What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-28 · 77 added, 78 removed, 369 unchanged (30% of the section changed)

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Our four reportable segments are Expedited, Dedicated, Managed Freight, and Warehousing, each as described under “Reportable Segments and Service Offerings” in Part I, Item 1 of this Annual Report on Form 10-K.

For 2023, despite the challenges that came with a soft freight market, we achieved our second highest adjusted annual earnings per diluted share in our history while improving the durability and diversification of our business through the acquisitions of LTST and Sims.

We also increased our quarterly dividend and repurchased approximately 5% of the shares of our outstanding Class A common stock at a weighted average share price of approximately $34 per share.

Within our Expedited reportable segment, both total revenue and margins declined year over year primarily as a result of rate pressure, however, these headwinds were partially offset by an almost 8% improvement in utilization year-over-year.

Managed Freight experienced significant reductions in both revenue and operating income with reduced volumes of high-margin overflow freight from both Expedited and Dedicated truckload operations and little to no project related freight during the year given changes in the freight market.

The brokerage environment remains highly competitive with numerous brokers aggressively competing for volumes at the expense of margin.

We anticipate continued margin pressure in this environment.

Warehousing was able to grow revenue through new customer startups and improve margins with contractual pricing increases put into place during the year.

We are continuing to work to increase the operating income and related margins in each of these segments by executing on our pipeline of new business, focused cost savings initiatives and additional proposed customer rate increases with existing customers within our Warehousing reportable segment.

For 2024, despite a challenging general freight environment, we achieved our third highest adjusted annual earnings per diluted share in our history.

Within our Expedited reportable segment, both total revenue and margins declined year over year primarily as a result of an approximately 4% reduction in average total tractors, partially offset by an approximately 2% increase in both freight revenue per total mile and utilization year-over-year.

Within our Dedicated reportable segment, we have worked hard over the last three years to improve the profitability within this segment by exiting unprofitable business and adding profitable business and while we are pleased with the improvement to adjusted operating income compared to 2023, we believe that if we are successful in providing best in class service and controlling costs, growth and improved profitability will result.

Managed Freight experienced reduced revenue but improved operating income with increased volumes of high-margin overflow freight from both Expedited and Dedicated truckload operations and focusing on cost control.

Going forward, we seek to grow Managed Freight with profitable revenue from new customers, work closely with our asset-based segment to capitalize on overflow opportunities when available, and optimize costs to yield longer term margin goals in the mid-single digits, which will generate an acceptable return on capital given the asset light nature of the business.

Warehousing was able to grow revenue and operating income through improvements to direct labor costs and improved margins with contractual pricing increases put into place during the year.

We are continuing to work towards increasing the operating income and related margins in each of these segments by executing on both our pipeline of new business and focused cost savings initiatives.

The table below reflects the total revenue trends in each of these reportable segments:

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Our equity investment in TEL provided $14.7 million of pre-tax earnings in 2024, compared to $21.4 million for 2023;

Since December 31, 2022, total indebtedness, comprised of total debt and finance leases, net of cash, increased by $202.0 million to $248.3 million;

Since December 31, 2023, total indebtedness, comprised of total debt and finance leases, net of cash, decreased by $28.7 million to $219.6 million;

Leverage ratio (average total indebtedness, net of cash, divided by the sum of operating income (loss, depreciation and amortization, gain on disposition of property and equipment, net, and impairment of long lived property and equipment) was 1.65 at December 31, 2024, compared to 2.14 at December 31, 2023;

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Tangible book value per end-of-quarter basic share at December 31, 2024 was $10.17, compared to $8.72 at December 31, 2023.

The Company’s consistently good performance in a weak freight market is evidence that our strategic plan is working.

Over the past two years, we reallocated a significant amount of fixed assets away from underperforming and highly cyclical legacy operations toward acquiring three high-performing, more steady businesses.

The Company’s consistently good performance in a weak freight market is evidence that our strategic plan continues to work.

Over the past three years, we reallocated a significant amount of fixed assets away from underperforming and highly cyclical legacy operations toward acquiring three high-performing, more steady businesses.

The result has been better margins, more stable earnings, and improved returns on capital compared with our legacy operations during previous downturns.

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Based on our anticipated cash flow generation profile, we expect to be able to continue our cash dividend program and evaluate a full range of capital allocation alternatives, including maintaining a lower leveraged balance sheet compared to 2020, organic growth, acquisition and disposition opportunities, and stock repurchases.

As we look to 2024, we do not see anything in the first half of the year that would indicate a near-term recovery of the freight market.

We anticipate a continuation of difficult conditions where capacity continues to exit the market at a rate that yields steady but modest improvement.

In the first quarter, we expect our revenue and earnings to decline, reflecting normal seasonality and the temporary headwinds of severe inclement weather conditions, year over year rate reductions in our Expedited reportable segment and incremental costs associated with a large new customer startup within our Dedicated reportable segment.

Despite these short-term headwinds, we believe our more resilient operating model, together with the steps we have taken to reduce costs and inefficiencies, have positioned us well for another successful year.

For the first quarter of 2025, the general freight market appears to be incrementally improving as capacity and demand are better balanced than they have been for approximately two years, and customers are acknowledging this during rate and volume allocation discussions.

However, in our dedicated markets, customers continue to experience greater than expected temporary customer shutdowns and volume pressure.

Additionally, bad weather has hampered operations and increased our costs limiting any benefit of general market uplift.

Beyond the first quarter, we are focusing on positioning the Company to execute quickly and gain operating leverage as conditions improve, continuing to capture new dedicated contracts to expand the fleet organically, and evaluating multiple acquisition and investment opportunities.

Our goal remains to grow profitably and generate meaningful returns for our stockholders while providing world-class career opportunities for our team members.

RESULTS OF CONSOLIDATED OPERATIONS

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Total revenue

The decrease in total revenue resulted from a $62.1 million, $22.7 million, and $11.6 million decrease in Managed Freight, Dedicated, and Expedited freight revenue, respectively, partially offset by a $20.5 million increase in freight revenue from our Warehousing reportable segment.

The increase in total revenue resulted from a $44.1 million and $1.0 million increase in Dedicated and Warehouse freight revenue, respectively, partially offset by a $10.0 million and $7.4 million decrease in freight revenue from our Managed Freight and Expedited reportable segments, respectively.

See results of reportable segment operations section for discussion of fluctuations.

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% of freight revenue

The decrease in salaries, wages, and related expenses on a dollars basis is primarily the result of averaging fewer drivers and tractors resulting in lower driver salaries, wages, and benefits, partially offset by driver and non-driver, including shop technicians, pay and benefits increases, as well as increased group health costs and executive retirement costs since 2022.

The increase in salaries, wages, and related expenses on a dollars basis is primarily the result of averaging more drivers and tractors resulting in higher driver salaries, wages, and benefits as a result of growth in Dedicated, along with increased shop technician salaries and benefits, workers compensation and group health costs, partially offset by contract labor reductions.

We believe driver and non-driver, including shop technicians, pay and benefits will continue to increase as the result of wage inflation, higher healthcare costs, and, in certain periods, increased incentive compensation due to better performance.

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% of freight revenue

The decreases in total fuel expense are primarily related to lower fuel prices in 2023 and the poor fuel economy of leased tractors abandoned during 2022, as well as a 0.6% decrease in total miles.

The decreases in total fuel expense are primarily related to lower fuel prices in 2024, as well as a 5.3% decrease in total miles.

We receive a fuel surcharge on our loaded miles from most shippers;

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% of freight revenue

Net fuel expense increased $2.9 million, or 40.5%, for the year ended December 31, 2023, compared to 2022.

As a percentage of freight revenue, net fuel expense increased 0.3% for the year ended December 31, 2023, compared to 2022, primarily due to decreased fuel surcharge recovery partially offset by lower fuel prices.

Net fuel expense decreased $2.5 million, or 25.1%, for the year ended December 31, 2024, compared to 2023.

As a percentage of freight revenue, net fuel expense decreased 0.3% for the year ended December 31, 2024, compared to 2023, primarily due to decreased fuel surcharge recovery partially offset by lower fuel prices.

There were no diesel fuel hedge gains or loss for the years ended December 31, 2024 or 2023.

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% of freight revenue

The decrease in operations and maintenance expense was primarily related to the reduced maintenance costs as a result of a decrease in the average age of equipment through the replacement of older tractors that experienced higher operating costs as well as having fewer new drivers and a smaller average fleet as compared to 2022.

Additionally, 2022 included unusually high maintenance costs on abandoned leased tractors.

The decrease in operations and maintenance expense was primarily related to the reduced maintenance costs as a result of the Company's strategic efforts to purchase newer equipment and replace older equipment that was more costly to maintain.

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, the reliability of new and untested revenue equipment models, and the global disruption of the supply chain.

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% of freight revenue

The decrease in revenue equipment rentals and purchased transportation was primarily the result of a reduction in purchased transportation costs in our Managed Freight reportable segment as a result of the softening freight market, the reduction in leased revenue equipment as the result of largely transitioning from tractors held under operating leases to owned tractors in 2022, and the recognition of $7.5 million of expense related to the early lease abandonment and disposal charges for tractors pulled from operations during the fourth quarter of 2022.

These decreases were partially offset by an increase in the percentage of the total miles run by independent contractors from 6.6% for 2022 to 7.5% for 2023.

These decreases were partially offset by a slight increase in the percentage of the total miles run by independent contractors from 7.5% for 2023 to 7.8% for 2024.

We expect purchased transportation to fluctuate as volumes in our Managed Freight reportable segment may be volatile.

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% of freight revenue

Insurance and claims per mile cost decreased slightly to 19.1 cents per mile for 2023 from 19.2 cents per mile in 2022.

The decrease is primarily the result of a reduction in outside claims partially offset by an increase in insurance premiums compared to 2022.

Insurance and claims per mile cost increased to 21.7 cents per mile for 2024 from 19.1 cents per mile in 2023.

The increase is primarily the result of an increase in current period claims expense including a large current year claim incurred partially offset by a decrease in insurance premiums compared to 2023.

Our insurance program includes multi-year policies with specific insurance limits that may be eroded over the course of the policy term.

If that occurs, we will be operating with less liability coverage insurance at various levels of our insurance tower.

If that occurs, we will be operating with less liability insurance coverage at various levels of our insurance tower.

For the policy period that ran from April 1, 2018 to March 31, 2021, the aggregate limits available in the coverage layer $9.0 million in excess of $1.0 million were fully eroded based on claims expense.

We replaced our $9.0 million in excess of $1.0 million layer with a new $7.0 million in excess of $3.0 million policy that runs from January 28, 2021 to April 1, 2024.

We replaced our $9.0 million in excess of $1.0 million layer with a new $7.0 million in excess of $3.0 million policy effective starting January 28, 2021 that we continue to maintain.

Due to the erosion of the $9.0 million in excess of $1.0 million layer, any adverse developments in claims filed between April 1, 2018 and March 31, 2021, could result in additional expense accruals.

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% of freight revenue

The increase in general supplies and expenses was primarily the result of an increase of $4.6 million for new leased spaces for our Warehousing reportable segment from 2022 to 2023 and the $3.0 million increase in the contingent consideration liability since the 2022 period related to the acquisition of AAT.

The increase in general supplies and expenses was primarily the result of a $15.8 million increase in the contingent consideration liability since the 2023 period related to the acquisition of LTST.

Depreciation and amortization

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Depreciation and amortization consists primarily of depreciation of tractors, trailers and other capital assets (including those under finance leases), as well as amortization of intangible assets.

Depreciation increased $9.2 million in 2023 to $62.4 million compared to 2022, primarily as a result of increased costs on new equipment and a higher percentage of owned tractors as we transitioned a large portion of tractors from operating leases to owned during 2022.

These increases were partially offset by reduced average total tractor count.

Depreciation increased $14.6 million in 2024 to $77.0 million compared to 2023, primarily as a result of the increased cost of new equipment purchased as part of our strategic initiative to support growth in our Dedicated segment and replace older equipment.

Amortization of intangible assets increased $2.0 million in 2024 to $9.5 million compared to 2023, primarily due to the amortization of the intangible assets related to the LTST and Sims acquisitions.

We expect depreciation and amortization to increase going forward as the cost of new equipment increases and we see the full year effect of our 2023 equipment replacement plan.

We expect depreciation and amortization to increase going forward as the cost of new equipment increases and we see the effect of our equipment investment and replacement plan.

Additionally, changes in the used tractor market could cause us to adjust residual values, increase depreciation, hold assets longer than planned, or experience increased losses on sale.

Successfully executing our 2025 growth plan could also increase depreciation and amortization going forward.

Gain on disposition of property and equipment, net

Loss (gain) on disposition of property and equipment, net

Year ended December 31,

(dollars in thousands)

Gain on disposition of property and equipment, net

Loss (gain) on disposition of property and equipment, net

% of total revenue

% of freight revenue

The decrease in gain on disposition of property and equipment, net is primarily the result of the $38.5 million gain on sale of a California terminal in the third quarter of 2022 partially offset by an increase in the sale of used equipment compared to 2022 and the $7.6 million gain on sale of a Tennessee terminal in the first quarter of 2023.

For 2024 we expect gains on disposition of property and equipment to be less than those of 2023 as a result of having no large real estate property sales planned and having executed our 2023 equipment replacement plan which has helped return us to a more normalized equipment replacement cycle.

The decrease in gain on disposition of property and equipment, net is primarily the result of the declining equipment values as a result of economic headwinds in the freight market and excess capacity challenges that continued in 2024.

For 2025 we expect gains on disposition of property and equipment to be more than those of 2024 as a result of a freight market that we expect to incrementally improve due to excess capacity that has exited the business.

Interest expense, net

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The decrease in tax expense primarily relates to the decrease in operating income and earnings on investment in TEL as described above.

The effective tax rate is different from the expected combined tax rate due primarily to state tax expense and permanent differences, such as executive compensation disallowance in 2022.

The nondeductible effect of the per diem payments was temporarily suspended for 2022 in accordance with IRS guidance issued during the quarter ended December 31, 2021.

The effective tax rate is different from the expected combined tax rate due primarily to state tax expense and permanent differences.

The rate impact of these items will fluctuate in future periods as income fluctuates.

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Comparison of Year Ended December 31, 2024 to Year Ended December 31, 2023

Our Expedited total revenue decreased $28.9 million, as freight revenue decreased $11.6 million and fuel surcharge revenue decreased $17.3 million.

The decrease in Expedited freight revenue relates to a decrease in average freight revenue per tractor per week of 1.4% compared to 2022 as well as a 17 (or 1.9%) average tractor decrease.

The decrease in average freight revenue per tractor per week is the result of an 8.2%, or 19.1 cents per mile, decrease in average rate per total mile partially offset by an approximately 7.5% increase in average miles per tractor when compared to 2022.

Our Expedited total revenue decreased $7.4 million, as fuel surcharge revenue decreased $10.3 million and freight revenue increased $2.9 million.

The increase in Expedited freight revenue relates to a 15 (or 1.7%) average tractor increase compared to 2023, partially offset by a decrease in average freight revenue per tractor per week of 1.1%.

The decrease in average freight revenue per tractor per week is the result of a 1.7%, or 3.7 cents per mile, decrease in average rate per total mile partially offset by an approximately 0.9% increase in average miles per tractor when compared to 2023.

Seated team driven tractors increased approximately 1.8% to an average of 829 teams in 2024 from 815 teams in 2023.

Our Dedicated total revenue decreased $42.7 million, as freight revenue decreased $22.7 million and fuel surcharge revenue decreased $20.0 million.

The decrease in Dedicated freight revenue relates to a 168 (or 12.0%) average tractor decrease partially offset by an increase in average freight revenue per tractor per week of 4.7%, compared to 2022.

The increase in average freight revenue per tractor per week is the result of a 1.3%, or 3.4 cents per mile, increase in average rate per total mile, as well as 3.4% more miles per tractor.

Managed Freight total revenue decreased $62.1 million in 2023, compared to 2022 as a result of reduced volumes of high-margin overflow freight from both Expedited and Dedicated truckload operations.

Our Dedicated total revenue increased $44.1 million, as freight revenue increased $49.3 million and fuel surcharge revenue decreased $5.2 million.

The increase in Dedicated freight revenue relates to a 133 (or 10.8%) average tractor increase and an increase in average freight revenue per tractor per week of 6.6%, compared to 2023.

The increase in average freight revenue per tractor per week is the result of a 8.0%, or 21.3 cents per mile, increase in average rate per total mile, as well as 1.0% fewer miles per tractor.

Managed Freight total revenue decreased $10.0 million in 2024, compared to 2023 as a result of reduced volumes of high-margin overflow freight from both Expedited and Dedicated truckload operations and excess capacity in the marketplace impacting freight rates and volumes.

Revenue in this reportable segment is expected to fluctuate with changes in the freight market and our percentage of contracted versus non-contracted freight.

The $20.4 million increase in Warehousing total revenue is a result of period-over-period new customer business as well as rate increases with existing customers since the third quarter of 2023.

The $1.1 million increase in Warehousing total revenue is a result of period-over-period new customer business as well as rate increases with existing customers in 2024.

Total operating income was $44.8 million in 2024, compared to operating income of $58.8 million in 2023.

In addition to the changes in revenue described above, the change was impacted by a $39.3 million and $34.6 million decrease in Dedicated and Managed Freight operating expenses, respectively, partially offset by a $19.7 million and $2.8 million increase in Warehousing and Expedited operating expenses, respectively.

The increase in Expedited operating expenses was primarily due to the Expedited portion of the gain sale of a California terminal during the third quarter of 2022 (which resulted in lower operating expenses during 2022), increases in depreciation expense as a result of our equipment trade cycle, driver and non-driver pay increases, and increases in the contingent consideration liability related to AAT since 2022.

These increases were partially offset by decreased fuel and maintenance and parts costs as well as averaging fewer drivers and tractors compared to 2022.

The decrease in Dedicated operating expenses was primarily the result of averaging fewer drivers and tractors, resulting in lower driver salaries, wages, and benefits, reduced use of third-party purchased transportation, decreased fuel costs, and decreased maintenance and parts costs.

Additionally, Expedited and Dedicated operating expenses were reduced as a result of the sale of a Tennessee terminal during 2023.

In addition to the changes in revenue described above, the change was impacted by a $59.4 million increase in Dedicated operating expenses, partially offset by a $12.9 million, $4.0 million, and $0.7 million decrease in Managed Freight, Warehouse and Expedited operating expenses, respectively.

The decrease in Expedited operating expenses was primarily due to decreases in driver and non-driver pay, resulting from averaging fewer drivers and tractors compared to 2023, and lower fuel, maintenance, and parts costs.

These decreases were partially offset by increased depreciation expense as a result of our equipment trade cycle.

The increase in Dedicated operating expenses was primarily the result of averaging more drivers and tractors as a result of growth within LTST, resulting in higher driver and non-driver salaries, wages, and benefits, depreciation expense from equipment purchases to support the growth, and increases in the contingent consideration liability related to LTST since 2023.

These increases were partially offset by decreased fuel expense as a result of declining fuel prices.

The decrease in Managed Freight operating expenses is the result of the changes in revenue driving changes in variable expenses, primarily purchased transportation.

The increase in Warehousing operating expenses is a result of additional leased space and equipment for new business and pay increases, partially offset by a reduction in outsourced labor since 2022.

In our asset-light reportable segments, we are prioritizing long-term growth, focusing on talent acquisition, and technology enhancements.

The decrease in Warehousing operating expenses is primarily the result of a reduction in outsourced labor since 2023.

In our asset-light reportable segments, we are prioritizing long-term growth, as well as focusing on talent acquisition and technology enhancements.

Liquidity and Capital Resources

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As of December 31, 2024 and December 31, 2023 we had $296.9 million and $293.5 million in debt and lease obligations, respectively, consisting of the following:

$11.6 million and no outstanding borrowings under the Credit Facility, respectively;

No outstanding borrowings under the Credit Facility;

No outstanding borrowings under the Draw Note;

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$41.7 million and $42.8 million of the operating lease obligations, respectively.

The increase in our revenue equipment installment notes was primarily due to replacing our older revenue equipment with new equipment.

The decrease in operating lease obligations was primarily due to largely having transitioned from tractors held under operating leases to owned tractors in 2022 as well as amortization of the operating lease liability.

During the third quarter of 2023, we repaid $40.1 million in borrowings under the Credit Facility that we had incurred during 2023 to help fund the acquisition of LTST and repurchases of our Class A Common Stock under the stock repurchase program.

As of December 31, 2023, we had $11.6 million of borrowings outstanding, undrawn letters of credit outstanding of approximately $21.8 million, and available borrowing capacity of $76.6 million under the Credit Facility.

The increase in our revenue equipment installment notes was primarily due to equipment acquisition to support growth in our Dedicated reportable segment.

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

As of December 31, 2024, we had no borrowings outstanding, undrawn letters of credit outstanding of approximately $19.8 million, and available borrowing capacity of $90.2 million under the Credit Facility.

Additionally, we had availability of a $45.0 million line of credit from Triumph Bank ("Triumph") which is available solely to fund any indemnification owed to Triumph in relation to the sale of TFS.

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However, due to early availability and the ability to take advantage of certain tax incentives not available to us in 2024, we opportunistically elected to bring these purchases forward.

For 2024, we are planning for a more normalized equipment replacement cycle with the potential for some growth if we're able to successfully execute on our growth plan for our Dedicated reportable segment.

Our baseline expectation for 2024 fleet net capital expenditures is a range of $55 million to $65 million, with the majority taking place during the second half of the year.

Our baseline expectation for 2025 fleet net capital expenditures is a range of $70 million to $80 million and reflects our priorities of growing our Dedicated footprint, maintaining the average age of our fleet in a manner that allows us to optimize operational uptime and related operating costs, and offering a fleet of equipment that our professional drivers are proud to operate.

These assumptions are subject to risk.

For example, global supply chain disruptions similar to 2021 and 2022 could impact the availability of tractors and trailers and lead to increased pricing on new and used equipment.

Net gains on disposal of equipment and real estate for December 31, 2023 were $12.6 million compared to $40.3 million in 2022 primarily due to the $38.5 million gain on a California terminal during 2022 and a $7.6 million gain on the sale of a Tennessee terminal during 2023.

Net losses on disposal of equipment and real estate for December 31, 2024 were $1.6 million compared to a net gain of $12.6 million in 2023, which was primarily due to a $7.6 million gain on the sale of a Tennessee terminal during 2023.

We had commitments outstanding at December 31, 2024, to acquire revenue equipment totaling approximately $114.0 million in 2024 versus commitments at December 31, 2023 of approximately $156.6 million.

These commitments are cancelable, subject to certain adjustments in the underlying obligations and benefits.

We distributed a total of $5.8 million to stockholders during December 31, 2023 through dividends compared to $4.3 million during 2022.

We distributed a total of $5.8 million to stockholders through dividends during the years ended December 31, 2024 and 2023, respectively.

We believe we have sufficient liquidity to satisfy our cash needs and 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 decreased to $84.8 million in 2023, compared with $159.2 million in 2022, primarily due to an increase in receivables and driver advances as a result of an increase in our average receivable days outstanding and a $53.5 million decrease of net income, which is partially the result of the $38.5 million gain on sale of a California terminal during 2022, and a $1.7 million indemnification payment during 2023.

Net cash flows provided by operating activities increased to $122.9 million in 2024, compared with $84.8 million in 2023, primarily due to increases in non-cash expenses such as depreciation and amortization and reductions to non-cash gains on sale of property and equipment compared to 2023.

Changes in operating assets and liabilities such as receivables and driver advances and insurance and claims accruals provided improved cash flow partially offset by a $19.3 million decrease in net income.

Net cash flows used by investing activities were $107.7 million in 2024, compared with $235.9 million used in 2023.

The increase in net cash flows used by investing activities was primarily the result of timing of our trade cycle whereby we took delivery of approximately 1,242 new company tractors and disposed of approximately 1,235 used tractors in 2023, compared to delivery of 458 new company tractors and disposal of 223 used company tractors in 2022, the April 2023 acquisition of LTST, and the August 2023 acquisition of Sims.

The 2022 period includes the February 2022 acquisition of AAT as well as the sale of a California terminal.

The decrease in net cash flows used by investing activities was primarily due to the April 2023 and the August 2023 acquisitions of LTST and Sims, respectively, for $107.9 million, net of cash acquired, partially offset by the $4.6 million payment related to the acquisition of LTST and our Section 338(h)(10) election during the 2024 period, and the timing of our trade cycle whereby we took delivery of approximately 747 new tractors and 791 new trailers, while disposing of approximately 1,051 used tractors and 444 used trailers during 2024 compared to delivery of 1,242 new tractors and 1,111 new trailers, while disposing of approximately 1,235 used tractors and 634 used trailers in 2023.

Additionally, the 2023 period provided $12.5 million of proceeds related to the sale of a Tennessee terminal.

Net cash flows provided by financing activities were approximately $18.1 million in 2024, compared to $84.7 million used in 2023.

The change in net cash flows from financing activities was primarily the result of net proceeds relating to notes payable and our Credit Facility of $129.7 million in 2023, compared to net proceeds of $77.7 million in 2022, the repurchase of $25.4 million of shares of our Class A common stock during 2023 compared to $84.7 million during 2022, as well as the payment of approximately $5.8 million in dividends during 2023 compared to $4.3 million during 2022.

Net cash flows provided by operating activities and financing activities in the 2023 period also included payment of $0.8 million and $9.2 million, respectively, of contingent consideration liabilities related to the acquisition of AAT.

On May 18, 2022, our Board approved a new stock repurchase authorization of up to $75.0 million of our Class A common stock, with any remaining amount available under prior authorizations being excluded and no longer available.

The change in net cash flows from financing activities was primarily the result of net proceeds relating to notes payable and our Credit Facility of $30.0 million compared to net proceeds of $129.7 million in 2023 and the repurchase of $25.4 million of shares of our Class A common stock during 2023 compared to none during 2024.

Net cash flows provided by operating activities and provided by financing activities in the 2024 period also included payment of $3.0 million and $7.0 million, respectively, of contingent consideration liabilities related to the acquisition of AAT.

Net cash flows provided by operating activities and provided by financing activities in the 2023 period also included payment of $0.8 million and $9.2 million, respectively, of contingent consideration liabilities related to the acquisition of AAT.

On May 18, 2022 our Board approved a stock repurchase authorization of up to $75.0 million of our Class A common stock, with any remaining amount available under prior authorizations being excluded and no longer available.

Under such authorization, we repurchased 2.0 million shares of our Class A common stock for $54.7 million during 2022.

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Between May 2022 and April 2023, we repurchased a total of 2.7 million shares of our Class A common stock.

No additional shares have been repurchased since April 2023 (through February 26, 2024).

The program expired on January 31, 2024.

Our cash flows may fluctuate depending on capital expenditures, future stock repurchases, dividends, strategic investments or divestitures, any indemnification calls related to the TFS settlement, and the extent of future income tax obligations and refunds.

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Total operating expenses

Operating income (loss)

Operating income

Operating ratio

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Amortization of intangibles (1)

Gain on sale of terminals, net

Contingent consideration liability adjustment

Transaction and executive retirement

Adjusted operating expenses

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Total operating expenses

Operating income (loss)

Operating income

Operating ratio

10 unchanged sentences

Amortization of intangibles (1)

Bad debt expense associated with customer bankruptcy and high credit risk customers

Strategic restructuring adjusting items:

Insurance policy erosion

Gain on disposal of terminals, net

Impairment of real estate and related tangible assets

Impairment of revenue equipment and related charges

Contingent consideration liability adjustment

Transaction and executive retirement

Adjusted operating expenses

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We generally depreciate new trailers over seven years for refrigerated trailers and ten years for dry van trailers to salvage values of approximately 20% and 25% of their cost, respectively.

We performed a review of our estimates for certain subsets of revenue equipment during the quarter ended June 30, 2024 and, due to a weak used revenue equipment market, we increased the rate of depreciation on these units in the period.

This change resulted in an additional $6.4 million of depreciation expense during the year ended December 31, 2024.

Historically, changes in estimated useful life or salvage values have typically resulted from us transferring tractors to different reportable segments with different operating profiles.

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Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations.

We record an impairment charge when the carrying value of the finite lived intangible asset is not recoverable by the cash flows generated from the use of the asset.

We record an impairment charge when the cost exceeds the fair value of the finite lived intangible asset.

We determine the useful lives of our identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset.

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New emissions control regulations and increases in wages of manufacturing workers and other items have resulted in higher tractor prices, while the market value of used equipment fluctuated significantly.

The cost of fuel has been volatile over the last several years, with costs increasing in 2021 and 2022 but decreasing in 2023.

The cost of fuel has been volatile over the last several years, with costs increasing in 2022 but decreasing in 2023 and 2024.

Health care prices have increased faster than general inflation, primarily due to the rapid increase in prescription drug costs and more people on our health plan.

20 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis