ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION S
ArcBest Corporation ™ (together with its subsidiaries, the “Company,” “ArcBest ® ,” “we,” “us,” and “our”) is a multibillion‑dollar integrated logistics company that leverages technology and a full suite of solutions across multiple modes of transportation to meet our customers’ supply chain needs. Our operations are conducted through two reportable operating segments:
Asset-Based, which consists of ABF Freight System, Inc. and certain other subsidiaries (“ABF Freight”); and
Asset-Light, which includes MoLo Solutions, LLC (“MoLo”), Panther Premium Logistics ® (“Panther”), and certain other subsidiaries.
For more information, see additional segment descriptions in Part I, Item 1 (Business) and in Note M to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
On February 28, 2023, the Company sold FleetNet America, Inc. (“FleetNet”), a wholly owned subsidiary of the Company, for an aggregate adjusted cash purchase price of $100.9 million, including post-closing adjustments. Following the sale, FleetNet ® was reported as discontinued operations. As such, historical results of FleetNet have been excluded from both continuing operations and segment results for all periods presented. Unless otherwise indicated, all amounts in this Annual Report on Form 10-K refer to continuing operations, including comparisons to the prior year.
ORGANIZATION OF INFORMATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided to assist readers in understanding our financial performance during the periods presented and significant trends which may impact our future performance, including the principal factors affecting our results of operations, liquidity and capital resources, and critical accounting policies. MD&A includes additional information about significant accounting policies, practices, and the transactions that underlie our financial results. This discussion should be read in conjunction with our consolidated financial statements and the related notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K. MD&A includes forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially from the statements made in this section due to a number of factors that are discussed in Part I (Forward-Looking Statements) and Part I, Item 1A (Risk Factors) of this Annual Report on Form 10-K. MD&A is comprised of the following:
Results of Operations includes:
an overview of consolidated results with 2025 compared to 2024, and a consolidated Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”) reconciliation to net income;
a financial summary and analysis of our Asset-Based segment results of 2025 compared to 2024, including a discussion of key actions and events that impacted the results;
a financial summary and analysis of our Asset-Light segment results for 2025 compared to 2024, including a discussion of key actions and events that impacted the results; and
a discussion of other matters impacting operating results, including effects of inflation, current economic conditions, environmental and legal matters, and information technology and cybersecurity.
Liquidity and Capital Resources provides an analysis of key elements of the cash flow statements, borrowing capacity, and contractual cash obligations, including a discussion of financing arrangements and financial commitments.
Income Taxes provides an analysis of the effective tax rates and deferred tax balances, including deferred tax asset valuation allowances.
Critical Accounting Policies and Estimates discusses those accounting policies that are important to understanding certain material judgments and assumptions incorporated in the reported financial results.
Recent Accounting Pronouncements discusses accounting standards that are not yet effective for our financial statements but may have a material effect on our future results of operations or financial condition.
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RESULTS OF OPERATIONS
This Results of Operations section of MD&A generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10 ‑ K can be found in the Results of Operations section of MD&A in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Consolidated Results
Year Ended December 31
(in thousands, except per share data)
REVENUES
Asset-Based
Asset-Light
Other and eliminations
Total consolidated revenues
OPERATING INCOME (LOSS)
Asset-Based
Asset-Light
Other and eliminations
Total consolidated operating income
NET INCOME FROM CONTINUING OPERATIONS
INCOME FROM DISCONTINUED OPERATIONS, net of tax (1)
NET INCOME
DILUTED EARNINGS PER COMMON SHARE (2)
Continuing operations
Discontinued operations (1)
Total diluted earnings per common share
Discontinued operations represents the FleetNet segment, which sold on February 28, 2023, as previously discussed. The year ended December 31, 2024 represents adjustments related to the prior year gain on sale of FleetNet.
Earnings per common share is calculated in total and may not equal the sum of earnings per common share from continuing operations and discontinued operations due to rounding.
Our consolidated revenues, which totaled $4.0 billion for 2025, decreased 4.0% compared to 2024. The revenue decline is primarily attributable to lower market rates and shipment levels for our Asset-Light shipping and logistics services in a soft market environment, which resulted in a decrease in Asset-Light revenues of 9.4%. Lower revenue per shipment, partially offset by higher shipment levels in our Asset-Based segment, resulted in a 0.6% decrease in Asset-Based revenues and contributed to the year-over-year decrease in consolidated revenues for 2025. The elimination of intersegment revenues reported within the “Other and eliminations” line of consolidated revenues increased 6.7% for 2025, compared to 2024, reflecting year-over-year changes in intersegment business levels among our operating segments.
Our Asset-Based billed revenue per hundredweight, including fuel surcharges, decreased 1.3% for 2025, compared to 2024. The decrease was driven by a shift in freight profile, including fewer shipments from existing customers in the manufacturing sector and the decrease in the fuel surcharge revenue associated with lower fuel prices. Tonnage per day increased 1.2% for 2025, compared to the prior year, supported by higher daily shipment volumes, despite a softer market environment driven in part by continued weakness in the manufacturing sector.
The decrease in revenues of our Asset-Light segment for 2025, compared to 2024, was impacted by a 7.4% decline in revenue per shipment associated with soft market conditions and changes in business mix, including a higher mix of managed transportation business, as well as a 1.8% decrease in shipments per day. Our Asset-Light segment generated approximately 34% and 36% of total revenues before other revenues and intercompany eliminations for 2025 and 2024, respectively.
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Consolidated operating income decreased $154.1 million year-over-year to an operating income of $90.3 million in 2025, reflecting the revenue decline, increases in Asset-Based segment salaries, wages and benefits; and the reduction in the contingent earnout consideration accrual during 2024, offset by lower purchased transportation costs and lower employee costs in the Asset-Light segment. Segment operating expenses are further described in the Asset-Based Segment Results and Asset-Light Segment Results sections of Results of Operations. In addition to the results of our operating segments, the year-over-year comparison of consolidated operating income was also impacted by items described in the following paragraphs.
Innovative technology costs impacted consolidated segment results during 2025 and 2024, including costs associated with our Vaux suite – Vaux Freight Movement System™, Vaux Smart Autonomy™, and Vaux Vision™. Certain costs related to Vaux and other initiatives to optimize performance through technological innovation are reported in the “Other and eliminations” line of consolidated operating income. These combined costs decreased consolidated results by $29.1 million (pre-tax), or $22.2 million (after-tax) and $0.97 per diluted share, for 2025, compared to $34.1 million (pre-tax), or $26.1 million (after-tax) and $1.10 per diluted share, for 2024.
The liability for contingent earnout consideration recorded for the MoLo ® acquisition was remeasured at each quarterly reporting date, and any change in fair value as a result of the recurring assessments was recognized in operating income. Consolidated operating results increased by $2.7 million (pre-tax), or $2.0 million (after-tax) and $0.09 per diluted share for 2025 and by $90.3 million (pre-tax), or $67.9 million (after-tax) and $2.85 per diluted share for 2024, in each case due to quarterly remeasurements, which resulted in a lower liability of the contingent earnout consideration. During 2025, the liability was reduced to zero as the earnout calculation did not meet the threshold for an earnout payment based on adjusted earnings before interest, taxes, depreciation and amortization, for 2025. Remeasurement calculations related to the prior year contingent earnout consideration are further discussed in Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
The Company recognized noncash asset impairment charges during fourth quarter 2025 related to the indefinite-lived Panther trade name within the Asset-Light segment and the write-off of certain obsolete assets utilized in our Vaux suite, which reduced operating results by $12.0 million (pre-tax), or $9.1 million (after-tax) and $0.40 per diluted share for the year ended December 31, 2025. Asset impairment charges were recognized during fourth quarter 2024 for certain revenue equipment and software as part of a strategic decision to adjust capacity within Asset-Light’s operations, which reduced operating results by $1.7 million (pre-tax), or $1.3 million (after-tax) and $0.05 per diluted share, for the year ended December 31, 2024. Remeasurement of the intangible and long-lived assets, operating right-of-use assets, and leasehold improvements is further discussed within Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Consolidated operating results benefited from the sale of certain properties, including two former service center locations, during the third quarter of 2025, which resulted in a net gain of $15.7 million (pre-tax), or $11.8 million (after-tax) and $0.51 per diluted share, for the year ended December 31, 2025.
During 2024, consolidated net income and earnings per share were impacted by a one-time, noncash impairment charge of $28.7 million (pre-tax), or $21.6 million (after-tax) and $0.91 per diluted share, to write off our equity investment in Phantom Auto, a provider of human‑centered remote operation software, which ceased operations during the first quarter of 2024. The charge was recognized in “Other, net” within “Other income (costs).” The write-off of our equity investment is further described within Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
In addition to the above items, the year-over-year changes in consolidated net income and earnings per share were impacted by changes in the cash surrender value of variable life insurance policies, tax effects from the vesting of share-based compensation awards, and other changes in the effective tax rate as described within the Income Taxes section of MD&A and in Note E to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. A portion of our variable life insurance policies have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility. Changes in the cash surrender value of life insurance policies, which are reported below the operating income line in the consolidated statements of operations, increased consolidated net income by $3.3 million and $0.15 per diluted share in 2025, and $3.3 million and $0.14 per diluted share in 2024. The vesting of restricted stock units resulted in a tax expense of $1.0 million and $0.04 per diluted share for 2025, compared to a tax benefit of $11.3 million and $0.47 per diluted share in 2024.
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Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”)
We report our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures and ratios, such as Adjusted EBITDA, utilized for internal analysis, provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance. Accordingly, using these measures improves comparability between current and prior results and provides important information to our analysis of performance trends because it removes the impact of items from operating results that, in management’s opinion, do not reflect our core operating performance. Management uses Adjusted EBITDA as a key performance measure and for business planning. The measure is particularly meaningful for analysis of our operating performance, because it excludes amortization of acquired intangibles and software of the Asset-Light segment, changes in the fair value of contingent earnout consideration and our equity investment, asset impairment charges, and certain legal settlement expenses of the Asset-Light segment, which are significant expenses or gains resulting from strategic decisions or other factors rather than core daily operations. Our calculation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies as other companies may calculate Adjusted EBITDA differently. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. Adjusted EBITDA should not be construed as a measurement than operating income, net income, or earnings per share, as determined under GAAP. The following table presents a reconciliation of Adjusted EBITDA to our net income, which is the most directly comparable GAAP measure for the periods presented.
Year Ended December 31
(in thousands)
Net Income from Continuing Operations
Interest and other related financing costs
Income tax provision
Depreciation and amortization (1)
Amortization of share-based compensation
Change in fair value of contingent consideration (2)
Asset impairment charges (3)
Legal settlement (4)
Change in fair value of equity investment (5)
Consolidated Adjusted EBITDA from Continuing Operations
Includes amortization of intangibles associated with acquired businesses.
Represents change in fair value of the contingent earnout consideration recorded for the MoLo acquisition, as previously discussed.
The 2025 period represents noncash asset impairment charges recognized during fourth quarter 2025 related to the indefinite-lived Panther trade name within the Asset-Light segment and the write-off of certain obsolete assets utilized within the Vaux suite. The 2024 period represents noncash asset impairment charges for certain revenue equipment and software recognized during fourth quarter 2024 as part of a strategic decision to adjust capacity within Asset-Light’s operations. The 2023 period represents noncash lease-related impairment charges for a freight handling pilot facility, a service center, and office spaces that were made available for sublease.
Represents settlement expenses related to the classification of certain Asset-Light employees under the Fair Labor Standards Act , which were paid during first quarter 2025.
Represents a noncash impairment charge to write off our equity investment in Phantom Auto, as previously discussed.
Asset-Based Operations
Asset-Based Segment Overview
The Asset-Based segment consists of ABF Freight, one of North America’s largest less-than-truckload (“LTL”) carriers and a wholly owned subsidiary of the Company, and certain other subsidiaries. Our customers trust the LTL solutions ABF Freight has provided for over a century and rely on our unwavering commitment to quality, safety, and customer service to solve their transportation challenges, including through market disruptions and rapidly changing economic conditions. We are strategically investing in our Asset-Based operations to utilize technology to drive efficiency and productivity. We are also committed to our deepening customer relationships to navigate challenges now and in the future.
Our Asset-Based operations are affected by general economic conditions, as well as a number of other competitive factors that are more fully described in Item 1 (Business) and in Item 1A (Risk Factors) of Part I of this Annual Report on Form 10-K. See Note M to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K
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for a description of the Asset-Based segment and additional segment information, including revenues, operating expenses, and operating income for the years ended December 31, 2025, 2024, and 2023.
In addition to the overall customer demand for Asset-Based transportation services, including the impact of economic factors, key indicators, as outlined below, are used by management to evaluate segment operating performance and measure the effectiveness of strategic initiatives in the results of our Asset-Based segment. We quantify certain key indicators using key operating statistics, which are important measures in analyzing segment operating results from period to period. These statistics are defined within the key indicators below and referred to throughout the discussion of the results of our Asset-Based segment:
Key indicator
Key operating statistic
Definition
Volume of transportation services through our network, which influences operating leverage
Tonnage per day (average daily shipment weight)
Total weight of shipments processed during the period in U.S. tons divided by the number of workdays in the period.
Shipments per day
Total number of shipments moving through the Asset-Based freight network during the period divided by the number of workdays in the period.
Weight per shipment
Total weight of shipments processed during the period in U.S. pounds divided by the number of shipments during the period.
Average length of haul (miles)
Weighted average distance in miles between origin and destination service centers for all shipments (including shipments moved with purchased transportation) during the period with each shipment weighted based on its proportionate utilization of linehaul schedules.
Prices obtained for services, including fuel surcharges
Billed revenue per hundredweight, including fuel surcharges (yield)
Revenue per 100 pounds of shipment weight, including fuel surcharges, systematically calculated as shipments are processed in the Asset-Based freight network. Revenue for undelivered freight is deferred for financial statement purposes in accordance with our revenue recognition policy. Billed revenue used for calculating revenue per hundredweight measurements is not adjusted for the portion of revenue deferred for financial statement purposes.
Billed revenue per shipment, including fuel surcharges
Asset-Based freight revenue, including fuel surcharges, divided by the number of shipments that are processed in the Asset-Based freight network. Revenue for undelivered freight is deferred for financial statement purposes in accordance with our revenue recognition policy. Billed revenue used for calculating revenue per shipment measurements is not adjusted for the portion of revenue deferred for financial statement purpose.
Ability to manage cost structure, primarily salaries, wages, and benefits (“labor”)
Operating ratio
The percent of operating expenses to revenue levels.
Productivity metrics of operations and labor efficiency
Shipments per dock, street, and yard (“DSY”) hour
Total shipments (including shipments handled by purchased transportation agents) divided by DSY hours. This metric is used to measure labor efficiency in the segment’s local operations. The shipments per DSY hour metric will generally increase when more purchased transportation is used; however, the labor efficiency may be offset by increased purchased transportation expense.
Pounds per mile
Total pounds divided by total miles driven during the period (including pounds and miles moved with purchased transportation). This metric is used to measure labor efficiency of linehaul operations, although it is influenced by other factors including freight density, loading efficiency, average length of haul, and the degree to which purchased transportation (including rail service) is used.
Other companies within our industry may present different key performance indicators or operating statistics, or they may calculate their measures differently; therefore, our key performance indicators or operating statistics may not be
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comparable to similarly titled measures of other companies. Key performance indicators or operating statistics should be viewed in addition to, and not as an alternative for, our reported results. Our key performance indicators or operating statistics should not be construed as better measurements of our results than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP.
Tonnage
The level of freight tonnage managed by the Asset-Based segment is directly affected by industrial production and manufacturing; distribution; residential and commercial construction; consumer spending, primarily in the North American economy; and capacity in the trucking industry. Operating results are affected by economic cycles and conditions, customers’ business cycles, and changes in customers’ business practices. The Asset-Based segment actively competes for freight business based primarily on price, service, and capacity availability.
Pricing
The industry pricing environment, another key factor affecting our Asset-Based results, influences the ability to obtain appropriate margins and implement price adjustments across our customer base. LTL freight is rated under a classification framework established by the National Motor Freight Traffic Association, Inc. (“NMFTA”). In July 2025, NMFTA updates accelerated the transition from the previous commodity-based model toward a density-based model that places greater emphasis on measured density, handling characteristics, stowability, and liability instead of fixed commodity classes. Changes in the freight class and packaging, along with changes in other freight profile factors, such as average shipment size; average length of haul; freight density; and customer and geographic mix, can affect the average billed revenue per hundredweight measure. Light, bulky freight generally results in higher classes and generates higher revenue per hundredweight while dense freight is usually assigned lower classes. As classification increasingly relies on density, pricing has become more sensitive to accurate dimensional data and other freight attributes.
Approximately 17% of our Asset-Based business is subject to base LTL tariffs, which are affected by general rate increases, subject to individually negotiated discounts. Rates on the remaining Asset-Based business, including business priced in the spot market, are subject to individual pricing arrangements negotiated at various times throughout the year. Most of the business that is subject to negotiated pricing arrangements is associated with larger customer accounts with annual pricing arrangements. The remaining business is priced on an individual shipment basis considering shipment characteristics, network capacity, and current market conditions. Since most pricing is established by account, the Asset‑Based segment focuses on individual account profitability rather than a single measure of billed revenue per hundredweight when considering customer account or market evaluations.
We allow shippers without negotiated published rates access to LTL rates through an online portal and application programming interface (“API”) connectivity, matching shipping needs with ABF Freight’s capacity options through a dynamic pricing option. The market has been receptive to this dynamic pricing option for transactional LTL shipments, and this program has been beneficial in optimizing our business levels by improving capacity utilization in the Asset‑Based network. Our dynamic pricing option allows us to strategically fill excess capacity, including during the current soft market environment, enabling us to improve utilization of our internal resources and be better positioned for a market rebound of higher freight demand, as well as provide a more sustainable service offering by reducing “empty miles” (or the number of miles we move empty or near-empty equipment for repositioning purposes). Although we continually evaluate our business mix to ensure revenue optimization, any resulting increase in revenues could be offset partially or entirely by the related increase in expenses needed to service higher shipment volumes.
We also utilize a space-based pricing approach for shipments subject to LTL tariffs to better reflect capacity usage and freight shipping trends in the industry, including the overall growth and ongoing profile shift to bulkier, yet often lighter, shipments across the supply chain, the acceleration in e-commerce, and the unique requirements of many shipping and logistics solutions, such as accommodating for smaller LTL shipments. An increasing percentage of freight is taking up more space in trailers without a corresponding increase in weight. Traditional LTL pricing is generally weight-based, while our linehaul costs are generally space-based (i.e., costs are impacted by the volume of space required for each shipment). Space-based pricing involves the use of freight dimensions (length, width, and height) to determine applicable cubic minimum charges (“CMC”) that supplement weight-based metrics when appropriate. We believe space-based pricing better aligns our pricing mechanisms with the metrics which affect our resources and, therefore, our costs to provide logistics services. The recent move by the NMFTA to density-driven class brackets reflects this shift in LTL pricing practices from traditional LTL pricing. We seek to provide logistics solutions to our customers’ businesses and the unique shipment characteristics of their various products and commodities, and we believe that we are particularly experienced in
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handling freight that is generally considered difficult to handle. CMC is an additional pricing mechanism to better capture the value we provide in transporting these shipments.
Fuel
The transportation industry is dependent upon the availability of adequate fuel supplies. The Asset-Based segment assesses a fuel surcharge based on the index of national on-highway average diesel fuel prices published weekly by the U.S. Department of Energy. Fuel surcharges apply across our Asset-Based network; however, to better align fuel surcharges to fuel- and energy-related expenses and provide more stability to account profitability as fuel prices change, we may, from time to time revise our standard fuel surcharge program, which primarily affects noncontractual customers representing a portion of Asset-Based shipments. While fuel surcharge revenue generally more than offsets the increase in direct diesel fuel costs when applied, the total impact of energy prices on other nonfuel-related expenses is difficult to ascertain. Management cannot predict, with reasonable certainty, future fuel price fluctuations, the impact of energy prices on other cost elements, recoverability of fuel costs through fuel surcharges, and the effect of fuel surcharges on the overall rate structure or the total price that the segment will receive from its customers. While the fuel surcharge is one of several components in the overall rate structure, the actual rate paid by customers is governed by market forces and the overall value of services provided to the customer.
During periods of changing diesel fuel prices, the fuel surcharge and associated direct diesel fuel costs also vary by different degrees. Depending upon the rates of these changes and the impact on costs in other fuel- and energy-related areas, operating margins could be impacted. Fuel prices have fluctuated significantly in recent years. Whether fuel prices fluctuate or remain constant, operating results may be adversely affected if competitive pressures limit our ability to recover fuel surcharges. Throughout 2025, the fuel surcharge mechanism generally continued to have market acceptance among customers; however, certain nonstandard pricing arrangements have limited the amount of fuel surcharge recovered. The negative impact on operating margins of capped fuel surcharge revenue during periods of increasing fuel costs is more evident when fuel prices remain above the maximum levels recovered through the fuel surcharge mechanism on certain accounts. In periods of declining fuel prices, as experienced in 2025, compared to 2024, fuel surcharge percentages also decrease, which negatively impacts the total billed revenue per hundredweight measure and, consequently, revenues, while total fuel costs also decreased. The segment’s operating results will continue to be impacted by further changes in fuel prices and the related fuel surcharges.
Labor Costs
Our Asset-Based labor costs, including retirement and healthcare benefits for contractual employees that are provided by a number of multiemployer plans (see Note I to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K), are impacted by contractual obligations under the 2023 ABF National Master Freight Agreement (“2023 ABF NMFA”), the collective bargaining agreement and other related supplemental agreements with the International Brotherhood of Teamsters (the “IBT”), which will remain in effect through June 30, 2028. Total salaries, wages, and benefits, amounted to 52.2% for 2025 and 50.5% of revenues for 2024. Changes in salaries, wages, and benefits expense and shared services expenses, which include labor costs related to ABF Freight’s portion of company‑wide functions, as a percentage of revenues are discussed in the Asset-Based Segment Results section.
ABF Freight operates in a highly competitive industry comprised primarily of nonunion motor carriers. Nonunion competitors have a lower fringe benefit cost structure and less stringent labor work rules, and certain carriers also have lower wage rates for their freight-handling and driving personnel. As of December 2025, approximately 81% of our Asset-Based segment’s employees were covered under the 2023 ABF NMFA. The terms of the 2023 ABF NMFA continue to provide some of the best wages and benefits in the industry to our contractual employees. The combined contractual wage and benefits top hourly rate is estimated to increase approximately 4.2% on a compounded annual basis over the term of the agreement, with potential profit-sharing bonuses representing additional costs under the 2023 ABF NMFA.
Under the 2023 ABF NMFA, ABF Freight continues to pay some of the highest benefit contribution rates in the industry, and through this contract, ABF Freight has the ability to implement location-specific wage increases in areas where hiring is challenging. ABF Freight’s benefit contributions for its contractual employees include contributions to multiemployer plans. Contributions to multiemployer pension plans and health and welfare plans totaled $164.1 million and $219.9 million, respectively, in 2025, and $157.9 million and $218.5 million, respectively, in 2024. ABF Freight’s latest labor agreement with the IBT requires wage rates and health, welfare, and pension contribution rates for most plans to increase annually in accordance with the terms of the 2023 ABF NMFA. Contractual wage rates increased effective July 1, 2024 and July 1, 2025. Health, welfare, and pension benefit contribution rates increased effective primarily on
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August 1, 2024 and August 1, 2025. These rate adjustments resulted in a combined contractual wage and benefits top hourly rate increase of approximately 2.9% in 2025 and 2.7% in 2024.
As compared to the 2018 National Master Freight Agreement with the IBT, the 2023 ABF NMFA provides for:
wage rate or per mile increases in each year of the contract;
continued annual contribution rate increases to multiemployer health and welfare and pension plans;
an additional paid holiday;
two additional paid sick days;
a new non-CDL employee classification; and
profit-sharing bonuses for qualifying contractual employees based upon the Asset-Based segment’s achievement of certain annual operating ratios for any full calendar year during the contract period.
Through the term of the 2023 ABF NMFA, ABF Freight’s multiemployer pension contribution obligations generally will be satisfied by making the specified contributions when due. Future contribution rates will be determined through the negotiation process for contract periods following the term of the current collective bargaining agreement. While contributions that will be required under future collective bargaining agreements for ABF Freight’s contractual employees cannot be predicted with certainty, legislation in recent years provided funding relief to many underfunded plans which may reduce the likelihood of future contribution rate increases (see Note I to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). If ABF Freight were to completely withdraw from certain multiemployer pension plans, under current law, ABF Freight would have material liabilities for its share of the unfunded vested liabilities of each such plan. Further, ABF Freight could also trigger complete or partial withdrawal liability from certain multiemployer pension plans through, among other things, mergers and other fundamental corporate transactions and as a result of operational changes, site closures and job losses, which could result in material liabilities.
Asset-Based Segment Results
The following table sets forth a summary of operating expenses and operating income as a percentage of revenue for the Asset-Based segment:
Year Ended December 31
Asset-Based Operating Expenses (Operating Ratio)
Salaries, wages, and benefits
Fuel, supplies, and expenses
Operating taxes and licenses
Insurance
Communications and utilities
Depreciation and amortization
Rents and purchased transportation
Shared services
Gain on sale of property and equipment
Innovative technology costs (1)
Other
Asset-Based Operating Income
Represents costs associated with the freight handling pilot test program at ABF Freight, for which the decision was made to pause the pilot during third quarter 2023.
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The following table provides a comparison of key operating statistics for the Asset-Based segment, as previously defined in the Asset-Based Segment Overview:
Year Ended December 31
% Change
Workdays (1)
Billed revenue per hundredweight, including fuel surcharges
Billed revenue per shipment, including fuel surcharges
Tonnage per day
Shipments per day
Shipments per DSY hour
Weight per shipment
Pounds per mile
Average length of haul (miles)
Workdays represent the number of operating days during the period after adjusting for holidays and weekends.
Asset-Based Revenues
Asset-Based segment revenues totaled $2.7 billion for the year ended December 31, 2025 and $2.8 billion for the prior‑year period. The decrease in revenue compared to the prior year primarily reflects lower billed revenue per hundredweight and weight per shipment. An increase in daily tonnage due to higher shipment volumes partially offset these impacts. There was one less workday in 2025 versus 2024.
The decrease in total billed revenue per hundredweight year-over-year was driven by the shift in freight profile and lower fuel surcharge revenue associated with lower fuel prices, compared to 2024, partially offset by lower weight per shipment, which generally increases revenue per hundredweight. The pricing environment continues to be rational. Excluding the impact of fuel surcharges, the percentage decrease in billed revenue per hundredweight was in the low-single digits for 2025, compared to 2024. Prices on accounts subject to deferred pricing agreements and annually negotiated contracts that were renewed during 2025 increased an average of 4.6%. The Asset-Based segment implemented nominal general rate increases on its LTL base rate tariffs of 5.9% effective on August 4, 2025, and September 9, 2024, although the rate changes vary by lane and shipment characteristics.
The increase in tonnage per day for 2025, compared to 2024, was driven by a 3.0% increase in daily shipments, reflecting changes in the Asset-Based business mix, including the onboarding of new core LTL customers. Ongoing weakness in the manufacturing sector and evolving freight dynamics, including the shift of some heavier LTL shipments to the truckload market due to lower rates amid excess capacity, resulted in lower average weight per shipment levels year-over-year.
Current economic conditions and the Asset-Based segment’s pricing approach, as previously discussed in the Pricing section of the Asset-Based Segment Overview within Results of Operations, will continue to impact the segment’s tonnage levels and the prices it receives for its services and, as such, there can be no assurance that our Asset-Based segment will maintain or achieve improvements in its current operating results. The industry pricing environment remains rational, which has benefited our efforts to secure needed price increases; however, the competitive environment could limit the Asset-Based segment from securing adequate increases in base LTL freight rates and could limit the amount of fuel surcharge revenue recovered in future periods.
Asset-Based Operating Income
The Asset-Based segment generated operating income of $172.0 million in 2025, compared to $242.6 million in 2024, with an operating ratio of 93.7% in 2025, compared to 91.2% in 2024. The 2.5 percentage-point increase in the Asset-Based segment’s operating ratio, primarily reflects the increase in operating expenses and slightly lower revenue levels. The Asset-Based segment’s operating ratio was positively impacted by the gain on the sale of property and equipment of $15.8 million, including gains on two service center sales.
Asset-Based Operating Expenses
Labor costs, which are reported in operating expenses as salaries, wages, and benefits increased $40.7 million for 2025, compared to 2024, primarily due to contract rate increases under the 2023 ABF NMFA, as previously discussed in the Asset-Based Segment Overview section, an increase in headcount to align with higher shipment levels and increased tonnage, and the effect of rising healthcare costs. Wage rates increased 2.4% on July 1, 2025 and 2.5% on July 1, 2024, and health, welfare and benefits rates increased 3.6% on August 1, 2025 and 2.9% on August 1, 2024, for a blended
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increase of 2.9% in 2025 and 2.7% in 2024. Lower accruals for incentives, improved productivity, as measured by shipments per DSY hour, and higher utilization of purchased transportation, as discussed later in this section, partially offset the increase in salaries, wages and benefits.
The Asset-Based segment manages costs with shipment levels; however, a number of factors impact DSY productivity, including the effect of freight profile and mix changes, utilization of local delivery agents, and efficiency of personnel. Shipments per DSY hour improved 0.1% for 2025, compared to 2024, primarily due to continued investments in technology and ongoing training and development at certain key locations as the ABF Freight Continuous Improvement Team continues to reinforce operational best practices throughout the Asset-Based network. Pounds per mile increased 1.3% for 2025, compared to 2024, reflecting an improvement in linehaul efficiency and an increase in the utilization of purchased transportation, partially offset by lower weight per shipment.
Depreciation and amortization as a percentage of revenue increased 0.8 percentage points in 2025, compared to 2024, primarily due to recent service center renovations and higher purchase prices for new revenue equipment, which has resulted in an increase in depreciation expense per unit.
Rents and purchased transportation as a percentage of revenue increased 0.7 percentage points in 2025, compared to 2024, primarily due to increased rent expense for new service centers, higher utilization of rail, local delivery agents, and linehaul purchased transportation to support shipment growth, partially offset by lower rail fuel surcharge cost per mile. Rail miles increased approximately 3% in 2025, compared to 2024.
Operating expenses were also impacted by the gain on the sale of property and equipment of $15.8 million, including gains on two service center sales during third quarter 2025, as previously discussed.
Asset-Light Operations
Asset-Light Segment Overview
Our Asset-Light segment is a key component of our strategy to offer a single source of integrated logistics solutions, designed to satisfy customers’ complex supply chain needs and unique shipping requirements. We are focused on growing and making strategic investments in our Asset-Light segment that enhance our service offerings and strengthen our customer relationships. Throughout our operations, we are seeking opportunities to expand our revenues by deepening existing customer relationships, securing new customers, and adding capacity options for our customers.
As supply chains become more complex, most shippers use a mix of modes to keep their supply chains moving, and our managed transportation solutions seamlessly connect these modes to build better supply chains. We continue to develop our managed transportation solutions as part of our strategic efforts to cross-sell our service offerings and meet the demand for these services that increase operational efficiencies, reduce costs, and give better insights into their supply chain. We expect to benefit from these and other strategic initiatives as we continue to deliver innovative solutions to customers.
Our Asset-Light operations are affected by general economic conditions, as well as several other competitive factors that are more fully described in Part I, Item 1 (Business) and in Part I, Item 1A (Risk Factors) of this Annual Report on Form 10-K. See Note M to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for descriptions of the Asset-Light segment and additional segment information, including revenues, operating expenses, and operating income (loss) for the years ended December 31, 2025, 2024, and 2023.
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Key indicators, as outlined below, are used by management to evaluate segment operating performance and measure the effectiveness of strategic initiatives in the results of our Asset-Light segment. We quantify certain key indicators using key operating statistics which are important measures in analyzing segment operating results from period to period. These statistics are defined within the key indicators below and referred to throughout the discussion of the results of our Asset‑Light segment:
Key indicator
Key operating statistic
Definition
Customer demand for logistics and premium transportation services
Shipments per day
Total shipments divided by the number of working days during the period, compared to the same prior-year period.
Prices obtained for services
Revenue per shipment
Total segment revenue divided by total segment shipments during the period, compared to the same prior-year period.
Availability of market capacity and cost of purchased transportation to fulfill customer shipments
Purchased transportation costs as a percentage of revenue
The expense incurred for third-party transportation providers to haul or deliver freight during the period, divided by segment revenues for the period, expressed as a percentage.
Management operating costs, primarily purchased transportation and total cost structure
Operating ratio
The percent of operating expenses to revenue levels.
Productivity of operations and labor efficiency
Shipments per employee per day
Total shipments divided by the number of employees divided by the number of working days during the period, compared to the same prior-year period.
Other companies within our industry may present different key performance indicators or they may calculate their key performance indicators differently; therefore, our key performance indicators may not be comparable to similarly titled measures of other companies. Key performance indicators should be viewed in addition to, and not as an alternative for, our reported results. Our key performance indicators should not be construed as better measurements of our results than operating income (loss), net income, or earnings per share, as determined under GAAP.
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Asset-Light Segment Results
The following table sets forth a summary of operating expenses and operating income (loss) as a percentage of revenue for the Asset-Light segment:
Year Ended December 31
Asset-Light Segment Operating Expenses (Operating Ratio)
Purchased transportation
Salaries, wages, and benefits
Supplies and expenses
Depreciation and amortization (1)
Shared services
Contingent consideration (2)
Asset impairment charges (3)
Legal settlement (4)
Other
Asset-Light Segment Operating Income (Loss)
Includes amortization of intangibles associated with acquired businesses.
Represents the change in fair value of the contingent earnout consideration recorded for the MoLo acquisition, as further discussed in the Asset-Light Operating Expenses section below.
The 2025 period represents a noncash impairment charge recognized during fourth quarter 2025 related to the indefinite-lived intangible asset within the Asset-Light segment, as further discussed in the Asset-Light Operating Expenses section below. The 2024 period represents noncash asset impairment charges for certain revenue equipment and software recognized during fourth quarter of 2024 as part of a strategic decision to adjust capacity within Asset-Light’s operations.
Represents settlement expenses related to the classification of certain Asset-Light employees under the Fair Labor Standards Act , which were paid during first quarter 2025, as further discussed in the Asset-Light Operating Expenses section below.
A comparison of key operating statistics for the Asset-Light segment, as previously defined in the Asset-Light Segment Overview section, is presented in the following table:
Year Over Year % Change
Year Ended December 31,
Revenue per shipment
Shipments per day
Shipments per employee per day
Asset-Light Revenues
Asset-Light segment revenues decreased 9.4% to $1.4 billion for 2025, compared to $1.6 billion in 2024. The revenue decline primarily reflects lower average revenue per shipment driven by a soft market environment and a higher mix of managed transportation business, which typically has smaller shipment sizes. Revenue was also impacted by a decrease in average daily shipment volume resulting from our strategic reduction in less profitable truckload shipments, despite shipment growth in our managed transportation solutions. Excess capacity in the truckload market continues to impact spot market rates.
Asset-Light Operating Income (Loss)
The Asset-Light segment generated operating loss of $15.3 million in 2025 and operating income of $58.4 million in 2024. The year-over-year decline in operating results is primarily attributable to the $90.3 million reduction in the fair value of the contingent earnout consideration for 2024, along with lower revenues and operating expense changes discussed in the following paragraphs. Operating results were also impacted by asset impairment charges recognized during fourth quarter 2025 of $6.6 million and during fourth quarter 2024 of $1.7 million, which are further described below.
Asset-Light Operating Expenses
Operating expenses decreased $71.8 million, or 4.8%, and increased as a percentage of revenue by 4.9 percentage points. Excluding the change in fair value of contingent earnout consideration and asset impairment charges, operating expenses
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were lower primarily due to reduced spending on outside services and employee-related cost reductions in relation to lower business levels and productivity improvements in shipments per person per day.
Purchased transportation costs as a percentage of revenue decreased by 1.0 percentage point for 2025, compared to 2024, reflecting the $138.7 million reduction of purchased transportation costs in 2025. Changes in market capacity impact the cost of purchased transportation and may not correspond to the timing of revisions to customer pricing and changes in revenue per shipment. There can be no assurance that we will be able to secure prices from our customers that will allow us to maintain or improve our margins on the cost of sourcing carrier equipment capacity.
Contingent earnout consideration, as previously described in the Consolidated Results section of Results of Operations, increased as a percentage of revenue by 5.6 percentage points for 2025, compared to 2024. The contingent earnout consideration is discussed further in Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Salaries, wages, and benefits decreased as a percentage of revenue by 0.7 percentage points in 2025, compared to 2024, or $19.9 million year-over-year as the segment continued efforts to align resources with business levels and advance employee productivity. Shipments per employee per day improved 16.9% for 2025, compared to 2024, as a result of these efforts, combined with changes in business mix and technology advancements from the digital roadmap initiatives.
Shared service costs as a percentage of revenue increased 0.8 percentage points for 2025, compared to 2024, primarily reflecting the impact of lower revenues during 2025.
Asset impairment charges, as previously described, of $6.6 million recorded in the fourth quarter of 2025 and $1.7 million recorded in the fourth quarter of 2024 were 0.5 percentage points for 2025 and 0.1 percentage points of revenue for 2024. The impairment charges are discussed further in Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
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Asset-Light Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Asset-Light Adjusted EBITDA”)
We report our financial results in accordance with GAAP. However, management believes that certain non-GAAP performance measures and ratios, such as Asset-Light Adjusted EBITDA, which is utilized for internal analysis, provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management’s opinion, do not reflect our core operating performance. Management uses Asset-Light Adjusted EBITDA as a key performance measure and for business planning. This measure is particularly meaningful for analysis of our Asset-Light segment because it excludes amortization of acquired intangibles and software, changes in the fair value of contingent earnout consideration, asset impairment charges, and certain legal settlement expenses, which are significant expenses or gains resulting from strategic decisions or other factors rather than core daily operations. Management also believes Asset-Light Adjusted EBITDA to be relevant and useful information, as EBITDA is a standard measure commonly reported and widely used by analysts, investors, and others to measure financial performance of asset-light businesses and the ability to service debt obligations. Other companies may calculate adjusted EBITDA differently; therefore, our calculation of Asset-Light Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. Asset-Light Adjusted EBITDA should not be construed as a measurement than operating income (), net income, or earnings per share, as determined under GAAP.
Asset-Light Adjusted EBITDA
Year Ended December 31
($ thousands)
Operating Income (Loss) (1)
Depreciation and amortization (2)
Change in fair value of contingent consideration (3)
Asset impairment charges (4)
Legal settlement (5)
Asset-Light Adjusted EBITDA
The calculation of Asset-Light Adjusted EBITDA as presented in this table begins with operating income (loss) as the most directly comparable GAAP measure. Other income (costs), income taxes, and net income are reported at the consolidated level and not included in the operating segment financial information evaluated by management to make operating decisions. Consolidated Adjusted EBITDA is reconciled to consolidated net income in the Consolidated Results section of Results of Operations.
Includes amortization of intangibles associated with acquired businesses. Amortization of acquired intangibles totaled $12.8 million for both 2025 and 2024 and $12.9 million for 2023 and is expected to total approximately $8.7 million for 2026.
Represents the change in fair value of the contingent earnout consideration recorded for the MoLo acquisition. See Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
The 2025 period represents noncash asset impairment charges recognized during fourth quarter 2025 related to the Panther trade name indefinite-lived intangible within the Asset-Light segment. The 2024 period represents noncash asset impairment charges for certain revenue equipment and software recognized during the fourth quarter of 2024 as part of a strategic decision to adjust capacity within Asset-Light’s operations. See Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Represents expenses related to the classification of certain Asset-Light employees under the Fair Labor Standards Act , which were paid during first quarter 2025, as previously described. See Note N to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
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Current Economic Conditions
Economic conditions in 2025 reflected slowing but continued growth, shifting trade and tariff policies, persistent but cooling inflation, elevated interest rates, ongoing supply chain disruptions, and a slowing labor market. Geopolitical conflicts present uncertain and potentially increasing economic impacts going into 2026. Certain economic factors, including housing cost growth, stabilized or improved during 2025. As pricing pressures eased and in response to signs of economic softening, the Federal Reserve cut interest rates three times in 2025 for a total of 75 basis points.
Although inflation is easing, the manufacturing sector, as measured by the Purchasing Managers’ Index (“PMI”), expanded in January 2026 after a period of nearly continuous contraction since November 2023. This prolonged period of weakness in manufacturing has contributed to a decrease in freight volumes. In 2025, the economy grew at a slower pace than 2024 as measured by U.S. real gross domestic product (“real GDP”), with the fourth quarter 2025 annual real GDP rate increase being primarily driven by increases in consumer spending and investment, partially offset by decreases in exports and government spending, including reductions associated with the 43-day government shutdown, which began on October 1, 2025.
Although we secured increases on deferred pricing agreements and annually negotiated contracts during the year ended December 31, 2025, there can be no assurance that the economic environment, including the impact of interest rates on consumer demand, will be favorable for our freight services in future periods.
Given the uncertainties of current economic conditions, there can be no assurance that our estimates and assumptions regarding the pricing environment and economic conditions, which are made for purposes of impairment tests related to operating assets and deferred tax assets, will prove to be accurate. Extended periods of economic disruption and resulting declines in industrial production and manufacturing and consumer spending could negatively impact demand for our services and have an adverse effect on our results of operations, financial condition, and cash flows. The soft freight environment and increased mix of managed transportation shipments contributed to a year-over-year decline in revenue per shipment for our Asset-Light segment, compared to 2024. There can be no assurance that we will be able to secure adequate prices from this new business or from our existing customers to maintain or improve our operating results. Significant declines in our business levels or other changes in cash flow assumptions or other factors that negatively impact the fair value of the operations of our reporting units could result in and a resulting noncash write-off of a significant portion of the goodwill and intangible assets of our Asset-Light segment, which would have an effect on our financial condition and operating results. During 2025, we recorded an charge related to our indefinite‑lived Panther trade name within the Asset-Light reporting unit. See Notes C and D to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion of the evaluation.
Effects of Inflation
Inflation remains above the Federal Reserve’s long-term target inflation rate of 2%. Elevated costs across a broad array of consumer goods continue to be driven by global supply chain volatility and labor and energy shortages, in addition to the impact of federal monetary policy. The consumer price index (CPI) increased 2.4%, before seasonal adjustment, year‑over‑year in January 2026 and 0.4% from December 2025. Although CPI has declined from the level reached in June 2022 due to market response to the Federal Reserve’s tighter monetary policy implemented in March 2022, recent CPI readings remain above the Federal Reserve’s target inflation rate. Most of our expenses are affected by inflation. While an increase in inflation generally results in increased operating costs, the potential impact of inflationary conditions on our business, including demand for our transportation services, remains uncertain.
Generally, inflationary increases in labor and fuel costs as they relate to our Asset-Based operations have historically been mostly offset through price increases and fuel surcharges. In periods of increasing fuel prices, the effect of higher associated fuel surcharges on the overall price to the customer influences our ability to obtain increases in base freight rates. In addition, certain nonstandard arrangements with some of our customers have limited the amount of fuel surcharge recovered. Our Asset-Based segment’s ability to fully offset inflationary and contractual cost increases can be challenging during periods of recessionary and uncertain economic conditions when certain cost saving measures and productivity improvements do not outpace inflationary increases.
Generally, inflationary increases in labor and operating costs related to our Asset-Light operations have historically been offset through price increases. Productivity improvements, as measured by shipments per employee per day, and
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disciplined cost management have helped mitigate the impact of rising operating costs. The pricing environment, however, generally becomes more competitive during economic downturns, which may, as it has in the past, affect the ability to obtain price increases from customers both during and following such periods. The pricing environment remains competitive, and we believe that Asset-Light pricing has stabilized at the bottom of the truckload market cycle. The impact of excess capacity in the truckload market continued during 2025; however, carriers are slowly exiting the market, driven by prolonged economic pressures as demand remains weak and margins have thinned.
The market continues to adjust to the impact of supply chain disruptions, including as a result of geopolitical conflicts and recent changes in trade and tariff policies. The prices for our revenue equipment (tractors and trailers) have also increased, partly as a result of inflationary pressures, and will very likely continue to be replaced at higher per-unit costs, which could result in higher depreciation charges on a per-unit basis. We consider these costs in setting our pricing policies, although the overall freight rate structure is governed by market forces. In addition to general effects of inflation, the motor carrier freight transportation industry faces rising costs related to insurance claims, compliance with government regulations on safety, equipment design and maintenance, driver utilization, emissions, and fuel economy.
Environmental and Legal Matters
We are subject to federal, state, and local environmental laws and regulations relating to, among other things: emissions control, transportation or handling of hazardous materials, underground and aboveground storage tanks, stormwater pollution prevention, contingency planning for spills of petroleum products, and disposal of waste oil. We may transport or arrange for the transportation of hazardous materials and explosives, and we operate in industrial areas where truck service centers and other industrial activities are located and where groundwater or other forms of environmental contamination could occur. In 2023, ABF Freight entered into a Consent Decree with the Environmental Protection Agency (the “EPA”) to resolve alleged compliance issues under the federal Clean Water Act , agreeing to certain compliance tasks, as further discussed in Part I, Item 1 (Business) and Part I, Item 1A (Risk Factors) of this Annual Report on Form 10-K.
Physical effects from climate change, including more frequent and severe weather events, have the potential to adversely impact our business levels and employee working conditions, cause shipping delays or disruption to our operations, increase our operating costs, and cause damage to our property and equipment. Due to the uncertainty of these matters, we cannot estimate the effect of any future climate-related developments on our operations or financial condition at this time. These and other matters related to climate change and the related risks to our business are further discussed in Part I, Item 1 (Business) and Part I, Item 1A (Risk Factors) of this Annual Report on Form 10-K. We continue to advance sustainability initiatives by investing in innovative technologies, developing our employees, and enhancing our capabilities and services for customers.
We are involved in various legal actions, the majority of which arise in the ordinary course of business. We maintain liability insurance against certain risks arising out of the normal course of our business, subject to certain self-insured retention limits. We routinely establish and review the adequacy of reserves for estimated legal, environmental, and self-insurance exposures. While management believes that amounts accrued in the consolidated financial statements are adequate, estimates of these liabilities may change as circumstances develop. Considering amounts recorded, routine legal matters are not expected to have a material adverse effect on our financial condition, results of operations, or cash flows.
In January 2023, we and MoLo were named as defendants in lawsuits related to an auto accident involving one of MoLo’s contract carriers. The accident occurred prior to our acquisition of MoLo. During the fourth quarter of 2024, we settled this claim, along with a $9.8 million claim related to the classification of certain Asset-Light employees under the Fair Labor Standards Act . These settlements were paid in January 2025, including amounts covered by insurance for the accident-related claim. See Note N to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion of the legal matters in which we are currently involved.
Information Technology and Cybersecurity
We depend on the proper functioning, availability, and security of our information technology (“IT”) systems, including communications, data processing, financial, and operating systems, as well as proprietary software programs and certain software applications provided by third parties that are integral to our business operations. A failure or other disruption in critical information systems, such as denial of service, intentional or inadvertent acts by employees or vendors with access to our systems or data, phishing, disruption by malware, ransomware, and other cybersecurity attacks and incidents that
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impact the availability, reliability, speed, accuracy, or other proper functioning of these systems, including the applications provided by third parties, or that result in proprietary information or sensitive or confidential data of customers, employees and others being compromised could have a significant impact on our operations. New or enhanced technology that we develop and implement may also be subject to cybersecurity attacks and may be more prone to related incidents. Although we strive to carefully select our third-party vendors, we have limited control over the operation, quality, maintenance and continued availability of services that they provide. We obtain assurance reports from independent service auditors engaged by our third-party software providers for systems in scope for our internal controls over financial reporting; however, we cannot ensure that these controls are adequate to prevent, detect or correct material misstatements or to mitigate system or operational vulnerabilities, including cybersecurity attacks and security breaches at a vendor, which could result in claims, litigation, losses, and/or liabilities and materially affect our ability to provide service to our customers and otherwise conduct our business.
Our IT systems are protected through physical and software safeguards as well as backup systems considered appropriate by management. However, these systems and third-party applications are vulnerable to interruption by adverse weather conditions; natural disasters; power, internet, or telecommunications outages; computer viruses; cybersecurity incidents; and other events beyond our control. It is not practicable to fully protect against the possibility of these events or cybersecurity attacks and other cyber events in every potential circumstance that may arise. To mitigate the potential for such occurrences at our primary data center, we have implemented various systems, including redundant telecommunication equipment; replication of critical data to an offsite location; fire suppression systems to protect our on-site data centers; and electrical power protection and generation facilities. We also have a catastrophic disaster recovery plan and alternate processing capability available for our critical data processes in the event of a that renders one of our data centers .
Some of our employees work remotely, including under hybrid work arrangements, which may increase the demand for IT resources and heighten our exposure to unauthorized access to proprietary information or sensitive or confidential data and other cybersecurity incidents. As a component of our cyber risk management program, we periodically engage a third‑party provider to assess our cyber posture and assist us in improving our security profile. We review our processes around cybersecurity risk management and related governance framework and perform materiality assessments. Although we have implemented measures to mitigate our exposure to the heightened risks of cybersecurity incidents, we cannot be certain that such measures will be effective to prevent a cybersecurity incident from materializing.
While we maintain property and cyber insurance, which would offset losses up to certain coverage limits in the event of a catastrophe or certain cyber incidents, losses arising from a catastrophe or significant cyber incident may exceed our insurance coverage and could have a material adverse impact on our results of operations and financial condition. We do not have insurance coverage specific to losses resulting from a pandemic or geopolitical conflict. A significant disruption in our IT systems, including but not limited to those previously mentioned, such as denial of service or system failure, could interrupt or delay our operations, damage our reputation, cause a of customers, cause or in financial reporting, result in of privacy laws, us to a risk of or , and/or cause us to incur significant time and expense to remedy such an event.
We have experienced incidents involving attempted denial of service attacks, malware attacks, and other events intended to disrupt our information systems, wrongfully obtain valuable information, or cause other types of malicious events that could have resulted in harm to our business. To our knowledge, the various protections we have employed have been effective to date in identifying such events at a point when the impact on our business could be minimized. We continuously monitor and develop our IT networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, and other events that could have a security impact. We have made and continue to make significant financial investments in technologies, including artificial intelligence (“AI”), and processes to mitigate these risks. We are still in the early stages of utilizing generative AI, which utilizes sensitive, proprietary, and confidential data that could be leaked, as well as having potential in algorithms and models that could ultimately outputs. We provide employee awareness training around cybersecurity risks. our efforts, due to the increasing speed, scale, automation, and sophistication of cyber attacks, including those conducted using new techniques and technologies for attack, such as those through generative AI, we may be to anticipate or promptly detect or implement adequate protective or remedial measures the activities of perpetrators of cybersecurity attacks. Management is not aware of any current cybersecurity that has had a material effect on our operations, although there can be no assurances that a cyber that could have a material impact to our operations could not occur.
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LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash, cash equivalents, and short-term investments; cash generated by continuing operations; and borrowing capacity under our revolving credit facility (“Credit Facility”) under our Fifth Amended and Restated Credit Agreement (the “Credit Agreement”) or our accounts receivable securitization program (“A/R Securitization”).
This Liquidity and Capital Resources section of MD&A generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in the Liquidity and Capital Resources section of MD&A in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Cash Flow and Short-Term Investments
Components of cash and cash equivalents and short-term investments, which are further described in Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, were as follows:
Year Ended December 31
(in thousands)
Cash and cash equivalents
Short-term investments
Total
Cash, cash equivalents, and short-term investments decreased $33.0 million from December 31, 2024 to December 31, 2025, primarily due to lower business levels in the prolonged freight recession; the payment of expenses accrued at December 31, 2024, including wage-related incentives and previously disclosed legal settlements; continued efforts to return capital to shareholders through share repurchases and dividends; planned capital expenditures, including service center remodels; paydown of long-term debt; and the assumption of two lease agreements, which included lease buyout payments during first quarter 2025, offset partially by proceeds from the sale of property and equipment and accounts receivable collections.
Cash provided by operating activities during 2025 was $229.0 million, compared to $285.8 million in 2024. Changes in operating assets and liabilities, excluding income taxes, decreased cash provided by operating activities by $26.2 million during 2025 and increased cash provided by operating activities by $1.9 million during 2024. The year-over-year decrease in accounts payable, accrued expenses and other liabilities, partially offset by the decrease in accounts receivable, contributed to the decrease in cash provided by operating activities.
Cash used in investing activities during 2025 was impacted by $80.3 million of capital expenditures, net of proceeds from asset sales, including the sales of two service centers and a parcel of land during third quarter 2025, and financings. Cash used in investing also reflected the renovation of properties for our Asset-Based network. See Capital Expenditures below for estimated annual expenditure amounts for 2026.
Cash was used to repay $83.1 million in promissory note payables during 2025. During 2025, we repurchased 1,025,524 shares of our common stock under our share repurchase plan for an aggregate cost of $75.6 million, including excise taxes. We also continued to return capital to our shareholders with our quarterly dividend payments, which totaled $11.0 million during 2025. Our dividends and share repurchase programs are further discussed in the Other Liquidity Information section below.
Financing Arrangements
We financed the purchase of $117.9 million of revenue equipment through notes payable during the year ended December 31, 2025. Future payments due under notes payable totaled $239.8 million, including interest, as of December 31, 2025, for an increase of $34.3 million from December 31, 2024.
During 2025, we borrowed $25.0 million on the Credit Facility and subsequently repaid the balance, returning the borrowing availability at December 31, 2025, to $250.0 million, the initial maximum credit amount of the Credit Facility.
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Our Credit Facility was amended during fourth quarter 2025 to extend the maturity date to November 25, 2030 and increase the letter of credit sub-facility sublimit to $50.0 million, among other things.
Our A/R Securitization was amended during second quarter 2025 to extend the maturity date to July 1, 2026, among other things. As of December 31, 2025, standby letters of credit of $23.5 million have been issued under the A/R Securitization which reduced our available borrowing capacity to $26.5 million.
See Note G to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion of our financing arrangements and presentation of the scheduled maturities of our long-term debt obligations.
Contractual Obligations
In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future. In addition to the obligations discussed within the preceding Financing Arrangements section, we have contractual obligations as described in the following paragraphs. Certain contractual obligations are also further disclosed in the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
While we own the majority of our larger service centers, distribution centers, and administrative offices, we lease certain facilities and equipment. As of December 31, 2025, contractual obligations for operating lease liabilities, primarily related to our Asset-Based service centers, totaled $293.7 million, including imputed interest, for an increase of $26.1 million from December 31, 2024. Operating lease payments due within one year total $46.8 million. The scheduled maturities of our operating lease liabilities as of December 31, 2025 are disclosed in Note F to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
We sponsor an insured postretirement health benefit plan that provides supplemental medical benefits and dental and vision care to certain executive officers. As of December 31, 2025, estimated projected payments, net of retiree premiums, related to postretirement health benefits total $0.8 million for the next year and $8.8 million for the next 10 years. These projected amounts are subject to change based upon increases and other changes in premiums and medical costs and continuation of the plan for current participants. The accumulated benefit obligation of the postretirement health benefit plan accrued in the consolidated balance sheet totaled $14.5 million as of December 31, 2025 (see Supplemental Benefit and Postretirement Health Benefit Plans within Note I to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K).
We have purchase obligations, consisting of authorizations to purchase and binding agreements with vendors, relating to revenue equipment used in our Asset-Based operations, other equipment, facility improvements, software, service contracts, and other items for which amounts were not accrued in the consolidated balance sheet as of December 31, 2025. These purchase obligations totaled $105.8 million as of December 31, 2025, with $86.7 million expected to be paid within the next year, provided that vendors complete their commitments to us. As of December 31, 2025, the amount of our purchase obligations decreased $90.0 million from December 31, 2024, primarily related to ABF Freight revenue equipment. We have no investments, loans, or any other known contractual arrangements with unconsolidated special-purpose entities, variable interest entities, or financial partnerships and have no outstanding loans with our executive officers or directors.
ABF Freight has a withdrawal liability that was triggered when its multiemployer pension plan obligation with the New England Teamsters Trucking Industry Pension Fund was restructured under a transition agreement in 2018. As of December 31, 2025, payments due within one year under the withdrawal liability settlement total $1.6 million, and total payments, which are due over the next 16 years, total $25.0 million. As of December 31, 2025, the outstanding withdrawal liability recognized in the consolidated balance sheet for this obligation totaled $17.9 million. ABF Freight contributes to other multiemployer health, welfare, and pension plans based generally on the time worked by their contractual employees, as specified in the collective bargaining agreement and other supporting supplemental agreements (see Multiemployer Plans within Note I to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K).
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Capital Expenditures
The following table sets forth our capital expenditures for the periods indicated below:
Year Ended December 31
(in thousands)
Capital expenditures, gross including notes payable (1)
Less financing from notes payable
Capital expenditures, net of notes payable
Less proceeds from asset sales
Total capital expenditures, net
Actual capital expenditures in 2025 were below our estimate as we proactively adjusted to demand trends and optimized project timing, allowing us to deploy capital where it creates the most value. 2024 and 2023 capital expenditures also fell below our estimates due to delays in the original build schedules of our Asset-Based and Asset-Light revenue equipment caused by parts shortages and manufacturing disruptions and delays in some real estate facility projects.
For 2026, our total capital expenditures, including amounts financed, are estimated to range from $150.0 million to $170.0 million, net of proceeds from asset sales. These 2026 estimated net capital expenditures include revenue equipment purchases of $75.0 million to $80.0 million, primarily for our Asset-Based operations and $35.0 million to $45.0 million of investments in real estate and facility upgrades to support our growth plans, in addition to other investments across the enterprise, such as technology-related items and miscellaneous dock equipment upgrades and enhancements. We have the flexibility to adjust certain planned 2026 capital expenditures as business levels dictate. Depreciation and amortization expense, excluding amortization of intangibles, is estimated to be approximately $180.0 million in 2026. The amortization of intangible assets is estimated to be approximately $9.0 million in 2026, primarily related to purchase accounting amortization associated with the MoLo acquisition.
Other Liquidity Information
General economic conditions are currently being impacted by geopolitical conflicts, tariff and trade policies, competitive market factors, higher interest rates, persistent inflation, and volatile energy prices, among other factors. These conditions and the related impact on our business (primarily tonnage and shipment levels and the pricing that we receive for our services in future periods) could affect our ability to generate cash from operating activities and maintain cash, cash equivalents, and short-term investments on hand. Our Credit Facility and A/R Securitization provide available sources of liquidity with flexible borrowing and payment options. We believe these agreements provide borrowing capacity necessary for growth of our business. During the next twelve months and for the foreseeable future, we believe existing cash, cash equivalents, short-term investments, cash generated by operating activities, amounts available under our Credit Facility and A/R Securitization, until maturity on July 1, 2026, will be sufficient to finance our operating expenses and to fund ongoing initiatives and grow our business, including investments in technology. Notes payable, finance leases, and other secured financing may also be used to fund capital expenditures, provided that such arrangements are available and the terms are acceptable to us.
The Agreement and Plan of Merger (the “Merger Agreement”) for our acquisition of MoLo provided for additional cash consideration based on the achievement of certain incremental adjusted EBITDA targets for years 2023 through 2025 (“the earnout period”) and provided for additional consideration under catch-up provisions through 2025. However, the adjusted EBITDA metrics were below target for the earnout period. As a result, the contingent consideration liability was reduced to zero during 2025 (see Assets and Liabilities Measured at Fair Value on a Recurring Basis within Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K).
We continue to return capital to shareholders with our quarterly dividend payments and treasury stock purchases. On January 27, 2026, we announced our Board of Directors declared a dividend of $0.12 per share payable to stockholders of record as of February 10, 2026. We expect to continue to pay quarterly dividends on our common stock in the foreseeable future, although there can be no assurance in this regard since future dividends will be at the discretion of the Board of Directors and are dependent upon our future earnings, capital requirements, and financial condition; contractual restrictions applying to the payment of dividends under our Credit Facility; and other factors.
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In September 2025, our Board of Directors increased the total amount available for purchases of our common stock under our share repurchase program to $125.0 million. We purchased 1,025,524 shares of our common stock during 2025 for an aggregate cost of $75.6 million, including excise taxes. As of December 31, 2025, $104.7 million remained available for repurchase under the share repurchase program (see Note J to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10 - K).
Balance Sheet Changes
Accounts Receivable
Accounts receivable, less allowances, decreased $23.9 million from December 31, 2024 to December 31, 2025, reflecting lower revenue levels within the Asset-Light segment and the timing of collections.
Prepaid and Refundable Income Taxes
Prepaid and refundable income taxes increased $16.8 million from December 31, 2024 to December 31, 2025, reflecting the current tax benefit accrual resulting from tax law changes under the One Big Beautiful Bill Act , which is discussed further in Note E to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, in addition to year-to-date 2025 estimated tax payments.
Property, Plant, and Equipment, Net
The increase in property, plant, and equipment, net of $77.4 million from December 31, 2024 to December 31, 2025, was primarily due to planned service center remodels and the purchase of revenue equipment used in our Asset-Based operations, offset by sales of property and equipment.
Intangible Assets, Net
Intangible assets, net decreased $19.2 million from December 31, 2024 to December 31, 2025, primarily due to amortization and the $6.6 million noncash asset impairment charge related to the Panther trade name, which is further discussed in Notes C and D to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Operating Right-of-Use Assets and Operating Lease Liabilities
The increase in operating right-of-use assets of $27.4 million and in operating lease liabilities, including current portion, of $16.4 million from December 31, 2024 to December 31, 2025, was primarily due to the assumption of two lease agreements, which included upfront lease buyout payments, and lease renewals during 2025, partially offset by amortization.
Other Long-Term Assets
Other long-term assets decreased $12.8 million from December 31, 2024 to December 31, 2025, due primarily to the $10.6 million decrease in held-for-sale assets year-over-year following the sale of land and revenue equipment. Death claims on life insurance also contributed to the decrease, offset by changes in cash surrender value and gains on the policies.
Accounts Payable
Accounts payable decreased $18.3 million from December 31, 2024 to December 31, 2025, primarily due to the timing of payables.
Accrued Expenses
Accrued expenses decreased $16.8 million from December 31, 2024 to December 31, 2025, primarily due to lower accruals for certain performance-based incentive plans due to lower operating results in 2025, compared to 2024, offset partially by higher third-party casualty insurance and workers’ compensation reserves due to higher average claim costs and increased retention levels. The settlement by insurers of the previously disclosed auto accident legal matter involving a MoLo carrier, which is further discussed in Note N to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, also contributed to the year-over-year decrease in accrued expenses.
Long-term Debt
The $34.7 million increase in long-term debt, including current portion, from December 31, 2024 to December 31, 2025, is primarily due to $117.9 million in equipment financed, offset by payments on notes payable of $83.1 million. The Company also borrowed and repaid $25.0 million in Credit Facility borrowings during 2025.
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Deferred Income Taxes
The $32.9 million increase in deferred income taxes is primarily due to tax deductions allowed by the One Big Beautiful Bill Act , which is discussed further below in the Income Taxes section in Note E to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, including depreciation and the expensing of research and development costs previously capitalized.
INCOME TAXES
This Income Taxes section of MD&A generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in the Income Taxes section of MD&A in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
On July 4, 2025, the United States Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill Act (the “OBBB”). The OBBB contains several changes to corporate taxation, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, including 100% expensing of qualified depreciable assets and modifications to capitalization of research and development expenses. As a result of the OBBB changes, during 2025, the Company recognized a one-time accelerated current tax benefit of $26.6 million. This benefit primarily reflects $101.2 million of tax deductions for 100% expensing of fixed asset additions purchased between January 20 and June 30, 2025, and the immediate expensing of previously capitalized research and development costs.
Our effective tax rate on continuing operations was 27.7% and 20.7% of pre-tax income for 2025 and 2024, respectively. For 2025, our U.S. statutory tax rate was 21.0%. Our average state tax rate, net of the associated federal deduction, was approximately 5%. Our 2025 effective tax rate varied from the statutory rate due to state income taxes, an increase in valuation allowances, and federal research and development and employment tax credits. Our 2024 effective tax rate was impacted by state income taxes, non-deductible compensation under IRC 162(m), and the settlement of share-based payment awards, which resulted in a $9.2 million tax benefit in 2024. Due to the impact of non-deductible expenses in prior years, lower levels of pre-tax income result in a higher tax rate on income and a lower benefit rate on losses. As pre‑tax income or pre-tax losses increase, the impact of non-deductible expenses on the overall rate declines.
The increase in net deferred tax liabilities after valuation allowances to $102.3 million at December 31, 2025, compared to $69.1 million at December 31, 2024, primarily relates to 100% expensing of qualified depreciable assets and expensing Section 174 research and development related expenses under the OBBB, which became effective during 2025. We evaluated the need for a valuation allowance for deferred tax assets at December 31, 2025 by considering the future reversal of existing taxable temporary differences, future taxable income, and available tax planning strategies. Valuation allowances for deferred tax assets totaled $4.5 million and $1.7 million at December 31, 2025 and 2024, respectively. As the Canadian tax rate is higher than the U.S. tax rate, it is unlikely that foreign tax credit carryforwards will be usable, as U.S. taxes paid will be at a lower rate than the tax rates in Canada. Thus, the foreign tax credit carryforwards were fully reserved, resulting in valuation allowances of $2.1 million and $1.0 million at December 31, 2025 and 2024, respectively. At December 31, 2025, we had gross state net operating loss carryforwards of $155.3 million. These state net operating losses and other state carryforwards were reserved by valuation allowances of $2.4 million and $0.7 million at December 31, 2025 and 2024, respectively. Valuation allowances on gross federal net operating loss carryforwards are insignificant.
Financial reporting income differs significantly from taxable income because of items such as accelerated depreciation for tax purposes, gains and losses on sale of assets, immediate expensing of certain research and development costs for tax purposes, and the deductibility of accrued liabilities – such as workers’ compensation, third-party casualty claims, legal expenses, and operating leases – only when paid. For 2025, there was financial reporting income, but a loss determined under tax law after the OBBB changes mentioned above. For 2024, financial reporting income exceeded taxable income.
During 2025, we made tax payments, net of refunds, of $2.3 million for federal taxes, $2.3 million to various state jurisdictions, and $2.2 million to foreign jurisdictions.
Management expects the cash outlays for income taxes will be less than reported income tax expense in 2026 due primarily to the effect of 100% bonus depreciation on qualified depreciable assets in 2026 as allowed under the OBBB. However,
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in the event we were to become unprofitable, net operating loss carrybacks allowed under the provisions of the Tax Reform Act could be limited in certain circumstances.
The Company's total effective tax rate was 27.7% and 20.8% for 2025 and 2024, respectively, including discontinued operations in 2024. Income tax expense reflected in discontinued operations, which primarily consisted of federal and state income taxes on the gain on the sale of FleetNet, was $0.2 million for 2024, or an effective tax rate of 25.5%.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are based on prior experience and other assumptions that management considers reasonable in our circumstances. Actual results could differ from those estimates under different assumptions or conditions, which would affect the related amounts reported in the financial statements.
The accounting policies and estimates that are “critical” to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described as follows.
Revenue Recognition
Revenues are recognized when or as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Our performance obligations are primarily satisfied upon final delivery of the freight to the specified destination. Revenue is recognized based on the relative transit time in each reporting period with expenses recognized as incurred using a bill-by-bill analysis or standard delivery times to establish estimates of revenue in transit for recognition in the appropriate period. This methodology utilizes the approximate location of the shipment in the delivery process to determine the revenue to recognize, and management believes it to be a reliable method.
Certain contracts may provide for volume-based or other discounts which are accounted for as variable consideration. We estimate these amounts based on the expected discounts earned by customers, and revenue is recognized using these estimates. Revenue adjustments may also occur due to rating or other billing adjustments. We estimate revenue adjustments based on historical information, and revenue is recognized accordingly at the time of shipment. We believe that actual amounts will not vary significantly from estimates of variable consideration.
Revenue, purchased transportation expense, and third-party service expenses are reported on a gross basis for certain shipments and services where we utilize a third-party carrier for pickup, linehaul, delivery of freight, or performance of services, but we remain primarily responsible for fulfilling delivery to the customer and maintain discretion in setting the price for the services. Purchased transportation expense is recognized as incurred.
Payment terms with customers may vary depending on the service provided, location or specific agreement with the customer. The time between invoicing and when payment is due is not significant. For certain services, we require payment before the services are delivered to the customer.
We expense sales commissions when incurred because the amortization period is one year or less.
Impairment Assessment of Long-Lived Assets
We review our long-lived assets, including property, plant and equipment and operating right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If such an event or change in circumstances is present, we will estimate the undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the undiscounted future cash flows is less than the carrying amount of the related assets, we will determine the fair value of the assets and will recognize an impairment loss if the fair value of the assets is less than the recorded value. The evaluation of future cash flows requires management’s judgment and the use of estimates and assumptions. Assumptions require considerable judgment because changes in broad economic factors and industry factors can result in variable and volatile values. Economic factors and the industry environment were considered in assessing recoverability of long-lived assets, including revenue equipment (primarily tractors and trailers used in our Asset-Based operations and trailers used in our Asset-Light operations). Our strict equipment maintenance
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schedules have served to mitigate declines in the value of revenue equipment. Assets meeting the held-for-sale criteria at period end are evaluated for impairment by comparing the fair value of the assets less costs to sell to the carrying values.
During the fourth quarter of 2025, we evaluated for impairment certain long-lived assets no longer in use. As a result, we recognized $5.4 million of noncash asset impairment charges, recorded within operating expenses in the consolidated statements of operations for the year ended December 31, 2025, to write off the obsolete assets previously utilized within the Vaux suite.
Impairment of Goodwill and Intangible Assets
Our consolidated goodwill balance of $304.8 million at December 31, 2025 is primarily related to acquisitions of MoLo and Panther in the Asset-Light segment. Goodwill is recorded as the excess of an acquired entity’s purchase price over the value of the amounts assigned to identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is evaluated for impairment annually on October 1, or more frequently if indicators of impairment exist. Our annual evaluation typically includes an analysis of qualitative factors to determine if it is more likely than not the fair value of the reporting unit is less than its carrying value. If we determine it is more likely than not that the fair value of the reporting unit is less than its carrying value, a quantitative valuation of the reporting unit is performed and compared to the carrying value to determine if the reporting unit is impaired and to measure impairment loss, if any. As a result of the impairment tests, we are required to record an impairment charge, if any, by the amount a reporting unit’s fair value is exceeded by the carrying value of the reporting unit, limited to the carrying value of goodwill included in the reporting unit.
As allowed by the accounting guidance, we elected to bypass the qualitative assessment of our goodwill and indefinite-lived intangible assets and proceed directly to performing the quantitative valuations for the annual impairment assessment as of October 1, 2025. The evaluation of goodwill impairment requires management’s judgment and the use of estimates and assumptions to determine the fair value of the reporting unit. Assumptions require considerable judgment because changes in broad economic factors and industry factors can result in variable and volatile fair values. Changes in key estimates and assumptions that impact the fair value of the operations could materially affect the impairment analysis. Management considered current and forecasted business levels and estimated future cash flows over several years, using the reporting unit’s weighted average cost of capital. Management’s assumptions included a truckload market recovery beginning in early-2027, which was previously estimated to begin mid-2025.
The fair value estimated for this evaluation is derived with the assistance of a third-party valuation firm and utilizing the discounted cash flow method (income approach) and the guideline public company and merger and acquisition methods (market approach). The discounted cash flow models utilized in the income approach incorporate discount rates, terminal multiples, and projections of future revenue, operating margins, and net capital expenditures. The projections used have changed over time based on historical performance and changing business conditions. Assumptions with respect to rates used to discount cash flows are dependent upon market interest rates and the cost of capital for our company and the industry at a point in time. We include a cash flow period of five years with a terminal value in the income approach. Cash flow projections for the forecast period generally reflect the cyclical nature of the industry. Changes in cash flow assumptions or other factors that negatively impact the fair value of the operations would influence the evaluation and could lead to impairment charges in the future. The market approach valuation methods considered EBITDA and revenue multiples relative to peer companies and those resulting from guideline merger and acquisition transactions. The income and market approaches were weighted evenly in the fair value conclusion.
In the impairment assessment of goodwill, management also considered the total market capitalization, which decreased from the prior annual assessment date of September 1, 2024. The decrease in our market capitalization year-over-year is primarily attributable to reduced business levels as market weakness has delayed recovery. This decline is consistent with broader industry and market trends not specific to the Company. We believe that there is no basis for adjustment of our goodwill asset value based on the impairment evaluation performed as the estimated fair value exceeded its carrying value by a substantial margin.
Our indefinite-lived intangible asset, which is the Panther Premium Logistics trade name, totaled $25.7 million as of December 31, 2025. Indefinite-lived intangible assets are not amortized but rather are evaluated for impairment annually on October 1, or more frequently if indicators of impairment exist. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. The October 1, 2025 annual impairment evaluation of our indefinite-lived intangible asset indicated a $6.6 million impairment, which was recognized during the fourth quarter of 2025 to write down the carrying value of our Panther trade name to the indicated fair value, reflecting prolonged soft market conditions extending estimated market recovery to early 2027 and resulting lower
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business levels (see Note D to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K).
The Panther trade name valuation model utilizes the relief from royalty method, whereby the value is determined by calculating the after-tax cost savings associated with owning the trade name and, therefore, not having to pay royalties for its use for the remainder of its estimated useful life. The evaluation of intangible asset impairment requires management’s judgment and the use of estimates and assumptions to determine the fair value of the indefinite-lived intangible assets. Assumptions require considerable judgment because changes in broad economic factors and industry factors can result in variable and volatile fair values. Changes in key estimates and assumptions that impact the operations and resulting revenues, royalty rates, and discount rates could materially affect the intangible asset impairment analysis.
Our finite-lived intangible assets consist primarily of customer relationship, carrier list, and trademark intangible assets and are amortized over their respective estimated useful lives. Finite-lived intangible assets are also evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In reviewing finite-lived intangible assets for impairment, the carrying amount of the asset or asset group is compared to the estimated undiscounted future cash flows expected from the use of the asset and its eventual disposition. If such cash flows are not sufficient to support the recorded value, an impairment loss to reduce the carrying value of the asset to its estimated fair value will be recognized in operating income.
Insurance Reserves
We are self-insured up to certain limits for workers’ compensation and certain third-party casualty claims. Our self-insurance limits are effectively $2.0 million for each workers’ compensation loss occurring after November 1, 2023 and $1.0 million for each loss occurring prior to November 1, 2023. Effective November 1, 2024, our self-insured limits for each loss are generally $5.0 million for each third-party casualty or general liability claim and auto liability claim, up from self-insured limits of $3.0 million for third-party casualty or general liability claims and auto liability claims prior to November 1, 2024, and $2.0 million for claims prior to November 1, 2023. For our third-party casualty or general liability claims and auto liability claims, we also have umbrella policies with certain coverage-layer-specific aggregate limits, whereby we could incur additional liability on claims in excess of our general self-insurance limits. Workers’ compensation and third-party casualty liabilities, which are reported in accrued expenses, totaled $217.6 million at December 31, 2025 and $211.2 million at December 31, 2024. At December 31, 2025 and 2024, the reserve includes an insured liability settlement for third-party casualty , for which the related receivable is recognized in other accounts receivable. We do not discount our liabilities.
Liabilities for self-insured workers’ compensation and third-party casualty claims are based on the case-basis reserve amounts plus an estimate of loss development and incurred but not reported (“IBNR”) claims, which is developed from an independent actuarial analysis. The process of determining reserve requirements utilizes historical trends and involves an evaluation of claim frequency and severity, claims management, and other factors. Case reserves established in prior years are evaluated as loss experience develops and new information becomes available. Adjustments to previously estimated case reserves are reflected in financial results in the periods in which they are made. Aggregate reserves represent the best estimate of the costs of claims incurred, and it is possible that the ultimate liability may differ significantly from such estimates, as a result of a number of factors, including increases in medical costs and other case-specific factors. A 10% increase in the estimate of IBNR would increase the total 2025 expense for workers’ compensation and third-party casualty claims by approximately $12.2 million. The actual payments are charged our accrued liabilities which have been reasonable with respect to the estimates of the related .
RECENT ACCOUNTING PRONOUNCEMENTS
New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of financial statements. Accounting pronouncements which have been issued but are not yet effective for our financial statements are disclosed in Note B to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
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