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 provider of transportation services, including LTL, truckload, final mile and intermodal drayage services across the United States and in Canada and Mexico. 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 services. Expedited Freight also offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling. We plan to grow our LTL and final mile geographic footprints through greenfield start-ups as well as through 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 CFS warehouse and handling services, and in select locations, linehaul and LTL services. We plan to grow our Intermodal geographic footprint through acquisitions as well as greenfield start-ups where no suitable acquisition is available.
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 focus on creating synergies across our services, particularly with services offered in our Expedited Freight reportable segment. Synergistic opportunities include the ability to share resources, in particular our fleet resources.
We monitor and analyze a number of key operating statistics in order to manage our business and evaluate our financial and operating performance. These key operating statistics are defined below and are referred to throughout the discussion of the financial results of our Expedited Freight and Intermodal reportable segments. Our key operating statistics should not be interpreted as better measurements of our results than income from operations as determined under U.S. generally accepted accounting principles.
Within our Expedited Freight reportable segment, our primary revenue focus is to increase density, which is shipment and tonnage growth within our existing LTL network. Increases in density allow us to maximize our asset utilization and labor productivity, which we measure over many different functional areas of our operations including linehaul load factor, pickup and delivery (“P&D”) stops per hour, P&D shipments per hour and door pounds handled per hour. In addition to our focus on density and operating efficiencies, it is critical for us to obtain an appropriate yield, which is measured as revenue per hundredweight, on the shipments we handle to offset our cost inflation and support our ongoing investments in capacity and technology. Revenue per hundredweight is also a commonly-used indicator for general pricing trends in the LTL industry and can be influenced by many other factors, such as changes in fuel surcharges, weight per shipment and length of haul. Therefore, changes in revenue per hundredweight may not necessarily indicate actual changes in underlying base rates. We regularly monitor the components of our pricing, including base freight rates, accessorial charges and fuel surcharges. The fuel surcharge is generally designed to offset fluctuations in the cost of the petroleum-based products used in our operations and is indexed to diesel fuel prices published by the U.S. Department of Energy. The impact of fuel on our results of operations depends on the relationship between the applicable surcharge, the fuel efficiency of our Company drivers, and the load factor achieved by our operation. Fluctuations in fuel prices in either direction could have a positive or negative impact on our margins, particularly in our LTL business where the weight of a shipment subject to the fuel surcharge on a given trailer can vary materially. We believe our yield management process focused on account level profitability, and ongoing improvements in operating efficiencies, are both key components of our ability to grow profitably.
The key operating statistics necessary to understand the operating results of our Expedited Freight reportable segment are described below in more detail:
Tonnage - Total weight of shipments in pounds. The level of freight tonnage is affected by economic cycles and conditions, customers’ business cycles, changes in customers’ business practices and capacity in the truckload market.
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Weight Per Shipment - Total pounds divided by the number of shipments. Fluctuations in weight per shipment can indicate changes in the mix of freight we receive from our customers, as well as changes in the number of units included in a shipment. Generally, increases in weight per shipment indicate higher demand and overall increased economic activity. Changes in weight per shipment can also be influenced by shifts between LTL and other modes of transportation, such as truckload, in response to capacity, service and pricing issues. Fluctuations in weight per shipment generally have an inverse effect on our revenue per hundredweight, as a decrease in weight per shipment will typically cause an increase in revenue per hundredweight.
Revenue Per Hundredweight - Network revenue per every 100 pounds of shipment weight. Our LTL transportation services are generally priced based on weight, commodity, and distance. Our pricing policies are reflective of the services we provide, and can be influenced by competitive market conditions. Changes in the freight profile factors such as average shipment size, average length of haul, freight density, and customer and geographic mix can impact the revenue per hundredweight. Fuel surcharges and intercompany revenue between Network and Truckload are included in this measurement.
Revenue Per Shipment - Network revenue divided by the number of shipments. Fuel surcharges and intercompany revenue between Network and Truckload are included in this measurement.
Average Length of Haul - Total miles between origin and destination service centers for all shipments, with miles based on the size of shipments. Length of haul is used to analyze our tonnage and pricing trends for shipments with similar characteristics. Changes in length of haul generally have a direct effect on our revenue per hundredweight, as an increase in length of haul will typically cause an increase in revenue per hundredweight.
Within our Intermodal reportable segment, our primary revenue focus is to increase the number of shipments. The key operating statistic necessary to understand the operating results of our Intermodal reportable segment is described below in more detail:
Drayage Revenue Per Shipment - Intermodal revenue divided by the number of drayage shipments. Revenue derived from container freight station warehouse and handling, and linehaul and LTL services is excluded from this measurement. Fuel surcharges and accessorial charges are included in this measurement.
Trends and Developments
Expedited Freight Acquisition
In January 2023, we acquired certain assets of Land Air Express, Inc. (“Land Air”) for $56,567. Land Air, headquartered in Bowling Green, Kentucky, offers a variety of less-than-truckload services including guaranteed, standard, exclusive, same day, hot shot and pickup and delivery, and operates in over 25 terminals across the United States. The acquisition of Land Air will accelerate the expansion of our national terminal footprint, particularly in the middle part of the United States, and it will strategically position us to better meet the current and future needs of customers.The acquisition was funded using cash flow from operations and proceeds from our credit facility. The results of Land Air have been included in our Condensed Consolidated Financial Statements as of and from the date of acquisition. The associated goodwill has been included in our Expedited Freight reportable segment.
Fuel
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. Through our fuel surcharge programs, we have been able to mitigate the impact of fluctuations in fuel prices. Our fuel surcharge rates are set weekly based on the national average for fuel prices as published by the U.S. Department of Energy and our fuel surcharge table. In periods of changing fuel prices, our fuel surcharges vary by different degrees and may not fully offset fuel price fluctuations or may result in higher than expected increases in revenue. 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 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.
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Economy
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. and global macroeconomic developments. During economic downturns, reductions in overall demand for transportation services will likely reduce demand for our services and exert downward pressures on our rates and margins. In periods of strong economic growth, overall demand may exceed the available supply of transportation resources. While this may present an opportunity to increase economies of scale in our network and enhanced pricing and margins, these benefits may be lessened by increased network congestion and operating inefficiencies.
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, 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. 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.
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Results from Operations
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
June 30,
2023 June 30,
2022 Change Percent Change
Operating revenues:
Expedited Freight $ 337,996 $ 408,857 $ (70,861) (17.3) %
Intermodal 64,251 106,411 (42,160) (39.6)
Eliminations and other operations (65) (49) (16) 32.7
Operating revenues 402,182 515,219 (113,037) (21.9)
Operating expenses:
Purchased transportation 181,643 239,490 (57,847) (24.2)
Salaries, wages, and employee benefits 86,686 86,358 328 0.4
Operating leases 26,184 23,459 2,725 11.6
Depreciation and amortization 14,513 11,595 2,918 25.2
Insurance and claims 13,360 13,196 164 1.2
Fuel expense 5,274 8,314 (3,040) (36.6)
Other operating expenses 44,311 57,262 (12,951) (22.6)
Total operating expenses 371,971 439,674 (67,703) (15.4)
Income (loss) from operations:
Expedited Freight 30,949 63,107 (32,158) (51.0)
Intermodal 4,312 15,249 (10,937) (71.7)
Other Operations (5,050) (2,811) (2,239) 79.7
Income from operations 30,211 75,545 (45,334) (60.0)
Other expense:
Interest expense, net (2,585) (1,193) (1,392) 116.7
Total other expense (2,585) (1,193) (1,392) 116.7
Income from operations before income taxes 27,626 74,352 (46,726) (62.8)
Income tax expense 7,675 18,922 (11,247) (59.4)
Net income and comprehensive income $ 19,951 $ 55,430 $ (35,479) (64.0) %
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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 $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 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 $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 $2,585 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.
Income Taxes
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.
Net Income
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.
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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
June 30,
2023 Percent of Revenue June 30,
2022 Percent of Revenue Change Percent Change
Operating revenues:
Network 1
$ 205,762 60.9 % $ 251,872 61.6 % $ (46,110) (18.3) %
Truckload 40,432 12.0 60,144 14.7 (19,712) (32.8)
Final Mile 68,560 20.3 73,028 17.9 (4,468) (6.1)
Other 23,242 6.9 23,813 5.8 (571) (2.4)
Total operating revenues 337,996 100.0 408,857 100.0 (70,861) (17.3)
Operating expenses:
Purchased transportation 163,798 48.5 212,575 52.0 (48,777) (22.9)
Salaries, wages and employee benefits 70,360 20.8 69,497 17.0 863 1.2
Operating leases 19,489 5.8 15,933 3.9 3,556 22.3
Depreciation and amortization 9,707 2.9 7,817 1.9 1,890 24.2
Insurance and claims 10,703 3.2 8,311 2.0 2,392 28.8
Fuel expense 2,583 0.8 3,229 0.8 (646) (20.0)
Other operating expenses 30,407 9.0 28,388 7.0 2,019 7.1
Total operating expenses 307,047 90.8 345,750 84.6 (38,703) (11.2)
Income from operations $ 30,949 9.2 % $ 63,107 15.4 % $ (32,158) (51.0) %
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
June 30,
2023 June 30,
2022 Percent Change
Business days 64 64 — %
Tonnage 1,2
Total pounds 673,878 730,128 (7.7)
Pounds per day 10,529 11,408 (7.7)
Shipments 1,2
Total shipments 842 961 (12.4)
Shipments per day 13.2 15.0 (12.0)
Weight per shipment 801 760 5.4
Revenue per hundredweight 3
$ 30.79 $ 34.75 (11.4)
Revenue per hundredweight, ex fuel 3
$ 24.08 $ 25.89 (7.0)
Revenue per shipment 3
$ 246.59 $ 264.09 (6.6)
Revenue per shipment, ex fuel 3
$ 192.85 $ 196.78 (2.0)
1 In thousands
2 Excludes accessorial, Truckload and Final Mile products
3 Includes intercompany revenue between the Network and Truckload revenue streams
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Operating Revenues
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 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 $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, 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 $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 $3,556, 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 $1,890, 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 $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.
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Fuel Expense
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 $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 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 $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.
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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
June 30,
2023 Percent of Revenue June 30,
2022 Percent of Revenue Change Percent Change
Operating revenues $ 64,251 100.0 % $ 106,411 100.0 % $ (42,160) (39.6) %
Operating expenses:
Purchased transportation 17,909 27.9 26,963 25.3 (9,054) (33.6)
Salaries, wages and employee benefits 16,650 25.9 18,831 17.7 (2,181) (11.6)
Operating leases 6,695 10.4 7,526 7.1 (831) (11.0)
Depreciation and amortization 4,806 7.5 3,716 3.5 1,090 29.3
Insurance and claims 2,815 4.4 2,338 2.2 477 20.4
Fuel expense 2,691 4.2 5,084 4.8 (2,393) (47.1)
Other operating expenses 8,373 13.0 26,704 25.1 (18,331) (68.6)
Total operating expenses 59,939 93.3 91,162 85.7 (31,223) (34.3)
Income from operations $ 4,312 6.7 % $ 15,249 14.3 % $ (10,937) (71.7) %
Intermodal Operating Statistics
Three Months Ended
June 30,
2023 June 30,
2022 Percent Change
Drayage shipments 68,180 94,986 (28.2) %
Drayage revenue per shipment $ 853 $ 1,026 (16.9) %
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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 $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 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 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 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 $1,090, 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 $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.
Fuel Expense
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.
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Other Operating Expenses
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 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.
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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
June 30,
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) %
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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. 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.
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.
Income Taxes
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.
Net Income
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.
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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
June 30,
2023 Percent of Revenue June 30,
2022 Percent of Revenue Change Percent Change
Operating revenues:
Network 1
$ 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.
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Expedited Freight Operating Statistics
Six Months Ended
June 30,
2023 June 30,
2022 Percent Change
Business days 128 128 — %
Tonnage 1,2
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
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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. 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 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.
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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.
Fuel Expense
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.
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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
June 30,
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
June 30,
2023 June 30,
2022 Percent Change
Drayage shipments 140,645 183,298 (23.3) %
Drayage revenue per shipment $ 999 $ 975 2.5 %
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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. 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 $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 . 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 $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.
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Fuel Expense
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
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 conformity with U.S. generally accepted accounting principles (“GAAP ” ). The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and expenses during the reporting period. 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 the Condensed Consolidated Financial Statements is set forth in the Annual Report on Form 10-K for the year-ended December 31, 2022.
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Liquidity and Capital Resources
We have historically financed our working capital needs, including capital expenditures, with available cash, cash flows from operations and borrowings under our credit facility. 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 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. We used cash from operations and our credit facility to finance this transaction and to provide any necessary liquidity for current and future operations. In addition, we frequently utilize operating leases to acquire revenue equipment.
To further support liquidity and cash reserves, in December 2021, we entered into a third amendment to our credit facility, which increased the amount available for borrowing to $450,000, consisting of $300,000 revolving line of credit and a term loan of $150,000. The amendment establishes annual mandatory repayment of the principal amount of the term loan of: 1.0% per annum in 2022 and 2023; 2.5% per annum in 2024 and 2025; 5.0% per annum in 2026; with the remaining unpaid principal being due on July 20, 2026. 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.
Cash Flows
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. 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 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.
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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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance. Some forward-looking statements may be identified by use of such terms as “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or “expects.” In this Form 10-Q, forward-looking statements include, but are not limited to, any statements regarding any projections of earnings, revenues, other financial items or related accounting treatment, or cost reduction measures; any statements regarding future performance; any statements regarding the availability of cash; any statements regarding our ability to maintain compliance with the covenants of our credit facility; any statements of plans, strategies, and objectives of management for future operations; any statements regarding our yield management process and any improvements in operating efficiencies; any statements regarding fuel shortages, changes in fuel prices and volatility in fuel surcharge revenue, and the impact on our business; any statements regarding consumer demand and inventory levels, and the impact on air freight volumes; any statements regarding future insurance, claims and litigation and any associated estimates or projections; any statements regarding an increase in the cost of new equipment; any statements concerning proposed or intended, new services, developments or integration measures; any statements regarding our technology and information systems, including the effectiveness of each; any statements regarding competition, including our specific advantages, the capabilities of our segments, including the integration of services and our geographic location; any statement regarding our properties; any statements regarding intended expansion through acquisition or greenfield startups; any statements regarding future business, economic conditions or performance; any statement regarding certain tax and accounting matters, including the impact on our financial statements; any statement regarding the impact and implementation of disclosure control systems; and any statements of belief and any statements of assumptions underlying any of the foregoing.
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, our ability to manage our growth and ability to grow, in part, through acquisitions, while being able to successfully integrate such acquisitions, our ability to secure terminal facilities in desirable locations at reasonable rates, more limited liquidity than expected which limits our ability to make key investments, the creditworthiness of our customers and their ability to pay for services rendered, 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, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party motor carriers needed to serve our customers’ transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws, the cost of new equipment, the impact and efficacy of our disclosure controls and procedures, and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2022. 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.