What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-10 compared with 2021-05-04 · 362 added, 134 removed, 195 unchanged (72% of the section changed)

10 unchanged sentences

Intermodal also offers dedicated contract and container freight station (“CFS ” ) warehouse and handling services.

Today, Intermodal operates primarily in the Midwest and Southeast, with smaller operational presence in Southwest and Mid-Atlantic United States.

Intermodal operates primarily in the Midwest and Southeast, with smaller operational presence in Southwest and Mid-Atlantic United States.

We plan to grow Intermodal’s geographic footprint through acquisitions as well as greenfield start-ups where we do not have an acceptable acquisition target.

6 unchanged sentences

Pool offered this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest United States.

Accordingly, the results of operations for Pool have been presented as a discontinued operation in our Consolidated Statements of Comprehensive Income for all period presented.

In addition, the assets and liabilities were presented as held for sale in the Consolidated Balance Sheets for the prior period.

Accordingly, the results of operations for Pool have been presented as a discontinued operation in our Condensed Consolidated Statements of Comprehensive Income for all period presented.

In addition, the assets and liabilities were presented as held for sale in the Condensed Consolidated Balance Sheets for the prior period.

Unless otherwise noted, amounts, percentages and discussion for all periods reflect the results of operations, financial condition and cash flows from our continuing operations.

6 unchanged sentences

As a result, transportation and supply chain companies such as ours experienced slowdowns and reduced demand for our services.

Although our business and operations have returned to pre-COVID levels, the situation surrounding COVID-19 remains fluid and may be further impacted by the policies of President Biden’s administration and the availability and success of a vaccine.

The extent to which the COVID-19 outbreak impacts our business, results of operations and financial condition in 2021 will depend on future developments, which are highly uncertain and cannot be predicted by, including, but not limited to the duration, spread, severity and impact of the COVID-19 outbreak, the effects of the outbreak on our customers and suppliers and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume.

Although our business and operations have returned to pre-COVID levels, the situation surrounding COVID-19 and its variants remains fluid and may be further impacted by the policies of President Biden’s administration, the availability and success of a vaccine and vaccination rates.

The extent to which outbreaks of COVID-19 and its variants impacts our business, results of operations and financial condition in 2021 will depend on future developments, which are highly uncertain and cannot be predicted by, including, but not limited to the duration, spread, severity and impact of the COVID-19 outbreak, including the new variants, the effects of the outbreak on our customers and suppliers and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume.

In addition, although we believe we have sufficient capital and liquidity to manage our business over the short- and long-term, our liquidity may be materially affected if conditions in the credit and financial markets deteriorate as a result of COVID-19 including failure by us or our customers to secure any necessary financing in a timely manner.

3 unchanged sentences

The estimated fair value of the earn-out liability on the date of acquisition was $829.

The fair value was based on the estimated one-year performance of the acquired customer revenue and was calculated using a Monte Carlo simulation model.

The fair value was based on the estimated one-year performance of the acquired customer revenue and was calculated using the option pricing method.

Proficient Transport is an intermodal drayage company headquartered in Chicago, Illinois.

2 unchanged sentences

The results of Proficient Transport have been included in our Condensed Consolidated Financial Statements as of and from the date of acquisition.

Expedited Freight Acquisition

In May 2021, we acquired certain assets and liabilities of J&P Hall Express Delivery (“J&P”) for $7,543.

J&P is headquartered in Atlanta, Georgia with a second terminal in Albany, Georgia.

The acquisition of J&P supports our strategic growth plan by expanding pickup and delivery, less than truckload, truckload, less than container load, container freight station warehousing, and airport transfer services across the Southeastern United States.

The acquisition was funded using cash flow from operations.

The results of J&P have been included in our Condensed Consolidated Financial Statements as of and from the date of acquisition.

On February 12, 2021, we sold Pool for an $8,000 cash payment and up to a $12,000 earn-out based on 2021 earnings before interest, taxes, depreciation and amortization attainment, beginning February 1, 2021.

The preliminary estimated fair value of the earn-out on the date of sale was $6,967, and was calculated based on the estimated performance of Pool using a Monte Carlo simulation model.

The estimated fair value of the earn-out on the date of sale was $6,967, and was calculated based on the estimated performance of Pool using a Monte Carlo simulation model.

A loss on the sale of Pool in the amount of $2,860 was recorded in discontinued operation.

1 unchanged sentence

We embrace a comprehensive definition of sustainability that addresses Environmental, Social, and Governance factors (“ESG”).

To our employees, our communities, our customers, our suppliers, and our investors, each impact area matters.

In 2019, our Board amended the Corporate Governance and Nominating (“CG&N”) Committee Charter to oversee our efforts related to environmental, social, and governance matters, and management of sustainability-related risks and opportunities.

In 2019, our Board amended the Corporate Governance and Nominating (“CG&N”) Committee Charter to ensure Board oversight of our efforts related to environmental, social, and governance matters, and management of sustainability-related risks and opportunities.

At least twice a year, the CG&N Committee is updated on each of these topics and provides feedback and recommendations that it deems appropriate.

10 unchanged sentences

Results from Operations

The following table sets forth our consolidated financial data from operations for the three months ended March 31, 2021 and 2020 (in thousands):

The following table sets forth our consolidated financial data from operations for the three months ended June 30, 2021 and 2020 (unaudited and in thousands):

Three Months Ended

March 31, March 31, Percent

2021 2020 Change Change

Operating revenue:

June 30, 2021 June 30, 2020 Change Percent Change

Operating revenues:

Expedited Freight $ 351,735 $ 235,658 $ 116,077 49.3 %

1 unchanged sentence

Eliminations and other operations (197) (408) 211 (51.7)

Operating revenue 362,202 305,557 56,645 18.5

Operating revenues 420,671 281,678 138,993 49.3

Operating expenses:

20 unchanged sentences

Net income and comprehensive income $ 30,677 $ 3,154 $ 27,523 872.6 %

Operating revenue increased $56,645, or 18.5%, to $362,202 for the three months ended March 31, 2021 compared to $305,557 for the three months ended March 31, 2020.

The increase was primarily driven by an increase in our Expedited Freight segment of $50,561 due to increased Network and Final Mile revenue.

Operating revenues increased $138,993, or 49.3%, to $420,671 for the three months ended June 30, 2021 compared to $281,678 for the three months ended June 30, 2020.

The increase was primarily driven by an increase in our Expedited Freight segment of $116,077 due to increased Network, Truckload and Final Mile revenue.

Operating Expenses

Operating expenses increased $49,693, or 17.1%, to $339,478 for the three months ended March 31, 2021 compared to $289,785 for the three months ended March 31, 2020.

The increase was primarily driven by a purchased transportation increase of $34,010 in our Expedited Freight segment.

Purchased transportation includes owner operators and third party carriers.

Operating expenses increased $110,783, or 41.4%, to $378,547 for the three months ended June 30, 2021 compared to $267,764 for the three months ended June 30, 2020.

The increase was primarily driven by an increase in purchased transportation expense of $73,148 in both our Expedited Freight and Intermodal segments.

Purchased transportation expense includes our independent contractor fleet owners and owner-operators, who lease their equipment to our motor carrier, (“Leased Capacity Providers ”) and third party carriers.

Income from Continuing Operations and Segment Operations

Income from continuing operations increased $6,952, or 44.1%, to $22,724 for the three months ended March 31, 2021 compared to $15,772 for the three months ended March 31, 2020.

The increase was primarily driven by increases at our Expedited Freight segment and Intermodal segment of $9,351 and $796, respectively.

Income from continuing operations increased $28,210, or 202.7%, to $42,124 for the three months ended June 30, 2021 compared to $13,914 for the three months ended June 30, 2020.

The increase was primarily driven by an increase in income from continuing operations at our Expedited Freight segment and Intermodal segment of $22,935 and $3,973, respectively.

The results for our two reportable segments are discussed in detail in the following sections.

Interest Expense

Interest expense was $1,165 for the three months ended March 31, 2021 compared to $853 for the three months ended March 31, 2020.

The increase in interest expense was attributable to a higher interest rate on the outstanding borrowings under our revolving credit facility.

The interest rate on the outstanding borrowings under the revolving credit facility was 3.25% and 2.3%, respectively, at March 31, 2021 and 2020.

Interest expense was $1,323 for the three months ended June 30, 2021 compared to $1,198 for the three months ended June 30, 2020.

The increase in interest expense was attributable to additional outstanding borrowings under our revolving credit facility during the second quarter of 2021.

The interest rate on the outstanding borrowings under the revolving credit facility was 3.25% as of both June 30, 2021 and June 30, 2020.

Income Taxes on a Continuing Basis

The combined federal and state effective tax rate on a continuing basis for the three months ended March 31, 2021 was 22.5% compared to a rate of 23.5% for the three months ended March 31, 2020.

The lower effective tax rate for the three months ended March 31, 2021 was primarily due to increased vesting of restricted shares as well as exercises of stock options in the current period when compared to the same period in 2020.

The combined federal and state effective tax rate on a continuing basis for the three months ended June 30, 2021 was 24.8% compared to a rate of 27.5% for the three months ended June 30, 2020.

The lower effective tax rate for the three months ended June 30, 2021 was primarily due to increased vesting of restricted shares as well as exercises of stock options in the second quarter of 2021 when compared to the same period in 2020 .

Loss from Discontinued Operation, net of tax

Loss from discontinued operation, net of tax increased $2,493 to a $5,533 loss for the three months ended March 31, 2021 compared to a $3,040 loss for the three months ended March 31, 2020.

The Pool business was sold on February 12, 2021, and the loss on sale recorded in discontinued operation was $2,860.

As a result of the foregoing factors, net income increased $2,806, or 33.5%, to $11,181 for the three months ended March 31, 2021 compared to $8,375 for the three months ended March 31, 2020.

Expedited Freight - Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

The following table sets forth the financial data of our Expedited Freight segment for the three months ended March 31, 2021 and 2020:

Loss from discontinued operation, net of tax was $6,071 for the three months ended June 30, 2020.

Loss from discontinued operation includes our Pool business and, as discussed above, the Pool business was sold on February 12, 2021.

For the three months ended June 30, 2020, our Pool business was adversely impacted by COVID-19 as many of our customers were affected by retail mall closure in response to stay-at-home orders beginning in March 2020.

As a result of the foregoing factors, net income increased $27,523, or 872.6%, to $30,677 for the three months ended June 30, 2021 compared to $3,154 for the three months ended June 30, 2020.

Expedited Freight - Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020

The following table sets forth the financial data of our Expedited Freight segment for the three months ended June 30, 2021 and 2020:

Expedited Freight Segment Information

(In thousands)

(unaudited and in thousands)

Three Months Ended

March 31, Percent of March 31, Percent of Percent

2021 Revenue 2020 Revenue Change Change

Operating revenue:

June 30, 2021 Percent of Revenue June 30, 2020 Percent of Revenue Change Percent Change

Operating revenues:

$ 210,088 59.7 % $ 134,173 56.9 % $ 75,915 56.6 %

2 unchanged sentences

Other 14,796 4.2 6,201 2.6 8,595 138.6

Total operating revenue 304,186 100.0 253,625 100.0 50,561 19.9

Total operating revenues 351,735 100.0 235,658 100.0 116,077 49.3

Operating expenses:

11 unchanged sentences

Three Months Ended

March 31, March 31, Percent

2021 2020 Change

June 30, 2021 June 30, 2020 Percent Change

Business days 64 64 — %

15 unchanged sentences

51.3 % 49.9 % 2.8

Network gross margin 5

51.9 % 53.4 % (2.8) %

1 In thousands

2 unchanged sentences

4 Door-to-door shipments include all shipments with a pickup and/or delivery

5 Network revenue less Network purchased transportation as a percentage of Network revenue

Expedited Freight operating revenue increased $50,561, or 19.9%, to $304,186 for the three months ended March 31, 2021 from $253,625 for the three months ended March 31, 2020.

Operating Revenues

Expedited Freight operating revenues increased $116,077, or 49.3%, to $351,735 for the three months ended June 30, 2021 from $235,658 for the three months ended June 30, 2020.

The increase was attributable to increased Network, Truckload and Final Mile revenue.

Network revenue increased due to a 39.5% increase in tonnage, a 13.8% increase in shipments and a 8.8% increase in revenue per hundredweight as compared to the prior year.

Fuel surcharge revenue increased $863, or 3.7% as a result of the rising fuel prices.

Truckload revenue increased $4,851 primarily due to an increase in revenue per mile.

Final Mile revenue increased $14,454 due to the combination of organic growth and the acquisition of CLW in October 2020.

The increase in tonnage and shipments was primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the second quarter of 2020.

Strategic pricing initiatives and freight rationalization actions contributed to the increase in the revenue per hundredweight.

Fuel surcharge revenue increased $11,925, or 70.6% as a result of the rise in fuel prices and increased tonnage.

Truckload revenue increased $15,111 primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the second quarter of 2020.

Final Mile revenue increased $16,456 due to the combination of organic growth and the acquisition of CLW Delivery, Inc.

(“CLW”) in October 2020.

Other revenue, which includes warehousing and terminal handling, increased $8,595 due to the higher linehaul tonnage and shipment counts.

Purchased Transportation

Expedited Freight purchased transportation increased $31,574, or 23.8%, to $164,364 for the three months ended March 31, 2021 from $132,790 for the three months ended March 31, 2020.

Purchased transportation was 54.0% of Expedited Freight operating revenue for the three months ended March 31, 2021 compared to 52.4% for the same period in 2020.

Expedited Freight purchased transportation includes owner operators and third party carriers, while Company-employed drivers are included in salaries, wages and benefits.

The increase in purchased transportation as a percentage of revenue was primarily due to the mix of owner operators, third party carriers and Company-employed drivers.

Expedited Freight purchased transportation increased $64,170, or 50.3%, to $191,648 for the three months ended June 30, 2021 from $127,478 for the three months ended June 30, 2020.

Purchased transportation was 54.5% of Expedited Freight operating revenues for the three months ended June 30, 2021 compared to 54.1% for the same period in 2020.

Expedited Freight purchased transportation includes Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits.

The increase in purchased transportation as a percentage of revenues was primarily due to the change in the mix of freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers for Network and Truckload services.

In the second quarter of 2021, we purchased 63.0 %, 33.7% and 3.3% of our freight capacity from Leased Capacity Providers, third party carriers and Company-employed drivers, respectively.

This compares to 68.4%, 27.3% and 4.3% i n the same period in 2020.

Salaries, Wages and Employee Benefits

Expedited Freight salaries, wages and employee benefits increased $6,252, or 11.3%, to $61,687 for the three months ended March 31, 2021 from $55,435 for the three months ended March 31, 2020.

Salaries, wages and employee benefits were 20.3% of Expedited Freight operating revenue for the three months ended March 31, 2021 compared to 21.9% for the same period in 2020.

The decrease in salaries, wages and employee benefits as a percentage of revenue was primarily due to cost-control measures and operating efficiencies.

Expedited Freight salaries, wages and employee benefits increased $17,052, or 33.8%, to $67,560 for the three months ended June 30, 2021 from $50,508 for the three months ended June 30, 2020.

Salaries, wages and employee benefits were 19.2% of Expedited Freight operating revenues for the three months ended June 30, 2021 compared to 21.4% for the same period in 2020.

The increase in salaries, wages and employee benefits expense was due to the additional employees hired in response to the increase in tonnage and shipments in the second quarter of 2021, higher group health insurance premiums and an increased reserve for incentive compensation.

Cost-control measures implemented in the prior year contributed to the decrease in salaries, wages and employee benefits expense as a percentage of operating revenues.

Operating Leases

Expedited Freight operating leases increased $616, or 4.5%, to $14,218 for the three months ended March 31, 2021 from $13,602 for the three months ended March 31, 2020.

Operating leases were 4.7% of Expedited Freight operating revenue for the three months ended March 31, 2021 compared to 5.4% for the same period in 2020.

The increase in operating leases was primarily due to additional truck leases and facility leases acquired from CLW.

Expedited Freight operating leases increased $1,530, or 11.5%, to $14,868 for the three months ended June 30, 2021 from $13,338 for the three months ended June 30, 2020.

Operating leases were 4.2% of Expedited Freight operating revenues for the three months ended June 30, 2021 compared to 5.7% for the same period in 2020.

The increase in operating leases expense was primarily due to higher facility and equipment lease expense in 2021, which is partially attributable to facility leases assumed in connection with the CLW and J&P acquisitions.

Depreciation and Amortization

Expedited Freight depreciation and amortization increased $103, or 1.5%, to $6,798 for the three months ended March 31, 2021 from $6,695 for the three months ended March 31, 2020.

Depreciation and amortization was 2.2% of Expedited Freight operating revenue for the three months ended March 31, 2021 compared to 2.6% for the same period in 2020.

The increase in amortization expense was primarily due to the amortization of intangibles resulting from the acquisition of CLW.

Expedited Freight depreciation and amortization increased $39, or 0.6%, to $6,779 for the three months ended June 30, 2021 from $6,740 for the three months ended June 30, 2020.

Depreciation and amortization was 1.9% of Expedited Freight operating revenues for the three months ended June 30, 2021 compared to 2.9% for the same period in 2020.

The increase in depreciation and amortization expense is primarily due to the additional amortization expense resulting from the acquisitions of CLW and J&P.

Insurance and Claims

Expedited Freight insurance and claims increased $998, or 15.1%, to $7,611 for the three months ended March 31, 2021 from $6,613 for the three months ended March 31, 2020.

Insurance and claims were 2.5% of Expedited Freight operating revenue for the three months ended March 31, 2021 compared to 2.6% for the same period in 2020.

The increase in insurance and claims expense was primarily attributable to an increase in vehicle insurance premiums.

See additio nal discussion over the consolidated change in self-insurance reserves in the “Other Operation ” section below.

Expedited Freight fuel expense decreased $151, or 7.0%, to $1,993 for the three months ended March 31, 2021 from $2,144 for the three months ended March 31, 2020.

Fuel expense was 0.7% of Expedited Freight operating revenue for the three months ended March 31, 2021 compared to 0.8% for the same period in 2020.

Expedited Freight fuel expense decreased due to a decline in our mileage and the average price of fuel in 2021.

Expedited Freight insurance and claims increased $2,670, or 46.7%, to $8,385 for the three months ended June 30, 2021 from $5,715 for the three months ended June 30, 2020.

Insurance and claims were 2.4% of Expedited Freight operating revenues for both the three months ended June 30, 2021 and 2020.

The increase in insurance and claims expense was primarily attributable to an increase in vehicle insurance premiums as well as additional vehicle liability and cargo claims.

See additio nal discussion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.

Expedited Freight fuel expense increased $741, or 52.7%, to $2,147 for the three months ended June 30, 2021 from $1,406 for the three months ended June 30, 2020.

Fuel expense was 0.6% of Expedited Freight operating revenues for both the three months ended June 30, 2021 and 2020.

Expedited Freight fuel expense increased due to increased mileage and the rise in the average price of fuel in the second quarter of 2021.

Other Operating Expenses

Expedited Freight other operating expenses increased $1,818, or 8.6%, to $22,985 for the three months ended March 31, 2021 from $21,167 for the three months ended March 31, 2020.

Other operating expenses were 7.6% of Expedited Freight operating revenue for the three months ended March 31, 2021 compared to 8.3% for the same period in 2020.

Other operating expenses included equipment maintenance, terminal and office expenses, legal and professional fees and other over-the-road costs.

These expenses primarily increased due to terminal and office expenses as well as parts costs for final mile installations.

Expedited Freight other operating expenses increased $6,940, or 37.1%, to $25,660 for the three months ended June 30, 2021 from $18,720 for the three months ended June 30, 2020.

Other operating expenses were 7.3% of Expedited Freight operating revenues for the three months ended June 30, 2021 compared to 7.9% for the same period in 2020.

The increase in other operating expenses was driven by an increase in equipment maintenance costs, terminal and office expenses, legal and professional fees, other over-the-road costs and parts for final mile installations.

In the second quarter of 2020, other operating expenses included a $2,108 gain from changes in the fair value of an earn-out liability due to the timing of expected new business wins.

A similar gain was not recorded in the second quarter of 2021.

Income from Operations

Expedited Freight income from operations increased $9,351, or 61.6%, to $24,530 for the three months ended March 31, 2021 compared to $15,179 for the three months ended March 31, 2020.

Income from operations was 8.1% of Expedited Freight operating revenue for the three months ended March 31, 2021 compared to 6.0% for the same period in 2020.

The increase in income from operations was due to an increase in tonnage, higher revenue per hundredweight and operating efficiencies.

Intermodal - Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

The following table sets forth the financial data of our Intermodal segment for the three months ended March 31, 2021 and 2020:

Expedited Freight income from operations increased $22,935, or 195.1%, to $34,688 for the three months ended June 30, 2021 compared to $11,753 for the three months ended June 30, 2020.

Income from operations was 9.9% of Expedited Freight operating revenues for the three months ended June 30, 2021 compared to 5.0% for the same period in 2020.

The increase in income from operations as a percentage of operating revenues was driven by increased revenue per hundredweight and higher number of shipments combine with cost-control measures and operational efficiencies, partially offset by the change in mix of freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers.

Intermodal - Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020

The following table sets forth the financial data of our Intermodal segment for the three months ended June 30, 2021 and 2020:

Intermodal Segment Information

(In thousands)

(unaudited and in thousands)

Three Months Ended

March 31, Percent of March 31, Percent of Percent

Revenue 2020 Revenue Change Change

Operating revenue $ 58,514 100.0 % $ 52,460 100.0 % $ 6,054 11.5 %

June 30, 2021 Percent of Revenue June 30, 2020 Percent of Revenue Change Percent Change

Operating revenues $ 69,133 100.0 % $ 46,428 100.0 % $ 22,705 48.9 %

Operating expenses:

8 unchanged sentences

Income from operations $ 8,386 12.1 % $ 4,413 9.5 % $ 3,973 90.0 %

1 Includes revenues and operating expenses from the acquisition of Proficient Transport, which was acquired in February 2021.

Intermodal Operating Statistics

Three Months Ended

March 31, March 31, Percent

2021 2020 Change

June 30, 2021 June 30, 2020 Percent Change

Drayage shipments 96,805 68,974 40.3 %

1 unchanged sentence

Number of locations 29 24 20.8 %

Intermodal operating revenue increased $6,054, or 11.5%, to $58,514 for the three months ended March 31, 2021 from $52,460 for the three months ended March 31, 2020.

The increase in operating revenue was primarily attributable to a 9.0% increase in drayage shipments over the same period in 2020.

Intermodal operating revenues increased $22,705, or 48.9%, to $69,133 for the three months ended June 30, 2021 from $46,428 for the three months ended June 30, 2020.

The increase in operating revenues was primarily attributable to a 40.3% increase in drayage shipments over the same period in 2020 and an increase in accessorial revenues.

The increase in drayage shipments was driven by the combination of the economic recovery from COVID-19, which adversely impacted the results of operations for the second quarter of 2020, and the Proficient Transport acquisition in February 2021.

Purchased Transportation

Intermodal purchased transportation increased $2,437, or 13.4%, to $20,603 for the three months ended March 31, 2021 from $18,166 for the three months ended March 31, 2020.

Purchased transportation was 35.2% of Intermodal operating revenue for the three months ended March 31, 2021 compared to 34.6% for the same period in 2020.

Intermodal purchased transportation includes owner operators and third party carriers, while Company-employed drivers are included in salaries, wages and benefits.

The increase in Intermodal purchased transportation as a percentage of revenue was primarily due to the mix of owner operators and Company-employed drivers.

Intermodal purchased transportation increased $8,863, or 59.5%, to $23,767 for the three months ended June 30, 2021 from $14,904 for the three months ended June 30, 2020.

Purchased transportation was 34.4% of Intermodal operating revenues for the three months ended June 30, 2021 compared to 32.1% for the same period in 2020.

Intermodal purchased transportation includes Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits.

Salaries, Wages and Employee Benefits

Intermodal salaries, wages and employee benefits increased $1,133, or 8.8%, to $14,063 for the three months ended March 31, 2021 compared to $12,930 for the three months ended March 31, 2020.

Salaries, wages and employee benefits were 24.0% of Intermodal operating revenue for the three months ended March 31, 2021 compared to 24.6% for the same period in 2020.

Intermodal salaries, wages and employee benefits increased $4,502, or 38.4%, to $16,230 for the three months ended June 30, 2021 compared to $11,728 for the three months ended June 30, 2020.

Salaries, wages and employee benefits were 23.5% of Intermodal operating revenues for the three months ended June 30, 2021 compared to 25.3% for the same period in 2020.

The increase in salaries, wages and employee benefits expense was primarily due to the additional employees hired in response to the increase in shipments in the second quarter of 2021 and an increased reserve for incentive compensation.

Cost-control measures implemented in the prior year contributed to the decrease in salaries, wages and employee benefits expense as a percentage of operating revenues.

Operating Leases

Intermodal operating leases increased $409, or 9.2%, to $4,837 for the three months ended March 31, 2021 compared to $4,428 for the three months ended March 31, 2020.

Operating leases were 8.3% of Intermodal operating revenue for the three months ended March 31, 2021 compared to 8.4% for the same period in 2020.

Intermodal operating leases increased $1,455, or 36.0%, to $5,500 for the three months ended June 30, 2021 compared to $4,045 for the three months ended June 30, 2020.

Operating leases were 8.0% of Intermodal operating revenues for the three months ended June 30, 2021 compared to 8.7% for the same period in 2020.

The increase in operating leases expense was primarily due to new trailer leases in 2021.

Depreciation and Amortization

Intermodal depreciation and amortization decreased $185, or 7.1%, to $2,436 for the three months ended March 31, 2021 from $2,621 for the three months ended March 31, 2020.

Depreciation and amortization was 4.2% of Intermodal operating revenue for the three months ended March 31, 2021 compared to 5.0% for the same period in 2020 .

The decrease was primarily due to the full depreciation in 2021 of equipment obtained through a prior year acquisition.

Intermodal depreciation and amortization decreased $36, or 1.4%, to $2,612 for the three months ended June 30, 2021 from $2,648 for the three months ended June 30, 2020.

Depreciation and amortization was 3.8% of Intermodal operating revenues for the three months ended June 30, 2021 compared to 5.7% for the same period in 2020 .

The decrease in depreciation and amortization expense was primarily due to the full depreciation of equipment obtained through acquisitions in 2020, partially offset by the additional amortization expense resulting from the acquisition of Proficient Transport.

Insurance and Claims

Intermodal insurance and claims increased $429, or 21.7%, to $2,402 for the three months ended March 31, 2021 from $1,973 for the three months ended March 31, 2020.

Insurance and claims were 4.1% of Intermodal operating revenue for the three months ended March 31, 2021 and compared to 3.8% for the same period in 2020.

Intermodal insurance and claims increased $566, or 31.6%, to $2,355 for the three months ended June 30, 2021 from $1,789 for the three months ended June 30, 2020.

Insurance and claims were 3.4% of Intermodal operating revenues for the three months ended June 30, 2021 compared to 3.9% for the same period in 2020.

The increase in insurance and claims expense was primarily due to an increase in vehicle insurance premiums.

See additional discuss ion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.

Intermodal fuel expense decreased $159, or 8.5%, to $1,710 for the three months ended March 31, 2021 from $1,869 for the three months ended March 31, 2020.

Fuel expense was 2.9% of Intermodal operating revenue for the three months ended March 31, 2021 compared to 3.6% for the same period in 2020.

Intermodal fuel expense decreased due to a decline in our mileage and the average price of fuel in 2021.

Intermodal fuel expense increased $799, or 71.8%, to $1,912 for the three months ended June 30, 2021 from $1,113 for the three months ended June 30, 2020.

Fuel expense was 2.8% of Intermodal operating revenues for the three months ended June 30, 2021 compared to 2.4% for the same period in 2020.

Intermodal fuel expense increased due to increased mileage and the rise in the average price of fuel in the second quarter of 2021.

Other Operating Expenses

Intermodal other operating expenses increased $1,194, or 17.7%, to $7,954 for the three months ended March 31, 2021 from $6,760 for the three months ended March 31, 2020.

Other operating expenses were 13.6% of Intermodal operating revenue for the three months ended March 31, 2021 compared to 12.9% for the same period in 2020.

The increase in Intermodal other operating expenses was primarily due to additional rail storage expenses and professional fees related to the acquisition of Proficient Transport.

Intermodal other operating expenses increased $2,583, or 44.6%, to $8,371 for the three months ended June 30, 2021 from $5,788 for the three months ended June 30, 2020.

Other operating expenses were 12.1% of Intermodal operating revenues for the three months ended June 30, 2021 compared to 12.5% for the same period in 2020.

The increase in Intermodal other operating expenses was primarily due to additional expenses to support the increased accessorial revenues noted above.

Income from Operations

Intermodal income from operations increased $796, or 21.4%, to $4,509 for the three months ended March 31, 2021 compared to $3,713 for the three months ended March 31, 2020.

Income from operations was 7.7% of Intermodal operating revenue for the three months ended March 31, 2021 compared to 7.1% for the same period in 2020.

Increase in the operating income was primarily attributable to leverage on fixed costs such as operating leases, depreciation and amortization.

Other Operations - Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

Other operating activity was a $6,315 operating loss during the three months ended March 31, 2021 compared to a $3,120 operating loss during the three months ended March 31, 2020.

Operating expenses for the three months ended March 31, 2021 included increased professional fees related to cybersecurity and shareholder engagement activities of $6,955, partially offset by decreased self-insurance reserves for vehicle liability claims and self-insurance reserves for group health insurance claims of $2,210 and $1,177, respectively.

The decrease in the self-insurance reserves for vehicle liability claims was due to the favorable loss development factor of historical claims.

Intermodal income from operations increased $3,973, or 90.0%, to $8,386 for the three months ended June 30, 2021 compared to $4,413 for the three months ended June 30, 2020.

Income from operations was 12.1% of Intermodal operating revenues for the three months ended June 30, 2021 compared to 9.5% for the same period in 2020.

The increase in income from operations as a percentage of operating revenues was driven by the operating leverage on fixed costs such as operating leases, depreciation and amortization.

Other Operations - Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020

Other operations included an $950 operating loss during the three months ended June 30, 2021 compared to a $2,252 operating loss during the three months ended June 30, 2020.

The change in the operating loss was driven by decreased self-insurance reserves for vehicle liability and workers’ compensation claims, partially offset by an accrual for an incentive program established in 2021 and increased reserves for group health insurance claims.

The decrease in the self-insurance reserves for vehicle liability and workers’ compensation claims was due to the favorable loss development factor of historical claims attributable to the safety measures in place.

In the second quarter of 2020, severance costs in the amount of $997 were recorded in accordance with severance agreements for former employees.

Similar severance costs were not recorded in the second quarter of 2021.

Results from Operations

The following table sets forth our consolidated historical financial data from operations for the six months ended June 30, 2021 and 2020 (unaudited and in thousands):

Six Months Ended

June 30, 2021 June 30, 2020 Change Percent Change

Operating revenues:

Expedited Freight $ 655,921 $ 489,287 $ 166,634 34.1 %

Intermodal 127,647 98,888 28,759 29.1

Eliminations and other operations (695) (940) 245 (26.1)

Operating revenues 782,873 587,235 195,638 33.3

Operating expenses:

Purchased transportation 399,825 292,667 107,158 36.6

Salaries, wages, and employee benefits 159,538 133,331 26,207 19.7

Operating leases 39,537 35,271 4,266 12.1

Depreciation and amortization 18,651 18,747 (96) (0.5)

Insurance and claims 20,632 17,766 2,866 16.1

Fuel expense 7,761 6,532 1,229 18.8

Other operating expenses 72,081 53,234 18,847 35.4

Total operating expenses 718,025 557,548 160,477 28.8

Income (loss) from continuing operations:

Expedited Freight 59,218 26,933 32,285 119.9

Intermodal 12,895 8,126 4,769 58.7

Other Operations (7,265) (5,372) (1,893) 35.2

Income from continuing operations 64,848 29,687 35,161 118.4

Other expense:

Interest expense (2,488) (2,051) (437) 21.3

Total other expense (2,488) (2,051) (437) 21.3

Income from continuing operations before income taxes 62,360 27,636 34,724 125.6

Income tax expense 14,969 6,995 7,974 114.0

Net income from continuing operations 47,391 20,641 26,750 129.6

Loss from discontinued operation, net of tax (5,533) (9,112) 3,579 (39.3)

Net income and comprehensive income $ 41,858 $ 11,529 $ 30,329 263.1 %

Operating revenues increased $195,638, or 33.3% to $782,873 for the six months ended June 30, 2021 compared to $587,235 for the six months ended June 30, 2020.

The increase was primarily driven by our Expedited Freight segment of $166,634 due to increased Network, Truckload and Final Mile.

Operating Expenses

Operating expenses increased $160,477, or 28.8%, to $718,025 for the six months ended June 30, 2021 compared to $557,548 for the six months ended June 30, 2020.

The increase was primarily driven by a purchased transportation increase of $107,158 in our Expedited Freight and Intermodal segments.

Purchased transportation includes Leased Capacity Providers and third party carriers.

Income from Continuing Operations and Segment Operations

Income from continuing operations increased $35,161, or 118.4%, to $64,848 for the six months ended June 30, 2021 compared to $29,687 for the six months ended June 30, 2020.

The increase was primarily driven by increases at our Expedited Freight segment and Intermodal segment of $32,285 and $4,769, respectively.

The results for our two reportable segments are discussed in detail in the following sections.

Interest Expense

Interest expense was $2,488 for the six months ended June 30, 2021 compared to $2,051 for the six months ended June 30, 2020.

The increase in interest expense was attributable to additional outstanding borrowings under our revolving credit facility during the six months ended June 30, 2021.

Income Taxes on a Continuing Basis

The combined federal and state effective tax rate on a continuing basis for the six months ended June 30, 2021 was 24.0% compared to a rate of 25.3% for the six months ended June 30, 2020.

The lower effective tax rate for the six months ended June 30, 2021 was primarily due to increased vesting of restricted shares as well as exercises of stock options in for the six months ended June 30, 2021 when compared to the same period in 2020 .

Loss from Discontinued Operation, net of tax

Loss from discontinued operations, net of tax decreased $3,579 to a $5,533 loss for the six months ended June 30, 2021 from a $9,112 loss for the six months ended June 30, 2020.

Loss from discontinued operation includes our Pool business and, as discussed above, the Pool business was sold on February 12, 2021.

For the six months ended June 30, 2020, our Pool business was adversely impacted by COVID-19 as many of our customers were affected by retail mall closure in response to stay-at-home orders beginning in March 2020.

As a result of the foregoing factors, net income increased by $30,329, or 263.1%, to $41,858 for the six months ended June 30, 2021 compared to $11,529 for the six months ended June 30, 2020.

Expedited Freight - Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020

The following table sets forth the historical financial data of our Expedited Freight segment for the six months ended June 30, 2021 and 2020:

Expedited Freight Segment Information

(unaudited and in thousands)

Six Months Ended

June 30, 2021 Percent of Revenue June 30, 2020 Percent of Revenue Change Percent Change

Operating revenues:

$ 388,715 59.3 % $ 286,182 58.5 % $ 102,533 35.8 %

Truckload 109,348 16.7 89,384 18.3 19,964 22.3

Final Mile 132,139 20.1 101,229 20.7 30,910 30.5

Other 25,719 3.9 12,492 2.6 13,227 105.9

Total operating revenues 655,921 100.0 489,287 100.0 166,634 34.1

Operating expenses:

Purchased transportation 356,012 54.3 260,268 53.2 95,744 36.8

Salaries, wages and employee benefits 129,247 19.7 105,943 21.7 23,304 22.0

Operating leases 29,086 4.4 26,940 5.5 2,146 8.0

Depreciation and amortization 13,577 2.1 13,435 2.7 142 1.1

Insurance and claims 15,996 2.4 12,328 2.5 3,668 29.8

Fuel expense 4,140 0.6 3,550 0.7 590 16.6

Other operating expenses 48,645 7.4 39,890 8.2 8,755 21.9

Total operating expenses 596,703 91.0 462,354 94.5 134,349 29.1

Income from operations $ 59,218 9.0 % $ 26,933 5.5 % $ 32,285 119.9 %

1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

Expedited Freight Operating Statistics

Six Months Ended

June 30, 2021 June 30, 2020 Percent Change

Business days 127 128 (0.8) %

Total pounds 1,379,530 1,091,987 26.3

Pounds per day 10,862 8,531 27.3

Shipments 1,2

Total shipments 2,122 1,849 14.8

Shipments per day 16.7 14.4 15.7

Weight per shipment 650 591 10.0

Revenue per hundredweight 3

$ 28.12 $ 26.76 5.1

Revenue per hundredweight, ex fuel 3

$ 24.29 $ 23.09 5.2

Revenue per shipment 3

$ 183.39 $ 154.81 18.5

Revenue per shipment, ex fuel 3

$ 158.47 $ 133.11 19.1

Network revenue from door-to-door shipments as a percentage of network revenue 3,4

50.0 % 46.9 % 6.6

1 In thousands

2 Excludes accessorial, Truckload and Final Mile products

3 Includes intercompany revenue between the Network and Truckload revenue streams

4 Door-to-door shipments include all shipments with a pickup and/or delivery

Operating Revenues

Expedited Freight operating revenues increased $166,634, or 34.1%, to $655,921 for the six months ended June 30, 2021 from $489,287 for the six months ended June 30, 2020.

The increase was attributable to increased Network, Truckload and Final Mile revenue.

Network revenue increased due to a 26.3% increase in tonnage, a 14.8% increase in shipments and a 10.0% increase in revenue per hundredweight as compared to the prior year.

The increase in tonnage and shipments was primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the six months ended June 30, 2020.

Strategic pricing initiatives and freight rationalization actions contributed to the increase in the revenue per hundredweight.

Fuel surcharge revenue increased $12,788, or 31.9% as a result of the rise in fuel prices and increased tonnage.

Truckload revenue increased $19,964 primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the six months ended June 30, 2020.

Final Mile revenue increased $30,910 due to the combination of organic growth and the acquisition of CLW Delivery, Inc.

(“CLW”) in October 2020.

Other revenue, which includes warehousing and terminal handling, increased $13,227 due to the higher linehaul tonnage and shipment counts.

Purchased Transportation

Expedited Freight purchased transportation increased $95,744, or 36.8%, to $356,012 for the six months ended June 30, 2021 from $260,268 for the six months ended June 30, 2020.

Purchased transportation was 54.3% of Expedited Freight operating revenue for the six months ended June 30, 2021 compared to 53.2% for the same period in 2020.

Expedited Freight purchased transportation includes Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits.

For the six months ended June 30, 2021, we purchase d 63.8%, 32.6% and 3.6% of our freight capacity from Leased Capacity Providers, third party carriers and Company-employed drivers, respectively.

This compares to 70.4%, 24.8% and 4.8% in the same period in 2020.

Salaries, Wages, and Employee Benefits

Expedited Freight salaries, wages and employee benefits increased by $23,304, or 22.0%, to $129,247 for the six months ended June 30, 2021 from $105,943 for the six months ended June 30, 2020.

Salaries, wages and employee benefits were 19.7% of Expedited Freight operating revenues for the six months ended June 30, 2021 compared to 21.7% for the same period in 2020.

The increase in salaries, wages and employee benefits expense was primarily due to the additional employees hired in response to the increase in tonnage and shipments in 2021, higher group health insurance premiums and an increased reserve for incentive compensation.

Cost-control measures implemented in the prior year contributed to the decrease in salaries, wages and employee benefits expense as a percentage of operating revenues.

Operating Leases

Expedited Freight operating leases increased $2,146, or 8.0%, to $29,086 for the six months ended June 30, 2021 from $26,940 for the six months ended June 30, 2020.

Operating leases were 4.4% of Expedited Freight operating revenues for the six months ended June 30, 2021 compared to 5.5% for the same period in 2020.

Depreciation and Amortization

Expedited Freight depreciation and amortization increased $142, or 1.1%, to $13,577 for the six months ended June 30, 2021 from $13,435 for the six months ended June 30, 2020.

Depreciation and amortization was 2.1% of Expedited Freight operating revenues for the six months ended June 30, 2021 compared to 2.7% for the same period in 2020.

The increase in depreciation and amortization expense is primarily due to the additional amortization expense resulting from the acquisitions of CLW and J&P.

Insurance and Claims

Expedited Freight insurance and claims increased $3,668, or 29.8%, to $15,996 for the six months ended June 30, 2021 from $12,328 for the six months ended June 30, 2020.

Insurance and claims were 2.4% of Expedited Freight operating revenues for the six months ended June 30, 2021 compared to 2.5% for the same period in 2020.

T he increase in insurance and claims expense was primarily attributable to an increase in vehicle insurance premiums as well as additional vehicle liability and cargo claims.

See additio nal discussion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.

Expedited Freight fuel expense increased $590, or 16.6%, to $4,140 for the six months ended June 30, 2021 from $3,550 for the six months ended June 30, 2020.

Fuel expense was 0.6% of Expedited Freight operating revenues for the six months ended June 30, 2021 compared to 0.7% for the same period in 2020.

Expedited Freight fuel expense increased due to increased mileage and the rise in the average price of fuel for the six months ended June 30, 2021.

Other Operating Expenses

Expedited Freight other operating expenses increased $8,755, or 21.9%, to $48,645 for the six months ended June 30, 2021 from $39,890 for the six months ended June 30, 2020.

Other operating expenses were 7.4% of Expedited Freight operating revenues for the six months ended June 30, 2021 compared to 8.2% for the same period in 2020.

For the six months ended June 30, 2020, other operating expenses included a $2,702 gain from changes in the fair value of an earn-out liability due to the timing of expected new business wins.

A similar gain was not recorded for the six months ended June 30, 2021.

Income from Operations

Expedited Freight income from operations increased $32,285, or 119.9%, to $59,218 for the six months ended June 30, 2021 compared to $26,933 for the six months ended June 30, 2020.

Income from operations was 9.0% of Expedited Freight operating revenues for six months ended June 30, 2021 compared to 5.5% for the same period in 2020.

Intermodal - Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020

The following table sets forth the historical financial data of our Intermodal segment for the six months ended June 30, 2021 and 2020:

Intermodal Segment Information

(unaudited and in thousands)

Six Months Ended

June 30, 2021 Percent of Revenue June 30, 2020 Percent of Revenue Change Percent Change

Operating revenue $ 127,647 100.0 % $ 98,888 100.0 % $ 28,759 29.1 %

Operating expenses:

Purchased transportation 44,370 34.8 33,070 33.4 11,300 34.2

Salaries, wages and employee benefits 30,293 23.7 24,658 24.9 5,635 22.9

Operating leases 10,337 8.1 8,473 8.6 1,864 22.0

Depreciation and amortization 5,048 4.0 5,269 5.3 (221) (4.2)

Insurance and claims 4,757 3.7 3,762 3.8 995 26.4

Fuel expense 3,622 2.8 2,982 3.0 640 21.5

Other operating expenses 16,325 12.8 12,548 12.7 3,777 30.1

Total operating expenses 114,752 89.9 90,762 91.8 23,990 26.4

Income from operations 12,895 10.1 % $ 8,126 8.2 % $ 4,769 58.7 %

Intermodal Operating Statistics

Six Months Ended

June 30, 2021 June 30, 2020 Percent Change

Drayage shipments 186,714 151,448 23.3 %

Drayage revenue per shipment $ 587 $ 553 6.1 %

Number of locations 29 24 20.8 %

Operating Revenues

Intermodal operating revenues increased $28,759, or 29.1%, to $127,647 for the six months ended June 30, 2021 from $98,888 for the six months ended June 30, 2020.

The increase in operating revenues was primarily attributable to a 23.3% increase in drayage shipments over the same period in 2020 and an increase in accessorial revenues.

The increase in drayage shipments was driven by the combination of the economic recovery from COVID-19, which adversely impacted the results of operations for the six months ended June 30, 2020, and the Proficient Transport acquisition in February 2021.

Purchased Transportation

Intermodal purchased transportation increased $11,300, or 34.2%, to $44,370 for the six months ended June 30, 2021 from $33,070 for the six months ended June 30, 2020.

Purchased transportation was 34.8% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 33.4% for the same period in 2020.

Intermodal purchased transportation includes Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits.

Salaries, Wages, and Employee Benefits

Intermodal salaries, wages and employee benefits increased $5,635, or 22.9%, to $30,293 for the six months ended June 30, 2021 compared to $24,658 for the six months ended June 30, 2020.

Salaries, wages and employee benefits were 23.7% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 24.9% for the same period in 2020.

The increase in salaries, wages and employee benefits expense was primarily due to the additional employees hired in response to the increase in shipments for the six months ended June 30, 2021 and an increased reserve for incentive compensation.

Cost-control measures implemented in the prior year contributed to the decrease in salaries, wages and employee benefits expense as a percentage of operating revenues.

Operating Leases

Intermodal operating leases increased $1,864, or 22.0%, to $10,337 for the six months ended June 30, 2021 from $8,473 for the six months ended June 30, 2020.

Operating leases were 8.1% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 8.6% for the same period in 2020.

The increase in operating leases expense was primarily due to new trailer leases in 2021.

Depreciation and Amortization

Intermodal depreciation and amortization decreased $221, or 4.2%, to $5,048 for the six months ended June 30, 2021 from $5,269 for the six months ended June 30, 2020.

Depreciation and amortization was 4.0% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 5.3% for the same period in 2020 .

The decrease in depreciation and amortization expense was primarily due to the full depreciation of equipment obtained through acquisitions in 2020, partially offset by additional amortization expense resulting from the acquisition of Proficient Transport.

Insurance and Claims

Intermodal insurance and claims increased $995, or 26.4%, to $4,757 for the six months ended June 30, 2021 from $3,762 for the six months ended June 30, 2020.

Insurance and claims were 3.7% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 3.8% for the same period in 2020.

The increase in insurance and claims expense was primarily due to an increase in vehicle insurance premiums.

See additional discuss ion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.

Intermodal fuel expense increased $640, or 21.5%, to $3,622 for the six months ended June 30, 2021 from $2,982 for the six months ended June 30, 2020.

Fuel expense was 2.8% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 3.0% for the same period in 2020.

Intermodal fuel expense increased due to increased mileage and the rise in the average price of fuel for the six months ended June 30, 2021.

Other Operating Expenses

Intermodal other operating expenses increased $3,777, or 30.1%, to $16,325 for the six months ended June 30, 2021 compared to $12,548 for the six months ended June 30, 2020.

Other operating expenses were 12.8% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 12.7% from the same period in 2020.

The increase in Intermodal other operating expenses was primarily due to additional expenses to support the increased accessorial revenues noted above.

Income from Operations

Intermodal income from operations increased by $4,769, or 58.7%, to $12,895 for the six months ended June 30, 2021 compared to $8,126 for the six months ended June 30, 2020.

Income from operations was 10.1% of Intermodal operating revenue for the six months ended June 30, 2021 compared to 8.2% for the same period in 2020.

The increase in income from operations as a percentage of operating revenues was driven by the operating leverage on fixed costs such as operating leases, depreciation and amortization.

Other Operations - Six Months Ended June 30, 2021 compared to Nine Months Ended June 30, 2020

Other operating activity was a $7,265 operating loss during the six months ended June 30, 2021 and a $5,372 operating loss during the six months ended June 30, 2020.

The change in the operating loss was driven by increased professional fees related to cybersecurity and shareholder engagement activities and accrual for an incentive program established in 2021, partially offset by decreased self-insurance reserves for vehicle liability, workers’ compensation and group health insurance claims.

For the six months ended June 30, 2020, severance costs in the amount of $997 were recorded in accordance with severance agreements for former employees.

Similar severance costs were not recorded for the six months ended June 30, 2021.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with U.S.

The discussion and analysis of our financial condition and results of operations are based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S.

generally accepted accounting principles.

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Actual results may differ from those estimates under different assumptions or conditions.

A description of critical accounting policies and related judgments and estimates that affect the preparation of our Consolidated Financial Statements is set forth in our Annual Report on Form 10-K for the year-ended December 31, 2020.

A description of critical accounting policies and related judgments and estimates that affect the preparation of our Condensed Consolidated Financial Statements is set forth in our Annual Report on Form 10-K for the year-ended December 31, 2020.

Liquidity and Capital Resources

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We believe that borrowings under our revolving credit facility, together with available cash and internally generated funds, will be sufficient to support our working capital, capital expenditures and debt service requirements for the foreseeable future.

In April 2021, we borrowed $20,000 under the revolving credit facility to provide financial flexibility.

We use LIBOR as a reference rate in our revolving credit facility to calculate interest due to our lender.

In the event the LIBOR is no longer published, we have amended our revolving credit facility to include provisions to address establishing a replacement benchmark rate.

We are in compliance with our financial convents contained in the revolving credit facility and expect to maintain such compliance.

In July 2021, we entered into the second amendment to our revolving credit facility, which extended the maturity date to July 20, 2026 and changed the interest rate options available.

In connection with the second amendment, we have replaced the London Interbank Offered Rate with the Bloomberg Short-Term Bank Yield Index rate as the reference rate in our revolving credit facility to calculate interest due to our lender.

Additionally, under the second amendment, the credit facility may be increased by up to $75,000 to a maximum aggregate principal amount of $300,000 pursuant to the terms of the amended credit agreement, subject to the l enders’ agreement to

increase their commitments or the addition of new lenders extending such commitments.

As of June 30, 2021, we are in compliance with our financial convents contained in the revolving credit facility and expect to maintain such compliance.

In the event that we encounter difficulties, our historical relationships with our lenders has been strong and we anticipate their continued long-term support of our business.

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Continuing Operations

Net cash provided by continuing operating activities was approximately $16,913 for the three months ended March 31, 2021 compared to approximately $30,828 for the three months ended March 31, 2020.

The decrease in the net cash provided by continuing operating activities was primarily due to the increase in the other receivable balance.

The other receivable balance changed as a result of the Transition Services Agreement entered into with the buyer of the Pool business.

Net cash provided by continuing operating activities was $39,661 for the six months ended June 30, 2021 compared to $59,929 for the six months ended June 30, 2020.

The decrease in the net cash provided by continuing operating activities was primarily due to the increase in the accounts receivable and other receivable balances.

The accounts receivable balance changed due to the increase in operating revenues for the six months ended June 30, 2021.

The other receivables balance changed as a result of the Transition Services Agreement entered into with the buyer of the Pool business.

Under the Transition Services Agreement, we remit payments to outside vendors on behalf of the buyer for expenses incurred by the Pool business, up to a limit of $18,000, and we are reimbursed by the buyer within 60 days from the end of the month in which the payment is remitted.

Net cash used in continuing investing activities was approximately $17,030 for the three months ended March 31, 2021 compared to approximately $57,862 for the three months ended March 31, 2020.

Capital expenditures for the first three months of 2021 were approximately $2,695 and primarily related to an organic investment to expand the capacity of our national hub in Columbus, Ohio.

Capital expenditures for the first three months of 2020 were approximately $2,651 and primarily were for new trailers, information technology and facility property and equipment.

Continuing investing activities for the first three months of 2021 included the acquisition of Proficient Transport for $15,000 while continuing investing activities for the first three months of 2020 included the acquisition of Linn Star Holdings, Inc., Linn Star Transfer, Inc.

Net cash used in continuing investing activities was $29,804 for the six months ended June 30, 2021 compared to $69,157 for the six months ended June 30, 2020.

Capital expenditures for the first six months of 2021 were $8,575, which primarily related to an organic investment to expand the capacity of our national hub in Columbus, Ohio.

Capital expenditures for the first six months of 2020 were $14,214, which primarily related to the organic investment to expand the capacity of our national hub in Columbus, Ohio.

Continuing investing activities for the first six months of 2021 included the acquisition of Proficient Transport for $15,000 and J&P Hall Express Delivery for $7,543 while continuing investing activities for the first six months of 2020 included the acquisition of Linn Star Holdings, Inc., Linn Star Transfer, Inc.

and Linn Star Logistics, LLC for $55,931.

Net cash used in continuing financing activities was approximately $15,741 for the three months ended March 31, 2021 compared to net cash provided by continuing financing activities was approximately $39,530 for the three months ended March 31, 2020.

The change in the net cash used in continuing financing activities was primarily due to proceeds from the revolving credit facility, partially offset by increased repurchases of common stock during the first three months of 2020.

Net cash provided by continuing financing activities was $733 for the six months ended June 30, 2021 compared to $25,395 for the six months ended June 30, 2020.

The change in the net cash provided by continuing financing activities was primarily due to decreased proceeds from the revolving credit facility for the first six months of 2021, increased repurchases and retirement of common stock for the first six months of 2021, partially offset by the payment of the earn-out liability for the six months of 2020.

Discontinued Operation

Net cash used in discontinued operating activities was approximately $6,902 for the three months ended March 31, 2021 compared to approximately $1,662 for the three months ended March 31, 2020.

The decrease in net cash used in discontinued operating activities was primarily related to a decrease in discontinued net income after consideration of non-cash items.

Net cash provided by discontinued investing activities was approximately $8,020 for the three months ended March 31, 2021 compared to net cash used in discontinued investing activities was approximately $491 for the three months ended March 31, 2020.

The change in the net cash provided by discontinued investing activities was due to the proceeds of $8,000 received from the sale of the Pool business.

Net cash used in discontinued financing activities was approximately $1,118 for the three months ended March 31, 2021 compared to net cash provided by discontinued financing activities was approximately $2,153 for the three months ended March 31, 2020.

Net cash used in discontinued operating activities was $6,902 for the six months ended June 30, 2021 compared to $4,672 for the six months ended June 30, 2020.

The change in net cash used in discontinued operating activities was primarily related to a decrease in discontinued net income after consideration of non-cash items.

Net cash provided by discontinued investing activities was $8,020 for the six months ended June 30, 2021 compared to net cash used in discontinued investing activities was $635 for the six months ended June 30, 2020.

The change in the net cash provided by discontinued investing activities was due to the proceeds of $8,000 received from the sale of the Pool business for the first six months of 2021.

Net cash used in discontinued financing activities was $1,118 for the six months ended June 30, 2021 compared to net cash provided by discontinued financing activities was $5,307 for the six months ended June 30, 2020.

The change in the net cash used in discontinued financing activities was due to decreased contributions from the parent.

Share Repurchase Program

During the three months ended March 31, 2021 and 2020, we repurchased 113,756 and 268,027 shares of our common stock, respectively, for approximately $9,998 and $15,259, respectively, through open market transactions.

During the six months ended June 30, 2021 and 2020, we repurchased 366 and 268 shares of our common stock, respectively, for approximately $33,992 and $15,259, respectively, through open market transactions.

All shares received were retired upon receipt, and the excess of the purchase price over the par value per share was recorded to “Retained Earnings” in our Condensed Consolidated Balance Sheets.

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Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance.

In this Form 10-Q, forward-looking statements include, but are not limited to, any statements regarding the impact of the COVID-19 pandemic on our business, results of operations and financial condition, including the impacts on our LTL and Intermodal businesses, our ability to emerge as a stronger LTL competitor, our pursuit of new revenue opportunities and steps to bolster our liquidity;

In this Form 10-Q, forward-looking statements include, but are not limited to, any statements regarding the impact of the COVID-19 pandemic on our business, results of operations and financial condition, our pursuit of new revenue opportunities and steps to bolster our liquidity;

any projections of earnings, revenues, dividends, or other financial items or methods of interpretation or measurement;

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any statements regarding future economic conditions or performance based on our business strategy, including acquisitions;

any statements related to the sufficiency of our credit facility;

any statements related to our ESG and sustainability initiatives and operations;

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and any statements of belief and any statements of assumptions underlying any of the foregoing.

Some forward-looking statements may be identified by use of such terms as “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or “expects.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed

or implied by such forward-looking statements.

The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements:

economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the impact of the COVID-19 pandemic on our business, results of operations and financial condition, the creditworthiness of our customers and their ability to pay for services rendered, more limited liquidity than expected which limits our ability to make key investments, the availability and compensation of qualified independent owner-operators and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, loss of a major customer, increasing competition and pricing pressure, our ability to secure terminal facilities in desirable locations at reasonable rates, our inability to successfully integrate acquisitions, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental and tax matters, insurance matters, the handling of hazardous materials, and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2020.

economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the impact of the COVID-19 pandemic on our business, results of operations and financial condition, the creditworthiness of our customers and their ability to pay for services rendered, more limited liquidity than expected which limits our ability to make key investments, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, loss of a major customer, increasing competition and pricing pressure, our ability to secure terminal facilities in desirable locations at reasonable rates, our inability to successfully integrate acquisitions, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental and tax matters, insurance matters, the handling of hazardous materials, and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2020.

As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis