SAIA INC

Previous wording

Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should carefully consider the risks and uncertainties described below, together with all the other information included in this Annual Report on Form 10-K, including our financial statements and the related notes. Our business, financial condition, operating results, cash flow and prospects could be materially and adversely affected by any of these risks or uncertainties. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we currently see as immaterial may also adversely affect our business. Some statements in this Annual Report on Form 10-K, including statements in the following risk factors, constitute forward-looking statements. Please refer to “Cautionary Note Regarding Forward-Looking Statements.”

Current wording

Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should carefully consider the risks and uncertainties described below, together with all the other information included in this Annual Report on Form 10-K, including our financial statements and the related notes. Our business, financial condition, operating results, cash flow and prospects could be materially and adversely affected by any of these risks or uncertainties. The risks below are organized by headings and each risk

Previous wording

Our business is subject to a number of general economic conditions that may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. These conditions include recessionary economic cycles and downturns in customer business cycles, labor and supply shortages, global uncertainty and instability, inflation, changes in U.S. social, political, and regulatory conditions, tariffs and disruptions in oil and financial markets. Economic conditions may adversely affect the business levels of our customers, the amount of transportation services they need and their ability to pay for our services and could reduce the prices we are able to charge for our services.

Current wording

Our business is subject to a number of general economic conditions that may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. These conditions include recessionary economic cycles and downturns in customer business cycles, labor and supply shortages, global uncertainty and instability, inflation, changes in U.S. social, political, and regulatory conditions, tariffs and international trade

Previous wording

Numerous competitive factors could reduce our revenues, profit margins or market share or otherwise impair our business, any one of which may materially adversely affect our financial condition, results of operations, liquidity and cash flows. These factors include the following:

Current wording

Numerous competitive factors could reduce our revenues, profit margins or market share or otherwise impair our business, any one of which may materially adversely affect our financial condition, results of operations, liquidity and cash flows. These factors include:

Previous wording

Technological advances require increased investments to remain competitive, and we may not utilize enough advanced technology, select the correct technology solutions or convince our customers to accept higher prices to cover the cost of these investments.

Current wording

Technological advances require increased investments to remain competitive, and we may not utilize sufficient advanced technology, select the correct technology solutions or persuade our customers to accept higher prices to offset these investment costs.

Previous wording

There is significant competition for qualified drivers within the trucking industry and attracting and retaining qualified drivers has become more challenging due to a decreasing pool of qualified drivers and high turnover rates. Age demographics, hours of service rules, the legalization and growing recreational use of marijuana and regulatory requirements, including the Compliance Safety Accountability program (CSA) and the Commercial Driver’s License Drug and Alcohol Clearinghouse of the FMCSA, have contributed to the reduction in the number of eligible drivers and may continue to do so in the future.

Current wording

There is significant competition for qualified drivers within the trucking industry and attracting and retaining qualified drivers has become more challenging due to a decreasing pool of qualified drivers and high turnover rates. Age demographics, hours of service rules, the legalization and growing recreational use of marijuana and regulatory requirements, including the Compliance Safety Accountability program and the Commercial Driver’s License Drug and Alcohol Clearinghouse of the Federal Motor Carrier Safety Administration (FMCSA), have contributed to the reduction in the number of eligible drivers and may continue to do so in the future.

Previous wording

Moreover, as a result of general macroeconomic factors and the increasingly competitive labor market, we are experiencing difficulty hiring sufficient qualified employees to fill all available positions, including qualified drivers. The labor shortage is not limited to qualified drivers and at times, we have been unable to hire qualified dockworkers, mechanics and office personnel. We may experience shortages of qualified employees that could result in the failure to meet customer demands, upward pressure on wages and benefits, underutilization of our truck fleet and/or use of higher cost purchased transportation, any of which could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

Moreover, as a result of general macroeconomic factors and the competitive labor market, we are experiencing difficulty hiring sufficient qualified employees to fill all available positions, including qualified drivers. The labor shortage is not limited to qualified drivers and at times, we have been unable to hire qualified dockworkers, mechanics and office personnel. We may experience shortages of qualified employees that could result in the failure to meet customer demands, upward pressure on wages and benefits, underutilization of our truck fleet and/or use of higher cost purchased transportation, any of which could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Previous wording

Economic pressures caused by inflation have been significant in the United States in recent years. Inflation increases most of our expenses, including equipment prices, maintenance and supply costs, diesel fuel costs, insurance costs, claims costs, utility costs, employee wages and benefits, real estate costs, and purchased transportation. With increasing costs, we may have to increase our prices to maintain the same level of profitability. If we are unable to increase our prices sufficiently to offset increasing expenses, then inflation may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

Inflation has been significant in the United States in recent years. Inflation increases most of our expenses, including equipment prices, maintenance and supply costs, diesel fuel costs, insurance costs, claims costs, utility costs, employee wages and benefits, healthcare costs, real estate costs, and purchased transportation. With increasing costs, we may have to increase our prices to maintain the same level of profitability. If we are unable to increase our prices sufficiently to offset increasing expenses, our financial condition, results of operations, liquidity and cash flows may be adversely affected.

Previous wording

Diesel fuel is a significant operating expense, and its availability is vital to daily operations. We do not hedge against the risk of diesel fuel price increases. General economic conditions, global political events, armed conflicts, acts of terrorism, cybersecurity incidents, inflation, tariffs, federal, state and local laws and regulations, world supply and demand imbalances, changes in refining capacity, public and investor sentiment, natural or man-made disasters, adverse weather conditions and other external factors could adversely affect the cost and availability of diesel fuel. In the past, we have been able to obtain diesel fuel from various sources and in the desired quantities, but there can be no assurance that this will continue to be the case in the future. Any shortage or interruption in the supply or distribution of diesel fuel could materially affect our financial condition, results of operations, liquidity and cash flows. To the extent not offset by diesel fuel surcharges or other customer price changes, volatility in diesel fuel prices could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. Historically, we have been able to offset significant diesel fuel price volatility through fuel surcharges and other pricing adjustments but we may not be able to do so in the future. Fluctuations in our fuel surcharge recovery may result in fluctuations in our revenue. Rapid and significant fluctuations in diesel fuel prices could reduce our profitability unless we are able to make the appropriate adjustments to our pricing strategy. Such fluctuations could materially adversely affect our financial condition, results of operations, liquidity and cash flows.

Current wording

Diesel fuel is a significant operating expense, and its availability is vital to daily operations. We do not hedge against the risk of diesel fuel price increases. General economic conditions, global political events, armed conflicts, acts of terrorism, cybersecurity incidents, inflation, tariffs, federal, state and local laws and regulations, world supply and demand imbalances, changes in refining capacity, public and investor sentiment, natural or man-made disasters, adverse weather conditions and other external factors could adversely affect the cost and availability of diesel fuel. In the past, we have secured diesel fuel from various sources and in the desired quantities, but there can be no assurance that this will continue to be the case in the future. Any shortage or interruption in the supply or distribution of diesel fuel could materially affect our financial condition, results of operations, liquidity and cash flows.

Previous wording

The Company is dependent on a limited number of third-party insurance companies to provide insurance coverage in excess of its self-insured retention amounts. In recent years, several insurance companies have completely stopped offering coverage to trucking companies or have significantly reduced the amount of coverage they offer or have significantly raised premiums as a result of increases in the severity of automobile liability claims and sharply higher costs of settlements and verdicts. To the extent that the third-party insurance companies propose increases to their premiums for coverage of commercial trucking claims, the Company may decide to pay such increased premiums or increase its financial exposure on an aggregate or per occurrence basis, including by increasing the amount of its self-insured retention or reducing the amount of total coverage. This trend could adversely affect our ability to obtain suitable insurance coverage, could significantly increase our cost for obtaining such coverage, or could subject us to significant liabilities for which no insurance coverage is in place, which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.

Current wording

The Company is dependent on a limited number of third-party insurance companies to provide insurance coverage in excess of our self-insured retention amounts. In recent years, several insurance companies have completely stopped offering coverage to trucking companies, have significantly reduced the amount of coverage they offer or have significantly raised premiums as a result of increases in the severity of automobile liability claims and sharply higher costs of settlements and verdicts. To the extent that the third-party insurance companies propose increases to their premiums for coverage of commercial trucking claims, the Company may decide to pay such increased premiums or increase its financial exposure on an aggregate or per occurrence basis, including by increasing the amount of its self-insured retention or reducing the amount of total coverage. This trend could adversely affect our ability to obtain suitable insurance coverage, could significantly increase our cost for obtaining such coverage, or could subject us to significant liabilities for which no insurance coverage is in place, which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.

Previous wording

We face risks related to our purchase of certain real estate assets from Yellow Corporation.

Current wording

We face risks related to our purchase of certain real estate assets.

Previous wording

In January 2024, we acquired 17 freight terminals and leases to operate an additional 11 freight terminals pursuant to a sale by Yellow Corporation under Sections 363 and 365 of Chapter 11 of Title 11 of the U.S. Code. In connection with this acquisition, the Company assumed certain liabilities related to those facilities, including assumption of the 11 leases and liabilities relating to environmental, health and safety matters in connection with the ownership, operation, use or maintenance of such facilities, to the extent not extinguished by the proceedings of the U.S. Bankruptcy Court for the District of Delaware. The Company acquired these real estate assets on an as-is basis and could incur costs and expenses in connection with the acquisition that are unexpected or that exceed costs and expenses otherwise known. Furthermore, the acquisition, refurbishment, integration, opening and operation of such facilities may be more disruptive to existing Company operations than anticipated or more expensive than expected. There can be no assurance that the Company will achieve the expected financial benefits of the acquisition of such terminals.

Current wording

In January 2024, we acquired 17 freight terminals and leases to operate an additional 11 freight terminals pursuant to a sale by Yellow Corporation under Sections 363 and 365 of Chapter 11 of Title 11 of the U.S. Code. In connection with this acquisition, we assumed certain liabilities related to those facilities, including assumption of liabilities relating to environmental, health and safety matters in connection with the ownership, operation, use or maintenance of such facilities, to the extent not extinguished by the proceedings of the U.S. Bankruptcy Court for the District of Delaware. Since January 2024, we have also acquired additional facilities by assuming certain Yellow Corporation leases. We acquired these real estate assets on an as-is basis and could incur costs and expenses related to these assets that are unexpected or that exceed costs and expenses otherwise known. Moreover, from time to time we acquire real estate previously utilized by other freight companies or located in industrial areas, which may have a history of environmental contamination prior to our occupation. Failure to detect prior environmental contamination or adequately protect ourselves from associated liabilities could adversely affect our financial condition, results of operations, liquidity and cash flows. There can be no assurance that the Company will achieve the expected financial benefits of the acquisition of such assets.

Previous wording

We rely heavily on technology to operate our business and cybersecurity threats or other disruptions to our technology infrastructure could harm our business or reputation.

Current wording

We rely heavily on technology to operate our business, including through the use of third-party applications, and cybersecurity threats or other disruptions to our technology infrastructure could harm our business or reputation.

Previous wording

Our ability to attract and retain customers and compete effectively depends upon the reliability of our technology network including our ability to provide services that are important to our customers. Our cybersecurity and technology infrastructure includes technology products and services provided to us for use in our business by outside providers such as software as a service and cloud-based products and services. Our technology systems are constantly subject to attacks and efforts by outsiders to breach or gain access to our systems. Any disruption, failure or breach to our cybersecurity processes, technology controls or information technology infrastructure, including those impacting our computer systems and website, could adversely impact our customer service and revenues and result in increased risk of litigation or other costs. Our cybersecurity and technology infrastructure may experience errors, interruptions, delays or damage from a number of causes outside of our control including power and internet outages, hardware, software and network failures, computer viruses, malware or other destructive software, internal design, manual or usage errors, cyber-attacks, terrorism, workplace violence or wrongdoing, catastrophic events, natural disasters and severe weather conditions. While we have invested and continue to invest in technology security initiatives and disaster recovery plans, these measures cannot fully protect us from technology disruptions that could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

Our ability to attract and retain customers and compete effectively depends upon the reliability of our technology systems and network. Our cybersecurity and technology infrastructure includes technology products and services provided to us for use in our business by third party providers such as software as a service and cloud-based products and services. These third parties may store or transmit our data and may have access to information regarding our business operations, customers, and employees. Our technology systems, including any third-party applications, are constantly subject to attacks and efforts by outsiders to breach or gain access to our systems. Any disruption, failure or breach to our cybersecurity processes, technology controls or information technology infrastructure, including those impacting our computer systems and website, could adversely impact our customer service and revenues and result in increased risk of litigation or other costs. Our cybersecurity and technology infrastructure may experience errors, interruptions, failures, delays or damage from a number of causes outside of our control, including power and internet outages, hardware, software and network failures, computer viruses, malware or other destructive software, internal design, manual or usage errors, cyber-attacks, terrorism, workplace violence or wrongdoing, catastrophic events, natural disasters and severe weather conditions. While we have invested and continue to invest in technology security initiatives and disaster recovery plans, these measures cannot fully protect us from technology disruptions that could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Previous wording

Our dependence on electronic data storage, cloud-based systems, automated systems and technology, including our website, gives rise to cybersecurity risks. The techniques used to obtain unauthorized access or to disable or degrade systems change frequently, have become increasingly more complex and sophisticated, may be difficult to detect for a period of time and we may not be able to anticipate these acts or respond adequately or timely. The rapid evolution and adoption of AI technologies may intensify our cybersecurity risks. We currently maintain insurance to address certain costs associated with cyber incidents and data privacy-related concerns. However, we cannot ensure that we will continue to maintain such insurance coverage in amounts we deem sufficient, that our insurance carriers will pay on our insurance claims, or that we will not experience uncovered claims. A security breach of our systems or those of our third-party providers may cause a disruption of our business, impact our ability to attract, retain and service customers, damage our reputation and brand, expose us to a loss of information or demand for payment of ransom or result in litigation, violations of applicable privacy and other laws, and regulatory scrutiny, investigations, actions, fines or penalties, and could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

Our dependence on electronic data storage, cloud-based systems, automated systems and technology, including our website, gives rise to cybersecurity risks. The techniques used to obtain unauthorized access or to disable or degrade systems change frequently, have become increasingly more complex and sophisticated and may be difficult to detect for a period of time and we may not be able to anticipate these acts or respond adequately or timely. Further, the evolution and increased adoption of technologies such as artificial intelligence and machine learning may make anticipating threats and implementing protective measures more difficult. We currently maintain insurance to address certain costs associated with cyber incidents and data privacy-related concerns. However, we cannot ensure that we will continue to maintain such insurance coverage in amounts we deem sufficient, that our insurance carriers will pay on our insurance claims, or that we will not experience uncovered claims. A security breach of our systems or those of our third-party providers may cause a disruption of our business, impact our ability to attract, retain and service customers, damage our reputation and brand, expose us to a loss of information or to a demand for payment of ransom or result in litigation, violations of applicable privacy and other laws, and regulatory scrutiny, investigations, actions, fines or penalties, any of which could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Previous wording

A portion of our workforce operates remotely full-time or under hybrid work arrangements, and we provide these employees with expanded remote network access options to enable them to work outside of our buildings and, in some cases, on their own personal devices, which exposes us to increased cybersecurity risks. Such risks include: (i) unauthorized access to sensitive or confidential information due to company or personal devices being used to remotely access, discuss, or transmit confidential information, (ii) increased exposure to social engineering attempts such as phishing and other scams as cybercriminals may, among other things, install malicious software on our systems and equipment and access sensitive or confidential information, (iii) increased demand for IT resources, and (iv) violation of international, federal, or state-specific privacy laws. Although we have measures in place designed to mitigate our exposure to the increased risk of cybersecurity incidents, we cannot ensure that such measures will effectively prevent a cybersecurity incident. Though we currently maintain property and cyber insurance, losses due to cybersecurity incidents may exceed our insurance coverage and may have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.

Current wording

A portion of our workforce operates remotely full-time or under hybrid work arrangements, and we provide these employees with expanded remote network access options to enable them to work outside of our buildings and, in some cases, on their own personal devices, which exposes us to increased cybersecurity risks. Such risks include: (i) unauthorized access to sensitive or confidential information due to company or personal devices being used to remotely access, discuss, or transmit confidential information, (ii) increased exposure to social engineering attempts such as phishing and other scams as cybercriminals may, among other things, install malicious software on systems and equipment and access sensitive or confidential information, (iii) increased demand for information technology resources, and (iv) violation of international, federal, or state-specific privacy laws. Although we have measures in place designed to mitigate our exposure to the increased risk of cybersecurity incidents, we cannot ensure that such measures will effectively prevent a cybersecurity incident. Further, as artificial intelligence technology continues to evolve, cybersecurity attacks leveraging artificial intelligence may become more sophisticated, potentially increasing in speed, scale and automation. Though we currently maintain property and cyber insurance, losses due to cybersecurity incidents may not be covered by insurance or may exceed our insurance coverage and may have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.

Previous wording

Our business demands the use of sophisticated systems and technology. These systems and technologies must be refined, updated and replaced with more advanced systems regularly for us to meet both internal requirements as well as our customers’ demands and expectations. If we are unable to do so in a timely manner or within reasonable cost parameters, or if we are unable to appropriately and timely train our employees to operate any of these new systems, our business could suffer. We also may not achieve the benefits that we anticipate from any new system or technology and a failure to do so could result in higher than anticipated costs or could impair our results of operations.

Current wording

Our business relies on sophisticated systems and technology to remain competitive. Systems and technologies must be refined, updated and replaced with more advanced systems regularly for us to meet both internal requirements as well as our customer demands and expectations. If we are unable to do so in a timely manner or within reasonable cost parameters, or if we are unable to appropriately and timely train our employees to operate any of these new systems, our business could suffer. We also may not achieve the benefits that we anticipate from any new system or technology and a failure to do so could result in higher than anticipated costs or could impair our results of operations.

Previous wording

Technology and new market entrants may also disrupt the way we and our competitors operate. We expect our customers to continue to demand more sophisticated systems and technology-driven solutions from their suppliers. If we do not pursue technological advances or engage in innovation, or if the new technology doesn’t yield the results we expect, we may be placed at a competitive disadvantage, lose customers, incur higher costs or fail to meet our growth strategy. A failure to successfully pursue technological advances, including AI applications could have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.

Current wording

Technology and new market entrants may also disrupt the way we and our competitors operate. We expect our customers to continue to demand more sophisticated systems and technology-driven solutions. If we do not pursue technological advances or engage in innovation, or if the new technology doesn’t yield the results we expect, we may be placed at a competitive disadvantage, lose customers, incur higher costs or fail to meet our growth strategy. A failure to successfully pursue technological advances, including artificial intelligence applications could have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.

Previous wording

We use AI in our business, and its use could result in reputational harm, competitive harm, cybersecurity risks and legal liability, which could have a material adverse effect on our results of operations.

Current wording

We use artificial intelligence in our business, and its use could result in increased costs, reputational harm, competitive harm, cybersecurity risks and legal liability, which could have a material adverse effect on our business.

Previous wording

We incorporate certain machine learning AI solutions (but not generative AI) into our business operations, and these applications may become important in our operations over time. Our competitors or other third parties may incorporate AI into their operations more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate or biased or to violate intellectual property rights of third parties, our financial condition, results of operations, liquidity and cash flows may be adversely affected.

Current wording

We incorporate certain artificial intelligence solutions into our business operations, and these applications may become more important in our operations over time. Our competitors or other third parties may incorporate artificial intelligence into their operations more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. To remain competitive, we may need to increase our investment in artificial intelligence solutions, and we may not be able to adjust pricing to offset the higher costs. Additionally, if the content, analyses, or recommendations that artificial intelligence applications assist in producing are, or are alleged to be, deficient, inaccurate or biased or to violate intellectual property rights of third parties, our financial condition, results of operations, liquidity and cash flows may be adversely affected.

Previous wording

The rapid evolution of AI may result in increased cybersecurity incidents. Any such cybersecurity incidents could adversely affect our reputation and results of operations. AI also presents emerging ethical issues and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution of AI, including potential government regulation of AI and increased cybersecurity risks, will require significant resources to develop, test, implement and maintain our IT systems to minimize unintended harmful impacts. The failure to effectively utilize AI or to respond to cybersecurity threats from the use of AI could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

The rapid evolution of artificial intelligence may result in increased cybersecurity incidents. Any such cybersecurity incidents could adversely affect our reputation and results of operations. Artificial intelligence also presents emerging ethical issues and if our use of artificial intelligence becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution of artificial intelligence, including potential government regulation of artificial intelligence and increased cybersecurity risks, will require significant resources to develop, test, implement and maintain our information technology systems to minimize unintended harmful impacts. The failure to effectively utilize artificial intelligence or to respond to cybersecurity threats from the use of artificial intelligence could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Previous wording

Investment in new revenue equipment, including tractors and trailers, is a significant part of our annual capital expenditures. The price of such equipment may increase as a result of inflation, new or higher tariffs, increased demand for or decreased supply of such equipment, increased cost of materials and labor or because of current or future regulations on newly manufactured tractors, such as regulations issued by the Environmental Protection Agency (EPA) and by various state agencies, particularly the California Air Resources Board (CARB), requiring progressive reductions in exhaust emissions and a transition to zero-emission vehicles. Current regulations have increased prices for tractors and maintenance costs and may continue to do so in the future. In addition, as we purchase new revenue equipment as part of our normal replacement cycle each year, we rely on the used equipment market to dispose of our older equipment. Oversupply in the transportation industry, higher maintenance or operating costs associated with older equipment, as well as adverse economic conditions, can negatively impact the demand for used equipment and, therefore, reduce the value we can obtain for used equipment. If we are unable to sell our used equipment at or above our salvage value, the resulting losses could have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.

Current wording

Investment in new revenue equipment, including tractors and trailers, is a significant part of our annual capital expenditures. The price of such equipment may increase as a result of inflation, new or higher tariffs, increased demand for or decreased supply of such equipment, increased cost of materials and labor or because of current or future regulations on newly manufactured tractors, such as regulations issued by the Environmental Protection Agency (EPA) and by various state agencies, particularly the California Air Resources Board (CARB), requiring progressive reductions in exhaust emissions and a transition to zero-emission vehicles. Current regulations have increased prices for tractors and maintenance costs and may continue to do so in the future. In addition, as we purchase new revenue equipment as part of our normal replacement cycle each year, we rely on the used equipment market to dispose of our older equipment. Oversupply in the transportation industry, higher maintenance or operating costs associated with older equipment, as well as adverse economic conditions, can negatively impact the demand for used equipment and, therefore, reduce the value we can obtain for our used equipment. If we are unable to sell our used equipment at or above our salvage value, the resulting losses could have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.

Previous wording

Changes in U.S. international trade relationships, including the imposition of new or higher tariffs, may adversely impact our customers, our industry, and our business.

Current wording

Changes in U.S. trade policy and the impact of tariffs may continue to adversely impact our customers, our industry, and our business.

Previous wording

We transport a significant number of shipments that have either been imported into the U.S. or are destined for export from the U.S. The U.S. government has proposed significant changes in U.S. trade policy, including the imposition of new or higher tariffs on goods entering the U.S., including from Mexico and Canada. Certain foreign governments either have taken or are threatening to take retaliatory actions in response. Any increase in tariffs or customs duties or renegotiation of U.S. trade agreements, or any other action that could have a negative impact on international trade, including corresponding actions taken by other countries in response to U.S. governmental actions, could cause a reduction in the volume of shipments transported in our network or could increase the cost to us of goods and materials used in our business, which could have a material adverse effect on our financial condition, results of operation, liquidity and cash flows.

Current wording

We transport a significant number of shipments that have either been imported into the U.S. or are destined for export from the U.S. The U.S. government has made significant changes in U.S. trade policy, including the imposition of a baseline tariff on product imports from almost all countries and the potential for higher tariffs on certain other countries. Certain foreign governments either have taken or are threatening to take retaliatory actions in response. These changes in U.S. trade policy and tariffs have decreased demand for our services and have caused uncertainty and volatility in financial markets. Tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S. and global financial and economic conditions, declining consumer confidence, inflation or an economic slowdown. These tariffs or other trade restrictions, including corresponding actions taken by other countries in response to U.S. governmental actions or continuing uncertainty around the timing or scale of tariffs, could continue to decrease demand for our services or could increase the cost to us of equipment, goods and materials used in our business, which could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Previous wording

We may experience capacity constraints due to increased demand for transportation services and decaying highway and energy infrastructure. Poor infrastructure conditions and roadway congestion could slow service times, reduce our operating efficiency and increase maintenance expense. Some states have taken infrastructure funding measures into their own hands and have explored or instituted road-usage programs, truck-only tolling, congestion pricing, and fuel tax increases. Infrastructure constraints and measures to fund infrastructure improvements could materially adversely affect our financial condition, results of operations, liquidity and cash flows.

Current wording

We may experience capacity constraints due to increased demand for transportation services and decaying highway and energy infrastructure. Poor infrastructure conditions and roadway congestion could slow service times, reduce our operating efficiency and increase maintenance expenses. Some states have taken infrastructure funding measures into their own hands and have explored or instituted road-usage programs, truck-only tolling, congestion pricing, and fuel tax increases. Infrastructure constraints and measures to fund infrastructure improvements could materially adversely affect our financial condition, results of operations, liquidity and cash flows.

Previous wording

Our business is highly capital intensive. Our net capital expenditures for 2024 were approximately $1 billion. Additionally, we anticipate net capital expenditures in 2025 in excess of $700 million, subject to the ongoing evaluation of market conditions. We depend on cash flows from operations, borrowings under our credit facilities and operating and finance leases. If we are unable to generate sufficient cash from operations and obtain sufficient financing on favorable terms in the future, we may have to limit our growth, enter into less favorable financing arrangements or operate our tractors and trailers for longer periods prior to replacement, possibly increasing our maintenance costs. The amount and timing of capital investments depend on various factors, including anticipated volume levels and the price and availability of appropriate-use property for service facilities and newly manufactured tractors. If anticipated service facilities and/or fleet requirements differ materially from actual usage, we may have too much or too little capacity. Any of these could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

Our business is highly capital intensive. Our net capital expenditures for 2025 were approximately $544 million and we anticipate net capital expenditures in 2026 of approximately $350 million to $400 million, subject to the ongoing evaluation of market conditions. We depend on cash flows from operations, borrowings under our credit facilities and operating and finance leases. If we are unable to generate sufficient cash from operations and obtain sufficient financing on favorable terms in the future, we may have to limit our growth, enter into more restrictive or higher cost financing arrangements or operate our tractors and trailers for longer periods prior to replacement, possibly increasing maintenance costs, any of which could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Previous wording

We must maintain certain financial and other restrictive covenants under our credit agreements, including among others, a maximum consolidated net lease adjusted leverage ratio. If we fail to comply with any of the covenants under our credit agreements, we will be in default under the agreements which could cause cross-defaults under other financial arrangements. In the event of any such default, if we fail to obtain replacement financing or amendments to or waivers under the financing arrangement, our financing sources could cease making further advances, cease issuing letters of credit required under our insurance programs and declare our debt to be immediately due and payable. If acceleration occurs, we may have difficulty borrowing sufficient additional funds to refinance the accelerated debt or obtain required letters of credit, or we may need to issue securities which would dilute stock ownership. Even if new financing is made available to us, the terms may not be acceptable. A default under our credit agreements could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

We must satisfy certain financial and other restrictive covenants under our credit agreements, including among others, a maximum consolidated net lease adjusted leverage ratio, as defined in our credit agreements. If we fail to comply with any of the covenants under our credit agreements, we will be in default under the agreements which could cause cross-defaults under other financial arrangements. In the event of any such default, if we fail to obtain replacement financing or amendments to or waivers under the financing arrangement, our financing sources could cease making further advances, cease issuing letters of credit required under our insurance programs and declare our debt to be immediately due and payable. If acceleration occurs, we may have difficulty borrowing sufficient additional funds to refinance the accelerated debt or obtain required letters of credit, or we may need to issue securities which would dilute stock ownership. Even if new financing is made available to us, the terms may not be acceptable. A default under our credit agreements could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Previous wording

We are required to make significant estimates and assumptions in the preparation of our financial statements. These estimates and assumptions may not be accurate and are subject to change.

Current wording

We are required to make significant estimates and assumptions in the preparation of our financial statements. These estimates and assumptions may not be accurate and are subject to change. Our internal controls over financial reporting may not prevent or detect all misstatements in our financial statements.

Previous wording

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles requires our management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of income and expense during the reported periods. Incorrect underlying estimates and assumptions or events that require us to revise our previous estimates or assumptions could have a material adverse effect on our financial condition and results of operations.

Current wording

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles requires our management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of income and expense during the reported periods. Our internal controls over financial reporting provide reasonable, not absolute, assurance of accurate financial statements and may not prevent or detect misstatements due to inherent limitations such as human error, information technology system failures, or fraud. Inadequate internal controls or incorrect underlying estimates and assumptions or events that require us to revise our previous estimates or assumptions could have a material adverse effect on our financial condition and results of operations.

Previous wording

We depend on the efforts and abilities of our senior management, and we believe their knowledge would be difficult to replicate. The future success of our business will continue to depend in part on our ability to retain our current management team and to recruit, hire, develop and retain highly qualified personnel in the future. Competition for senior management is intense, and most members of our senior management do not have employment agreements. Certain members of senior management are subject to non-compete and non-solicitation agreements; however, there is no assurance that such agreements will be enforced as written or that they will be effective to prevent members of senior management from working for a competitor or soliciting our customers. The loss of the services of any of our senior management could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. Inadequate succession planning or the unexpected departure of a member of senior management would require our remaining executive officers to divert immediate and substantial attention to fulfilling the duties of the departing executive and to seeking a replacement. The inability to adequately fill vacancies in our senior management positions on a timely basis could negatively affect our ability to implement our business strategy and thus materially adversely affect our financial condition, results of operations, liquidity and cash flows.

Current wording

We depend on the efforts and abilities of our management, and we believe their knowledge would be difficult to replicate. Our success is dependent on our ability to retain our current management team and to recruit, hire, develop and retain highly qualified personnel in the future. Competition for key management is intense, and qualified individuals are in high demand, such that we may incur significant costs to attract and retain them. Other than our Chief Executive Officer, members of our management team do not have employment agreements. Certain of our key employees are subject to non-compete and non-solicitation agreements; however, there is no assurance that such agreements will be enforced as written or that they will be effective to prevent those employees from working for a competitor or soliciting our customers. The loss of the services of any of our key employees could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. Inadequate succession planning or the unexpected departure of a key employee would require our remaining management team to divert immediate and substantial attention to fulfilling the duties of the departing employee and to seeking a replacement. The inability to adequately fill vacancies on a timely basis could negatively affect our ability to implement our business strategy and thus materially adversely affect our financial condition, results of operations, liquidity and cash flows.

Previous wording

We believe that the Company’s corporate reputation and the positive image of our brand are valuable assets. As use of social media becomes more prevalent, our susceptibility to risks related to adverse publicity, whether or not justified, increases. Adverse publicity regarding labor relations, legal matters, cybersecurity and data privacy events, truck accidents, cargo theft, environmental issues and similar matters, even when based on erroneous information, could have a negative impact on our reputation and may result in the loss of customers and our inability to secure new customer relationships. The immediacy of certain social media outlets precludes us from having real-time control over postings related to the Company, whether matters of fact or opinion. Information distributed via social media could result in immediate unfavorable publicity that we do not have the ability to reverse. Unfavorable publicity, regardless of its cause or source, could result in damage to our reputation and adversely impact our financial condition, results of operations, liquidity and cash flows.

Current wording

We believe that our corporate reputation and the positive image of our brand are valuable assets. As social media usage increases, our susceptibility to risks related to adverse publicity, whether or not justified, increases. Adverse publicity regarding labor relations, legal matters, cybersecurity and data privacy events, truck accidents, cargo theft, environmental issues and similar matters, even when based on erroneous information, could have a negative impact on our reputation and may result in the loss of customers and our inability to secure new customer relationships. The immediacy of certain social media outlets precludes us from having real-time control over postings related to the Company, whether matters of fact or opinion. Information distributed via social media could result in immediate unfavorable publicity that we do not have the ability to reverse. Unfavorable publicity, regardless of its cause or source, could result in damage to our reputation and adversely impact our financial condition, results of operations, liquidity and cash flows.

Previous wording

Our past acquisitions, as well as any future acquisitions we may make, may be unsuccessful or result in other risks such as the failure to realize the anticipated benefits of such acquisitions or the disruption of our business due to such acquisitions.

Current wording

Our acquisitions may be unsuccessful or result in other risks such as the failure to realize the anticipated benefits of such acquisitions or the disruption of our business due to such acquisitions.

Previous wording

Unanticipated issues in the assimilation and consolidation of IT, communications, and other systems, including additional systems training and other labor inefficiencies;

Current wording

Unanticipated issues in the assimilation and consolidation of information technology, communications, and other systems, including additional systems training and other labor inefficiencies;

Previous wording

Potential failure of the due diligence processes to identify significant issues with legal and financial liabilities and contingencies, among other things.

Current wording

Potential failure of the due diligence processes to identify significant issues with legal, financial, or environmental liabilities and contingencies, among other things.

Previous wording

In the event that we do not realize the anticipated benefits of an acquisition or if the acquired business is not successfully integrated, there could be a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

In the event that we do not realize the anticipated benefits of an acquisition, if we incur unexpected liabilities with an acquisition, or if the acquired business is not successfully integrated, there could be a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Previous wording

Tractor engines that comply with the EPA emission-control design requirements have generally been more expensive, less fuel-efficient and have increased maintenance costs compared to engines in tractors manufactured before these requirements became effective. If we are unable to offset the higher costs associated with this equipment with higher freight rates or improved fuel economy, our financial condition, results of operations, liquidity and cash flows could be materially adversely affected.

Current wording

Tractor engines that comply with emission-control regulatory requirements have generally been more expensive, less fuel-efficient and have increased maintenance costs. If we are unable to offset the higher costs associated with this equipment with higher freight rates or improved fuel economy, our financial condition, results of operations, liquidity and cash flows could be materially adversely affected.

Previous wording

At this point, there are virtually no zero-emissions vehicles widely available that are suitable replacements for current technology used in less-than-truckload operations. In addition, there does not appear to be sufficient infrastructure in place to support an electric vehicle fleet operation throughout our current terminal network. If zero-emission vehicles are not available or not commercially viable for the less-than-truckload market, we may be required to modify or curtail our operations in California or other states that may adopt similar regulations. During any transition to zero-emission trucks, due to the mandates on manufacturers limiting diesel engine sales, we may be forced to continue using older model diesel trucks that may require higher maintenance costs or be less reliable. The transition to utilizing zero-emission vehicles could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

At this point, there are virtually no zero-emissions vehicles widely available that are suitable replacements for current technology used in less-than-truckload operations. In addition, there does not appear to be sufficient infrastructure in place to support an electric vehicle fleet operation throughout our current terminal network. If zero-emission vehicles are not available or not commercially viable for the less-than-truckload market, we may be required to modify or curtail our operations in California or other states that have adopted or may adopt similar regulations. During any transition to zero-emission trucks, due to the mandates on manufacturers limiting diesel engine sales, we may be forced to continue using older model diesel trucks that may require higher maintenance costs or be less reliable. Compliance with EPA, CARB, and other federal and state regulations regarding the transition to utilizing zero-emission vehicles could increase our equipment costs and may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Previous wording

The DOT and various state agencies exercise broad powers over our business, generally governing such activities as authorization to engage in motor carrier operations, safety and financial reporting. We may also become subject to new or more restrictive regulations imposed by the DOT, the Occupational Safety and Health Administration, the Food and Drug Administration or other authorities relating to engine exhaust emissions, safety performance and measurements, driver hours of service, drug and alcohol testing, food safety, security, ergonomics, as well as other unforeseen matters. Compliance with such regulations could substantially impair equipment productivity and increase our costs.

Current wording

The DOT and various state agencies exercise broad powers over our business, generally governing such activities as authorization to engage in motor carrier operations, safety and financial reporting. We may also become subject to new or more restrictive regulations imposed by the DOT, the Occupational Safety and Health Administration, the Food and Drug Administration or other authorities relating to engine exhaust emissions, safety performance and measurements, driver hours of service, immigration, drug and alcohol testing, food safety, security, ergonomics, as well as other unforeseen matters. Compliance with such regulations could substantially impair equipment productivity and increase our costs.

Previous wording

Our business is subject to increased legislative and regulatory efforts regarding data protection and transparency in how data is used and stored. State governments have enacted and may enact in the future data protection laws, such as the California Consumer Privacy Act of 2018 as amended and extended by the California Privacy Rights Act in 2020. As a transportation and logistics provider, we collect and process significant amounts of data daily. Complying with data protection laws may increase our compliance costs or require alterations to our data handling practices. The increasing scope and complexity and the uncertainty of the interpretation and enforcement of these laws create legal risk. Violations or noncompliance with data protection laws could result in significant liability from governmental or civil actions and negative impacts to our reputation, financial condition, results of operations, liquidity and cash flows.

Current wording

Our business is subject to increased legislative and regulatory efforts regarding data protection and transparency in how data is used and stored. State governments have enacted and may enact in the future data protection laws, such as the California Consumer Privacy Act of 2018 as amended and extended by the California Privacy Rights Act in 2020. The reporting requirements imposed by data protection and transparency laws may differ in scope and applicability and may result in conflicting obligations. As a transportation and logistics provider, we collect and process significant amounts of data daily. Monitoring and complying with data protection laws may increase our compliance costs or require alterations to our data handling practices. The increasing scope and complexity and the uncertainty of the interpretation and enforcement of these laws create legal risk. Violations or noncompliance with data protection laws could result in significant liability from governmental or civil actions and negative impacts to our reputation, financial condition, results of operations, liquidity and cash flows.

Previous wording

Our operations are subject to environmental laws and regulations dealing with the handling of hazardous materials, underground fuel storage tanks and discharge and retention of storm water. We operate in industrial areas where truck terminals and other industrial activities are located and where groundwater or other forms of environmental contamination may have occurred. Under existing law, we could be held responsible for costs related to environmental contamination at or emanating from our current and past facilities and at third party waste disposal sites. Our operations involve the risks of fuel spillage or seepage, environmental damage and hazardous waste disposal and costs associated with the leakage or discharge of hazardous materials we transport for our customers, among others. Violations of applicable environmental laws or regulations or spills or other accidents involving hazardous substances have occurred in the past and can occur in the future and may subject us to cleanup costs, liabilities not covered by insurance, substantial fines or penalties and to civil and criminal liability, any of which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.

Current wording

Our operations are subject to environmental laws and regulations dealing with the handling of hazardous materials, underground fuel storage tanks and discharge and retention of storm water. We operate in industrial areas where truck terminals and other industrial activities are located and where groundwater or other forms of environmental contamination may have occurred. Under existing law, we could be held responsible for costs related to environmental contamination at, or emanating from, our current and past facilities and at third party waste disposal sites. Our operations involve the risks of fuel spillage or seepage, environmental damage and hazardous waste disposal and costs associated with the leakage or discharge of hazardous materials we transport for our customers, among others. Violations of applicable environmental laws or regulations or spills or other accidents involving hazardous substances have occurred in the past, can occur in the future, and may subject us to cleanup costs, liabilities not covered by insurance, substantial fines or penalties and to civil and criminal liability, any of which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.

Previous wording

In addition, there is global scientific consensus that emissions of greenhouse gases (GHG) continue to alter the composition of Earth’s atmosphere in ways that are affecting and are expected to continue to affect the global climate. As these climate change concerns become more prevalent, federal, state and local governments and our customers are increasingly sensitive to these issues. This increased focus may result in new legislation, taxes, regulations and customer requirements, such as limits on vehicle weight and size and restrictions on GHG emissions, which could negatively affect us. In addition, several states, including states where we conduct business, have adopted various GHG disclosure and reduction programs. The EPA and the states could also further regulate GHG emissions. These regulations could increase the costs of replacing and maintaining tractors, and cause us to incur additional taxes and operating costs and capital expenditures to make changes to our operations in order to comply with these regulations. The regulations could also cause delays or disruptions in our operations and could reduce our revenues. We are subject to increasing investor and customer sensitivity to sustainability issues, and we may be subject to additional requirements related to shareholder proposals, customer-led initiatives, or our customers’ efforts to comply with environmental programs. Until the timing, scope, and extent of any future regulation or customer requirements become known, we cannot predict their effect on our cost structure, business, or results of operations. We could lose revenue if our customers divert business from us because we have not complied with their sustainability requirements. These costs, changes and loss of revenue could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Current wording

In addition, there is global scientific consensus that emissions of greenhouse gases (GHG) continue to alter the composition of Earth’s atmosphere in ways that are affecting, and are expected to continue to affect, the global climate. As these climate change concerns become more prevalent, federal, state and local governments and our customers are increasingly sensitive to these issues. Increased awareness and negative publicity regarding greenhouse gas emissions from transportation companies may damage our reputation and could reduce demand for our services. This increased focus may result in new legislation, taxes, regulations and customer requirements, such as limits on vehicle weight and size and restrictions on GHG emissions, which could negatively affect us. In addition, several states, including states where we conduct business, have adopted various GHG disclosure and reduction programs. The EPA and the states could also further regulate GHG emissions. These regulations could increase the costs of replacing and maintaining tractors, and cause us to incur additional taxes and operating costs and capital expenditures to make changes to our operations in order to comply with these regulations. The regulations could also cause delays or disruptions in our operations and could reduce our revenues. We are subject to increasing investor and customer sensitivity to sustainability issues, and we may be subject to additional requirements related to shareholder proposals, customer-led initiatives, or our customers’ efforts to comply with environmental programs. Until the timing, scope, and extent of any future regulation or customer requirements become known, we cannot predict their effect on our cost structure, business, or results of operations. We could lose revenue if our customers divert business from us because we have not complied with their sustainability requirements. These costs, changes and loss of revenue could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.