What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-08-05 · 448 added, 307 removed, 964 unchanged (44% of the section changed)

4 unchanged sentences

(In thousands, except share data)

June 30, 2021

September 30, 2021

December 31, 2020

85 unchanged sentences

40,000,000 shares authorized;

16,211,918 shares issued and 14,442,750 outstanding as of June 30, 2021;

16,125,786 shares issued and 14,367,543 outstanding as of September 30, 2021;

and 16,183,139 shares issued and 14,784,214 outstanding as of December 31, 2020

6 unchanged sentences

Treasury stock at cost;

1,769,168 and 1,398,925 shares as of June 30, 2021 and December 31, 2020, respectively

1,758,243 and 1,398,925 shares as of September 30, 2021 and December 31, 2020, respectively

( 24,218 )  

15 unchanged sentences

FOR THE 

three and six months ended June 30, 2021 and 2020

three and nine months ended September 30, 2021 and 2020

(In thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Freight revenue

15 unchanged sentences

Interest expense, net

Income (loss) from equity method investment

Income from equity method investment

Income (loss) before income taxes

1 unchanged sentence

Income (loss) from continuing operations, net of tax

(Loss) income from discontinued operations, net of tax

Income from discontinued operations, net of tax

Net income (loss)

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE three and six months ended June 30, 2021 and 2020

FOR THE three and nine months ended September 30, 2021 and 2020

(Unaudited and in thousands )

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net income (loss)

3 unchanged sentences

Other comprehensive (loss) income:

Unrealized (loss) gain on effective portion of cash flow hedges, net of tax of $ 157 and ($ 235 ) in 2021 and ($ 9 ) and $ 809 in 2020, respectively

( 407 )  

Reclassification of cash flow hedge losses (gains) into statement of operations, net of tax of ($ 45 ) and $ 6 in 2021 and ($ 115 ) and ($ 129 ) in 2020, respectively

( 35 )  

Reclassification of losses (gains) on sale of investments classified as available-for-sale

Unrealized gain (loss) on effective portion of cash flow hedges, net of tax of ($5) and ($240) in 2021 and $12 and $821 in 2020, respectively

( 34 )  

Total other comprehensive (loss) income

Reclassification of cash flow hedge losses into statement of operations, net of tax of ($44) and ($38) in 2021 and ($56) and ($185) in 2020, respectively

Reclassification of (gains) losses on sale of investments classified as available-for-sale

( 63 )  

Total other comprehensive income (loss)

Comprehensive income (loss)

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE three and six months ended June 30, 2021 and 2020

FOR THE three and nine months ended September 30, 2021 and 2020

(Unaudited and in thousands)

For the Three and Six Months Ended June 30, 2021

For the Three and Nine Months Ended September 30, 2021

Comprehensive

6 unchanged sentences

Balances at March 31, 2021

Other comprehensive loss

Other comprehensive income

Share repurchase

2 unchanged sentences

Balances at June 30, 2021

For the Three and Six Months Ended June 30, 2020

Other comprehensive income

Share repurchase

Stock-based employee compensation expense

Issuance of restricted shares, net

Balances at September 30, 2021

For the Three and Nine Months Ended September 30, 2020

Comprehensive

6 unchanged sentences

Balances at March 31, 2020

Other comprehensive income

Other comprehensive loss

Share repurchase

Stock-based employee compensation expense

Stock-based employee compensation expense reversal

Issuance of restricted shares, net

Balances at June 30, 2020

Other comprehensive loss

Stock-based employee compensation expense

Issuance of restricted shares, net

Balances at September 30, 2020

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE  six months ended June 30, 2021 and 2020

FOR THE  nine months ended September 30, 2021 and 2020

(Unaudited and in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income to net cash provided (used) by operating activities:

7 unchanged sentences

Stock-based compensation expense

(Income) loss from equity method investment

Return on investment in affiliated company

Income from equity method investment

Return on investment in equity method investee

Gain on disposition of property and equipment

Gain on disposition of reportable segment

Gain on reversal of contingent loss of discontinued operations

11 unchanged sentences

Acquisition of property and equipment

Proceeds from disposition of property and equipment

Proceeds from disposition of reportable segment

Proceeds from dispositions of property and equipment

Net cash flows provided by investing activities

30 unchanged sentences

Our operating results are subject to seasonal trends when measured on a quarterly basis;

therefore, operating results for the six months ended June 30, 2021  are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 .

therefore, operating results for the nine months ended September 30, 2021  are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 .

These condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10 -K for the year ended December 31, 2020 .

11 unchanged sentences

Additionally, Triumph was able to collect some funds related to our fourth quarter 2020 accrual that allowed us the opportunity to reverse $ 3.4 million of our accrual during the first quarter of 2021.

During the second quarter of 2021 we repaid $ 31.0 million of the borrowings under the Draw Note resulting in $ 4.6 million outstanding as of June 30, 2021. 

During the second quarter of 2021 we repaid $ 31.0 million of the borrowings under the Draw Note and during the third quarter of 2021 we repaid the remaining balance.

As of September 30, 2021, there were no outstanding borrowings under the Draw Note and a remaining contingent liability of $ 5.1 million.

The payment of amounts with respect to the indemnification obligations could create volatility in our reported future financial results and could have an adverse effect on our results of operations, cash flows, available liquidity, and total indebtedness.

32 unchanged sentences

There were approximately 193,000 and 209,000 shares issuable upon conversion of unvested restricted shares for the 

three or six months ended June 30, 2021 , respectively.

Unvested restricted shares were not included in the computation of diluted (loss) income per share for the same prior period as the inclusion would have been anti-dilutive due to the net loss.

three or nine months ended September 30, 2021 , respectively.

There were approximately 133,000 shares issuable upon conversion of unvested restricted shares for the 

three months ended September 30, 2020. 

Unvested restricted shares were not included in the computation of diluted (loss) income per share for the nine months ended September 30, 2020 

as the inclusion would have been anti-dilutive due to the net loss.

There were approximately 

1,171,000 and no outstanding stock options at June 30, 2021 and June 30, 2020 , respectively. Income per share is the same for both Class A and Class B shares.

1,171,000 and no outstanding stock options at September 30, 2021 and September 30, 2020 , respectively. Income per share is the same for both Class A and Class B shares.

The following table sets forth, for the periods indicated, the calculation of net income (loss) per share included in the condensed consolidated statements of operations:

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Income (loss) from continuing operations

(Loss) income from discontinued operations

$ 16,442  

$ 4,713  

$ 40,459  

Income from discontinued operations

Net income (loss)

$ 16,442  

$ 7,501  

$ 42,999  

Denominator for basic income (loss) per share –

weighted-average shares

16,782  

17,134  

16,832  

17,435  

Effect of dilutive securities:

2 unchanged sentences

Denominator for diluted income (loss) per share adjusted weighted-average shares and assumed conversions

16,975  

17,267  

17,041  

17,435  

Basic income (loss) per share:

Income (loss) from continuing operations

$ 0.98  

$ 0.28  

$ 2.40  

Income from discontinued operations

Net income (loss) (1)

$ 0.98  

$ 0.44  

$ 2.55  

Diluted income (loss) per share:

Income (loss) from continuing operations

$ 0.97  

$ 0.27  

$ 2.37  

Income from discontinued operations

Net income (loss) (1)

$ 0.97  

$ 0.43  

$ 2.52  

( 1 ) Sum of the individual amounts may not add due to rounding.

14 unchanged sentences

Hedge derivatives

June 30, 2021

September 30, 2021

December 31, 2020 (1)

Net Fair Value of Derivative

$ (2,055 )  

Quoted Prices in Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

(2,055 )  

Significant Unobservable Inputs (Level 3)

1 unchanged sentence

Available-for-sale securities

June 30, 2021

September 30, 2021

December 31, 2020

Fair Value of Securities

$ 1,541  

$ 1,310  

Quoted Prices in Active Markets (Level 1)

4 unchanged sentences

Interest rates that are currently available to us for issuance of long-term debt with similar terms and remaining maturities are used to estimate the fair value of our long-term debt, which primarily consists of revenue equipment installment notes. The fair value of our revenue equipment installment notes approximated the carrying value as of 

June 30, 2021 , as the weighted average interest rate on these notes approximates the market rate for similar debt.

Borrowings under our revolving Credit Facility (as defined herein) approximate fair value due to the variable interest rate on that facility. There were no fuel hedge derivatives outstanding as of June 30, 2021 .

September 30, 2021 , as the weighted average interest rate on these notes approximates the market rate for similar debt.

The fair value of all interest rate swap agreements that were in effect as of 

June 30, 2021 was an approximately $ 2.2 million liability.

September 30, 2021 was an approximately $ 2.1 million liability.

Discontinued Operations

4 unchanged sentences

Prior periods have been adjusted to conform to the current presentation.

The following table summarizes the results of our discontinued operations for the three and six months ended June 30, 2021 and 2020 :

The following table summarizes the results of our discontinued operations for the three and nine months ended September 30, 2021 and 2020 :

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Total revenue

$ 5,397  

$ 5,255  

Operating expenses

Operating income

( 3,601 )  

Operating income

( 25 )  

3 unchanged sentences

Income before income taxes

( 25 )  

Income tax (benefit) expense

3 unchanged sentences

$ 4,485  

Operating income for the 

six months ended June 30, 2021  relates to the gain on the reversal of our contingent loss liability in the amount of $ 3.4 million. Reversal of contingent liability for the six months ended 

June 30, 2021 relates to the reduced exposure of future indemnification by the Company to Triumph, as a result of the collection of covered receivables identified in the amended purchase agreement, as described in Note 1.

Operating income for the nine months ended September 30, 2021  relates to the gain on the reversal of our contingent loss liability in the amount of $ 3.4 million. Reversal of contingent liability for the nine months ended 

September 30, 2021 relates to the reduced exposure of future indemnification by the Company to Triumph, as a result of the collection of covered receivables identified in the amended purchase agreement, as described in Note 1.

Interest expense not directly attributable to or related to other operations has been allocated to discontinued operations in a manner consistent with debt needed to finance the net average funds employed by the Factoring reportable segment, multiplied by the Company’s weighted average interest rate.

The following table summarizes the major classes of assets and liabilities included as discontinued operations as of 

June 30, 2021 and December 31, 2020 :

September 30, 2021 and December 31, 2020 :

(in thousands)

June 30, 2021

September 30, 2021

December 31, 2020

15 unchanged sentences

$ 44,967  

There were no net cash flows related to discontinued operations for the six months ended June 30, 2021 .

For the six months ended June 30, 2020 , discontinued operations used $ 10.0 million of net cash flows from operating activities, and there were no related investing or financing cash flows.

There were no net cash flows related to discontinued operations for the nine months ended September 30, 2021 .

For the nine months ended September 30, 2020 , discontinued operations used $ 10.0 million of net cash flows from operating activities, and there were no related investing or financing cash flows.

The following unaudited summary information is presented on a consolidated pro forma basis as if the Factoring assets were sold as of January 1, 2020.

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Total revenue

6 unchanged sentences

40,459  

28,843  

Income (loss) per basic share from continuing operations

9 unchanged sentences

Segment Information

As of September 30, 2020, the segment formerly known as Highway Services is now reflected as Expedited, given the change in business mix surrounding the exit of the majority of the solo-refrigerated business in the second quarter of 2020.

 In addition, given management changes and growth, we have reported Warehousing as a separate reportable segment from Managed Freight.

We believe the updated reportable segments reflect our service offerings, strategic direction, and how management, including our chief operating decision maker, monitors our performance.

four reportable segments include:

We have four reportable segments:

The Expedited segment primarily provides truckload services to customers with high service freight and delivery standards, such as 1,000 miles in 22 hours, or 15 -minute delivery windows.

14 unchanged sentences

We evaluate performance based on operating income of the respective business units.

The following table summarizes our total revenue by our four reportable segments, as used by our chief operating decision maker in making decisions regarding allocation of resources etc., for the three and six months ended June 30, 2021 and 2020 :

(in thousands)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Managed Freight

Total revenue from external customers

$ 85,289  

$ 83,477  

$ 90,072  

$ 15,723  

$ 274,561  

Intersegment revenue

Operating income (loss)

Six Months Ended June 30, 2021

11,064  

( 659 )  

20,083  

Nine Months Ended September 30, 2021

Managed Freight

Total revenue from external customers

$ 251,139  

$ 240,791  

$ 213,104  

$ 46,741  

$ 751,775  

Intersegment revenue

Operating income (loss)

Three Months Ended June 30, 2020

27,479  

( 2,629 )  

21,510  

48,925  

Three Months Ended September 30, 2020

Managed Freight

Total revenue from external customers

$ 78,410  

$ 71,104  

$ 47,595  

$ 13,721  

$ 210,830  

Intersegment revenue

Operating (loss) income

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Managed Freight

Total revenue from external customers

$ 244,347  

$ 218,833  

$ 112,695  

$ 37,458  

$ 613,333  

Intersegment revenue

10,213  

Operating (loss) income

( 11,845 )  

( 13,796 )  

( 893 )  

(in thousands)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Total external revenues for reportable segments

$ 274,561  

$ 210,830  

$ 751,775  

$ 613,333  

Intersegment revenues for reportable segments

10,213  

Elimination of intersegment revenues

( 2,494 )  

( 2,610 )  

( 4,674 )  

Total consolidated revenues

Prior period segment results have been recast for internal reporting changes so that they are comparable to current period reporting.

$ 274,561  

$ 210,830  

$ 751,775  

$ 613,333  

Income tax expense in both 

4 unchanged sentences

Our liability recorded for uncertain tax positions as of 

June 30, 2021 has decreased by less than $ 0.1 million since December 31, 2020 .

The net deferred tax liability of $ 73.5 million primarily relates to differences in cumulative book versus tax depreciation of property and equipment, partially off-set by net operating loss carryovers and insurance claims that have been reserved but not paid.

The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis, we assess the need for adjustment of the valuation allowance. Based on forecasted taxable income resulting from the reversal of deferred tax liabilities, primarily generated by accelerated depreciation for tax purposes in prior periods, and tax planning strategies available to us, a valuation allowance has been established at June 30, 2021 , for $ 0.4 million related to certain state net operating loss carryforwards. If these estimates and related assumptions change in the future, we may be required to modify our valuation allowance against the carrying value of the deferred tax assets.

September 30, 2021 has decreased by less than $ 0.1 million since December 31, 2020 .

The net deferred tax liability of $ 77.9 million primarily relates to differences in cumulative book versus tax depreciation of property and equipment, partially off-set by net operating loss carryovers and insurance claims that have been reserved but not paid.

The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis, we assess the need for adjustment of the valuation allowance. Based on forecasted taxable income resulting from the reversal of deferred tax liabilities, primarily generated by accelerated depreciation for tax purposes in prior periods, and tax planning strategies available to us, a valuation allowance has been established at September 30, 2021 , for $ 0.4 million related to certain state net operating loss carryforwards. If these estimates and related assumptions change in the future, we may be required to modify our valuation allowance against the carrying value of the deferred tax assets.

March 27, 2020, 

1 unchanged sentence

The CARES Act, among other things, includes provisions for refundable payroll tax credits, deferral for employer-side social-security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

On June 30, 2021, the Company has recorded a benefit of $ 0.6 million against labor expense for refundable payroll tax credits.

On September 30, 2021, the Company has recorded a benefit of $ 0.6 million against labor expense for refundable payroll tax credits.

The Company will continue to monitor the benefits of the Cares Act going forward.

Current and long-term debt and lease obligations consisted of the following as of 

June 30, 2021 and December 31, 2020 :

September 30, 2021 and December 31, 2020 :

(in thousands)

June 30, 2021

September 30, 2021

December 31, 2020

1 unchanged sentence

$ 15,000  

Borrowings under the Draw Note

Revenue equipment installment notes;

weighted average interest rate of 1.6 % at June 30, 2021, and 2.0 % at December 31, 2020, due in monthly installments with final maturities at various dates ranging from December 2021 to November 2022, secured by related revenue equipment

weighted average interest rate of 1.6% at September 30, 2021, and 2.0% at December 31, 2020, due in monthly installments with final maturities at various dates ranging from December 2021 to November 2022, secured by related revenue equipment

11,358  

Real estate notes;

interest rate of 1.8 % at June 30, 2021 and 1.9 % at December 31, 2020 due in monthly installments with a fixed maturity at August 2035, secured by related real estate

interest rate of 1.8% at September 30, 2021 and 1.9% at December 31, 2020 due in monthly installments with a fixed maturity at August 2035, secured by related real estate

20,642  

24 unchanged sentences

or (B) the sum of (i) 87.5 % of eligible accounts receivable, plus (ii) the least of (a) 85 % of the appraised net orderly liquidation value of eligible revenue equipment, (b) 100 % of the net book value of eligible revenue equipment, (c) 40.9 % of the Lenders' aggregate revolving commitments under the Credit Facility, or (d) $ 45.0 million, plus (iii) the lesser of (a) $ 10.4 million or (b) 80 % of the appraised fair market value of eligible real estate, as reduced by a periodic amortization amount.

We had $ 10.0 million borrowings under the Credit Facility as of June 30, 2021 , undrawn letters of credit outstanding of approximately $ 29.5 million, and available borrowing capacity of $ 70.5 million.

As of June 30, 2021 , there were 

no  base rate and $ 10.0 million of LIBOR loans.

Based on availability as of June 30, 2021 and 2020 , there was no fixed charge coverage requirement.

We had no  borrowings under the Credit Facility as of September 30, 2021 , undrawn letters of credit outstanding of approximately $ 29.5 million, and available borrowing capacity of $ 80.5 million.

As of September 30, 2021 , there were 

no  base rate and 

no of LIBOR loans.

Based on availability as of September 30, 2021 and 2020 , there was no fixed charge coverage requirement.

The Credit Facility includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the Credit Facility may be accelerated, and the Lenders' commitments may be terminated. If an event of default occurs under the Credit Facility and the Lenders cause, or have the ability to cause, all of the outstanding debt obligations under the Credit Facility to become due and payable, this could result in a default under other debt instruments that contain acceleration or cross-default provisions.

18 unchanged sentences

During the first quarter of 2021, we received an indemnification call from Triumph of $ 35.6 million related to the TFS Settlement, which was funded by drawing on the Draw Note.

During the second quarter of 2021 we repaid $ 31.0 million of the borrowings under the Draw Note resulting in $ 4.6 million outstanding as of June 30, 2021.

During the second quarter of 2021 we repaid $ 31.0 million of the borrowings under the Draw Note and during the third quarter of 2021 we repaid the remaining balance. As of September 30, 2021, there were no outstanding borrowings under the Draw Note.

Lease Obligations

The finance leases in effect at 

June 30, 2021 terminate from 

September 2021 through 

September 30, 2021 terminate from 

December 2021 through 

November 2023  and contain guarantees of the residual value of the related equipment by us.

 A summary of our lease obligations at June 30, 2021  and 2020 are as follows:

 A summary of our lease obligations at September 30, 2021  and 2020 are as follows:

(dollars in thousands)

1 unchanged sentence

Three Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Finance lease cost:

Amortization of right-of-use assets

$ 1,018  

$ 2,806  

$ 3,023  

Interest on lease liabilities

Operating lease cost

18,044  

19,782  

Variable lease cost

Total lease cost

$ 7,332  

$ 7,080  

$ 21,442  

$ 23,971  

Other information

2 unchanged sentences

Operating cash flows from operating leases

14,388  

20,140  

Financing cash flows from finance leases

Right-of-use assets obtained in exchange for new finance lease liabilities

Right-of-use assets obtained in exchange for new operating lease liabilities

Weighted-average remaining lease term—finance leases

Weighted-average remaining lease term—operating leases

13,265  

15,795  

Weighted-average remaining lease term—finance leases (in years)

Weighted-average remaining lease term—operating leases (in years)

Weighted-average discount rate—finance leases

Weighted-average discount rate—operating leases

June 30, 2021 , and December 31, 2020 , right-of-use assets of $ 31.4 million and $ 37.4 million for operating leases and $ 25.2 million and $ 29.4 million for finance leases, respectively, are included in net property and equipment in our condensed consolidated balance sheets.

September 30, 2021 , and December 31, 2020 , right-of-use assets of $ 40.2 million and $ 37.4 million for operating leases and $ 24.3 million and $ 29.4 million for finance leases, respectively, are included in net property and equipment in our condensed consolidated balance sheets.

Operating lease right-of-use asset amortization is included in revenue equipment rentals and purchased transportation, communication and utilities, and general supplies and expenses, depending on the underlying asset, in the condensed consolidated statement of operations. Amortization of finance leased assets is included in depreciation and amortization expense in the condensed consolidated statement of operations.

Our future minimum lease payments as of June 30, 2021 , are summarized as follows by lease category:

Our future minimum lease payments as of September 30, 2021 , are summarized as follows by lease category:

(in thousands)

2021 (1)  

$ 4,607  

$ 7,655  

17,645  

13,669  

Total minimum lease payments

$ 49,275  

$ 13,579  

amount representing interest

( 7,904 )  

Present value of minimum lease payments

$ 41,371  

$ 13,250  

current portion

( 16,847 )  

Lease obligations, long-term

( 1 ) Excludes the six months ended June 30, 2021 .

$ 24,524  

$ 5,751  

( 1 ) Excludes the nine months ended September 30, 2021 .

Stock -Based Compensation

15 unchanged sentences

The Incentive Plan permits annual awards of shares of our Class A common stock to executives, other key employees, consultants, non-employee directors, and eligible participants under various types of options, restricted stock, or other equity instruments.

June 30, 2021 , there were 

1,054,176 shares remaining of the 

4,200,000 shares available for award under the Incentive Plan. 

September 30, 2021 , there were 

1,049,793  shares remaining of the 4,200,000 shares available for award under the Incentive Plan. 

No awards may be made under the Incentive Plan after June 1, 2030.

To the extent available, we have issued treasury stock to satisfy all share-based incentive plans.

Included in salaries, wages, and related expenses within the condensed consolidated statements of operations is stock-based compensation expense of $ 2.3 million and $ 0.4 million for the three months ended June 30, 2021 and 2020, respectively, and $ 3.8 million and $ 0.8 million for the six months ended June 30, 2021, respectively. Of the stock compensation expense recorded for the three months ended June 30, 2021, 

$ 1.6 million relates to restricted shares and $ 0.7 million relates to unvested options.

Of the stock compensation expense recorded for the six months ended June 30, 2021, $ 2.7 million relates to restricted shares and $ 1.2 million relates to unvested options. Included in general supplies and expenses within the condensed consolidated statements of operations is stock-based compensation expense for non-employee directors of less than $ 0.1 million and $ 0.0 million for the three and six months ended June 30, 2021 and 2020, respectively. All stock compensation expense recorded in the 

Included in salaries, wages, and related expenses within the condensed consolidated statements of operations is stock-based compensation expense of $ 1.7 million and the reversal of $ 0.2 million for the three months ended September 30, 2021 and 2020, respectively, and compensation expense of $ 5.4 million and $ 0.7 million for the nine months ended September 30, 2021 and 2020 , respectively. Of the stock compensation expense recorded for the three months ended 

September 30, 2021 , $ 1.0 million relates to restricted shares and $ 0.7 million relates to unvested options.

Of the stock compensation expense recorded for the nine months ended September 30, 2021 , $ 3.6 million relates to restricted shares and $ 1.8 million relates to unvested options. Included in general supplies and expenses within the condensed consolidated statements of operations is stock-based compensation expense for non-employee directors of $ 0.1 million and $ 0.2 million for the three and nine months ended September 

30, 2021, respectively and $ 0.4 million for the three and nine months ended September 30, 2020.

All stock compensation expense recorded in the 

2020  periods relates to restricted shares, as no unvested options were outstanding during this period.

The Incentive Plan allows participants to pay the federal and state minimum statutory tax withholding requirements related to awards that vest or allows participants to deliver to us shares of Class A common stock having a fair market value equal to the minimum amount of such required withholding taxes.

To satisfy withholding requirements for shares that vested through June 30, 2021 , certain participants elected to forfeit receipt of an aggregate of 

42,803 shares of Class A common stock at a weighted average per share price of $ 20.56  based on the closing price of our Class A common stock on the dates the shares vested in 2021 , in lieu of the federal and state minimum statutory tax withholding requirements.

To satisfy withholding requirements for shares that vested through September 30, 2021 , certain participants elected to forfeit receipt of an aggregate of 

47,128  shares of Class A common stock at a weighted average per share price of $ 20.55  based on the closing price of our Class A common stock on the dates the shares vested in 2021 , in lieu of the federal and state minimum statutory tax withholding requirements.

We remitted $ 1.0 million to the proper taxing authorities in satisfaction of the employees' minimum statutory withholding requirements.

4 unchanged sentences

District Court in the Central District of California and subsequently the case was transferred to the U.S.

District Court in the Eastern District of Tennessee where the case is now pending. This lawsuit was settled at mediation during the quarter ended June 30, 2021, for an immaterial amount, pending court approval.

Our accruals related to this claim as of June 30, 2021 

were sufficient to cover this settlement.

On February, 28 2019, Covenant Transport was named in a separate (but related) lawsuit filed in the Superior Court of Los Angeles County, California requesting civil penalties under the California Private Attorneys’

District Court in the Eastern District of Tennessee where the case is now pending. This lawsuit was settled at mediation on April 29, 2021, for an immaterial amount, pending court approval.

Our accruals related to this claim as of September 

30, 2021  were sufficient to cover this settlement.

On February 

28, 2019, Covenant Transport was named in a separate (but related) lawsuit filed in the Superior Court of Los Angeles County, California requesting civil penalties under the California Private Attorneys’

General Act for the same underlying wage and hour claims at issue in the putative class action case noted above.

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Plaintiffs contend that these notifications evidence a collusive agreement by the named defendants to restrain competition among trucking companies in California and suppress wages.

Southern Refrigerated Transport, Inc.

and Covenant Transport, Inc.

are vigorously defending themselves against these claims.

We do not currently have enough information to make a reasonable estimate as to the likelihood, or amount of a loss, or a range of reasonably possible losses as a result of this claim, as such there have been no related accruals recorded as of June 30, 2021 .

This lawsuit was settled following mediation on August 20, 2021, for an immaterial amount pending court approval. Our accruals related to this claim as of September 

30, 2021  were sufficient to cover this settlement.

On February 11, 2021, a lawsuit was filed against Covenant Transport on behalf of Wesley Maas (a California resident and former driver) who is seeking to have the lawsuit certified as a class action.

The lawsuit was filed in the Superior Court of San Bernardino County, California.

Covenant Transport intends to vigorously defend itself in this matter. We do not currently have enough information to make a reasonable estimate as to the likelihood, or amount of a loss, or a range of reasonably possible losses as a result of this claim, as such there have been no related accruals recorded as of 

June 30, 2021 . 

The Complaint alleges claims for failure to pay all lawful wages, failure to provide lawful meal and rest periods or compensation in lieu thereof, failure to timely pay wages, failure to comply with itemized wage statement provisions, failure to indemnify for expenditures, and violations of California Labor Code and unfair competition laws.  Covenant Transport intends to vigorously defend itself in this matter. We do not currently have enough information to make a reasonable estimate as to the likelihood, or amount of a loss, or a range of reasonably possible losses as a result of this claim, as such there have been no related accruals recorded as of 

September 30, 2021. 

Based on our present knowledge of the facts and, in certain cases, advice of outside counsel, management believes the resolution of open claims and pending litigation, discussed above, taking into account existing reserves, is not likely to have a materially adverse effect on our condensed consolidated financial statements, however, any future liability claims could impact this analysis.

We had $ 29.5 million of outstanding and undrawn letters of credit as of June 30, 2021  and December 31, 2020 .

The letters of credit are maintained primarily to support our insurance programs. Additionally, we had $ 40.4  million of availability on a line of credit from Triumph solely to fund any indemnification owed to Triumph in relation to the sale of TFS.

We had $ 29.5 million of outstanding and undrawn letters of credit as of September 30, 2021  and December 31, 2020 .

The letters of credit are maintained primarily to support our insurance programs. Additionally, we had $ 45.0 million of availability on a line of credit from Triumph solely to fund any indemnification owed to Triumph in relation to the sale of TFS.

Equity Method Investment

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We have not guaranteed any of TEL's debt and have no obligation to provide funding, services, or assets.

In May 2016, the operating agreement with TEL was amended to, among other things, remove the previously agreed to fixed date purchase options.

Our option to acquire up to the remaining 51 % of TEL would have expired May 31, 2016, and TEL’s majority owners would have received the option to purchase our ownership in TEL.

There are no current put rights to purchase or sell with any owners.

In May 2016, the operating agreement with TEL was amended to, among other things, remove the previously agreed to fixed date purchase options. There are no current put rights to purchase or sell with any owners.

TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent.

There are no third -party liquidity arrangements, guarantees, and/or other commitments that may affect the fair value or risk of our interest in TEL.

We sold $ 1.0 million and 

no tractors or trailers to TEL during the six months ended June 30, 2021 and 2020 , respectively, and we received $ 0.4 million and $ 4.4 million, respectively, for providing various maintenance services, certain back-office functions, building and lot rental, and for miscellaneous equipment.

There was no equipment purchased from TEL during the six months ended June 30, 2021 and 2020 .

Additionally, we paid approximately $ 0.1  million to TEL for leases of revenue equipment during each of the 

six months ended June 30, 2021 and 2020 . We recognized a net deferral of gains totaling less than $ 0.1 million and net reversal of previously deferred gains totaling less than $ 0.1 million for the six months ended June 30, 2021 and 2020 , respectively, representing 49 % of the gains on units sold to TEL less any gains previously deferred and recognized when the equipment was subsequently sold to a third -party. Deferred gains, totaling $ 0.3 million and $ 0.2 million at 

June 30, 2021  and 2020 , respectively, are being carried as a reduction in our investment in TEL. At 

June 30, 2021  and 

December 31, 2020 , we had accounts receivable from TEL of $ 0.7 million related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL’s behalf.

We sold tractors and trailers to TEL for $ 1.0 million and $ 0.0 million during the nine months ended September 30, 2021 and 2020 , respectively, and we received $ 0.7 million and $ 6.3 million, respectively, for providing various maintenance services, certain back-office functions, building and lot rental, and for miscellaneous equipment for the same periods.

There was no equipment purchased from TEL during the nine months ended September 30, 2021 and 2020 .

Additionally, we paid approximately $ 0.2  million and $ 0.1 million to TEL for leases of revenue equipment during each of the 

nine months ended September 30, 2021 and 2020 , respectively.

We recognized a net deferral of gains totaling less than $ 0.1 million and net reversal of previously deferred gains totaling less than $ 0.1 million for the nine months ended September 30, 2021 and 2020 , respectively, representing 49 % of the gains on units sold to TEL less any gains previously deferred and recognized when the equipment was subsequently sold to a third -party. Deferred gains, totaling $ 0.3 million and $ 0.2 million at 

September 30, 2021  and 2020 , respectively, are being carried as a reduction in our investment in TEL. At 

September 30, 2021  and 

December 31, 2020 , we had accounts receivable from TEL of $ 0.8 million and $ 0.7 million, respectively, related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL’s behalf.

We have accounted for our investment in TEL using the equity method of accounting, and thus our financial results include our proportionate share of TEL's 

2021 net income through June 30, 2021 , or $ 6.3 million. We received no equity distributions from TEL during the 

six months ended June 30, 2021 and 2020 .

2021 net income through September 30, 2021 , or $ 9.6 million. We received $ 2.0 million of equity distributions from TEL during the nine months ended September 30, 2021.

Our accounts receivable from TEL and investment in TEL as of 

June 30, 2021  and December 31, 

September 30, 2021  and December 31, 

2020 are as follows (in thousands):

Balance Sheet Line Item:

June 30, 2021

September 30, 2021

December 31, 2020

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(in thousands)

As of June 30,

As of September 30,

As of December 31,

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Three Months Ended  

Six Months Ended  

Nine Months Ended  

September 30,

$ 27,626  

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Cost of Sales

10,332  

Operating Expenses

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24,644  

Net Income (Loss)

10,162  

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$ 2,729  

$ 19,191  

$ 2,308  

Goodwill and Other Assets

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There was no change to the gross amount of identifiable intangible assets during the 

six months ended June 30, 2021 .

nine months ended September 30, 2021 .

At the end of its useful life, the Landair trade name will have a residual value of $ 0.5 million.

Amortization expense of $ 2.3 million and $ 2.8 million for the six months ended June 30, 2021 and 2020 , respectively, was included in depreciation and amortization in the condensed consolidated statements of operations.

Amortization expense of $ 3.5  million and $ 3.9  million for the nine months ended September 30, 2021 and 2020 , respectively, was included in depreciation and amortization in the condensed consolidated statements of operations.

A summary of other intangible assets as of 

June 30, 2021 and 

September 30, 2021 and 

December 31, 2020 is as follows:

(in thousands)

June 30, 2021

September 30, 2021

Gross intangible assets

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Remaining life (months)

$ 2,402  

$ ( 1,822 )  

Managed Freight

( 757 )  

Total trade name

( 3,336 )  

Non-Compete agreement:

( 914 )  

Managed Freight

( 130 )  

( 356 )  

Total non-compete agreement

( 1,400 )  

Customer relationships:

14,072  

( 3,518 )  

10,554  

Managed Freight

( 423 )  

12,436  

( 3,109 )  

Total customer relationships:

28,200  

( 7,050 )  

21,150  

Total other intangible assets

$ 34,000  

$ ( 11,785 )  

$ 22,214  

(in thousands)

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( 2,206 )  

Non-Compete agreement:

( 914 )  

Managed Freight

( 130 )  

( 356 )  

Total non-compete agreement

( 1,400 )  

Customer relationships:

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$ 24,518  

The carrying amount of goodwill was $ 42.5 million at June 30, 2021 and December 31, 2020 , respectively.

On February 10, 2020, our Board approved the repurchase of up to $ 20.0 million of the Company’s outstanding Class A common stock.

The program was suspended on March 26, 2020, with approximately $ 2.5 million remaining authorized. On January 25, 2021, our Board approved the repurchase of up to $ 40.0 million of the Company's outstanding Class A common stock.

There were 0.5 million and 1.4 million shares repurchased in the open market for $ 8.4  million and $ 17.5 million during the six months ended June 30, 2021 and 2020 , respectively.

The Company has the ability to repurchase up to $ 31.6 million of the Company's outstanding Class A common stock under the current stock repurchase program as circumstances warrant based on market conditions, cash flow requirements, securities law limitations, and other factors.

The carrying amount of goodwill was $ 42.5 million at September 30, 2021 and December 31, 2020 , respectively.

On February 10, 2020, our Board approved the repurchase of up to $ 20.0 million of our outstanding Class A common stock.

Under such authorization, we repurchased 0.5 million shares of our Class A common stock for $ 8.4 million between January 2021 and April 2021.

On August 5, 2021, our Board increased such authorization to $ 40.0 million.

On August 9, 2021, we commenced a modified Dutch tender offer to purchase for cash shares of our Class A common stock for an aggregate purchase price of not more than $ 40.0 million and at a price per share of not less than $ 21.00 and not more than $ 23.00 per share.

The tender offer expired on September 

Through the tender offer, we accepted for purchase 86,132 shares of our Class A common stock at a purchase price of $ 23.00 per share for an aggregate purchase price of approximately $ 2.0 million, excluding fees and expenses.

The shares of Class A common stock purchased through the tender offer were immediately retired.

The excess purchase price over par value was recorded as a reduction of retained earnings on the unaudited condensed consolidated balance sheet as of September 30, 2021.

Including the tender offer, we repurchased 

0.6 million and 1.4 million shares for $ 10.3 million and $ 17.5 million during the nine months ended September 30, 2021 and 2020 , respectively.

We have the ability to repurchase up to $ 38.0 million of our outstanding Class A common stock under the current stock repurchase program as circumstances warrant based on market conditions, cash flow requirements, securities law limitations, and other factors.

Our business requires significant capital investments over the short-term and the long-term.

We generally finance our capital requirements with borrowings under our Credit Facility, cash flows from operations, long-term operating leases, finance leases, secured installment notes with finance companies, and proceeds from the sale of our used revenue equipment.

We had working capital (total current assets less total current liabilities) of $ 21.5 million and $ 14.4 million at June 30, 2021  and December 31, 2020 , respectively.

We had working capital (total current assets less total current liabilities) of $ 31.5 million and $ 14.4 million at September 30, 2021  and December 31, 2020 , respectively.

Based on our expected financial condition, net capital expenditures, and results of operations and related net cash flows, we believe our working capital and sources of liquidity will be adequate to meet our current and projected needs for at least the next year.

As of June 30, 2021 , we had $ 10.0 million borrowings outstanding, undrawn letters of credit outstanding of approximately $ 29.5 million, and available borrowing capacity of $ 70.5 million under the Credit Facility.

Additionally, we had $ 40.4 million of availability on a line of credit from Triumph solely to fund any indemnification owed to Triumph in relation to the sale of TFS.

As of September 30, 2021 , we had no  borrowings outstanding, undrawn letters of credit outstanding of approximately $ 29.5 million, and available borrowing capacity of $ 80.5 million under the Credit Facility.

Additionally, we had $ 45.0  million of availability on a line of credit from Triumph solely to fund any indemnification owed to Triumph in relation to the sale of TFS.

Fluctuations in the outstanding balance and related availability under our Credit Facility are driven primarily by cash flows from operations and the timing and nature of property and equipment additions that are not funded through notes payable, as well as the nature and timing of collection of accounts receivable, payments of accrued expenses, and receipt of proceeds from disposals of property and equipment.

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In this Form 10-Q, statements relating to future impact of  

accounting standards, future third-party transportation provider expenses, future tax rates, expenses, and deductions, expected freight demand and volumes and trucking industry conditions, potential results of a default and testing of our fixed charge covenant under the Credit Facility or other debt agreements, expected sources of working capital and liquidity (including our mix of debt, finance leases, and operating leases as means of financing revenue equipment), future stock repurchases, if any, expected capital expenditures, allocations, and requirements, future customer relationships, expected debt reduction, including future interest expense, future driver market conditions, future use of independent contractors, expected cash flows, expected operating income, future investments in and growth of our segments and services, expected adjusted operating ratio, future trucking capacity, future rates and prices, future utilization, future depreciation and amortization, future salaries, wages, and related expenses, including driver compensation and the impact of our cost saving measures, expected net fuel costs, strategies for managing fuel costs, the effectiveness and impact of, and cash flows relating to, our fuel surcharge programs, future fluctuations in operations and maintenance expenses, expected effects and mix of our solo and team operations, future fleet size,  

management, and upgrades, the market value of used equipment, including equipment subject to operating or finance leases relative to our payment obligations under such operating leases (including residual value guarantees and the proceeds from the sale thereof), the anticipated impact of our investment in TEL, the future impact of our restructuring activities, strategic plan, and other strategic initiatives, anticipated levels of and fluctuations relating to insurance, claims, and litigation expenses, including the erosion of available limits in our aggregate insurance policies, our disposition of the assets of TFS, including any future indemnification obligations related to the TFS Portfolio,  

future Department of Transportation ( “

) safety ratings for our motor carriers and the potential impact of a change in such ratings, and the anticipated impact of the COVID-19 outbreak or other similar outbreaks, among others, are forward-looking statements.

accounting standards, future third-party transportation provider expenses, future tax rates, expenses, and deductions, expected freight demand and volumes and trucking industry conditions, potential results of a default and testing of our fixed charge covenant under the Credit Facility or other debt agreements, expected sources, as well as adequacy, of working capital and liquidity (including our mix of debt, finance leases, and operating leases as means of financing revenue equipment), future stock repurchases, if any, expected capital expenditures, allocations, and requirements, future customer relationships, expected debt reduction, including future interest expense, future driver market conditions, future use of independent contractors, expected cash flows, expected operating income, future investments in and growth of our segments and services, future market share, expected adjusted operating ratio, future trucking capacity, future rates and prices, future utilization, future depreciation and amortization, future salaries, wages, and related expenses, including driver compensation and the impact of our cost saving measures, expected net fuel costs, strategies for managing fuel costs, the effectiveness and impact of, and cash flows relating to, our fuel surcharge programs, future fluctuations in operations and maintenance expenses, expected effects and mix of our solo and team operations, future fleet size,  

management, and upgrades, availability of tractors and trailers, the market value of used equipment, including equipment subject to operating or finance leases relative to our payment obligations under such operating leases (including residual value guarantees and the proceeds from the sale thereof), the anticipated impact of our investment in TEL, the future impact of our restructuring activities, strategic plan, and other strategic initiatives, anticipated levels of and fluctuations relating to insurance, claims, and litigation expenses, including the erosion of available limits in our aggregate insurance policies, our disposition of the assets of TFS, including any future indemnification obligations related to the TFS Portfolio,  

and the anticipated impact of the COVID-19 outbreak or other similar outbreaks and related vaccination mandates, among others, are forward-looking statements.

Forward-looking statements may be identified by the use of terms or phrases such as "believe," "may," "could," "would," "will," "expects," "estimates," "projects," "anticipates," "plans," " outlook," "focus," "seek," "potential," "continue," "goal," "target," "objective," "intends," derivations thereof, and similar terms and phrases.

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Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sections entitled "Item 1A.

Risk Factors," set forth in this Form 10-Q and our Form 10-K for the year ended December 31, 2020, as amended.

Risk Factors," set forth in this Form 10-Q, our Form 10-Q for the quarter ended June 30, 2021, and our Form 10-K for the year ended December 31, 2020, as amended.

Readers should review and consider the factors discussed in "Item 1A.

Risk Factors," set forth  

in this Form 10-Q and our Form 10-K for the year ended December 31, 2020, as amended, along with various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.

in this Form 10-Q, our Form 10-Q for the quarter ended June 30, 2021, and our Form 10-K for the year ended December 31, 2020, as amended, along with various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.

All such forward-looking statements speak only as of the date of this Form 10-Q.

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Executive Overview

For the second quarter of 2021, we were pleased to report earnings per share of $0.91, which is the highest earnings for any quarter in the Company's history.

In the second quarter, we saw freight market demand firing on all cylinders as a result of growing economic activity, low inventories, and supply chain disruptions, accompanied by constrained supply due to an intensifying national driver shortage.

These conditions have continued into the third quarter.

The full impact of these factors on our operating statistics year-over-year is complicated by changes in business mix due to downsizing our refrigerated fleet and solo tractor count in the Expedited business.

We expect year-over-year comparability to be clearer in the second half of 2021.

For the third quarter of 2021, we were pleased to report earnings per share of $0.97, which is the highest earnings for any quarter in the Company's history.

In the third quarter we experienced the continuation of an exceptionally strong freight market resulting from growing economic activity, low inventories, and supply chain disruptions, accompanied by constrained capacity due to an intensifying national driver shortage.

These conditions have continued into the fourth quarter. Based on our current run-rate, we expect to generate over $1 billion in revenue and the highest annual earnings per share in our history during 2021.

Despite these achievements, we remain focused on further improving our profitability, particularly in our Dedicated segment, which fell short of our expectations for the quarter.

Although we are pleased with these results, we recognize the opportunity for further improvement, particularly in our Dedicated segment.

In the short run, this means continuing to improve rates and contractual terms with customers who are not yielding the level of consistent profit we expect from this segment of the business, and in the long run, this means holding ourselves accountable for improved margins and returns across all aspects of our business.

We are continuing to work with our Dedicated customers on contract revisions and have given exit notice to certain customers where our efforts have been unsuccessful. 

We have a robust pipeline of opportunities for our Dedicated service offering and will continue to transition business to new customers in instances where we are unable to come to terms with existing customers. We expect sequential incremental improvement in our Dedicated service offering’s operating margin in the fourth quarter of 2021. 

Our Warehousing service offering fell short of our expectations from a profitability perspective as well. 

Building rent on a newly leased facility and increased labor costs resulting from the resurgence of the COVID-19 pandemic in the third quarter were the primary drivers of the decline in profitability. 

Going forward, we expect to partially offset these costs with new business and rate increases.

As of June 30, 2020, our Factoring segment was classified as discontinued operations as it:

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Additional items of note for the 

second quarter of 

third quarter of 

2021 include the following:

Total revenue of $256.3 million, an increase of 33.7% compared with the second quarter of 2020, and freight revenue (which excludes revenue from fuel surcharges) of $231.9 million, an increase of 29.2% compared with the second quarter of 2020, despite our reduced tractor fleet;

Operating income of $18.3 million, compared with operating loss of $29.0 million in the second quarter of 2020;

Net income of $15.4 million, or $0.91 per diluted share, compared with net loss of $22.3 million, or $1.31 per diluted share, in the second quarter of 2020.

Net income from continuing operations of $15.4 million, or $0.91 per diluted share, compared to $23.2 million net loss from continuing operations or $1.36 per diluted share, in the second quarter of 2020. Net income from discontinued operations of $0.0 million, or $0.00 per diluted share, compared to net income from discontinued operations of $0.8 million, or $0.05 per diluted share, in the second quarter of 2020.

Total revenue of $274.6 million, an increase of 30.2% compared with the third quarter of 2020, and freight revenue (which excludes revenue from fuel surcharges) of $250.3 million, an increase of 

27.5% compared with the third quarter of 2020, despite our reduced tractor fleet;

Operating income of $20.1 million, compared with $6.8 million in the third quarter of 2020;

Net income of $16.4 million, or $0.97 per diluted share, compared with $7.5 million, or $0.43 per diluted share, in the third quarter of 2020.

Net income from continuing operations of $16.4 million, or $0.97 per diluted share, compared to $4.7 million or $0.27 per diluted share, in the third quarter of 2020. Net income from discontinued operations of $0.0 million, or $0.00 per diluted share, compared to $2.8 million, or $0.16 per diluted share, in the third quarter of 2020.

31% of consolidated total revenue was in our more volatile Expedited reportable segment, as compared to 37% in the second quarter of 2020;

Our Managed Freight reportable segment’s total revenue increased to $71.6 million in the 2021 quarter from $34.4 million in the 2020 quarter and the segment had an operating income of $7.3 million in the 2021 quarter compared to operating loss of $3.7 million in the 2020 quarter; 

Our equity investment in TEL has fully recovered from the soft equipment market and provided $3.4 million of pre-tax earnings in the second quarter of 2021 compared to $0.5 million in the second quarter of 2020;

Since December 31, 2020, total indebtedness, net of cash, decreased by $13.9 million to $88.1 million, primarily related to the indemnification call under the TFS Settlement, and with available borrowing capacity of $70.5 million under our Credit Facility at June 30, 2021, we do not expect to be required to test our fixed charge covenant in the foreseeable future;

Stockholders' equity and tangible book value at June 30, 2021, were $313.5 million and $248.8 million, respectively.

Our Managed Freight reportable segment’s total revenue increased to $90.1 million in the 2021 quarter from $47.6 million in the 2020 quarter and the segment had an operating income of $9.3 million in the 2021 quarter compared to $2.1 million in the 2020 quarter; 

Our equity investment in TEL has fully recovered from the soft equipment market and provided $3.2 million of pre-tax earnings in the third quarter of 2021 compared to $1.2 million in the third quarter of 2020;

Since December 31, 2020, total indebtedness, net of cash, decreased by $39.1 million to $62.8 million, and with available borrowing capacity of $80.5 million under our Credit Facility at September 30, 2021, we do not expect to be required to test our fixed charge covenant in the foreseeable future;

Stockholders' equity and tangible book value at September 30, 2021, were $329.9 million and $266.3 million, respectively.

For the balance of 2021, our short-term focus will be to continue to improve the profitability of our Dedicated segment and continue working to solidify longer term agreements with certain of our key Expedited and Brokerage customers.

Thus far, we have seen some success in these efforts.

The freight environment and our new business pipeline are both currently robust, which we believe will support our commercial plan.

The freight environment and our new business pipeline are both currently robust, which we believe will support our commercial plan and offer growth opportunities.

Potential headwinds include inefficiencies from re-engineering or replacing certain contracts, driver availability and cost, accident experience, the cost and volatility of claims, general inflation, and supply and demand factors for our customers and our industry.

At present, we expect to continue to make steady, incremental progress on our Dedicated segment’s margins over the remainder of 2021.

Over time, we expect our Managed Freight segment’s margin to gravitate toward the mid-single digits and Dedicated to gravitate toward the mid to high single digits and ultimately double digits.

Over time, we expect our Managed Freight segment’s margin to gravitate toward the mid-single digits and Dedicated's to gravitate toward the mid to high single digits and ultimately double digits.

Directionally the margin changes may offset each other to some extent as the freight and driver markets return to more balanced levels.

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This will be a gradual process of diversifying our customer base with less seasonal and cyclical exposure, implementing more consistent contracts, and investing in systems, technology, and people to support the growth of these previously under-invested areas.

With diligence and accountability, we expect to make consistent progress and be a stronger, more profitable, and more predictable business with the opportunity for significant and sustained value creation.

In addition, we will continue to evaluate organic and acquisition growth opportunities that deliver the required returns.

With diligence and accountability, we expect to grow our market share and make consistent progress and be a stronger, more profitable, and more predictable business with the opportunity for significant and sustained value creation.

Non-GAAP Reconciliation

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Operating Ratio

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

GAAP Operating Ratio:

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We are a major carrier for transportation companies such as parcel freight forwarders, less-than-truckload carriers, and third-party logistics providers that require a high level of service to support their businesses, as well as for traditional truckload customers such as manufacturers, retailers, and food and beverage shippers. 

Until the second quarter of 2020, we had four reportable segments, Highway Services, Dedicated, Managed Freight, and Factoring Services. As discussed above, our Factoring reportable segment was classified as discontinued operations as of June 30, 2020. As of September 30, 2020, the segment formerly known as Highway Services is now reflected as Expedited, given the change in business mix surrounding the exit of the majority of the solo-refrigerated business in the second quarter of 2020. In addition, given management changes and growth, we have reported Warehousing as a separate reportable segment from Managed Freight.

We believe the updated reportable segments reflect our service offerings, strategic direction, and how management, including our chief operating decision maker, monitors our performance.

Our four reportable segments include:

We have four reportable segments, which include:

The Expedited segment primarily provides truckload services to customers with high service freight and delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows.

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Revenue Equipment

At June 30, 2021, we operated 2,407 tractors and 5,314 trailers.

Of such tractors, 1,570 were owned, 670 were financed under operating leases, and 167 were provided by independent contractors, who provide and drive their own tractors. Of such trailers, 4,607 were owned, 621 were financed under finance type leases, and 86 were held under short-term operating leases. We finance a small portion of our trailer fleet and larger portion of our tractor fleet with operating leases, which generally run for a period of three to five years for tractors and five to seven years for trailers. At June 30, 2021, our fleet had an average tractor age of 1.9 years and an average trailer age of 4.7 years.

At September 30, 2021, we operated 2,348 tractors and 5,346 trailers.

Of such tractors, 1,540 were owned, 670 were financed under operating leases, and 138 were provided by independent contractors, who provide and drive their own tractors. Of such trailers, 4,628 were owned, 622 were financed under finance type leases, and 96 were held under short-term operating leases. We finance a small portion of our trailer fleet and larger portion of our tractor fleet with operating leases, which generally run for a period of three to five years for tractors and five to seven years for trailers. At September 30, 2021, our fleet had an average tractor age of 2.0 years and an average trailer age of 4.9 years.

Independent contractors provide a tractor and a driver and are responsible for all operating expenses in exchange for a fixed payment per mile. We do not have the capital outlay of purchasing or leasing the tractor. The payments to independent contractors and the financing of equipment under operating leases are recorded in revenue equipment rentals and purchased transportation. Expenses associated with owned equipment, such as interest and depreciation, and expenses associated with employee drivers, including driver compensation, fuel, and other expenses, are not incurred with respect to independent contractors. Obtaining equipment from independent contractors and under operating leases effectively shifts financing expenses from interest to "above the line" operating expenses, and as such, we evaluate our efficiency using net income margin as well as operating ratio.

RESULTS OF CONSOLIDATED OPERATIONS

COMPARISON OF three and six months ended June 30, 2021 TO three and six months ended June 30, 2020

COMPARISON OF three and nine months ended September 30, 2021 TO three and nine months ended September 30, 2020

The following tables set forth the percentage relationship of certain items to total revenue and freight revenue (total revenue less fuel surcharge revenue) for the periods indicated, where applicable (dollars in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Freight revenue

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Total revenue

The increase in total revenue resulted from a $37.2 million, $9.3 million, $3.8 million, and $2.0 million increase in Managed Freight, Dedicated, Warehousing, and Expedited freight revenue, respectively, for the three months ended June 30, 2021 and a $57.9 million, $7.2 million, and $4.0 million increase in Managed Freight, Warehousing, and Dedicated freight revenue, respectively, partially offset by a $5.7 million decrease in Expedited freight revenue for the six months ended June 30, 2021.

The increase in total revenue resulted from a $42.5 million, $8.4 million, $1.9 million, and $1.2 million increase in Managed Freight, Dedicated, Warehousing, and Expedited freight revenue, respectively, for the three months ended September 30, 2021 and a $100.4 million, $12.4 million, and $9.1 million increase in Managed Freight, Dedicated, and Warehousing freight revenue, respectively, partially offset by a $4.5 million decrease in Expedited freight revenue for the nine months ended September 30, 2021.

See results of segment operations section for discussion of fluctuations.

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Salaries, wages, and related expenses

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% of freight revenue

Salaries, wages, and related expenses for the three months ended June 30, 2021, increased on a dollars basis primarily as the result of substantial cents per mile driver pay increases made effective in early January 2021, increases in workers' compensation insurance, and management incentive compensation attributable to favorable second quarter results.

The decreases on a percentage basis are due to increased revenue over which to spread those costs.

For the six months ended June 30, 2021, the increase on a dollars basis in salaries, wages, and benefits was primarily the result of substantial cents per mile driver pay increases made effective in early January 2021, as well as management incentive compensation attributable to favorable results in the 2021 period, and increases in workers' compensation insurance.

Salaries, wages, and related expenses for the three and nine months ended 

September 30, 2021 , increased on a dollars basis primarily as the result of substantial cents per mile driver pay increases made effective throughout 2021, management incentive compensation attributable to favorable 2021 results, and increases in contract labor that are primarily the result of the resurgence of the COVID-19 pandemic.

The decreases on a percentage basis are due to increased revenue over which to spread those costs.

For the remainder of 2021 we believe salaries, wages, and related expenses will increase in comparison to the first half of 2021 and 2020 as a result of driver pay changes put in place in the tight freight market, partially offset by fewer drivers as a result of our change in business model and our smaller fleet.

Additionally, we expect salaries, wages, and related expenses to continue to increase period over period as the result of reinstatement of the 401(k) match, wage inflation, and, in certain periods, increased incentive compensation due to improved performance. Salaries, wages, and related expenses will fluctuate to some extent based on the percentage of revenue generated by independent contractors and our Managed Freight reportable segment, for which payments are reflected in the purchased transportation line item.

We believe salaries, wages, and related expenses will continue to increase as a result of driver pay changes put in place in the tight freight market, partially offset by fewer drivers as a result of our change in business model and our smaller fleet.

Driver compensation headwinds are expected to continue for the foreseeable future as a result of the tight driver market being experienced across our industry.

Salaries, wages, and related expenses will fluctuate to some extent based on the percentage of revenue generated by independent contractors and our Managed Freight reportable segment, for which payments are reflected in the purchased transportation line item.

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% of total revenue

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In periods of declining prices, the opposite is true.

Fuel prices as measured by the DOE were $0.10 per gallon higher for the quarter ended June 30, 2021 compared with the same quarter in 2020.

Fuel prices as measured by the DOE wer e $0.94 per g allon higher for the quarter ended September 30, 2021 compared with the same quarter in 2020.

To measure the effectiveness of our fuel surcharge program, we subtract fuel surcharge revenue (other than the fuel surcharge revenue we reimburse to independent contractors and other third parties which is included in purchased transportation) from our fuel expense. The result is referred to as net fuel expense. Our net fuel expense as a percentage of freight revenue is affected by the cost of diesel fuel net of fuel surcharge revenue, the percentage of miles driven by company tractors, our fuel economy, our percentage of deadhead miles, for which we do not receive material fuel surcharge revenues, and the net impact of fuel hedging gains and losses.

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Total fuel surcharge

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% of freight revenue

Net fuel expense for the three months ended June 30, 2021, decreased primarily due to higher fuel surcharge recovery, partially offset by slightly higher fuel prices.

There were no diesel fuel hedge gains or losses for the quarter, compared to $0.3 million of losses for the same 2020 quarter. Also, as a result of the change in our business mix our fleet was more fuel efficient due to less idling and less temperature-controlled freight thus reducing refrigerated trailer fuel expense. As of June 30, 2021, we had no remaining fuel hedging contracts.

For the six months ended June 30, 2021, net fuel expense decreased primarily due to higher fuel surcharge recovery, partially offset by slightly higher fuel prices. Additionally, there were $0.4 million of diesel fuel hedge gains for the year-to-date period, compared to $0.3 million of losses for the same 2020 period. Also, as a result of the change in our business mix our fleet was more fuel efficient due to less idling and less temperature-controlled freight thus reducing refrigerated trailer fuel expense. 

Net fuel expense for the three months ended September 30, 2021, decreased primarily due to higher fuel surcharge recovery, partially offset by slightly higher fuel prices.

There were no diesel fuel hedge gains or losses for the quarter compared to $0.1 million of losses for the same 2020 quarter. Also, as a result of the change in our business mix our fleet was more fuel efficient due to less idling and less temperature-controlled freight thus reducing refrigerated trailer fuel expense. As of September 30, 2021, we had no remaining fuel hedging contracts.

For the nine months ended September 30, 2021, net fuel expense decreased primarily due to higher fuel surcharge recovery, partially offset by slightly higher fuel prices. A dditio nally, there were $0.4 million of diesel fuel hedge gains for the year-to-date period, compared to $0.4 million of losses for the same 2020 period. Also, as a result of the change in our business mix our fleet was more fuel efficient due to less idling and less temperature-controlled freight thus reducing refrigerated trailer fuel expense. 

We expect to continue managing our idle time and tractor speeds, investing in more fuel-efficient tractors to improve our miles per gallon, locking in fuel hedges when deemed appropriate, and partnering with customers to adjust fuel surcharge programs that are inadequate to recover a fair portion of fuel costs.

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Operations and maintenance

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% of freight revenue

The increases in operations and maintenance on a dollar basis for the three months and six months ended June 30, 2021 were primarily related to an additional $2.3 million and $3.4 million in costs related to the recruitment and onboarding of drivers, respectively, when compared to the prior year periods, despite having a smaller fleet in 2021.

The increases in operations and maintenance on a dollar basis for the three months and nine months ended September 30, 2021 were primarily related to an additio nal $1.7 million and $5.1 million in costs related to the recruitment and onboarding of drivers, respec tively, when compared to the prior year periods, despite having a smaller fleet in 2021.

This increase is attributable to the extremely tight driver market and our focused effort to seat more of our tractors.

Additionally, maintenance costs, including parts and labor, have increased as compared to the prior year periods as a result of the global supply chain disruptions.

This was partially offset by a reduction in tolls, cargo damage, and other costs associated with temperature-controlled freight that was exited in the second quarter of 2020 as a result of our business restructuring.

Going forward, we believe this category will fluctuate based on several factors, including the condition of the driver market and our ability to hire and retain drivers, our continued ability to maintain a relatively young fleet, accident severity and frequency, weather, and the reliability of new and untested revenue equipment models.

Going forward, we believe this category will increase based on several factors, including the condition of the driver market and our ability to hire and retain drivers, our continued ability to maintain a relatively young fleet, accident severity and frequency, weather, the reliability of new and untested revenue equipment models, and the global disruption of the supply chain.

Revenue equipment rentals and purchased transportation

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Revenue equipment rentals and purchased transportation

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% of freight revenue

The increases in revenue equipment rentals and purchased transportation for the three and six months ended June 30, 2021,were primarily the result of a more competitive market for sourcing third-party capacity and growth in the Managed Freight reportable segment, partially offset by a reduction in the percentage of the total miles run by independent contractors from 11.1% for the three months ended June 30, 2020 to 8.5% for the same 2021 period and from 11.6% for the six months ended June 30, 2020 to 8.7% for the same 2021 period.

The increases in revenue equipment rentals and purchased transportation for the three and nine months ended September 30, 2021, were primarily the result of a more competitive market for sourcing third-party capacity and growth in the Managed Freight reportable segment, partially offset by a reduction in the percentage of the total miles run by independent contractors from 11.1% for the three months ended September 30, 2020 to 7.8% for the same 2021 period and from 11.4% for the nine months ended September 30, 2020 to 8.4% for the same 2021 period.

When compared year-over-year, we expect revenue equipment rentals to decrease going forward as a result of the reduction of our tractor fleet.

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Operating taxes and licenses

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% of freight revenue

The decreases in operating taxes and licenses as a percentage of revenue for the three and six months ended June 30, 2021 are primarily due to increased revenue over which to spread those costs.

The decreases in operating taxes and licenses as a percentage of revenue for the three and nine months ended September 30, 2021 are primarily due to increased revenue over which to spread those costs.

Insurance and claims

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Insurance and claims

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% of freight revenue

Insurance and claims per mile cost decreased to 12.8 cents per mile for the three months ended June 30, 2021 compared to 15.4 cents per mile for the same 2020 quarter and 11.8 cents per mile for the six months ended June 30, 2021 compared to 17.4 cents per mile for the same 2020 period.

This change is primarily a result of the occurrence and development of large claims in the 2020 periods partially offset by the 2020 refund of $7.3 million of previously expensed premiums from our commutation of the April 10, 2015 through March 31, 2018 policy for our primary auto liability insurance. Additionally, incident rates during the 2021 periods have decreased as compared to the same 2020 periods. 

Insurance and claims per mile cost decreased to 16.0 cents per mile for the three months ended 

September 30, 2021  compared to 17.6 cents per mile for the same 2020 quarter and 13.1 cents per mile for the nine months ended September 30, 2021 compared to 

17.4 cents per mile for the same 2020 period.

The decrease for the three months ended September 30, 2021 is primarily a result of additional premiums in the third of quarter of 2020 as a result of the erosion of our excess insurance coverage layer $9.0 million in excess of $1.0 million.

The decrease for the nine months ended September 30, 2021 is primarily a result of the occurrence and development of large claims in the 2020 period partially offset by the 2020 refund of $7.3 million of previously expensed premiums from our commutation of the April 10, 2015 through March 31, 2018 policy for our primary auto liability insurance.

Additionally, incident rates during the 2021 periods have decreased as compared to the same 2020 periods. 

The auto liability policy contains a feature whereby we are able to retroactively obtain a partial refund of the premium in exchange for taking on the liability for incidents that occurred during the period and releasing the insurers.

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A decision with respect to commutation of the policy has not yet been made.

Management cannot predict whether or not future claims or the development of existing claims will justify a commutation of the policy period, and accordingly, no related amounts were recorded at June 30, 2021.

Our auto liability (personal injury and property damage), cargo, and general liability insurance programs include significant self-insured retention amounts.

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Due to these developments, we may experience additional expense accruals, increased insurance and claims expenses, and greater volatility in our insurance and claims expenses, which could have a material adverse effect on our business, financial condition, and results of operations.

In addition, in future periods, insurance and claims costs may be more volatile depending on our future accident experience, which could have a material adverse effect on our business, financial condition, and results of operations.

The Company expects insurance and claims expense to continue to be volatile over the long-term.

 Recently, the trucking industry has experienced a decline in the number of carriers and underwriters that write insurance policies or that are willing to provide insurance for trucking companies.

 These factors caused the Company’s insurance premiums to increase during the April 2020 renewal.

Communications and utilities

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Communications and utilities

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% of freight revenue

For the periods presented, the changes in communications and utilities as a percentage of revenue for the three and six months ended June 30, 2021 is primarily due to increased revenue over which to spread those costs.

For the periods presented, the changes in communications and utilities as a percentage of revenue for the three and nine months ended September 30, 2021 is primarily due to increased revenue over which to spread those costs.

General supplies and expenses

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General supplies and expenses

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% of freight revenue

The decreases in general supplies and expenses for the three and six months ended 

June 30, 2021 primarily relate to 

additional reserves put in place during the second quarter of 2020 for potentially uncollectible accounts receivable and 2020 strategic planning and process improvement investments that were part of our organizational restructuring. Additionally, travel expenses were decreased for the six months ended June 30, 2021 compared to the same 2020 period due to the travel limitations brought on by the COVID-19 pandemic.

The decrease in general supplies and expenses for the three and nine months ended September 30, 2021 primarily relate to 2020 strategic planning and process improvement investments that were part of our organizational restructuring.

Additional reserves put in place during the same 2020 period for potentially uncollectible accounts receivable also contributed to the decrease for the nine months ended September 30, 2021.

Depreciation and amortization

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Depreciation and amortization

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Depreciation and amortization consists primarily of depreciation of tractors, trailers, and other capital assets, as well as amortization of intangible assets.

Depreciation expense decreased $4.9 million and $9.5 million to $12.7 million and $25.6 million for the three and six months ended June 30, 2021, respectively, compared to $17.6 million and $35.1 million in the same 2020 periods.

The decreases in depreciation expense are due to the mix change in the overall business that reduced total tractor count and increased utilization, along with reductions in terminals and other capital assets. Amortization of intangible assets was $1.2 million and $2.3 million for the three and six months ended June 30, 2021, respectively, and $2.1 million and $2.8 million for the same 2020 periods.

The decrease is a result of the 2020 termination of the non-compete agreement with a former Landair executive partially offset by the revised remaining useful life of the Landair trade name to 15 months as of June 30, 2020, as a result of management changes, a change in the branding of the organization, and the expected use of the Landair trade name.

Depreciation expense decreased $0.1 million and $9.5 million to $12.2 million and $37.9 million for the three and nine months ended September 30, 2021, respectively, compared to $12.3 million and $47.3 million in the same 2020 periods.

The decreases in depreciation expense are due to the mix change in the overall business that reduced total tractor count and increased utilization, along with reductions in terminals and other capital assets. Amortization of intangible assets was $1.2 million and $3.5 million for the three and nine months ended September 30, 2021, respectively, and $1.2 million and $3.9 million for the same 2020 periods.

The decrease is a result of the 2020 termination of the non-compete agreement with a former Landair executive partially offset by the revised remaining useful life of the Landair trade name to 15 months as of June 30, 2020, as a result of management changes, a change in the branding of the organization, and the expected use of the Landair trade name.

For the remainder of 2021, we expect our average operational fleet size to remain relatively flat at approximately 2,400 tractors.

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Gain on disposition of property and equipment, net

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% of freight revenue

The decreases in gain on disposition of property and equipment, net are primarily the result of the $5.7 million gain on a terminal in the second quarter of 2020, as part of the Company's restructuring plan, partially offset by the timing of the trade cycle of our equipment. 

The decreases in gain on disposition of property and equipment, net for the three months ended September 30, 2021 are primarily the result of timing of the trade cycle of our equipment and the strategic reduction of our tractors that began during the second quarter of 2020.

The decreases for the nine months ended September 30, 2021 are primarily the result of the $5.7 million gain on a terminal in the second quarter of 2020, as part of the Company's restructuring plan, partially offset by the timing of the trade cycle of our equipment and the strategic reduction of our tractors that began during the second quarter of 2020. 

Impairment of long-lived property and equipment

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Impairment of long-lived property and equipment

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During the second quarter of 2020, we recognized impairment of $16.8 million on revenue equipment, $7.3 million on a terminal, related leasehold improvements, and equipment, $2.2 million on an office facility held under an operating lease, and $0.2 million on a training and orientation facility.

During the second quarter of 2020, as part of our efforts to restructure the organization, we recognized impairment of $16.8 million on revenue equipment, $7.3 million on a terminal, related leasehold improvements, and equipment, $2.2 million on an office facility held under an operating lease, and $0.2 million on a training and orientation facility.

We've incurred no restructuring charges in 2021.

Interest expense, net

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Interest expense, net

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% of freight revenue

The decreases in interest expense, net for the three and six months ended June 30, 2021 are primarily the result of the reduction of our total indebtedness since the same 2020 periods, partially offset by interest expense on the $35.6 million Draw Note related to the indemnification call by Triumph.

The decreases in interest expense, net for the three and nine months ended September 30, 2021 are primarily the result of the reduction of our total indebtedness since the same 2020 periods.

This line item will fluctuate based on our decision with respect to purchasing revenue equipment with balance sheet debt versus operating leases as well as our ability to continue to generate profitable results and reduce our leverage.

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Income (loss) from equity method investment

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Income from equity method investment

We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income or loss.

The increase in TEL's contributions to our results for the three and six months ended June 30, 2021 is the result of constricted used equipment capacity in the transportation market.

We expect the impact on our earnings for the remaining quarters of 2021 to be consistent with the first half of 2021.

The increase in TEL's contributions to our results for the three and nine months ended September 30, 2021 is the result of constricted used equipment capacity in the transportation market.

We expect the impact on our earnings for the remaining quarter of 2021 to be consistent with the first nine months of 2021.

Income tax  expense (benefit)

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Income tax expense (benefit)

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% of freight revenue

The changes in income tax expense (benefit) were primarily related to the $51.5 million and $68.3 million increases in pre-tax income in the three and six months ended June 30, 2021, respectively, compared to the same 2020 periods, resulting from the increases in operating income, earnings on investment in TEL, and income from discontinued operations.

The changes in income tax expense (benefit) were primarily related to the $16.5 million and $84.9 million increases in pre-tax income in the three and nine months ended September 30, 2021, respectively, compared to the same 2020 periods, resulting from the increases in operating income and earnings on investment in TEL.

The effective tax rate is different from the expected combined tax rate due primarily to permanent differences related to our per diem pay structure for drivers.

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We are currently estimating our 2021 effective income tax rate to be approximately 27.1%.

The actual rate for our year-to-date results differs from the forecasted rate due to discrete items that are recorded directly to tax expense in the quarter incurred.

Examples of these discrete items recorded through September 30, 2021 include the impacts of vested stock awards and return to provision adjustments, including adjustments to our state blended rates used to value deferred tax assets and liabilities.

RESULTS OF SEGMENT OPERATIONS

We have four reportable segments, Expedited, Dedicated, Managed Freight, and Warehousing, each as described above.

COMPARISON O F three and six months ended June 30, 2021 TO three and six months ended June 30, 2020

COMPARISON O F three and nine months ended September 30, 2021 TO three and nine months ended September 30, 2020

The following table summarizes financial and operating data by reportable segment:

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Managed Freight

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Total operating income

The increase in Expedited revenue for the three months ended June 30, 2021 relates to an increase in average freight revenue per tractor per week of 43.3% and a $5.6 million increase in fuel surcharge revenue compared to the 2020 quarter, partially offset by a 342 (or 28.3%) average tractor decrease related to the exit of the solo-refrigerated business in the second quarter of 2020.

The increase in average freight revenue per tractor per week for the quarter ended June 30, 2021 is the result of a 31.0% increase in average miles per unit and a 16.5 cents per mile (or 9.4%) increase in average rate per total mile compared to the 2020 quarter.

Expedited team-driven tractors averaged 866 tractors in the second quarter of 2021, a decrease of approximately 0.8% from the average of 873 tractors in the second quarter of 2020.

For the six months ended June 30, 2021, the change in Expedited revenue relates to a 383 (or 30.4%) average tractor decrease related to the exit of the solo-refrigerated business in the second quarter of 2020 partially offset by an increase in average freight revenue per tractor per week of 39.0% compared to the same 2020 period.

The increase in average freight revenue per tractor per week for the six months ended June 30, 2021 is the result of a 31.9% increase in average miles per unit and an 8.0 cents per mile (or 4.4%) increase in average rate per total mile compared to the same 2020 period.

Expedited team-driven tractors averaged 871 tractors for the six months ended June 30, 2021, an increase of approximately 1.2% from the average of 860 tractors for the same 2020 period.

The increase in Dedicated revenue relates to an increase in average freight revenue per tractor per week compared to the 2020 quarter as the result of a 7.4% increase in average miles per unit as well as a 18.0 cents per mile (or 9.4% increase) in average rate per total mile compared to the 2020 quarter, as well as a $6.6 million increase in fuel surcharge revenue.

These increases were partially offset by a 27 (or 1.7%) average tractor decrease  

as a result of not renewing underperforming contracts.

For the six months ended June 30, 2021, the increase in Dedicated revenue relates to an increase in average freight revenue per tractor per week compared to the same 2020 period as the result of a 17.0 cents per mile (or 9.2%) increase in average rate per total mile, partially offset by a 3.5% decrease in average miles per unit as compared to the same 2020 period.

The increase in Expedited revenue for the three months ended September 30, 2021 relates to an increase in average freight revenue per tractor per week of 20.8% and a $5.7 million increase in fuel surcharge revenue compared to the 2020 quarter, partially offset by a 156 (or 15.8%) average tractor decrease.

The increase in average freight revenue per tractor per week for the quarter ended September 30, 2021 is the result of a 6.2% increase in average miles per unit and a 24.0 cents per mile (or 13.7%) increase in average rate per total mile compared to the 2020 quarter.

Expedited team-driven tractors averaged 832 tractors in the third quarter of 2021, a decrease of approximately 7.2% from the average of 896 tractors in the third quarter of 2020.

For the nine months ended September 30, 2021, the change in Expedited revenue relates to an increase in average freight revenue per tractor per week of 33.4% compared to the same 2020 period, partially offset by a 307 (or 26.3%) average tractor decrease related to the exit of the solo-refrigerated business in the second quarter of 2020.

The increase in average freight revenue per tractor per week for the nine months ended September 30, 2021 is the result of a 23.5% increase in average miles per unit and a 14.0 cents per mile (or 7.8%) increase in average rate per total mile compared to the same 2020 period.

Expedited team-driven tractors averaged 857 tractors for the nine months ended September 30, 2021, a decrease of approximately 1.8% from the average of 872 tractors for the same 2020 period.

The increase in Dedicated revenue relates to an increase in average freight revenue per tractor per week compared to the 2020 quarter as the result of a 43.0 cents per mile (or 23.1%) increase in average rate per total mile compared to the 2020 quarter, as well as a $4.0 million increase in fuel surcharge revenue, partially offset by a 7.9% decrease in average miles per unit.

Average tractors remained comparable to the three months ended September 30, 2020 at 1,538 tractors.

For the nine months ended September 30, 2021, the increase in Dedicated revenue relates to an increase in average freight revenue per tractor per week compared to the same 2020 period as the result of a 25.0 cents per mile (or 13.4%) increase in average rate per total mile, partially offset by a 5.0% decrease in average miles per unit as compared to the same 2020 period.

Additionally, fuel surcharge revenue increased $9.5 million compared to the 2020 period.

These increases were partially offset by a 35 (or 2.1%) average tractor decrease  

These increases were partially offset by a 23 (or 1.4%) average tractor decrease  

as a result of not renewing underperforming contracts.

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Warehousing total revenue for the quarter and year-to-date periods increased as a result of new customer business that began operations during the third quarter of 2020.

In addition to the changes in revenue described above for the three and six months ended June 30, 2021, the change in operating income for the three months ended June 30, 2021, resulted from a $26.3 million, $3.5 million, and $2.9 million increase in Managed Freight, Warehousing, and Dedicated operating expenses, respectively, partially offset by a $15.5 million decrease in Expedited operating expenses.

For the six months ended June 30, 2021, the change in operating income resulted from a $42.7 million and $6.8 million increase in Managed Freight and Warehousing operating expenses, respectively, partially offset by a $30.9 million and $3.1 million decrease in Expedited and Dedicated operating expenses, respectively.

The decrease in Expedited operating expenses for the three and six months ended June 30, 2021, and the decrease in Dedicated operating expenses for the six months ended June 30, 2021, is primarily the result of the restructuring costs incurred in the second quarter of 2020 related to downsizing our solo-driver refrigerated, one-way irregular routes, and other less profitable operations.

Operating expenses for Expedited were further reduced by a decrease in insurance and claims expense and a 28.3% and 30.4% average operating fleet reduction, respectively, partially offset by higher variable costs associated with driver pay increases and greater concentration of team driven units. The increase in Dedicated operating expenses for the three months ended June 30, 2021 primarily related to driver pay increases partially offset by the aforementioned 2020 restructuring costs.

In addition to the changes in revenue described above for the three and nine months ended September 30, 2021, the change in operating income for the three months ended September 30, 2021, resulted from a $35.3 million, $14.0 million, and $2.9 million increase in Managed Freight, Dedicated, and Warehousing operating expenses, respectively, partially offset by a $1.7 million decrease in Expedited operating expenses.

For the nine months ended September 30, 2021, the change in operating income resulted from a $78.0 million, $10.8 million, and $9.7 million increase in Managed Freight, Dedicated, and Warehousing operating expenses, respectively, partially offset by a $32.5 million decrease in Expedited operating expenses.

The decrease in Expedited operating expenses for the three months ended September 30, 2021, is primarily the result of a 15.8% average operating fleet reduction and 2020 restructuring costs, partially offset by higher variable costs associated with driver pay increases.

The decrease in Expedited operating expenses for the nine months ended September 30, 2021, is primarily the result of the restructuring costs incurred in 2020 related to downsizing our solo-driver refrigerated, one-way irregular routes, and other less profitable operations, as well as a decrease in insurance and claims expense and a 26.3% reduction in average operating fleet.

The increase in Dedicated operating expenses for the three and nine months ended September 30, 2021 primarily related to driver pay increases and increased driver recruiting costs, partially offset by the aforementioned 2020 restructuring costs.

The increase in Managed Freight operating expenses is the result of increased revenue driving an increase in variable expenses, primarily purchased transportation.

The increase for Warehousing was primarily driven by the new customer business that began operations during the third quarter of 2020.

The increase for Warehousing was primarily driven by the new customer business that began operations during the latter portion the third quarter of 2020, as well as increased contract labor costs as a result of the resurgence of the COVID-19 pandemic and escalating real estate costs for a newly leased facility.

LIQUIDITY AND CAPITAL RESOURCES

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Recently, we have financed our capital requirements with borrowings under our Credit Facility, cash flows from operations, long-term operating leases, finance leases, secured installment notes with finance companies, and proceeds from the sale of our used revenue equipment.

Going forward, we expect revenue equipment acquisitions through purchases and finance leases to increase as a percentage of our fleet as we decrease our use of operating leases.

Further, we expect to increase our capital allocation toward Dedicated and Managed Freight reportable segments to become the go-to partner for our customers’

Going forward, we expect revenue equipment acquisitions through purchases and finance leases to increase as a percentage of our fleet as we decrease our use of operating leases for revenue equipment.

Further, we expect to increase our capital allocation toward contract based operations to become the go-to partner for our customers’

most critical transportation and logistics needs.

We had working capital (total current assets less total current liabilities) of $21.5 million and $14.4 million at June 30, 2021 and December 31, 2020, respectively.

We had working capital (total current assets less total current liabilities) of $31.5 million and $14.4 million at September 30, 2021 and December 31, 2020, respectively.

Our working capital on any particular day can vary significantly due to the timing of collections and cash disbursements.

Based on our expected financial condition, net capital expenditures, results of operations, related net cash flows, installment notes, and other sources of financing, we believe our working capital and sources of liquidity will be adequate to meet our current and projected needs, and we do not expect to experience material liquidity constraints in the foreseeable future.

With an average fleet age of 1.9 years at June 30, 2021, we believe we have flexibility to manage our fleet, and we plan to regularly evaluate our tractor replacement cycle, new tractor purchase requirements, and purchase options.

With an average fleet age of 2.0 years at September 30, 2021, we believe we have flexibility to manage our fleet, and we plan to regularly evaluate our tractor replacement cycle, new tractor purchase requirements, and purchase options.

If we were to grow our independent contractor fleet, our capital requirements would be reduced.

As of June 30, 2021 and December 31, 2020 we had $93.0 million and $110.4 million in long-term debt and lease obligations, respectively, consisting of the following:

$10.0 million and $15.0 million outstanding borrowings under the Credit Facility, respectively;

$4.6 million and no outstanding borrowings under the Draw Note, respectively;

$9.0 million and $17.8 million in revenue equipment installment notes, respectively;

$22.1 million and $22.7 million in real estate notes, respectively;

No deferred loan costs (which reduce long-term debt) as of June 30, 2021 and $0.1 million as of December 31, 2020;

$15.0 million and $16.4 million of the principal portion of financing lease obligations, respectively;

$32.4 million and $38.5 million of the operating lease obligations, respectively.

The decrease in our revenue equipment installment notes and financing lease obligations was primarily due to a strategic decision to reduce our debt and lease obligations through the second quarter of 2021.

The decrease in operating lease obligations was primarily due to the amortization of the operating lease liability.

As of June 30, 2021, we had $10.0 million of borrowings outstanding, undrawn letters of credit outstanding of approximately $29.5 million, and available borrowing capacity of $70.5 million under the Credit Facility.

Additionally, we had $40.4 million of remaining availability of a $45.0 million Draw Note from Triumph which is available solely to fund any indemnification owed to Triumph in relation to the TFS Settlement.

As of September 30, 2021 and December 31, 2020 we had $85.0 million and $110.4 million in debt and lease obligations, respectively, consisting of the following:

No and $15.0 million outstanding borrowings under the Credit Facility, respectively;

No outstanding borrowings under the Draw Note;

$8.6 million and $17.8 million in revenue equipment installment notes, respectively;

$21.8 million and $22.7 million in real estate notes, respectively;

No deferred loan costs (which reduce long-term debt) as of September 30, 2021 and $0.1 million as of December 31, 2020;

$13.3 million and $16.4 million of the principal portion of financing lease obligations, respectively;

$41.4 million and $38.5 million of the operating lease obligations, respectively.

The increase in operating lease obligations was primarily due to the addition of a leased property related to a specific customer, partially offset by amortization of the operating lease liability.

As of September 30, 2021, we had no borrowings outstanding, undrawn letters of credit outstanding of approximately $29.5 million, and available borrowing capacity of $80.5 million under the Credit Facility.

Additionally, we had $45.0 million of remaining availability of a $45.0 million Draw Note from Triumph which is available solely to fund any indemnification owed to Triumph in relation to the TFS Settlement.

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of the accompanying condensed consolidated financial statements for further information about material debt agreements.

Our net capital expenditures for the six months ended June 30, 2021 totaled $19.9 million of proceeds, as compared to $4.5 million of proceeds for the prior year period.

In the first half of 2021, we took delivery of approximately 88 new tractors and 75 new trailers, while disposing of approximately 249 used tractors and 482 used trailers.

Our net capital expenditures for the nine months ended September 30, 2021 totaled $19.4 million of proceeds, as compared to $22.9 million of proceeds for the prior year period.

In the nine months ended September 30, 2021, we took delivery of approximately 193 new tractors and 27 new trailers, while disposing of approximately 344 used tractors and 496 used trailers.

Our current fleet plan for fiscal 2021 includes the delivery of an additional 98 new company replacement tractors and no additional new trailer deliveries.

For the remainder of 2021, we expect our average operational fleet size to remain relatively flat with the first quarter of 2021 at approximately 2,500 tractors. Net gains on disposal of equipment and real estate in the first half of 2021 were $2.8 compared to $5.0 million in the same prior year period.

For the remainder of 2021, we expect our average operational fleet size to remain relatively flat at approximately 2,400 tractors. Net gains on disposal of equipment and real estate in the nine months ended 2021 were $3.7 million compared to $7.0 million in the same prior year period.

Global supply chain disruptions could impact the availability of tractors and trailers and lead to increased pricing.

We believe we have sufficient liquidity to satisfy our cash needs, however we continue to evaluate and act, as necessary, to maintain sufficient liquidity to ensure our ability to operate during these unprecedented times. The extent to which COVID-19 and its variants could impact our operations, financial condition, liquidity, results of operations, and cash flows is highly uncertain and will depend on future developments.

We will continue to evaluate the nature and extent of the potential short-term and long-term impacts to our business.

Net cash flows provided by operating activities increased to $34.1 million for the six months ended June 30, 2021, compared to $24.1 million for the same 2020 period, primarily due to a $51.1 million increase in net income, as well as, funding receivables of our discontinued Factoring reportable segment in the prior year period, partially offset by changes in the timing and amount of payments on insurance claims. 

Net cash flows provided by investing activities were $19.8 million for the six months ended June 30, 2021, compared to $4.1 million in the same 2020 period.

The change in net cash flows provided by investing activities was primarily the result of the timing of our trade cycle whereby we took delivery of approximately 88 new company tractors and disposed of approximately 249 used tractors in the 2021 period compared to delivery and disposal of approximately 305 and 781 tractors, respectively in the same 2020 period.

Net cash flows used by financing activities were approximately $57.3 million for the six months ended June 30, 2021, compared to $4.6 million in the same 2020 period.

The change in net cash flows used by financing activities was primarily a function of net proceeds in the 2020 period and net repayments in the 2021 period relating to notes payable, the Draw Note, and under our Credit Facility.

On February 10, 2020, our Board approved the repurchase of up to $20.0 million of the Company's Class A common stock. The program was suspended on March 26, 2020 with approximately $2.5 million remaining authorized.

On January 25, 2021, our Board approved the repurchase of up to $40.0 million of the Company's outstanding Class A common stock. There were 0.5 million and 1.4 million shares repurchased in the open market for $8.4 million and $17.5 million during the six months ended June 30, 2021 and 2020, respectively.

The Company has the ability to repurchase up to $31.6 million of the Company's outstanding Class A common stock under the current stock repurchase program as circumstances warrant based on market conditions, cash flow requirements, securities law limitations, and other factors.

Net cash flows provided by operating activities increased to $68.2 million for the nine months ended September 30, 2021, compared to $25.0 million for the same 2020 period, primarily due to a $60.1 million increase in net income, partially offset by decreases to non-cash expenses compared to the prior year period. 

Net cash flows provided by investing activities were $22.0 million for the nine months ended September 30, 2021, compared to $131.0 million in the same 2020 period.

The change in net cash flows provided by investing activities was primarily the result of the 2020 disposal of substantially all of the operations and assets of TFS, which included substantially all of the assets and operations of our former Factoring reportable segment as well as the 2020 disposal of our Orlando and Hutchins properties.

The change is also due to the timing of our trade cycle whereby we took delivery of approximately 193 new company tractors and disposed of approximately 344 used tractors in the 2021 period compared to delivery and disposal of approximately 86 and 391 tractors, respectively in the same 2020 period.

Net cash flows used by financing activities were approximately $76.4 million for the nine months ended September 30, 2021, compared to $185.8 million in the same 2020 period.

The change in net cash flows used by financing activities was primarily a function of net repayments of $63.9 million in the 2021 period compared to $166.7 million in the 2020 period relating to notes payable, the Draw Note, and our Credit Facility.

Additionally, we repurchased $10.3 million and $17.5 million shares of our Class A common stock during the nine months ended September 30, 2021 and 2020, respectively.

On February 10, 2020, our Board approved the repurchase of up to $20.0 million of our Class A common stock. The program was suspended on March 26, 2020 with approximately $2.5 million remaining authorized. 

On January 25, 2021, our Board approved the repurchase of up to $40.0 million of our outstanding Class A common stock.

Under such authorization, we repurchased 0.5 million shares of our Class A common stock for $8.4 million between January 2021 and April 2021.

On August 5, 2021, our Board increased such authorization to $40.0 million.

On August 9, 2021 we commenced a modified Dutch tender offer to purchase for cash shares of our Class A common stock for an aggregate purchase price of not more than $40.0 million and at a price per share of not less than $21.00 and not more than $23.00 per share.

The tender offer expired on September 3, 2021.

Through the tender offer, we accepted for purchase 86,132 shares of our Class A common stock at a purchase price of $23.00 per share for an aggregate purchase price of approximately $2.0 million, excluding fees and expenses.

The shares of Class A common stock purchased through the tender offer were immediately retired.

The excess purchase price over par value was recorded as a reduction of retained earnings on the unaudited condensed consolidated balance sheet as of September 30, 2021.

Including the tender offer, we repurchased 0.6 million and 1.4 million shares for $10.3 million and $17.5 million during the nine months ended September 30, 2021 and 2020, respectively.

We have the ability to repurchase up to $38.0 million of the Company's outstanding Class A common stock under the current stock repurchase program as circumstances warrant based on market conditions, cash flow requirements, securities law limitations, and other factors.

Going forward, the disposition of our Factoring reportable segment is expected to continue to improve our cash flows used by financing activities.

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Accordingly, actual results could differ from those anticipated.

There have been no material changes to our most critical accounting policies and estimates during the three and six months ended June 30, 2021, compared to those disclosed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our 2020 Form 10-K, as amended, other than those discussed above.

There have been no material changes to our most critical accounting policies and estimates during the three and nine months ended September 30, 2021, compared to those disclosed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our 2020 Form 10-K, as amended, other than those discussed above.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements