What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-08 compared with 2021-08-10 · 251 added, 221 removed, 336 unchanged (58% of the section changed)

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

We are a leading asset-light freight and logistics company providing less-than-truckload (“LTL ” ), final mile truckload and intermodal drayage services across the United States and in Canada.

We are a leading asset-light freight and logistics company providing expedited less-than-truckload (“LTL ” ), truckload, final mile and intermodal container drayage services across the United States and in Canada.

We offer premium services that typically require precision execution, such as expedited transit, delivery during tight time windows and special handling.

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Expedited Freight and Intermodal.

Through the Expedited Freight segment, we operate a comprehensive national network to provide expedited regional, inter-regional and national LTL services.

Expedited Freight offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.

We plan to grow our LTL and final mile geographic footprints through greenfield start-ups as well as acquisitions.

Our Expedited Freight segment provides expedited regional, inter-regional and national LTL, truckload and final mile services.

Expedited Freight also offers customers local pick-up and delivery and other services including shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.

We plan to grow our LTL, truckload and final mile geographic footprints through greenfield start-ups and acquisitions.

Our Intermodal segment provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads.

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

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.

We plan to grow our Intermodal geographic footprint through acquisitions and greenfield start-ups where an acceptable acquisition target is not feasible.

Our operations, particularly our network of hubs and terminals, represent substantial fixed costs.

Consequently, our ability to increase our earnings depends in significant part on our ability to increase the amount of freight and the revenue per pound for the freight shipped through our networks and to grow other services, such as LTL pickup and delivery, final mile solutions and intermodal services, which will allow us to maintain revenue growth in challenging shipping environments.

In addition, we are continuing to execute synergies across our services, particularly with service offerings in the Expedited Freight segment.

Consequently, our ability to increase our earnings depends in significant part on our ability to increase the amount of freight and the revenue per pound or shipment for the freight shipped or moved through our network.

Additionally, our earnings depend on the growth of other services, such as LTL pickup and delivery, which will allow us to maintain revenue growth in a challenging freight environment.

We continue to execute synergies across our services, particularly with services offered in the Expedited Freight segment.

Synergistic opportunities include the ability to share resources, particularly our fleet resources.

The Board approved a strategy to divest the Pool Distribution business (“Pool ” ) on April 23, 2020, and the sale of Pool was completed on February 12, 2021.

On April 23, 2020, our Board approved a strategy to divest of the Pool Distribution business (“Pool ” ), and the sale of Pool was completed on February 12, 2021.

Pool provided high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region.

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 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.

As a result of the strategy to divest of Pool, the results of operations for Pool are presented as a discontinued operation in our Condensed Consolidated Statements of Comprehensive Income for all periods presented.

In addition, assets and liabilities were reflected as “Assets and liabilities held for sale ” in our 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.

Refer to Note 4, Discontinued Operation and Held for Sale , to the our Condensed Consolidated Financial Statements for additional information on our discontinued operation.

Refer to Note 4, Discontinued Operation and Held for Sale , to our Condensed Consolidated Financial Statements for further discussion.

Trends and Developments

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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.

The extent to which outbreaks of COVID-19 and its variants impacts our business, results of operations and financial condition during the balance of 2021 and 2022 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.

Like many other businesses affected by current macroeconomic conditions, we are experiencing a labor shortage relating to our employee drivers, terminal and dock workers and otherwise throughout our business and operations.

We are also operating in an environment where competition is intense for independent fleet owner-operators, creating shortages in the marketplace.

These factors have adversely affected our operations, by increasing our operational costs for labor and purchased transportation.

The steps we have taken to address these shortages include paying sign-on bonuses, and offering enhanced wages in select competitive markets.

These measures have increased costs in certain areas of our business.

We will continue to mitigate the effects of the labor shortages and other inflationary conditions through similar actions.

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.

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Expedited Freight Acquisition

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

As part of the inorganic growth strategy, 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.

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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.

A loss on the sale of Pool in the amount of $2,860 was recorded in the first quarter of 2021 in discontinued operation.

The financial performance of the Pool business significantly deteriorated during the three months ended September 30, 2021.

As a result, an evaluation of the earn-out asset for impairment was completed, which included a review of the revised forecasts.

The revised forecasts indicated an impairment of the entire earn-out asset was necessary as of September 30, 2021.

In the third quarter of 2021, a non-cash charge of $6,967 was recorded as an “Impairment charge” in discontinued operation.

Environmental Protection and Community Support

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We began in 2020 to conduct an ESG assessment, starting with a third-party stakeholder assessment that served as a basis for identifying and prioritizing ESG topics most relevant to our industry, our business, and our stakeholders.

The assessment’s findings yielded initial topics that we recognized as important.

assessment’s findings yielded initial topics that we recognized as important.

We followed with a more in-depth assessment of risks and opportunities, utilizing Sustainable Accounting Standards Board (“SASB”) standards as a guide, in order to further refine our disclosure topics and gain stakeholder alignment.

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In first quarter of 2021, we published our first ESG report that describes our sustainability focus and plan.

We are committed to making our results count across the country and will continue to update our future disclosures accordingly.

We will continue to update our future disclosures accordingly.

Results from Operations

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):

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

Three Months Ended

June 30, 2021 June 30, 2020 Change Percent Change

September 30,

2021 September 30,

2020 Change Percent Change

Operating revenues:

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Net income from continuing operations 30,503 16,992 13,511 79.5

Loss from discontinued operations, net of tax — (6,071) 6,071 (100.0)

Loss from discontinued operation, net of tax (6,967) (345) (6,622) 1,919.4

Net income and comprehensive income $ 23,536 $ 16,647 $ 6,889 41.4 %

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.

Operating revenues increased $87,628, or 26.4%, to $419,625 for the three months ended September 30, 2021 compared to $331,997 for the three months ended September 30, 2020.

The increase was primarily driven by an increase in our Expedited Freight segment of $58,043 due to increased Network, Truckload and Final Mile revenue.

Operating Expenses

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.

Operating expenses increased $68,662, or 22.3%, to $377,149 for the three months ended September 30, 2021 compared to $308,487 for the three months ended September 30, 2020.

The increase was primarily driven by an increase in purchased transportation expense of $32,420 in both our Expedited Freight and Intermodal segments.

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Income from Continuing Operations and Segment Operations

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.

Income from continuing operations increased $18,966, or 80.7%, to $42,476 for the three months ended September 30, 2021 compared to $23,510 for the three months ended September 30, 2020.

The increase was primarily driven by an increase in income from continuing operations in our Expedited Freight segment and Intermodal segment of $11,175 and $3,875, respectively.

The results of our two reportable segments are discussed below in the following sections.

Interest Expense

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.

Interest expense was $973 for the three months ended September 30, 2021 compared to $1,304 for the three months ended September 30, 2020.

The decrease in interest expense was due to a lower interest rate during the third quarter of 2021, partially offset by higher borrowings outstanding under our revolving credit facility during the third quarter of 2021.

The interest rate on outstanding borrowings under our revolving credit facility was 1.35% and 3.27% at September 30, 2021 and September 30, 2020, respectively.

Income Taxes on a Continuing Basis

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 .

The effective tax rate on a continuing basis for the three months ended September 30, 2021 was 26.5% compared to a rate of 23.5% for the three months ended September 30, 2020.

The higher effective tax rate for the three months ended September 30, 2021 was primarily due to a return to provision expense adjustment recorded in the third quarter of 2021 compared to a return to provision benefit adjustment recorded in the same period in 2020.

Loss from Discontinued Operation, net of tax

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

Loss from discontinued operation, net of tax was $6,967 for the three months ended September 30, 2021 compared to a loss from discontinued operation, net of tax of $345 for the three months ended September 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:

An evaluation of the earn-out asset indicated an impairment was necessary and as a result, for the three months ended September 30, 2021, a non-cash impairment charge was recorded.

For the three months ended September 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 $6,889, or 41.4%, to $23,536 for the three months ended September 30, 2021 compared to $16,647 for the three months ended September 30, 2020.

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

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

Expedited Freight Segment Information

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Three Months Ended

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

September 30,

2021 Percent of Revenue September 30,

2020 Percent of Revenue Change Percent Change

Operating revenues:

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Three Months Ended

June 30, 2021 June 30, 2020 Percent Change

September 30,

2021 September 30,

2020 Percent Change

Business days 64 64 — %

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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.

Expedited Freight operating revenues increased $58,043, or 20.5%, to $341,557 for the three months ended September 30, 2021 from $283,514 for the three months ended September 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.

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.

Network revenue increased due to a 8.1% increase in tonnage, a 44.7% increase in revenue per shipment and a 8.1% increase in revenue per hundredweight as compared to the prior year.

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

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

Fuel surcharge revenue increased $12,405, or 56.9% 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.

Truckload revenue increased $3,815 primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the third quarter of 2020.

Final Mile revenue increased $14,361 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.

Other revenue, which includes warehousing and terminal handling, increased $1,511 due to the higher linehaul tonnage.

Purchased Transportation

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 increased $26,518, or 17.0%, to $182,596 for the three months ended September 30, 2021 from $156,078 for the three months ended September 30, 2020.

Purchased transportation was 53.5% of Expedited Freight operating revenues for the three months ended September 30, 2021 compared to 55.1% 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.

In the third quarter of 2021, we purchased 63.4%, 32.7% and 3.9% of our freight capacity from Leased Capacity Providers, third party carriers and Company-employed drivers, respectively.

This compares to 67.2%, 29.0% and 3.8% in the same period in 2020.

Salaries, Wages and Employee Benefits

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.

Expedited Freight salaries, wages and employee benefits increased $11,807, or 21.8%, to $65,898 for the three months ended September 30, 2021 from $54,091 for the three months ended September 30, 2020.

Salaries, wages and employee benefits were 19.3% of Expedited Freight operating revenues for the three months ended September 30, 2021 compared to 19.1% 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 in the third quarter of 2021, increased reserve for incentive compensation and higher group health insurance premiums.

Operating Leases

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.

Expedited Freight operating leases increased $1,249, or 9.3%, to $14,687 for the three months ended September 30, 2021 from $13,438 for the three months ended September 30, 2020.

Operating leases were 4.3% of Expedited Freight operating revenues for the three months ended September 30, 2021 compared to 4.7% for the same period in 2020.

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

Depreciation and Amortization

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.

Expedited Freight depreciation and amortization increased $4, or 0.1%, to $6,784 for the three months ended September 30, 2021 from $6,780 for the three months ended September 30, 2020.

Depreciation and amortization was 2.0% of Expedited Freight operating revenues for the three months ended September 30, 2021 compared to 2.4% for the same period in 2020.

The increase in depreciation and amortization expense was primarily due to additional amortization expense resulting from the intangible assets recorded in connection with the CLW and J&P acquisitions, partially offset by the reduction in equipment depreciation expense.

Insurance and Claims

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.

Expedited Freight insurance and claims increased $2,309, or 40.1%, to $8,074 for the three months ended September 30, 2021 from $5,765 for the three months ended September 30, 2020.

Insurance and claims was 2.4% of Expedited Freight operating revenues for the three months ended September 30, 2021 compared to 2.0% for the same period in 2020.

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

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

Expedited Freight fuel expense increased $681, or 44.1%, to $2,225 for the three months ended September 30, 2021 from $1,544 for the three months ended September 30, 2020.

Fuel expense was 0.7% of Expedited Freight operating revenues for the three months ended September 30, 2021 compared to 0.5% for the same period in 2020.

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

Other Operating Expenses

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.

Expedited Freight other operating expenses increased $4,300, or 19.2%, to $26,657 for the three months ended September 30, 2021 from $22,357 for the three months ended September 30, 2020.

Other operating expenses were 7.8% of Expedited Freight operating revenues for the three months ended September 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, bad debt expense and other over-the-road costs.

Income from Operations

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:

Expedited Freight income from operations increased $11,175, or 47.6%, to $34,636 for the three months ended September 30, 2021 compared to $23,461 for the three months ended September 30, 2020.

Income from operations was 10.1% of Expedited Freight operating revenues for the three months ended September 30, 2021 compared to 8.3% 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 combined 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 September 30, 2021 compared to Three Months Ended September 30, 2020

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

Intermodal Segment Information

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Three Months Ended

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

September 30,

2021 Percent of Revenue September 30,

2020 Percent of Revenue Change Percent Change

Operating revenues $ 78,173 100.0 % $ 48,948 100.0 % $ 29,225 59.7 %

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Three Months Ended

June 30, 2021 June 30, 2020 Percent Change

September 30,

2021 September 30,

2020 Percent Change

Drayage shipments 91,774 74,506 23.2 %

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Number of locations 29 24 20.8 %

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.

Intermodal operating revenues increased $29,225, or 59.7%, to $78,173 for the three months ended September 30, 2021 from $48,948 for the three months ended September 30, 2020.

The increase in operating revenues was primarily attributable to a 23.2% 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.

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 third quarter of 2020, and the Proficient Transport acquisition in February 2021.

Purchased Transportation

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 increased $5,714, or 33.1%, to $22,984 for the three months ended September 30, 2021 from $17,270 for the three months ended September 30, 2020.

Purchased transportation was 29.4% of Intermodal operating revenues for the three months ended September 30, 2021 compared to 35.3% 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.

The decrease 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.

Salaries, Wages and Employee Benefits

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.

Intermodal salaries, wages and employee benefits increased $5,959, or 51.2%, to $17,596 for the three months ended September 30, 2021 compared to $11,637 for the three months ended September 30, 2020.

Salaries, wages and employee benefits were 22.5% of Intermodal operating revenues for the three months ended September 30, 2021 compared to 23.8% 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 drayage shipments in the third quarter of 2021, an increased reserve for incentive compensation and higher group health insurance premiums.

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 $1,455, 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.

Intermodal operating leases increased $1,924, or 48.9%, to $5,856 for the three months ended September 30, 2021 compared to $3,932 for the three months ended September 30, 2020.

Operating leases were 7.5% of Intermodal operating revenues for the three months ended September 30, 2021 compared to 8.0% for the same period in 2020.

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

Depreciation and Amortization

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.

Intermodal depreciation and amortization increased $260, or 11.0%, to $2,616 for the three months ended September 30, 2021 from $2,356 for the three months ended September 30, 2020.

Depreciation and amortization was 3.3% of Intermodal operating revenues for the three months ended September 30, 2021 compared to 4.8% for the same period in 2020 .

Insurance and Claims

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.

Intermodal insurance and claims increased $650, or 31.6%, to $2,708 for the three months ended September 30, 2021 from $2,058 for the three months ended September 30, 2020.

Insurance and claims were 3.5% of Intermodal operating revenues for the three months ended September 30, 2021 compared to 4.2% 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 $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.

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

Intermodal fuel expense increased $1,060, or 90.5%, to $2,231 for the three months ended September 30, 2021 from $1,171 for the three months ended September 30, 2020.

Fuel expense was 2.9% of Intermodal operating revenues for the three months ended September 30, 2021 compared to 2.4% for the same period in 2020.

Intermodal fuel expense increased due to the rise in the average price of fuel in the third quarter of 2021.

Other Operating Expenses

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.

Intermodal other operating expenses increased $9,783, or 172.0%, to $15,470 for the three months ended September 30, 2021 from $5,687 for the three months ended September 30, 2020.

Other operating expenses were 19.8% of Intermodal operating revenues for the three months ended September 30, 2021 compared to 11.6% for the same period in 2020.

The increase in Intermodal other operating expenses was driven by additional expenses incurred to support the increased accessorial revenues noted above, increase in bad debt expense and higher equipment maintenance costs.

Income from Operations

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.

Intermodal income from operations increased $3,875, or 80.1%, to $8,712 for the three months ended September 30, 2021 compared to $4,837 for the three months ended September 30, 2020.

Income from operations was 11.1% of Intermodal operating revenues for the three months ended September 30, 2021 compared to 9.9% for the same period in 2020.

The increase in income from operations as a percentage of operating revenues was driven by increased drayage revenue per shipment combined 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.

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

Other operations included an $872 operating loss during the three months ended September 30, 2021 compared to a $4,788 operating loss during the three months ended September 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 increased reserve for an incentive program established in 2021.

The decrease in 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 third quarter of 2020, a reserve in the amount of $2,300 was recorded for a litigated contract dispute.

A similar reserve was not recorded in the third 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

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

Nine Months Ended

September 30,

2021 September 30,

2020 Change Percent Change

Operating revenues:

25 unchanged sentences

Net income and comprehensive income $ 65,394 $ 28,176 $ 37,218 132.1 %

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 revenues increased $283,266, or 30.8% to $1,202,498 for the nine months ended September 30, 2021 compared to $919,232 for the nine months ended September 30, 2020.

The increase was primarily driven by our Expedited Freight segment of $224,677 due to increased Network, Truckload and Final Mile revenue.

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.

Operating expenses increased $229,140, or 26.5%, to $1,095,174 for the nine months ended September 30, 2021 compared to $866,034 for the nine months ended September 30, 2020.

The increase was primarily driven by an increase in purchased transportation expense of $139,578 in both 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.

Income from continuing operations increased $54,126, or 101.7%, to $107,324 for the nine months ended September 30, 2021 compared to $53,198 for the nine months ended September 30, 2020.

The increase was primarily driven by an increase in income from continuing operations in our Expedited Freight segment and Intermodal segment of $43,460 and $8,644, respectively.

The results of our two reportable segments are discussed below 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.

Interest expense was $3,461 for the nine months ended September 30, 2021 compared to $3,355 for the nine months ended September 30, 2020.

The increase in interest expense was due to higher borrowings outstanding under our revolving credit facility during the nine months ended September 30, 2021, partially offset by a lower interest rate during the nine months ended September 30, 2021.

The interest rate on outstanding borrowings under our revolving credit facility was 1.35% and 3.27% at September 30, 2021 and 2020, respectively.

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 .

The effective tax rate on a continuing basis for the nine months ended September 30, 2021 was 25.0% compared to a rate of 24.5% for the nine months ended September 30, 2020.

The higher effective tax rate for the nine months ended September 30, 2021 was primarily due a return to provision expense adjustment recorded in 2021 compared to a return to provision benefit adjustment recorded in 2020, partially offset by increased excess tax benefits realized on share-based awards in 2021 compared to the same period in 2020.

During the nine months ended September 30, 2020, a refund for Tennessee tax credits was received.

A similar refund was not received during the nine months ended September 30, 2021.

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, net of tax increased $3,042 to a $12,500 loss for the nine months ended September 30, 2021 from a $9,458 loss for the nine months ended September 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:

An evaluation of the earn-out asset indicated an impairment was necessary and as a result, for the nine months ended September 30, 2021, a non-cash impairment charge was recorded.

For the nine months ended September 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 $37,218, or 132.1%, to $65,394 for the nine months ended September 30, 2021 compared to $28,176 for the nine months ended September 30, 2020.

Expedited Freight - Nine Months Ended September 30, 2021 compared to Nine Months Ended September 30, 2020

The following table sets forth the financial data of our Expedited Freight segment for the nine months ended September 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

Nine Months Ended

September 30,

2021 Percent of Revenue September 30,

2020 Percent of Revenue Change Percent Change

Operating revenues:

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Expedited Freight Operating Statistics

Six Months Ended

June 30, 2021 June 30, 2020 Percent Change

Nine Months Ended

September 30,

2021 September 30,

2020 Percent Change

Business days 191 192 (0.5) %

20 unchanged sentences

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.

Expedited Freight operating revenues increased $224,677, or 29.1%, to $997,478 for the nine months ended September 30, 2021 from $772,801 for the nine months ended September 30, 2020.

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

Network revenue increased due to a 19.6% increase in tonnage, a 3.5% increase in shipments and a 6.1% 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.

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 nine months ended September 30, 2020.

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

Fuel surcharge revenue increased $34,501, or 55.7% 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.

Truckload revenue increased $23,779 primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the nine months ended September 30, 2020.

Final Mile revenue increased $45,271 due to the combination of organic growth and the acquisition of CLW in October 2020.

Other revenue, which includes warehousing and terminal handling, increased $4,896 due to the higher linehaul tonnage.

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 increased $122,262, or 29.4%, to $538,608 for the nine months ended September 30, 2021 from $416,346 for the nine months ended September 30, 2020.

Purchased transportation was 54.0% of Expedited Freight operating revenue for the nine months ended September 30, 2021 compared to 53.9% 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.

For the nine months ended September 30, 2021, we purchased 63.7%, 32.6% and 3.7% of our freight capacity from Leased Capacity Providers, third party carriers and Company-employed drivers, respectively.

This compares to 69.3%, 26.3% and 4.4% 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.

Expedited Freight salaries, wages and employee benefits increased $35,111, or 21.9%, to $195,145 for the nine months ended September 30, 2021 from $160,034 for the nine months ended September 30, 2020.

Salaries, wages and employee benefits were 19.6% of Expedited Freight operating revenues for the nine months ended September 30, 2021 compared to 20.7% 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 in 2021, increased reserve for incentive compensation and higher group health insurance premiums.

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.

Expedited Freight operating leases increased $3,395, or 8.4%, to $43,773 for the nine months ended September 30, 2021 from $40,378 for the nine months ended September 30, 2020.

Operating leases were 4.4% of Expedited Freight operating revenues for the nine months ended September 30, 2021 compared to 5.2% for the same period in 2020.

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

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.

Expedited Freight depreciation and amortization increased $146, or 0.7%, to $20,361 for the nine months ended September 30, 2021 from $20,215 for the nine months ended September 30, 2020.

Depreciation and amortization was 2.0% of Expedited Freight operating revenues for the nine months ended September 30, 2021 compared to 2.6% for the same period in 2020.

The increase in depreciation and amortization expense was primarily due to additional amortization expense resulting from intangible assets recorded in connection with the CLW and J&P acquisitions.

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.

Expedited Freight insurance and claims increased $5,977, or 33.0%, to $24,070 for the nine months ended September 30, 2021 from $18,093 for the nine months ended September 30, 2020.

Insurance and claims were 2.4% of Expedited Freight operating revenues for the nine months ended September 30, 2021 compared to 2.3% for the same period in 2020.

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

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

Expedited Freight fuel expense increased $1,271, or 25.0%, to $6,365 for the nine months ended September 30, 2021 from $5,094 for the nine months ended September 30, 2020.

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

Expedited Freight fuel expense increased due to the rise in the average price of fuel in the nine months ended September 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.

Expedited Freight other operating expenses increased $13,055, or 21.0%, to $75,302 for the nine months ended September 30, 2021 from $62,247 for the nine months ended September 30, 2020.

Other operating expenses were 7.5% of Expedited Freight operating revenues for the nine months ended September 30, 2021 compared to 8.1% 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.

For the nine months ended September 30, 2020, other operating expenses included a $2,209 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 nine months ended September 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:

Expedited Freight income from operations increased $43,460, or 86.2%, to $93,854 for the nine months ended September 30, 2021 compared to $50,394 for the nine months ended September 30, 2020.

Income from operations was 9.4% of Expedited Freight operating revenues for nine months ended September 30, 2021 compared to 6.5% for the same period in 2020.

Intermodal - Nine Months Ended September 30, 2021 compared to Nine Months Ended September 30, 2020

The following table sets forth the financial data of our Intermodal segment for the nine months ended September 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

Nine Months Ended

September 30,

2021 Percent of Revenue September 30,

2020 Percent of Revenue Change Percent Change

Operating revenue $ 205,820 100.0 % $ 147,836 100.0 % $ 57,984 39.2 %

10 unchanged sentences

Intermodal Operating Statistics

Six Months Ended

June 30, 2021 June 30, 2020 Percent Change

Nine Months Ended

September 30,

2021 September 30,

2020 Percent Change

Drayage shipments 278,488 225,954 23.2 %

2 unchanged sentences

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.

Intermodal operating revenues increased $57,984, or 39.2%, to $205,820 for the nine months ended September 30, 2021 from $147,836 for the nine months ended September 30, 2020.

The increase in operating revenues was primarily attributable to a 23.2% 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.

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 nine months ended September 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 increased $17,014, or 33.8%, to $67,354 for the nine months ended September 30, 2021 from $50,340 for the nine months ended September 30, 2020.

Purchased transportation was 32.7% of Intermodal operating revenues for the nine months ended September 30, 2021 compared to 34.1% 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 $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.

Intermodal salaries, wages and employee benefits increased $11,594, or 31.9%, to $47,889 for the nine months ended September 30, 2021 compared to $36,295 for the nine months ended September 30, 2020.

Salaries, wages and employee benefits were 23.3% of Intermodal operating revenues for the nine months ended September 30, 2021 compared to 24.6% 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 drayage shipments for the nine months ended September 30, 2021, an increased reserve for incentive compensation and higher group health insurance premiums.

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.

Intermodal operating leases increased $3,788, or 30.5%, to $16,193 for the nine months ended September 30, 2021 from $12,405 for the nine months ended September 30, 2020.

Operating leases were 7.9% of Intermodal operating revenues for the nine months ended September 30, 2021 compared to 8.4% for the same period in 2020.

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

Intermodal depreciation and amortization increased $39, or 0.5%, to $7,664 for the nine months ended September 30, 2021 from $7,625 for the nine months ended September 30, 2020.

Depreciation and amortization was 3.7% of Intermodal operating revenues for the nine months ended September 30, 2021 compared to 5.2% for the same period in 2020 .

The increase in depreciation and amortization expense was primarily due to amortization expense resulting from intangible assets recorded in connection with the Proficient Transport acquisition, partially offset by a decrease in equipment depreciation.

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.

Intermodal insurance and claims increased $1,645, or 28.3%, to $7,465 for the nine months ended September 30, 2021 from $5,820 for the nine months ended September 30, 2020.

Insurance and claims were 3.6% of Intermodal operating revenues for the nine months ended September 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 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.

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

Intermodal fuel expense increased $1,700, or 40.9%, to $5,853 for the nine months ended September 30, 2021 from $4,153 for the nine months ended September 30, 2020.

Fuel expense was 2.8% of Intermodal operating revenues for both the nine months ended September 30, 2021 and 2020.

Intermodal fuel expense increased due to increased mileage and the rise in the average price of fuel in the nine months ended September 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.

Intermodal other operating expenses increased $13,560, or 74.4%, to $31,795 for the nine months ended September 30, 2021 compared to $18,235 for the nine months ended September 30, 2020.

Other operating expenses were 15.4% of Intermodal operating revenues for the nine months ended September 30, 2021 compared to 12.3% from the same period in 2020.

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.

Intermodal income from operations increased by $8,644, or 66.7%, to $21,607 for the nine months ended September 30, 2021 compared to $12,963 for the nine months ended September 30, 2020.

Income from operations was 10.5% of Intermodal operating revenue for the nine months ended September 30, 2021 compared to 8.8% for the same period in 2020.

The increase in income from operations as a percentage of operating revenues was increased in drayage revenue per shipment combined 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.

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

Other operating activity was a $8,137 operating loss during the nine months ended September 30, 2021 and a $10,159 operating loss during the nine months ended September 30, 2020 .

The change in the operating loss was driven by increased professional fees related to cybersecurity and shareholder engagement activities and an increased reserve 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 nine months ended September 30, 2020, severance costs in the amount of $997 were recorded in accordance with se verance agreements for former employees and a reserve in the amount of $2,300 was recorded for a litigated contract dispute.

Similar costs were not recorded in the nine months ended September 30, 2021.

Critical Accounting Policies

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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 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.

We entered into a second amendment to our revolving credit facility in the third quarter of 2021, 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 revolving 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 lenders’ agreement to increase their commitments or the addition of new lenders extending such commitments.

As of September 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 $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.

Net cash provided by continuing operating activities was $82,752 for the nine months ended September 30, 2021 compared to $80,493 for the nine months ended September 30, 2020.

The increase in the net cash provided by continuing operating activities was primarily due to the increase in net income from continuing operations, partially offset by an increase in the accounts receivable and other receivable balances.

The accounts receivable balance changed due to the increase in operating revenues for the nine months ended September 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 $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.

Net cash used in continuing investing activities was $43,729 for the nine months ended September 30, 2021 compared to $70,955 for the nine months ended September 30, 2020.

Capital expenditures for the first nine months of 2021 were $23,015, which primarily related to an organic investment to expand the capacity of our national hub in Columbus, Ohio and the purchase of new trailers Capital expenditures for the first nine months of 2020 were $16,439, which primarily related to the organic investment to expand the capacity of our national hub in Columbus, Ohio.

Continuing investing activities for the first nine months of 2021 included the acquisition of Proficient Transport for $15,510 and J&P for $7,543 while continuing investing activities for the first nine 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 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.

Net cash used in continuing financing activities was $27,347 for the nine months ended September 30, 2021 compared to $31,297 for the nine months ended September 30, 2020.

The change in the net cash used in continuing financing activities was primarily due to increased contributions from a subsidiary held for sale, partially offset by increased repurchases and retirement of common stock for the first nine months of 2021 and increased payment of dividends for the first nine months of 2021.

Discontinued Operation

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.

Net cash used in discontinued operating activities was $6,902 for the nine months ended September 30, 2021 compared to $8,090 for the nine months ended September 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.

Net cash provided by discontinued investing activities was $8,020 for the nine months ended September 30, 2021 compared to net cash used in discontinued investing activities was $807 for the nine months ended September 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 nine months of 2021.

Net cash used in discontinued financing activities was $1,118 for the nine months ended September 30, 2021 compared to net cash provided by discontinued financing activities was $8,897 for the nine months ended September 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 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.

During the nine months ended September 30, 2021 and 2020, we repurchased 535 and 787 shares of our common stock, respectively, for approximately $48,989 and $45,248, 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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any statements regarding future economic conditions or performance based on our business strategy, including acquisitions;

any statements regarding future macroeconomic conditions, including but not limited to, labor shortages and our ability to successfully address such conditions;

any statements related to the sufficiency of our credit facility;

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis