PAMT CORP

PAMT CORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

September 30, 2025

NOTE A: BASIS OF PRESENTATION

In accordance with generally accepted accounting principles (“GAAP”) and applicable rules of the Securities and Exchange Commission, the information reported in this Quarterly Report on Form10-Q for PAMT CORP and its legally distinct subsidiaries, unless otherwise indicated, is presented on a consolidated basis. Unless the context otherwise requires, all references in this Quarterly Report on Form10-Q to the “Company,” “we,” “our,” or “us” mean PAMT CORP and its consolidated subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form10-Q and Article10 of Regulation S-X. Accordingly, they donot include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In management’s opinion, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included. The consolidated balance sheet at* December 31, 2024has been derived from the audited financial statements at that date but doesnot* include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for thenine-month period ended* September 30, 2025arenot* necessarily indicative of the results that* maybe expected for the year ending December 31, 2025.For further information, refer to the consolidated financial statements and the footnotes thereto included in the Company’s annual report on Form10*-K for the year ended* December 31, 2024.*

NOTE B: RECENT ACCOUNTING PRONOUNCEMENTS

In* December 2023,the FASB issued ASU2023*-09, Improvements to Income Tax Disclosures. ASU2023-09 was issued to enhance the transparency and decision usefulness of income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The guidance is effective for annual reporting periods beginning after* December 15, 2024,with early adoption permitted. The Company has evaluated the new guidance and doesnot* expect it to have a material impact on its financial condition, results of operations, or cash flows.

In* November 2024,the FASB issued ASU2024*-03, Disaggregation of Income Statement Expenses. ASU2024-03 was issued to enhance the transparency of financial reporting by requiring public business entities to provide more detailed disclosures about certain operating expenses. The FASB also issued ASU2025-01 in* Januaryclarifying that ASU2024*-03 is effective for public business entities for annual reporting periods beginning after* December 15, 2026,and interim reporting periods within annual reporting periods beginning after December 15, 2027.Early adoption is permitted. The Company has evaluated the new guidance and doesnot* expect it to have a material impact on its financial condition, results of operations, or cash flows.

The Company has reviewed other recently issued accounting standards and determined they arenot expected to have a material impact on its consolidated financial statements.

NOTE C: REVENUE RECOGNITION

The Company has a single performance obligation to transport our customers’ freight from a specified origin to a specified destination. The Company has the discretion to choose to self-transport or to arrange for alternate transportation to fulfill the performance obligation. Where the Company decides to self-transport the freight, the Company classifies the service as truckload services, and where the Company arranges for alternate transportation of the freight, the Company classifies the service as brokerage and logistics services. In either case, the Company is paid a rate to transport freight from its origin location to a specified destination. Because the primary factors influencing revenue recognition, including performance obligation, customer base, and timing of revenue recognition are the same for both of its service categories, the Company utilizes the same revenue recognition method throughout its operations.

Company revenue is generated from freight transportation services performed utilizing heavy truck trailer combinations. While various ownership arrangements* mayexist for the equipment utilized to perform these services, including Company-owned or leased, owner-operator owned, andthird*-party carriers, revenue is generated from the same base of customers. Contracts with these customers establish rates for services performed, which are predominantly rates that will be paid to pick up, transport and drop off freight at various locations. In addition to transportation, revenue is also awarded for various accessorial services performed in conjunction with the base transportation service. The Company also has other revenue categories that arenot discussed in this note or broken out in our consolidated statements of operations due to their immaterial amounts.

In fulfilling the Company’s obligation to transport freight from a specified origin to a specified destination, the control of freight is transferred to the Company at the point it has been loaded into the driver’s trailer, the doors are sealed and the driver has signed a bill of lading, which is the basic transportation agreement that establishes the nature, quantity and condition of the freight loaded, responsibility for invoice payment, and pickup and delivery locations. The Company’s revenue is generated, and our customer receives benefit, as the freight progresses towards delivery locations. In the event the Company’s customer cancels the shipment at some point prior to the final delivery location and re-consigns the shipment to an alternate delivery location, the Company is entitled to receive payment for services performed for the partial shipment. Shipments are generally conducted over a relatively short time span, generallyone tothree days; however, freight is sometimes stored temporarily in our trailer atone of our drop yard locations or at a location designated by a customer. The Company’s revenue is categorized as either Freight Revenue or Fuel Surcharge Revenue, and both are earned by performing the same freight transportation services, as discussed further below.

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Freight Revenue – revenue generated by the performance of the freight transportation service, including any accessorial service, provided to customers.

Fuel Surcharge Revenue – revenue designed to adjust freight revenue rates to an agreed-upon base cost for diesel fuel. Diesel fuel prices can fluctuate widely during the term of a contract with a customer. At the point that freight revenue rates are negotiated with customers, a sliding scale is agreed upon that systematically adjusts diesel fuel costs to an agreed-upon base amount. In general, as fuel prices increase, revenue from fuel surcharge increases, so that diesel fuel cost is adjusted to the approximate agreed upon base amount.

Revenue is recognized over time as the freight progresses towards its destination and the transportation service obligation is fulfilled. For loads picked up during the reporting period, but delivered in a subsequent reporting period, revenue is allocated to each period based on the transit time in each period as a percentage of total transit time. The contract asset, or the amount of remaining performance obligation relating to loads in process, at* September 30, 2025was $3.1 million compared to $2.3 million at December 31, 2024.Recorded contract assets are included in the accounts receivable line item of the balance sheet. Corresponding liabilities are recorded in the accrued expenses and other liabilities line items for the estimated expenses on these same in-process loads. The Company hadno contract liabilities associated with our operations as of September 30, 2025and December 31, 2024,*respectively.

The Company recognizes operating lease revenue from leasing tractors and related equipment tothird parties, including independent contractors. Operating lease revenue from rental operations is recognized in revenue as it is earned. Upon lease termination, losses* may*be incurred in the recovery of leased equipment which are recognized as an expense in the period in which they are incurred.

NOTE D: MARKETABLE EQUITY SECURITIES

The Company’s investments in marketable securities consist of equity securities with readily determinable fair values. The cost of securities sold is based on the specific identification method, and interest and dividends on securities are included in non-operating income.

Marketable equity securities are carried at fair value, with gains and losses in fair market value included in the determination of net income. The fair value of marketable equity securities is determined based on quoted market prices in active markets, as described in Note J.

The following table sets forth market value, cost, and unrealized gains on equity securities as of* September 30, 2025and December 31, 2024.*

The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities as of* September 30, 2025and December 31, 2024.*

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The following table shows the Company’s net realized gains (losses) during thethree andnine months ending on* September 30, 2025and2024,* respectively, on certain marketable equity securities.

For the quarter ended* September 30, 2025,the Company recognized dividends received of approximately $316,000 in non-operating income in its condensed consolidated statements of operations. For thenine* months ended* September 30, 2025,*the Company recognized dividends received of approximately $1,150,000 in non-operating income in its condensed consolidated statements of operations.

The Company’s equity securities are periodically used as collateral against any outstanding margin account borrowings. As of* September 30, 2025,the Company hadno outstanding borrowings under its margin account, which isno* change from* December 31, 2024*when the Company hadno outstanding borrowings under the same account. Margin account borrowings, when utilized, are used for the purchase of marketable equity securities and as a source of short-term liquidity and are included in accrued expenses and other liabilities on our condensed consolidated balance sheets.

Our marketable equity securities portfolio had a net unrealized pre-tax gain in market value of approximately $1,392,000 during thethird quarter of2025, and a net unrealized pre-tax gain in market value of approximately $2,365,000 during thethird quarter of2024, which were reported as non-operating income in its condensed consolidated statements of operations for the respective periods.

NOTE E: STOCK-BASED COMPENSATION

The Company maintains a stock incentive plan under which incentive and non-qualified stock options and other stock awards* maybe granted. On February 15, 2024,the Company’s Board of Directors adopted, and on October 31, 2024,our shareholders approved, the2024* Equity Incentive Plan, as amended (the*“2024* Plan”). Under the2024 Plan,1,600,000 shares are reserved for the issuance of stock awards to employees, officers, directors, consultants and advisors of the Company. The stock option exercise price and the restricted stock unit purchase price under the2024 Plan shallnot be less than 100% of the fair market value of the Company’s common stock on the date the award is granted. The fair market value is determined by the closing price of the Company’s common stock, on its primary exchange, on the same date that the option or other award is granted.

In* August 2025,the Company granted awards of restricted stock units representing 100,000 shares of common stock to its Chief Executive Officer under the2024* Plan. The stock award had a grant date fair value of $12.15 per share, based on the closing price of the Company’s stock on the date of grant. The awarded share units will vest infour equal installments beginning on* February 9, 2026.*

Prior to the2024 Plan, the Company maintained the2014 Amended and Restated Stock Option and Incentive Plan (the*“2014* Plan”), which was adopted by the Company’s Board of Directors in* March 2014and approved by the Company’s shareholders in May 2014.Under the2014* Plan,3,000,000 shares (as adjusted for the Company’s 2-for-1 forward splits of its common stock paid in* August 2021and March 2022,respectively) were reserved for the issuance of stock awards to directors, officers, key employees, and others. The stock option exercise price and the restricted stock purchase price under the2014* Plan werenot to be less than 85% of the fair market value of the Company’s common stock on the date the award is granted. The fair market value was determined by the closing price of the Company’s common stock, on its primary exchange, on the same date that the option or award was granted. The2014 Plan expired on* March 13, 2024,andno* further grants* maybe made under this plan. All outstanding unvested awards granted under the2014* Plan, however, remain subject to the terms and conditions of the2014 Plan.

The total grant date fair value of stock vested during thefirst nine months of2025 was approximately $437,000. The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during thefirst nine months of2025, was approximately $325,000 and includes approximately $45,000 recognized as a result of the issuance of shares to certain non-employee directors. The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $0.01 during thefirst nine months of2025. As of* September 30, 2025,the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $2,178,000, which is being amortized on a straight-line basis over the remaining vesting period. As a result, the Company expects to recognize approximately $228,000 in additional compensation expense related to unvested stock awards during the remainder of2025* and to recognize approximately $644,000, $545,000, and $537,000 in additional compensation expense related to unvested stock-based awards during the years2026, 2027, and2028, respectively.

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The total grant date fair value of stock vested during thefirst nine months of2024 was approximately $928,000. The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during thefirst nine months of2024, was approximately $550,000 and included approximately $38,000 recognized as a result of the issuance of shares to certain non-employee directors. The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $0.02 during thefirst nine months of2024. As of* September 30, 2024,*the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $1,536,000, which was being amortized on a straight-line basis over the remaining vesting period.

A summary of the status of the Company’s non-vested stock awards as of* September 30, 2025,and changes during thenine* months ended* September 30, 2025,*is as follows:

NOTE F: SEGMENT INFORMATION

The Company follows the guidance provided by ASC Topic280, Segment Reporting,in its identification of operating segments. The Company has determined that it has a total oftwo operating segments whose primary operations can be characterized as either Truckload Services or Brokerage and Logistics Services; however, in accordance with the aggregation criteria provided by FASB ASC Topic280, the Company has determined that the operations of thetwo operating segments can be aggregated into a single reportable segment. Both our truckload operations and our brokerage/logistics operations have similar qualitative and quantitative economic characteristics and are impacted by virtually the same economic factors. Based on the Company’s segment identification, interpretation of the aggregation criteria outlined in ASC280-10-50-11, and the similar qualitative and quantitative economic characteristics of the Company’s operating segments, the operations of the Company are aggregated into a single motor carrier segment. The Company’s chief operating decision maker, the Chief Executive Officer, utilizes the metrics of net income and operating ratio to evaluate company performance and in competitive analysis when comparing to competing companies.

Truckload Services revenues and Brokerage and Logistics Services revenues, each before fuel surcharges, were as follows:

The Company provides truckload transportation services as well as brokerage and logistics services to customers throughout the United States and portions of Canada and Mexico. The table below presents revenue dollars and percentages, each including fuel surcharges, by geographic area:

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NOTE G: TREASURY STOCK

The Company’s stock repurchase program has been extended and expanded several times, most recently in* July 2023,when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011authorization. As of September 30, 2025,*there remain 474,016 shares of common stock authorized for repurchase under this plan.

On* April 3, 2025,the Company commenced a tender offer to repurchase up to 435,000 shares of the Company’s outstanding common stock at a price ofnot* greater than $17.00 nor less than $14.00 per share. On* April 11, 2025,the Company amended the terms of the tender offer to increase the minimum purchase price for shares purchased in the tender offer to $14.50 per share. Following the expiration of the tender offer on May 1, 2025,the Company accepted 870,000 shares of its common stock for purchase at $17.00 per share, at an aggregate purchase price of approximately $14.8 million, excluding fees and expenses related to the offer. The number of shares purchased by the Company reflects the Company’s right to purchase additional shares in the tender offer up to an additional 2% of its outstanding shares. The Company funded the purchase of the accepted shares tendered with available cash and accounted for the repurchase of these shares as treasury stock on the Company’s condensed consolidated balance sheet as of September 30, 2025.*

The Company accounts for treasury stock using the cost method. As of* September 30, 2025,*1,451,586 shares were held in the treasury at an aggregate cost of approximately $28,924,000.

NOTE H: EARNINGS PER SHARE

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by adjusting the weighted average number of shares of common stock outstanding by common stock equivalents attributable to dilutive restricted stock. The computation of diluted earnings per share doesnot assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect on earnings per share. The computations of basic and diluted earnings per share were as follows:

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NOTE I: INCOME TAXES

The Company and its subsidiaries are subject to U.S. and Canadian federal income tax laws as well as the income tax laws of multiple state jurisdictions. The major tax jurisdictions in which the Company operates generally provide for a deficiency assessment statute of limitations period ofthree years, and as a result, the Company’s tax years 2021 and forward remain open to examination in those jurisdictions.

In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of ASC740-10-30, Accounting for Income Taxes, weighs all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is necessary. If negative conditions exist which indicate a valuation allowance might be necessary, consideration is then given to what effect the future reversals of existing taxable temporary differences and the availability of tax strategies might have on future taxable income to determine the amount, if any, of the required valuation allowance. As of* September 30, 2025,management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance wasnot* necessary.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely thannot that the position will be sustained on examination by taxing authorities, based on the technical merits of the position. As of* September 30, 2025,an adjustment to the Company’s condensed consolidated financial statements for uncertain tax positions hasnot* been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws. The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense. During thenine months ended* September 30, 2025and2024,* the Company hasnot recognized or accrued any interest or penalties related to uncertain income tax positions.

The Company’s effective income tax rates were 25.3% and 23.8% for thenine months ended* September 30, 2025and2024,* respectively. Our effective tax rate for thenine months ended* September 30, 2025*differs from amounts computed by applying the United States federal statutory rates to pre-tax income primarily due to state income taxes.

On* July 4, 2025,theOne Big Beautiful Bill Act* (the “OBBBA”) was enacted into law. Among other provisions, the legislation reinstated100% bonus depreciation for qualifying property acquired and placed in service after* January 19, 2025,and modified the limitation on business interest expense under Internal Revenue Code Section163*(j) to be based on30% of adjusted taxable income determined using an EBITDA measure, rather than EBIT. These provisions are effective for tax years beginning after* December 31, 2024,and therefore apply to the Company’s2025* tax year.

As a result of these provisions, the Company recorded accelerated depreciation deductions and recognized previously disallowed interest expense, which collectively increased current-year deductible expenses and are expected to result in a projected federal net operating loss position for the year ending* December 31, 2025.The enactment of the OBBBA resulted in a material impact to the Company’s current and deferred income tax balances reflected on the condensed consolidated balance sheet and income statement for the quarter ended September 30, 2025.The net operating loss partially offset previously recorded deferred tax balances, resulting in a net decrease of $8.5 million in deferred tax liabilities as of September 30, 2025compared to December 31, 2024.*

The effects of the OBBBA have been reflected in the Company’s current and deferred tax calculations as of* September 30, 2025,in accordance with ASC740*-10-45-15, which requires the Company to recognize the impact of enacted changes in tax laws on both current tax expense and deferred tax assets and liabilities in the period of enactment, and to provide sufficient disclosure so that users of the financial statements understand the effect of such changes on the Company’s financial position and results of operations.

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NOTE J: FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash and cash equivalents, marketable equity securities, accounts receivable, trade accounts payable, and borrowings.

The Company follows the guidance for financial assets and liabilities measured on a recurring basis. This guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describesthree levels of inputs that* may*be used to measure fair value:

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

At* September 30, 2025,*the following items are measured at fair value on a recurring basis:

The Company’s investments in marketable securities are recorded at fair value based on quoted market prices. The carrying value of other financial instruments, including cash, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities.

The carrying amount for the line of credit approximates fair value because the line of credit interest rate is adjusted frequently.

For long-term debt other than the lines of credit, the fair values are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The carrying value and estimated fair value of this other long-term debt at* September 30, 2025*was as follows:

The Company hasnot elected the fair value option for any of its financial instruments.

NOTE K: NOTES PAYABLE

During thefirst nine months of2025, the Company’s subsidiaries entered into installment obligations totaling approximately $76.3 million for the purpose of purchasing revenue equipment and other assets. These obligations are payable in monthly installments and are recorded in long-term debt and current maturities on the condensed consolidated balance sheets. The terms of these obligations range from 60 to 84 months.

NOTE L: COMMITMENTS AND CONTINGENCIES

We are involved in certain claims and pending litigation arising from the ordinary conduct of business. We also provide accruals for claims within our self-insured retention amounts. Since* September 1, 2020,we have been self-insured for certain layers of auto liability claims in excess of $2.0 million. We currently specifically reserve for claims that are expected to exceed $2.0 million when fully developed, based on the facts and circumstances of those claims. Based on our knowledge of the facts, and in certain cases, opinions of outside counsel, we believe the resolution of such claims and pending litigation willnot* have a material effect on our financial position, results of operations or cash flows. However, if we experience claims that arenot covered by our insurance or that exceed our estimated claim reserve, it could increase the volatility of our earnings and have a materially adverse effect on our financial condition, results of operations or cash flows.

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NOTE M: LEASES

The Company currently leases shop, office and parking spaces in various locations in the United States and Mexico. The initial term for the majority of these leases isone year or less, with an option for early cancellation and an option to renew for subsequentone- month periods. These leases can be terminated by either party by providing notice to the other party of the intent to cancel or tonot extend. Relatively short lease durations for these properties are intended to provide flexibility to the Company as changing operational needs and shifting opportunities often result in cancellation or non-renewal of these leases by the Company or the lessor.

The initial lease term for certain shop and office locations is for periods ranging fromone tofive years with early cancellation options. The Company prefers that leases include early cancellation provisions to prevent becoming locked into long-term leases that become operationally unjustified and to allow the flexibility to pursue more cost-effective options for similar properties if they become available. These leases often include the option to extend for additional periods, which* mayor may**not* be exercised. Based on historical experience, the Company doesnot always extend these leases, sometimes exercises the option to cancel leases early and sometimes lessors choose to cancel leases ornot extend.

The Company leases trucks to owner-operators under our lease-to-own program. We also lease dock space to a related party at our Laredo, Texas terminal.

Right-of-Use Leases

The Company is party to an operating lease with initial terms ofthree years and doesnot provide an option for early cancellation. In accordance with the provisions of ASC Topic842, this lease resulted in the recognition of a right-of-use asset and corresponding operating lease liability of $0.8 million as of* September 30, 2025.These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using the Company’s incremental borrowing rate as of the respective dates of lease inception, as the rate implicit in each lease isnot* readily determinable. The right-of-use assets are recorded in other assets, and the lease liability is recorded in accrued expenses and other liabilities and in other long-term liabilities on our condensed consolidated balance sheet at* September 30, 2025.Lease expense is recorded on a straight-line basis over the lease term and is recorded in rent and purchased transportation in our condensed consolidated statements of operations. While this lease agreement maycontain provisions to extend after the initial term for an additionalfive* years, the Company isnot reasonably certain these extension options will be exercised. Therefore, potential lease payments that might occur under this extension period arenot included in amounts recorded in our condensed consolidated balance sheets as of* September 30, 2025.*

Scheduled amounts and timing of cash flows arising from future right-of-use operating lease payments at* September 30, 2025,*are:

Cash Flows

No new right-of-use assets were recognized as a non-cash asset addition that resulted from new operating lease liabilities during thethree months ended* September 30, 2025.Cash paid for amounts included in the present value of operating lease liabilities was $0.1 million during thenine* months ended* September 30, 2025*and is included in operating cash flows within the condensed consolidated statement of cash flows.

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Operating Lease Costs

Lease Revenue

The Company's operating lease revenue is disclosed in the table below.

The Company leases trucks to owner-operators under operating leases, which generally have a term of up tofive years and include options to purchase the truck at the end of the lease. In the event that an owner-operator defaults on their lease, the Company generally leases the truck to another independent contractor.

As of* September 30, 2025,the gross carrying value of trucks underlying these leases was $67.3 million and accumulated depreciation was $36.1 million. Depreciation is calculated on a straight-line basis over the estimated useful life of the equipment, down to an estimated salvage value. In most cases, the Company has agreements in place with certain manufacturers whereby salvage values are guaranteed by the manufacturer. In other cases, where salvage values arenot* guaranteed, estimates of salvage value are based on the expected market values of equipment at the time of disposal. During the quarter ended* September 30, 2025,*the Company incurred $2.4 million of depreciation expense for these assets.

The Company leases dock space to a related party at our Laredo, Texas, terminal. The dock space is depreciated in conjunction with the structures and improvements for the entire Laredo terminal on a straight-line basis over the estimated useful life of the assets. Lease income is recorded as a component of non-operating income in our condensed consolidated statements of operations.

Lease Receivables

Future minimum operating lease payments receivable at* September 30, 2025:*

NOTE N: NONCASH INVESTING AND FINANCING ACTIVITIES

The Company financed approximately $46.3 million in equipment purchases during thefirst nine months of2025 utilizing noncash financing, compared to approximately $75.0 million during the same period of2024.

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