Overview of the Company’s Financial Performance

The company operates two main business segments - truckload services and logistics/brokerage services. In the first quarter of 2025, the company reported a net loss of $8.1 million, or $0.37 per diluted share, compared to net income of $0.3 million, or $0.01 per diluted share, in the same period of 2024.

Truckload Services Segment

Truckload services revenue, excluding fuel surcharges, decreased by 9.6% year-over-year to $92.4 million in Q1 2025. This was primarily due to a 6.5% decrease in total miles traveled and a 3.3% decrease in the average rate per mile. The reduction in miles was driven by a 3.5% decrease in the average number of trucks operated and a 1.5% decrease in average miles per truck.

On the expense side, key factors impacting profitability included:

• Salaries, wages and benefits increased from 40.5% to 41.3% of revenues, due to the fixed-cost nature of labor as revenues declined.
• Operating supplies and expenses increased from 12.4% to 13.5% of revenues, also due to the interaction of fixed costs with lower revenues.
• Rent and purchased transportation increased from 22.2% to 25.8% of revenues, as the company used more third-party owner-operators.
• Depreciation expense increased from 18.3% to 24.0% of revenues, primarily due to changes in accounting estimates for revenue equipment useful lives and salvage values.

The truckload services operating ratio, which measures the ratio of operating expenses to revenues, worsened from 104.2% in Q1 2024 to 110.9% in Q1 2025, indicating lower profitability.

Logistics and Brokerage Services Segment

Logistics and brokerage services revenue, excluding fuel surcharges, decreased by 24.7% year-over-year to $44.3 million in Q1 2025. This was primarily due to a 28.0% decrease in the number of brokered loads.

On the expense side, rent and purchased transportation increased from 86.1% to 88.4% of revenues, as the company paid third-party carriers a larger percentage of customer revenue amid the decline in volumes.

The logistics and brokerage services operating ratio worsened from 93.9% in Q1 2024 to 98.0% in Q1 2025.

Liquidity and Capital Resources

The company generated $5.0 million in cash from operating activities in Q1 2025. Investing activities generated $0.4 million, while financing activities used $16.3 million in cash.

The company’s primary uses of funds are for the purchase of revenue equipment. During Q1 2025, the company utilized cash on hand, installment notes, and its line of credit to finance approximately $11.8 million in revenue equipment and other asset purchases.

For the remainder of 2025, the company expects to purchase approximately 282 new trucks and 775 new trailers, resulting in net capital expenditures of around $30.2 million.

The company has a $60.0 million revolving line of credit, of which $59.8 million was available as of March 31, 2025. Long-term debt and current maturities of long-term debt decreased from $325.6 million at the end of 2024 to $309.2 million at the end of Q1 2025.

The company also recently completed a tender offer to repurchase up to 435,000 shares of its common stock at a price between $14.50 and $17.00 per share, for a total of approximately $14.8 million.

Analysis of Strengths and Weaknesses

Strengths:

• Diversified business model with both truckload services and logistics/brokerage operations
• Strong liquidity position with available credit facilities and cash flow from operations
• Ongoing investment in revenue equipment to maintain a modern, efficient fleet

Weaknesses:

• Declining revenues and profitability in both business segments, indicating challenges in the current market environment
• Increasing costs, particularly in areas like depreciation, purchased transportation, and interest expense, putting pressure on margins
• Reliance on third-party owner-operators in the logistics/brokerage segment, which can be less profitable than company-owned assets

Outlook and Future Prospects

The company’s financial performance in the first quarter of 2025 was disappointing, with significant declines in revenue and profitability across both business segments. The truckload services division in particular struggled with lower volumes, pricing pressure, and rising costs, leading to an operating loss.

The logistics and brokerage services segment also saw a sharp drop in revenue and profitability, as the company had to pay third-party carriers a larger percentage of customer revenue amid the decline in brokered loads.

Looking ahead, the company faces a challenging operating environment characterized by an oversupply of trucks in the market, pricing pressure, and rising costs. The company’s planned capital expenditures of $30.2 million for the remainder of 2025 to upgrade its fleet may help improve efficiency and competitiveness, but the broader market conditions could continue to weigh on financial performance.

To address these challenges, the company may need to focus on cost-cutting measures, such as optimizing its fleet size and utilization, as well as exploring ways to differentiate its services and improve pricing power. Diversifying its customer base and service offerings could also help the company navigate the current market environment more effectively.

Overall, the company’s financial results in the first quarter of 2025 raise concerns about its near-term outlook, and management will need to take decisive action to improve profitability and position the company for long-term success.