provide a high level

We are highly dependent on our major customers, the loss of one or more of which could have a material adverse effect on our business.

A significant portion of our revenue is generated from our major customers. For 2018,2021, our top five customers, based on revenue, accounted for approximately 42%33% of our revenue, and our threerevenue. Our largest customers, Fiat Chrysler Automobiles,customer, General Motors Company, and Ford Motor Company, accounted for approximately 16%, 13% and 8%11% of our revenue, respectively.revenue. We also provide transportation services to other manufacturers who are suppliers for automobile manufacturers. As a result, the concentration of our business within the automobile industry is greater than the concentration in a single customer. Approximately 46%27% of our revenues for 20182021 were derived from transportation services provided to the automobile industry.

Generally, we do not have long-term contractual relationships with our major customers, and we cannot assure that our customer relationships will continue as presently in effect. AOur business and profitability was materially and adversely affected by the closure of North American automotive manufacturing facilities during the spring of 2020 due to the COVID-19 outbreak and is currently being adversely impacted by similar production slowdowns and closures within the automotive manufacturing industry due to shortages of microprocessors and other computer chips essential for new vehicle production. Any sustained or future reduction in or termination of our services by our major customers could have a further material adverse effect on our business and operating results.

We may be adversely impacted by fluctuations in the priceA significant labor dispute involving one or more of our customers could reduce our revenues and availability of diesel fuel.harm our profitability.

Diesel fuel representsA substantial number of the employees of our largest customers are members of industrial trade unions and are employed under the terms of collective bargaining agreements. Future labor disputes involving our customers could affect our operations. If the UAW and our automotive customers and their suppliers are unable to negotiate new contracts in the future and our customers’ plants experience slowdowns or closures as a significant operating expense for the Companyresult, our revenue and we do not currently hedge against the risk of diesel fuel price increases. An increase in diesel fuel prices or diesel fuel taxes, or any change in federal or state regulationsprofitability could be negatively impacted. A labor dispute involving another supplier to our customers that results in such an increase,a slowdown or closure of our customers’ plants to which we provide services could also have a material adverse effect on our operating results to the extent we are unable to recoup such increases from customers in the form of increased freight rates or through fuel surcharges. Historically, we have been able to offset, to a certain extent, diesel fuel price increases through fuel surcharges to our customers, but we cannot be certain that we will be able to do so in the future. We continuously monitor the components of our pricing, including base freight rates and fuel surcharges, and address individual account profitability issues with our customers when necessary. While we have historically been able to adjust our pricing to help offset changes to the cost of diesel fuel through changes to base rates and/or fuel surcharges, we cannot be certain that we will be able to do so in the future.

Difficulty in attracting drivers and independent contractors could affect our profitability and ability to grow.

The transportation industry often experiences significant difficulty in attracting and retaining qualified drivers and independent contractors. This shortage is exacerbated by several factors, including demand from competing industries, such as manufacturing, construction and farming, demand from other transportation companies, and the impact of regulations, including CSA and hours of service rules. Economic conditions affecting operating costs such as fuel, insurance, equipment and maintenance costs can negatively impact the number of qualified independent contractors available to us. We have from time to time experienced under-utilization and increased expenses due to a shortage of qualified drivers. If we are unable to attract drivers or contract with independent contractors when needed, we could be required to further adjust our driver compensation packages, increase driver recruiting efforts, or let trucks sit idle, any of which could adversely affect our growth and profitability.

If we are unable to retain our key employees, our business, financial condition and results of operations could be harmed.

We are highly dependent upon the services of our key employees and executive officers. The loss of any of their services could have a material adverse effect on our operations and future profitability. We must continue to develop and retain a core group of managers if we are to realize our goal of expanding our operations and continuing our growth. We cannot be certain of our ability to retain these key individuals.business.

Ongoing insurance and claims expenses could significantly reduce our earnings.

Our future insurance and claims expenses might exceed historical levels, which could reduce our earnings. The Company is self-insured for a material portion of auto liability claims in excess of two million dollars and for health and workers’ compensation insurance coverage up to certain limits. The actual cost to settle self-insured claims can differ from amounts reserved due to various uncertainties, including the ultimate severity of the claims and potential amounts required to defend and settle claims. If medicalclaims costs continue to increase, or if the severity or number of claims increase, and if we are unable to offset the resulting increases in expenses with higher freight rates, our earnings could be materially and adversely affected. Healthcare legislation and inflationary cost increases could also have a negative effect on our results.

Purchase price increases for new revenue equipment and/or decreases in the value

We have significant ongoing capital requirementsmay be subject to litigation claims that could affect our liquidity and profitability if we are unable to generate sufficient cash from operations or obtain sufficient financing on favorable terms.result in significant expenditures.

The trucking industry is capital intensive. IfBy the nature of our operations we are unableexposed to generate sufficient cash from operations in the potential for a variety of litigation, including personal injury claims, vehicular collisions and accidents, alleged violations of federal and state labor and employment laws, such as class-action lawsuits alleging wage and hour violations and improper pay, commercial and contract disputes, cargo loss and property damage claims. While we purchase insurance coverage at levels we deem adequate, future welitigation may haveexceed our insurance coverage or may not be covered by insurance. We accrue a provision for a litigation matter according to limit our growth, enter into unfavorable financing arrangements, or operate our revenue equipment for longer periods, anyapplicable accounting standards based on the ongoing assessment of whichthe strengths and weaknesses of the litigation, its likelihood of success, and an evaluation of the possible range of loss. Our inability to defend ourselves against a significant litigation claim could have a material adverse effect on our profitability.financial results.

We have a substantial amount of debt, which could restrict our growth, place us at a competitive disadvantage or otherwise materially adversely affect our financial health. Our substantial debt levels could have important consequences such as the following:

Our ability to make scheduled payments on, or to refinance, our debt and other obligations will depend on our financial and operating performance, which, in turn, is subject to our ability to implement our strategic initiatives, prevailing economic conditions and certain financial, business and other factors beyond our control. If our cash flow and capital resources are insufficient to fund our debt service and other obligations, we may be forced to reduce or delay expansion plans and capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt. We cannot provide any assurance that our operating performance, cash flow and capital resources will be sufficient to pay our debt obligations when they become due. We also cannot provide assurance that we would be able to dispose of material assets or operations or restructure our debt or other obligations if necessary or, even if we were able to take such actions, that we could do so on terms that are acceptable to us.

Disruptions in the credit markets may adversely affect our business, including the availability and cost of short-term funds for liquidity requirements and our ability to meet long-term commitments, which could adversely affect our results of operations, cash flows and financial condition.

If cash from operations is not sufficient, we may be required to rely on the capital and credit markets to meet our financial commitments and short-term liquidity needs. Disruptions in the capital and credit markets could adversely affect our ability to draw on our bank revolving credit facility. Our access to funds under the credit facility is dependent on the ability of banks to meet their funding commitments. A bank may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from other borrowers within a short period of time.

Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, or failures of significant financial institutions could adversely affect our access to liquidity needed for our business. Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged, which could adversely affect our growth and profitability.

We operate in a highly regulated industry and increased costs of compliance with, or liability for violation of, existing or future regulations could have a material adverse effect on our business.

Our operations are authorized and regulated by various federal and state agencies in the United States, Mexico and Canada, that generally govern such activities as authorization to engage in motor carrier operations, safety, and financial reporting. Specific standards and regulations such as equipment dimensions, engine emissions, maintenance, drivers’ hours of service, drug and alcohol testing, and hazardous materials are regulated by the Department of Transportation, Federal Motor Carrier Safety Administration, the Environmental Protection Agency and various other state and federal agencies. We may become subject to new or more restrictive regulations imposed by these authorities which could significantly impair equipment and driver productivity and increase operating expenses.

The FMCSA administers carrier safety compliance and enforcement through its CSA program that became effective in December 2010. The program places carriers in peer groups and assigns each carrier a relative ranking compared to their peers in various categories. Carriers that exceed allowable thresholds in a particular category are placed in “intervention” status by the FMCSA until the score improves to a level below the threshold. If future roadside inspections or crashes were to result in the Company being placed in intervention status, we may incur additional operating costs to improve our safety program in deficient categories, experience increased roadside inspections, or have onsite visits by the FMCSA. If the intervention category is not remedied, it could affect our ability to attract and retain drivers and customers as they seek competitive carriers with scores below intervention thresholds. In addition, the CSA program could increase competition and related compensation and recruitment costs for drivers and independent contractors by reducing the pool of qualified drivers if existing drivers exit the profession, become disqualified due to low scores or as carriers focus recruiting efforts on drivers with the best relative safety scores.

The EPA and the NHTSA jointly developed standards for various vehicles, including heavy duty trucks, that were adopted in August 2011 and cover model years 2014 through 2018. These standards are designed to reduce GHG emissions and improve fuel economy for heavy duty trucks. In August 2016, the EPA and NHTSA finalized the second phase of these standards which will further reduce GHG emissions and fuel consumption for heavy duty trucks through model year 2027. Compliance with these federal and state requirements has increased the cost of our equipment and may further increase the cost of replacement equipment in the future.

The Regulation section in Item 1 of Part I of this Annual Report on Form 10-K discusses several proposed and final regulations that could materially impact our business and operations.

We are subject to certain risks arising from doing business in Mexico.

As we continue to grow our business in Mexico, we are subject to greater risks of doing business internationally, including fluctuations in foreign currencies, changes in the economic strength of Mexico, difficulties in enforcing contractual obligations and intellectual property rights, burdens of complying with a wide variety of international and U.S. export and import laws, and social, political, and economic instability. We also face additional risks associated with our Mexico business, including potential restrictive trade policies and imposition of any import or export taxes, duties, fees, etc. If we are unable to address business concerns related to our international operations in a timely and cost efficient manner, our financial position, results of operations or cash flows could be adversely affected. Additionally, approximately 32% of the freight we haul crosses the border between the United States and Mexico. In past years, we have experienced delays in Mexico border-crossings due to weather events, immigration-related issues and the reallocation of border agents to other border areas. Any future shutdowns or disruptions of Mexico border-crossings, particularly at the Laredo, Texas border, could materially and adversely impact our operations, cash flows and profitability. The agreement permitting cross-border movements for both United States and Mexican basedMexican-based carriers in the United States and Mexico presents additional risks in the form of potential increased competition and the potential for increased congestion in our lanes that cross the border between countries.

A determination by regulatorsOn April 23, 2021, a decree was published that independent contractors are employeesreforms various laws in Mexico regarding labor outsourcing. Under this new decree, operating companies will no longer be able to source their labor resources used to carry out core business functions from service entities or third-party providers and could expose usbe subject to various liabilitiesthe loss of tax deductions and additional costs.

Taxvalue-added tax credits on payments to outsourced personnel and other regulatory authorities often seekcertain penalties for failing to assert that independent contractors incomply with the transportation service industry are employees rather than independent contractors. There can be no assurance that interpretationsnew requirements. The Company is currently evaluating the new decree and tax laws that supportits potential implications. While the independent contractor status will not change or that various authorities will not successfully assert a position that re-classifies independent contractorsoverall impact of the new decree and its provisions continue to be employees. If our independent contractors are determined to be our employees, that determinationassessed, the new law could materially increase our exposure under a variety of federal and state tax, workers’ compensation, unemployment benefits, labor, employment and tort laws, as well as our potential liability for employee benefits. In addition, such changes may be applied retroactively, and if so, we may be required to pay additional amounts to compensate for prior periods. Any of the aboveresult in increased costs would adversely affectto our operations in Mexico and could have a material adverse impact on our business and operatingfinancial results.

Our results of operations may be affected by seasonal factors.

Our productivity may decrease during the winter season when severe winter weather impedes operations. Also, some shippers may reduce their shipments after the winter holiday season. At the same time, operating expenses may increase and fuel efficiency may decline due to engine idling during periods of inclement weather. Harsh weather conditions generally also result in higher accident frequency, increased freight claims, and higher equipment repair expenditures. In addition, automobile plants for which we transport a large amount of freight typically undergo scheduled shutdowns in July and December, which reduces the volume of automotive freight we ship during these plant shutdowns.

Our business may be disrupted by natural disasters and severe weather conditions causing supply chain disruptions.

Natural disasters such as earthquakes, tsunamis, hurricanes, tornadoes, floods or other adverse weather and climate conditions, whether occurring in the United States or abroad, could disrupt our operations or the operations of our customers or could damage or destroy infrastructure necessary to transport products as part of the supply chain. Specifically, these events may damage or destroy our assets, disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, and affect regional economies. As a result, these events could make it difficult or impossible for us to provide logistics and transportation services; disrupt or prevent our ability to perform functions at the corporate level; and/or otherwise impede our ability to continue business operations in a continuous manner consistent with the level and extent of business activities prior to the occurrence of the unexpected event, which could adversely affect our business and results of operations or make our results more volatile.

We may incur additional operating expenses or liabilities as a result of potential future requirements to address climate change issues.

As global warming issues become more prevalent, federal, state and local governments as well as some of our customers, have made efforts to respond to these issues. This increased focus on sustainability may result in new legislation or regulations and customer requirements that could negatively affect us as we may incur additional costs or be required to make changes to our operations in order to comply with any new regulations or customer requirements. Legislation or regulations that potentially impose restrictions, caps, taxes, or other controls on emissions of greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels such as those used in the Company’s trucks, could adversely affect our operations and financial results. More specifically, legislative or regulatory actions relating to climate change could adversely impact the Company by increasing our fuel costs and reducing fuel efficiency and could result in the creation of substantial additional capital expenditures and operating costs in the form of taxes, emissions allowances, or required equipment upgrades. Any of these factors could impair our operating efficiency and productivity and result in higher operating costs. In addition, revenues could decrease if we are unable to meet regulatory or customer sustainability requirements. These additional costs, changes in operations, or loss of revenues could have a material adverse effect on our business, financial condition and results of operations.

Our operations are subject to various environmental laws and regulations, the violation of which could result in substantial fines or penalties.

We are subject to various 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 could occur. In prior years, weWe also maintainedmaintain bulk fuel storage and fuel islands at twoone of our facilities. Our operations may involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among others. If we are involved in a spill or other accident involving hazardous substances, or if we are found to be in violation of applicable laws or regulations, it could have a materially adverse effect on our business and operating results. If we should fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.

If our employees were to unionize, our operating costs would increase and our ability to compete would be impaired.

None of our employees are currently represented by a collective bargaining agreement. However, we can offer no assurance that our employees will not unionize in the future, particularly if legislation is passed that facilitates unionization. If our employees were to unionize, our operating costs would increase and our profitability could be adversely affected.

Our information technology systems are subject to certain cyber security and disaster risks that are beyond our control.

We depend heavily on the proper functioning and availability of our information, communications, and data processing systems, including operating and financial reporting systems, in operating our business. Our operating system is critical in meeting customer expectations, effectively tracking, maintaining and operating our equipment, directing and compensating our employees, and interfacing with our financial reporting system. Our financial reporting system receives, processes, controls and reports information for operating our business and for tabulation into our financial statements.

While we are not aware of a breach that has resulted in significant lost productivity or exposure of sensitive information to date, we are aware that our systems are targeted by various viruses and cyber-attacks and expect these efforts to continue. Our systems and those of our technology and communications providers are vulnerable to interruptions caused by natural disasters, power loss, telecommunication and internet failures, cyber-attack, and other events beyond our control. Accordingly, information security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us and we maintain information security processes and policies to protect our systems and data from cyber security events and threats.

Although we have processes, policies and procedures in place and our information systems are protected through physical and software security as well as redundant backup systems, they remain susceptible to cyber security risks. Some of our software systems are utilized by third parties who provide outsourced processing services which may increase the risk of a cyber-security incident.

A successful cyber-attack or catastrophic natural disaster could significantly affect our operating and financial systems and could temporarily disrupt our ability to provide required services to our customers and impact our ability to manage our operations and perform vital financial processes, any of which could have a materially adverse effect on our business. In addition, regulatory and enforcement focus on data protection in the U.S., and failure to comply with applicable U.S. data protection regulations or other data protection standards may expose us to litigation, fines, sanctions or other penalties, which could harm our reputation and adversely impact our business, results of operations and financial condition.

We have substantial fixed costs and, as a result, our operating income fluctuates disproportionately with changes in our net sales.

A significant portion of our expenses are fixed costs that neither increase nor decrease proportionately with sales. There can be no assurance that we would be able to reduce our fixed costs proportionately in response to a decline in our sales, and therefore our competitiveness could be significantly impacted. As a result, a decline in our sales would result in a higher percentage decline in our income from operations and net income.

If our employees were to unionize, our operating costs would increase and our ability to compete would be impaired.

Our financial results may

None of our employees are currently represented by a collective bargaining agreement. However, we can offer no assurance that our employees will not unionize in the future, particularly if legislation is passed that facilitates unionization. If our employees were to unionize, our operating costs would increase and our profitability could be adversely impacted by potential future changes in accounting standards or practices.affected.

Future changes in accounting standards or practices, and related legal and regulatory interpretations of those changes, may adversely impact public companies in general, the transportation industry or our operations specifically. New accounting standards or requirements, could change the way we account for, disclose and present various aspects of our financial position, results of operations or cash flows and could be costly to implement.

Our business may be harmed by terrorist attacks, future war or anti-terrorism measures.

In order to prevent terrorist attacks, federal, state and municipal authorities have implemented and continue to follow various security measures, including checkpoints and travel restrictions on large trucks. Our international operations in Canada and Mexico may be affected significantly if there are any disruptions or closures of border traffic due to security measures. Such measures may have costs associated with them, which, in connection with the transportation services we provide, we or our independent contractors could be forced to bear. In addition,Further, a terrorist attack, war, or risk of warsuch an event, also may have an adverse effect on the economy. A decline in economic activity could adversely affect our revenue or restrict our future growth. Instability in the financial markets as a result of a health pandemic, terrorism or war also could affect our ability to raise capital. In addition, the insurance premiums charged for some or all of the coverage currently maintained by us could increase dramatically or such coverage could be unavailable in the future.

We may be unable to successfully integrate businesses we acquire into our operations.

Integrating businesses we acquire may involve unanticipated delays, costs or other operational or financial problems. Successful integration of the businesses we acquire depends on a number of factors, including our ability to transition acquired companies to our information systems. In integrating businesses we acquire, we may not achieve expected economies of scale or profitability or realize sufficient revenues to justify our investment. We also face the risk that an unexpected problem at one of the companies we acquire will require substantial time and attention from senior management, diverting management’s attention from other aspects of our business. We cannot be certain that our management and operational controls will be able to support us as we grow.

Risks Related to Our Common Stock

The Chairman of our board of directors holds a controlling interest in the Company;Company; therefore, the influence of our public shareholders over significant corporate actions is limited, and we are not subject to certain corporate governance standards that apply to other publicly traded companies.

Matthew T. Moroun, the Chairman of our Board of Directors, and a trust of which Mr. Moroun is a co-trustee together own approximately 65.6%70.2% of our outstanding common stock. As a result, Mr. Moroun has the power to:

This concentration of ownership could limit the price that some investors might be willing to pay for shares of our common stock, and our ability to engage in significant transactions, such as a merger, acquisition or liquidation, will require the consent of Mr. Moroun. Conflicts of interest could arise between us and Mr. Moroun, and any conflict of interest may be resolved in a manner that does not favor us. Accordingly, Mr. Moroun could cause us to enter into transactions or agreements of which our other shareholders would not approve or make decisions with which they may disagree. Because of Mr. Moroun’s level of ownership, we have elected to be treated as a controlled company in accordance with the rules of the NASDAQ Stock Market. Accordingly, we are not required to comply with NASDAQ Stock Market rules which would otherwise require a majority of our Board to be comprised of independent directors and require our Board to have a compensation committee and a nominating and corporate governance committee comprised of independent directors.

Mr. Moroun may continue to retain control of the Company for the foreseeable future and may decide not to enter into a transaction in which shareholders would receive consideration for our common stock that is much higher than the then-current market price of our common stock. In addition, Mr. Moroun could elect to sell a controlling interest in us to a third-party and our other shareholders may not be able to participate in such transaction or, if they are able to participate in such a transaction, such shareholders may receive less than the then-current fair market value of their shares. Any decision regarding ownership of us that Mr. Moroun may make at some future time will be in his absolute discretion, subject to applicable laws and fiduciary duties.

Our stock trading volume may not provide adequate liquidity for investors.

Although shares of our common stock are traded on the NASDAQ Global Market, the average daily trading volume in our common stock is less than that of other larger transportation and logistics companies. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of a sufficient number of willing buyers and sellers of the common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Given the daily average trading volume of our common stock, significant sales of the common stock in a brief period of time, or the expectation of these sales, could cause a decline in the price of our common stock. Additionally, low trading volumes may limit a stockholder’s ability to sell shares of our common stock.

We currently do not intend to pay future dividends on our common stock.

We currently do not anticipate paying future cash dividends on our common stock. Any determination to pay future dividends and other distributions in cash, stock, or property by the Company in the future will be at the discretion of our Board of Directors and will be dependent on then-existing conditions, including our financial condition and results of operations and contractual restrictions. Therefore, stockholders should not rely on future dividend income from shares of our common stock.

Item 1B.1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our executive offices and primary terminal facilities, which we own, are located in Tontitown, Arkansas. These facilities are located on approximately 46.146.3 acres and consist of 153,420134,581 square feet of office space and maintenance and storage facilities.

Our subsidiaries lease facilities in Fort Wayne and Indianapolis, Indiana; Romulus, Michigan; Tahlequah, Oklahoma; Memphis, Tennessee,Tennessee; and Monterrey, Mexico. Our terminal facilities in North Little Rock, Arkansas; North Jackson, Ohio; Willard, Ohio; and Irving and Laredo, Texas are owned. The leased facilities are leased primarily on contractual terms typically ranging from one to five years and have provisions for early cancellation if we so choose. As of December 31, 2018,2021, the following table provides a summary of the ownership and types of activities conducted at each location:

We also have access to trailer drop and relay stations in various other locations across the country. We lease certain of these facilities on a month-to-month basis from affiliates of our largest stockholder.

We believe that all of the properties that we own or lease are suitable for their purposes and adequate to meet our needs.

Item 3. Legal Proceedings.

The natureWe are involved in certain claims and pending litigation arising from the ordinary conduct of business. We also provide accruals for claims within our business routinely resultsself-insured retention amounts. On September 1, 2019, we elected to become self-insured for certain layers of auto liability claims in litigation, primarily involvingexcess of $1.0 million for which we previously maintained auto liability insurance coverage. On September 1, 2020, we elected to become self-insured for certain layers of auto liability claims in excess of $2.0 million. We currently specifically reserve for personal injuriesclaims that are expected to exceed $2.0 million when fully developed, based on the facts and property damage incurred in the transportation of freight. We believe that all such routine litigation is adequately covered by insurance and that adverse results in one or morecircumstances of those claims. Based on our knowledge of the facts, and in certain cases, wouldopinions of outside counsel, we believe the resolution of such claims and pending litigation will not have a material effect on our financial position, results of operations or cash flows. However, if we experience claims that are not 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 statements.condition, results of operations or cash flows.

We are a defendant in a collective-action lawsuit which was re-filedfiled on December 9, 2016,August 6, 2021, in the United States District Court for the Western District of Arkansas. The plaintiffs, who areplaintiff is a former drivers who worked for the Company during the period of December 6, 2013, through the date of the filing, allege violationsdriver and is seeking class certification. The complaint alleges failure to pay minimum wage under the Fair Labor Standards Act and the Arkansas Minimum Wage Law. The plaintiffs, through their attorneys, have filed causesAct, violations of the Electronic Funds Transfer Act (EFTA), violations of the Arkansas Wage Payment Law (discharge pay and unlawful, usurious advance fees), violations of the Arkansas Common Law, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).  Should this lawsuit be certified as a class action, alleging “Failure to pay minimum wage during orientation, failure to pay minimum wage to teaminclude similarly situated drivers after initial orientation, failure to pay minimum wage to solo-drivers after initial orientation, failure to pay for compensable travel time, Comdata card fees, unlawful deductions, and breach of contract.” The plaintiffs are seekingas the plaintiff, the class will seek actual and liquidatedliquated damages to include court costs and legal fees.fees associated with the lawsuit. The related litigation is ongoingclass, if certified, will include any company driver employed from January 1, 2020 through the present and we cannot reasonably estimate, at this time,ongoing. A mediation was held on January 14, 2022 in an attempt to resolve the possible loss or range of loss, if any, that may arise from this lawsuit.case but was unsuccessful. Management has determined that any losses under this claim will not be covered by existing insurance policies.

Item 4. Mine Safety Disclosures.Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’sRegistrant’s Common Equity,, Related Stockholder Matters and Issuer Purchases of Equity Securities.Securities.

Our common stock is traded on the NASDAQ Global Market under the symbol PTSI. As of February 22, 2019,21, 2022, there were approximately 7459 holders of record of our common stock.

Dividends

The Company paid cash dividends of $1.00 per common share during each of the months of April 2012 and December 2012. No dividends were paid during any year prior to 2012 or subsequent to 2012. Future dividend policy and the payment of dividends, if any, will be determined by the Board of Directors in light of circumstances then existing, including our earnings, financial condition and other factors deemed relevant by the Board of Directors. Currently, the Company does not intend to pay dividends in the foreseeable future.

Repurchases of Equity Securities by the Issuer

The Company’s stock repurchase program has been extended and expanded several times, most recently in April 2017,November 2021, when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011 authorization. Since

No shares were repurchased under the reauthorization,Company’s stock repurchase program during the Company has repurchased 212,070 sharesfourth quarter of its common stock under this repurchase program.2021.

In addition, during 2021, 2020 and 2019 the Company has repurchased 185,597272,405 shares, 143,8590 shares and 567,413and192,743 shares, during 2018, 2017 and 2016, respectively, through publicly announced Dutch auction tender offers. See “Item 8. Financial Statements and Supplementary Data, Note 9 to the Consolidated Financial Statements – Capital Stock” for additional information regarding these tender offers. The Company did not engage in any tender offers during 2020.

The following table summarizesOn July 27, 2021, the Company commenced a tender offer to repurchase up to 200,000 shares of the Company’s outstanding common stock repurchases duringat a price of not greater than $37.00 nor less than $32.00 per share. Following the fourth quarterexpiration of 2018. Nothe tender offer on August 31, 2021, the Company accepted 272,405 shares, were purchased duringincluding 72,405 oversubscribed shares tendered, of its common stock (as adjusted for the quarter other than throughCompany’s 2-for-1 forward split of its common stock in the form of a 100% stock dividend paid on August 16, 2021, to stockholders of record on July 30,2021) for purchase at $37.00 per share, at an aggregate purchase price of approximately $10.1 million, excluding fees and expenses related to the offer. The Company funded the purchase of the accepted shares tendered with available cash and accounted for the repurchase program described above, and all purchases were made by orof these shares as treasury stock on behalfthe Company’s condensed consolidated balance sheet as of the Company and not by any “affiliated purchaser.”September 30, 2021.

Securities Authorized for Issuance Under Equity Compensation Plans

See Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report for a presentation of compensation plans under which equity securities of the Company are authorized for issuance.

Performance Graph

Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our common stock against the cumulative total return of the NASDAQ OMX Index for the NASDAQ Stock Market (U.S. companies) and the NASDAQ OMX Index for the NASDAQ Trucking and Transportation Stocks for the period of five years commencing December 31, 20132016 and ending December 31, 2018.2021. The graph assumes that the value of the investment in our common stock and in each index was $100 on December 31, 20132016 and that all dividends were reinvested.

COMPARISON OF CUMULATIVE TOTAL RETURN AMONG OUR COMMON STOCK,

THE NASDAQ OMX INDEX FOR THE NASDAQ STOCK MARKET (U.S. COMPANIES)

AND THE NASDAQ TRUCKING AND TRANSPORTATION STOCKS INDEX THROUGH DECEMBER 31, 20182021

Item 6. Selected Financial Data.[Reserved]

The following selected financial and operating data should be read in conjunction with the Consolidated Financial Statements and notes thereto included elsewhere in this Report.

Item 7. Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations.

Business Overview

The Company's administrative headquarters are in Tontitown, Arkansas. From this location we manage operations conducted through our wholly owned subsidiaries based in various locations around the United States, Mexico, and Canada. The operations of these subsidiaries can generally be classified into either truckload services or brokerage and logistics services. This designation is based primarily on the ownership of the asset that performed the freight transportation service. Truckload services are performed by Company divisions that generally utilize CompanyCompany- owned trucks, long-term contractors, or single-trip contractors to transport loads of freight for customers, while brokerage and logistics services coordinate or facilitate the transport of loads of freight for customers and generally involve the utilization of single-trip contractors. Both our truckload operations and our brokerage/logistics operations have similar economic characteristics and are impacted by virtually the same economic factors as discussed elsewhere in this Report. All of the Company's operations are in the motor carrier segment.

For both operations, substantially all of our revenue is generated by transporting freight for customers and is predominantly affected by the rates per mile received from our customers, equipment utilization, and our percentage of non-compensated miles. These aspects of our business are carefully managed and efforts are continuously underway to achieve favorable results. Truckload services revenues, excluding fuel surcharges, represented 80.0%67.0%, 86.3%76.9% and 88.4%82.7% of total revenues, excluding fuel surcharges for the twelve months ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.

The main factors that impact our profitability on the expense side are costs incurred in transporting freight for our customers. Currently, our most challenging costs include fuel, driver recruitment, training, wage and benefit costs, independent broker costs (which we record as purchased transportation), insurance and claims, and maintenance and capital equipment costs.

In discussing our results of operations we use revenue, before fuel surcharge (and operating supplies and expense, net of fuel surcharge), because management believes that eliminating the impact of this sometimes volatile source of revenue allows a more consistent basis for comparing our results of operations from period to period. During 2018, 20172021, 2020 and 2016,2019, approximately $87.4$65.9 million, $64.3$47.8 million and $50.1$74.7 million, respectively, of the Company's total revenue was generated from fuel surcharges. We also discuss certain changes in our expenses as a percentage of revenue, before fuel surcharge, rather than absolute dollar changes. We do this because we believe the high variable cost nature of certain expenses makes a comparison of changes in expenses as a percentage of revenue more meaningful than absolute dollar changes.

Results of Operations - Truckload Services

The following table sets forth, for truckload services, the percentage relationship of expense items to operating revenues, before fuel surcharges, for the periods indicated. Operating supplies and expenses are shown net of fuel surcharges.

20182021 Compared to 20172020

For the year ended December 31, 2018,2021, truckload services revenue, before fuel surcharges, increased 10.6%27.3% to $356.6$429.6 million as compared to $322.4$337.5 million for the year ended December 31, 2017.2020. The increase relates primarily to a 13.3%34.6% increase in our rate per loaded mile, from $1.51$1.91 for the year ended December 31, 20172020 to $1.71$2.58 for the year ended December 31, 2018,2021 and to temporary plant shutdowns in early 2020 experienced by some of our major customers due to COVID-19.

Salaries, wages and benefits decreased from 35.3% of revenues, before fuel surcharges, during 2020 to 30.6% of revenues, before fuel surcharges, during 2021. The percentage-based decrease relates primarily to the interaction of expenses with fixed-cost characteristics, such as general and administrative wages, maintenance wages, and operations wages with the increase in revenues for the periods compared.

Operating supplies and expenses decreased from 10.7% of revenues, before fuel surcharges, during 2020 to 8.3% of revenues, before fuel surcharges, during 2021. The decrease relates primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel, due to increased fuel surcharge collections from customers, and to for the year ended December 31, 2021 compared to December 31, 2020. The decrease also relates to the interaction of expenses with fixed-cost characteristics, such as rents, driver training schools and operating taxes and licenses.

Rent and purchased transportation increased from 23.2% of revenues, before fuel surcharges, during 2020 to 24.3% of revenues, before fuel surcharges, during 2021. The increase was primarily due to an increase in the rates paid to third-party owner-operators for the year ended December 31, 2021 compared to the year ended December 31, 2020.

Depreciation decreased from 16.5% of revenues, before fuel surcharges, during 2020 to 12.5% of revenues, before fuel surcharges, during 2021. The decrease relates primarily to the interaction of an increase in operating revenues with the fixed-cost nature of depreciation expense.

Insurance and claims increased from 2.6% of revenues, before fuel surcharges, during 2020 to 4.4% of revenues, before fuel surcharges, during 2021. This increase relates primarily to an increase in accident and legal reserves, recognized in 2021 as compared to 2020 and to an increase in the premiums paid for auto liability and cargo insurance.

Other expenses decreased from 3.6% of revenues, before fuel surcharges, during 2020 to 2.5% of revenues, before fuel surcharges, during 2021. This decrease relates primarily to a decrease in outside professional services expenses in 2021 as compared to 2020.

Non-operating income increased from a loss of 0.5% of revenues, before fuel surcharges, during 2020 to a gain of 1.9% of revenues, before fuel surcharges, during 2021. This increase resulted primarily from an increase in the market value of our marketable equity securities portfolio at December 31, 2021 as compared to December 31, 2020.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 82.3% for 2021 from 92.0% for 2020.

2020 Compared to 2019

For the year ended December 31, 2020, truckload services revenue, before fuel surcharges, decreased 7.2% to $337.5 million as compared to $363.6 million for the year ended December 31, 2019. The decrease relates primarily to temporary plant shutdowns in early 2020 experienced by some of our major customers due to COVID-19, and to a decrease in the average number of trucks in service from 1,8352,075 during 20172019 to 1,9012,004 during 2018.2020. These increasesdecreases were partially offset by a decrease3.9% increase in our rate per loaded mile, from $1.84 for the average number of miles travelled per day by our trucks in 2018 comparedyear ended December 31, 2019 to 2017, which was a result of a decrease in$1.91 for the average length of haul of shipments offered by our customers.year ended December 31, 2020

Salaries, wages and benefits increased from 30.9%34.5% of revenues, before fuel surcharges, during 20172019 to 32.4%35.3% of revenues, before fuel surcharges, during 2018.2020. The percentage-based increase relates primarily to an increase in company driveramounts expensed for group health insurance expense and workers compensation claims expense. Also contributing to the percentage-based increase was the interaction of expenses with fixed-cost characteristics, such as general and administrative wages, paid during 2018 compared to 2017. The increasemaintenance wages, and operations wages with a decrease in driver wages relates primarily to a per mile pay increase that went into effect duringrevenues for the last week of December 2017, and to route specific raises that were phased in throughout 2018. These per mile pay increases raised the average rate per mile paid to company drivers, which increased driver pay by approximately $7.4 million for 2018 compared to 2017.periods compared. In addition, the proportion of total miles driven by company drivers increased as the number of company drivers increased year-over-year. Also contributing to the increase were salaries, wages and benefits paid to regional and short haul drivers, which increased by approximately $5.1 million for the periods compared. This increase occurred as we expanded our regional dedicated service offerings during 2018.

Operating supplies and expenses decreasedincreased from 4.7%6.5% of revenues, before fuel surcharges, during 20172019 to 1.5%10.7% of revenues, before fuel surcharges, during 2018.2020. The decreaseincrease relates primarily to a decreasean increase in the average surcharge-adjustedproportion of total miles driven by company drivers for the year ended December 31, 2020 compared to December 31, 2019. This increase in miles driven by company drivers has the effect of increasing our net operating supplies and expenses while decreasing the Rent and purchased transportation category, as fuel price paid per gallon of diesel fuel, which was a result of increased fuel surcharge collections from customers. Fuel surcharge collections can fluctuate significantly from period to period as they are generally based on changes in fuel prices from period to period so that, during periods of rising fuel prices, fuel surcharge collections increase, while fuel surcharge collections decrease during periods of falling fuel prices. Fuel surcharge revenue generated from transportation services performed by owner-operators is reflected as a reduction in net operating supplies and expenses, while fuel surcharges paid to owner-operators for their services is reported along with their base rate of pay in the Rent and purchased transportation category. These categorizations have the effect of reducing our net operating supplies and expenses while increasing the Rent and purchased transportation category, as discussed below.

Rent and purchased transportation decreased from 39.9%28.3% of revenues, before fuel surcharges, during 20172019 to 34.4%23.2% of revenues, before fuel surcharges, during 2018.2020. The decrease was primarily due to a reduction in amounts paidthe proportion of total miles driven by owner-operators for equipment leases during 2018the year ended December 31, 2020 compared to 2017, as the scheduled expiration of our final truck operating lease occurred during the first quarter of 2018. Trucks leased under these operating leases were replaced with company owned trucks as the scheduled expirations occurred. Also contributing to the decrease was a decrease in the average number of owner-operators under contract from 634 during 2017 to 574 during 2018, partially offset by an increase in the average rate per mile, including fuel surcharges, paid to owner operators during the respective periods.year ended December 31, 2019.

Depreciation increased from 13.1%15.0% of revenues, before fuel surcharges, during 20172019 to 13.7%16.5% of revenues, before fuel surcharges, during 2018. This2020. The increase isrelates primarily to the resultinteraction of a decrease in operating revenues with the fixed-cost nature of depreciation expense. Also contributing to the increase was an increase in the average number of trucks and trailers owned by the company. As previously discussed, new trucks were purchasedcompany and to replace trucks returned under expiring operating leases. This transition resulteda general increase in a shift in expense from the Renttruck and purchased transportation category to the Depreciation category as leased trucks were replaced with owned trucks.trailer replacement costs. During 2018,2020, the average number of company owned trucks andcompany-owned trailers increased by 305 and 597, respectively,634 as compared to 2017. The Company uses a three-year and seven-year equipment replacement cycle for trucks and trailers, respectively, and the cost of new trucks and trailers have increased significantly over the previous three-year and seven-year periods. Depreciating higher cost equipment over the same length of time will result in an increase in depreciation expense during the respective period.2019.

Insurance and claims decreased from 5.4%9.8% of revenues, before fuel surcharges, during 20172019 to 4.8%2.6% of revenues, before fuel surcharges, during 2018.2020. This decrease relates primarily resulted fromto the negative impact, recognized in 2019, of the settlement of a decisionlawsuit which claimed that the Company was in violation of minimum wage laws with regard to becomecertain activities performed by employee drivers and for a lawsuit brought against the Company by certain individuals who asserted that they were misclassified as owner-operators. In addition, the Company became self-insured for property damage on company owned truckscertain lower layers of auto liability claims commencing on September 1, 2018.2019. During 2017,the first nine months of 2019, the Company paid for property damage coverage for company owned trucks through a third party insurance carrier for the entire year. This coverage was in place through August 31, 2018, when the Company droppedauto liability insurance coverage and became self-insured. Also contributingin these lower levels through various third-party insurance carriers. The decision to self-insure these layers reduced insurance premium costs from that point through to the decrease as a percentageannual renewal date of revenue, before fuel surcharges, is the interaction of the increase in revenue with the decrease in total miles driven. Miles driven generally serve as the premium basis for the majority of our insurance coverage.

Non-operating income decreased from 1.7% of revenues, before fuel surcharges, during 2017 to a loss of 1.0% of revenue, before fuel surcharges, during 2018. This decrease resulted primarily from the adoption of ASU 2016-01 on JanuarySeptember 1, 2018. As discussed in Note 4 to the consolidated financial statements, this standard requires that equity investments be adjusted to market value each period with current period gains and losses in value recorded in net income. Previous guidance generally required that unrealized gains and losses be reported on our consolidated balance sheets in Accumulated Other Comprehensive Income. During 2017, equity investments were sold with pre-tax realized gains of approximately $4,735,000. During 2018, equity investments were sold with pre-tax realized gains of approximately $375,000. In addition, our marketable securities portfolio had net unrealized pre-tax losses in market value of approximately $5,763,000, which was reported as Non-operating expense for 2018.2020.

Interest expense increasedNon-operating income decreased from 1.1%a gain of 1.5% of revenues, before fuel surcharges, during 20172019 to 1.6%a loss of 0.5% of revenues, before fuel surcharges, during 2018.2020. This increase is attributable to market increases in interest rates, and to increases in amounts financed by the Company for new equipment. The increase in amounts financed was the result of the replacement of trucks operated under equipment leases during 2017 with company owned trucks, as discussed previously, and to overall growthdecrease resulted primarily from a decrease in the numbermarket value of company owned trucks and trailers operated within our fleet.marketable equity securities portfolio at December 31, 2020 as compared to December 31, 2019.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 92.0% for 2020 from 96.7%97.7% for 2017 to 89.7% for 2018.2019.

2017 Compared to 2016

For the year ended December 31, 2017, truckload services revenue, before fuel surcharges, decreased 4.7% to $322.4 million as compared to $338.3 million for the year ended December 31, 2016. The decrease related primarily to a decrease in the number of miles traveled and a decrease in the average revenue per mile. The number of miles traveled decreased from 237.3 million miles during 2016 to 229.4 million miles during 2017, primarily as a result of a decrease in the average number of trucks in service, which decreased from 1,891 during 2016 to 1,835 during 2017.

Salaries, wages and benefits decreased from 32.6% of revenues, before fuel surcharges, during 2016 to 30.9% of revenues, before fuel surcharges, during 2017. The decrease related primarily to a decrease in company driver wages paid during 2017 compared to 2016. Our driver pool consists of both company drivers and third-party owner-operator drivers. Company drivers are employees of the Company and perform services in company-owned equipment while owner-operator drivers provide services, under contract, using their own equipment. While each group is generally compensated on a per-mile basis, owner-operator payments are classified in the Company’s financial statements under Rent and purchased transportation. The decrease in Salaries, wages and benefits primarily resulted from a decrease in the overall number of miles driven and to the proportion of total miles driven by company drivers during 2017 compared to 2016. Also contributing to the decrease was a decrease in group health insurance claims under the Company’s self-insured health plan during 2017 as compared to 2016.

Operating supplies and expenses decreased from 9.7% of revenues, before fuel surcharges, during 2016 to 4.7% of revenues, before fuel surcharges, during 2017. The decrease relates primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel. The average surcharge-adjusted fuel price paid per gallon of diesel fuel decreased as a result of increased fuel surcharge collections from customers and to an increase in the proportion of total miles travelled by owner-operators in 2017 compared to 2016. Fuel surcharge collections can fluctuate significantly from period to period as they are generally based on changes in fuel prices from period to period so that, during periods of rising fuel prices, fuel surcharge collections increase, while fuel surcharge collections decrease during periods of falling fuel prices. Fuel surcharge revenue generated from transportation services performed by owner-operators is reflected as a reduction in net operating supplies and expenses, while fuel surcharges paid to owner-operators for their services is reported along with their base rate of pay in the Rent and purchased transportation category. These categorizations have the effect of reducing our net operating supplies and expenses while increasing the Rent and purchased transportation category, as discussed below. Also contributing to the decrease was a decrease in amounts paid for driver recruiting and to driver training schools during 2017 as compared to amounts paid during 2016.

Rent and purchased transportation increased from 34.7% of revenues, before fuel surcharges, during 2016 to 39.9% of revenues, before fuel surcharges, during 2017. The increase was primarily due to an increase in driver lease expense as average number of owner-operator trucks under contract increased from 557 during 2016 to 634 during 2017. The increase in costs in this category, as it relates to the increase in owner-operators, is partially offset by a decrease in other cost categories, such as repairs and fuel, which are generally borne by the owner-operator.

Depreciation increased from 11.5% of revenues, before fuel surcharges, during 2016 to 13.1% of revenues, before fuel surcharges, during 2017. The increase relates primarily to an increase in equipment acquisition costs, increases in the size of the Company’s owned truck and trailer fleet, and to a change in the estimated residual values of certain equipment. The Company uses a three-year and seven-year equipment replacement cycle for trucks and trailers, respectively, and the cost of new trucks and trailers have increased significantly over the previous three-year and seven-year periods. Depreciating higher cost equipment over the same length of time will result in an increase in depreciation expense during the respective period. During 2017, the company-owned trailer fleet increased by 328 trailers as rented trailers were turned in and replaced by company owned trailers. The number of company owned trucks being depreciated increased as trucks used under operating leases were turned in and replaced by company owned equipment. In addition, year over year depreciation increased due to a reduction in expected residual values of certain groups of trucks in August 2016 due to a prolonged depressed used truck market. The reduction in expected residual values resulted in additional depreciation expense of approximately $2.7 million during 2017 compared to $1.3 million during 2016.

Gains and losses on sale or disposal of property decreased from a net gain of 1.4% of revenues, before fuel surcharges, during 2016 to less than 0.05% of revenues, before fuel surcharges, during 2017. The decrease relates primarily to fewer trailers being sold during 2017 as compared to 2016 and to the continued depressed market for used equipment.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased to 96.7% for 2017 from 94.4% for 2016.

Results of Operations - Logistics and Brokerage Services

The following table sets forth, for logistics and brokerage services, the percentage relationship of expense items to operating revenues, before fuel surcharges, for the periods indicated. Brokerage operations occur specifically in certain divisions; however, brokerage operations occur throughout the Company in similar operations having substantially similar economic characteristics. Rent and purchased transportation, which includes costs paid to third partythird-party carriers, are shown net of fuel surcharges.

20182021 Compared to 20172020

For the year ended December 31, 2018,2021, logistics and brokerage services revenues, before fuel surcharges, increased 74.7%108.6% to $89.3$211.7 million as compared to $51.1$101.5 million for the year ended December 31, 2017.2020. The increase was primarily the result of anrelated to a 69.5% increase in the number of loads brokered and to improvement in freight ratescarried for customers during 20182021 as compared to 2017.2020, coupled with a 23.1% increase in revenue per load.

Salaries, wages and benefits decreased from 4.9%5.0% of revenues, before fuel surcharges, in 20172020 to 4.6% of revenues, before fuel surcharges, in 2018. This decrease primarily relates to increases in freight rates outpacing employee wage growth and to efficiency improvements in our brokerage and logistics operations which allowed improvements in the quantity of loads booked per employee to increase year over year.

Rent and purchased transportation decreased from 89.8% of revenues, before fuel surcharges, in 2017 to 88.1% of revenues, before fuel surcharges, in 2018.2021. The decrease results from paying third party carriersrelates primarily to the effect of higher revenues without a smaller percentage of customer revenue.corresponding increase in those wages with fixed cost characteristics, such as general and administrative wages.

Rent and purchased transportation decreased from 92.5%86.5% of revenues, before fuel surcharges, in 20162020 to 89.8%82.5% of revenues, before fuel surcharges, in 2017.2021. The decrease resultedresults from paying third partythird-party carriers a smaller percentage of customer revenue.

The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 96.0%88.7% for 20172021 from 97.6%93.3% for 2016.2020.

2020 Compared to 2019

For the year ended December 31, 2020, logistics and brokerage services revenues, before fuel surcharges, increased 33.6% to $101.5 million as compared to $75.9 million for the year ended December 31, 2019. The increase was primarily related to a 36.0% increase in the number of loads carried for customers during 2020 as compared to 2019.

Salaries, wages and benefits decreased from 5.8% of revenues, before fuel surcharges, in 2019 to 5.0% of revenues, before fuel surcharges, in 2020. The decrease relates primarily to the effect of higher revenues without a corresponding increase in those wages with fixed cost characteristics, such as general and administrative wages.

Rent and purchased transportation increased from 86.4% of revenues, before fuel surcharges, in 2019 to 86.5% of revenues, before fuel surcharges, in 2020. The increase results from paying third-party carriers a larger percentage of customer revenue.

The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 93.3% for 2020 from 94.7% for 2019.

Results of Operations - Combined Services

20182021 Compared to 20172020

Income tax expense was approximately $7.3$26.0 million in 2018,2021, resulting in an effective rate of 23.4%25.4%, as compared to an income tax benefit of approximately $(24.3)$5.6 million, in 2017, resulting inor an effective tax rate of (165.9%). This increase primarily resulted from tax benefits23.8% in 2017 resulting from the passage of the Tax Cuts and Jobs Act on December 22, 2017. The Company recorded a tax benefit of $29.3 million in the fourth quarter 2017 related to the revaluation of its net deferred tax attributes. This benefit to 2017 was partially offset by a reduction in the federal corporate income tax rate from 35% in 2017 to 21% effective January 1, 2018.2020. The effective tax rate is also impacted by the existenceeffect of partially non-deductible mealstate taxes and incidental expense per-diem payments to company drivers. Per-diem payments may cause a significant difference in the Company’s effective tax rate from period-to-period as the proportionother factors.

In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of Accounting Standards Codification (“ASC”) 740-10-30, weighs all available evidence, both positive and negative to determine whether, based on the weight of that evidence, a valuation allowance is necessary. 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 December 31, 2018,2021, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by taxing authorities, based on the technical merits of the position. As of December 31, 2018,2021, an adjustment to the Company’s consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws. The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense. During 20182021 and 2017,2020, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.

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 we operate generally provide for a deficiency assessment statute of limitation period of three years and as a result, the Company’s tax years 20152018 and forward remain open to examination in those jurisdictions.

The combined net income for all divisions was $24.0$76.5 million, or 5.4%11.9% of revenues, before fuel surcharge, for 20182021 as compared to the combined net income for all divisions of $38.9$17.8 million or 10.4%4.1% of revenues, before fuel surcharge, for 2017. The decrease in net income resulted in a decrease in diluted2020. Diluted earnings per share increased to $3.90$6.69 for 2018the year ended December 31, 2021 from a diluted earnings per share of $6.08$1.55 for 2017.the year ended December 31, 2020.

20172020 Compared to 20162019

Income tax benefitexpense was approximately $(24.3)$5.6 million in 20172020, resulting in an effective rate of (165.9%)23.8%, as compared to an income tax expense of approximately $6.7$2.2 million, in 2016 resulting inor an effective rate of 37.5%.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act included numerous changes to tax laws, including a permanent reduction in the federal corporate income tax rate from 35% to 21% effective January 1, 2018 and repeal of the alternative minimum tax (“AMT”) allowing a refund of existing AMT carryovers during the years 2018 through 2021. As a result, the Company recorded a tax benefit of $29.3 million in the fourth quarter of 2017 related to the revaluation of its net deferred tax attributes. In addition, the effective tax rate was alsoof 21.9% in 2019. The effective tax rate is impacted by the existence of partially non-deductible meal and incidental expense per-diem payments to company drivers. Per-diem payments may cause a significant difference in the Company’s effective tax rate from period-to-period as the proportion of non-deductible expenses to pre-tax net income increases or decreases.

In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of ASC 740-10-30, weighs all available evidence, both positive and negative to determine whether, based on the weight of that evidence, a valuation allowance is necessary. 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 December 31, 2020, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by taxing authorities, based on the technical merits of the position. As of December 31, 2020, an adjustment to the Company’s consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws. The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense. During 2020 and 2019, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.

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 we operate generally provide for a deficiency assessment statute of limitation period of three years and as a result, the Company’s tax years 2017 and forward remain open to examination in those jurisdictions.

The combined net income for all divisions was $38.9$17.8 million, or 10.4%4.1% of revenues, before fuel surcharge, for 20172020 as compared to the combined net income for all divisions of $11.1$7.9 million or 2.9%1.8% of revenues, before fuel surcharge, for 2016. The increase in net income resulted in an increase in diluted2019. Diluted earnings per share increased to $6.08$3.09 for 2017 from a diluted earnings per share of $1.67 for 2016.

Quarterly Results of Operations

The following table presents selected consolidated financial information for each of our last eight fiscal quarters throughthe year ended December 31, 2018. The information has been derived2020 from unaudited consolidated financial statements that, in$1.34 for the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the quarterly information.year ended December 31, 2019.

Liquidity and Capital Resources

Our business has required, and will continue to require, a significant investment in new revenue equipment. Our primary sources of liquidity have been funds provided by operations, proceeds from the sales of revenue equipment, borrowings under our lines of credit, installment notes and investment margin account, and issuances of equity securities.

During 2018,2021, we generated $82.3$101.7 million in cash from operating activities compared to $50.6$67.6 million and $47.7$84.3 million in 20172020 and 2016,2019, respectively. Investing activities used $55.3generated $9.3 million in cash during 20182021 compared to $45.3using $32.7 million and $53.1$62.3 million in 20172020 and 2016,2019, respectively. The cash used for investing activities in all three years relatedrelates primarily to the purchase of revenue equipment such as trucks and trailers and related equipment such as auxiliary power units.trailers. Financing activities used $27.0$92.8 million in cash during 20182021 compared to using $5.2$34.9 million during 20172020 and providing $5.4$22.0 million during 2016.2019. See the Consolidated Statements of Cash Flows in Item 8 of this Report.

Our primary use of funds is for the purchase of revenue equipment. We typically use installment notes, our existing lines of credit on an interim basis, proceeds from the sale or trade of equipment, and cash flows from operations to finance capital expenditures and repay long-term debt. During 20182021 and 2017,2020, we utilized cash on hand, installment notes, and our lines of credit to finance revenue equipment purchases of approximately $140.4$51.9 million and $66.8$106.9 million, respectively.

We often finance the acquisition of revenue equipment through installment notes with fixed interest rates and terms ranging from 36 to 84 months. At December 31, 2018,2021, the Company’s subsidiaries had combined outstanding indebtedness under such installment notes of $211.0$222.3 million. These installment notes are payable in monthly installments, ranging from 36 monthly installments to 84 monthly installments, at a weighted average interest rate of 3.61%2.81%. At December 31, 2017,2020, the Company’s subsidiaries had combined outstanding indebtedness under such installment notes of $172.6$250.6 million. These installment notes were payable in monthly installments, ranging from 36 to 84 months at a weighted average interest rate of 2.52%3.30%.

In order to maintain our truck and trailer fleet count, it is often necessary to purchase replacement units and place them in service before trade units are removed from service. The timing of this process often requires the Company to pay for new units without any reduction in price for trade units. In this situation, the Company later receives payment for the trade units as they are delivered to the equipment vendor and have passed vendor inspection. During the twelve months ended December 31, 20182021 and 2017,2020, the Company received approximately $11.9$22.4 million and $15.7$14.8 million, respectively, for units delivered for trade.

During 2018, the Company2021, we maintained a $40.0 million revolving line of credit. Amountscredit with a borrowing limit of $60.0 million. Under this credit facility, amounts outstanding under the line bear interest at LIBOR (determined(with a floor of 0.5%, determined as of the first day of each month) plus 1.50% (3.85%1.25% (1.75% at December 31, 2018)2021), are secured by our trade accounts receivable and mature on July 1, 2020.2024. The credit facility also establishes an “unused fee” of 0.25% if average borrowings are less than $18.0 million. At December 31, 2018,2021 outstanding advances on the line of credit were approximately $10.9$0.4 million, including approximately $0.7$0.3 million in letters of credit, with availability to borrow $29.1$59.6 million. On

In February 2022, we borrowed $35.5 million under a term loan secured by our real estate. This term loan bears interest at a fixed rate of 2.95%, with principal and interest payable monthly, and matures on January 25, 2019, certain terms1, 2032. The loan is secured by mortgages and assignments of this revolving line of credit were amended to increaserents on the borrowing limit to $60.0 million, extend the term by one year, reduce the interest rate by 25 basis pointsCompany’s principal office and make certain other changes. See “Item 8. Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements - Subsequent Events” for additional information.four terminal locations.

Trade accounts receivable increased from $59.1$77.7 million at December 31, 20172020 to $63.4$121.9 million at December 31, 2018.2021. The increase relates to a general increase in freight revenue and fuel surcharge revenue, which flows through the accounts receivable account, during 2018the fourth quarter of 2021 as compared to the freight revenue and fuel surcharge revenue generated during 2017.the fourth quarter of 2020.

Marketable equity securities at December 31, 20182021 increased approximately $0.9$11.5 million as compared to December 31, 2017.2020. The increase resulted from purchases of marketable equity securities of $7.3approximately $6.4 million and an increase in the market value of the portfolio of approximately $8.2 million, offset by sales of marketable equity securities of approximately $1.0 million and a decrease in the market value of the portfolio of approximately $5.4 million,.$3.1 million. At December 31, 2018,2021, the remaining marketable equity securities have a combined cost basis of approximately $25.6$29.4 million and a combined fair market value of approximately $27.6$39.4 million. The Company has developed a strategy to invest in securities from which it expects to receive dividends that qualify for favorable tax treatment, as well as appreciate in value. The Company anticipates that increases in the market value of the investments combined with dividend payments will exceed interest rates paid on borrowings for the same period. During 2018,2021, the Company received dividends of approximately $1.2$1.4 million. The holding term of these securities depends largely on the general economic environment, the equity markets, borrowing rates, and the Company's cash requirements.

Revenue equipment at December 31, 2018,2021, which generally consists of trucks, trailers, and revenue equipment accessories such as Qualcomm™ satellite tracking units and auxiliary power units, increaseddecreased approximately $81.3$71.6 million as compared to December 31, 2017.2020. The increasedecrease relates primarily to a delay in the trade-in or used trade trucks in exchange for the new replacement trucks. These delayed trades were disposed when payment was received during 2021, which reduced the balance in the Revenue equipment category.

Accounts payable decreased from $46.1 million at December 31, 2020 to $43.4 million at December 31, 2021. This decrease was primarily attributable to the decrease in amounts accrued for fixed asset purchases from $9.1 million at the end of trucks that had been leased under operating leases with new company owned trucks and2020 to growth in both our company owned tractor and trailer fleet size. The increase is also reflective$0.3 million at the end of 2021. Accounts payable accruals can vary significantly at the end of each reporting period depending on the timing of the higher purchase priceactual date of new trucks and trailers comparedpayment in relation to the truckslast day of the reporting period.

Accrued expenses and trailers which are being replaced and sold.other liabilities decreased from $26.6 million at December 31, 2020 to $14.1 million at December 31, 2021. The decrease was primarily related to the use of available cash to pay off the majority of the balance on the Company’s investment margin account.

Current maturities of long term-debt and long-term debt fluctuations are reviewed on an aggregate basis as the classification of amounts in each category are typically affected merely by the passage of time. Current maturities of long-term debt and long-term debt, on an aggregate basis, at December 31, 2018, increased2021, decreased approximately $48.6$63.8 million as compared to December 31, 2017.2020. The increase was relateddecrease relates primarily to additionalthe use of available cash to pay down the borrowings on our revolving line of credit and onother installment notes received during 2018, netnotes.

For 2019,2022, we expect to purchase 500400 new trucks and 500 new1,000 trailers while continuing to sell or trade equipment that has reached the end of its life cycle, which we expect to result in net capital expenditures of approximately $62.4$95.1 million. Management believes we will be able to finance our existing needs for working capital over the next twelve months, as well as acquisitions of revenue equipment and any other asset acquisitions or capital transactions during such period, with cash balances, cash flows from operations, and borrowings believed to be available from financing sources. We will continue to have significant capital requirements over the long-term, which may require us to incur debt or seek additional equity capital. The availability of additional capital will depend upon prevailing market conditions, the market price of our common stock and several other factors over which we have limited control, as well as our financial condition and results of operations. Nevertheless, based on our anticipated future cash flows and sources of financing that we expect will be available to us, we do not expect that we will experience any significant liquidity constraints in the foreseeable future.

Contractual Obligations and Commercial Commitments

The following table sets forth the Company's contractual obligations and commercial commitments as of December 31, 2018:

Off-Balance Sheet Arrangements

At December 31, 2018 the Company did not have any equipment operating leases or other arrangements that meet the definition of an off-balance sheet arrangement.

At December 31, 2017, the Company operated 56 trucks under operating lease agreements. These trucks were turned in pursuant to the lease agreement in January 2018. The trucks held under operating leases were not carried on our balance sheet and the respective lease payments were reflected in our consolidated statements of operations as a component of the caption “Rents and purchased transportation.” Rent expense related to the trucks under the operating lease agreements totaled approximately $5.5 million for the year ended December 31, 2017.

Insurance

The Company maintains certain insurance coverage for auto liability and cargo loss risks as well as other general business risks. This coverage is provided through insurance policies with various insurance carriers which have per occurrence deductibles of up to $10,000. The Company maintains workers’ compensation coverage in Arkansas, Ohio, Oklahoma, Mississippi, and Florida with a $500,000 self-insured retention and a $500,000 per occurrence excess policy. The Company has elected to opt out of workers' compensation coverage in Texas and is providing coverage through the P.A.M. Texas Injury Plan. The Company has reserved for estimated losses to pay such claims as well as claims incurred but not yet reported. The Company has not experienced any adverse trends involving differences in claims experienced versus claims estimates for workers’ compensation claims. Letters of credit aggregating approximately $515,000 and certificates of deposit totaling $300,000 are held by banks as security for workers’ compensation claims. The Company self-insures for employee health claims with a stop loss of $325,000 per covered employee per year and estimates its liability for claims incurred but not reported.

Inflation

Inflation has an impact on most of our operating costs. Over the past three years, the effect of inflation has been minimal. If the current rate of inflation persists, inflation, coupled with supply chain issues and international events could continue to result in increased costs for drivers, employee wages, equipment, fuel and other costs.

Adoption of Accounting Policies

See “Item 8. Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements -– Accounting Policies, Recent Accounting Pronouncements.”

Critical Accounting PoliciesEstimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to adopt accounting policies and make significant judgments and estimates that impact the amounts reported in our consolidated financial statements and accompanying notes. Therefore, the reported amounts of assets, liabilities, revenue, expenses, and associated disclosures of contingent assets and liabilities are affected by judgments and estimates. In manysome cases, there are alternative assumptions, policies, or estimation techniques that could be used. Management evaluates its assumptions, policies, and estimates on an ongoing basis, utilizing historical experience, and other methods considered reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates and assumptions, and it is possible that materially different amounts would be reported using differing estimates or assumptions. Management considers our critical accounting policiesestimates to be those that require more significant judgments and estimates when we prepare our consolidated financial statements.

Note 1 in Part II, Item 8 of this Annual Report describes the Company's accounting policies. The following discussion of accounting estimates should be read in conjunction with Note 1, as it provides additional insight into critical accounting estimates. Our critical accounting policiesestimates include the following:

Accounts receivableDepreciation and allowance for doubtful accounts. Accounts receivable are presented in the Company’s consolidated financial statements net of an allowance for estimated uncollectible amounts. Management estimates this allowance based upon an evaluation of the aging of our customer receivables and historical write-offs, as well as other trends and factors surrounding the credit risk of specific customers. The Company continually updates the history it uses to make these estimates so as to reflect the most recent trends, factors and other information available. In order to gather information regarding these trends and factors, the Company also performs ongoing credit evaluations of its customers. Customer receivables are considered to be past due when payment has not been received by the invoice due date. Write-offs occur when we determine an account to be uncollectible and could differ from the allowance estimate as a result of a number of factors, including unanticipated changes in the overall economic environment or factors and risks surrounding a particular customer. Management believes its methodology for estimating the allowance for doubtful accounts to be reliable; however, additional allowances may be required if the financial condition of our customers were to deteriorate and could have a material effect on the Company’s consolidated financial statements.

Depreciation of trucks and trailersAmortization. Depreciation of trucks and trailers is calculated by the straight-line method over the assetsassets’ estimated useful life,lives, which generally range from three to seventen years, down to an estimated salvage value at the end of the assetsassets’ estimated useful life.lives. Management must use its judgment in the selection of estimated useful lives and salvage values for purposes of this calculation. In some cases, the Company has agreements in place with certain manufacturers whereby salvage values are guaranteed by the manufacturer. In other cases, where salvage values are not guaranteed, estimates of salvage value are based on the expected market values of equipment at the time of disposal.

The depreciation of trucks and trailers over their estimated useful lives and the determination of any salvage value also require management to make judgments about future events. Therefore, the Company’s management periodically evaluates whether changes to estimated useful lives or salvage values are necessary to ensure these estimates accurately reflect the economic reality of the assets. This periodic evaluation may result in changes in the estimated lives and/or salvage values used by the Company to depreciate its assets, which can affect the amount of periodic depreciation expense recognized and, ultimately, the gain or loss on the disposal of an asset. Future changes in our estimated useful life or salvage value estimates, or fluctuations in market value that are not reflected in current estimates, could have a material effect on the Company’s consolidated financial statements.

Impairment of long-lived assets. Long-lived assets are reviewed for impairment in accordance with ASC Topic 360, “Property, Plant, and Equipment.” This authoritative guidance provides that whenever there are certain significant events or changes in circumstances the value of long-lived assets or groups of assets must be tested to determine if their value can be recovered from their future cash flows. In the event that undiscounted cash flows expected to be generated by the asset are less than the carrying amount, the asset or group of assets must be evaluated for impairment. Impairment exists if the carrying value of the asset exceeds its fair value.

Significantly all of the Company’s cash flows from operations are generated by trucks and trailers, and as such, the cost of other long-lived assets are funded by those operations. Therefore, management tests for the recoverability of all of the Company’s long-lived assets as a single group at the entity level and examines the forecasted future cash flows generated by trucks and trailers, including their eventual disposition, to determine if those cash flows exceed the carrying value of the long-lived assets. Forecasted cash flows are estimated using assumptions about future operations. To the extent that facts and circumstances change in the future, our estimates of future cash flows may also change either positively or negatively. In light of the Company’s market capitalization during 2018 and net operating profits of the Company for the years ended December 31, 2018 and 2017, no impairment indicators existed which required management to test the Company’s long-lived assets for recoverability as of December 31, 2018. As such, no impairment losses were recorded during 2018.

Claims accruals. The Company is self-insured for health and workers' compensation benefits up to certain stop-loss limits. Such costs are accrued based on known claims and an estimate of incurred but not reported (IBNR) claims. IBNR claims are estimated using historical lag information and other data either provided by outside claims administrators or developed internally. Actual claims payments may differ from management’s estimates as a result of a number of factors, including evaluation of severity, increases in legal or medical costs, and other case-specific factors. The actual claims payments are charged against the Company’s recorded accrued claims liabilities and have been historically reasonable with respect to the estimates of the liabilities made under the Company’s methodology. However, the estimation process is generally subjective, and to the extent that future actual results materially differ from original estimates made by management, adjustments to recorded accruals may be necessary which could have a material effect on the Company’s consolidated financial statements. Based upon our 20182021 health and workers' compensation expenses, a 10% increase in both claims incurred and IBNR claims would increase our annual health and workers' compensation expenses by approximately $0.6$0.5 million.

Revenue recognition. Revenue is recognized over time as freight progresses towards its destination andOn September 1, 2020, the transportation service obligation is fulfilled. For loads picked up during the reporting period, but deliveredCompany elected to become self-insured for certain layers of auto liability claims in a subsequent reporting period, revenue is allocatedexcess of $2.0 million. The Company specifically reserves for claims that are expected to each periodexceed $2.0 million when fully developed, based on the transit time in each period as a percentage of total transit time. See “Item 8. Financial Statements and Supplementary Data, Note 2 to the Consolidated Financial Statements – Revenue Recognition.”

Income Taxes. The Company’s deferred tax assets and liabilities represent items that will result in taxable income or a tax deduction in future years for which the Company has already recorded the related tax expense or benefit in its consolidated statements of operations. Deferred tax accounts arise as a result of timing differences between when items are recognized in the Company’s consolidated financial statements compared to when they are recognized in the Company’s tax returns. In establishing the Company’s deferred income tax assets and liabilities, management makes judgments and interpretations based on the enacted tax laws and published tax guidance that are applicable to its operations. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of ASC 740-10-30, weighs all available evidence, both positive and negative to determine whether, based on the weight of that evidence, a valuation allowance is necessary. 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. Significant management judgment is required as it relates to future taxable income, future capital gains, tax settlements, valuation allowances, and the Company’s ability to utilize tax loss and credit carryforwards. As of December 31, 2018, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.

Management believes that future tax consequences have been adequately provided for based on the current facts and circumstances and current tax law. However, should current circumstances change or the Company’s tax positions be challenged, different outcomes could result which could have a material effect on the Company’s consolidated financial statements.of those claims.

Item 7A. Quantitative and Qualitative DisclosuresQualitative Disclosures about Market Risk.

Our primary market risk exposures include equity price risk, interest rate risk, commodity price risk (the price paid to obtain diesel fuel for our trucks), and foreign currency exchange rate risk. The potential adverse impact of these risks are discussed below. While the Company has used derivative financial instruments in the past to manage its interest rate and commodity price risks, the Company does not currently enter into such instruments for risk management purposes or for speculation or trading.

The following sensitivity analyses do not consider the effects that an adverse change may have on the overall economy nor do they consider additional actions we may take to mitigate our exposure to such changes. Actual results of changes in prices or rates may differ materially from the hypothetical results described below.

Equity Price Risk

We hold certain actively traded marketable equity securities, which subjects the Company to fluctuations in the fair market value of its investment portfolio based on current market price. The recorded value of marketable equity securities increased to $27.5$39.4 million at December 31, 20182021 from $26.7$27.9 million at December 31, 2017.2020. The increase resulted from purchases of marketable equity securities of approximately $7.3$6.4 million and an increase in market value of the portfolio of approximately $8.2 million, partially offset by sales of marketable equity securities of approximately $1.0 million and a decrease in market value of the portfolio of approximately $5.4$3.1 million. A 10% decrease in the market price of our marketable equity securities would cause a corresponding 10% decrease in the carrying amounts of these securities, or approximately $2.8$3.9 million. For additional information with respect to the marketable equity securities, see “Item 8. Financial Statements and Supplementary Data, Note 4 to the Consolidated Financial Statements – Marketable Equity Securities.”

Interest Rate Risk

Our line of credit bears interest at a floating rate equal to LIBOR plus a fixed percentage. Accordingly, changes in LIBOR, which are affected by changes in interest rates, will affect the interest rate on, and therefore our costs under, the line of credit. Assuming $10.2$18.0 million of variable rate debt was outstanding under our line of credit for a full fiscal year;year, a hypothetical 100 basis point increase in LIBOR would result in approximately $102,000$180,000 of additional interest expense.

Commodity Price Risk

Prices and availability of all petroleum products are subject to political, economic and market factors that are generally outside of our control. Accordingly, the price and availability of diesel fuel, as well as other petroleum products, can be unpredictable. Because our operations are dependent upon diesel fuel, significant increases in diesel fuel costs could materially and adversely affect our results of operations and financial condition. Based upon our 20182021 fuel consumption, a 10% increase in the average annual price per gallon of diesel fuel would increase our annual fuel expenses by approximately $5.2 million.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk related to the activities of our branch office located in Mexico. Currently, we do not hedge our exchange rate exposure through any currency forward contracts, currency options, or currency swaps as all of our revenues, and substantially all of our expenses and capital expenditures are transacted in U.S. dollars. However, certain operating expenditures and capital purchases related to our Mexico branch office are incurred within or exposed to fluctuations in the exchange rate between the U.S. Dollardollar and the Mexican peso. Based on 20182021 expenditures denominated in pesos, a 10% decrease in the exchange rate would increase our annual operating expenses by approximately $267,000.$0.2 million.Foreign currency exchange rates did not have a material impact to our financial condition, results of operations or cash flows for the years ended December 31, 2021 or 2020.

Item 8. Financial StatementsStatements and Supplementary Data.

The following statements are filed with this report:

Report of Independent Registered Public Accounting Firm – Grant Thornton LLP (PCAOB ID Number 248)

Consolidated Balance Sheets - December 31, 20182021 and 20172020

Consolidated Statements of Operations - Years ended December 31, 2018, 20172021, 2020 and 20162019

Consolidated Statements of Comprehensive Income - Years ended December 31, 2018, 20172021, 2020 and 20162019

Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2018, 20172021, 2020 and 20162019

Consolidated Statements of Cash Flows - Years ended December 31, 2018, 20172021, 2020 and 20162019

Notes to Consolidated Financial Statements

Board of Directors and Stockholders

P.A.M. Transportation Services, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of P.A.M. Transportation Services, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 20182021 and 2017,2020, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018,2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182021 and 2017,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2018,2021, based on criteria established in the 2013 Internal Control—Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 12, 201911, 2022 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Claims Liabilities

As described further in Note 6 to the consolidated financial statements, the Company is self-insured for a portion of its risk related to auto liability and workers’ compensation. Self-insurance results when the Company insures itself by maintaining funds to cover possible losses rather than purchasing an insurance policy. The Company accrues for the cost of the self-insured portion of unpaid claims by evaluating the nature and severity of individual claims and by estimating future claims development based upon historical development trends. The actual cost to settle self-insured claim liabilities may differ from the Company’s reserve estimates due to legal costs, claims that have been incurred but not reported, and various other uncertainties.

We identified the estimation of auto liability and workers’ compensation claims accruals, subject to certain self-insured retention, as a critical audit matter. Auto liability and workers’ compensation unpaid claim liabilities are determined by projecting the estimated ultimate loss related to a claim, less actual costs paid to date. These estimates rely on the assumption that historical claim patterns are an accurate representation for future claims that have been incurred but not completely paid. The principal considerations for assessing auto liability and workers’ compensation claims as a critical audit matter are the high level of estimation uncertainty related to determining the severity of these types of claims, as well as the inherent subjectivity in management’s judgment in estimating the total costs to settle or dispose of these claims.

Our audit procedures related to this critical audit matter included the following, among others:

/s/S/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2005.

Tulsa, Oklahoma

March 12, 201911, 2022