Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
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. We utilize an asset-light strategy to minimize our investments in equipment and facilities and to reduce our capital expenditures.
Our services are classified into two reportable segments: Expedited Freight and Intermodal.
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. 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 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.
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. 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 our Condensed Consolidated Financial Statements for further discussion.
Trends and Developments
COVID-19
Our business is highly susceptible to changes in the economic conditions. Our products and services are directly tied to the production and sale of goods and, more generally, to the North American economy. The COVID-19 pandemic has adversely impacted economic activity and conditions worldwide and created significant volatility and disruption to the financial markets. Efforts to control the spread of COVID-19 led governments and other authorities to impose restrictions which resulted in business closures and disrupted supply chains worldwide. 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 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 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.
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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.
Intermodal Acquisition
As part of the inorganic growth strategy, in February 2021, we acquired certain assets and liabilities of Proficient Transport Incorporated and Proficient Trucking, Inc. (together “Proficient Transport ” ) for $15,510 and a potential earn-out up to $2,000. 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 the option pricing method. Proficient Transport is an intermodal drayage company headquartered in Chicago, Illinois. The acquisition of Proficient Transport will expand our intermodal footprint in Georgia, Illinois, North Carolina, and Texas, and will introduce a new location in Ohio. The acquisition was funded using cash flows from operations. 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
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. 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.
Sale of Pool
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 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 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
We embrace a comprehensive definition of sustainability that addresses Environmental, Social, and Governance factors (“ESG”). 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.
In 2020, we created and staffed the Head of Corporate ESG role to provide oversight of our ESG vision, strategic planning, performance management and improvement activities. Shortly after, we initiated an ESG market analysis and benchmarking exercise that explored the ESG issues that most impact transportation and logistics industries and marketplaces.
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
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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. This more detailed assessment yielded clarity of our ESG topics and prioritization based on the degree of both qualitative and quantitative impact to our business.
We identified ten ESG topic priority areas relevant to our business and mapped each to widely adopted ESG reporting standards as identified by SASB. Within these ten topic areas, we identified specific related risks and opportunities, and aligned on improvement activities. In first quarter of 2021, we published our first ESG report that describes our sustainability focus and plan. We will continue to update our future disclosures accordingly.
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Results from Operations
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
September 30,
2021 September 30,
2020 Change Percent Change
Operating revenues:
Expedited Freight $ 341,557 $ 283,514 $ 58,043 20.5 %
Intermodal 78,173 48,948 29,225 59.7
Eliminations and other operations (105) (465) 360 (77.4)
Operating revenues 419,625 331,997 87,628 26.4
Operating expenses:
Purchased transportation 205,474 173,054 32,420 18.7
Salaries, wages, and employee benefits 84,410 66,927 17,483 26.1
Operating leases 20,536 17,327 3,209 18.5
Depreciation and amortization 9,416 9,172 244 2.7
Insurance and claims 9,984 8,671 1,313 15.1
Fuel expense 4,457 2,715 1,742 64.2
Other operating expenses 42,872 30,621 12,251 40.0
Total operating expenses 377,149 308,487 68,662 22.3
Income (loss) from continuing operations:
Expedited Freight 34,636 23,461 11,175 47.6
Intermodal 8,712 4,837 3,875 80.1
Other Operations (872) (4,788) 3,916 (81.8)
Income from continuing operations 42,476 23,510 18,966 80.7
Other expense:
Interest expense (973) (1,304) 331 (25.4)
Total other expense (973) (1,304) 331 (25.4)
Income from continuing operations before income taxes 41,503 22,206 19,297 86.9
Income tax expense 11,000 5,214 5,786 111.0
Net income from continuing operations 30,503 16,992 13,511 79.5
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 %
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Revenues
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 $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. 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 $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 $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 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 $6,967 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. 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.
Net Income
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.
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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
(unaudited and in thousands)
Three Months Ended
September 30,
2021 Percent of Revenue September 30,
2020 Percent of Revenue Change Percent Change
Operating revenues:
Network 1
$ 207,656 60.8 % $ 169,300 59.7 % $ 38,356 22.7 %
Truckload 53,651 15.7 49,836 17.6 3,815 7.7
Final Mile 71,355 20.9 56,994 20.1 14,361 25.2
Other 8,895 2.6 7,384 2.6 1,511 20.5
Total operating revenues 341,557 100.0 283,514 100.0 58,043 20.5
Operating expenses:
Purchased transportation 182,596 53.5 156,078 55.1 26,518 17.0
Salaries, wages and employee benefits 65,898 19.3 54,091 19.1 11,807 21.8
Operating leases 14,687 4.3 13,438 4.7 1,249 9.3
Depreciation and amortization 6,784 2.0 6,780 2.4 4 0.1
Insurance and claims 8,074 2.4 5,765 2.0 2,309 40.1
Fuel expense 2,225 0.7 1,544 0.5 681 44.1
Other operating expenses 26,657 7.8 22,357 7.9 4,300 19.2
Total operating expenses 306,921 89.9 260,053 91.7 46,868 18.0
Income from operations $ 34,636 10.1 % $ 23,461 8.3 % $ 11,175 47.6 %
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.
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Expedited Freight Operating Statistics
Three Months Ended
September 30,
2021 September 30,
2020 Percent Change
Business days 64 64 — %
Tonnage 1,2
Total pounds 687,816 636,194 8.1
Pounds per day 10,747 9,941 8.1
Shipments 1,2
Total shipments 845 1,018 (17.0)
Shipments per day 13.2 15.9 (17.0)
Weight per shipment 814 625 30.2
Revenue per hundredweight 3
$ 29.01 $ 26.84 8.1
Revenue per hundredweight, ex fuel 3
$ 24.73 $ 23.41 5.6
Revenue per shipment 3
$ 240.27 $ 166.09 44.7
Revenue per shipment, ex fuel 3
$ 205.42 $ 144.66 42.0
Network revenue from door-to-door shipments as a percentage of network revenue 3,4
46.7 % 51.3 % (9.0)
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
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Operating Revenues
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 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 $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 $1,511 due to the higher linehaul tonnage.
Purchased Transportation
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 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 $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 $1,249, 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 $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 $2,309, 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.
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Fuel Expense
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 $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 $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.
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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
(unaudited and in thousands)
Three Months Ended
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 %
Operating expenses:
Purchased transportation 22,984 29.4 17,270 35.3 5,714 33.1
Salaries, wages and employee benefits 17,596 22.5 11,637 23.8 5,959 51.2
Operating leases 5,856 7.5 3,932 8.0 1,924 48.9
Depreciation and amortization 2,616 3.3 2,356 4.8 260 11.0
Insurance and claims 2,708 3.5 2,058 4.2 650 31.6
Fuel expense 2,231 2.9 1,171 2.4 1,060 90.5
Other operating expenses 15,470 19.8 5,687 11.6 9,783 172.0
Total operating expenses 69,461 88.9 44,111 90.1 25,350 57.5
Income from operations $ 8,712 11.1 % $ 4,837 9.9 % $ 3,875 80.1 %
Intermodal Operating Statistics
Three Months Ended
September 30,
2021 September 30,
2020 Percent Change
Drayage shipments 91,774 74,506 23.2 %
Drayage revenue per shipment $ 723 $ 562 28.6 %
Number of locations 29 24 20.8 %
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Revenues
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 third quarter of 2020, and the Proficient Transport acquisition in February 2021.
Purchased Transportation
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 $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 $1,924, 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 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 . The increase in depreciation and amortization expense was primarily due to additional amortization expense resulting from the intangible assets recorded in connection with the Proficient Transport acquisition.
Insurance and Claims
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 discussion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.
Fuel Expense
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.
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Other Operating Expenses
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 $3,875, 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.
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Results from Operations
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:
Expedited Freight $ 997,478 $ 772,801 $ 224,677 29.1 %
Intermodal 205,820 147,836 57,984 39.2
Eliminations and other operations (800) (1,405) 605 (43.1)
Operating revenues 1,202,498 919,232 283,266 30.8
Operating expenses:
Purchased transportation 605,299 465,721 139,578 30.0
Salaries, wages, and employee benefits 243,948 200,258 43,690 21.8
Operating leases 60,073 52,598 7,475 14.2
Depreciation and amortization 28,067 27,919 148 0.5
Insurance and claims 30,616 26,437 4,179 15.8
Fuel expense 12,218 9,247 2,971 32.1
Other operating expenses 114,953 83,854 31,099 37.1
Total operating expenses 1,095,174 866,034 229,140 26.5
Income (loss) from continuing operations:
Expedited Freight 93,854 50,394 43,460 86.2
Intermodal 21,607 12,963 8,644 66.7
Other Operations (8,137) (10,159) 2,022 (19.9)
Income from continuing operations 107,324 53,198 54,126 101.7
Other expense:
Interest expense (3,461) (3,355) (106) 3.2
Total other expense (3,461) (3,355) (106) 3.2
Income from continuing operations before income taxes 103,863 49,843 54,020 108.4
Income tax expense 25,969 12,209 13,760 112.7
Net income from continuing operations 77,894 37,634 40,260 107.0
Loss from discontinued operation, net of tax (12,500) (9,458) (3,042) 32.2
Net income and comprehensive income $ 65,394 $ 28,176 $ 37,218 132.1 %
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Revenues
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 $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 $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 $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 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 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. 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.
Net Income
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.
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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)
Nine Months Ended
September 30,
2021 Percent of Revenue September 30,
2020 Percent of Revenue Change Percent Change
Operating revenues:
Network 1
$ 606,213 60.8 % $ 455,482 58.9 % $ 150,731 33.1 %
Truckload 162,999 16.3 139,220 18.0 23,779 17.1
Final Mile 203,494 20.4 158,223 20.5 45,271 28.6
Other 24,772 2.5 19,876 2.6 4,896 24.6
Total operating revenues 997,478 100.0 772,801 100.0 224,677 29.1
Operating expenses:
Purchased transportation 538,608 54.0 416,346 53.9 122,262 29.4
Salaries, wages and employee benefits 195,145 19.6 160,034 20.7 35,111 21.9
Operating leases 43,773 4.4 40,378 5.2 3,395 8.4
Depreciation and amortization 20,361 2.0 20,215 2.6 146 0.7
Insurance and claims 24,070 2.4 18,093 2.3 5,977 33.0
Fuel expense 6,365 0.6 5,094 0.7 1,271 25.0
Other operating expenses 75,302 7.5 62,247 8.1 13,055 21.0
Total operating expenses 903,624 90.6 722,407 93.5 181,217 25.1
Income from operations $ 93,854 9.4 % $ 50,394 6.5 % $ 43,460 86.2 %
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.
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Expedited Freight Operating Statistics
Nine Months Ended
September 30,
2021 September 30,
2020 Percent Change
Business days 191 192 (0.5) %
Tonnage 1,2
Total pounds 2,067,346 1,728,181 19.6
Pounds per day 10,824 9,001 20.3
Shipments 1,2
Total shipments 2,967 2,866 3.5
Shipments per day 15.5 14.9 4.1
Weight per shipment 697 603 15.6
Revenue per hundredweight 3
$ 28.42 $ 26.79 6.1
Revenue per hundredweight, ex fuel 3
$ 24.44 $ 23.21 5.3
Revenue per shipment 3
$ 199.59 $ 158.82 25.7
Revenue per shipment, ex fuel 3
$ 171.84 $ 137.21 25.2
Network revenue from door-to-door shipments as a percentage of network revenue 3,4
48.9 % 48.6 % 0.6
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
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Operating Revenues
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 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 $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 $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. 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 Truckl oad services. 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 $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 $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 $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.
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Insurance and Claims
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.
Fuel Expense
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 $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. 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. 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 $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. 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.
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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)
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 %
Operating expenses:
Purchased transportation 67,354 32.7 50,340 34.1 17,014 33.8
Salaries, wages and employee benefits 47,889 23.3 36,295 24.6 11,594 31.9
Operating leases 16,193 7.9 12,405 8.4 3,788 30.5
Depreciation and amortization 7,664 3.7 7,625 5.2 39 0.5
Insurance and claims 7,465 3.6 5,820 3.9 1,645 28.3
Fuel expense 5,853 2.8 4,153 2.8 1,700 40.9
Other operating expenses 31,795 15.4 18,235 12.3 13,560 74.4
Total operating expenses 184,213 89.5 134,873 91.2 49,340 36.6
Income from operations $ 21,607 10.5 % $ 12,963 8.8 % $ 8,644 66.7 %
Intermodal Operating Statistics
Nine Months Ended
September 30,
2021 September 30,
2020 Percent Change
Drayage shipments 278,488 225,954 23.2 %
Drayage revenue per shipment $ 632 $ 556 13.7 %
Number of locations 29 24 20.8 %
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Operating Revenues
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 nine months ended September 30, 2020, and the Proficient Transport acquisition in February 2021.
Purchased Transportation
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. 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 $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 $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 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 $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 discussion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.
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Fuel Expense
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 $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. 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 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. 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. 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
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. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates estimates, including those related to allowance for doubtful accounts and revenue adjustments, deferred income taxes and uncertain tax positions, goodwill, other intangible and long-lived assets, and self-insurance loss reserves. Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. 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 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
We have historically financed our working capital needs, including capital expenditures, with cash flows from operations and borrowings under our revolving credit facility. 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. 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
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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. Refer to Note 7, Indebtedness, to our Condensed Consolidated Financial Statements for additional information regarding our revolving credit facility.
Cash Flows
Continuing Operations
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 $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 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 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 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 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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Forward-Looking Statements
This report contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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, 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; any statements of plans, strategies, and objectives of management for future operations; any statements regarding the estimated earn-out from the sale of our Pool business; any statements regarding future performance; any statements regarding future insurance, claims and litigation and any associated estimates or projections; any statements concerning proposed or intended new services or developments and related integration costs; any statements regarding intended expansion through acquisition or greenfield start-ups; 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; any statements related to our ESG and sustainability initiatives and operations; any statements regarding certain tax and accounting matters, including the impact on our financial statements; 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 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.