025 was $89.3 million compared to $144.3 million for 2024.
The total net amount of accrued interest and penalties for such unrecognized tax benefits was $1.0 million at December 31, 2024, and is included in long-term income taxes payable within the consolidated balance sheet. Income tax expense is increased each period for the accrual of interest on outstanding positions and penalties when the uncertain tax position is initially recorded.
The total net amount of accrued interest and penalties for such unrecognized tax benefits was $0.9 million at December 31, 2025, and is included in long-term income taxes payable within the consolidated balance sheet. Income tax expense is increased each period for the accrual of interest on outstanding positions and penalties when the uncertain tax position is initially recorded.
Based on debt repayments made through December 31, 2024, required minimum payments have been covered until the term loan maturity on August 31, 2027.
Based on debt repayments made through December 31, 2025, required minimum payments have been covered until the term loan maturity on August 31, 2027.
We were in compliance with the respective financial covenants at December 31, 2024 and have been in compliance since the inception of the Credit Facilities.
We were in compliance with the respective financial covenants at December 31, 2025 and have been in compliance since the inception of the Credit Facilities.
The Smith Debt has $5.9 million of outstanding principal and is made up of installment notes with a weighted average interest rate of 4.4% at December 31, 2024, due in monthly installments with final maturities at various dates ranging from February 2027 to January 2029, secured by related revenue equipment.
The Smith Debt has $4.1 million of outstanding principal and is made up of installment notes with a weighted average interest rate of 4.4% at December 31, 2025, due in monthly installments with final maturities at various dates ranging from February 2027 to January 2029, secured by related revenue equipment.
At December 31, 2024, we had a total of $5.2 million in gross unrecognized tax benefits included in long-term income taxes payable in the consolidated balance sheets. Of this amount, $4.1 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate as of December 31, 2024.
At December 31, 2025, we had a total of $4.5 million in gross unrecognized tax benefits included in long-term income taxes payable in the consolidated balance sheets. Of this amount, $3.5 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate as of December 31, 2025.
Contractual Obligations and Commercial Commitments The Company's material cash requirements include the following contractual obligations and commercial commitments at December 31, 2024.
Contractual Obligations and Commercial Commitments The Company's material cash requirements include the following contractual obligations and commercial commitments at December 31, 2025.
Payments due by period (in millions) Contractual Obligations Total Less than 1 year 1–3 years 3–5 years More than 5 years Purchase obligations (1) $ 60.3 $ 60.3 $ — $ — $ — Obligations for unrecognized tax benefits (2) 6.2 — — — 6.2 $ 66.5 $ 60.3 $ — $ — $ 6.2 (1) Relates mainly to our commitment on revenue equipment purchases, net of estimated sale values of tractor equipment where we have contracted values for used equipment.
Payments due by period (in millions) Contractual Obligations Total Less than 1 year 1–3 years 3–5 years More than 5 years Purchase obligations (1) $ 34.6 $ 34.6 $ — $ — $ — Obligations for unrecognized tax benefits (2) 5.4 — — — 5.4 $ 40.0 $ 34.6 $ — $ — $ 5.4 (1) Relates mainly to our commitment on revenue equipment purchases, net of estimated sale values of tractor equipment where we have contracted values for used equipment.
The May 31, 2022 acquisition of Smith Transport included the assumption of $46.8 million of debt and financing lease obligations associated with the fleet of revenue equipment of which $16.9 million was outstanding at December 31, 2024, (the "Smith Debt").
The May 31, 2022 acquisition of Smith Transport included the assumption of $46.8 million of debt and financing lease obligations associated with the fleet of revenue equipment of which $7.9 million was outstanding at December 31, 2025 (the "Smith Debt").
The most significant accounting policies and estimates that affect the financial statements include the following: Revenue equipment estimated useful lives and salvage values Over 96% of our total miles comes from company drivers operating the Company's revenue equipment. Management estimates the useful lives of revenue equipment based on estimated period of use for the asset.
The most significant accounting policies and estimates that affect the financial statements include the following: Revenue equipment estimated useful lives and salvage values Of our total miles, 98% come from company drivers operating the Company's revenue equipment. Management estimates the useful lives of revenue equipment based on estimated period of use for the asset.
As discussed under "Drivers, Independent Contractors, and Other Employees " in Part I, Item 1 of this Annual Report, the Company's driver training program provides an additional source of future potential professional drivers.
As discussed under "Drivers, Independent Contractors, and Other Employees " in Part I, Item 1 of this Annual Report, the Company's driver training programs provide an additional source of future potential professional drivers.
These initiatives include strategic fueling of our trucks, whether it be terminal fuel or over-the-road fuel, reducing tractor idle time, controlling out-of-route miles, controlling empty miles, utilizing on-board power units to minimize idling, educating drivers to save energy, trailer skirting, and increasing fuel economy through the purchase of newer, more fuel-efficient tractors. 36 Results of Operations The following table sets forth the percentage relationships of expense items to total operating revenue for the periods indicated: Year Ended December 31, 2024 2023 Operating revenue 100.0 % 100.0 % Operating expenses: Salaries, wages, and benefits 40.8 % 39.3 % Rent and purchased transportation 7.6 9.3 Fuel 16.9 17.6 Operations and maintenance 6.8 5.3 Operating taxes and licenses 1.9 1.8 Insurance and claims 4.9 3.7 Communications and utilities 0.9 0.9 Depreciation and amortization 17.3 16.5 Other operating expenses 5.5 5.5 Gain on disposal of property and equipment (0.7) (3.4) 101.9 % 96.5 % Operating income (1.9) % 3.5 % Interest income 0.1 % 0.1 % Interest expense (1.7) % (2.0) % Income before income taxes (3.5) % 1.6 % Income tax expense (0.7) 0.4 Net income (2.8) % 1.2 % Year Ended December 31, 2024 Compared with the Year Ended December 31, 2023 Operating revenue decreased $160.0 million (13.2%), to $1.0 billion for the year ended December 31, 2024 from $1.2 billion for the year ended December 31, 2023.
These initiatives include strategic fueling of our trucks, whether it be terminal fuel or over-the-road fuel, reducing tractor idle time, controlling out-of-route miles, controlling empty miles, utilizing on-board power units to minimize idling, educating drivers to save energy, trailer skirting, and increasing fuel economy through the purchase of newer, more fuel-efficient tractors. 35 Results of Operations The following table sets forth the percentage relationships of expense items to total operating revenue for the periods indicated: Year Ended December 31, 2025 2024 Operating revenue 100.0 % 100.0 % Operating expenses: Salaries, wages, and benefits 40.8 % 40.8 % Rent and purchased transportation 6.4 7.6 Fuel 16.8 16.9 Operations and maintenance 7.8 6.8 Operating taxes and licenses 2.1 1.9 Insurance and claims 7.2 4.9 Communications and utilities 1.1 0.9 Depreciation and amortization 19.7 17.3 Impairment of trade name 2.4 — Other operating expenses 5.7 5.5 Gain on disposal of property and equipment (2.9) (0.7) 107.1 % 101.9 % Operating loss (7.1) % (1.9) % Interest income 0.1 % 0.1 % Interest expense (1.4) % (1.7) % Income before income taxes (8.4) % (3.5) % Income tax expense (1.9) (0.7) Net loss (6.5) % (2.8) % Year Ended December 31, 2025 Compared with the Year Ended December 31, 2024 Operating revenue decreased $241.8 million (23.1%), to $805.7 million for the year ended December 31, 2025 from $1.0 billion for the year ended December 31, 2024.
The applicable margin for ABR Loans ranges from 0.250% to 0.875% and the applicable margin for SOFR Loans ranges from 1.250% to 1.875%, depending on the Company’s net leverage ratio. We had $184.0 million outstanding on the Term Facility and no outstanding borrowings under the Revolving Facility at December 31, 2024.
The applicable margin for ABR Loans ranges from 0.250% to 0.875% and the applicable margin for SOFR Loans ranges from 1.250% to 1.875%, depending on the Company’s net leverage ratio. We had $151.9 million outstanding on the Term Facility and no outstanding borrowings under the Revolving Facility at December 31, 2025.
Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis. Our cash flow provided by operating activities for the twelve months ended December 31, 2024 was $144.3 million or 13.8% of operating revenues, compared to $165.3 million or 13.7% of operating revenues in 2023.
Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis. Our cash flow provided by operating activities for the twelve months ended December 31, 2025 was $89.3 million or 11.1% of operating revenues, compared to $144.3 million or 13.8% of operating revenues in 2024.
In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as an additional resource of performance review. Rent and purchased transportation decreased $32.6 million, to $80.1 million for the year ended December 31, 2024 from $112.7 million for the same period of 2023.
In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as an additional resource of performance review. Rent and purchased transportation decreased $28.4 million, to $51.7 million for the year ended December 31, 2025 from $80.1 million for the same period of 2024.
These arrangements also may prevent us from receiving the full benefit of any fuel price decreases. Additionally, we are not able to recover fuel surcharge on empty miles, out of route miles, or fuel used in idling. Empty miles, out of route miles and idling were all elevated in 2024 as a result of lower freight demand throughout the year.
These arrangements also may prevent us from receiving the full benefit of any fuel price decreases. Additionally, we are not able to recover fuel surcharge on empty miles, out of route miles, or fuel used in idling. Empty miles, out of route miles and idling have been elevated as a result of lower freight demand.
We posted an 101.9% operating ratio (which represents operating expenses as a percentage of operating revenues) for the year ended December 31, 2024, compared to 96.5% for the same period of 2023, and a 2.8% net loss as a percentage of operating revenues for 2024, compared to 1.2% net income as a percentage of operating revenues in the same period of 2023.
We posted an 107.1% operating ratio (which represents operating expenses as a percentage of operating revenues) for the year ended December 31, 2025, compared to 101.9% for the same period of 2024, and a 6.5% net loss as a percentage of operating revenues for 2025, compared to 2.8% net loss as a percentage of operating revenues in the same period of 2024.
We have continued to get more creative in providing better pay, driving opportunities, benefits, equipment, and facilities for our drivers. We expect the qualified driver shortage within the trucking industry to continue to be a challenge in the foreseeable future.
We continue to evaluate creative ways in providing better pay, driving opportunities, benefits, equipment, and facilities for our drivers. We expect the qualified driver shortage within the trucking industry to continue to be a challenge in the foreseeable future.
However, we expect to focus primarily on paying down the debt resulting from our 2022 acquisitions in 2025. For the periods ended December 31, 2024, our operating 35 cash flows as a percentage of operating revenues five-year average was 18.0%, our three-year average was 15.6%, and most recently for 2024 was 13.8%.
However, we expect to focus primarily on paying down the debt resulting from our 2022 acquisitions in 2026. For the periods ended December 31, 2025, our operating cash flows as a percentage of operating revenues five-year average was 15.5%, our three-year average was 13.0%, and most recently for 2025 was 11.1%.
The share repurchase authorization is discretionary and has no expiration date. We had net payments of $15.6 million and $30.1 million for income taxes, net of refunds, for the years ended December 31, 2024 and 2023.
The share repurchase authorization is discretionary and has no expiration date. We had net payments of 9.3 million and 15.6 million for income taxes, net of refunds, for the years ended December 31, 2025 and 2024.
Operating taxes and licenses expense decreased $1.4 million (6.4%), to $20.4 million during the year ended December 31, 2024 from $21.8 million in 2023, due to a decrease in number of revenue equipment units (tractors and trailers) licensed in 2024 as compared to 2023. We decreased the number of revenue equipment units due to the soft freight environment.
Operating taxes and licenses expense decreased $3.1 million (15.3%), to $17.3 million during the year ended December 31, 2025 from $20.4 million in 2024, due to a decrease in number of revenue equipment units (tractors and trailers) licensed in 2025 as compared to 2024. We decreased the number of revenue equipment units due to the soft freight environment.
We posted an 101.7% non-GAAP adjusted operating ratio (1) for the year ended December 31, 2024 compared to 95.4% for the same period of 2023. See the “GAAP to Non-GAAP Reconciliation Schedule” below for a reconciliation of our non-GAAP adjusted operating ratio. We had total assets of $1.3 billion and total stockholders' equity of $822.6 million at December 31, 2024.
We posted an 104.7% non-GAAP adjusted operating ratio (1) for the year ended December 31, 2025 compared to 101.7% for the same period of 2024. See the “GAAP to Non-GAAP Reconciliation Schedule” below for a reconciliation of our non-GAAP adjusted operating ratio. We had total assets of $1.2 billion and total stockholders' equity of $755.3 million at December 31, 2025.
The challenging freight environment during 2024 and 2023, combined with acquisitions of Smith Transport and CFI in 2022, have pressured our financial results to a level below our historical results and management expectations, and also resulted in the incurrence of debt.
The challenging freight environment over the past three years, combined with acquisitions of Smith Transport and CFI in 2022, have pressured our financial results to a level below our historical results and management expectations, and also resulted in the incurrence of debt.
We believe that operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio are more representative of our underlying operations by excluding the volatility of fuel prices, which we cannot control, and removes items resulting from acquisitions that do not reflect our core operating performance.
We believe that operating revenue excluding fuel surcharge revenue, adjusted operating (loss) income, and adjusted operating ratio are more representative of our underlying 33 operations by excluding the volatility of fuel prices, which we cannot control, and removes other items that, in our opinion, do not reflect our core operating performance.
The decreased fuel surcharge revenue was the result of decreased miles driven, along with a decrease in average DOE diesel fuel prices of 10.8% during 2024 compared to 2023, as reported by the DOE. Operating revenues (the total of trucking and fuel surcharge revenue) are primarily earned based on loaded miles driven in providing truckload services.
The decreased fuel surcharge revenue was the result of decreased miles driven, along with a decrease in average DOE diesel fuel prices of 2.6% during 2025 compared to 2024. Operating revenues (the total of trucking and fuel surcharge revenue) are primarily earned based on loaded miles driven in providing truckload services.
Recent Developments In 2024, we generated operating revenues of $1.0 billion, including fuel surcharges, net loss of $29.7 million, and basic loss per share of $0.38 on basic weighted average outstanding shares of 78.7 million.
This compared to operating revenues of $1.0 billion, including fuel surcharges, net loss of $29.7 million, and basic net loss per share of $0.38 on basic weighted average outstanding shares of 78.7 million in 2024.
The decrease in revenue was driven by a decrease in trucking and other revenues of $120.0 million and a decrease in fuel surcharge revenue of $40.0 million. The decrease in trucking and other revenues was the result of a weak freight environment leading to a decline in total miles and lower freight rates.
The decrease in revenue was driven by a decrease in trucking and other revenues of $204.6 million and a decrease in fuel surcharge revenue of $37.2 million. The decrease in trucking and other revenues was the result of a weak freight environment leading to a decline in total miles and lower freight rates.
The freight rates, earned on miles driven, were generally soft due to weak market conditions and demand for freight services during 2023, particularly during the second half of 2023 and throughout 2024.
The freight rates, earned on miles driven, were generally soft due to weak market conditions and demand for freight services during 2024 and throughout 2025.
The remaining Smith Debt of $11.0 million are finance lease obligations with a weighted average interest rate of 4.0% at December 31, 2024, due in monthly installments with final maturities at various dates ranging from August 2025 to April 2026 with the weighted average remaining lease term of 1.0 year.
The remaining Smith Debt of $3.8 million are finance lease obligations with a weighted average interest rate of 4.3% at December 31, 2025, due in monthly installments with final maturities at various dates ranging from January 2026 to April 2026 with the weighted average remaining lease term of 0.2 years.
There were 0.6 million shares repurchased in the open market during the year ended December 31, 2024 while there were no shares repurchased during 2023.
There were 1.2 million shares repurchased in the open market during the year ended December 31, 2025 while there were 0.6 million shares repurchased during 2024.
Outstanding letters of credit associated with the Revolving Facility at December 31, 2024 were $11.7 million. As of December 31, 2024 the weighted average interest rate on outstanding borrowings under the Credit Facilities was 6.0%.
Outstanding letters of credit associated with the Revolving Facility at December 31, 2025 were $11.2 million. As of December 31, 2025 the weighted average interest rate on outstanding borrowings under the Credit Facilities was 5.5%.
The operating and maintenance expense during 2025 will be impacted by the volume of fleet modernization as newer equipment operating under warranty results in less realized maintenance costs.
The operating and maintenance expense during 2026 will be impacted by the total miles driven, along with the volume of fleet modernization as newer equipment operating under warranty results in less realized maintenance costs.
Other operating expenses decreased $9.2 million (13.9%), to $57.2 million, during the year ended December 31, 2024 from $66.4 million in 2023, due mainly to a reduction of costs stemming from a reduction in freight volume as a result of weak freight demand in combination with expense reduction initiatives.
Other operating expenses decreased $11.5 million (20.1%), to $45.7 million, during the year ended December 31, 2025 from $57.2 million in 2024, due mainly to a reduction of costs stemming from a reduction in freight volume as a result of weak freight demand in combination with expense reduction initiatives.
Income tax expense is reduced in periods by the amount of accrued interest and penalties associated with reversed uncertain tax positions due to lapse of applicable statute of limitations, when applicable, or when a position is settled.
Income tax expense is reduced in periods by the amount of accrued interest and penalties associated with reversed uncertain tax positions due to lapse of applicable statute of limitations, when applicable, or when a position is settled. These unrecognized tax benefits relate to risks associated with state income tax filing positions for our corporate subsidiaries.
Throughout our history, these principles have allowed us to generate significant cash flows and be opportunistic with acquiring and disposing of equipment and facilities, making acquisitions, and returning capital to stockholders.
Throughout our history, these principles have allowed us to generate significant cash flows and be opportunistic with acquiring and disposing of equipment and facilities, making acquisitions, and returning capital to stockholders. Our operating ratio remains significantly above our historical financial performance and our financial and operational targets.
We have attempted to limit the effects of increases in fuel prices through certain cost control efforts and our fuel surcharge program. We impose fuel surcharges on substantially all accounts.
In addition to inflation, significant fluctuations in fuel prices can adversely affect our operating results and profitability. We have attempted to limit the effects of increases in fuel prices through certain cost control efforts and our fuel surcharge program. We impose fuel surcharges on substantially all accounts.
In 2023, $120.7 million was used in financing activities included $114.1 million used for repayments of finance leases and debt along with $6.3 million to pay dividends. We have a stock repurchase program with 6.0 million shares remaining authorized for repurchase as of December 31, 2024 and the program has no expiration date.
In 2024, $112.7 million used in financing activities included $100.3 million used for repayments of finance leases and debt, $7.3 million to repurchase common stock, and $4.7 million to pay dividends. We have a stock repurchase program with 4.8 million shares remaining authorized for repurchase as of December 31, 2025 and the program has no expiration date.
Cash flows used in investing activities were $46.5 million during 2024, representing a decrease in cash used of $21.4 million compared to cash flows used in investing activities of $67.9 million during 2023. The decrease in cash used in investing activities was mainly the result of $24.7 million less net cash used for property and equipment in 2024.
Cash flows used in investing activities were $26.0 million during 2025, representing a decrease in cash used of $20.5 million compared to cash flows used in investing activities of $46.5 million during 2024. The decrease in cash used in investing activities was mainly the result of less net cash used for property and equipment in 2025.
Adjusted operating income as reported in this annual report is based upon operating revenue excluding fuel surcharge revenue, less operating expenses, net of fuel surcharge revenue, and non-cash amortization expense related to intangible assets.
Adjusted operating (loss) income as reported in this annual report is based upon operating revenue excluding fuel surcharge revenue, less operating expenses, net of fuel surcharge revenue, non-cash amortization expense related to intangible assets, and non-cash impairment of trade name associated with the decision to unify CFI with Heartland Express.
Based on currently agreed upon equipment deals we expect equipment transaction gains to be between $5.0 million to $10.0 million during 2025. Interest expense decreased $6.6 million (27.3%), to $17.6 million during the year December 31, 2024 from $24.2 million in 2023.
Based on currently agreed upon equipment deals we expect equipment transaction gains to be between $20.0 million to $30.0 million during 2026. 37 Interest expense decreased $6.1 million (34.6%), to $11.5 million during the year December 31, 2025 from $17.6 million in 2024.
We had net cash of $112.7 million used by financing activities during 2024, including $100.3 million of repayments of finance leases and debt, $7.3 million used to repurchase common stock, and $4.7 million used to pay dividends to our shareholders.
We had net cash of $58.2 million used by financing activities during 2025, including $41.2 million of repayments of finance leases and debt, $10.4 million used to repurchase common stock, and $6.2 million used to pay dividends to our shareholders.
Insurance and claims expense increased $5.6 million (12.3%), to $50.9 million during the year ended December 31, 2024 from $45.3 million in 2023. The increase is due to unfavorable claim severity and frequency along with insurance cost.
Insurance and claims expense increased $7.0 million (13.8%), to $57.9 million during the year ended December 31, 2025 from $50.9 million in 2024. The increase is due to unfavorable claim severity and frequency along with insurance cost.
At December 31, 2024, we had $12.8 million in cash and cash equivalents, $189.7 million in outstanding debt, $11.0 million in finance lease liabilities, $7.9 million in operating lease obligations, and $88.3 million available borrowing capacity on the Revolving Facility.
At December 31, 2025, we had $18.5 million in cash and cash equivalents, $156.0 million in outstanding debt, $3.8 million in finance lease liabilities, $1.6 million in operating lease obligations, and $88.8 million available borrowing capacity on the Revolving Facility.
This $21.0 million decrease was primarily due to a $41.2 million decrease in net income net of non-working capital adjustment items, offset by $20.2 million more cash provided by working capital items. Cash flow from operating activities was 13.8% of operating revenues for the year ended December 31, 2024, compared to 13.7% for the same period of 2023.
This $55.0 million decrease was primarily due to a $36.7 million decrease in net income net of non-working capital adjustment items along with $18.3 million less cash provided by working capital items. Cash flow from operating activities was 11.1% of operating revenues for the year ended December 31, 2025, compared to 13.8% for the same period of 2024.
Depreciation and amortization decreased $17.5 million (8.8%), to $181.5 million during the year ended December 31, 2024 from $199.0 million in the same period of 2023. The decrease in depreciation and amortization is primarily due to ongoing fleet replacement strategies. We expect depreciation expense in 2025 to be approximately $160 million to $165 million.
Depreciation and amortization decreased $22.3 million (12.3%), to $159.2 million during the year ended December 31, 2025 from $181.5 million in the same period of 2024. The decrease in depreciation and amortization is primarily due to ongoing fleet replacement strategies. We expect depreciation expense in 2026 to be approximately $140 million to $150 million.
During 2024, we used $46.5 million in net investing cash flows, which was the result of net cash used for the purchase of property and equipment. We used $109.5 million to purchase property and equipment and received $63.0 million from the sales of property and equipment.
During 2025, we used $26.0 million in net investing cash flows, which was the result of net cash used for the purchase of property and equipment. We used $156.2 million to purchase property and equipment and received $129.9 million from the sales of property and equipment.
In recent years there have been several insurance carriers that have exited the excess reinsurance market. Insurance carriers have raised premiums and collateral requirements for many businesses, including trucking companies. In our April 2023 renewal we increased retained claim exposure in response to the premium increase trend, but also were able to increase our aggregate excess coverage.
In recent years there have been several insurance carriers that have exited the excess reinsurance market. Insurance carriers have raised premiums and collateral requirements for many businesses, including trucking companies. In recent years we have increased retained claim exposure in response to the premium increase trend and added corridor features which have the effect of increasing retained exposure.
These ten acquisitions have enabled us to solidify our position within existing regions, expand into new operating regions, expand service offerings to address longer length of haul needs from customers, and pursue new customer relationships in new markets, as well as expand business relationships with current customers in new markets.
These ten acquisitions have enabled us to solidify our position within existing regions, expand into new operating regions, expand service offerings to address longer length of haul needs from customers, and pursue new customer relationships in new markets, as well as expand business relationships with current customers in new markets. 34 We have historically been a debt free organization although with the acquisition of CFI we incurred debt, but have significantly lowered our debt balance since the acquisition.
The federal statute of limitations remains open for the years 2021 and forward. Tax years 2014 and forward are subject to audit by state tax authorities depending on the tax code and administrative practice of each state.
Tax years 2015 and forward are subject to audit by state tax authorities depending on the tax code and administrative practice of each state.
Our financial goals continue to be (i) generate an operating ratio in the low to mid 80s, (ii) grow revenue profitably, organically and through acquisitions, and (iii) carry a debt-free balance sheet.
However, the acquisitions have also allowed us to deliver $0.8 billion and $1.0 billion of operating revenues during 2025 and 2024. Our financial goals continue to be (i) generate an operating ratio in the low to mid 80s, (ii) grow revenue profitably, organically and through acquisitions, and (iii) carry a debt-free balance sheet.
At December 31, 2024, the Company’s tractor fleet had an average age of 2.5 years compared to 2.2 years at December 31, 2023.
At December 31, 2025, the Company’s tractor fleet had an average age of 2.6 years compared to 2.5 years at December 31, 2024. The average age of our trailer fleet was 7.3 years at December 31, 2025 compared to 7.4 years at December 31, 2024.
The $112.7 million used in financing activities during 2024 included $100.3 million of repayments of finance leases and debt, $7.3 million repurchases of common stock, and $4.7 million used to pay dividends to our shareholders.
The $58.2 million used in financing activities during 2025 included $41.2 million of repayments of finance leases and debt, $10.4 million repurchases of common 39 stock, and $6.2 million used to pay dividends to our shareholders.
The decrease in gains on trailer sales was primarily due to a 18.9% decrease in the gains per unit sold in 2024 as compared to 2023. Gains on tractor equipment sales decreased as a result of a 53.9% decrease in gains per tractor sold.
The increase in gains on trailer sales was primarily due to a 87.2% increase in the gains per unit sold in 2025 as compared to 2024. Gains on tractor equipment sales increased as a result of a 24.2% increase in gains per tractor sold.
Inflation has also impacted the cost of parts for equipment repairs and maintenance, inclusive of tires. The cost of parts and equipment have the potential for further increases due to proposed tariffs. The continued qualified driver shortage experienced by the trucking industry has had the effect of increasing compensation paid to drivers.
The cost of parts and equipment have the potential for further increases due to tariffs. The continued qualified driver shortage experienced by the trucking industry has had the effect of increasing compensation paid to drivers. Significant inflation has been experienced in insurance and claims cost related to health insurance and claims as well as auto liability insurance and claims.
We currently anticipate net capital expenditures for revenue equipment and terminal properties in 2025 to be between $55.0 million to $65.0 million. 40 Cash flows used in financing activities decreased $8.0 million in 2024 compared to 2023.
We currently do not anticipate net capital expenditures for revenue equipment and terminal properties in 2026 to be significantly different than 2025. Cash flows used in financing activities decreased $54.5 million in 2025 compared to 2024.
The full amount of the Term Facility was made in a single draw on the CFI Closing Date and amounts borrowed under the Term Facility that are repaid or prepaid may not be reborrowed.
The Credit Facilities includes a consortium of lenders, including joint bookrunners JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association (“Wells Fargo”). The full amount of the Term Facility was made in a single draw on the CFI Closing Date and amounts borrowed under the Term Facility that are repaid or prepaid may not be reborrowed.
Measurement of uncertain income tax positions is based on statutes of limitations, penalty rates, and interest rates on a state by state and year by year basis. 43 New Accounting Pronouncements See Note 1 of the consolidated financial statements for a full description of recent accounting pronouncements and the respective dates of adoption and effects on results of operations and financial position.
New Accounting Pronouncements See Note 1 of the consolidated financial statements for a full description of recent accounting pronouncements and the respective dates of adoption and effects on results of operations and financial position.
A change in estimate would impact depreciation and amortization in the consolidated statements of comprehensive income and revenue equipment in the consolidated balance sheets.
A change in estimate would impact depreciation and amortization in the consolidated statements of comprehensive income and revenue equipment in the consolidated balance sheets. We have not had any material changes to our estimate methodology in the past three years.
The reduction in taxes paid during the year ended December 31, 2024 is due to prior year overpayment credit forwards and reduced current year taxable income. Management believes we have adequate liquidity to meet our current and projected needs in the foreseeable future.
The reduction in taxes paid during the year ended December 31, 2025 is primarily due to 100% bonus depreciation being made permanent in 2025 reducing the current year tax liability. Management believes we have adequate liquidity to meet our current and projected needs in the foreseeable future.
In addition to margin progress, we are making strides toward our goal to be debt free. Even in this challenging and prolonged negative operating environment, we continued to generate positive operating cash flows.
In addition to margin progress, we are making strides toward our goal to be debt free. Even in this challenging and prolonged negative operating environment, we continued to generate positive operating cash flows. Since making the acquisitions of CFI and Smith Transport in 2022, we have repaid $337.0 million of debt and capital leases while maintaining a relatively young fleet.
Significant price increases in original equipment manufacturer revenue equipment has impacted the cost for us to acquire new equipment. While there was a corresponding inflationary impact to prices offered on the sale of our used equipment during prior years, the market for used equipment softened significantly during 2023 and was weak throughout 2024.
While there was a corresponding inflationary impact to prices offered on the sale of our used equipment during prior years, the market for used equipment softened significantly corresponding to the weak freight environment. Inflation has also impacted the cost of parts for equipment repairs and maintenance, inclusive of tires.
We believe that our driver compensation and benefits package is consistently among the best in the industry. We are committed to investing in our drivers and compensating them for safety as both are key to our operational and financial performance. Currently over 12% of our driver employees, individually, have achieved 1.0 million safe miles.
Driver pay, home time, and other amenities have allowed us to maintain driver turnover rates lower than the industry average. We believe that our driver compensation and benefits package is consistently among the best in the industry. We are committed to investing in our drivers and compensating them for safety as both are key to our operational and financial performance.
We have not had any material changes to our estimate methodology in the past three years. 42 Auto Liability and Workers’ Compensation Claims Reserve The Company is self-insured for a portion of the risk related to auto liability and workers' compensation.
Auto Liability and Workers’ Compensation Claims Reserve The Company is self-insured for a portion of the risk related to auto liability and workers' compensation.
The interest expense is made up of $16.5 million from the Credit Facilities coinciding with the acquisition of CFI while the remaining $1.1 million is the result of debt and financing leases assumed through the Smith Transport acquisition.
The interest expense is made up of $10.9 million from the Credit Facilities coinciding with the acquisition of CFI while the remaining $0.6 million is the result of debt and financing leases assumed through the Smith Transport acquisition. Based on debt repayments made during 2025, along with projected debt paydowns in 2026, we expect interest expense to decrease in 2026.
Adjusted operating ratio as reported in this annual report is based upon operating expenses, net of fuel surcharge revenue, and amortization of intangibles, as a percentage of operating revenue excluding fuel surcharge revenue.
Adjusted operating ratio as reported in this annual report is based upon operating expenses, net of fuel surcharge revenue, non-cash amortization expense related to intangible assets, and non-cash impairment of trade name associated with the decision to unify CFI with Heartland Express, as a percentage of operating revenue excluding fuel surcharge revenue.
Over the long term, general economic growth and industry supply and demand conditions have allowed rate increases, although the rate increases received have significantly lagged the increases in tractor prices and related depreciation expense. In addition to inflation, significant fluctuations in fuel prices can adversely affect our operating results and profitability.
We historically have limited the effects of inflation through increases in freight rates and certain cost control efforts. Over the long term, general economic growth and industry supply and demand conditions have allowed rate increases, although the rate increases received have significantly lagged the increases in tractor prices and related depreciation expense.
We expect the strategic and operational changes that we have implemented during 2024 will improve our operational readiness ahead of future expected freight demand growth. However, general consumer product output and inventory volatility, consumer demand, the political landscape, potential tariffs, foreign wars, and disruption in oil and diesel markets all could create additional volatility regarding freight demand during 2025.
However, general consumer product output and inventory volatility, consumer demand, the political landscape, potential tariffs, foreign wars, and disruption in oil and diesel markets all could create additional volatility regarding future freight demand. The issue of a decreasing amount of overall qualified CDL drivers in our industry continues.
We have historically been a debt free organization although with the acquisition of CFI we now have a significant amount of debt, although we significantly lowered our debt balance during 2024. We expect to continue to evaluate acquisition candidates presented to us, however, we do not expect to make any significant acquisitions while we are paying down debt.
We expect to continue to evaluate acquisition candidates presented to us, however, we do not expect to make any significant acquisitions while we are paying down debt.
Fuel Costs After Salaries, wages, and benefits and Deprecation and amortization, Fuel expense was our next highest operating cost in 2024. Containment of fuel cost continues to be one of management's top priorities. Average DOE diesel fuel prices per gallon for 2024 and 2023 were $3.76 and $4.21, respectively.
Containment of fuel cost continues to be one of management's top priorities. Average DOE diesel fuel prices per gallon for 2025 and 2024 were $3.66 and $3.76, respectively. The average price per gallon in 2026, through February 23, 2026, was $3.62.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest rates associated with borrowings under the Credit Facilities are based on the SOFR plus a spread based on the Company’s net leverage ratio. Increases in interest rates would currently impact our interest expense given we have outstanding borrowings subject to variable interest rates.
Biggest changeOf the total $159.8 million of debt and finance lease liabilities outstanding, $151.9 million is subject to variable interest rates and the remainder is at fixed annual interest rates. Interest rates associated with borrowings under the Credit Facilities are based on the SOFR plus a spread based on the Company’s net leverage ratio.
Based on our tire purchases for 2024, a 10% increase in the price of tires would increase our tire purchase expense by $2.2 million, resulting in a corresponding decrease in income before income taxes.
Based on our tire purchases for 2025, a 10% increase in the price of tires would increase our tire purchase expense by $2.2 million, resulting in a corresponding decrease in income before income taxes.
Based on our actual fuel purchases for 2024, assuming miles driven, fuel surcharges as a percentage of revenue, percentage of unproductive miles, and miles per gallon remained consistent with 2024 amounts, a $1.00 increase in the average price of fuel per gallon, year over year, would decrease our income before income taxes by approximately $14.4 million.
Based on our actual fuel purchases for 2025, assuming miles driven, fuel surcharges as a percentage of revenue, percentage of unproductive miles, and miles per gallon remained consistent with 2025 amounts, a $1.00 increase in the average price of fuel per gallon, year over year, would decrease our income before income taxes by approximately $12.6 million.
We have fuel surcharge agreements with most customers that enable us to pass through most long-term price increases therefore limiting our exposure to commodity price risk.
Commodity Price Risk We are subject to commodity price risk primarily with respect to purchases of fuel and rubber. We have fuel surcharge agreements with most customers that enable us to pass through most long-term price increases therefore limiting our exposure to commodity price risk.
We do not currently use derivative financial instruments for risk management purposes, although we have used instruments in the past for fuel price risk management, and do not use them for either speculation or trading. Because substantially all of our operations are confined to the U.S., we are not directly subject to a material foreign currency risk.
We do not currently use derivative financial instruments for risk management purposes, although we have used instruments in the past for fuel price risk management, and do not use them for either speculation or trading.
An increase of 1.0% in the SOFR rate would drive an increase of $1.8 million in interest expense annually based on our current amount of debt outstanding that is subject to variable interest rates. Commodity Price Risk We are subject to commodity price risk primarily with respect to purchases of fuel and rubber.
Increases in interest rates would currently impact our interest expense given we have outstanding borrowings subject to variable interest rates. An increase of 1.0% in the SOFR rate would drive an increase of $1.5 million in interest expense annually based on our current amount of debt outstanding that is subject to variable interest rates.
Interest Rate Risk We had $189.7 million debt outstanding and $11.0 million in finance lease liabilities at December 31, 2024. Of the total $200.7 million of debt and finance lease liabilities outstanding, $184.0 million is subject to variable interest rates and the remainder is at fixed annual interest rates.
Because substantially all of our operations are confined to the U.S., we are not directly subject to a material foreign currency risk. 42 Interest Rate Risk We had $156.0 million debt outstanding and $3.8 million in finance lease liabilities at December 31, 2025.

Other HTLD 10-K year-over-year comparisons