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What changed in PAMT CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PAMT CORP's 2022 and 2023 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 2023 report.

+186 added−198 removedSource: 10-K (2024-03-13) vs 10-K (2023-03-10)

Top changes in PAMT CORP's 2023 10-K

186 paragraphs added · 198 removed · 153 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

43 edited+4 added−15 removed41 unchanged
Biggest changeThese rules reduced the maximum hours that could be worked in a consecutive seven-day period from 82 to 70, required that a driver take a mandatory thirty-minute break during each consecutive eight hour driving period, and required that a driver take a 34-hour rest period, or restart, that included two periods between 1:00 a.m. and 5:00 a.m. that could only be used one time every seven calendar days. - 6 - Table of Contents In July 2012, Congress passed legislation renewing the mandate for electronic logging devices and designated authority to the FMCSA to propose a new rule.
Biggest changeThese rules required that a driver take a mandatory thirty-minute break during each consecutive eight hour driving period. In July 2012, Congress passed legislation renewing the mandate for electronic logging devices and designated authority to the FMCSA to propose a new rule.
Our drivers are paid for an array of services, including calculated miles driven, loading and unloading, additional stops, detention and layovers, among other things. We contract with independent contractors to supply one or more trucks and drivers for our use. Independent contractors must pay their own truck expenses, fuel, maintenance, insurance, and driver costs.
Drivers are paid for an array of services, including calculated miles driven, loading and unloading, additional stops, detention and layovers, among other things. We contract with independent contractors to supply one or more trucks and drivers for our use. Independent contractors must pay their own truck expenses, fuel, maintenance, insurance, and driver costs.
Compliance with these federal and state requirements has increased the cost of our equipment and may further increase the cost of replacement equipment in the future. The FMCSA Commercial Driver’s License (“CDL”) Drug and Alcohol Clearinghouse (“Clearinghouse”) became effective January 6, 2020. This new database contains information pertaining to violations of the U.S.
Compliance with these federal and state requirements has increased the cost of our equipment and may further increase the cost of replacement equipment in the future. The FMCSA Commercial Driver’s License (“CDL”) Drug and Alcohol Clearinghouse (“Clearinghouse”) became effective January 6, 2020. This database contains information pertaining to violations of the U.S.
Drivers can earn bonuses by recruiting other qualified drivers who become employed by us, and both cash and non-cash prizes are awarded for achieving certain safety and fuel efficiency goals.
Drivers can earn bonuses by recruiting other qualified drivers who become employed by us, and both cash and non-cash prizes are awarded for achieving certain safety, productivity and fuel efficiency goals.
We anticipate enforcement of the Clearinghouse will remove certain drivers from the pool of drivers available to the industry and increase competition and related costs to attract and retain the remaining qualified drivers. - 7 - Table of Contents Our motor carrier operations are subject to additional. environmental laws and regulations, including laws and regulations dealing with the transportation of hazardous materials and other environmental matters, and our operations involve certain inherent environmental risks.
We anticipate enforcement of the Clearinghouse will remove certain drivers from the pool of drivers available to the industry and increase competition and related costs to attract and retain the remaining qualified drivers. - 6 - Table of Contents Our motor carrier operations are subject to additional environmental laws and regulations, including laws and regulations dealing with the transportation of hazardous materials and other environmental matters, and our operations involve certain inherent environmental risks.
The Company was an early adopter of ELD capable devices, requiring the devices to be installed on its entire fleet and requiring its drivers to use AOBRD’s since 2010. These rulings affect the majority of carriers, including us, and the Company’s ELD devices were in compliance with FMCA requirements prior to the December 16, 2019 deadline.
The Company was an early adopter of ELD capable devices, requiring the devices to be installed on its entire fleet and requiring its drivers to use AOBRD’s since 2010. These rulings affect the majority of carriers, including us, and the Company’s ELD devices were in compliance with FMCSA requirements prior to the December 16, 2019 deadline.
This increased focus on sustainability may result in new legislation or regulations and customer requirements that could negatively affect us as we may incur additional costs or be required to make changes to our operations in order to comply with any new regulations or customer requirements.
This increased focus on sustainability may result in new legislation or regulations, as well as customer requirements that could negatively affect us as we may incur additional costs or be required to make changes to our operations in order to comply with any new regulations or customer requirements.
The Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration (“NHTSA”) jointly developed new standards for various vehicles, including heavy duty trucks, that were adopted in August 2011 and cover model years 2014 through 2018.
The Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration (“NHTSA”) jointly developed new standards for various vehicles, including heavy duty trucks, that were adopted in August 2011 and covered model years 2014 through 2018.
In many instances, our systems also directly provide real-time information electronically to our customers regarding the status of freight shipments and anticipated arrival times, adding flexibility and convenience by extending supply chain visibility. - 4 - Table of Contents Maintenance We have a strictly-enforced, comprehensive preventive maintenance program for our trucks and trailers.
In many instances, our systems also directly provide real-time information electronically to our customers regarding the status of freight shipments and anticipated arrival times, adding flexibility and convenience by extending supply chain visibility. Maintenance We have a strictly-enforced, comprehensive preventive maintenance program for our trucks and trailers.
The standard adopted for heavy duty trucks was intended to achieve a reduction in CO 2 and fuel consumption ranging from 7% to 20% by model year 2017. In August 2016, the EPA and NHTSA finalized the second phase of these standards which will further reduce greenhouse gas emissions and fuel consumption for heavy duty trucks through model year 2027.
The standard adopted for heavy duty trucks was intended to achieve a reduction in CO 2 and fuel consumption ranging from 7% to 20% by model year 2017. In August 2016, the EPA and NHTSA finalized the second phase of these standards which further reduces greenhouse gas emissions and fuel consumption for heavy duty trucks through model year 2027.
We place a high priority on the recruitment and retention of an adequate supply of qualified drivers. Our truck fleet averages 2.1 years old, keeping our drivers safe, comfortable, and on the road. With many dedicated and over-the-road assignments, we allow our drivers to select routes that fit their lifestyles.
Therefore, we place a high priority on the recruitment and retention of an adequate supply of qualified drivers. Our truck fleet averages 2.9 years old, keeping our drivers safe, comfortable, and on the road. With many dedicated and over-the-road assignments, we allow our drivers to select routes that fit their lifestyles.
Segment Financial Information The Company's operations are all in the motor carrier segment and are aggregated into a single reporting segment in accordance with the aggregation criteria under Generally Accepted Accounting Principles (“GAAP”). Operations Our operations can generally be classified into truckload services or brokerage and logistics services.
Segment Financial Information The operations of the Company’s subsidiaries are all in the motor carrier segment and are aggregated into a single reporting segment in accordance with the aggregation criteria under Generally Accepted Accounting Principles (“GAAP”). Operations Our subsidiaries’ operations can generally be classified into truckload services or brokerage and logistics services.
We strive to provide a very high level of service to our customers, thus creating a level of satisfaction, value and loyalty within our customer base. We closely monitor each shipment for compliance regarding scheduled pickup, delivery and transit times, service levels and customer specific expectations.
Providing Superior and Flexible Customer Service . We strive to provide a very high level of service to our customers, thus creating a level of satisfaction, value, and loyalty within our customer base. We closely monitor each shipment for compliance regarding scheduled pickup, delivery and transit times, service levels and customer specific expectations.
We believe we are currently in material compliance with applicable laws and regulations and that the cost of compliance has not materially affected results of operations.
We believe we are currently in material compliance with applicable laws and regulations and that the cost of compliance has not materially affected results of operations to date.
Walmart Inc. accounted for approximately 9%, 9% and 5% of our revenues in 2022, 2021 and 2020, respectively. Fiat Chrysler Automobiles accounted for approximately 6%, 5% and 5% of our revenues in 2022, 2021 and 2020, respectively. We also provide transportation services to other manufacturers who are suppliers for automobile manufacturers.
Fiat Chrysler Automobiles accounted for approximately 7%, 6% and 5% of our revenues in 2023, 2022 and 2021, respectively. Walmart Inc. accounted for approximately 6%, 9% and 9% of our revenues in 2023, 2022 and 2021, respectively. We also provide transportation services to other manufacturers who are suppliers for automobile manufacturers.
Our commitment to diversity and inclusion means that we will continue to strive to establish and improve an inclusive workplace environment where employees from all backgrounds can succeed and be heard. Employee Health and Safety. We are committed to being an industry leader in health and safety standards.
Our commitment to diversity and inclusion means that we will continue to strive to establish and improve an inclusive workplace environment where employees from all backgrounds can succeed and be heard. - 4 - Table of Contents Employee Health and Safety. We are committed to being an industry leader in health and safety standards.
The average age of our trucks and trailers as of December 31, 2022 was 2.1 years and 6.6 years, respectively. We evaluate our equipment purchasing decisions based on factors such as initial cost, useful life, warranty terms, expected maintenance costs, fuel economy, driver comfort, customer needs, manufacturer support, and resale value.
The average age of our trucks and trailers as of December 31, 2023 was 2.9 years and 6.5 years, respectively. We evaluate our equipment purchasing decisions based on factors such as initial cost, useful life, warranty terms, expected maintenance costs, fuel economy, driver comfort, customer needs, manufacturer support, and resale value.
If we should fail to comply with applicable regulations, we could be subject to substantial fines or penalties and to civil and criminal liability. As global warming issues become more prevalent, federal, state and local governments, as well as some of our customers, have made efforts to respond to these issues.
If we should fail to comply with applicable regulations, we could be subject to substantial fines or penalties and to civil and criminal liability. As issues related to climate change become more prevalent, federal, state and local governments, as well as some of our customers, have made efforts to respond to these issues.
Both our truckload operations and our brokerage and logistics operations have similar economic characteristics and are impacted by virtually the same economic factors as discussed elsewhere in this Report. Truckload services operating revenues, before fuel surcharges, represented 66.1%, 67.0% and 76.9% of total operating revenues for the years ended December 31, 2022, 2021 and 2020, respectively.
Both our truckload operations and our brokerage and logistics operations have similar economic characteristics and are impacted by virtually the same economic factors as discussed elsewhere in this Report. Truckload services operating revenues, before fuel surcharges, represented 65.3%, 66.1% and 67.0% of total operating revenues for the years ended December 31, 2023, 2022 and 2021, respectively.
The remaining operating revenues, before fuel surcharge, for the same periods were generated by brokerage and logistics services, representing 33.9%, 33.0% and 23.1%, respectively.
The remaining operating revenues, before fuel surcharge, for the same periods were generated by brokerage and logistics services, representing 34.7%, 33.9% and 33.0%, respectively.
The current operating environment is characterized by the following: · competition for drivers; · competition for freight; · price increases by truck and trailer equipment manufacturers; · volatile fuel costs; and · pressure on less profitable or undercapitalized carriers to consolidate or exit the industry.
The current operating environment is characterized by the following: · competition for drivers; · competition for freight; - 2 - Table of Contents · price increases by truck and trailer equipment manufacturers; · volatile fuel costs; · increasing insurance costs; and · pressure on less profitable or undercapitalized carriers to consolidate or exit the industry.
Our five largest customers, for which we provide carrier services covering a number of geographic locations, accounted for approximately 39%, 33% and 35% of our total revenues in 2022, 2021 and 2020, respectively. General Motors Company accounted for approximately 13%, 11% and 15% of our revenues in 2022, 2021 and 2020, respectively.
Our five largest customers, for which we provide carrier services covering a number of geographic locations, accounted for approximately 34%, 39% and 33% of our total revenues in 2023, 2022 and 2021, respectively. General Motors Company accounted for approximately 12%, 13% and 11% of our revenues in 2023, 2022 and 2021, respectively.
We continually strive to hire, develop and retain the top talent in our industry. Critical to attracting and retaining top talent is employee satisfaction, and we regularly implement programs to increase employee satisfaction. We reward our employees by providing competitive compensation, benefits and incentives throughout all levels in our organization, including for our drivers.
Critical to attracting and retaining top talent is employee satisfaction, and we regularly implement programs to increase employee satisfaction. We reward our employees by providing competitive compensation, benefits and incentives throughout all levels in our organization, including for our drivers.
Approximately 31%, 27% and 30% of our revenues were derived from transportation services provided to the automobile industry during 2022, 2021 and 2020, respectively. Revenue Equipment At December 31, 2022, we operated a fleet of 2,451 trucks, which included 407 independent contractor trucks. At December 31, 2022, our trailer fleet consisted of 7,784 trailers.
Approximately 30%, 31% and 27% of our revenues were derived from transportation services provided to the automobile industry during 2023, 2022 and 2021, respectively. Revenue Equipment At December 31, 2023, we operated a fleet of 2,200 trucks, which included 300 independent contractor trucks. At December 31, 2023, our trailer fleet consisted of 8,567 trailers.
A total of 3,379 of our employees were employed on a full-time basis as of December 31, 2022. None of our employees are represented by a collective bargaining unit, and we believe that our employee relations are good. At December 31, 2022, we also had 407 drivers for independent contractors under contract who were compensated on a per mile basis.
A total of 2,512 of our employees were employed on a full-time basis as of December 31, 2023. None of our employees are represented by a collective bargaining unit, and we believe that our employee relations are good. At December 31, 2023, we also had 390 independent contractor drivers under contract who were compensated on a per mile basis.
Expenses are intensely scrutinized for opportunities for elimination, reduction or to further leverage our purchasing power to achieve more favorable pricing. Industry According to the American Trucking Association’s “American Trucking Trends 2022” report, the trucking industry generated over $875 billion in revenue during 2021 which represented approximately 80% of the total U.S. freight spend.
Expenses are intensely scrutinized for opportunities for elimination, reduction or to further leverage our purchasing power to achieve more favorable pricing. Industry According to the American Trucking Association’s “American Trucking Trends 2023” report, the trucking industry generated over $940 billion in revenue during 2022 which represented approximately 81% of the total amount spent on U.S. freight.
Cartage Carriers, LLC, Overdrive Leasing, LLC, Choctaw Express, LLC, Choctaw Brokerage, Inc., Transcend Logistics, Inc., Decker Transport Co., LLC, East Coast Transport and Logistics, LLC, S & L Logistics, Inc., P.A.M. International, Inc, and P.A.M. Mexico Holdings LLC. Our operating authorities are held by P.A.M. Transport, Inc., P.A.M.
International, Inc, and P.A.M. Mexico Holdings LLC. Our operating authorities are held by P.A.M. Transport, Inc., Met Express, Inc., P.A.M. Cartage Carriers, LLC, Choctaw Express, LLC, Choctaw Brokerage, Inc., T.T.X., LLC, Decker Transport Co., LLC, and East Coast Transport and Logistics, LLC.
We contract with independent contractors to provide greater flexibility in responding to fluctuations in consumer demand. Independent contractors provide their own trucks and are contractually responsible for all associated expenses, including financing costs, fuel, maintenance, insurance, and taxes, among other things. They are also responsible for maintaining compliance with the Federal Motor Carrier Safety Administration regulations.
We contract with independent contractors to provide greater flexibility in responding to fluctuations in consumer demand. Independent contractors provide their own trucks and are contractually responsible for all associated expenses, including financing costs, fuel, maintenance, insurance, and taxes, among other things.
Our brokerage and logistics solutions offer similar services but utilize third-party equipment to expand available capacity. Our area of service includes the continental United States, Mexico and to a lesser degree Canada. Developing Customer Relationships within High Density Traffic Lanes. We strive to maximize utilization and increase revenue per truck while minimizing our time and empty miles between loads.
Our area of service includes the continental United States, Mexico and, to a lesser degree, Canada. Developing Customer Relationships within High Density Traffic Lanes. We strive to maximize utilization and increase revenue per truck while minimizing our time and empty miles between loads.
We also provide transportation services in Mexico under agreements with Mexican carriers. Our freight consists primarily of automotive parts, expedited goods, consumer goods, such as general retail store merchandise, and manufactured goods, such as heating and air conditioning units. P.A.M. Transportation Services, Inc. is a holding company incorporated under the laws of the State of Delaware in June 1986.
Our freight consists primarily of automotive parts, expedited goods, consumer goods, such as general retail store merchandise, and manufactured goods, such as heating and air conditioning units. P.A.M. Transportation Services, Inc. is a holding company incorporated under the laws of the State of Delaware in June 1986. We conduct operations and hold assets principally through the following wholly-owned subsidiaries: P.A.M.
Our sales efforts are conducted by a staff of eleven employees who are located in our major markets and supervised from our headquarters. These individuals work to improve profitability by maintaining an even flow of freight traffic (taking into account the balance between originations and destinations in a given geographical area), high utilization, and minimizing movement of empty equipment.
These individuals work to improve profitability by maintaining an even flow of freight traffic (taking into account the balance between originations and destinations in a given geographical area), high utilization, and minimizing movement of empty equipment.
Instruction in defensive driving and safety techniques continues after hiring, with seminars at several of our terminals. At December 31, 2022, we employed 81 persons on a full-time basis in our driver recruiting, training and safety instruction programs. - 5 - Table of Contents Talent Acquisition, Retention and Development.
Instruction in defensive driving and safety techniques continues after hiring, with seminars at several of our terminals. At December 31, 2023, we employed 85 persons on a full-time basis in our driver recruiting, training and safety instruction programs. Talent Acquisition, Retention and Development. We continually strive to hire, develop and retain the top talent in our industry.
This strategy enables us to: · maintain more consistent equipment capacity; · provide a high level of service to our customers, including time-sensitive delivery schedules; · attract and retain drivers; and · maintain a sound safety record as drivers travel familiar routes. - 2 - Table of Contents Providing Superior and Flexible Customer Service .
In this regard, we seek to provide equipment to our customers in defined regions and disciplined traffic lanes. This strategy enables us to: · maintain more consistent equipment capacity; · provide a high level of service to our customers, including time-sensitive delivery schedules; · attract and retain drivers; and · maintain a sound safety record as drivers travel familiar routes.
Item 1. Business. Unless the context otherwise requires, all references in this Annual Report on Form 10-K to “P.A.M.,” the “Company,” “we,” “our,” or “us” mean P.A.M. Transportation Services, Inc. and its subsidiaries. We are a truckload dry van carrier transporting general commodities throughout the continental United States, as well as in certain Canadian provinces.
Item 1. Business. Unless the context otherwise requires, all references in this Annual Report on Form 10-K to “P.A.M.,” the “Company,” “we,” “our,” or “us” mean P.A.M. Transportation Services, Inc. and its subsidiaries.
Department of Homeland Security. To the extent that we conduct operations outside the United States, we are subject to the Foreign Corrupt Practices Act, which generally prohibits U.S. companies and their intermediaries from offering bribes to foreign officials for the purpose of obtaining or retaining favorable treatment.
To the extent that we conduct operations outside the United States, we are subject to the Foreign Corrupt Practices Act, which generally prohibits U.S. companies and their intermediaries from offering bribes to foreign officials for the purpose of obtaining or retaining favorable treatment. - 5 - Table of Contents In December 2011, the FMCSA released new rules regulating HOS that became effective in July 2013.
This system provides information that allows us to calculate accurate estimated time of arrival information, which helps to optimize planning and customer service levels.
Drivers provide location, status, and informational updates directly to our computer system which increases productivity, convenience, and customer visibility. This system provides information that allows us to calculate accurate estimated time of arrival information, which helps to optimize planning and customer service levels.
At December 31, 2022, we employed 3,395 persons, of whom 2,575 were drivers, 259 were employed in maintenance, 309 were employed in operations, 74 were employed in marketing, 109 were employed in safety and personnel, and 69 were employed in general administration and accounting.
At December 31, 2023, we employed 2,530 persons, of whom 1,739 were drivers, 274 were employed in maintenance, 260 were employed in operations, 69 were employed in marketing, 116 were employed in safety and personnel, and 72 were employed in general administration and accounting.
Business and Growth Strategy Our strategy focuses on the following elements: Providing a Full Suite of Complimentary Truckload Transportation Solutions. Our objective is to provide our customers with a comprehensive solution to their truckload transportation needs. Our array of asset-based service offerings consists of dedicated, expedited, automotive, local, regional, and long-haul truckload services.
Our objective is to provide our customers with a comprehensive solution to their truckload transportation needs. Our array of asset-based service offerings consists of dedicated, expedited, automotive, local, regional, and long-haul truckload services. Our brokerage and logistics solutions offer similar services but utilize third-party equipment to expand available capacity.
At December 31, 2022, approximately 288 independent contractors were leasing 428 trucks in this program. Diversity and Inclusion. We believe diversity, equity, and inclusion are critical to our ability to win in the marketplace and enable our workforce and communities to succeed.
At December 31, 2023, our lease-purchase program had 333 trucks available for use, with approximately 280 drivers participating in the program. Diversity and Inclusion. We believe diversity, equity, and inclusion are critical to our ability to win in the marketplace and enable our workforce and communities to succeed.
Many of the carriers we compete with have substantially greater financial resources, own more equipment or carry a larger total volume of freight as compared to the Company. - 3 - Table of Contents Marketing and Significant Customers Our marketing emphasis is directed to that portion of the truckload market which is generally service-sensitive, as opposed to being solely price driven.
We compete on the basis of quality of service and delivery performance, as well as price. Many of the carriers we compete with have substantially greater financial resources, own more equipment or carry a larger total volume of freight as compared to the Company.
We seek to become a “core carrier” for our customers in order to maintain high utilization and capitalize on recurring revenue opportunities. Our marketing efforts are diversified and designed to gain access to dedicated, expedited, regional, automotive, and long-haul opportunities (including those in Mexico and Canada) and to expand brokerage and logistics offerings.
Our marketing efforts are diversified and designed to gain access to dedicated, expedited, regional, automotive, and long-haul opportunities (including those in Mexico and Canada) and to expand brokerage and logistics offerings. Our sales efforts are conducted by a staff of eleven employees who are located in our major markets and supervised from our headquarters.
Technology Our trucks are equipped with cellular-based global positioning and communications systems that allow fleet managers to communicate directly with drivers. Drivers provide location, status, and informational updates directly to our computer system which increases productivity, convenience, and customer visibility.
They are also responsible for maintaining compliance with the Federal Motor Carrier Safety Administration regulations. - 3 - Table of Contents Technology Our trucks and trailers are equipped with cellular-based global positioning and communications systems that allow fleet managers to communicate directly with drivers.
We conduct operations and hold assets principally through the following wholly owned subsidiaries: P.A.M. Transport, Inc., Met Express, Inc., Costar Real Estate Holding, Inc., Costar Equipment, Inc., Unmoored Realty, LLC, T.T.X., LLC, P.A.M.
Transport, Inc., Met Express, Inc., Costar Real Estate Holding, Inc., Costar Equipment, Inc., Costar Management, Inc., Select CDL Driving School, Inc., Unmoored Realty, LLC, T.T.X., LLC, P.A.M. Cartage Carriers, LLC, Overdrive Leasing, LLC, Choctaw Express, LLC, Choctaw Brokerage, Inc., Transcend Logistics, Inc., Decker Transport Co., LLC, East Coast Transport and Logistics, LLC, S & L Logistics, Inc., P.A.M.
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Cartage Carriers, LLC, Choctaw Express, LLC, Choctaw Brokerage, Inc., T.T.X., LLC, Decker Transport Co., LLC, and East Coast Transport and Logistics, LLC. Effective on January 1, 2010, the operations of most of the Company’s operating subsidiaries were consolidated under the P.A.M. Transport, Inc. name in an effort to more clearly reflect the Company’s scope and available service offerings.
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We are a holding company that owns subsidiaries engaged in providing truckload dry van carrier services transporting general commodities throughout the continental United States and Mexico, as well as in certain Canadian provinces. Our consolidated operating subsidiaries also provide transportation services in Mexico under agreements with Mexican carriers.
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Approximately 66% of the Company's revenues are derived from domestic shipments while approximately 34% of the Company’s revenues are derived from freight originating from or destined to locations in Mexico or Canada. - 1 - Table of Contents Impact of COVID-19 The Company’s primary concern during the COVID-19 pandemic has been to do its part to protect its employees, customers, vendors and the general public from the spread of COVID-19 while continuing to serve the vital role of supplying essential goods to the nation.
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Approximately 63% of the Company's revenues are derived from domestic shipments while approximately 37% of the Company’s revenues are derived from freight originating from or destined to locations in Mexico or Canada. - 1 - Table of Contents Business and Growth Strategy Our strategy focuses on the following elements: Providing a Full Suite of Complementary Truckload Transportation Solutions.
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Where feasible, our employees are working remotely from their homes. For essential functions, including our driving professionals, we have distributed cleaning and protective supplies to various terminals so that they are available to those that need them, increased cleaning frequency and coverage, and provided employees direction on precautionary measures, such as sanitizing truck interiors, personal hygiene, and social distancing.
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Marketing and Significant Customers Our marketing emphasis is directed to that portion of the truckload market which is generally service-sensitive, as opposed to being solely price driven. We seek to become a “core carrier” for our customers in order to maintain high utilization and capitalize on recurring revenue opportunities.
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We will continue to adapt our operations as required to ensure safety while continuing to provide a high level of service to our customers. While we and most of our customers have returned to normal operations and economic activity continued to increase during 2021 and 2022, we continue to monitor ongoing developments with the COVID-19 pandemic.
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The physical health, wellbeing, and mental health of our employees is crucial to our success.
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Any future waves or outbreaks of alternative strains of the virus, including the current spread of the Delta and Omicron variants, could adversely impact our future operations and financial results.
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On September 9, 2021, President Biden announced that he has directed the Occupational Safety and Health Administration (OSHA) to develop an Emergency Temporary Standard (ETS) mandating either the full vaccination or weekly testing of employees for employers with 100 or more employees. On January 13, 2022, the Supreme Court ruled that the mandate could not be enforced.
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We will continue to monitor new regulations for any potential impacts to our operations.
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The ultimate extent of the impact of any future outbreaks or adverse developments with the pandemic on the Company’s financial and operating results, which could be material, will be determined by the length of time such outbreak continues, its severity, further government regulations imposed in response to the pandemic and the effect of any such outbreak on the economy and transportation demand.
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The Company believes we will be able to continue to finance our near-term needs for working capital over the next twelve months, as well as any planned capital expenditures during such period, with cash balances, cash flows from operations, and borrowings believed to be available from financing sources.
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In this regard, we seek to provide equipment to our customers in defined regions and disciplined traffic lanes.
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We compete on the basis of quality of service and delivery performance, as well as price.
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The physical health, wellbeing, and mental health of our employees is crucial to our success. Most recently, our primary concern during the COVID-19 pandemic has been to do our part to protect our employees, customers, vendors and the general public from the spread of COVID-19 while continuing to serve the vital role of supplying essential goods to the nation.
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For essential functions, including our driving professionals, we have distributed cleaning and protective supplies to various terminals so that they are available to those that need them, increased cleaning frequency and coverage, and provided employees direction on precautionary measures, such as sanitizing truck interiors, personal hygiene, and social distancing.
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We will continue to adapt our operations as required to ensure safety while continuing to provide a high level of service to our customers.
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In December 2011, the FMCSA released new rules regulating HOS that became effective in July 2013.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+16 added−12 removed67 unchanged
Biggest changeShould such disruptions continue or worsen, it could significantly disrupt our equipment replacement cycle, further increase the prices for new revenue equipment and cause us to incur increased maintenance and operating expenses due to having to utilize existing equipment for longer time periods, and of which could have a material adverse effect on our business and profitability. - 9 - Table of Contents We have significant ongoing capital requirements that could affect our liquidity and profitability if we are unable to generate sufficient cash from operations or obtain sufficient financing on favorable terms.
Biggest changeWe have significant ongoing capital requirements that could affect our liquidity and profitability if we are unable to generate sufficient cash from operations or obtain sufficient financing on favorable terms. The trucking industry is capital intensive.
These factors include, but are not limited to, the following: · we compete with many other truckload carriers of varying sizes and, to a lesser extent, with less-than-truckload carriers and railroads, some of which have more equipment and greater capital resources than we do; · some 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, maintain our margins or maintain significant growth in our business; · many customers reduce the number of carriers they use by selecting so-called “core carriers” as approved service providers, and in some instances we may not be selected; - 11 - Table of Contents · many customers periodically accept bids from multiple carriers for their shipping needs, and this process may depress freight rates or result in the loss of some of our business to competitors; · the trend toward consolidation in the trucking industry may create other large carriers with greater financial resources and other competitive advantages relating to their size and with whom we may have difficulty competing; · advances in technology require increased investments to remain competitive, and our customers may not be willing to accept higher freight rates to cover the cost of these investments; · competition from Internet-based and other logistics and freight brokerage companies may adversely affect our customer relationships and freight rates; and · economies of scale that may be passed on to smaller carriers by procurement aggregation providers may improve their ability to compete with us.
These factors include, but are not limited to, the following: · we compete with many other truckload carriers of varying sizes and, to a lesser extent, with less-than-truckload carriers and railroads, some of which have more equipment and greater capital resources than we do; · some 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, maintain our margins or maintain significant growth in our business; · many customers reduce the number of carriers they use by selecting so-called “core carriers” as approved service providers, and in some instances we may not be selected; · many customers periodically accept bids from multiple carriers for their shipping needs, and this process may depress freight rates or result in the loss of some of our business to competitors; · the trend toward consolidation in the trucking industry may create other large carriers with greater financial resources and other competitive advantages relating to their size and with whom we may have difficulty competing; · advances in technology require increased investments to remain competitive, and our customers may not be willing to accept higher freight rates to cover the cost of these investments; · competition from Internet-based and other logistics and freight brokerage companies may adversely affect our customer relationships and freight rates; and · economies of scale that may be passed on to smaller carriers by procurement aggregation providers may improve their ability to compete with us.
If we were unable to offset any such increase in expenses with freight rate increases, our cash flows and results of operations could be adversely affected. If the market price for used revenue equipment declines, we could incur substantial losses upon disposition of our revenue equipment which could adversely affect our results of operations and financial condition.
If we are unable to offset any such increase in expenses with freight rate increases, our cash flows and results of operations could be adversely affected. If the market price for used revenue equipment declines, we could incur substantial losses upon disposition of our revenue equipment which could adversely affect our results of operations and financial condition.
If our independent contractors are determined to be our employees, that determination could materially increase our exposure under a variety of federal and state tax, workers’ compensation, unemployment benefits, labor, employment and tort laws, as well as our potential liability for employee benefits.
If our independent contractors are determined to be properly classified as employees, that determination could materially increase our exposure under a variety of federal and state tax, workers’ compensation, unemployment benefits, labor, employment and tort laws, as well as our potential liability for employee benefits.
Our largest customer, General Motors Company, accounted for approximately 13% of our revenue. We also provide transportation services to other manufacturers who are suppliers for automobile manufacturers. As a result, the concentration of our business within the automobile industry is greater than the concentration in a single customer.
Our largest customer, General Motors Company, accounted for approximately 12% of our revenue. We also provide transportation services to other manufacturers who are suppliers for automobile manufacturers. As a result, the concentration of our business within the automobile industry is greater than the concentration in a single customer.
Additionally, approximately 34% of the freight we haul crosses the border between the United States and Mexico. In past years, we have experienced delays in Mexico border-crossings due to weather events, immigration-related issues and the reallocation of border agents to other border areas.
Additionally, approximately 37% of the freight we haul crosses the border between the United States and Mexico. In past years, we have experienced delays in Mexico border-crossings due to weather events, immigration-related issues and the reallocation of border agents to other border areas.
The rapid spread of COVID-19 resulted in governmental authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, increased border and port controls and closures, and shutdowns. These measures and the public health concerns resulting from the outbreak severely disrupted economic and commercial activity.
The rapid spread of the COVID-19 pandemic during 2020 resulted in governmental authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, increased border and port controls and closures, and shutdowns. These measures and the public health concerns resulting from the outbreak severely disrupted economic and commercial activity.
In addition, automobile plants for which we transport a large amount of freight typically undergo scheduled shutdowns in July and December, which reduces the volume of automotive freight we ship during these plant shutdowns. Our business may be disrupted by natural disasters and severe weather conditions causing supply chain disruptions.
In addition, automobile plants for which we transport a large amount of freight typically undergo scheduled shutdowns in July and December, which reduces the volume of automotive freight we ship during these plant shutdowns. - 12 - Table of Contents Our business may be disrupted by natural disasters and severe weather conditions causing supply chain disruptions.
We may become subject to new or more restrictive regulations imposed by these authorities which could significantly impair equipment and driver productivity and increase operating expenses. The FMCSA administers carrier safety compliance and enforcement through its CSA program, which places carriers in peer groups and assigns each carrier a relative ranking compared to their peers in various categories.
We may become subject to new or more restrictive regulations imposed by these authorities, which could significantly impair equipment and driver productivity and increase operating expenses. - 8 - Table of Contents The FMCSA administers carrier safety compliance and enforcement through its CSA program, which places carriers in peer groups and assigns each carrier a relative ranking compared to their peers in various categories.
Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged, which could adversely affect our growth and profitability. - 13 - Table of Contents We are subject to certain risks arising from doing business in Mexico.
Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged, which could adversely affect our growth and profitability. We are subject to certain risks arising from doing business in Mexico.
Approximately 31% of our revenues for 2022 were derived from transportation services provided to the automobile industry. Generally, we do not have long-term contractual relationships with our major customers, and we cannot assure that our customer relationships will continue as presently in effect.
Approximately 30% of our revenues for 2023 were derived from transportation services provided to the automobile industry. Generally, we do not have long-term contractual relationships with our major customers, and we cannot assure that our customer relationships will continue as presently in effect.
We are highly dependent on our major customers, the loss of one or more of which could have a material adverse effect on our business. A significant portion of our revenue is generated from our major customers. For 2022, our top five customers, based on revenue, accounted for approximately 39% of our revenue.
We are highly dependent on our major customers, the loss of one or more of which could have a material adverse effect on our business. A significant portion of our revenue is generated from our major customers. For 2023, our top five customers, based on revenue, accounted for approximately 34% of our revenue.
If we should fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil and criminal liability. - 14 - Table of Contents Our information technology systems are subject to certain cyber security and disaster risks that are beyond our control.
If we should fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil and criminal liability. Our information technology systems are subject to certain cyber security and disaster risks that are beyond our control.
The trucking industry is capital intensive. If we are unable to generate sufficient cash from operations in the future, we may have to limit our growth, enter into unfavorable financing arrangements, or operate our revenue equipment for longer periods, any of which could have a material adverse effect on our profitability.
If we are unable to generate sufficient cash from operations in the future, we may have to limit our growth, enter into unfavorable financing arrangements, or operate our revenue equipment for longer periods, any of which could have a material adverse effect on our profitability.
The passage of this decree did not have a material adverse impact on our business and financial results. Our results of operations may be affected by seasonal factors. Our productivity may decrease during the winter season when severe winter weather impedes operations. Also, some shippers may reduce their shipments after the winter holiday season.
The passage of this decree has not had a material adverse impact on our business and financial results to date. Our results of operations may be affected by seasonal factors. Our productivity may decrease during the winter season when severe winter weather impedes operations. Also, some shippers may reduce their shipments after the winter holiday season.
A determination that independent contractors are employees could expose us to various liabilities and additional costs. Federal and state legislation as well as tax and other regulatory authorities often seek to assert that independent contractors in the transportation service industry are employees rather than independent contractors.
A determination that independent contractors are employees could expose us to various liabilities and additional costs. Federal and state legislation as well as tax and other regulatory authorities often seek to assert that independent contractors in the transportation service industry are employees rather than independent contractors. Recently issued rulemaking by the U.S.
If the unions and our automotive customers and their suppliers are unable to negotiate new contracts in the future and our customers’ plants experience slowdowns or closures as a result, our revenue and profitability could be negatively impacted.
If our automotive customers and their suppliers are unable to return to full operations in the near future or if these customers are unable to negotiate new contracts in the future and our customers’ plants experience slowdowns or closures as a result, our revenue and profitability could be negatively impacted.
If future roadside inspections or crashes were to result in the Company being placed in intervention status, we may incur additional operating costs to improve our safety program in deficient categories, experience increased roadside inspections, or have onsite visits by the FMCSA.
While the Company has not exceeded allowable thresholds to date, if future roadside inspections or crashes were to result in the Company being placed in intervention status, we may incur additional operating costs to improve our safety program in deficient categories, experience increased roadside inspections, or have onsite visits by the FMCSA.
Therefore, stockholders should not rely on future dividend income from shares of our common stock. - 16 - Table of Contents
Therefore, stockholders should not rely on future dividend income from shares of our common stock.
We operate in industrial areas, where truck terminals and other industrial activities are located, and where groundwater or other forms of environmental contamination could occur. We also maintain bulk fuel storage and fuel islands at one of our facilities. Our operations may involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among others.
We operate in industrial areas, where truck terminals and other industrial activities are located, and where groundwater or other forms of environmental contamination could occur. Our operations may involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among others.
As global warming issues become more prevalent, federal, state and local governments, as well as some of our customers, have made efforts to respond to these issues.
As issues related to climate change become more prevalent, federal, state and local governments, as well as some of our customers, have made efforts to respond to these issues.
Our substantial debt levels could have important consequences such as the following: · impair our ability to obtain additional future financing for working capital, capital expenditures, acquisitions or general corporate expenses; · limit our ability to use operating cash flow in other areas of our business due to the necessity of dedicating a substantial portion of these funds for payments on our indebtedness; · limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; · make it more difficult for us to satisfy our obligations; · increase our vulnerability to general adverse economic and industry conditions; and · place us at a competitive disadvantage compared to our competitors.
Our substantial debt levels could have important consequences such as the following: · impair our ability to obtain additional future financing for working capital, capital expenditures, acquisitions or general corporate expenses; · limit our ability to use operating cash flow in other areas of our business due to the necessity of dedicating a substantial portion of these funds for payments on our indebtedness; · limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; · make it more difficult for us to satisfy our obligations; · increase our vulnerability to general adverse economic and industry conditions; and · place us at a competitive disadvantage compared to our competitors. - 11 - Table of Contents Our ability to make scheduled payments on, or to refinance, our debt and other obligations will depend on our financial and operating performance, which, in turn, is subject to our ability to implement our strategic initiatives, prevailing economic conditions and certain financial, business and other factors beyond our control.
A substantial number of the employees of our largest customers are members of industrial trade unions and are employed under the terms of collective bargaining agreements. Future labor disputes involving our customers could affect our operations.
A substantial number of the employees of our largest customers are members of industrial trade unions and are employed under the terms of collective bargaining agreements.
If claims costs increase, or if the severity or number of claims increase, and if we are unable to offset the resulting increases in expenses with higher freight rates, our earnings could be materially and adversely affected.
If claims costs increase, or if the severity or number of claims increase, and if we are unable to offset the resulting increases in expenses with higher freight rates, our earnings could be materially and adversely affected. Healthcare legislation and inflationary cost increases could also have a negative effect on our results.
We may be adversely impacted by fluctuations in the price and availability of diesel fuel. Diesel fuel represents a significant operating expense for the Company and we do not currently hedge against the risk of diesel fuel price increases.
Diesel fuel represents a significant operating expense for the Company and we do not currently hedge against the risk of diesel fuel price increases.
Further, we are affected by recessionary economic cycles and downturns in customers’ business cycles, particularly in market segments and industries, such as the automotive industry, where we have a significant concentration of customers.
Further, we are affected by recessionary economic cycles and downturns in customers’ business cycles, particularly in market segments and industries, such as the automotive industry, where we have a significant concentration of customers. Economic conditions may also adversely affect our customers and their ability to pay for our services.
Given the daily average trading volume of our common stock, significant sales of the common stock in a brief period of time, or the expectation of these sales, could cause a decline in the price of our common stock. Additionally, low trading volumes may limit a stockholder’s ability to sell shares of our common stock.
Given the daily average trading volume of our common stock, significant sales of the common stock in a brief period of time, or the expectation of these sales, could cause a decline in the price of our common stock.
Any sustained or future reduction in or termination of our services by our major customers could have a further material adverse effect on our business and operating results. A significant labor dispute involving one or more of our customers could reduce our revenues and harm our profitability.
Any sustained or future reduction in or termination of our services by our major customers could have a further material adverse effect on our business and operating results. - 10 - Table of Contents Ongoing effects from recent labor disputes involving several of our customers or the impact of any future significant labor dispute involving one or more of our customers, or that could otherwise affect our operations, could reduce our revenues and harm our profitability.
Any of these factors could impair our operating efficiency and productivity and result in higher operating costs. In addition, revenues could decrease if we are unable to meet regulatory or customer sustainability requirements. These additional costs, changes in operations, or loss of revenues could have a material adverse effect on our business, financial condition and results of operations.
Any of these factors could impair our operating efficiency and productivity and result in higher operating costs. In addition, revenues could decrease if we are unable to meet regulatory or customer sustainability requirements.
A successful cyber-attack or catastrophic natural disaster could significantly affect our operating and financial systems and could temporarily disrupt our ability to provide required services to our customers and impact our ability to manage our operations and perform vital financial processes, any of which could have a materially adverse effect on our business.
Some of our software systems are utilized by third parties who provide outsourced processing services which may increase the risk of a cyber-security incident. - 13 - Table of Contents A successful cyber-attack or catastrophic natural disaster could significantly affect our operating and financial systems and could temporarily disrupt our ability to provide required services to our customers and impact our ability to manage our operations and perform vital financial processes, any of which could have a materially adverse effect on our business.
Economic conditions may also adversely affect our customers and their ability to pay for our services. - 8 - Table of Contents Deterioration in the United States and/or world economies could exacerbate any difficulties experienced by our customers and suppliers in obtaining financing, which, in turn, could materially and adversely impact our business, financial condition, results of operations and cash flows.
Deterioration in the United States and/or world economies could exacerbate any difficulties experienced by our customers and suppliers in obtaining financing, which, in turn, could materially and adversely impact our business, financial condition, results of operations and cash flows. - 7 - Table of Contents We may be adversely impacted by fluctuations in the price and availability of diesel fuel.
Although we have processes, policies and procedures in place and our information systems are protected through physical and software security as well as redundant backup systems, they remain susceptible to cyber security risks. Some of our software systems are utilized by third parties who provide outsourced processing services which may increase the risk of a cyber-security incident.
Although we have processes, policies and procedures in place and our information systems are protected through physical and software security as well as redundant backup systems, they remain susceptible to cyber-security risks.
Any of the above increased costs would adversely affect our business and operating results. - 10 - Table of Contents We may incur additional operating expenses or liabilities as a result of potential future requirements to address climate change issues.
In addition, such changes may be applied retroactively, and if so, we may be required to pay additional amounts to compensate individuals for prior time periods. Any of the above increased costs would adversely affect our business and operating results. We may incur additional operating expenses or liabilities as a result of potential future requirements to address climate change issues.
The resulting impact on domestic and global supply chains caused slowdowns and reduced freight demand for transportation companies such as ours. Because we have a significant concentration of customers within the automotive industry, our freight volumes and revenues were significantly affected by the closure of North American automotive manufacturing facilities beginning in late March of 2020.
Because we have a significant concentration of customers within the automotive industry, our freight volumes and revenues were significantly affected by the temporary closure of North American automotive manufacturing facilities during the spring of 2020 as a result of the pandemic.
Our automotive customers resumed operations during the second quarter of 2020 and have not been materially disrupted during 2021 or 2022. Any future delays or interruptions of automotive production and other consumer activity affecting our customers that could result from any future wave of the virus or other similar outbreaks could further adversely affect our business.
Any future delays or interruptions of automotive production and other consumer activity affecting our customers that could result from any future public health crises could further adversely affect our business.
We currently do not intend to pay future dividends on our common stock. We currently do not anticipate paying future cash dividends on our common stock.
Additionally, low trading volumes may limit a stockholder’s ability to sell shares of our common stock. - 15 - Table of Contents We currently do not intend to pay future dividends on our common stock. We currently do not anticipate paying future cash dividends on our common stock.
Further, negative financial results, an economic downturn or uncertainty, or a tightening of credit markets caused by COVID-19 or other similar outbreaks could have a material adverse effect on our liquidity and our ability to effectively meet our short- and long-term financial obligations. Numerous competitive factors could impair our ability to operate at an acceptable profit.
Further, negative financial results, an economic downturn or uncertainty, or a tightening of credit markets caused by a public health crisis could have a material adverse effect on our liquidity and our ability to effectively meet our short- and long-term financial obligations. - 14 - Table of Contents Risks Related to Our Common Stock Our public shareholders may have limited influence over our significant corporate actions.
There can be no assurance that interpretations that support the independent contractor status will not change, that other federal or state legislation will not be enacted or that various authorities will not successfully assert a position that re-classifies independent contractors to be employees.
However, it is possible that other federal or state legislation or regulations could be enacted or that various authorities could assert a position that re-classifies independent contractors as employees.
This concentration of ownership could limit the price that some investors might be willing to pay for shares of our common stock, and our ability to engage in significant transactions, such as a merger, acquisition or liquidation, will require the consent of Mr. Moroun. Conflicts of interest could arise between us and Mr.
This concentration of ownership could also limit the price that some investors might be willing to pay for shares of our common stock. The interests of our controlling shareholders may conflict with those of the Company and our other shareholders. The interests of the Moroun family trusts could conflict with the interests of the Company or our other shareholders.
Healthcare legislation and inflationary cost increases could also have a negative effect on our results. - 12 - Table of Contents We may be subject to litigation claims that could result in significant expenditures.
We may be subject to litigation claims that could result in significant expenditures.
Moroun may continue to retain control of the Company for the foreseeable future and may decide not to enter into a transaction in which shareholders would receive consideration for our common stock that is much higher than the then-current market price of our common stock. In addition, Mr.
Our controlling shareholders might also refrain from voting in favor of a transaction that would result in our other shareholders receiving consideration for our common stock that is much higher than its then-current market price.
Matthew T. Moroun, the Chairman of our Board of Directors, and a trust of which Mr. Moroun is a co-trustee together own approximately 70% of our outstanding common stock. As a result, Mr.
Matthew T. Moroun, the Chairman of our Board of Directors, is the trustee of family trusts that collectively own greater than 50% of our outstanding common stock. In this capacity, Mr. Moroun holds investment power over the shares of our common stock held by the family trusts. Frederick P.
Risks Related to Our Business The ongoing impact of the COVID-19 pandemic, or other similar outbreaks in the future, could negatively impact our financial condition, liquidity, results of operations, and cash flows.
In addition, the insurance premiums charged for some or all of the coverage currently maintained by us could increase dramatically or such coverage could be unavailable in the future. Future public health crises could negatively impact our financial condition, liquidity, results of operations, and cash flows.
Removed
Additionally, supply chain disruptions resulting from the COVID-19 pandemic and the related global shortage of microprocessors and other computer chips has caused significant production slowdowns at the North American Class 8 truck manufacturers and has substantially limited the availability of new revenue equipment available for delivery.
Added
Department of Labor, which is effective March 11, 2024, and the laws of several states, including California, apply stricter tests for determining whether an independent contractor should be classified as an employee. We believe we are in compliance with all applicable independent contractor classification requirements.
Removed
An example of such legislation recently enacted in California is currently under a judicial stay with respect to trucking companies while a legal challenge to the law is pending.
Added
These additional costs, changes in operations, or loss of revenues could have a material adverse effect on our business, financial condition and results of operations. - 9 - Table of Contents Risks Related to Our Business Numerous competitive factors could impair our ability to operate at an acceptable profit.
Removed
In addition, such changes may be applied retroactively, and if so, we may be required to pay additional amounts to compensate for prior periods.
Added
In September 2023, the United Auto Workers initiated a trilateral strike against Ford, General Motors, and Stellantis that lasted several weeks until each of these automotive customers was able to negotiate a new contract with the union.
Removed
Our business and profitability was materially and adversely affected by the closure of North American automotive manufacturing facilities during the spring of 2020 due to the COVID-19 outbreak and is currently being adversely impacted by similar production slowdowns and closures within the automotive manufacturing industry due to shortages of microprocessors and other computer chips essential for new vehicle production.
Added
The strike targeted select plants at each of these automotive companies, causing prolonged plant shutdowns for these customers and ripple effects on plants and workers for other customers and automotive suppliers. The effects of these shutdowns adversely impacted our business and financial performance during the third and fourth quarters of 2023 and have continued into the first quarter of 2024.
Removed
Our ability to make scheduled payments on, or to refinance, our debt and other obligations will depend on our financial and operating performance, which, in turn, is subject to our ability to implement our strategic initiatives, prevailing economic conditions and certain financial, business and other factors beyond our control.
Added
While operations at the affected customer and supplier plants have resumed, some of these customer facilities have yet to return to fully operational status, and we continue to experience reduced freight volumes as a result of the recent labor disruptions.
Removed
In addition, the insurance premiums charged for some or all of the coverage currently maintained by us could increase dramatically or such coverage could be unavailable in the future. - 15 - Table of Contents Risks Related to Our Common Stock The Chairman of our board of directors holds a controlling interest in the Company; therefore, the influence of our public shareholders over significant corporate actions is limited, and we are not subject to certain corporate governance standards that apply to other publicly traded companies.
Added
Any sustained slowdown in operations for these customers and any future labor disputes involving our customers could further affect our operations.
Removed
Moroun has the power to: · control all matters submitted to our shareholders; · elect our directors; · adopt, extend or remove any anti-takeover provisions that are available to us; and · exercise control over our business, policies and affairs.
Added
The resulting impact on domestic and global supply chains caused slowdowns and reduced freight demand for transportation companies such as ours.
Removed
Moroun, and any conflict of interest may be resolved in a manner that does not favor us. Accordingly, Mr. Moroun could cause us to enter into transactions or agreements of which our other shareholders would not approve or make decisions with which they may disagree. Because of Mr.
Added
Calderone, a member of our Board of Directors, is the special trustee of certain of these family trusts, and in that capacity, he exercises voting power over the shares held by such trusts, while Mr. Moroun exercises voting power over the shares held by the other family trust of which he is trustee.
Removed
Moroun’s level of ownership, we have elected to be treated as a controlled company in accordance with the rules of the NASDAQ Stock Market.
Added
The special trustee serves at the discretion of the trustee of the trusts, and members of the Moroun family are the beneficiaries of the family trusts. Messrs. Moroun and Calderone have entered into a voting agreement under which Mr.
Removed
Accordingly, we are not required to comply with NASDAQ Stock Market rules which would otherwise require a majority of our Board to be comprised of independent directors and require our Board to have a compensation committee and a nominating and corporate governance committee comprised of independent directors. Mr.
Added
Moroun agreed to vote the shares of our common stock over which he exercises voting power in accordance with and in the same manner as Mr. Calderone votes the shares of our common stock held by the family trusts over which the special trustee exercises voting power.
Removed
Moroun could elect to sell a controlling interest in us to a third-party and our other shareholders may not be able to participate in such transaction or, if they are able to participate in such a transaction, such shareholders may receive less than the then-current fair market value of their shares. Any decision regarding ownership of us that Mr.
Added
Therefore, votes cast on behalf of the family trusts control any action requiring the general approval of our shareholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and bylaws, and the approval of any merger or sale of substantially all of our assets.
Removed
Moroun may make at some future time will be in his absolute discretion, subject to applicable laws and fiduciary duties. Our stock trading volume may not provide adequate liquidity for investors.
Added
For example, the concentration of ownership in the trusts could delay, defer, or prevent a change of control of the Company that may otherwise be favorable to the Company and our other shareholders. The votes cast on behalf of the family trusts could also result in our entry into transactions or agreements that our other shareholders do not approve.
Added
Any such decisions that may be made in the future by our controlling shareholders will be in their absolute discretion, subject to applicable laws and fiduciary duties. Because we are a “ controlled company ” under NASDAQ rules, we are not subject to certain corporate governance standards that apply to other publicly traded companies.
Added
The NASDAQ rules state that a controlled company is one in which more than 50% of the voting power is held by another person or group of persons acting together.
Added
A controlled company may elect not to comply with certain corporate governance requirements, including: • a majority of the board of directors consist of independent directors; • a nominating and corporate governance committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and • the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
Added
We are a controlled company under these rules, and these requirements will not apply to us as long as we retain that status. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of NASDAQ. Our stock trading volume may not provide adequate liquidity for investors.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe leased facilities are leased primarily on contractual terms typically ranging from one to five years and have provisions for early cancellation if we so choose.
Biggest changeOur terminal facilities in North Little Rock, Arkansas; North Jackson, Ohio; Willard, Ohio; Bloomsburg, Pennsylvania; Bolingbrook, Illinois; and Irving and Laredo, Texas are owned. The leased facilities are leased primarily on contractual terms typically ranging from one to five years and have provisions for early cancellation if we so choose.
As of December 31, 2022, the following table provides a summary of the ownership and types of activities conducted at each location: Location Own/ Lease Dispatch Office Maintenance Facility Safety Training Tontitown, Arkansas Own Yes Yes Yes Bloomsburg, Pennsylvania Lease Yes Yes Yes Bolingbrook, Illinois Lease Yes No No North Little Rock, Arkansas Own No Yes Yes Indianapolis, Indiana Lease No Yes No Romulus, Michigan Lease No Yes No North Jackson, Ohio Own Yes Yes Yes Willard, Ohio Own Yes Yes No Memphis, Tennessee Lease No Yes No Irving, Texas Own Yes Yes Yes Laredo, Texas Own Yes Yes Yes Monterrey, Mexico Lease No No No Fort Wayne, Indiana Lease Yes Yes No We also have access to trailer drop and relay stations in various other locations across the country.
As of December 31, 2023, the following table provides a summary of the ownership and types of activities conducted at each location: Location Own/ Lease Dispatch Office Maintenance Facility Safety Training Tontitown, Arkansas Own Yes Yes Yes Bloomsburg, Pennsylvania Own Yes Yes Yes Bolingbrook, Illinois Own Yes No No North Little Rock, Arkansas Own Yes Yes Yes Indianapolis, Indiana Lease No Yes No Romulus, Michigan Lease No Yes No North Jackson, Ohio Own Yes Yes Yes Willard, Ohio Own Yes Yes No Irving, Texas Own Yes Yes Yes Laredo, Texas Own Yes Yes Yes Monterrey, Mexico Lease Yes No No Fort Wayne, Indiana Lease Yes Yes No Charlotte, North Carolina Lease No Yes No We also have access to trailer drop and relay stations in various other locations across the country.
Item 2. Properties. Our executive offices and primary terminal facilities, which we own, are located in Tontitown, Arkansas. These facilities are located on approximately 54.9 acres and consist of 134,581 square feet of office space and maintenance and storage facilities.
Item 2. Properties. Our executive offices and primary terminal facilities, which we own, are located in Tontitown, Arkansas. These facilities are located on approximately 54.9 acres and consist of 113,249 square feet of office space and maintenance and storage facilities. Our subsidiaries lease facilities in Fort Wayne and Indianapolis, Indiana; Romulus, Michigan; Charlotte, North Carolina; and Monterrey, Mexico.
Removed
Our subsidiaries lease facilities in Fort Wayne and Indianapolis, Indiana; Bloomsburg, Pennsylvania; Bolingbrook, Illinois; Romulus, Michigan; Memphis, Tennessee; and Monterrey, Mexico. Our terminal facilities in North Little Rock, Arkansas; North Jackson, Ohio; Willard, Ohio; and Irving and Laredo, Texas are owned.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. We are involved in certain claims and pending litigation arising from the ordinary conduct of business. We also provide accruals for claims within our self-insured retention amounts.
Biggest changeItem 3. Legal Proceedings. We are involved in certain claims and pending litigation arising from the ordinary conduct of business. We also provide accruals for claims within our self-insured retention amounts. On September 1, 2020, we elected to become self-insured for certain layers of auto liability claims in excess of $2.0 million.
On October 7, 2022, the parties submitted to the court an executed Settlement Agreement and Release, to resolve and release all claims asserted in the litigation from January 1, 2020 through July 31, 2022 for $4,750,000. We did not admit liability for any claim. The District Court granted preliminary approval of the settlement on November 14, 2022.
On October 7, 2022, the parties submitted to the court an executed Settlement Agreement and Release, to resolve and release all claims asserted in the litigation from January 1, 2020, through July 31, 2022, for $4,750,000. We did not admit liability for any claim.
Removed
On September 1, 2019, we elected to become self-insured for certain layers of auto liability claims in excess of $1.0 million for which we previously maintained auto liability insurance coverage. On September 1, 2020, we elected to become self-insured for certain layers of auto liability claims in excess of $2.0 million.
Added
The District Court granted preliminary approval of the settlement on November 14, 2022, and notice of the settlement was sent to class and collective action members. A final settlement approval hearing was held, and the settlement was approved, on October 11, 2023. - 17 - Table of Contents
Removed
Notice of the settlement has been sent to class and collective action members. A final fairness hearing on the settlement is scheduled to be held by the District Court on April 5, 2023. Management has determined that any losses under this claim will not be covered by existing insurance policies.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is traded on the NASDAQ Global Market under the symbol PTSI. As of February 20, 2023, there were approximately 62 holders of record of our common stock. Dividends No dividends were paid during any year subsequent to 2012.
Biggest changeItem 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is traded on the NASDAQ Global Market under the symbol PTSI. As of February 7, 2024, there were approximately 63 holders of record of our common stock.
Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report for a presentation of compensation plans under which equity securities of the Company are authorized for issuance. - 18 - Table of Contents Performance Graph Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our common stock against the cumulative total return of the NASDAQ OMX Index for the NASDAQ Stock Market (U.S. companies) and the NASDAQ OMX Index for the NASDAQ Trucking and Transportation Stocks for the period of five years commencing December 31, 2017 and ending December 31, 2022.
Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report for a presentation of compensation plans under which equity securities of the Company are authorized for issuance. - 18 - Table of Contents Performance Graph Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our common stock against the cumulative total return of the NASDAQ OMX Index for the NASDAQ Stock Market (U.S. companies) and the NASDAQ OMX Index for the NASDAQ Trucking and Transportation Stocks for the period of five years commencing December 31, 2018 and ending December 31, 2023.
The graph assumes that the value of the investment in our common stock and in each index was $100 on December 31, 2017 and that all dividends were reinvested. COMPARISON OF CUMULATIVE TOTAL RETURN AMONG OUR COMMON STOCK, THE NASDAQ OMX INDEX FOR THE NASDAQ STOCK MARKET (U.S.
The graph assumes that the value of the investment in our common stock and in each index was $100 on December 31, 2018 and that all dividends were reinvested. COMPARISON OF CUMULATIVE TOTAL RETURN AMONG OUR COMMON STOCK, THE NASDAQ OMX INDEX FOR THE NASDAQ STOCK MARKET (U.S.
COMPANIES) AND THE NASDAQ TRUCKING AND TRANSPORTATION STOCKS INDEX THROUGH DECEMBER 31, 2022 - 19 - Table of Contents
COMPANIES) AND THE NASDAQ TRUCKING AND TRANSPORTATION STOCKS INDEX THROUGH DECEMBER 31, 2023 - 19 - Table of Contents
Repurchases of Equity Securities by the Issuer The Company’s stock repurchase program has been extended and expanded several times, most recently in November 2021, when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011 authorization. The following table summarizes the Company’s common stock repurchases during the fourth quarter of 2022.
Repurchases of Equity Securities by the Issuer The Company’s stock repurchase program has been extended and expanded several times, most recently in July 2023, when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011 authorization. No shares were repurchased under the Company’s stock repurchase program during the fourth quarter of 2023.
Removed
No shares were purchased during the quarter other than through the repurchase program described above, and all purchases were made by or on behalf of the Company and not by any “affiliated purchaser.” Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs(1) October 1-31, 2022 34,113 $ 32.90 34,113 331,153 November 1-30, 2022 -- -- -- 331,153 December 1-31, 2022 -- -- -- 331,153 Total 34,113 $ 32.90 34,113 (1) The Company’s stock repurchase program does not have an expiration date.
Added
Dividends The Company historically has not declared or paid any cash dividends on our common stock, except for certain special cash dividends paid during 2012. No dividends have been paid during any year since 2012.

Item 7. Management's Discussion & Analysis

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

50 edited+11 added−14 removed40 unchanged
Biggest changeRevenue equipment at December 31, 2022, which generally consists of trucks, trailers, and revenue equipment accessories such as satellite tracking units and auxiliary power units, increased approximately $116.7 million as compared to December 31, 2021. The increase relates primarily to the purchase of assets from Metropolitan Trucking, Inc. and related subsidiaries, and the purchase of new replacement trucks.
Biggest changeThe holding term of these securities depends largely on the general economic environment, the equity markets, borrowing rates, and the Company's cash requirements. - 25 - Table of Contents Revenue equipment at December 31, 2023, which generally consists of trucks, trailers, and revenue equipment accessories such as satellite tracking units and auxiliary power units, increased approximately $51.7 million as compared to December 31, 2022.
Currently, our most challenging costs include fuel, driver recruitment, training, wage and benefit costs, independent broker costs (which we record as purchased transportation), insurance and claims, and maintenance and capital equipment costs.
Currently, our most challenging costs include fuel, driver recruitment, training, wage and benefit costs, independent broker costs (which we record as purchased transportation), insurance and claims, maintenance, and capital equipment costs.
As of December 31, 2022, an adjustment to the Company’s consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws.
As of December 31, 2023, an adjustment to the Company’s consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws.
As of December 31, 2022, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.
As of December 31, 2023, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.
The major tax jurisdictions in which we operate generally provide for a deficiency assessment statute of limitation period of three years and as a result, the Company’s tax years 2019 and forward remain open to examination in those jurisdictions.
The major tax jurisdictions in which we operate generally provide for a deficiency assessment statute of limitation period of three years and as a result, the Company’s tax years 2020 and forward remain open to examination in those jurisdictions.
Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements – Accounting Policies, Recent Accounting Pronouncements.” - 26 - Table of Contents Critical Accounting Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to adopt accounting policies and make significant judgments and estimates that impact the amounts reported in our consolidated financial statements and accompanying notes.
Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements – Accounting Policies, Recent Accounting Pronouncements.” Critical Accounting Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to adopt accounting policies and make significant judgments and estimates that impact the amounts reported in our consolidated financial statements and accompanying notes.
Our primary sources of liquidity have been funds provided by operations, proceeds from the sales of revenue equipment, borrowings under our lines of credit, installment notes and investment margin account, and issuances of equity securities. During 2022, we generated $168.8 million in cash from operating activities compared to $101.7 million and $67.6 million in 2021 and 2020, respectively.
Our primary sources of liquidity have been funds provided by operations, proceeds from the sales of revenue equipment, borrowings under our lines of credit, installment notes and investment margin account, and issuances of equity securities. During 2023, we generated $114.6 million in cash from operating activities compared to $168.8 million and $101.7 million in 2022 and 2021, respectively.
Management considers our critical accounting estimates to be those that require more significant judgments and estimates when we prepare our consolidated financial statements. Note 1 in Part II, Item 8 of this Annual Report describes the Company's accounting policies.
Management considers our critical accounting estimates to be those that require more significant judgments and estimates when we prepare our consolidated financial statements. - 26 - Table of Contents Note 1 in Part II, Item 8 of this Annual Report describes the Company's accounting policies.
The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense. During 2022 and 2021, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.
The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense. During 2023 and 2022, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.
Based upon our 2022 health and workers' compensation expenses, a 10% increase in both claims incurred and IBNR claims would increase our annual health and workers' compensation expenses by approximately $0.6 million. On September 1, 2020, the Company elected to become self-insured for certain layers of auto liability claims in excess of $2.0 million.
Based upon our 2023 health and workers' compensation expenses, a 10% increase in both claims incurred and IBNR claims would increase our annual health and workers' compensation expenses by approximately $0.7 million. On September 1, 2020, the Company elected to become self-insured for certain layers of auto liability claims in excess of $2.0 million.
The increase was primarily related to a 35.8% increase in the number of loads carried for customers during 2022 as compared to 2021, offset by a 3.5% decrease in revenue per load. Rent and purchased transportation decreased from 82.5% of revenues, before fuel surcharges, in 2021 to 80.8% of revenues, before fuel surcharges, in 2022.
The increase was primarily related to a 20.9% increase in the number of loads carried for customers during 2022 as compared to 2021, partially offset by a 3.5% decrease in revenue per load. Rent and purchased transportation decreased from 82.5% of revenues, before fuel surcharges, in 2021 to 80.8% of revenues, before fuel surcharges, in 2022.
The Company specifically reserves for claims that are expected to exceed $2.0 million when fully developed, based on the facts and circumstances of those claims. - 27 - Table of Contents
The Company specifically reserves for claims that are expected to exceed $2.0 million when fully developed, based on the facts and circumstances of those claims.
At December 31, 2022, the remaining marketable equity securities have a combined cost basis of approximately $30.3 million and a combined fair market value of approximately $41.7 million. The Company has developed a strategy to invest in securities from which it expects to receive dividends that qualify for favorable tax treatment, as well as appreciate in value.
At December 31, 2023, the remaining marketable equity securities have a combined cost basis of approximately $30.3 million and a combined fair market value of approximately $43.2 million. The Company has developed a strategy to invest in securities from which it expects to receive dividends that qualify for favorable tax treatment, as well as appreciate in value.
Truckload services revenues, excluding fuel surcharges, represented 66.1%, 67.0% and 76.9% of total revenues, excluding fuel surcharges for the twelve months ended December 31, 2022, 2021 and 2020, respectively. The main factors that impact our profitability on the expense side are costs incurred in transporting freight for our customers.
Truckload services revenues, excluding fuel surcharges, represented 65.3%, 66.1% and 67.0% of total revenues, excluding fuel surcharges for the twelve months ended December 31, 2023, 2022 and 2021, respectively. The main factors that impact our profitability on the expense side are costs incurred in transporting freight for our customers.
During 2022, 2021 and 2020, approximately $128.1 million, $65.9 million and $47.8 million, respectively, of the Company's total revenue was generated from fuel surcharges. We also discuss certain changes in our expenses as a percentage of revenue, before fuel surcharge, rather than absolute dollar changes.
During 2023, 2022 and 2021, approximately $104.7 million, $128.1 million and $65.9 million, respectively, of the Company's total revenue was generated from fuel surcharges. We also discuss certain changes in our expenses as a percentage of revenue, before fuel surcharge, rather than absolute dollar changes.
The increase relates to a general increase in freight revenue and fuel surcharge revenue, which flows through the accounts receivable account, during the fourth quarter of 2022 as compared to the freight revenue and fuel surcharge revenue generated during the fourth quarter of 2021.
The decrease relates to a general decrease in freight revenue and fuel surcharge revenue, which flows through the accounts receivable account, during the fourth quarter of 2023 as compared to the freight revenue and fuel surcharge revenue generated during the fourth quarter of 2022.
We typically use installment notes, our existing lines of credit on an interim basis, proceeds from the sale or trade of equipment, and cash flows from operations to finance capital expenditures and repay long-term debt.
Our primary use of funds is for the purchase of revenue equipment. We typically use installment notes, our existing lines of credit on an interim basis, proceeds from the sale or trade of equipment, and cash flows from operations to finance capital expenditures and repay long-term debt.
Years Ended December 31, 2022 2021 2020 Operating revenues, before fuel surcharge 100.0 % 100.0 % 100.0 % Operating expenses: Salaries, wages and benefits 31.3 30.6 35.3 Operating supplies and expenses, net of fuel surcharge 6.8 8.3 10.7 Rent and purchased transportation 26.0 24.3 23.2 Depreciation 11.3 12.5 16.5 Insurance and claims 6.0 4.4 2.6 Other 2.9 2.5 3.6 (Gain) Loss on sale or disposal of property (0.6 ) (0.3 ) 0.1 Total operating expenses 83.7 82.3 92.0 Operating income 16.3 17.7 8.0 Non-operating income (expense) 0.5 1.9 (0.5 ) Interest expense (1.2 ) (1.4 ) (2.2 ) Income before income taxes 15.6 % 18.2 % 5.3 % 2022 Compared to 2021 For the year ended December 31, 2022, truckload services revenue, before fuel surcharges, increased 25.9% to $540.9 million as compared to $429.6 million for the year ended December 31, 2021.
Years Ended December 31, 2023 2022 2021 Operating revenues, before fuel surcharge 100.0 % 100.0 % 100.0 % Operating expenses: Salaries, wages and benefits 37.8 31.3 30.6 Operating supplies and expenses, net of fuel surcharge 11.8 6.8 8.3 Rent and purchased transportation 23.5 26.0 24.3 Depreciation 13.8 11.3 12.5 Insurance and claims 6.7 6.0 4.4 Other 4.4 2.9 2.5 (Gain) on sale or disposal of property (0.3 ) (0.6 ) (0.3 ) Total operating expenses 97.7 83.7 82.3 Operating income 2.3 16.3 17.7 Non-operating income 1.2 0.5 1.9 Interest expense (1.6 ) (1.2 ) (1.4 ) Income before income taxes 1.9 % 15.6 % 18.2 % 2023 Compared to 2022 For the year ended December 31, 2023, truckload services revenue, before fuel surcharges, decreased 14.8% to $460.9 million as compared to $540.9 million for the year ended December 31, 2022.
The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 82.3% for 2021 from 92.0% for 2020. - 22 - Table of Contents Results of Operations - Logistics and Brokerage Services The following table sets forth, for logistics and brokerage services, the percentage relationship of expense items to operating revenues, before fuel surcharges, for the periods indicated.
The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased to 83.7% for 2022 from 82.3% for 2021. - 22 - Table of Contents Results of Operations - Logistics and Brokerage Services The following table sets forth, for logistics and brokerage services, the percentage relationship of expense items to operating revenues, before fuel surcharges, for the periods indicated.
These installment notes are payable in monthly installments, ranging from 36 monthly installments to 84 monthly installments, at a weighted average interest rate of 3.16%. At December 31, 2021, the Company’s subsidiaries had combined outstanding indebtedness under such installment notes of $222.3 million.
At December 31, 2022, the Company’s subsidiaries had combined outstanding indebtedness under such installment notes of $264.3 million. These installment notes were payable in monthly installments, ranging from 36 to 84 months at a weighted average interest rate of 3.16%.
Accounts payable accruals can vary significantly at the end of each reporting period depending on the timing of the actual date of payment in relation to the last day of the reporting period. Accrued expenses and other liabilities increased from $14.1 million at December 31, 2021 to $34.2 million at December 31, 2022.
Accounts payable accruals can vary significantly at the end of each reporting period depending on the timing of the actual date of payment in relation to the last day of the reporting period. Accrued expenses and other liabilities decreased from $34.2 million at December 31, 2022 to $16.8 million at December 31, 2023.
Years Ended December 31, 2022 2021 2020 Operating revenues, before fuel surcharge 100.0 % 100.0 % 100.0 % Operating expenses: Salaries, wages and benefits 4.6 4.6 5.0 Rent and purchased transportation 80.8 82.5 86.5 Insurance and claims 0.0 0.0 0.1 Other 1.8 1.6 1.7 Total operating expenses 87.2 88.7 93.3 Operating income 12.8 11.3 6.7 Non-operating income 0.2 1.0 0.0 Interest expense (0.5 ) (0.8 ) (1.1 ) Income before income taxes 12.5 % 11.5 % 5.6 % 2022 Compared to 2021 For the year ended December 31, 2022, logistics and brokerage services revenues, before fuel surcharges, increased 31.3% to $277.8 million as compared to $211.7 million for the year ended December 31, 2021.
Years Ended December 31, 2023 2022 2021 Operating revenues, before fuel surcharge 100.0 % 100.0 % 100.0 % Operating expenses: Salaries, wages and benefits 4.9 4.6 4.6 Rent and purchased transportation 84.6 80.8 82.5 Other 2.4 1.8 1.6 Total operating expenses 91.9 87.2 88.7 Operating income 8.1 12.8 11.3 Non-operating income 0.8 0.2 1.0 Interest expense (0.7 ) (0.5 ) (0.8 ) Income before income taxes 8.2 % 12.5 % 11.5 % 2023 Compared to 2022 For the year ended December 31, 2023, logistics and brokerage services revenues, before fuel surcharges, decreased 11.7% to $245.2 million as compared to $277.8 million for the year ended December 31, 2022.
Diluted earnings per share increased to $4.04 for the year ended December 31, 2022 from $3.35 for the year ended December 31, 2021. 2021 Compared to 2020 Income tax expense was approximately $26.0 million in 2021, resulting in an effective rate of 25.4%, as compared to approximately $5.6 million, or an effective tax rate of 23.8% in 2020.
Diluted earnings per share decreased to $0.83 for the year ended December 31, 2023 from $4.04 for the year ended December 31, 2022. 2022 Compared to 2021 Income tax expense was approximately $28.3 million in 2022, resulting in an effective rate of 23.8%, as compared to approximately $26.0 million, or an effective tax rate of 25.4% in 2021.
The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 88.7% for 2021 from 93.3% for 2020. - 23 - Table of Contents Results of Operations - Combined Services 2022 Compared to 2021 Income tax expense was approximately $28.3 million in 2022, resulting in an effective rate of 23.8%, as compared to approximately $26.0 million, or an effective tax rate of 25.4% in 2021.
The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 87.2% for 2022 from 88.7% for 2021. - 23 - Table of Contents Results of Operations - Combined Services 2023 Compared to 2022 Income tax expense was approximately $10.2 million in 2023, resulting in an effective rate of 35.6%, as compared to approximately $28.3 million, or an effective tax rate of 23.8% in 2022.
This increase resulted primarily from an increase in the market value of our marketable equity securities portfolio at December 31, 2021 as compared to December 31, 2020.
This decrease resulted primarily from a smaller increase in the market value of our marketable equity securities portfolio at December 31, 2022 as compared to December 31, 2021.
For 2023, we expect to purchase 680 new trucks and 1,000 trailers while continuing to sell or trade equipment that has reached the end of its life cycle, which we expect to result in net capital expenditures of approximately $124.3 million.
For 2024, we expect to purchase 688 new trucks and 1,548 trailers while continuing to sell or trade equipment that has reached the end of its life cycle, which we expect to result in net capital expenditures of approximately $113.1 million.
Diluted earnings per share increased to $3.35 for the year ended December 31, 2021 from $0.77 for the year ended December 31, 2020. Liquidity and Capital Resources Our business has required, and will continue to require, a significant investment in new revenue equipment.
Diluted earnings per share increased to $4.04 for the year ended December 31, 2022 from $3.35 for the year ended December 31, 2021. - 24 - Table of Contents Liquidity and Capital Resources Our business has required, and will continue to require, a significant investment in new revenue equipment.
As of December 31, 2021, an adjustment to the Company’s consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws.
Management also determined that no adjustment to the Company’s consolidated financial statements for uncertain tax positions was required as of December 31, 2022 as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws.
As of December 31, 2021, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.
The effective tax rate is impacted by the effect of state taxes and other factors. As of December 31, 2022, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.
The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 87.2% for 2022 from 88.7% for 2021. 2021 Compared to 2020 For the year ended December 31, 2021, logistics and brokerage services revenues, before fuel surcharges, increased 108.6% to $211.7 million as compared to $101.5 million for the year ended December 31, 2020.
The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased to 91.9% for 2023 from 87.2% for 2022. 2022 Compared to 2021 For the year ended December 31, 2022, logistics and brokerage services revenues, before fuel surcharges, increased 31.3% to $277.8 million as compared to $211.7 million for the year ended December 31, 2021.
The decrease relates primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel, due to increased fuel surcharge collections from customers, and to for the year ended December 31, 2021 compared to December 31, 2020.
The increase also relates to an increase in the average surcharge-adjusted fuel price paid per gallon of diesel fuel, due to decreased fuel surcharge collections from customers for the year ended December 31, 2023 compared to December 31, 2022.
Marketable equity securities at December 31, 2022 increased approximately $2.3 million as compared to December 31, 2021. The increase resulted from purchases of marketable equity securities of approximately $1.2 million and an increase in the market value of the portfolio of approximately $1.1 million.
Marketable equity securities at December 31, 2023 increased approximately $1.5 million as compared to December 31, 2022. The increase resulted from an increase in the market value of the portfolio by approximately $1.6 million offset by sales of marketable equity securities approximating $0.1 million.
The decrease relates primarily to the interaction of an increase in operating revenues with the fixed-cost nature of depreciation expense. Insurance and claims increased from 2.6% of revenues, before fuel surcharges, during 2020 to 4.4% of revenues, before fuel surcharges, during 2021.
The increase relates primarily to an increase in cost for replacement revenue equipment compared to the cost of retired equipment and to the interaction of a decrease in operating revenues with the fixed-cost nature of depreciation expense. - 21 - Table of Contents Insurance and claims increased from 6.0% of revenues, before fuel surcharges, during 2022 to 6.7% of revenues, before fuel surcharges, during 2023.
The decrease also relates to the interaction of expenses with fixed-cost characteristics, such as rents, driver training schools and operating taxes and licenses. Rent and purchased transportation increased from 23.2% of revenues, before fuel surcharges, during 2020 to 24.3% of revenues, before fuel surcharges, during 2021.
Operating supplies and expenses increased from 6.8% of revenues, before fuel surcharges, during 2022 to 11.8% of revenues, before fuel surcharges, during 2023. The increase relates primarily to the interaction of expenses with fixed-cost characteristics, such as rents, driver training schools and operating taxes and licenses with a decrease in revenue.
Financing activities generated $0.3 million in cash during 2022 compared to using $92.8 million during 2021 and $34.9 million during 2020. See the Consolidated Statements of Cash Flows in Item 8 of this Report. Our primary use of funds is for the purchase of revenue equipment.
Investing activities used $11.3 million in cash during 2023 compared to using $113.5 million and generating $9.3 million in 2022 and 2021, respectively. Financing activities used $76.8 million in cash during 2023 compared to generating $0.3 million during 2022 and using $92.8 million during 2021. See the Consolidated Statements of Cash Flows in Item 8 of this Report.
Under this credit facility, amounts outstanding under the line bear interest at Term SOFR plus 1.35% (5.65% at December 31, 2022), are secured by our trade accounts receivable and mature on July 1, 2024. The credit facility also establishes an “unused fee” of 0.25% if average borrowings are less than $18.0 million.
During 2023, we maintained a revolving line of credit with a borrowing limit of $60.0 million. Under this credit facility, amounts outstanding under the line bear interest at Term SOFR plus 1.35% (6.66% at December 31, 2023), are secured by our trade accounts receivable and mature on July 1, 2026.
This decrease resulted primarily from a smaller increase in the market value of our marketable equity securities portfolio at December 31, 2022 as compared to December 31, 2021. - 21 - Table of Contents The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased to 83.7% for 2022 from 82.3% for 2021. 2021 Compared to 2020 For the year ended December 31, 2021, truckload services revenue, before fuel surcharges, increased 27.3% to $429.6 million as compared to $337.5 million for the year ended December 31, 2020.
The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased to 97.7% for 2023 from 83.7% for 2022. 2022 Compared to 2021 For the year ended December 31, 2022, truckload services revenue, before fuel surcharges, increased 25.9% to $540.9 million as compared to $429.6 million for the year ended December 31, 2021.
The increase was primarily due to an increase in the rates paid to third-party owner-operators for the year ended December 31, 2021 compared to the year ended December 31, 2020. Depreciation decreased from 16.5% of revenues, before fuel surcharges, during 2020 to 12.5% of revenues, before fuel surcharges, during 2021.
The decrease also relates to a decrease in the rates paid to third-party owner-operators for the year ended December 31, 2023 compared to the year ended December 31, 2022. Depreciation increased from 11.3% of revenues, before fuel surcharges, during 2022 to 13.8% of revenues, before fuel surcharges, during 2023.
The decrease results from paying third-party carriers a smaller percentage of customer revenue.
The increase results from paying third-party carriers a larger percentage of customer revenue, coupled with the interaction of a decrease in operating revenues with the need for purchased transportation.
During 2022 and 2021, we utilized cash on hand, installment notes, and our lines of credit to finance revenue equipment purchases of approximately $82.6 million and $51.9 million, respectively. During 2022, we also utilized $64.3 million of cash for the acquisition of the assets of Metropolitan Trucking, Inc. and related subsidiaries.
During 2023 and 2022, we utilized cash on hand, installment notes, and our lines of credit to finance revenue equipment purchases of approximately $113.5 million and $82.6 million, respectively. We often finance the acquisition of revenue equipment through installment notes with fixed interest rates and terms ranging from 36 to 84 months.
The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense.
Additionally, during 2022 and 2021, the Company did not recognize or accrue any interest or penalties related to uncertain income tax positions.
The timing of this process often requires the Company to pay for new units without any reduction in price for trade units. In this situation, the Company later receives payment for the trade units as they are delivered to the equipment vendor and have passed vendor inspection.
In this situation, the Company later receives payment for the trade units as they are delivered to the equipment vendor and have passed vendor inspection. During the twelve months ended December 31, 2023 and 2022, the Company received approximately $15.7 million and $0.0 million, respectively, for units delivered for trade.
These installment notes were payable in monthly installments, ranging from 36 to 84 months at a weighted average interest rate of 2.81%. In order to maintain our truck and trailer fleet count, it is often necessary to purchase replacement units and place them in service before trade units are removed from service.
In order to maintain our truck and trailer fleet count, it is often necessary to purchase replacement units and place them in service before trade units are removed from service. The timing of this process often requires the Company to pay for new units without any reduction in price for trade units.
This decrease relates primarily to a decrease in outside professional services expenses in 2021 as compared to 2020. Non-operating income increased from a loss of 0.5% of revenues, before fuel surcharges, during 2020 to a gain of 1.9% of revenues, before fuel surcharges, during 2021.
This increase relates primarily to an increase in the rate per mile paid for auto liability insurance combined with a decrease in our revenue rate per mile. Non-operating income increased from 0.5% of revenues, before fuel surcharges, during 2022 to 1.2% of revenues, before fuel surcharges, during 2023.
We often finance the acquisition of revenue equipment through installment notes with fixed interest rates and terms ranging from 36 to 84 months. At December 31, 2022, the Company’s subsidiaries had combined outstanding indebtedness under such installment notes of $264.3 million.
At December 31, 2023, the Company’s subsidiaries had combined outstanding indebtedness under such installment notes of $261.7 million. These installment notes are payable in monthly installments, ranging from 36 monthly installments to 84 monthly installments, at a weighted average interest rate of 4.20%.
During 2021 and 2020, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions. - 24 - Table of Contents The combined net income for all divisions was $76.5 million, or 11.9% of revenues, before fuel surcharge, for 2021 as compared to the combined net income for all divisions of $17.8 million or 4.1% of revenues, before fuel surcharge, for 2020.
The combined net income for all divisions was $18.4 million, or 2.6% of revenues, before fuel surcharge, for 2023 as compared to the combined net income for all divisions of $90.7 million or 11.1% of revenues, before fuel surcharge, for 2022.
Accounts payable increased from $43.4 million at December 31, 2021 to $48.9 million at December 31, 2022. This increase was primarily attributable to the increase in amounts accrued for commissions and parts at the end of 2022.
The increase relates primarily to the purchase of replacement trucks and trailers. Accounts payable increased from $48.9 million at December 31, 2022 to $62.7 million at December 31, 2023. This increase was primarily attributable to new revenue equipment that was invoiced, or delivered, but not yet paid as of December 31, 2023.
At December 31, 2022 outstanding advances on the line of credit were approximately $0.4 million, including approximately $0.3 million in letters of credit, with availability to borrow $59.6 million. In February 2022, we borrowed $35.5 million under a term loan secured by our real estate.
The credit facility also establishes an “unused fee” of 0.25% if average borrowings are less than $18.0 million. At December 31, 2023, outstanding advances on the line of credit were approximately $0.1 million, including approximately $0.1 million in letters of credit, with availability to borrow $59.9 million.
The increase relates primarily to a 34.6% increase in our rate per loaded mile, from $1.91 for the year ended December 31, 2020 to $2.58 for the year ended December 31, 2021 and to temporary plant shutdowns in early 2020 experienced by some of our major customers due to COVID-19.
The decrease relates primarily to a 14.2% decrease in our rate per loaded mile, from $2.92 for the year ended December 31, 2022 to $2.51 for the year ended December 31, 2023 and to a 0.8% decrease in loaded miles from 185.0 million for the year ended December 31, 2022 to 183.8 million for the year ended December 31, 2023.
The increase was primarily related to a 69.5% increase in the number of loads carried for customers during 2021 as compared to 2020, coupled with a 23.1% increase in revenue per load. Salaries, wages and benefits decreased from 5.0% of revenues, before fuel surcharges, in 2020 to 4.6% of revenues, before fuel surcharges, in 2021.
The decrease was primarily related to a 21.4% decrease in revenue per load, partially offset by a 12.3% increase in the number of loads during 2023 as compared to 2022.
Removed
Salaries, wages and benefits decreased from 35.3% of revenues, before fuel surcharges, during 2020 to 30.6% of revenues, before fuel surcharges, during 2021. The percentage-based decrease relates primarily to the interaction of expenses with fixed-cost characteristics, such as general and administrative wages, maintenance wages, and operations wages with the increase in revenues for the periods compared.
Added
The decrease in rate per loaded mile reflects the challenging freight rate environment across our industry during 2023, while the slight reduction in loaded miles was largely due to the impacts of the automotive plant shutdowns during the UAW strikes in September and October 2023, partially offset by an increase in our average truck count during the current year attributable to the acquisition of Metropolitan Trucking assets in June 2022.
Removed
Operating supplies and expenses decreased from 10.7% of revenues, before fuel surcharges, during 2020 to 8.3% of revenues, before fuel surcharges, during 2021.
Added
We expect freight rates to generally remain under pressure from customers during 2024 with freight demand continuing to be somewhat impacted by the recent automotive shutdowns and general economic uncertainties. Salaries, wages and benefits increased from 31.3% of revenues, before fuel surcharges, during 2022 to 37.8% of revenues, before fuel surcharges, during 2023.
Removed
This increase relates primarily to an increase in accident and legal reserves, recognized in 2021 as compared to 2020 and to an increase in the premiums paid for auto liability and cargo insurance. Other expenses decreased from 3.6% of revenues, before fuel surcharges, during 2020 to 2.5% of revenues, before fuel surcharges, during 2021.
Added
The percentage-based increase relates primarily to an increase in the percentage of miles driven by company-employed drivers, as opposed to third-party owner-operators for the year-ended December 31, 2023 compared to December 31, 2022. The increase also relates to the interaction of a decrease in operating revenues with the fixed-cost nature of employing human capital.
Removed
The decrease relates primarily to the effect of higher revenues without a corresponding increase in those wages with fixed cost characteristics, such as general and administrative wages. Rent and purchased transportation decreased from 86.5% of revenues, before fuel surcharges, in 2020 to 82.5% of revenues, before fuel surcharges, in 2021.
Added
Rent and purchased transportation decreased from 26.0% of revenues, before fuel surcharges, during 2022 to 23.5% of revenues, before fuel surcharges, during 2023. The decrease was primarily due to a decrease in the percentage of miles driven by third-party owner-operators as opposed to company-employed drivers for the year-ended December 31, 2023 compared to December 31, 2022.
Removed
The effective tax rate is impacted by the effect of state taxes and other factors. In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of Accounting Standards Codification (“ASC”) 740-10-30, weighs all available evidence, both positive and negative to determine whether, based on the weight of that evidence, a valuation allowance is necessary.
Added
This increase resulted primarily from an increase in interest income recognized, as well as a larger increase in the market value of our marketable equity securities portfolio at December 31, 2023 as compared to December 31, 2022.
Removed
If negative conditions exist which indicate a valuation allowance might be necessary, consideration is then given to what effect the future reversals of existing taxable temporary differences and the availability of tax strategies might have on future taxable income to determine the amount, if any, of the required valuation allowance.
Added
The decrease in revenue per load was due to a reduction in rates paid for brokered loads during 2023, as spot market rates were negatively impacted by downward rate pressure driven by the challenging truckload freight rate environment across our industry during 2023.
Removed
The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by taxing authorities, based on the technical merits of the position.
Added
We expect freight rates to generally remain under pressure from customers during 2024 with freight demand continuing to be somewhat impacted by the recent automotive shutdowns and general economic uncertainties. Rent and purchased transportation increased from 80.8% of revenues, before fuel surcharges, in 2022 to 84.6% of revenues, before fuel surcharges, in 2023.
Removed
Investing activities used $113.5 million in cash during 2022 compared to generating $9.3 million and using $32.7 million in 2021 and 2020, respectively. The cash used for investing activities relates primarily to the purchase of Metropolitan Trucking, Inc. during the second quarter of 2022, coupled with purchases of revenue equipment such as trucks and trailers.
Added
Trade accounts receivable decreased from $134.7 million at December 31, 2022 to $80.6 million at December 31, 2023.
Removed
During the twelve months ended December 31, 2022 and 2021, the Company received approximately $0.0 million and $22.4 million, respectively, for units delivered for trade. During 2022, we maintained a revolving line of credit with a borrowing limit of $60.0 million.
Added
During 2023, the Company received dividends of approximately $1.5 million.
Removed
This term loan bears interest at a fixed rate of 3.62%, with principal and interest payable monthly, and matures on March 1, 2032.
Added
This increase was offset by other factors including a decrease in the percentage of miles driven by third-party owner-operators, as opposed to company-employed drivers, a reduction in the bonus accrual and a decrease in amounts accrued for parts at the end of 2023.
Removed
The loan is secured by mortgages and assignments of rents on the Company’s principal office and four terminal locations. - 25 - Table of Contents Trade accounts receivable increased from $121.9 million at December 31, 2021 to $134.7 million at December 31, 2022.
Added
The decrease was primarily related to payments during 2023 of amounts accrued for liability and legal claims at December 31, 2022.
Removed
During 2022, the Company received dividends of approximately $1.5 million. The holding term of these securities depends largely on the general economic environment, the equity markets, borrowing rates, and the Company's cash requirements.
Removed
The increase was primarily related to claims accruals. Current maturities of long term-debt and long-term debt fluctuations are reviewed on an aggregate basis as the classification of amounts in each category are typically affected merely by the passage of time.
Removed
Current maturities of long-term debt and long-term debt, on an aggregate basis, at December 31, 2022, increased approximately $42.0 million as compared to December 31, 2021. The increase relates primarily to the financing of real estate and note financing for the purchase of assets from Metropolitan Trucking, Inc. and of new equipment during 2022.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed7 unchanged
Biggest changeThe increase resulted from purchases of marketable equity securities of approximately $1.2 million and an increase in market value of the portfolio of approximately $1.1 million. A 10% decrease in the market price of our marketable equity securities would cause a corresponding 10% decrease in the carrying amounts of these securities, or approximately $4.2 million.
Biggest changeThe increase resulted from an increase in market value of the portfolio by approximately $1.6 million and offset by net sales of marketable equity securities of approximately $0.1 million. A 10% decrease in the market price of our marketable equity securities would cause a corresponding 10% decrease in the carrying amounts of these securities, or approximately $4.3 million.
For additional information with respect to the marketable equity securities, see “Item 8. Financial Statements and Supplementary Data, Note 4 to the Consolidated Financial Statements – Marketable Equity Securities.” Interest Rate Risk Our line of credit bears interest at a floating rate equal to Term SOFR plus a fixed percentage.
For additional information with respect to the marketable equity securities, see “Item 8. Financial Statements and Supplementary Data, Note 4 to the Consolidated Financial Statements – Marketable Equity Securities.” - 27 - Table of Contents Interest Rate Risk Our line of credit bears interest at a floating rate equal to Term SOFR plus a fixed percentage.
Assuming $18.0 million of variable rate debt was outstanding under our line of credit for a full fiscal year, a hypothetical 100 basis point increase in LIBOR would result in approximately $180,000 of additional interest expense.
Assuming $18.0 million of variable rate debt was outstanding under our line of credit for a full fiscal year, a hypothetical 100 basis point increase in Term SOFR would result in approximately $180,000 of additional interest expense.
However, certain operating expenditures and capital purchases related to our Mexico branch office are incurred within or exposed to fluctuations in the exchange rate between the U.S. dollar and the Mexican peso. Based on 2022 expenditures denominated in pesos, a 10% decrease in the exchange rate would increase our annual operating expenses by approximately $0.6 million.
However, certain operating expenditures and capital purchases related to our Mexico branch office are incurred within or exposed to fluctuations in the exchange rate between the U.S. dollar and the Mexican peso. Based on 2023 expenditures denominated in pesos, a 10% decrease in the exchange rate would increase our annual operating expenses by approximately $0.9 million.
Equity Price Risk We hold certain actively traded marketable equity securities, which subjects the Company to fluctuations in the fair market value of its investment portfolio based on current market price. The recorded value of marketable equity securities increased to $41.7 million at December 31, 2022 from $39.4 million at December 31, 2021.
Equity Price Risk We hold certain actively traded marketable equity securities, which subjects the Company to fluctuations in the fair market value of its investment portfolio based on current market price. The recorded value of marketable equity securities increased to $43.2 million at December 31, 2023 from $41.7 million at December 31, 2022.
Because our operations are dependent upon diesel fuel, significant increases in diesel fuel costs could materially and adversely affect our results of operations and financial condition. Based upon our 2022 fuel consumption, a 10% increase in the average annual price per gallon of diesel fuel would increase our annual fuel expenses by approximately $9.7 million.
Because our operations are dependent upon diesel fuel, significant increases in diesel fuel costs could materially and adversely affect our results of operations and financial condition. Based upon our 2023 fuel consumption, a 10% increase in the average annual price per gallon of diesel fuel would increase our annual fuel expenses by approximately $8.2 million.
Foreign currency exchange rates did not have a material impact to our financial condition, results of operations or cash flows for the years ended December 31, 2022 or 2021. - 28 - Table of Contents
Foreign currency exchange rates did not have a material impact to our financial condition, results of operations or cash flows for the years ended December 31, 2023 or 2022.

Other PAMT 10-K year-over-year comparisons