PAMT CORP (PAMT)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING INFORMATION

Certain information included in this Quarterly Report on Form 10-Q constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may relate to expected future financial and operating results, prospects, plans or events, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, increases in compensation for and difficulty in attracting and retaining qualified drivers and owner-operators, including as a result of recent regulatory initiatives impacting driver capacity, to meet available freight demand; general inflation, recessionary economic cycles and downturns in customers' business cycles; a significant reduction in or termination of the Company's trucking service by a key customer, including as a result of labor or international trade disruptions; increases or rapid fluctuations in fuel prices, interest rates, fuel taxes, tolls, and license and registration fees; excess capacity in the trucking industry; surplus inventories; the resale value of the Company's used equipment; the price and availability of new equipment consistent with anticipated acquisitions and replacement plans; increases in insurance premiums and deductible amounts relating to accident, cargo, workers' compensation, health, and other claims; increases in the number or amount of claims for which the Company is self-insured; inability of the Company to continue to secure acceptable financing arrangements; seasonal factors such as harsh weather conditions that increase operating costs; competition from trucking, rail, and intermodal competitors including reductions in rates resulting from competitive bidding; our ability to develop, implement and govern suitable information technology systems and prevent failures in or breaches, disruptions or unauthorized use of such systems; the impact of pending or future litigation; general risks associated with doing business in Mexico, including, without limitation, exchange rate fluctuations, inflation, import duties, tariffs, quotas, political and economic instability and terrorism; the potential impact of new laws, regulations or policy, including, without limitation, rules regarding the classification of independent contractors as employees, tariffs, import/export, trade and immigration regulations or policies; the impacts of ongoing or future military conflicts and other major domestic or international events; the ability to identify acceptable acquisition candidates, consummate acquisitions, and integrate acquired operations; potential economic, business or operational disruptions or uncertainties that may result from any future public health crises; and other factors, including risk factors, included from time to time in filings made by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise forward-looking statements, whether due to new information, future events or otherwise. Considering these risks and uncertainties, the forward-looking events and circumstances discussed above and in company filings might not transpire.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Form 10-K for the fiscal year ended December 31, 2025.

BUSINESS OVERVIEW

The Company is a holding company that owns subsidiaries engaged in providing truckload dry van carrier services transporting general commodities throughout the continental United States, as well as in certain Canadian provinces. The Company’s consolidated operating subsidiaries also provide transportation services in Mexico under agreements with Mexican carriers. Unless the context otherwise requires, this report presents information regarding the Company and its subsidiaries on a consolidated basis. 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 and in 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 Company-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.

The operations of the Company and its subsidiaries are all in the motor carrier segment and are aggregated into a single reporting segment in accordance with the aggregation criteria under Generally Accepted Accounting Principles (“GAAP”). The Company has carefully considered the segment reporting requirements under Accounting Standards Codification (“ASC”) 280 and has determined that both our truckload operations and our brokerage/logistics operations have similar qualitative and quantitative economic characteristics and are impacted by virtually the same economic factors, such as rates per mile, equipment utilization and the percentage of non-compensated miles. Based on the Company’s segment identification, interpretation of the aggregation criteria outlined in ASC 280-10-50-11, and the similar qualitative and quantitative economic characteristics of the Company’s operating segments, the operations of the Company are aggregated into a single motor carrier segment. The Company’s chief operating decision maker, the Chief Executive Officer, utilizes the metrics of net income and operating ratio to evaluate company performance and in competitive analysis when comparing to competing companies.

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Truckload services revenues, excluding fuel surcharges, represented 62.9% and 69.4% of total revenues, excluding fuel surcharges, for the quarters ended June 30, 2026, and 2025, respectively. The remaining operating revenues, before fuel surcharges, for the same periods were generated from brokerage and logistics services, representing 37.1% and 30.6%, respectively.

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

In discussing our results of operations, we use revenue, before fuel surcharge (and fuel 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 the three months ended June 30, 2026 and 2025, approximately $27.8 million and $17.3 million, respectively, of the Company’s total revenue was generated from fuel surcharges. During the six months ended June 30, 2026 and 2025, approximately $47.0 million and $36.0 million, respectively, of the Company’s total revenue was generated from fuel surcharges. We may 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 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. Fuel costs are reported net of fuel surcharges.

THREE MONTHS ENDED JUNE 30, 2026 VS. THREE MONTHS ENDED JUNE 30, 2025

During the second quarter of 2026, truckload services revenue, before fuel surcharges, decreased 7.3% to $86.1 million as compared to $92.8 million during the second quarter of 2025. The decrease was primarily due to a 3.3% decline in average rate per mile, from $2.04 for the quarter ended June 30, 2025 to $1.98 for the quarter ended June 30, 2026, as well as a 3.6% decrease in the average number of manned trucks during the period. The impact of these factors was partially offset by a 12.0% increase in truck utilization, as measured by miles per truck per day.

Salaries, wages and benefits increased from 41.7% of revenues, before fuel surcharges, in the second quarter of 2025 to 45.1% of revenues, before fuel surcharges, during the second quarter of 2026. The percentage-based increase relates primarily to the interaction of a decrease in operating revenues with the fixed-cost nature of employing human capital.

Operating supplies and expenses decreased from 12.3% of revenues, before fuel surcharges, during the second quarter of 2025 to 9.9% of revenues, before fuel surcharges, during the second quarter of 2026. The decrease was primarily driven by a $1.2 million increase in the net benefit of fuel surcharge collections over fuel expense, lower maintenance costs associated with a decrease in the number of trucks in service from 2,083 at June 30, 2025 to 1,994 at June 30, 2026, and the continued replacement of older equipment with newer equipment. The decrease in maintenance costs occurred despite a 3.2 million increase in miles driven during the second quarter of 2026 compared to the prior-year period.

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Rent and purchased transportation decreased from 30.2% of revenues, before fuel surcharges, during the second quarter of 2025 to 23.0% of revenues, before fuel surcharges, during the second quarter of 2026. The decrease was primarily due to a year-over-year decrease in the percentage of miles driven by third-party owner-operators rather than Company-employed drivers, as we

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Item 7. Management’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 in the continental United States, Mexico, and Canada conducted through our wholly-owned subsidiaries. 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 Company-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 and logistics operations have similar economic characteristics and are impacted by virtually the same economic factors as discussed elsewhere in this report. Based on the Company’s segment identification, interpretation of the aggregation criteria outlined in ASC 280-10-50-11, and the similar qualitative and quantitative economic characteristics of the Company’s operating segments, the operations of the Company are aggregated into a single motor carrier segment.

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 68.3%, 67.1% and 65.3% of total revenues, excluding fuel surcharges for the twelve months ended December 31, 2025, 2024 and 2023, 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, maintenance, and capital equipment costs.

The Company’s chief operating decision maker, the Chief Executive Officer, utilizes the metrics of net income and operating ratio to evaluate company performance and in competitive analysis when comparing to competing companies. The accounting policies of the motor carrier segment are the same as those described in the summary of accounting policies found in this report. For purposes of this report, net income reflects the profitability of our operations by calculating the total earnings after deducting operating expenses, interest expense, income taxes and any other applicable costs from total revenue. The measure of net income is reported on the consolidated statement of operations as consolidated net (loss) income. Operating ratio is the measure of our efficiency in managing operating expenses relative to revenue generation and is calculated as total operating expenses as a percentage of total operating revenue.

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 2025, 2024 and 2023, approximately $71.5 million, $85.6 million, and $104.7 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.

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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.

2025 Compared to 2024

For the year ended December 31, 2025, truckload services revenue, before fuel surcharges, decreased 14.8% to $359.6 million as compared to $422.0 million for the year ended December 31, 2024. The decrease relates primarily to an 8.3% decrease in total miles travelled from 178.6 million during the year ended December 31, 2024 to 163.8 million for the year ended December 31, 2025 and to a 3.8% decrease in our rate per mile, from $2.10 for the year ended December 31, 2024 to $2.02 for the year ended December 31, 2025. The reduction in total miles was primarily driven by a 10.4% reduction in the average number of trucks operated offset by a 2.7% improvement in average miles driven by each truck during the year ended December 31, 2025 compared to the year ended December 31, 2024. The reduction in truck count and miles resulted from a less favorable freight market year over year, characterized by an oversupply of available trucks in the market compared to available freight.

Salaries, wages and benefits increased from 38.9% of revenues, before fuel surcharges, during 2024 to 42.0% of revenues, before fuel surcharges, during 2025. The percentage-based increase relates primarily to the interaction of a decrease in operating revenues with the fixed-cost nature of employing human capital.

Rent and purchased transportation increased from 26.1% of revenues, before fuel surcharges, during 2024 to 27.4% of revenues, before fuel surcharges, during 2025. The increase was primarily due to an increase in the percentage of miles driven by third-party owner-operators as opposed to company-employed drivers for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Depreciation expense decreased from 23.3% of revenues, before fuel surcharges, for the year ended December 31, 2024 to 22.6% of revenues, before fuel surcharges, for the year ended December 31, 2025. The decrease is primarily attributable to the absence of the incremental depreciation recognized in 2024 resulting from the Company’s change in accounting estimates related to the useful lives and salvage values of revenue equipment. As previously disclosed, during the year ended December 31, 2024, the Company reduced the estimated useful lives of its trailer equipment and lowered the estimated salvage values of revenue equipment, which increased depreciation expense in that period. Depreciation expense in 2025 reflects the continued application of those revised estimates but does not include a comparable incremental impact from an additional change in estimate. Although depreciation decreased as a percentage of revenue year over year, it remains elevated relative to 2023 due to the ongoing effect of the shorter estimated useful lives and lower salvage values established in 2024, as well as the continued replacement of revenue equipment at costs that remain above historical levels. In addition, the fixed-cost nature of depreciation expense, combined with lower operating revenues in 2025, affects period-over-period comparability of depreciation as a percentage of revenue.

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Impairment loss accounted for 0% of revenues, before fuel surcharges, during 2025, compared to 1.5% of revenues, before fuel surcharges, during 2024. Although management continues to believe that market conditions for used revenue equipment have deteriorated since their peak in 2022, the Company performed a recoverability analysis of its long-lived asset groups during the year ended December 31, 2025 and concluded that the carrying amounts of all applicable asset groups were recoverable, as the estimated future undiscounted cash flows for each asset group exceeded its respective carrying value. Accordingly, no impairment loss was recognized during 2025. In contrast, during the year ended December 31, 2024, management determined that certain asset groups of trucks and trailers were impaired, resulting in an impairment loss of approximately $6.4 million, or $0.22 loss per share, net of tax.

Insurance and claims increased from 4.6% of revenues, before fuel surcharges, during 2024 to 12.9% of revenues, before fuel surcharges, during 2025. The increase is attributable to an increase in the Company’s auto-liability reserve during the fourth quarter of 2025. This increase in auto-liability reserve is due to an agreement in principle to settle a significant auto-liability claim in which the Company was a named defendant. The total settlement amount is $30.0 million, of which $26.5 million represents the Company’s net exposure after consideration of applicable insurance coverage.

Gains (losses) on disposition of equipment increased from a loss of 0.2% of revenues, before fuel surcharges, for the year ended December 31, 2024 to a gain of 4.3% of revenues, before fuel surcharges, for the year ended December 31, 2025. The Company recognized a net loss on disposition of equipment of approximately $0.8 million during 2024, compared to net gains of approximately $15.5 million during 2025. The increase was primarily attributable to higher disposition volumes in 2025, including the sale of approximately 650 additional trailers and 250 additional trucks compared to 2024, as well as the sale of certain equipment whose carrying values had been reduced in 2024 as a result of impairment charges. The increased volume of disposals was driven in part by the reduction in estimated useful lives of trailers implemented in 2024, which accelerated the planned retirement and disposal of certain assets that were not previously expected to be sold in 2025.

Non-operating income increased from 1.9% of revenues, before fuel surcharges, during 2024 to 2.8% of revenues, before fuel surcharges, during 2025. This increase resulted primarily from an increase in the market value of our marketable equity securities portfolio and an increase in the Company’s net realized gains from the sale of certain marketable equity securities during the year-ended December 31, 2025 as compared to the year ended December 31, 2024.

Interest expense increased from 2.9% of revenues, before fuel surcharges, for the year ended December 31, 2024 to 4.7% of revenues, before fuel surcharges, for the year ended December 31, 2025. The increase

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