Management’s Discussion and Analysis of Financial Condition and Results of Operations.
−Removed: 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.
+Added: We are a leading asset-light freight provider of transportation services, including LTL, truckload and intermodal drayage services and freight brokerage and supply chain services across North America, Europe, and Asia.
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.
−Removed: Our services are classified into two reportable segments:
−Removed: Expedited Freight and Intermodal.
+Added: Our services are classified into three reportable segments:
+Added: Expedited Freight, Intermodal and Omni Logistics.
Our Expedited Freight segment provides expedited regional, inter-regional and national LTL services.
−Removed: 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.
−Removed: We plan to grow our LTL and final mile geographic footprints through greenfield start-ups as well as through acquisitions.
+Added: Expedited Freight also offers customers local pick-up and delivery and other services including truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.
+Added: We plan to grow our LTL geographic footprint 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.
−Removed: Intermodal also offers dedicated contract and Container Freight Station warehouse and handling services, and in select locations, linehaul and LTL services.
−Removed: We plan to grow our Intermodal geographic footprint through acquisitions as well as greenfield start-ups where no suitable acquisition is available.
+Added: Intermodal also offers dedicated contract and CFS warehouse and handling services, and in select locations, linehaul and LTL services.
+Added: We plan to grow our Intermodal geographic footprint through acquisitions as well as through greenfield start-ups where no suitable acquisition is available.
+Added: Our Omni Logistics segment provides a full suite of global logistics services.
+Added: Services include air and ocean freight consolidation and forwarding, customs brokerage, warehousing and distribution, time-definite transportation services and other supply chain solutions.
Our operations, particularly our network of hubs and terminals, represent substantial fixed costs.
7 unchanged sentences
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.
−Removed: 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.
+Added: 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 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.
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Trends and Developments
−Removed: Expedited Freight Acquisitions
−Removed: In January 2023, we acquired certain assets of Land Air Express, Inc.
−Removed: (“Land Air”) for $56,567.
−Removed: 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.
−Removed: The acquisition of Land Air will accelerate the expansion of our national terminal footprint, particularly in the middle part of the United States, and is expected to 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.
−Removed: The results of Land Air have been included in our Condensed Consolidated Financial Statements as of and from the date of acquisition.
−Removed: The associated goodwill has been included in our Expedited Freight reportable segment.
−Removed: On August 10, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Omni Newco LLC (“Omni”) and certain other parties.
−Removed: Omni, headquartered in Dallas, Texas, is an asset-light, high-touch logistics and supply chain management company with customer relationships in high-growth end markets.
−Removed: Omni delivers domestic and international freight forwarding, fulfillment services, customs brokerage, distribution, and value-added services for time-sensitive freight to U.S.-based customers operating both domestically and internationally.
−Removed: The Merger Agreement provides that we, through a series of transactions involving the our direct and indirect subsidiaries (collectively with the other transactions contemplated by the Merger Agreement and the other Transaction Agreements referred to therein, the “Transactions”), will acquire Omni for a combination of (a) $150 million in cash and (b) (i) common equity consideration representing 5,135,008 shares of our outstanding common stock on an as-converted and as-exchanged basis (the “Common Equity Consideration”) and (ii) non-voting, convertible perpetual preferred equity consideration representing, if the Conversion Approval (as defined below) is obtained, an additional 10,615,418 shares of our common stock on an as-converted and as-exchanged basis (the “Convertible Preferred Equity Consideration”).
−Removed: The Common Equity Consideration will represent, as of the closing of the Transactions (the “Closing”) and before any Conversion Approval, 16.5% of our common stock, on a fully diluted, as-exchanged basis.
−Removed: Conversion Approval is obtained, the Common Equity Consideration and the Convertible Preferred Equity Consideration together will represent as of Closing 37.7% of our common stock on a fully diluted, as-converted and as-exchanged basis.
−Removed: Prior to the consummation of the Transactions, we will complete a restructuring, pursuant to which, among other things, we will contribute all of our operating assets to Clue Opco LLC, a newly formed subsidiary of us (“Opco”).
−Removed: After giving effect to the consummation of the Transactions, Opco will be structured as an umbrella partnership C corporation through which the existing direct and certain indirect equityholders of Omni (“Omni Holders”) will at Closing hold (i) a portion of the Common Equity Consideration in the form of units of Opco designated as “Class B Units” (“Opco Class B Units”) and corresponding Series B Preferred Units (as defined below) and (ii) a portion of the Convertible Preferred Equity Consideration in the form of units of Opco designated as “Series C-2 Preferred Units” (“Opco Series C-2 Preferred Units”).
−Removed: Following the Closing, we will operate its business through Opco, which will indirectly hold all of the assets and operations of us and Omni.
−Removed: Opco will be governed by an amended and restated limited liability company agreement of Opco (“Opco LLCA”) to be entered into at Closing.
−Removed: The portion of the transaction consideration payable to Omni Holders that is Common Equity Consideration will consist of (a) shares of our common stock and (b) Opco Class B Units and corresponding Series B Preferred Units that will be exchangeable at the option of the holders thereof into shares of our common stock pursuant to the Opco LLCA.
−Removed: The portion of the transaction consideration payable to the Omni Holders that is Convertible Preferred Equity Consideration will consist of (a) Series C Preferred Units that will automatically convert into shares of our common stock upon the receipt of the Conversion Approval and (b) Opco Series C-2 Preferred Units that will be economically equivalent to the Series C Preferred Units and will automatically convert into Opco Class B Units and corresponding Series B Preferred Units upon receipt of the Conversion Approval pursuant to the Opco LLCA.
−Removed: If the Conversion Approval is obtained, the Convertible Preferred Equity Consideration will convert into (i) the Company’s common stock and (ii) Opco Class B Units and corresponding Series B Preferred Units.
−Removed: In connection with the Transactions, we have agreed to use its reasonable best efforts to obtain the approval of its shareholders to, among other things, convert the Series C Preferred Units to our common stock in accordance with the listing rules of NASDAQ (the “Conversion Approval”) at the first annual meeting of our shareholders following the Closing.
−Removed: If we do not obtain the Conversion Approval at such annual meeting, then, so long as any Series C Preferred Units remain outstanding, we have agreed to continue to use its reasonable best efforts to obtain the Conversion Approval at each annual meeting of shareholders thereafter until the Conversion Approval is obtained.
−Removed: We, Opco, Omni Holders and certain other parties will enter into a tax receivable agreement (the “Tax Receivable Agreement”), which sets forth the agreement among the parties regarding the sharing of certain tax benefits realized by us as a result of the Transactions.
−Removed: Pursuant to the Tax Receivable Agreement, we will be generally obligated to pay certain Omni Holders 83.5% of (a) the total tax benefit that we realize as a result of increases in tax basis in Opco’s assets resulting from certain actual or deemed distributions and the future exchange of units of Opco for shares of securities of us (or cash) pursuant to the Opco LLCA, (b) certain pre-existing tax attributes of certain Omni Holders that are corporate entities for tax purposes, (c) the tax benefits that we realize from certain tax allocations that correspond to items of income or gain required to be recognized by certain Omni Holders, and (d) other tax benefits attributable to payments under the Tax Receivable Agreement.
−Removed: The consummation of the Transactions is subject to customary closing conditions, including the expiration or termination of any waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and there not having occurred with respect to Omni’s business or our business a material adverse effect, subject to certain customary exceptions.
−Removed: All approvals required from the Omni Holders have been obtained.
−Removed: Neither the Conversion Approval nor the financing are conditions to Closing.
−Removed: On September 28, 2023, the waiting period expired under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to the Transactions.
+Added: Our business is highly susceptible to changes in economic conditions.
+Added: Our products and services are directly tied to the production and sale of goods and, more generally, to the global economy.
+Added: 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.
+Added: and global macroeconomic developments.
+Added: During economic downturns, reductions in overall demand for transportation services will likely reduce demand for our services and exert downward pressure on our rates and margins.
+Added: In periods of strong economic growth, overall demand may exceed the available supply of transportation resources.
+Added: 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.
+Added: Like other providers of freight transportation services, our business has been impacted by the macroeconomic conditions of the past year.
+Added: International trade is influenced by many factors, including economic and political conditions in the United States and abroad, currency exchange rates, laws and policies relating to tariffs, trade restrictions and foreign investment.
+Added: Periodically, governments consider a variety of changes to tariffs and impose trade restrictions.
+Added: We cannot predict the outcome of changes in tariffs, or interpretations, and trade restrictions and the effects they will have on our business.
+Added: Doing business in foreign locations also subjects us to a variety of risks and considerations not normally encountered by domestic enterprises.
+Added: In addition to being influenced by governmental policies, our business may also be negatively affected by political developments and changes in government personnel or policies in the United States and other countries, as well as economic turbulence, political unrest and security concerns in the nations and on the trade shipping lanes in which we conduct business and the future impact that these events may have on international trade.
+Added: Our ability to provide services to our customers is highly dependent on good working relationships with a variety of entities, including airlines, ocean carrier lines and ground transportation providers.
+Added: We consider our current working relationships with these entities to be satisfactory.
+Added: However, changes in the financial stability and operating capabilities and capacity of asset-based carriers, capacity allotments available from carriers could affect our business in unpredictable ways.
+Added: When the market experiences seasonal peaks or any sort of disruption, the carriers often increase their pricing suddenly.
+Added: This carrier behavior creates pricing volatility that could impact our ability to maintain historical profitability.
+Added: The global economic and trade environments remain uncertain, including inflation remaining higher than historical levels, greater volatility in oil prices and high interest rates.
+Added: Starting in the second quarter of 2022 and continuing through most of 2023, we saw a slowdown in the global economy and a softening of customer demand resulting in declines in rates.
+Added: As demand remains soft, available transportation capacity continues to exceed demand.
+Added: These conditions could result in further declines in rates in 2024.
+Added: We also expect that pricing volatility will continue as carriers adapt to lower demand, changing fuel prices, security risks and react to governmental trade policies and other regulations.
We depend heavily upon the availability of adequate diesel fuel supplies, and recently, fuel availability and prices have fluctuated significantly.
−Removed: 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.
+Added: Fuel availability and prices can be impacted by factors beyond our control, such as natural or manmade 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.
3 unchanged sentences
Fuel shortages, changes in fuel prices, and the potential volatility in fuel surcharge revenue may impact our results of operations and overall profitability.
−Removed: Fuel surcharge revenue as a percentage of operating revenues decreased to 16.9% for t he quarter ended September 30, 2023 compared to 17.7% for the quarter ended September 30, 2022 as a result of changes in fuel prices.
−Removed: Our business is highly susceptible to changes in the economic conditions.
−Removed: Our products and services are directly tied to the production and sale of goods and, more generally, to the North American economy.
−Removed: 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.
−Removed: and global macroeconomic developments.
−Removed: 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.
−Removed: In periods of strong economic growth, overall demand may exceed the available supply of transportation resources.
−Removed: 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.
−Removed: Like other providers of freight transportation services, our business has been impacted by the macroeconomic conditions of the past year.
−Removed: Industry freight volumes, as measured by the Cass Freight Index, decreased in the third quarter of 2023 compared to the third quarter of 2022.
−Removed: Transportation rates continue to decline as carrier capacity during the third quarter of 2023 continued to exceed shipper demand in the United States.
−Removed: While recently elevated inventory levels have largely stabilized, shippers continue to closely monitor consumer spending and carefully manage inventory restocking activities.
−Removed: Consecutive quarters of weak consumer demand have nearly eliminated the challenges from port congestion and transportation equipment shortages.
−Removed: Despite the weak demand, new vessel deliveries continue to add capacity to the market, which suggests excess capacity may persist even though steamship lines continue to rationalize services by reducing capacity where possible.
−Removed: The air freight market has also seen an increase in capacity resulting from increased commercial flight activity to support elevated consumer travel.
−Removed: Air freight capacity, however, tighten slightly following the end of the peak summer travel season.
−Removed: For Intermodal, a key driver of volumes are imports into the United States, which have declined over several months due to inflation, customer demand and a shift of spending by consumers from goods to services.
−Removed: For Truckload, the capacity contraction has created a sustained market of depressed spot market truckload rates with minimal signs of improvement.
−Removed: These trends drove a decline in the volume of freight shipped by our customers and placed pressure on rates in an extended freight environment in the third quarter of 2023 and is expected to continue into the fourth quarter of 2023.
−Removed: Results from Operations
−Removed: The following table sets forth our consolidated financial data for the three months ended September 30, 2023 and 2022 (unaudited and in thousands):
−Removed: Three Months Ended
−Removed: September 30, 2023 September 30, 2022 Change Percent Change
−Removed: Operating revenues:
−Removed: Expedited Freight $ 351,346 $ 395,635 $ (44,289) (11.2) %
−Removed: Intermodal 62,183 114,421 (52,238) (45.7)
−Removed: Eliminations and other operations (82) (33) (49) 148.5
−Removed: Operating revenues 413,447 510,023 (96,576) (18.9)
−Removed: Operating expenses:
−Removed: Purchased transportation 190,766 229,326 (38,560) (16.8)
−Removed: Salaries, wages, and employee benefits 88,159 90,755 (2,596) (2.9)
−Removed: Operating leases 22,662 24,965 (2,303) (9.2)
−Removed: Depreciation and amortization 15,506 12,269 3,237 26.4
−Removed: Insurance and claims 13,626 12,093 1,533 12.7
−Removed: Fuel expense 5,917 6,772 (855) (12.6)
−Removed: Other operating expenses 61,318 62,178 (860) (1.4)
−Removed: Total operating expenses 397,954 438,358 (40,404) (9.2)
−Removed: Income (loss) from operations:
−Removed: Expedited Freight 36,351 56,304 (19,953) (35.4)
−Removed: Intermodal 4,744 16,610 (11,866) (71.4)
−Removed: Other Operations (25,602) (1,249) (24,353) 1,949.8
−Removed: Income from operations 15,493 71,665 (56,172) (78.4)
−Removed: Other expense:
−Removed: Interest expense, net (2,655) (1,544) (1,111) 72.0
−Removed: Total other expense (2,655) (1,544) (1,111) 72.0
−Removed: Income from operations before income taxes 12,838 70,121 (57,283) (81.7)
−Removed: Income tax expense 3,550 17,988 (14,438) (80.3)
−Removed: Net income and comprehensive income $ 9,288 $ 52,133 $ (42,845) (82.2) %
−Removed: Operating Revenues
−Removed: Operating revenues decreased $96,576, or 18.9%, to $413,447 for the three months ended September 30, 2023 compared to $510,023 for the three months ended September 30, 2022.
−Removed: The decrease was driven primarily by lower revenue from our Expedited Freight segment of $44,289 due to decreased Network and Truckload revenue, and from our Intermodal segment of $52,238.
−Removed: The results for our two reportable segments are discussed in detail in the following sections.
−Removed: Operating Expenses
−Removed: Operating expenses decreased $40,404, or 9.2%, to $397,954 for the three months ended September 30, 2023 compared to $438,358 for the three months ended September 30, 2022.
−Removed: The decrease was primarily driven by a decrease in purchased transportation expense of $38,560 and a decrease in salaries, wages, and employee benefits of $2,596 in both our Expedited Freight and Intermodal segments.
−Removed: 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.
−Removed: Purchased transportation expense primarily decreased due to fewer Network miles drive, Intermodal drayage shipments and Truckload loads moved over the same period in the prior year.
−Removed: In addition, we utilized fewer third-party motor carriers over the same period in the prior year combined with a lower third-party motor carrier cost per mile.
−Removed: Salaries, wages, and employee benefits decreased primarily due to a decrease in the reserve for incentive compensation, partially offset by an increase in the reserves for group health insurance claims over the same period in 2022.
−Removed: Income from Operations and Segment Operations
−Removed: Income from decreased $56,172, or 78.4%, to $15,493 for the three months ended September 30, 2023 compared to $71,665 for the three months ended September 30, 2022.
−Removed: The decrease was driven by a decrease in income from operations in our Other Operations of $24,353 and a decrease in our Expedited Freight segment of $19,953.
−Removed: Interest Expense
−Removed: Interest expense, net was $2,655 for the three months ended September 30, 2023 compared to $1,544 for the three months ended September 30, 2022.
−Removed: The increase in interest expense was due to a higher variable interest rate during the third quarter of 2023 on higher borrowings outstanding under the credit facility as compared to the same period in 2022.
−Removed: The weighted-average interest rate on the borrowings under our credit facility was 6.62% and 3.33% during the three months ended September 30, 2023 and 2022, respectively.
−Removed: The effective tax rate for the three months ended September 30, 2023 was 27.7% compared to 25.7% for the three months ended September 30, 2022.
−Removed: As a result of the foregoing factors, net income decreased $42,845, or 82.2%, to $9,288 for the three months ended September 30, 2023 compared to $52,133 for the three months ended September 30, 2022.
−Removed: Expedited Freight - Three Months Ended September 30, 2023 compared to Three Months Ended September 30, 2022
−Removed: The following table sets forth the financial data of our Expedited Freight segment for the three months ended September 30, 2023 and 2022 (unaudited and in thousands):
−Removed: Three Months Ended
−Removed: September 30, 2023 Percent of Revenue September 30, 2022 Percent of Revenue Change Percent Change
−Removed: Operating revenues:
−Removed: $ 216,977 61.8 % $ 240,482 60.8 % $ (23,505) (9.8) %
−Removed: Truckload 38,800 11.0 55,607 14.1 (16,807) (30.2)
−Removed: Final Mile 72,471 20.6 76,822 19.4 (4,351) (5.7)
−Removed: Other 23,098 6.6 22,724 5.7 374 1.6
−Removed: Total operating revenues 351,346 100.0 395,635 100.0 (44,289) (11.2)
−Removed: Operating expenses:
−Removed: Purchased transportation 171,910 48.9 200,783 50.7 (28,873) (14.4)
−Removed: Salaries, wages and employee benefits 69,468 19.8 71,543 18.1 (2,075) (2.9)
−Removed: Operating leases 17,518 5.0 15,819 4.0 1,699 10.7
−Removed: Depreciation and amortization 10,319 2.9 8,140 2.1 2,179 26.8
−Removed: Insurance and claims 10,190 2.9 9,196 2.3 994 10.8
−Removed: Fuel expense 3,026 0.9 2,873 0.7 153 5.3
−Removed: Other operating expenses 32,564 9.3 30,977 7.8 1,587 5.1
−Removed: Total operating expenses 314,995 89.7 339,331 85.8 (24,336) (7.2)
−Removed: Income from operations $ 36,351 10.3 % $ 56,304 14.2 % $ (19,953) (35.4) %
−Removed: 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.
−Removed: Expedited Freight Operating Statistics
−Removed: Three Months Ended
−Removed: September 30, 2023 September 30, 2022 Percent Change
−Removed: Business days 63 64 (1.6) %
−Removed: Total pounds 685,756 698,004 (1.8)
−Removed: Pounds per day 10,885 10,906 (0.2)
−Removed: Shipments 1,2
−Removed: Total shipments 835 916 (8.8)
−Removed: Shipments per day 13.3 14.3 (7.0)
−Removed: Weight per shipment 821 762 7.7
−Removed: Revenue per hundredweight 3
−Removed: $ 31.66 $ 34.70 (8.8)
−Removed: Revenue per hundredweight, ex fuel 3
−Removed: $ 24.20 $ 26.05 (7.1)
−Removed: Revenue per shipment 3
−Removed: $ 259.94 $ 264.30 (1.6)
−Removed: Revenue per shipment, ex fuel 3
−Removed: $ 198.71 $ 198.39 0.2
−Removed: 1 In thousands
−Removed: 2 Excludes accessorial, Truckload and Final Mile products
−Removed: 3 Includes intercompany revenue between the Network and Truckload revenue streams
−Removed: Operating Revenues
−Removed: Expedited Freight operating revenues decreased $44,289, or 11.2%, to $351,346 for the three months ended September 30, 2023 from $395,635 for the three months ended September 30, 2022.
−Removed: The decrease was driven by decreased Network, Truckload, and Final Mile revenue.
−Removed: Network revenue decreased due to a 1.8% decrease in tonnage and 7.1% decrease in revenue per hundredweight ex fuel as compared to the same period in 2022.
−Removed: The decrease in tonnage reflects an increase in weight per shipment of 7.7% on 8.8% fewer shipments.
−Removed: 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.
−Removed: Fuel surcharge revenue decreased $9,270, or 15.3% as a result of the decline in the average price of fuel and a decrease in tonnage in the Network.
−Removed: Truckload and Final Mile revenue decreased $16,807 and $4,351, respectively, primarily due to challenged market demand for our services driven by an extended weak freight environment.
−Removed: Other revenue, which includes accessorial revenue, warehousing and terminal handling, increased $374.
−Removed: Purchased Transportation
−Removed: Expedited Freight purchased transportation decreased $28,873, or 14.4%, to $171,910 for the three months ended September 30, 2023 from $200,783 for the three months ended September 30, 2022.
−Removed: Purchased transportation was 48.9% of Expedited Freight operating revenues for the three months ended September 30, 2023 compared to 50.7% for the same period in 2022.
−Removed: 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.
−Removed: 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.
−Removed: For the three months ended September 30, 2023, we purchased 62.4%, 32.5% and 5.1% of our freight capacity from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers, respectively.
−Removed: This compares to 68.3%, 28.1% and 3.6% in the same period in 2022.
−Removed: Salaries, Wages and Employee Benefits
−Removed: Expedited Freight salaries, wages and employee benefits decreased $2,075, or 2.9%, to $69,468 for the three months ended September 30, 2023 from $71,543 for the three months ended September 30, 2022.
−Removed: Salaries, wages and employee benefits were 19.8% of Expedited Freight operating revenues for the three months ended September 30, 2023 compared to 18.1% for the same period in 2022.
−Removed: The decrease in salaries, wages and employee benefits expense was primarily due to a decrease in the reserve for incentive compensation, partially offset by incremental Company drivers hired in the first half of 2023 and an increase in salaries and wages as compared to the same period in 2022.
−Removed: Operating Leases
−Removed: Expedited Freight operating leases increased $1,699, or 10.7%, to $17,518 for the three months ended September 30, 2023 from $15,819 for the three months ended September 30, 2022.
−Removed: Operating leases were 5.0% of Expedited Freight operating revenues for the three months ended September 30, 2023 compared to 4.0% for the same period in 2022.
−Removed: The increase in operating lease expense was primarily due to higher facility expense as a result of new locations added in the first half of 2023 and higher facility costs in the third quarter of 2023 as compared to the same period in 2022.
−Removed: Depreciation and Amortization
−Removed: Expedited Freight depreciation and amortization increased $2,179, or 26.8%, to $10,319 for the three months ended September 30, 2023 from $8,140 for the three months ended September 30, 2022.
−Removed: Depreciation and amortization was 2.9% of Expedited Freight operating revenues for the three months ended September 30, 2023 compared to 2.1% for the same period in 2022.
−Removed: The increase in depreciation and amortization expense was primarily due to an increase in equipment depreciation in the third quarter of 2023 as compared to the same period in 2022 as the result of purchasing and placing in service new equipment in 2023.
−Removed: Insurance and Claims
−Removed: Expedited Freight insurance and claims increased $994, or 10.8%, to $10,190 for the three months ended September 30, 2023 from $9,196 for the three months ended September 30, 2022.
−Removed: Insurance and claims was 2.9% of Expedited Freight operating revenues for the three months ended September 30, 2023 compared to 2.3% for the same period in 2022.
−Removed: The increase in insurance and claims expense was primarily due to an increase in equipment repair claims in the third quarter of 2023 as compared to the same period in 2022.
−Removed: See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.
−Removed: Expedited Freight fuel expense increased $153, or 5.3%, to $3,026 for the three months ended September 30, 2023 from $2,873 for the three months ended September 30, 2022.
−Removed: Fuel expense was 0.9% of Expedited Freight operating revenues for the three months ended September 30, 2023 compared to 0.7% and for the same period in 2022.
−Removed: Expedited Freight fuel expense increased due to additional miles driven by Company-employed drivers, partially offset by a decrease in the average price of fuel in the third quarter of 2023 as compared to the same period in 2022.
−Removed: Other Operating Expenses
−Removed: Expedited Freight other operating expenses increased $1,587, or 5.1%, to $32,564 for the three months ended September 30, 2023 from $30,977 for the three months ended September 30, 2022.
−Removed: Other operating expenses were 9.3% of Expedited Freight operating revenues for the three months ended September 30, 2023 compared to 7.8% for the same period in 2022.
−Removed: Other operating expenses include contract labor, equipment maintenance, facility expenses, legal and professional fees, and other over-the-road costs.
−Removed: The increase in other operating expenses was primarily driven by an increase in software license and subscription fees, professional fees, and bad debt expense, partially offset by a decrease in maintenance and repair expense, outside services, and contract labor in the third quarter of 2023 as compared to the same period in 2022.
−Removed: Income from Operations
−Removed: Expedited Freight income from operations decreased $19,953, or 35.4%, to $36,351 for the three months ended September 30, 2023 compared to $56,304 for the three months ended September 30, 2022.
−Removed: Income from operations was 10.3% of Expedited Freight operating revenues for the three months ended September 30, 2023 compared to 14.2% for the same period in 2022.
−Removed: 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.
−Removed: Intermodal - Three Months Ended September 30, 2023 compared to Three Months Ended September 30, 2022
−Removed: The following table sets forth the financial data of our Intermodal segment for the three months ended September 30, 2023 and 2022 (unaudited and in thousands):
+Added: Fuel surcharge revenue as a percentage of operating revenues decreased to 11.7% for the quarter ended March 31, 2024 compared to 18.0% for the quarter ended March 31, 2023 as a result of the inclusion of Omni in the results for the quarter ended March 31, 2024 .
+Added: Recent Events and Factors Affecting Comparability
+Added: Omni Acquisition
+Added: On January 25, 2024, we acquired Omni Newco, LLC (“Omni Logistics”) for a combination of (a) $100 million in cash and (b) (i) common equity consideration representing 5,135 shares of our common stock on an as-converted and as-exchanged basis and (ii) non-voting, convertible perpetual preferred equity consideration representing, if our shareholders approve, an additional 8,880 shares of our common stock on an as-exchanged basis (“Omni Acquisition”).
+Added: See Note 4, Acquisitions, to our Condensed Consolidated Financial Statements for more information about our acquisitions
+Added: Omni Logistics revenues and segment income from January 25, 2024 through March 31, 2024 are included in our condensed consolidated statements of comprehensive (loss) income for the three months ended March 31, 2024.
+Added: The changes in our results of operations for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 are partially driven by the inclusion of the results of operations of Omni Logistics.
+Added: The following table sets forth the financial data of our Omni Logistics segment for the three months ended March 31, 2024 (unaudited and in thousands):
Three Months Ended
−Removed: September 30, 2023 Percent of Revenue September 30, 2022 Percent of Revenue Change Percent Change
−Removed: Operating revenues $ 62,183 100.0 % $ 114,421 100.0 % $ (52,238) (45.7) %
+Added: March 31, 2024 Percent of Revenue
+Added: Operating revenue $ 224,838 100.0 %
Operating expenses:
7 unchanged sentences
Total operating expenses 253,423 112.7
−Removed: Income from operations $ 4,744 7.6 % $ 16,610 14.5 % $ (11,866) (71.4) %
−Removed: Intermodal Operating Statistics
−Removed: Three Months Ended
−Removed: September 30, 2023 September 30, 2022 Percent Change
−Removed: Drayage shipments 68,576 89,236 (23.2) %
−Removed: Drayage revenue per shipment $ 823 $ 1,203 (31.6) %
−Removed: Operating Revenues
−Removed: Intermodal operating revenues decreased $52,238, or 45.7%, to $62,183 for the three months ended September 30, 2023 from $114,421 for the three months ended September 30, 2022.
−Removed: The decrease in operating revenues was primarily due to a 23.2% decrease in drayage shipments and a decrease in drayage revenue per shipment of 31.6% as compared to the same period in 2022.
−Removed: The decrease in drayage shipments and lower accessorial revenues to support customers was primarily due to challenged market demand for our services driven by an extended weak freight environment in the third quarter of 2023 as compared to the same period in 2022.
−Removed: In addition, fuel surcharge revenue decreased $7,007, or 44.9%, as a result of the decline in the average price of fuel.
−Removed: Purchased Transportation
−Removed: Intermodal purchased transportation decreased $9,665, or 33.8%, to $18,945 for the three months ended September 30, 2023 from $28,610 for the three months ended September 30, 2022.
−Removed: Purchased transportation was 30.5% of Intermodal operating revenues for the three months ended September 30, 2023 compared to 25.0% for the same period in 2022.
−Removed: Intermodal purchased transportation includes Leased Capacity Providers and third-party motor carriers, while Company-employed drivers are included in salaries, wages and employee benefits.
−Removed: The decrease in purchased transportation 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 compared to the same period in 2022.
−Removed: Salaries, Wages and Employee Benefits
−Removed: Intermodal salaries, wages and employee benefits decreased $1,827, or 10.2%, to $16,118 for the three months ended September 30, 2023 compared to $17,945 for the three months ended September 30, 2022.
−Removed: Salaries, wages and employee benefits were 25.9% of Intermodal operating revenues for the three months ended September 30, 2023 compared to 15.7% for the same period in 2022.
−Removed: The decrease in salaries, wages and employee benefits expense was primarily due to a decreased reserve for incentive compensation and fewer Company-employed drivers in response to the lower volumes, partially offset by higher salaries and wages as compared to the same period in 2022.
−Removed: Operating Leases
−Removed: Intermodal operating leases decreased $4,002, or 43.8%, to $5,144 for the three months ended September 30, 2023 compared to $9,146 for the three months ended September 30, 2022.
−Removed: Operating leases were 8.3% of Intermodal operating revenues for the three months ended September 30, 2023 compared to 8.0% for the same period in 2022.
−Removed: The decrease in operating leases expense was primarily due to lower equipment lease expense incurred to support the decreased accessorial revenues in the third quarter of 2023 as compared to the same period in 2022.
−Removed: Depreciation and Amortization
−Removed: Intermodal depreciation and amortization increased $1,058, or 25.6%, to $5,187 for the three months ended September 30, 2023 from $4,129 for the three months ended September 30, 2022.
−Removed: Depreciation and amortization was 8.3% of Intermodal operating revenues for the three months ended September 30, 2023 compared to 3.6% for the same period in 2022 .
−Removed: 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.
−Removed: Insurance and Claims
−Removed: Intermodal insurance and claims increased $517, or 23.1%, to $2,758 for the three months ended September 30, 2023 from $2,241 for the three months ended September 30, 2022.
−Removed: Insurance and claims were 4.4% of Intermodal operating revenues for the three months ended September 30, 2023 compared to 2.0% for the same period in 2022.
−Removed: The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims and equipment repair claims during the third quarter of 2023 as compared to the same period in 2022.
−Removed: See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.
−Removed: Intermodal fuel expense decreased $1,007, or 25.8%, to $2,892 for the three months ended September 30, 2023 from $3,899 for the three months ended September 30, 2022.
−Removed: Fuel expense was 4.7% of Intermodal operating revenues for the three months ended September 30, 2023 compared to 3.4% for the same period in 2022.
−Removed: Intermodal fuel expense decreased due to fewer miles driven by Company-employed drivers and a decrease in the average price of fuel in the third quarter of 2023 as compared to the same period in 2022.
−Removed: Other Operating Expenses
−Removed: Intermodal other operating expenses decreased $25,446, or 79.9%, to $6,395 for the three months ended September 30, 2023 from $31,841 for the three months ended September 30, 2022.
−Removed: Other operating expenses were 10.3% of Intermodal operating revenues for the three months ended September 30, 2023 compared to 27.8% for the same period in 2022.
−Removed: Other operating expenses include contract labor, equipment maintenance, facility expenses, legal and professional fees, and accessorial storage costs.
−Removed: The decrease in other operating expenses was driven by lower accessorial storage costs incurred to support the decreased accessorial revenues, maintenance and repair expense, and professional fees, partially offset by higher software license and subscription fees in the third quarter of 2023 as compared to the same period in 2022.
−Removed: Income from Operations
−Removed: Intermodal income from operations decreased $11,866, or 71.4%, to $4,744 for the three months ended September 30, 2023 compared to $16,610 for the three months ended September 30, 2022.
−Removed: Income from operations was 7.6% of Intermodal operating revenues for the three months ended September 30, 2023 compared to 14.5% for the same period in 2022.
−Removed: The decrease in income from operations as a percentage of operating revenues was driven by lower drayage revenue per shipment on fewer drayage shipments, partially offset by the a change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers, and Company-employed drivers.
−Removed: Other Operations - Three Months Ended September 30, 2023 compared to Three Months Ended September 30, 2022
−Removed: Other operations included a $25,602 operating loss during the three months ended September 30, 2023 compared to an $1,249 operating loss during the three months ended September 30, 2022.
−Removed: The change in the operating loss was primarily driven by $22,371 of professional fees incurred for due diligence and transaction costs incurred in connection with the acquisition of Omni, an increase in the reserves for group health insurance claims, and an increase in the reserves for vehicle liability claims.
−Removed: The increase in the self-insurance reserves for vehicle liability claims was due to the unfavorable loss development factor of historical claims.
+Added: Loss from operations $ (28,585) (12.7) %
Results from Operations
−Removed: The following table sets forth our consolidated financial data for the nine months ended September 30, 2023 and 2022 (unaudited and in thousands):
−Removed: Nine Months Ended
−Removed: September 30, 2023 September 30, 2022 Change Percent Change
+Added: The following table sets forth our consolidated financial data for the three months ended March 31, 2024 and 2023 (unaudited and in thousands):
+Added: Three Months Ended
+Added: March 31, 2024 March 31, 2023 Change Percent Change
Operating revenues:
1 unchanged sentence
Intermodal 56,292 88,169 (31,877) (36.2)
+Added: Omni Logistics 224,838 — 224,838 —
Eliminations and other operations (12,612) (37) (12,575) 33,986.5
9 unchanged sentences
Total operating expenses 607,545 310,513 297,032 95.7
−Removed: Income (loss) from operations:
+Added: Income (loss) from continuing operations:
Expedited Freight 19,498 29,685 (10,187) (34.3)
Intermodal 3,586 11,203 (7,617) (68.0)
+Added: Omni Logistics (28,585) — (28,585) —
Other Operations (60,231) 6,308 (66,539) (1,054.8)
−Removed: Income from operations 96,213 204,561 (108,348) (53.0)
−Removed: Other expense:
+Added: (Loss) income from continuing operations (65,732) 47,196 (112,928) (239.3)
+Added: Other income and expenses:
Interest expense, net (40,753) (2,355) (38,398) 1,630.5
+Added: Foreign exchange loss (668) — (668) —
+Added: Other income, net 9 — 9 —
Total other expense (41,412) (2,355) (39,057) 1,658.5
−Removed: Income from operations before income taxes 88,618 201,040 (112,422) (55.9)
−Removed: Income tax expense 23,011 50,791 (27,780) (54.7)
−Removed: Net income and comprehensive income $ 65,607 $ 150,249 $ (84,642) (56.3) %
+Added: (Loss) income before income taxes (107,144) 44,841 (151,985) (338.9)
+Added: Income tax (benefit) expense (18,350) 10,937 (29,287) (267.8)
+Added: Net (loss) income from continuing operations (88,794) 33,904 (122,698) (361.9)
+Added: Income from discontinued operation, net of tax — 2,464 (2,464) (100.0)
+Added: Net (loss) income (88,794) 36,368 (125,162) (344.2)
+Added: Net loss attributable to noncontrolling interest (27,082) — (27,082) —
+Added: Net (loss) income attributable to Forward Air $ (61,712) $ 36,368 $ (98,080) (269.7) %
Operating Revenues
−Removed: Operating revenues decreased $249,508, or 16.7% to $1,242,695 for the nine months ended September 30, 2023 compared to $1,492,203 for the nine months ended September 30, 2022.
−Removed: The decrease was primarily driven by lower revenue from our Expedited Freight segment revenue of $152,807 due to decreased Network and Truckload revenue, and from our Intermodal segment of $96,669, The results for our two reportable segments are discussed in detail in the following sections.
+Added: Operating revenues increased $184,104, or 51.5%, to $541,813 for the three months ended March 31, 2024 compared to $357,709 for the three months ended March 31, 2023.
+Added: The increase was primarily due to the inclusion of $224,838 from the Omni Logistics segment and an increase in our Expedited Freight segment of $3,718 due to increased Network revenue, offset by a decrease from our Intermodal segment of $31,877.
+Added: The results for our reportable segments are discussed in detail in the following sections.
Operating Expenses
−Removed: Operating expenses decreased $141,160, or 11.0%, to $1,146,482 for the nine months ended September 30, 2023 compared to $1,287,642 for the nine months ended September 30, 2022.
−Removed: The decrease was primarily driven by an decrease in purchased transportation expense of $136,022 in both our Expedited Freight and Intermodal segments.
−Removed: 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.
−Removed: Purchased transportation expense primarily decreased due to fewer Network miles driven, Intermodal drayage shipments and Truckload loads moved over the same period in the prior year.
−Removed: In addition, we utilized fewer third-party motor carriers over the same period in the prior year combined with a lower third-party motor carrier cost per mile.
−Removed: Income from Operations and Segment Operations
−Removed: Income from operations decreased $108,348, or 53.0%, to $96,213 for the nine months ended September 30, 2023 compared to $204,561 for the nine months ended September 30, 2022.
−Removed: The decrease was primarily driven by a decrease in income from operations in our Expedited Freight segment of $66,793, in our Intermodal segment of $22,746, and in Other Operations of $18,809.
−Removed: Interest Expense
−Removed: Interest expense, net was $7,595 for the nine months ended September 30, 2023 compared to $3,521 for the nine months ended September 30, 2022.
−Removed: The increase in interest expense was due to higher variable interest rates during the nine months ended September 30, 2023 on higher borrowings outstanding under credit facility as compared to the same period in 2022.
−Removed: The weighted-average interest rate on the borrowings under our credit facility was 6.24% and 2.27% during the nine months ended September 30, 2023 and 2022, respectively.
−Removed: The effective tax rate for the nine months ended September 30, 2023 was 26.0% compared to a rate of 25.3% for the nine months ended September 30, 2022.
−Removed: As a result of the foregoing factors, net income decreased $84,642, or 56.3%, to $65,607 for the nine months ended September 30, 2023 compared to $150,249 for the nine months ended September 30, 2022.
−Removed: Expedited Freight - Nine Months Ended September 30, 2023 compared to Nine Months Ended September 30, 2022
−Removed: The following table sets forth the financial data of our Expedited Freight segment for the nine months ended September 30, 2023 and 2022:
−Removed: Expedited Freight Segment Information
−Removed: (unaudited and in thousands)
−Removed: Nine Months Ended
−Removed: September 30, 2023 Percent of Revenue September 30, 2022 Percent of Revenue Change Percent Change
+Added: Operating expenses increased $297,032, or 95.7%, to $607,545 for the three months ended March 31, 2024 compared to $310,513 for the three months ended March 31, 2023.
+Added: The increase was primarily due to the inclusion of the $253,423 of operating expenses from the Omni Logistics segment and a $13,905 increase in operating expenses from the Expedited Freight segment, partially offset by a $24,260 decrease in operating expenses from the Intermodal segment.
+Added: Purchased transportation expense is our largest expense which includes our independent contractor fleet owners and owner-operators, who lease their equipment to our motor carriers (“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.
+Added: Income from Continuing Operations and Segment Operations
+Added: Income from operations decreased $112,928, or 239.3%, to a $65,732 loss for the three months ended March 31, 2024 compared to a $47,196 of income for the three months ended March 31, 2023.
+Added: The decrease was primarily due to a decrease in Other Operations of $66,539, Omni Logistics segment of $28,585, Expedited Freight segment of $10,187, and Intermodal segment of $7,617.
+Added: Interest Expense, net
+Added: Interest expense, net was $40,753 for the three months ended March 31, 2024 compared to $2,355 for the three months ended March 31, 2023.
+Added: The increase in interest expense was primarily due to an increase in the average interest rate during the first quarter of 2024 on higher borrowings outstanding as compared to the same period in 2023.
+Added: In connection with the acquisition of Omni Logistics, the outstanding borrowings increased in the first quarter of 2024.
+Added: The weighted-average interest rate on the outstanding borrowings were 9.58% and 5.96% during the three months ended March 31, 2024 and 2023, respectively.
+Added: Income Taxes on a Continuing Basis
+Added: The effective tax rate for the three months ended March 31, 2024 was 17.1% compared to 24.3% for the three months ended March 31, 2023.
+Added: The effective tax rate varied from the statutory United States federal rate of 21% in the first quarter of 2024 primarily due to the effect of the noncontrolling interest, non-deductible executive compensation, excess tax benefits realized on share-based awards, partially offset by state income taxes, net of the federal benefit, and foreign taxes.
+Added: The effective tax rate varied from the statutory United States federal rate of 21% in the first quarter of 2023 primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards.
+Added: Income from Discontinued Operations, net of Tax
+Added: Income from discontinued operations, net of tax decreased $2,464 or 100% for the three months ended March 31, 2024.
+Added: The decrease was due to the sale of our Final Mile business in December 2023.
+Added: Net (Loss) Income
+Added: As a result of the foregoing factors, net income decreased $125,162, or 344.2%, to a $88,794 loss for the three months ended March 31, 2024 compared to $36,368 income for the three months ended March 31, 2023.
+Added: Expedited Freight - Three Months Ended March 31, 2024 compared to Three Months Ended March 31, 2023
+Added: The following table sets forth the financial data of our Expedited Freight segment for the three months ended March 31, 2024 and 2023 (unaudited and in thousands):
+Added: Three Months Ended
+Added: March 31, 2024 Percent of Revenue March 31, 2023 Percent of Revenue Change Percent Change
Operating revenues:
1 unchanged sentence
Truckload 37,055 13.6 41,744 15.5 (4,689) (11.2)
−Removed: Final Mile 210,388 20.5 215,608 18.3 (5,220) (2.4)
Other 21,747 7.9 21,902 8.1 (155) (0.7)
10 unchanged sentences
Income from operations $ 19,498 7.1 % $ 29,685 11.0 % $ (10,187) (34.3) %
−Removed: 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.
+Added: 1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial and Truckload revenue.
Expedited Freight Operating Statistics
−Removed: Nine Months Ended
−Removed: September 30, 2023 September 30, 2022 Percent Change
+Added: Three Months Ended
+Added: March 31, 2024 March 31, 2023 Percent Change
Business days 64 64 — %
14 unchanged sentences
1 In thousands
−Removed: 2 Excludes accessorial, Truckload and Final Mile products
+Added: 2 Excludes accessorial and Truckload products
3 Includes intercompany revenue between the Network and Truckload revenue streams
Operating Revenues
−Removed: Expedited Freight operating revenues decreased $152,807, or 12.9%, to $1,028,276 for the nine months ended September 30, 2023 from $1,181,083 for the nine months ended September 30, 2022.
−Removed: The decrease was driven by decreased Network, Truckload and Final Mile revenue.
−Removed: Network revenue decreased due to a 7.3% decrease in tonnage and 5.0% decrease in revenue per hundredweight ex fuel as compared to the same period in the prior year.
−Removed: The decrease in tonnage reflects an increase in weight per shipment of 3.0% on 9.9% fewer shipments.
−Removed: The decrease in tonnage is due to softer market demand for our services driven by an extended 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.
−Removed: Fuel surcharge revenue decreased $30,465, or 17.4% as a result of the decline in the average price of fuel and a decrease in tonnage in the Network.
−Removed: Truckload and Final Mile revenue decreased $50,683 and $5,220, primarily due to challenged market demand for our services driven by an extended weak freight environment.
−Removed: Other revenue, which includes accessorial revenue, warehousing and terminal handling, increased $480.
+Added: Expedited Freight operating revenues increased $3,718, or 1.4%, to $273,295 for the three months ended March 31, 2024 from $269,577 for the three months ended March 31, 2023.
+Added: The increase was primarily due to increased Network revenue, partially offset by decreased Truckload revenue.
+Added: Network revenue increased due to a 8.9% increase in pounds per day, offset by a 6.2% decrease in revenue per hundredweight excluding fuel as compared to the same period in 2023.
+Added: The increase in tonnage reflects an increase in weight per shipment of 7.4% on 1.4% more shipments per day.
+Added: The increase in shipments is due to higher demand for our services 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.
+Added: Fuel surcharge revenue increased $1,286, or 2.7% as a result of the increased tonnage in our Network, partially offset by a decline in the average price of fuel as compared to the same period in 2023.
+Added: Truckload revenue decreased $4,689, primarily due to challenged market conditions that led to decreased customer demand for our services.
+Added: Other revenue, which includes accessorial revenue, warehousing and terminal handling, decreased $155.
Purchased Transportation
−Removed: Expedited Freight purchased transportation decreased $112,444, or 18.3%, to $500,948 for the nine months ended September 30, 2023 from $613,392 for the nine months ended September 30, 2022.
−Removed: Purchased transportation was 48.7% of Expedited Freight operating revenue for the nine months ended September 30, 2023 compared to 51.9% for the same period in 2022.
+Added: Expedited Freight purchased transportation increased $2,566, or 2.0%, to $127,760 for the three months ended March 31, 2024 from $125,194 for the three months ended March 31, 2023.
+Added: Purchased transportation was 46.7% of Expedited Freight operating revenues for the three months ended March 31, 2024 compared to 46.4% for the same period in 2023.
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.
−Removed: The decrease in purchased transportation was primarily due to lower volumes in the 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.
−Removed: For the nine months ended September 30, 2023, we purchased 65.1%, 30.1% and 4.8% of our freight capacity from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers, respectively.
−Removed: This compares to 65.7%, 30.9% and 3.4% in the same period in 2022.
+Added: The increase in purchased transportation was primarily due to higher volumes in Network, 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.
+Added: For the three months ended March 31, 2024, 65.5%, 30.0% and 4.5% of our freight capacity was purchased from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers, respectively, for Network and Truckload.
+Added: This compares to 71.1%, 24.8% and 4.1%, respectively, in the same period in 2023.
Salaries, Wages and Employee Benefits
−Removed: Expedited Freight salaries, wages and employee benefits decreased $640, or 0.3%, to $208,619 for the nine months ended September 30, 2023 from $209,259 for the nine months ended September 30, 2022.
−Removed: Salaries, wages and employee benefits were 20.3% of Expedited Freight operating revenues for the nine months ended September 30, 2023 compared to 17.7% for the same period in 2022.
−Removed: The decrease in salaries, wages and employee benefits expense was primarily due to a decrease in the reserve for incentive compensation, partially offset by incremental Company drivers hired in the first half of 2023 and an increase in salaries and wages compared to the same period in 2022.
+Added: Expedited Freight salaries, wages and employee benefits increased $6,635, or 11.9%, to $62,553 for the three months ended March 31, 2024 from $55,918 for the three months ended March 31, 2023.
+Added: Salaries, wages and employee benefits were 22.9% of Expedited Freight operating revenues for the three months ended March 31, 2024 compared to 20.7% for the same period in 2023.
+Added: The increase in salaries, wages and employee benefits expense was primarily due to an increase in Company-employed drivers in response to the higher volumes, an increase in the reserve for incentive compensation and an increase in salaries and wages as compared to the same period in 2023.
Operating Leases
−Removed: Expedited Freight operating leases increased $8,437, or 17.8%, to $55,920 for the nine months ended September 30, 2023 from $47,483 for the nine months ended September 30, 2022.
−Removed: Operating leases were 5.4% of Expedited Freight operating revenues for the nine months ended September 30, 2023 compared to 4.0% for the same period in 2022.
−Removed: The increase in operating leases expense was primarily due to higher facility expense as a result of new locations added in the first half of 2023 and higher facility costs for the nine months ended September 30, 2023, as compared to the same period in 2022.
+Added: Expedited Freight operating leases decreased $756, or 4.8%, to $14,982 for the three months ended March 31, 2024 from $15,738 for the three months ended March 31, 2023.
+Added: Operating leases were 5.5% of Expedited Freight operating revenues for the three months ended March 31, 2024 compared to 5.8% for the same period in 2023.
+Added: The decrease in operating lease expense was primarily due to fewer equipment leases in the first quarter of 2024 as compared to the same period in 2023.
Depreciation and Amortization
−Removed: Expedited Freight depreciation and amortization increased $5,477, or 23.4%, to $28,915 for the nine months ended September 30, 2023 from $23,438 for the nine months ended September 30, 2022.
−Removed: Depreciation and amortization was 2.8% of Expedited Freight operating revenues for the nine months ended September 30, 2023 compared to 2.0% for the same period in 2022.
−Removed: The increase in depreciation and amortization expense was primarily due to an increase in equipment depreciation expense for the nine months ended September 30, 2023 as compared to the same period in 2022 as the result of purchasing and placing in service new equipment in 2023.
+Added: Expedited Freight depreciation and amortization increased $2,664, or 34.9%, to $10,290 for the three months ended March 31, 2024 from $7,626 for the three months ended March 31, 2023.
+Added: Depreciation and amortization was 3.8% of Expedited Freight operating revenues for the three months ended March 31, 2024 compared to 2.8% for the same period in 2023.
+Added: The increase in depreciation and amortization expense was primarily due to an increase in equipment depreciation in the first quarter of 2024 as compared to the same period in 2023 as the result of purchasing and placing in service new equipment in the second half of 2023 and 2024.
Insurance and Claims
−Removed: Expedited Freight insurance and claims increased $4,378, or 16.7%, to $30,636 for the nine months ended September 30, 2023 from $26,258 for the nine months ended September 30, 2022.
−Removed: Insurance and claims were 3.0% of Expedited Freight operating revenues for the nine months ended September 30, 2023 compared to 2.2% for the same period in 2022.
−Removed: The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims, equipment repair claims, and insurance premiums, partially offset by a decrease in cargo claims for the nine months ended September 30, 2023 as compared to the same period in 2022.
+Added: Expedited Freight insurance and claims increased $1,433, or 15.5%, to $10,652 for the three months ended March 31, 2024 from $9,219 for the three months ended March 31, 2023.
+Added: Insurance and claims was 3.9% of Expedited Freight operating revenues for the three months ended March 31, 2024 compared to 3.4% for the same period in 2023.
+Added: The increase in insurance and claims expense was primarily due to an increase in equipment repairs and vehicle liability claims in the first quarter of 2024 as compared to the same period in 2023.
See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.
−Removed: Expedited Freight fuel expense decreased $532, or 6.1%, to $8,220 for the nine months ended September 30, 2023 from $8,752 for the nine months ended September 30, 2022.
−Removed: Fuel expense was 0.8% of Expedited Freight operating revenues for the nine months ended September 30, 2023 compared to 0.7% for the same period in 2022.
−Removed: 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 for the nine months ended September 30, 2023 as compared to the same period in 2022.
+Added: Expedited Freight fuel expense increased $68, or 2.7%, to $2,581 for the three months ended March 31, 2024 from $2,513 for the three months ended March 31, 2023.
+Added: Fuel expense was 0.9% of Expedited Freight operating revenues for the three months ended March 31, 2024 compared to 0.9% and for the same period in 2023.
+Added: Expedited Freight fuel expense increased primarily due to additional miles driven by Company-employed drivers, partially offset by a decrease in the average price of fuel in the first quarter of 2024 as compared to the same period in 2023.
Other Operating Expenses
−Removed: Expedited Freight other operating expenses increased $9,310, or 10.9%, to $94,720 for the nine months ended September 30, 2023 from $85,410 for the nine months ended September 30, 2022.
−Removed: Other operating expenses were 9.2% of Expedited Freight operating revenues for the nine months ended September 30, 2023 compared to 7.2% for the same period in 2022.
+Added: Expedited Freight other operating expenses increased $1,295, or 5.5%, to $24,979 for the three months ended March 31, 2024 from $23,684 for the three months ended March 31, 2023.
+Added: Other operating expenses were 9.2% of Expedited Freight operating revenues for the three months ended March 31, 2024 compared to 9.0% for the same period in 2023.
Other operating expenses include contract labor, equipment maintenance, facility expenses, legal and professional fees, and other over-the-road costs.
−Removed: The increase in other operating expenses was primarily driven by an increase in contract labor, software license and subscription fees, professional fees, and bad debt expense, partially offset by a decrease in operating supplies and maintenance and repair expense for nine months ended September 30, 2023 as compared to the same period in 2022.
+Added: The increase in other operating expenses was primarily due to an increase in software license and subscription fees, partially offset by a decrease in maintenance and repair expense, professional fees, and contract labor in the first quarter of 2024 as compared to the same period in 2023.
Income from Operations
−Removed: Expedited Freight income from operations decreased $66,793, or 40.0%, to $100,298 for the nine months ended September 30, 2023 compared to $167,091 for the nine months ended September 30, 2022.
−Removed: Income from operations was 9.8% of Expedited Freight operating revenues for nine months ended September 30, 2023 compared to 14.1% for the same period in 2022.
−Removed: 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 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.
−Removed: Intermodal - Nine Months Ended September 30, 2023 compared to Nine Months Ended September 30, 2022
−Removed: The following table sets forth the financial data of our Intermodal segment for the nine months ended September 30, 2023 and 2022:
−Removed: Intermodal Segment Information
−Removed: (unaudited and in thousands)
−Removed: Nine Months Ended
−Removed: September 30, 2023 Percent of Revenue September 30, 2022 Percent of Revenue Change Percent Change
−Removed: Operating revenue $ 214,603 100.0 % $ 311,272 100.0 % $ (96,669) (31.1) %
+Added: Expedited Freight income from operations decreased $10,187, or 34.3%, to $19,498 for the three months ended March 31, 2024 compared to $29,685 for the three months ended March 31, 2023.
+Added: Income from operations was 7.1% of Expedited Freight operating revenues for the three months ended March 31, 2024 compared to 11.0% for the same period in 2023.
+Added: The decrease in income from operations as a percentage of operating revenues was driven by decreased revenue per hundredweight excluding fuel on increased tonnage, 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, and increased operating expenses for the three months ended March 31, 2024 compared to the same period in 2023.
+Added: Intermodal - Three Months Ended March 31, 2024 compared to Three Months Ended March 31, 2023
+Added: The following table sets forth the financial data of our Intermodal segment for the three months ended March 31, 2024 and 2023 (unaudited and in thousands):
+Added: Three Months Ended
+Added: March 31, 2024 Percent of Revenue March 31, 2023 Percent of Revenue Change Percent Change
+Added: Operating revenues $ 56,292 100.0 % $ 88,169 100.0 % $ (31,877) (36.2) %
Operating expenses:
9 unchanged sentences
Intermodal Operating Statistics
−Removed: Nine Months Ended
−Removed: September 30, 2023 September 30, 2022 Percent Change
+Added: Three Months Ended
+Added: March 31, 2024 March 31, 2023 Percent Change
Drayage shipments 62,659 72,465 (13.5) %
1 unchanged sentence
Operating Revenues
−Removed: Intermodal operating revenues decreased $96,669, or 31.1%, to $214,603 for the nine months ended September 30, 2023 from $311,272 for the nine months ended September 30, 2022.
+Added: Intermodal operating revenues decreased $31,877, or 36.2%, to $56,292 for the three months ended March 31, 2024 from $88,169 for the three months ended March 31, 2023.
The decrease in operating revenues was primarily due to a 13.5% decrease in drayage shipments and a decrease in drayage revenue per shipment of 27.6% as compared to the same period in 2023.
−Removed: The decrease in drayage shipments and lower accessorial revenue to support customers was primarily due to challenged market demand for our services driven by an extended weak freight environment for the nine months ended September 30, 2023 as compared to the same period in 2022.
−Removed: In addition, fuel surcharge revenue decreased $12,803 or 32.3% as a result of the decline in the average price of fuel.
+Added: The decrease in drayage shipments and lower accessorial revenues to support customers was primarily due to the challenged market conditions that led to decreased customer demand for our services in the first quarter of 2024 as compared to the same period in 2023.
+Added: In addition, fuel surcharge revenue decreased $2,135, or 21.4%, as a result of the decline in the average price of fuel and fewer drayage shipments.
Purchased Transportation
−Removed: Intermodal purchased transportation decreased $23,573, or 29.3%, to $56,868 for the nine months ended September 30, 2023 from $80,441 for the nine months ended September 30, 2022.
−Removed: Purchased transportation was 26.5% of Intermodal operating revenues for the nine months ended September 30, 2023 compared to 25.8% for the same period in 2022.
+Added: Intermodal purchased transportation decreased $2,571, or 12.8%, to $17,443 for the three months ended March 31, 2024 from $20,014 for the three months ended March 31, 2023.
+Added: Purchased transportation was 31.0% of Intermodal operating revenues for the three months ended March 31, 2024 compared to 22.7% for the same period in 2023.
Intermodal purchased transportation includes Leased Capacity Providers and third-party motor carriers, while Company-employed drivers are included in salaries, wages and employee benefits.
−Removed: The decrease in purchased transportation was primarily due to fewer drayage shipments and the change in the mix of freight capacity purchased from Lease Capacity Providers, third-party motor carriers and Company-employed drivers compared to the same period in 2022.
+Added: The decrease in purchased transportation 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 compared to the same period in 2023.
Salaries, Wages and Employee Benefits
−Removed: Intermodal salaries, wages and employee benefits decreased $3,029, or 5.5%, to $51,682 for the nine months ended September 30, 2023 compared to $54,711 for the nine months ended September 30, 2022.
−Removed: Salaries, wages and employee benefits were 24.1% of Intermodal operating revenues for the nine months ended September 30, 2023 compared to 17.6% for the same period in 2022.
−Removed: The decrease in salaries, wages and employee benefits expense was primarily due to a decreased reserve for incentive compensation and fewer Company-employed drivers in response to the lower volumes, partially offset by higher salaries and wages as compared to the same period in 2022.
+Added: Intermodal salaries, wages and employee benefits decreased $3,832, or 20.3%, to $15,082 for the three months ended March 31, 2024 compared to $18,914 for the three months ended March 31, 2023.
+Added: Salaries, wages and employee benefits were 26.8% of Intermodal operating revenues for the three months ended March 31, 2024 compared to 21.5% for the same period in 2023.
+Added: The decrease in salaries, wages and employee benefits expense was primarily due to a decrease in the reserve for incentive compensation and fewer Company-employed drivers and office employees in response to the lower volumes, as compared to the same period in 2023.
Operating Leases
−Removed: Intermodal operating leases decreased $3,439, or 14.6%, to $20,174 for the nine months ended September 30, 2023 from $23,613 for the nine months ended September 30, 2022.
−Removed: Operating leases were 9.4% of Intermodal operating revenues for the nine months ended September 30, 2023 compared to 7.6% for the same period in 2022.
−Removed: The decrease in operating leases expense was primarily due to decreased equipment rental expense incurred to support the decreased accessorial revenues for the the nine months ended September 30, 2023 as compared to the same period in 2022.
+Added: Intermodal operating leases decreased $3,643, or 43.7%, to $4,692 for the three months ended March 31, 2024 compared to $8,335 for the three months ended March 31, 2023.
+Added: Operating leases were 8.3% of Intermodal operating revenues for the three months ended March 31, 2024 compared to 9.5% for the same period in 2023.
+Added: The decrease in operating leases expense was primarily due to lower equipment expense incurred to support decreased accessorial revenues in the first quarter of 2024 as compared to the same period in 2023.
Depreciation and Amortization
−Removed: Intermodal depreciation and amortization increased $3,284, or 28.7%, to $14,739 for the nine months ended September 30, 2023 from $11,455 for the nine months ended September 30, 2022.
−Removed: Depreciation and amortization was 6.9% of Intermodal operating revenues for the nine months ended September 30, 2023 compared to 3.7% for the same period in 2022 .
−Removed: 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.
+Added: Intermodal depreciation and amortization decreased $119, or 2.5%, to $4,627 for the three months ended March 31, 2024 from $4,746 for the three months ended March 31, 2023.
+Added: Depreciation and amortization was 8.2% of Intermodal operating revenues for the three months ended March 31, 2024 compared to 5.4% for the same period in 2023 .
+Added: The decrease in depreciation and amortization expense was primarily due to the lower amount of depreciable equipment in the first quarter of 2024 as compared to the same period in 2023.
Insurance and Claims
−Removed: Intermodal insurance and claims increased $1,283, or 19.3%, to $7,922 for the nine months ended September 30, 2023 from $6,639 for the nine months ended September 30, 2022.
−Removed: Insurance and claims were 3.7% of Intermodal operating revenues for the nine months ended September 30, 2023 compared to 2.1% for the same period in 2022.
−Removed: The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims and equipment repair claims for the nine months ended September 30, 2023 as compared to the same period in 2022.
+Added: Intermodal insurance and claims increased $257, or 10.9%, to $2,606 for the three months ended March 31, 2024 from $2,349 for the three months ended March 31, 2023.
+Added: Insurance and claims were 4.6% of Intermodal operating revenues for the three months ended March 31, 2024 compared to 2.7% for the same period in 2023.
+Added: The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims, partially offset by decreased equipment repairs in the first quarter of 2024 as compared to the same period in 2023.
See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations ” section below.
−Removed: Intermodal fuel expense decreased $3,442, or 28.2%, to $8,756 for the nine months ended September 30, 2023 from $12,198 for the nine months ended September 30, 2022.
−Removed: Fuel expense was 4.1% of Intermodal operating revenues for the nine months ended September 30, 2023 compared to 3.9% for the same period in 2022.
−Removed: Intermodal fuel expense decreased due to fewer miles driven by Company-employed drivers and a decrease in the average price of fuel for the nine months ended September 30, 2023 as compared to the same period in 2022.
+Added: Intermodal fuel expense decreased $812, or 25.6%, to $2,361 for the three months ended March 31, 2024 from $3,173 for the three months ended March 31, 2023.
+Added: Fuel expense was 4.2% of Intermodal operating revenues for the three months ended March 31, 2024 compared to 3.6% for the same period in 2023.
+Added: Intermodal fuel expense decreased due to fewer miles driven by Company-employed drivers and a decrease in the average price of fuel in the first quarter of 2024 as compared to the same period in 2023.
Other Operating Expenses
−Removed: Intermodal other operating expenses decreased $45,007, or 56.8%, to $34,203 for the nine months ended September 30, 2023 compared to $79,210 for the nine months ended September 30, 2022.
−Removed: Other operating expenses were 15.9% of Intermodal operating revenues for the nine months ended September 30, 2023 compared to 25.4% for the same period in 2022.
+Added: Intermodal other operating expenses decreased $13,540, or 69.7%, to $5,895 for the three months ended March 31, 2024 from $19,435 for the three months ended March 31, 2023.
+Added: Other operating expenses were 10.5% of Intermodal operating revenues for the three months ended March 31, 2024 compared to 21.9% for the same period in 2023.
Other operating expenses include contract labor, equipment maintenance, facility expenses, legal and professional fees, and accessorial storage costs.
−Removed: The decrease in other operating expenses was driven by lower accessorial storage costs incurred to support the decreased accessorial revenues, maintenance and repair expense, and professional fees, partially offset by higher contract labor and software license and subscription fees for the nine months ended September 30, 2023 as compared to the same period in 2022.
+Added: The decrease in other operating expenses was partially due to lower accessorial storage costs incurred as a result of decreased accessorial revenues, contract labor, maintenance and repairs expense and warehouse supplies in the first quarter of 2024 as compared to the same period in 2023.
Income from Operations
−Removed: Intermodal income from operations decreased by $22,746, or 52.9%, to $20,259 for the nine months ended September 30, 2023 compared to $43,005 for the nine months ended September 30, 2022.
−Removed: Income from operations was 9.4% of Intermodal operating revenue for the nine months ended September 30, 2023 compared to 13.8% for the same period in 2022.
−Removed: The decrease in income from operations as a percentage of operating revenues was driven by lower drayage revenue per shipment on fewer drayage shipments, partially offset by the change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers and Company-employed drivers.
−Removed: Other Operations - Nine Months Ended September 30, 2023 compared to Nine Months Ended September 30, 2022
−Removed: Other operations included a $24,344 operating loss during the nine months ended September 30, 2023 compared to a $5,535 operating loss during the nine months ended September 30, 2022.
−Removed: The change in the operating loss was primarily driven by $27,871 of professional fees incurred for due diligence and transaction costs incurred in connection with the acquisition of Omni, an increase in the reserves for group health insurance claims and an increase in the reserves for workers compensation claims, partially offset by the 2022 reversal of an accrual for an incentive program established for certain employees in 2021, and a decrease in the reserves for vehicle liability claims.
+Added: Intermodal income from operations decreased $7,617, or 68.0%, to $3,586 for the three months ended March 31, 2024 compared to $11,203 for the three months ended March 31, 2023.
+Added: Income from operations was 6.4% of Intermodal operating revenues for the three months ended March 31, 2024 compared to 12.7% for the same period in 2023.
+Added: The decrease in income from operations as a percentage of operating revenues was primarily due to lower drayage revenue per shipment on fewer drayage shipments, partially offset by the a change in mix of freight capacity purchased from Leased Capacity Providers, third-party motor carriers, and Company-employed drivers.
+Added: Other Operations - Three Months Ended March 31, 2024 compared to Three Months Ended March 31, 2023
+Added: Other operations included a $60,231 operating loss during the three months ended March 31, 2024 compared to $6,308 of operating income during the three months ended March 31, 2023.
+Added: The change in the operating loss was primarily due to $58,226 of professional fees incurred for transaction and integration costs in connection with the acquisition of Omni, partially offset by a decrease in the reserves for vehicle liability claims.
The decrease in the self-insurance reserves for vehicle liability claims was due to the favorable loss development factor of historical claims.
Critical Accounting Policies
−Removed: 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.
−Removed: generally accepted accounting principles (“GAAP ” ).
+Added: 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 United States 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.
5 unchanged sentences
We have historically financed our working capital needs, including capital expenditures, with available cash, cash flows from operations and borrowings under our credit facility.
−Removed: 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.
−Removed: In the first half of 2023, we completed a business acquisition.
−Removed: See Note 3, Acquisitions, in the Notes to the Condensed Consolidated Financial Statements for further discussion on this topic.
−Removed: We used cash from operations and our credit facility to finance this transaction and to provide any necessary liquidity for current and future operations.
+Added: In the first quarter of 2024, our credit facility was repaid and extinguished in tandem with the acquisition of Omni.
+Added: We believe that borrowings under our Revolving Credit Facility (defined below) and our New Term Loans (defined below), together with available cash and internally generated funds, will be sufficient to support our working capital, capital expenditures and debt service requirements over the next twelve months.
In addition, we frequently utilize operating leases to acquire revenue equipment.
−Removed: 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.
−Removed: The amendment establishes annual mandatory repayment of the principal amount of the term loan of:
−Removed: 1.0% per annum in 2022 and 2023;
−Removed: 2.5% per annum in 2024 and 2025;
−Removed: 5.0% per annum in 2026;
−Removed: with the remaining unpaid principal being due on July 20, 20 26.
−Removed: As of September 30, 2023, we were in compliance with our financial convents contained in the credit facility and expect to maintain such compliance.
−Removed: 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.
−Removed: Refer to Note 6, Indebtedness, to our Condensed Consolidated Financial Statements for additional information regarding our credit facility.
−Removed: Senior Secured Note s
−Removed: On September 20, 2023, we announced that, in connection with the Merger Agreement, the Escrow Issuer commenced a private offering of $725,000 aggregate principal amount of our 9.50% senior secured notes due 2031 (the “Notes”) in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) (the “Notes Offering”).
−Removed: On October 2, 2023, the Escrow Issuer closed its Notes Offering and the Notes were issued pursuant to an indenture (the “Indenture”), dated as of October 2, 2023, between the Escrow Issuer and U.S.
+Added: Senior Secured Notes
+Added: In order to finance a portion of the cash consideration payable for the Omni Acquisition and the costs and expenses incurred in connection therewith, GN Bondco, LLC, a Delaware limited liability company and wholly owned subsidiary of Omni Newco, LLC (the “Escrow Issuer” and consolidated VIE at December 31, 2023) launched a private offering of $725,000 aggregate principal amount of its 9.5% senior secured notes due 2031 (the “Notes”), in a transaction exempt from registration under the Securities Act.
+Added: Upon the closing of the Omni Acquisition, Clue Opco, LLC, a newly formed subsidiary, (“Opco”) assumed the Escrow Issuer’s obligations under the Notes.
+Added: The Notes bear interest at a rate of 9.5% per annum, payable semiannually in cash in arrears on April 15 and October 15 of each year, commencing April 15, 2024.
+Added: The Notes were issued at 98.0% of the face amount and will mature on October 15, 2031.
+Added: The Notes were issued pursuant to an indenture, dated as of October 2, 2023, between the Escrow Issuer and U.S.
Bank Trust Company, National Association, as trustee and notes collateral agent.
−Removed: In connection with the Merger Agreement, the Escrow Issuer would be merged with and into Opco, with Opco surviving the merger as a wholly owned subsidiary of us (the “Escrow Merger”).
−Removed: Upon consummation of the Escrow Merger, Opco would assume the obligations of the Escrow Issuer under the Notes and the Indenture and become the “Issuer” thereunder of executing a supplemental indenture to the Indenture.
−Removed: The Notes and the related future guarantees have not been, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
−Removed: Net cash provided by operating activities was $159,431 for the nine months ended September 30, 2023 compared to $196,814 for the nine months ended September 30, 2022.
−Removed: The decrease in net cash provided by operating activities was primarily due to the decrease in net income from operations after consideration of non-cash items, and the change in accounts payable and accrued expenses, partially offset by the change in accounts receivable.
−Removed: The accounts receivable balance changed due to the decrease in operating revenues and a higher amount of cash collected in 2023.
−Removed: Net cash used in investing activities was $76,846 for the nine months ended September 30, 2023 compared to $64,411 for the nine months ended September 30, 2022.
−Removed: Capital expenditures for the first nine months of 2023 were $23,418, which primarily related to the purchase of technology and operating equipment.
−Removed: Capital expenditures for the first nine months of 2022 were $25,401, which primarily related to the investment in the expansion of our national hub in Columbus, Ohio and the purchase of technology and operating equipment.
−Removed: Investing activities for the first nine months of 2023 included the acquisition of Land Air Express, Inc.
−Removed: for a preliminary purchase price of $56,567, while investing activities for the first nine months of 2022 included the acquisition of Edgmon Trucking, LLC for a preliminary purchase price of $40,433.
−Removed: Net cash used in financing activities was $109,564 for the nine months ended September 30, 2023 compared to $122,873 for the nine months ended September 30, 2022.
−Removed: 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 nine months of 2023 as compared to the same period in 2022.
−Removed: During the first nine months of 2023, net proceeds from the credit facility were $13,875 as compared to during the first nine months of 2022 payments on the credit facility were $48,625.
−Removed: Share Repurchase Program
−Removed: During the nine months ended September 30, 2023 and 2022, we repurchased 883 and 466 shares of our common stock, respectively, for approximately $93,811 and $47,774, respectively, through open market transactions.
+Added: The Notes are guaranteed on a senior secured basis in an aggregate principal amount in excess of $100,000.
+Added: Prior to October 15, 2026, Opco may redeem some or all of the Notes at any time and from time to time at a redemption price equal to 100.000% of the principal amount thereof plus the applicable “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
+Added: On or after October 15, 2026, Opco may redeem some or all of the Notes at the following prices (expressed as a percentage of principal), plus in each case accrued and unpaid interest, if any, to, but excluding, the redemption date:
+Added: (a) in the case of a redemption occurring during the 12-month period commencing October 15, 2026, at a redemption price of 104.750%;
+Added: (b) in the case of a redemption occurring during the 12-month period commencing on October 15, 2027, at a redemption price of 102.375%;
+Added: and (c) in the case of a redemption occurring on or after October 15, 2028, at a redemption price of 100.000%.
+Added: In addition, at any time prior to October 15, 2026, Opco may redeem up to 40.000% of the original aggregate principal amount of the Notes in an amount not to exceed the amount of net cash proceeds from one or more equity offerings at a redemption price equal to 109.5 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
+Added: Upon the occurrence of a “change of control”, Opco will be required to offer to repurchase all of the outstanding principal amount of the Notes at a purchase price of 101.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.
+Added: Senior Secured Term Loan Facility
+Added: In order to finance a portion of the cash consideration payable for the Omni Acquisition and the costs and expenses incurred in connection therewith, GN Loanco, LLC, a Delaware limited liability company and wholly owned subsidiary of Omni Newco, LLC (the “Escrow Loan Borrower” and consolidated VIE at December 31, 2023), entered into a credit agreement (the “Credit Agreement”) with Citibank, N.A., as administrative agent and collateral agent and as initial term loan lender.
+Added: Pursuant to the Credit Agreement, the Escrow Loan Borrower obtained senior secured term B loans in an aggregate principal amount of $1,125,000 (the “New Term Loans”) and the ability to draw down up to $400,000 under a line of credit (the “Revolving Credit Facility”).
+Added: The New Term Loans bear interest based, at Opco’s election, on (a) SOFR plus an applicable margin or (b) the base rate plus an applicable margin.
+Added: The base rate is equal the highest of the following:
+Added: (i) the prime rate;
+Added: (ii) 0.50% above the overnight federal funds rate;
+Added: and (iii) the one-month SOFR plus 1.00%.
+Added: The applicable margin for SOFR loans is 4.50% and the applicable margin for base rate loans is 3.50%.
+Added: The New Term Loans are subject to customary amortization of 1.00% per year.
+Added: The New Term Loans were issued at 96.0% of the face amount and will mature on December 19, 2030.
+Added: No borrowings under the Revolving Credit Facility were made in connection with the Omni Acquisition.
+Added: The Revolving Credit Facility will mature on January 25, 2029.
+Added: Loans made under the Revolving Credit Facility bear interest based, at Opco’s election, on (a) SOFR plus an applicable margin or (b) the base rate plus an applicable margin.
+Added: Until delivery of a compliance certificate in respect of the fiscal quarter ending June 30, 2024, the applicable margin for SOFR loans is 4.25% and the applicable margin for base rate loans is 3.25%.
+Added: Thereafter, the applicable margin can range from 3.75% to 4.25% for SOFR loans and from 2.75% to 3.25% for base rate loans, in each case depending on Opco’s first lien net leverage ratio, as set forth in the Credit Agreement.
+Added: Upon the closing of the Omni Acquisition, Opco assumed the Escrow Loan Borrower’s obligations under the Credit Agreement, which were further secured by certain guarantors.
+Added: Opco’s obligations under the Credit Agreement are guaranteed on a senior secured basis by us and each of Opco’s existing and future domestic subsidiaries (subject to customary exceptions).
+Added: On January 25, 2024, the date of the Omni Acquisition, both GN Bondco, LLC and GN Loanco, LLC ceased operations and their debt and related funds were transferred to Opco, a consolidated subsidiary of us.
+Added: On February 12, 2024, Opco and the parties to the Credit Agreement entered into Amendment No.
+Added: 2 (“Amendment No.
+Added: 2”) to the Credit Agreement, which (a) modifies the financial performance covenant in the Credit Agreement by temporarily increasing the 4.50:1.00 maximum consolidated first lien net leverage ratio permitted by the covenant to (i) 6.00:1.00 (for the second and third quarters of 2024), (ii) 5.50:1.00 (for the fourth quarter of 2024), (iii) 5.25:1.00 (for the first quarter of 2025), (iv) 5.00:1.00 (for the second quarter of 2025) and (v) 4.75:1.00 (for the third quarter of 2025) and (b) reduces the revolving credit commitments available under the Credit Agreement from an aggregate principal amount of $400,000 to an aggregate principal amount of $340,000.
+Added: Amendment No.
+Added: 2 also amends certain other terms of the Credit Agreement in connection with the foregoing.
+Added: Prior to the effectiveness of Amendment No.
+Added: 2 on February 12, 2024, Opco repaid $80,000 aggregate principal amount of the New Term Loans outstanding under the Credit Agreement, together with all accrued and unpaid interest thereon.
+Added: Both the Notes and Revolving Credit Facility contain covenants that, among other things, restrict the ability of us, without the approval of the required lenders, to engage in certain mergers, consolidations, asset sales, dividends and stock repurchases, investments, and other transactions or to incur liens or indebtedness in excess of agreed thresholds, as set forth in the credit agreement.
+Added: The Revolving Credit Facility’s terms also include a financial covenant which requires us to maintain a specific leverage ratio.
+Added: As of the date of this report, we were in compliance with all aforementioned covenants.
+Added: Tax Receivable Agreement
+Added: In connection with the Omni Acquisition, we, Opco, Omni Holders and certain other parties entered into a tax receivable agreement (the “Tax Receivable Agreement”), which sets forth the agreement among the parties regarding the sharing of certain tax benefits realized by us as a result of the Omni Acquisition.
+Added: Pursuant to the Tax Receivable Agreement, we are generally obligated to pay certain Omni Holders 83.5% of (a) the total tax benefit that we realize as a result of increases in tax basis in Opco’s assets resulting from certain actual or deemed distributions and the future exchange of units of Opco for shares of securities of us (or cash) pursuant to Opco’s operating agreement that became effective as of the Closing, (b) certain pre-existing tax attributes of certain Omni Holders that are corporate entities for tax purposes, (c) the tax benefits that we realize from certain tax allocations that correspond to items of income or gain required to be recognized by certain Omni Holders, and (d) other tax benefits attributable to payments under the Tax Receivable Agreement.
+Added: Payment obligations under the Tax Receivable Agreement rank pari passu with all unsecured obligations but senior to any future tax receivable or similar agreement entered into by us.
+Added: The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless we elect to terminate the Tax Receivable Agreement early (or it is terminated early due to a change of control or insolvency event with respect to us or a material breach by us of a material obligation under the Tax Receivable Agreement).
+Added: Upon such an early termination, we will be required to make a payment equal to the present value of the anticipated future payments to be made by it under the Tax Receivable Agreement (based upon certain assumptions and deemed events set forth in the Tax Receivable Agreement).
+Added: In the event of a change of control, under certain circumstances, we may elect to pay the early termination payment over a period of 15 years, with the payments increased to reflect the time value of money.
+Added: Continuing Operations
+Added: Net cash used in operating activities of continuing operations was $51,719 for the three months ended March 31, 2024 compared to net cash provided by operating activities of $60,839 for the three months ended March 31, 2023.
+Added: The increase in net cash used in operating activities was primarily due to the change in net income from operations after consideration of non-cash items and the increase in accounts receivable and other current and noncurrent assets, partially offset by the change in accounts payable and accrued expenses.
+Added: Net cash used in investing activities was $1,569,452 for the three months ended March 31, 2024 compared to $61,271 for the three months ended March 31, 2023.
+Added: Capital expenditures for the first three months of 2024 were $4,970, which primarily related to the purchase of technology and operating equipment.
+Added: Capital expenditures for the first three months of 2023 were $6,519, which primarily related to the purchase of technology and operating equipment.
+Added: Investing activities of continuing operations for the first three months of 2024 included the Omni Acquisition for a preliminary purchase price of $2,313,653, while investing activities for the first three months of 2023 included the acquisition of Land Air Express, Inc for a preliminary purchase price of $56,567.
+Added: Net cash used in financing activities of continuing operations was $158,726 for the three months ended March 31, 2024 compared to $13,362 for the three months ended March 31, 2023.
+Added: The change in the net cash used in financing activities of continuing operations was primarily due to the payment of debt issuance costs, payments on the New Term Loans, and payment of an earn-out liability.
+Added: Discontinued Operation
+Added: Net cash provided by operating activities of discontinued operation was $— for the three months ended March 31, 2024 compared to $5,154 for the three months ended March 31, 2023.
+Added: The change in net cash provided by operating activities of discontinued operation was primarily related to a decrease in net income of discontinued operation after consideration of non-cash items.
+Added: The sale of Final Mile was completed on December 20, 2023.
+Added: Net cash used in investing activities of discontinued operation was $— for the three months ended March 31, 2024 compared to $270 for the three months ended March 31, 2023.
+Added: The change in the net cash used in investing activities of discontinued operation was due to the sale of Final Mile on December 20, 2023.
+Added: Net cash used in financing activities of discontinued operation was $— for the three months ended March 31, 2024 compared to $4,884 for the three months ended March 31, 2023.
+Added: The change in the net cash used in financing activities of discontinued operation was due to decreased contributions to the parent.
+Added: The sale of Final Mile was completed on December 20, 2023.
+Added: Stock Repurchase Program
+Added: During the three months ended March 31, 2024, we did not repurchase any shares of our common stock.
+Added: During the three months ended March 31, 2023, we repurchased 474 shares of our common stock for approximately $50,491 through open market transactions.
All shares received were retired upon receipt, and the excess of the purchase price over the par value per share was recorded to “Retained Earnings” in our Condensed Consolidated Balance Sheets.
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Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance.
−Removed: 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;
−Removed: any statements regarding future performance;
−Removed: any statements regarding the availability of cash;
−Removed: any statements regarding our ability to maintain compliance with the covenants of our credit facility;
−Removed: any statements of plans, strategies, and objectives of management for future operations;
−Removed: any statements regarding future debt and financing levels and expectations regarding the transactions involving Omni, including whether such transactions are consummated and, if consummated, whether such transactions meet expectations regarding timing, completion and outcome thereof;
−Removed: any statements regarding our yield management process, any improvements in operating efficiencies and our ability to create synergies across our services;
−Removed: any statements regarding fuel shortages, changes in fuel prices and volatility in fuel surcharge revenue, and the impact on our business;
−Removed: any statements regarding consumer demand and inventory levels, and the impact on air freight volumes;
−Removed: any statements regarding future insurance, claims and litigation and any associated estimates or projections;
−Removed: any statements concerning proposed or intended, new services, developments or integration measures;
−Removed: any statements regarding competition, including our specific advantages, the capabilities of our segments, including the integration of services and our geographic location;
−Removed: any statements regarding intended expansion through acquisitions or greenfield startups, and the impact of any such acquisition;
−Removed: any statement regarding the expected timeline for completing valuations;
−Removed: any statements regarding future business, economic conditions or performance;
−Removed: any statement regarding certain tax and accounting matters, including the impact on our financial statements;
−Removed: any statement regarding the impact and implementation of disclosure control systems;
−Removed: and any statements of belief and any statements of assumptions underlying any of the foregoing.
+Added: 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 In this Form 10-Q, forward-looking statements include, but are not limited to, any statements regarding:
+Added: (i) any projections of earnings, revenues, other financial items or related accounting treatment, or cost reduction measures, including any impact of the Omni Acquisition on our financial statements;
+Added: (ii) future performance, including any expectations about our ability to increase shipments;
+Added: (iii) our ability to maintain compliance with the covenants of our indebtedness instruments;
+Added: (iv) our expectations regarding our ability to recognize synergies as a result of the Omni Acquisition;
+Added: (v) our yield management process, any improvements in operating efficiencies and our ability to create synergies across our services;
+Added: (vi) fuel shortages, changes in fuel prices and volatility in fuel surcharge revenue, and the impact on our business;
+Added: (vii) consumer demand and inventory levels, and the impact on freight volumes;
+Added: (viii) future insurance, claims and litigation and any associated estimates or projections;
+Added: (ix) our ability to accelerate the expansion of the Company’s terminal footprint;
+Added: (x) certain tax and accounting matters, including the impact on our financial statements and our ability realize remaining net deferred tax assets;
+Added: (xi) intended expansion through acquisitions or greenfield startups, and the impact of any such acquisition on our business;
+Added: (xii) our ability to use key performance metrics to gauge growth strategies;
+Added: (xiii) future business, economic conditions or performance, as well as industry projections;
+Added: (xiv) competition, including our specific advantages, the capabilities of our segments, including the integration of services and our geographic location;
+Added: (xv) expectations regarding new vessel deliveries;
+Added: (xvi) expectations regarding plans, strategies, and objectives of management for future operations, including the Grow Forward strategy;
+Added: (xvii) the Company’s ability to finalize the valuation in connection with assets acquired and liabilities assumed in connection with the Omni Acquisition;
+Added: and (xviii) any 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:
−Removed: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the outcome and related impact of the proposed acquisition of Omni, continued weakening of the freight environment, future debt and financing levels, the outcome of the transactions involving Omni, including any legal proceedings related to such transactions, our ability to manage our growth and ability to grow, in part, through acquisitions, (including the acquisition involving Omni) 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.
+Added: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the outcome and related impact of the Omni Acquisition, continued weakening of the freight environment, future debt and financing levels, the outcome of any legal proceedings related to the Omni Acquisition, our substantial indebtedness, 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, 2023.
As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations.
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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.