What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-07 compared with 2023-05-10 · 316 added, 113 removed, 240 unchanged (64% of the section changed)

62 unchanged sentences

The associated goodwill has been included in our Expedited Freight reportable segment.

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 and supply chains worldwide.

Although our operations have returned to pre-COVID levels, should we experience another COVID-19-like virus outbreak in the future with similar restrictions, we would anticipate a similar impact on our business.

We depend heavily upon the availability of adequate diesel fuel supplies, and recently, fuel availability and prices have fluctuated significantly.

Fuel availability and prices can be impacted by factors beyond our control, such as natural or man-

made disasters, adverse weather conditions, political events, economic sanctions imposed against oil-producing countries or specific industry participants, disruptions or failure of technology or information systems, price and supply decisions by oil producing countries and cartels, terrorist activities, armed conflict, tariffs, sanctions, other changes to trade agreements and world supply and demand imbalance.

Fuel availability and prices can be impacted by factors beyond our control, such as natural or man-made disasters, adverse weather conditions, political events, economic sanctions imposed against oil-producing countries or specific industry participants, disruptions or failure of technology or information systems, price and supply decisions by oil producing countries and cartels, terrorist activities, armed conflict, tariffs, sanctions, other changes to trade agreements and world supply and demand imbalance.

Through our fuel surcharge programs, we have been able to mitigate the impact of fluctuations in fuel prices.

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Fuel shortages, changes in fuel prices, and the potential volatility in fuel surcharge revenue may impact our results of operations and overall profitability.

Fuel surcharge revenue as a percentage of operating revenues increased to 15.8% for the quarter ended March 31, 2023 compared to 14.7% for the quarter ended March 31, 2022 as a result of changes in fuel prices.

Fuel surcharge revenue as a percentage of operating revenues decreased to 15.6% for the quarter ended June 30, 2023 compared to 18.4% for the quarter ended June 30, 2022 as a result of changes in fuel prices.

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.

Participants in the transportation industry have historically experienced cyclical fluctuations in financial results due to economic recessions, downturns in the business cycles of customers, volatility in the prices charged by third-party carriers, interest rate fluctuations and other U.S.

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Like other providers of freight transportation services, our business has been impacted by the macroeconomic conditions of the past year.

Industry freight volumes, as measured by the Cass Freight Index, were approximately flat in the first quarter of 2023 compared to the first quarter of 2022.

The balance of supply and demand in the United States transportation market continued to shift toward a market with excess carrier capacity in the first quarter of 2023.

Industry freight volumes, as measured by the Cass Freight Index, decreased in the second quarter of 2023 compared to the second quarter of 2022.

Transportation rates continue to decline as shippers in the United States manage through elevated inventory levels amidst slowing economic growth.

In response to this slowing demand, steamship lines continue to rationalize services by reducing capacity where possible, which has allowed port congestion to ease.

The slowdown of consumer demand has also had a significant impact on the air freight market.

Air freight volumes have significantly declined, also as a consequence of higher inventory levels and declining consumer demand.

These trends drove a decline in the volume of freight shipped by our customers in the first quarter of 2023 and is expected to continue into the second quarter of 2023.

Consecutive quarters of weak consumer demand have nearly eliminated the challenges from port congestion and transportation equipment shortages.

Despite the weak demand, new vessel deliveries continue to add capacity to the market, which suggests excess capacity may persist for several months even though steamship lines continue to rationalize services by reducing capacity where possible.

The air freight market has also seen an increase in capacity resulting from increased commercial flight activity to support elevated consumer travel.

These trends drove a decline in the volume of freight shipped by our customers in the second quarter of 2023 and is expected to continue into the third quarter of 2023.

Results from Operations

The following table sets forth our consolidated financial data for the three months ended March 31, 2023 and 2022 (unaudited and in thousands):

The following table sets forth our consolidated financial data for the three months ended June 30, 2023 and 2022 (unaudited and in thousands):

Three Months Ended

2023 March 31,

2023 June 30,

2022 Change Percent Change

19 unchanged sentences

Other expense:

Interest expense (2,355) (784) (1,571) 200.4

Interest expense, net (2,585) (1,193) (1,392) 116.7

Total other expense (2,585) (1,193) (1,392) 116.7

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Net income and comprehensive income $ 19,951 $ 55,430 $ (35,479) (64.0) %

Operating revenues decreased $39,895, or 8.5%, to $427,066 for the three months ended March 31, 2023 compared to $466,961 for the three months ended March 31, 2022.

The decrease was driven primarily by decreased revenue from our Expedited Freight segment of $37,657 due to decreased Network and Truckload revenue, and from our Intermodal segment of $2,271 driven by decreased drayage shipments.

Operating Revenues

Operating revenues decreased $113,037, or 21.9%, to $402,182 for the three months ended June 30, 2023 compared to $515,219 for the three months ended June 30, 2022.

The decrease was driven primarily by lower revenue from our Expedited Freight segment of $70,861 due to decreased Network and Truckload revenue, and from our Intermodal segment of $42,160.

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

Operating Expenses

Operating expenses decreased $33,053, or 8.1%, to $376,557 for the three months ended March 31, 2023 compared to $409,610 for the three months ended March 31, 2022.

The decrease was primarily driven by a decrease in purchased transportation expense of $39,615 and salaries, wages and employee benefits of $6,561 offset by an increase in operating leases of $4,575 and other operating expenses of $4,310 in both our Expedited Freight and Intermodal segments.

Operating expenses decreased $67,703, or 15.4%, to $371,971 for the three months ended June 30, 2023 compared to $439,674 for the three months ended June 30, 2022.

The decrease was primarily driven by a decrease in purchased transportation expense of $57,847 in both our Expedited Freight and Intermodal segments and other operating expenses of $12,951 in our Intermodal segment.

Purchased transportation expense includes our independent contractor fleet owners and owner-operators, who lease their equipment to our motor carrier (“Leased Capacity Providers ”), third-party motor carriers and capacity secured by transportation intermediaries, while Company-employed drivers are included in salaries, wages and employee benefits.

Purchased transportation expense decreased due to the utilization of less third-party motor carriers over the same period in the prior year combined with a lower third-party motor carrier cost per mile.

Salaries, wages and employee benefits decreased primarily due to a decrease in the accrual for an incentive plan established for certain employees in 2021.

Operating leases increased primarily due to higher facility and equipment lease expense.

Other operating expenses increased due to higher contract labor, travel and entertainment, software l icense fees and professional fees, partially offset by lower expenses incurred to support the decreased container rental revenues in our Intermodal segment.

Purchased transportation expense primarily decreased due to the utilization of less third-party motor carriers over the same period in the prior year combined with a lower third-party motor carrier cost per mile.

Other operating expenses decreased primarily due to lower expenses incurred to support the decreased accessorial revenues in our Intermodal segment, maintenance and repairs, and operating supplies, partially offset by higher contract labor and professional fees.

Income from Operations and Segment Operations

Income from continuing operations decreased $6,842, or 11.9%, to $50,509 for the three months ended March 31, 2023 compared to $57,351 for the three months ended March 31, 2022.

The decrease was primarily driven by a decrease in income from operations in our Expedited Freight segment of $14,682, partially offset by an increase in our Intermodal segment of $57 and Other Operations of $7,783.

Income from continuing operations decreased $45,334, or 60.0%, to $30,211 for the three months ended June 30, 2023 compared to $75,545 for the three months ended June 30, 2022.

The decrease was driven by a decrease in income from operations in our Expedited Freight segment of $32,158 and a decrease in our Intermodal segment of $10,937.

Interest Expense

Interest expense was $2,355 for the three months ended March 31, 2023 compared to $784 for the three months ended March 31, 2022.

The increase in interest expense was due to a higher variable interest rate during the first quarter of 2023.

The interest rate on the outstanding borrowings under our credit facility was 5.96% and 1.44% during the three months ended March 31, 2023 and 2022, respectively.

The effective tax rate on a continuing basis for both the three months ended March 31, 2023 and 2022 was 24.5%.

As a result of the foregoing factors, net income decreased $6,318, or 14.8%, to $36,368 for the three months ended March 31, 2023 compared to $42,686 for the three months ended March 31, 2022.

Expedited Freight - Three Months Ended March 31, 2023 compared to Three Months Ended March 31, 2022

The following table sets forth the financial data of our Expedited Freight segment for the three months ended March 31, 2023 and 2022 (unaudited and in thousands):

Interest expense was $2,585 for the three months ended June 30, 2023 compared to $1,193 for the three months ended June 30, 2022.

The increase in interest expense was due to a higher variable interest rate during the second quarter of 2023.

The weighted-average interest rate on the outstanding borrowings under our credit facility w as 6.32% and 2.14% du ring the three months ended June 30, 2023 and 2022, respectively.

The effective tax rate on a continuing basis for the three months ended June 30, 2023 was 27.8% compared to 25.4% for the three months ended June 30, 2022.

As a result of the foregoing factors, net income decreased $35,479, or 64.0%, to $19,951 for the three months ended June 30, 2023 compared to $55,430 for the three months ended June 30, 2022.

Expedited Freight - Three Months Ended June 30, 2023 compared to Three Months Ended June 30, 2022

The following table sets forth the financial data of our Expedited Freight segment for the three months ended June 30, 2023 and 2022 (unaudited and in thousands):

Three Months Ended

2023 Percent of Revenue March 31,

2023 Percent of Revenue June 30,

2022 Percent of Revenue Change Percent Change

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Three Months Ended

2023 March 31,

2023 June 30,

2022 Percent Change

18 unchanged sentences

Operating Revenues

Expedited Freight operating revenues decreased $37,657, or 10.0%, to $338,934 for the three months ended March 31, 2023 from $376,591 for the three months ended March 31, 2022.

The decrease was attributable to decreased Network and Truckload revenue, offset by increased Final Mile revenue.

Expedited Freight operating revenues decreased $70,861, or 17.3%, to $337,996 for the three months ended June 30, 2023 from $408,857 for the three months ended June 30, 2022.

The decrease was attributable to decreased Network, Truckload, Final Mile and other revenue.

Network revenue decreased due to a 7.7% decrease in tonnage and 7.0% decrease in revenue per hundredweight ex fuel as compared to the same period in the prior year.

The decrease in tonnage reflects a decrease in weight per shipment of 4.2% on 8.4% fewer number of shipments.

The decreased tonnage is due to softer demand for our services driven by the weak freight environment while the decrease in weight per shipment was the result of less dense freight in our network driven by fewer pieces per a shipment.

Fuel surcharge revenue decreased $1,756, or 3.5% as a result of lower tonnage in the Network, partially offset by the rise in diesel fuel prices.

Truckload revenue decreased $14,164 primarily due to softer demand for our services driven by the weak freight environment and Final Mile revenue increased $3,599 primarily due to new locations with existing and new customers.

Other revenue, which includes warehousing and terminal handling, increased $677.

The decrease in tonnage reflects an increase in weight per shipment of 5.4% on 12.4% fewer number of shipments.

The decrease in tonnage is due to softer demand for our services driven by the weak freight environment while the increase in weight per shipment was the result of more dense freight in our network driven by a change in the mix of services provided to customers.

Fuel surcharge revenue decreased $19,439, or 30% as a result of the decline in the average price of fuel and a decrease in tonnage in the Network.

Truckload and Final Mile revenue decreased $19,712 and $4,468, respectively, primarily due to softer demand for our services driven by the weak freight environment.

Other revenue, which includes warehousing and terminal handling, decreased $571 as a result of fewer shipments.

Purchased Transportation

Expedited Freight purchased transportation decreased $34,794, or 17.4%, to $165,240 for the three months ended March 31, 2023 from $200,034 for the three months ended March 31, 2022.

Purchased transportation was 48.8% of Expedited Freight operating revenues for the three months ended March 31, 2023 compared to 53.1% for the same period in 2022.

Expedited Freight purchased transportation decreased $48,777, or 22.9%, to $163,798 for the three months ended June 30, 2023 from $212,575 for the three months ended June 30, 2022.

Purchased transportation was 48.5% of Expedited Freight operating revenues for the three months ended June 30, 2023 compared to 52.0% for the same period in 2022.

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

The decrease in purchased transportation was primarily due to lower volumes in Network and Truckload and the change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and transportation intermediaries, and Company-employed drivers for Network and Truckload services.

In the first quarter of 2023, we purchased 71.1%, 24.8% and 4.1% of our freight capacity from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers, respectively.

The decrease in purchased transportation was primarily due to lower volumes in Network, Truckload, and Final Mile and the change in the mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers for Network and Truckload Services.

For the three months ended June 30, 2023, we purchased 62.1%, 32.7% and 5.3% of our freight capacity from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers, respectively.

This compares to 64.5%, 32.3% and 3.2% in the same period in 2022.

Salaries, Wages and Employee Benefits

Expedited Freight salaries, wages and employee benefits increased $571, or 0.8%, to $68,791 for the three months ended March 31, 2023 from $68,220 for the three months ended March 31, 2022.

Salaries, wages and employee benefits were 20.3% of Expedited Freight operating revenues for the three months ended March 31, 2023 compared to 18.1% for the same period in 2022.

The increase in salaries, wages and employee benefits expense was due to additional employees from the Land Air Express, LLC acquisition and an increase in salaries and wages in the first quarter of 2023 as compared to the same period in 2022.

Expedited Freight salaries, wages and employee benefits increased $863, or 1.2%, to $70,360 for the three months ended June 30, 2023 from $69,497 for the three months ended June 30, 2022.

Salaries, wages and employee benefits were 20.8% of Expedited Freight operating revenues for the three months ended June 30, 2023 compared to 17.0% for the same period in 2022.

The increase in salaries, wages and employee benefits expense was due to incremental Company drivers hired in the second quarter of 2023 and an increase in salaries and wages, partially offset by a decreased reserve for incentive compensation as compared to the same period in 2022.

Operating Leases

Expedited Freight operating leases increased $3,182, or 20.2%, to $18,913 for the three months ended March 31, 2023 from $15,731 for the three months ended March 31, 2022.

Operating leases were 5.6% of Expedited Freight operating revenues for the three months ended March 31, 2023 compared to 4.2% for the same period in 2022.

The increase in operating leases expense was primarily due to higher facility expense in the first quarter of 2023 as compared to the same period in 2022 .

Expedited Freight operating leases increased $3,556, or 22.3%, to $19,489 for the three months ended June 30, 2023 from $15,933 for the three months ended June 30, 2022.

Operating leases were 5.8% of Expedited Freight operating revenues for the three months ended June 30, 2023 compared to 3.9% for the same period in 2022.

The increase in operating lease expense was primarily due to higher facility expense as a result of new locations in the second quarter of 2023 as compared to the same period in 2022.

Depreciation and Amortization

Expedited Freight depreciation and amortization increased $1,408, or 18.8%, to $8,889 for the three months ended March 31, 2023 from $7,481 for the three months ended March 31, 2022.

Depreciation and amortization was 2.6% of Expedited Freight operating revenues for the three months ended March 31, 2023 compared to 2.0% for the same period in 2022.

The increase in depreciation and amortization expense was primarily due to an increase in equipment depreciation in the first quarter of 2023 as compared to the same period in 2022 .

Expedited Freight depreciation and amortization increased $1,890, or 24.2%, to $9,707 for the three months ended June 30, 2023 from $7,817 for the three months ended June 30, 2022.

Depreciation and amortization was 2.9% of Expedited Freight operating revenues for the three months ended June 30, 2023 compared to 1.9% for the same period in 2022.

The increase in depreciation and amortization expense was primarily due to an increase in equipment depreciation in the second quarter of 2023 as compared to the same period in 2022.

Insurance and Claims

Expedited Freight insurance and claims increased $992, or 11.3%, to $9,743 for the three months ended March 31, 2023 from $8,751 for the three months ended March 31, 2022.

Insurance and claims was 2.9% of Expedited Freight operating revenues for the three months ended March 31, 2023 compared to 2.3% for the same period in 2022.

The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims and equipment repairs in the first quarter of 2023 as compared to the same period in 2022 .

Expedited Freight insurance and claims increased $2,392, or 28.8%, to $10,703 for the three months ended June 30, 2023 from $8,311 for the three months ended June 30, 2022.

Insurance and claims was 3.2% of Expedited Freight operating revenues for the three months ended June 30, 2023 compared to 2.0% for the same period in 2022.

The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims and equipment repairs in the second quarter of 2023 as compared to the same period in 2022 .

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

Expedited Freight fuel expense decreased $39, or 1.5%, to $2,611 for the three months ended March 31, 2023 from $2,650 for the three months ended March 31, 2022.

Fuel expense was 0.8% of Expedited Freight operating revenues for the three months ended March 31, 2023 compared to 0.7% and for the same period in 2022.

Expedited Freight fuel expense decreased due to fewer miles driven by Company-employed drivers in the first quarter of 2023 offset by an increase in the average price of fuel as compared to the same period in 2022.

Expedited Freight fuel expense decreased $646, or 20.0%, to $2,583 for the three months ended June 30, 2023 from $3,229 for the three months ended June 30, 2022.

Fuel expense was 0.8% of Expedited Freight operating revenues for the three months ended June 30, 2023 compared to 0.8% and for the same period in 2022.

Expedited Freight fuel expense decreased due to a decrease in the average price of fuel, partially offset by additional miles driven by Company-employed drivers in the second quarter of 2023 as compared to the same period in 2022.

Other Operating Expenses

Expedited Freight other operating expenses increased $5,705, or 21.9%, to $31,749 for the three months ended March 31, 2023 from $26,044 for the three months ended March 31, 2022.

Other operating expenses were 9.4% of Expedited Freight operating revenues for the three months ended March 31, 2023 compared to 6.9% for the same period in 2022.

Expedited Freight other operating expenses increased $2,019, or 7.1%, to $30,407 for the three months ended June 30, 2023 from $28,388 for the three months ended June 30, 2022.

Other operating expenses were 9.0% of Expedited Freight operating revenues for the three months ended June 30, 2023 compared to 7.0% for the same period in 2022.

Other operating expenses include equipment maintenance, facility expenses, legal and professional fees, and other over-the-road costs.

The increase in other operating expenses was primarily driven by an increase in contract labor, software license fees, professional fees and bad debts in the first quarter of 2023 as compared to the same period in 2022.

The increase in other operating expenses was primarily driven by an increase in contract labor, software license fees and professional fees, partially offset by a decrease in operating supplies in the second quarter of 2023 as compared to the same period in 2022.

Income from Operations

Expedited Freight income from operations decreased $14,682, or 30.8%, to $32,998 for the three months ended March 31, 2023 compared to $47,680 for the three months ended March 31, 2022.

Income from operations was 9.7% of Expedited Freight operating revenues for the three months ended March 31, 2023 compared to 12.7% for the same period in 2022.

The decrease in income from operations as a percentage of operating revenues was driven by decreased tonnage in the Network as well as a decline in the revenue per hundredweight ex fuel, partially offset by the change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers for Network and Truckload.

Intermodal - Three Months Ended March 31, 2023 compared to Three Months Ended March 31, 2022

The following table sets forth the financial data of our Intermodal segment for the three months ended March 31, 2023 and 2022 (unaudited and in thousands):

Expedited Freight income from operations decreased $32,158, or 51.0%, to $30,949 for the three months ended June 30, 2023 compared to $63,107 for the three months ended June 30, 2022.

Income from operations was 9.2% of Expedited Freight operating revenues for the three months ended June 30, 2023 compared to 15.4% for the same period in 2022.

The decrease in income from operations as a percentage of operating revenues was driven by decreased tonnage and revenue per hundredweight ex fuel combined with lower fuel surcharge revenue, partially offset by the change in the mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers for Network and Truckload.

Intermodal - Three Months Ended June 30, 2023 compared to Three Months Ended June 30, 2022

The following table sets forth the financial data of our Intermodal segment for the three months ended June 30, 2023 and 2022 (unaudited and in thousands):

Three Months Ended

2023 Percent of Revenue March 31,

2023 Percent of Revenue June 30,

2022 Percent of Revenue Change Percent Change

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Three Months Ended

2023 March 31,

2023 June 30,

2022 Percent Change

1 unchanged sentence

Drayage revenue per shipment $ 853 $ 1,026 (16.9) %

Intermodal operating revenues decreased $2,271, or 2.5%, to $88,169 for the three months ended March 31, 2023 from $90,440 for the three months ended March 31, 2022.

The decrease in operating revenues was primarily attributable to a 17.9% decrease in drayage shipments, partially offset by an increase in drayage revenue per shipment of 23.6% over the same period in 2022.

The increase in drayage revenue per shipment was driven by execution of our pricing initiatives, the acquisitions completed in 2022 and higher accessorial revenue to support our customers.

Operating Revenues

Intermodal operating revenues decreased $42,160, or 39.6%, to $64,251 for the three months ended June 30, 2023 from $106,411 for the three months ended June 30, 2022.

The decrease in operating revenues was primarily attributable to a 28.2% decrease in drayage shipments as well as a decrease in drayage revenue per shipment of 16.9% over the same period in 2022.

The decrease in drayage revenue per shipment was driven by a weaker freight environment and lower accessorial revenue to support customers in the second quarter of 2023 as compared to the same period in 2022.

Purchased Transportation

Intermodal purchased transportation decreased $4,854, or 19.5%, to $20,014 for the three months ended March 31, 2023 from $24,868 for the three months ended March 31, 2022.

Purchased transportation was 22.7% of Intermodal operating revenues for the three months ended March 31, 2023 compared to 27.5% for the same period in 2022.

Intermodal purchased transportation decreased $9,054, or 33.6%, to $17,909 for the three months ended June 30, 2023 from $26,963 for the three months ended June 30, 2022.

Purchased transportation was 27.9% of Intermodal operating revenues for the three months ended June 30, 2023 compared to 25.3% for the same period in 2022.

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

The decrease in purchased transportation costs was primarily due to fewer drayage shipments and the change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and Company-employed drivers.

The decrease in purchased transportation costs was primarily due to fewer drayage shipments and the change in the mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and Company-employed drivers.

Salaries, Wages and Employee Benefits

Intermodal salaries, wages and employee benefits increased $979, or 5.5%, to $18,914 for the three months ended March 31, 2023 compared to $17,935 for the three months ended March 31, 2022.

Salaries, wages and employee benefits were 21.5% of Intermodal operating revenues for the three months ended March 31, 2023 compared to 19.8% for the same period in 2022.

The increase in salaries, wages and employee benefits expense was primarily due to additional employees from the acquisitions completed in 2022 and higher salaries and wages as compared to the same period in 2022.

Intermodal salaries, wages and employee benefits decreased $2,181, or 11.6%, to $16,650 for the three months ended June 30, 2023 compared to $18,831 for the three months ended June 30, 2022.

Salaries, wages and employee benefits were 25.9% of Intermodal operating revenues for the three months ended June 30, 2023 compared to 17.7% for the same period in 2022.

The decrease in salaries, wages and employee benefits expense was primarily due to fewer employees in response to the lower volumes, partially offset by higher salaries and wages as compared to the same period in 2022.

Operating Leases

Intermodal operating leases increased $1,394, or 20.1%, to $8,335 for the three months ended March 31, 2023 compared to $6,941 for the three months ended March 31, 2022.

Operating leases were 9.5% of Intermodal operating revenues for the three months ended March 31, 2023 compared to 7.7% for the same period in 2022.

The increase in operating leases expense was primarily due to higher facility expense in the first quarter of 2023 as compared to the same period in 2022.

Intermodal operating leases decreased $831, or 11.0%, to $6,695 for the three months ended June 30, 2023 compared to $7,526 for the three months ended June 30, 2022.

Operating leases were 10.4% of Intermodal operating revenues for the three months ended June 30, 2023 compared to 7.1% for the same period in 2022.

The decrease in operating leases expense was primarily due to lower equipment lease expense in the second quarter of 2023 as compared to the same period in 2022.

Depreciation and Amortization

Intermodal depreciation and amortization increased $1,136, or 31.5%, to $4,746 for the three months ended March 31, 2023 from $3,610 for the three months ended March 31, 2022.

Depreciation and amortization was 5.4% of Intermodal operating revenues for the three months ended March 31, 2023 compared to 4.0% for the same period in 2022 .

The increase in depreciation and amortization expense was primarily due to the additional depreciation and amortization expense as result of the equipment and intangible assets acquired in connection with the acquisitions completed in 2022.

Intermodal depreciation and amortization increased $1,090, or 29.3%, to $4,806 for the three months ended June 30, 2023 from $3,716 for the three months ended June 30, 2022.

Depreciation and amortization was 7.5% of Intermodal operating revenues for the three months ended June 30, 2023 compared to 3.5% for the same period in 2022 .

The increase in depreciation and amortization expense was primarily due to the additional depreciation and amortization expense as a result of the equipment and intangible assets acquired in connection with the acquisitions completed in 2022.

Insurance and Claims

Intermodal insurance and claims increased $289, or 14.0%, to $2,349 for the three months ended March 31, 2023 from $2,060 for the three months ended March 31, 2022.

Insurance and claims were 2.7% of Intermodal operating revenues for the three months ended March 31, 2023 compared to 2.3% for the same period in 2022.

The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims and equipment repairs during the first quarter of 2023 as compared to the same period in 2022.

Intermodal insurance and claims increased $477, or 20.4%, to $2,815 for the three months ended June 30, 2023 from $2,338 for the three months ended June 30, 2022.

Insurance and claims were 4.4% of Intermodal operating revenues for the three months ended June 30, 2023 compared to 2.2% for the same period in 2022.

The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims and equipment repairs during the second quarter of 2023 as compared to the same period in 2022.

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

Intermodal fuel expense decreased $42, or 1.3%, to $3,173 for the three months ended March 31, 2023 from $3,215 for the three months ended March 31, 2022.

Fuel expense was 3.6% of Intermodal operating revenues for both the three months ended March 31, 2023 and 2022.

Intermodal fuel expense decreased due to fewer miles driven by Company-employed drivers in the first quarter of 2023 offset by an increase in the average price of fuel as compared to the same period in 2022.

Intermodal fuel expense decreased $2,393, or 47.1%, to $2,691 for the three months ended June 30, 2023 from $5,084 for the three months ended June 30, 2022.

Fuel expense was 4.2% of Intermodal operating revenues for the three months ended June 30, 2023 compared to 4.8% for the same period in 2022.

Intermodal fuel expense decreased due to fewer miles driven by Company-employed drivers in the second quarter of 2023 and a decrease in the average price of fuel as compared to the same period in 2022.

Other Operating Expenses

Intermodal other operating expenses decreased $1,230, or 6.0%, to $19,435 for the three months ended March 31, 2023 from $20,665 for the three months ended March 31, 2022.

Other operating expenses were 22.0% of Intermodal operating revenues for the three months ended March 31, 2023 compared to 22.8% for the same period in 2022.

The decrease in Intermodal other operating expenses was driven by lower expenses incurred to support the decreased container rental revenues, partially offset by higher contract labor in the first quarter of 2023 as compared to the same period in 2022.

Intermodal other operating expenses decreased $18,331, or 68.6%, to $8,373 for the three months ended June 30, 2023 from $26,704 for the three months ended June 30, 2022.

Other operating expenses were 13.0% of Intermodal operating revenues for the three months ended June 30, 2023 compared to 25.1% for the same period in 2022.

Other operating expenses include equipment maintenance, facility expenses, legal and professional fees, and accessorial storage costs.

The decrease in Intermodal other operating expenses was driven by lower accessorial storage costs incurred to support the decreased accessorial revenues, partially offset by higher contract labor in the second quarter of 2023 as compared to the same period in 2022.

Income from Operations

Intermodal income from operations increased $57, or 0.5%, to $11,203 for the three months ended March 31, 2023 compared to $11,146 for the three months ended March 31, 2022.

Income from operations was 12.7% of Intermodal operating revenues for the three months ended March 31, 2023 compared to 12.3% for the same period in 2022.

The increase in income from operations as a percentage of operating revenues was driven by increased drayage revenue per shipment on fewer drayage shipments and a change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and Company-employed drivers.

Other Operations - Three Months Ended March 31, 2023 compared to Three Months Ended March 31, 2022

Other operations included $6,308 operating income during the three months ended March 31, 2023 compared to an $1,475 operating loss during the three months ended March 31, 2022.

The change in the operating income was driven by the reversal of an accrual for an incentive program established for certain employees in 2021, partially offset by an increase in the reserves for group health insurance claims and vehicle liability claims.

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

Intermodal income from operations decreased $10,937, or 71.7%, to $4,312 for the three months ended June 30, 2023 compared to $15,249 for the three months ended June 30, 2022.

Income from operations was 6.7% of Intermodal operating revenues for the three months ended June 30, 2023 compared to 14.3% for the same period in 2022.

The decrease in income from operations as a percentage of operating revenues was driven by decreased drayage revenue per shipment on fewer drayage shipments and a change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers, while Company-employed drivers..

Other Operations - Three Months Ended June 30, 2023 compared to Three Months Ended June 30, 2022

Other operations included a $5,050 operating loss during the three months ended June 30, 2023 compared to an $2,811 operating loss during the three months ended June 30, 2022.

The change in the operating loss was driven by professional fees incurred for non-recurring strategic initiatives, an increase in the reserves for group health insurance claims and workers compensation claims, partially offset by the reversal of an accrual for an incentive program established for certain employees in 2021, and a decrease in the reserves for vehicle liability claims, legal reserves and bad debt expense related to other receivables.

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

Results from Operations

The following table sets forth our consolidated financial data for the six months ended June 30, 2023 and 2022 (unaudited and in thousands):

Six Months Ended

2023 June 30,

2022 Change Percent Change

Operating revenues:

Expedited Freight $ 676,930 $ 785,448 $ (108,518) (13.8) %

Intermodal 152,420 196,851 (44,431) (22.6)

Eliminations and other operations (102) (119) 17 (14.3)

Operating revenues 829,248 982,180 (152,932) (15.6)

Operating expenses:

Purchased transportation 366,860 464,322 (97,462) (21.0)

Salaries, wages, and employee benefits 166,206 172,439 (6,233) (3.6)

Operating leases 53,432 46,132 7,300 15.8

Depreciation and amortization 28,148 22,725 5,423 23.9

Insurance and claims 27,142 25,164 1,978 7.9

Fuel expense 11,058 14,179 (3,121) (22.0)

Other operating expenses 95,682 104,323 (8,641) (8.3)

Total operating expenses 748,528 849,284 (100,756) (11.9)

Income (loss) from operations:

Expedited Freight 63,947 110,787 (46,840) (42.3)

Intermodal 15,515 26,395 (10,880) (41.2)

Other Operations 1,258 (4,286) 5,544 (129.4)

Income from operations 80,720 132,896 (52,176) (39.3)

Other expense:

Interest expense, net (4,940) (1,977) (2,963) 149.9

Total other expense (4,940) (1,977) (2,963) 149.9

Income from operations before income taxes 75,780 130,919 (55,139) (42.1)

Income tax expense 19,461 32,803 (13,342) (40.7)

Net income and comprehensive income $ 56,319 $ 98,116 $ (41,797) (42.6) %

Operating Revenues

Operating revenues decreased $152,932, or 15.6% to $829,248 for the six months ended June 30, 2023 compared to $982,180 for the six months ended June 30, 2022.

The decrease was primarily driven by lower revenue from our Expedited Freight segment revenue of $108,518 due to decreased Network and Truckload revenue, and from our Intermodal segment of $44,431, The results for our two reportable segments are discussed in detail in the following sections.

Operating Expenses

Operating expenses decreased $100,756, or 11.9%, to $748,528 for the six months ended June 30, 2023 compared to $849,284 for the six months ended June 30, 2022.

The decrease was primarily driven by an decrease in purchased transportation expense of $97,462 in both our Expedited Freight and Intermodal segments.

Purchased transportation expense includes our Leased Capacity Providers, third-party motor carriers and capacity secured by transportation intermediaries, while Company-employed drivers are included in salaries, wages and employee benefits.

Income from Operations and Segment Operations

Income from operations decreased $52,176, or 39.3%, to $80,720 for the six months ended June 30, 2023 compared to $132,896 for the six months ended June 30, 2022.

The decrease was primarily driven by a decrease in income from operations in our Expedited Freight segment of $46,840 and a decrease in our Intermodal segment of $10,880.

Interest Expense

Interest expense was $4,940 for the six months ended June 30, 2023 compared to $1,977 for the six months ended June 30, 2022.

The increase in interest expense was due to higher borrowings outstanding under our credit facility and higher variable interest rates during the six months ended June 30, 2023, The interest rate on the outstanding borrowings under our credit facility was 6.05% and 1.80% during the six months ended June 30, 2023 and 2022, respectively.

The effective tax rate on a continuing basis for the six months ended June 30, 2023 was 25.7% compared to a rate of 25.1% for the six months ended June 30, 2022.

As a result of the foregoing factors, net income decreased $41,797, or 42.6%, to $56,319 for the six months ended June 30, 2023 compared to $98,116 for the six months ended June 30, 2022.

Expedited Freight - Six Months Ended June 30, 2023 compared to Six Months Ended June 30, 2022

The following table sets forth the financial data of our Expedited Freight segment for the six months ended June 30, 2023 and 2022:

Expedited Freight Segment Information

(unaudited and in thousands)

Six Months Ended

2023 Percent of Revenue June 30,

2022 Percent of Revenue Change Percent Change

Operating revenues:

$ 411,693 60.8 % $ 485,572 61.8 % $ (73,879) (15.2) %

Truckload 82,176 12.1 116,052 14.8 (33,876) (29.2)

Final Mile 137,917 20.4 138,786 17.7 (869) (0.6)

Other 45,144 6.7 45,038 5.7 106 0.2

Total operating revenues 676,930 100.0 785,448 100.0 (108,518) (13.8)

Operating expenses:

Purchased transportation 329,038 48.6 412,609 52.5 (83,571) (20.3)

Salaries, wages and employee benefits 139,151 20.6 137,717 17.5 1,434 1.0

Operating leases 38,402 5.7 31,664 4.0 6,738 21.3

Depreciation and amortization 18,596 2.7 15,298 1.9 3,298 21.6

Insurance and claims 20,446 3.0 17,062 2.2 3,384 19.8

Fuel expense 5,194 0.8 5,879 0.7 (685) (11.7)

Other operating expenses 62,156 9.2 54,432 6.9 7,724 14.2

Total operating expenses 612,983 90.6 674,661 85.9 (61,678) (9.1)

Income from operations $ 63,947 9.4 % $ 110,787 14.1 % $ (46,840) (42.3) %

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

Expedited Freight Operating Statistics

Six Months Ended

2023 June 30,

2022 Percent Change

Business days 128 128 — %

Total pounds 1,302,958 1,447,740 (10.0)

Pounds per day 10,179 11,310 (10.0)

Shipments 1,2

Total shipments 1,658 1,853 (10.5)

Shipments per day 13.0 14.5 (10.3)

Weight per shipment 786 781 0.6

Revenue per hundredweight 3

$ 32.03 $ 33.80 (5.2)

Revenue per hundredweight, ex fuel 3

$ 24.89 $ 25.91 (3.9)

Revenue per shipment 3

$ 251.66 $ 264.13 (4.7)

Revenue per shipment, ex fuel 3

$ 195.53 $ 202.44 (3.4)

1 In thousands

2 Excludes accessorial, Truckload and Final Mile products

3 Includes intercompany revenue between the Network and Truckload revenue streams

Operating Revenues

Expedited Freight operating revenues decreased $108,518, or 13.8%, to $676,930 for the six months ended June 30, 2023 from $785,448 for the six months ended June 30, 2022.

The decrease was primarily attributable to decreased Network, Truckload and Final Mile revenue.

Network revenue decreased due to a 10.0% decrease in tonnage, a 10.5% decrease in shipments and a 3.9% decrease in revenue per hundredweight as compared to the prior year.

The decrease in tonnage reflects an increase in weight per shipment of 0.6%, on 10.5% fewer number of shipments.

The decrease in tonnage is due to softer demand for our services driven by the weak freight environment, while the increase in weight per shipment was the result of more dense freight in our network driven by a change in the mix of services provided to customers.

Fuel surcharge revenue decreased $21,195, or 18.5% as a result of the decline in the average price of fuel and a decrease in the Network tonnage.

Truckload and Final Mile revenue decreased $33,876 and $869, primarily due to softer demand for our services driven by the weak freight environment.

Other revenue, which includes warehousing and terminal handling, increased $106.

Purchased Transportation

Expedited Freight purchased transportation decreased $83,571, or 20.3%, to $329,038 for the six months ended June 30, 2023 from $412,609 for the six months ended June 30, 2022.

Purchased transportation was 48.6% of Expedited Freight operating revenue for the six months ended June 30, 2023 compared to 52.5% for the same period in 2022.

The decrease in purchased transportation was primarily due to lower volumes in the Network, Truckload and Final Mile tonnage and the change in the mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers for Network and Truckload services.

For the six months ended June 30, 2023, we purchased 66.5%, 28.8% and 4.7% of our freight capacity from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers, respectively.

This compares to 62.6%, 34.1% and 3.3% in the same period in 2022.

Salaries, Wages, and Employee Benefits

Expedited Freight salaries, wages and employee benefits increased $1,434, or 1.0%, to $139,151 for the six months ended June 30, 2023 from $137,717 for the six months ended June 30, 2022.

Salaries, wages and employee benefits were 20.6% of Expedited Freight operating revenues for the six months ended June 30, 2023 compared to 17.5% for the same period in 2022.

The increase in salaries, wages and employee benefits expense was primarily due to the additional employees from the Land Air Express, LLC acquisition, incremental company drivers hired in 2023, and an increase in salaries and wages, partially offset by a decreased reserve for incentive compensation as compared to the same period in 2022.

Operating Leases

Expedited Freight operating leases increased $6,738, or 21.3%, to $38,402 for the six months ended June 30, 2023 from $31,664 for the six months ended June 30, 2022.

Operating leases were 5.7% of Expedited Freight operating revenues for the six months ended June 30, 2023 compared to 4.0% for the same period in 2022.

The increase in operating leases expense was primarily due to higher facility expense as a result of new locations for the six months ended June 30, 2023, as compared to the same period in 2022.

Depreciation and Amortization

Expedited Freight depreciation and amortization increased $3,298, or 21.6%, to $18,596 for the six months ended June 30, 2023 from $15,298 for the six months ended June 30, 2022.

Depreciation and amortization was 2.7% of Expedited Freight operating revenues for the six months ended June 30, 2023 compared to 1.9% for the same period in 2022.

The increase in depreciation and amortization expense was primarily due to an increase in equipment depreciation expense for he six months ended June 30, 2023, as compared to the same period in 2022.

Insurance and Claims

Expedited Freight insurance and claims increased $3,384, or 19.8%, to $20,446 for the six months ended June 30, 2023 from $17,062 for the six months ended June 30, 2022.

Insurance and claims were 3.0% of Expedited Freight operating revenues for the six months ended June 30, 2023 compared to 2.2% for the same period in 2022.

The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims and equipment repairs, partially offset by a decrease in cargo claims for the six months ended June 30, 2023 as compared to the same period in 2022.

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

Expedited Freight fuel expense decreased $685, or 11.7%, to $5,194 for the six months ended June 30, 2023 from $5,879 for the six months ended June 30, 2022.

Fuel expense was 0.8% of Expedited Freight operating revenues for the six months ended June 30, 2023 compared to 0.7% for the same period in 2022.

Expedited Freight fuel expense decreased due to decrease in the average price of fuel, partially offset by additional miles driven by Company-employed drivers for the six months ended June 30, 2023 as compared to the same period in 2022.

Other Operating Expenses

Expedited Freight other operating expenses increased $7,724, or 14.2%, to $62,156 for the six months ended June 30, 2023 from $54,432 for the six months ended June 30, 2022.

Other operating expenses were 9.2% of Expedited Freight operating revenues for the six months ended June 30, 2023 compared to 6.9% for the same period in 2022.

Other operating expenses include equipment maintenance, facility expenses, legal and professional fees, and other over-the-road costs.

The increase in other operating expenses was primarily driven by an increase in contract labor, software license fees, professional fees, partially offset by a decrease in operating supplies and equipment maintenance.

Income from Operations

Expedited Freight income from operations decreased $46,840, or 42.3%, to $63,947 for the six months ended June 30, 2023 compared to $110,787 for the six months ended June 30, 2022.

Income from operations was 9.4% of Expedited Freight operating revenues for six months ended June 30, 2023 compared to 14.1% for the same period in 2022.

The decrease in income from operations as a percentage of operating revenues was primarily driven by decreased tonnage and revenue per hundredweight ex fuel combined with lower fuel surcharge revenue, partially offset by the change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and Company-employed drivers for Network and Truckload.

Intermodal - Six Months Ended June 30, 2023 compared to Six Months Ended June 30, 2022

The following table sets forth the financial data of our Intermodal segment for the six months ended June 30, 2023 and 2022:

Intermodal Segment Information

(unaudited and in thousands)

Six Months Ended

2023 Percent of Revenue June 30,

2022 Percent of Revenue Change Percent Change

Operating revenue $ 152,420 100.0 % $ 196,851 100.0 % $ (44,431) (22.6) %

Operating expenses:

Purchased transportation 37,923 24.9 51,831 26.3 (13,908) (26.8)

Salaries, wages and employee benefits 35,564 23.3 36,766 18.7 (1,202) (3.3)

Operating leases 15,030 9.9 14,467 7.3 563 3.9

Depreciation and amortization 9,552 6.3 7,326 3.7 2,226 30.4

Insurance and claims 5,164 3.4 4,398 2.2 766 17.4

Fuel expense 5,864 3.8 8,299 4.2 (2,435) (29.3)

Other operating expenses 27,808 18.2 47,369 24.1 (19,561) (41.3)

Total operating expenses 136,905 89.8 170,456 86.6 (33,551) (19.7)

Income from operations $ 15,515 10.2 % $ 26,395 13.4 % $ (10,880) (41.2) %

Intermodal Operating Statistics

Six Months Ended

2023 June 30,

2022 Percent Change

Drayage shipments 140,645 183,298 (23.3) %

Drayage revenue per shipment $ 999 $ 975 2.5 %

Operating Revenues

Intermodal operating revenues decreased $44,431, or 22.6%, to $152,420 for the six months ended June 30, 2023 from $196,851 for the six months ended June 30, 2022.

The decrease in operating revenues was primarily attributable to a 23.3% decrease in drayage shipments, partially offset by a 2.5% increase in drayage revenue per shipment as compared to the same period in 2022.

The decrease in drayage shipments was driven by a weaker freight environment and lower accessorial revenue to support customers for the six months ended June 30, 2023, as compared to the same period in 2022.

Purchased Transportation

Intermodal purchased transportation decreased $13,908, or 26.8%, to $37,923 for the six months ended June 30, 2023 from $51,831 for the six months ended June 30, 2022.

Purchased transportation was 24.9% of Intermodal operating revenues for the six months ended June 30, 2023 compared to 26.3% for the same period in 2022.

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

The decrease in purchased transportation was primarily due to fewer drayage shipments and the change in mix of freight capacity purchased from Lease Capacity Providers, third-party motor carriers and Company-employed drivers compared to the same period in 2022.

Salaries, Wages, and Employee Benefits

Intermodal salaries, wages and employee benefits decreased $1,202, or 3.3%, to $35,564 for the six months ended June 30, 2023 compared to $36,766 for the six months ended June 30, 2022.

Salaries, wages and employee benefits were 23.3% of Intermodal operating revenues for the six months ended June 30, 2023 compared to 18.7% for the same period in 2022.

Operating Leases

Intermodal operating leases increased $563, or 3.9%, to $15,030 for the six months ended June 30, 2023 from $14,467 for the six months ended June 30, 2022.

Operating leases were 9.9% of Intermodal operating revenues for the six months ended June 30, 2023 compared to 7.3% for the same period in 2022.

The increase in operating leases expense was primarily due to higher facility expense for the the six months ended June 30, 2023 as compared to the same period in 2022.

Depreciation and Amortization

Intermodal depreciation and amortization increased $2,226, or 30.4%, to $9,552 for the six months ended June 30, 2023 from $7,326 for the six months ended June 30, 2022.

Depreciation and amortization was 6.3% of Intermodal operating revenues for the six months ended June 30, 2023 compared to 3.7% for the same period in 2022 .

Insurance and Claims

Intermodal insurance and claims increased $766, or 17.4%, to $5,164 for the six months ended June 30, 2023 from $4,398 for the six months ended June 30, 2022.

Insurance and claims were 3.4% of Intermodal operating revenues for the six months ended June 30, 2023 compared to 2.2% for the same period in 2022.

The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims and equipment repairs for the six months ended June 30, 2023 as compared to the same period in 2022.

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

Intermodal fuel expense decreased $2,435, or 29.3%, to $5,864 for the six months ended June 30, 2023 from $8,299 for the six months ended June 30, 2022.

Fuel expense was 3.8% of Intermodal operating revenues for the six months ended June 30, 2023 compared to 4.2% for the same period in 2022.

Intermodal fuel expense decreased due to fewer miles driven by Company-employed drivers and a decrease in the average price of fuel for the six months ended June 30, 2023 as compared to the same period in 2022.

Other Operating Expenses

Intermodal other operating expenses decreased $19,561, or 41.3%, to $27,808 for the six months ended June 30, 2023 compared to $47,369 for the six months ended June 30, 2022.

Other operating expenses were 18.2% of Intermodal operating revenues for the six months ended June 30, 2023 compared to 24.1% from the same period in 2022.

Other operating expenses include equipment maintenance, facility expenses, legal and professional fees, and accessorial storage costs.

The decrease in Intermodal other operating expenses was driven by lower accessorial storage costs incurred to support the decreased accessorial revenues, partially offset by higher contract labor and software license fees for the six months ended June 30, 2023 as compared to the same period in 2022.

Income from Operations

Intermodal income from operations decreased by $10,880, or 41.2%, to $15,515 for the six months ended June 30, 2023 compared to $26,395 for the six months ended June 30, 2022.

Income from operations was 10.2% of Intermodal operating revenue for the six months ended June 30, 2023 compared to 13.4% for the same period in 2022.

The decrease in income from operations as a percentage of operating revenues was driven by decreased drayage shipments and change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and Company-employed drivers.

Other Operations - Six Months Ended June 30, 2023 compared to Six Months Ended June 30, 2022

Other operations included $1,258 operating income during the six months ended June 30, 2023 compared to a $4,286 operating loss during the six months ended June 30, 2022 .

The change in other operating income was primarily driven the 2022 reversal of an accrual for an incentive program established for certain employees in 2021, a decrease in the reserves for vehicle liability claims, legal reserves and bad debt expense related to other receivables, partially offset by professional fees incurred for nonrecurring strategic initiatives, an increase in a reserve for group health insurance claims and workers compensation claims.

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

Critical Accounting Policies

9 unchanged sentences

We believe that borrowings under our 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 the first quarter of 2023, we completed a business acquisition.

In the first half of 2023, we completed a business acquisition.

See Note 3, Acquisitions, in the Notes to the Condensed Consolidated Financial Statements for further discussion on this topic.

7 unchanged sentences

with the remaining unpaid principal being due on July 20, 2026.

As of March 31, 2023, we were in compliance with our financial convents contained in the credit facility and expect to maintain such compliance.

As of June 30, 2023, we were in compliance with our financial convents contained in the 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 6, Indebtedness, to our Condensed Consolidated Financial Statements for additional information regarding our credit facility.

Net cash provided by operating activities was $65,993 for the three months ended March 31, 2023 compared to $62,486 for the three months ended March 31, 2022.

The increase in net cash provided by operating activities was primarily due to the decrease in accounts receivable, partially offset by the decrease in accounts payable and accrued expenses and net income from operations after consideration of non-cash items.

Net cash used in investing activities was $61,541 for the three months ended March 31, 2023 compared to $9,397 for the three months ended March 31, 2022.

Capital expenditures for the first three months of 2023 were $6,789, which primarily related to the purchase of equipment.

Capital expenditures for the first three months of 2022 were $9,908, which primarily related to the organic investment in the expansion of our national hub in Columbus, Ohio and for the purchase of equipment.

Investing activities for the first three months of 2023 included the acquisition of Land Air Express, Inc.

Net cash provided by operating activities was $129,566 for the six months ended June 30, 2023 compared to $112,820 for the six months ended June 30, 2022.

The increase in net cash provided by operating activities was primarily due to the change in accounts receivable, partially offset by the change in accounts payable and accrued expenses and, the decrease in net income from operations after consideration of non-cash items.

The accounts receivable balance changed due to the decrease in operating revenues and a higher amount of cash collected in 2023.

Net cash used in investing activities was $71,107 for the six months ended June 30, 2023 compared to $58,339 for the six months ended June 30, 2022.

Capital expenditures for the first six months of 2023 were $17,575, which primarily related to the purchase of technology and operating equipment.

Capital expenditures for the first six months of 2022 were $18,673, which primarily related to the investment in the expansion of our national hub in Columbus, Ohio and the purchase of operating equipment.

Investing activities for the first six months of 2023 included the acquisition of Land Air Express, Inc.

for a preliminary purchase price of $56,567.

Net cash used in financing activities was $18,246 for the three months ended March 31, 2023 compared to $28,775 for the three months ended March 31, 2022.

The change in the net cash used in financing activities was primarily due to proceeds from the revolving credit facility, partially offset by the increase in repurchases and retirement of common stock for the first three months of 2023 as compared to the same period in 2022.

While investing activities for the first six months of 2022 included the acquisition of Edgmon Trucking, LLC for a preliminary purchase price of $40,433.

Net cash used in financing activities was $86,000 for the six months ended June 30, 2023 compared to $44,411 for the six months ended June 30, 2022.

The change in the net cash used in financing activities was primarily due to the net proceeds from the credit facility, partially offset by the increase in repurchases and retirement of common stock for the first six months of 2023 as compared to the same period in 2022.

During the first six months of 2023 , net proceeds from the credit facility were $14,250 as compared to during the first six months of 2022 payments on the credit facility were $8,250.

Share Repurchase Program

During the three months ended March 31, 2023 and 2022, we repurchased 474 and 176 shares of our common stock, respectively, for approximately $50,491 and $17,780, respectively, through open market transactions.

During the six months ended June 30, 2023 and 2022, we repurchased 759 and 176 shares of our common stock, respectively, for approximately $79,792 and $17,780, 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.

27 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis