What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-08 compared with 2024-08-09 · 201 added, 176 removed, 467 unchanged (45% of the section changed)

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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.

We consider our current working relationships with these entities to be satisfactory.

We consider our current working relationships with these entities strong and beneficial to the Company.

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.

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As demand remains soft, available transportation capacity continues to exceed demand.

These conditions could result in further declines in rates in 2024.

These conditions have continued to impact our rates negatively in 2024.

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.

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.

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

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

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

Fuel surcharge revenue as a percentage of operating revenues decreased to 10.1% for the quarter ended June 30, 2024 compared to 17.9% for the quarter ended June 30, 2023 as a result of the inclusion of Omni in the results for the quarter ended June 30, 2024 .

Fuel surcharge revenue as a percentage of operating revenues decreased to 9.2% for the quarter ended September 30, 2024 compared to 19.6% for the quarter ended September 30, 2023 as a result of the inclusion of Omni in the results for the quarter ended September 30, 2024 .

Recent Events and Factors Affecting Comparability

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See Note 4, Acquisitions, to our Condensed Consolidated Financial Statements for more information about our acquisitions.

Omni Logistics revenues and segment income from January 25, 2024 through June 30, 2024 are included in our condensed consolidated statements of comprehensive (loss) income for the three months ended June 30, 2024.

The changes in our results of operations for the three and six months ended June 30, 2024 as compared to the three months ended June 30, 2023 are primarily driven by the inclusion of the results of operations of Omni Logistics.

The following table sets forth the financial data of our Omni Logistics segment for the three and six months ended June 30, 2024 (unaudited and in thousands):

Omni Logistics revenues and segment income from January 25, 2024 through September 30, 2024 are included in our condensed consolidated statements of comprehensive (loss) income for the three and nine months ended September 30, 2024.

The changes in our results of operations for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 are primarily driven by the inclusion of the results of operations of Omni Logistics.

The following table sets forth the financial data of our Omni Logistics segment for the three and nine months ended September 30, 2024 (unaudited and in thousands):

Three Months Ended

June 30, 2024 Percent of Revenue

September 30, 2024 Percent of Revenue

Operating revenue $ 334,538 100.0 %

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Total operating expenses 333,402 99.7

Loss from operations $ (1,105,871) (354.6) %

Six Months Ended

June 30, 2024 Percent of Revenue

Income from operations $ 1,136 0.3 %

Nine Months Ended

September 30, 2024 Percent of Revenue

Operating revenue $ 871,232 100.0 %

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Results from Operations

The following table sets forth our consolidated financial data for the three months ended June 30, 2024 and 2023 (unaudited and in thousands):

The following table sets forth our consolidated financial data for the three months ended September 30, 2024 and 2023 (unaudited and in thousands):

Three Months Ended

June 30, 2024 June 30, 2023 Change Percent Change

September 30, 2024 September 30, 2023 Change Percent Change

Operating revenues:

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Other Operations (1,799) (25,602) 23,803 (93.0)

(Loss) income from continuing operations (1,095,755) 26,325 (1,122,080) (4,262.4)

Income from continuing operations 22,697 11,689 11,008 94.2

Other income and expenses:

Interest expense, net (52,770) (2,655) (50,115) 1,887.6

Foreign exchange gain 1,567 — 1,567 —

Other income, net 40 — 40 —

Foreign exchange (loss) gain (2,812) — (2,812) —

Other income (expense), net (11) — (11) —

Total other expense (55,593) (2,655) (52,938) 1,993.9

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Net (loss) income (35,335) 9,288 (44,623) (480.4)

Net (loss) attributable to noncontrolling interest (325,914) — (325,914) —

Net income (loss) attributable to noncontrolling interest 38,073 — 38,073 —

Net (loss) income attributable to Forward Air $ (73,408) $ 9,288 $ (82,696) (890.4) %

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Operating Revenues

Operating revenues increased $310,044, or 92.9%, to $643,666 for the three months ended June 30, 2024 compared to $333,622 for the three months ended June 30, 2023.

The increase was primarily due to the inclusion of $311,856 from the Omni Logistics segment and an increase in our Expedited Freight segment of $21,846 due to increased Network revenue, offset by a decrease from our Intermodal segment of $4,952.

Operating revenues increased $314,961, or 92.4%, to $655,937 for the three months ended September 30, 2024 compared to $340,976 for the three months ended September 30, 2023.

The increase was primarily due to the inclusion of $334,538 from the Omni Logistics segment and an increase in our Expedited Freight segment of $5,832 due to increased Truckload revenue, offset by a decrease from our Intermodal segment of $4,771.

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

Operating Expenses

Operating expenses increased $1,432,124, or 466.0%, to $1,739,421 for the three months ended June 30, 2024 compared to $307,297 for the three months ended June 30, 2023.

The increase was primarily due to the inclusion of the $1,417,727 of operating expenses from the Omni Logistics segment which includes an impairment charge of $1,092,714 and a $26,963 increase in operating expenses from the Expedited Freight segment, partially offset by a $5,957 decrease in operating expenses from the Intermodal segment.

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.

Operating expenses increased $303,953, or 92.3%, to $633,240 for the three months ended September 30, 2024 compared to $329,287 for the three months ended September 30, 2023.

The increase was primarily due to the inclusion of the $333,402 of operating expenses from the Omni Logistics segment and a $19,110 increase in operating expenses from the Expedited Freight segment due to margin compression, partially offset by a $4,118 volume driven decrease in operating expenses from the Intermodal segment.

Purchased transportation expense, given our asset-light model, 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.

Income from Continuing Operations and Segment Operations

Income from operations decreased $1,122,080, or 4,262.4%, to a $1,095,755 loss for the three months ended June 30, 2024 compared to a $26,325 of income for the three months ended June 30, 2023.

The decrease was primarily due to a decrease in Omni Logistics segment of $1,105,871, driven by an impairment charge of $1,092,714, Expedited Freight segment of $5,117, and Intermodal segment of $1,005.

Income from operations decreased $11,008, or 94.2%, to a $22,697 loss for the three months ended September 30, 2024 compared to a $11,689 of income for the three months ended September 30, 2023.

The decrease was primarily due to a decrease in Omni Logistics segment of $1,136, and Expedited Freight segment of $13,278.

Interest Expense, net

Interest expense, net was $47,265 for the three months ended June 30, 2024 compared to $2,585 for the three months ended June 30, 2023.

The increase in interest expense was primarily due to higher borrowings outstanding during the second quarter of 2024 as compared to the same period in 2023 and an increase in the average interest rate.

In connection with the Omni Acquisition, the outstanding borrowings remained steady in the second quarter of 2024.

The weighted-average interest rate on the outstanding borrowings were 9.56% and 6.32% during the three months ended June 30, 2024 and 2023, respectively.

Interest expense, net was $52,770 for the three months ended September 30, 2024 compared to $2,655 for the three months ended September 30, 2023.

The increase in interest expense was primarily due to higher borrowings outstanding during the third quarter of 2024 as compared to the same period in 2023 and an increase in the average interest rate.

In connection with the Omni Acquisition, the outstanding borrowings remained steady in the third quarter of 2024.

The weighted-average interest rate on the outstanding borrowings were 9.56% and 6.62% during the three months ended September 30, 2024 and 2023, respectively.

Income Taxes on a Continuing Basis

The effective tax rate for the three months ended June 30, 2024 was 15.3% compared to 27.8% for the three months ended June 30, 2023.

The effective tax rate varied from the statutory United States federal rate of 21% in the second 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.

The effective tax rate varied from the statutory United States federal rate of 21% in the second 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.

The effective tax rate for the three months ended September 30, 2024 was (4.0)% compared to 28.1% for the three months ended September 30, 2023.

The effective tax rate varied from the statutory United States federal rate of 21% in the third quarter of 2024 primarily due to the cumulative effect of the noncontrolling interest, and to a lesser extent foreign earnings and state income taxes, net of the federal benefit.

Income from Discontinued Operations, net of Tax

Loss from discontinued operations, net of tax increased $7,700 or 272.7% for the three months ended June 30, 2024 compared to the same period in 2023.

Loss from discontinued operations, net of tax increased $3,932 or 140.7% to net loss of $1,137 for the three months ended September 30, 2024 compared to income of $2,795 for the same period in 2023.

The increase was due to the final net working capital settlement following the sale of our Final Mile business in December 2023.

Net (Loss) Income

As a result of the foregoing factors, net income decreased $991,298, to a $971,347 loss for the three months ended June 30, 2024 compared to $19,951 income for the three months ended June 30, 2023.

Expedited Freight - Three Months Ended June 30, 2024 compared to Three Months Ended June 30, 2023

The following table sets forth the financial data of our Expedited Freight segment for the three months ended June 30, 2024 and 2023 (unaudited and in thousands):

As a result of the foregoing factors, net income decreased $44,623, to a $35,335 loss for the three months ended September 30, 2024 compared to $9,288 income for the three months ended September 30, 2023.

Expedited Freight - Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023

The following table sets forth the financial data of our Expedited Freight segment for the three months ended September 30, 2024 and 2023 (unaudited and in thousands):

Three Months Ended

June 30, 2024 Percent of Revenue June 30, 2023 Percent of Revenue Change Percent Change

September 30, 2024 Percent of Revenue September 30, 2023 Percent of Revenue Change Percent Change

Operating revenues:

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Three Months Ended

June 30, 2024 June 30, 2023 Percent Change

September 30, 2024 September 30, 2023 Percent Change

Business days 64 63 1.6 %

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Operating Revenues

Expedited Freight operating revenues increased $21,846, or 8.1%, to $291,282 for the three months ended June 30, 2024 from $269,436 for the three months ended June 30, 2023.

The increase was primarily due to increased Network and Truckload revenue.

Expedited Freight operating revenues increased $5,832, or 2.1%, to $284,707 for the three months ended September 30, 2024 from $278,875 for the three months ended September 30, 2023.

The increase was primarily due to increased Truckload revenue.

Truckload revenue increased $4,835, primarily due to increased customer demand for our services as compared to the same period in 2023.

Network revenue increased due to a 4.0% increase in pounds per day, offset by a 0.5% decrease in revenue per hundredweight excluding fuel as compared to the same period in 2023.

The increase in tonnage reflects an increase in weight per shipment of 2.5% on 1.4% more shipments per day.

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.

Fuel surcharge revenue increased $4,151, or 9.2% as a result of the increased tonnage in our Network as compared to the same period in 2023.

Truckload revenue increased $4,246, primarily due to increased customer demand for our services.

The increase in tonnage reflects an increase in weight per shipment of 4.5% on 0.5% less shipments per day.

The increase in weight per shipment was the result of more dense freight in our network driven by a change in the mix of freight in our network.

Fuel surcharge revenue decreased $5,499, or 9.4% as a result of the higher tonnage in our Network as compared to the same period in 2023.

Purchased Transportation

Expedited Freight purchased transportation increased $18,390, or 14.8%, to $142,512 for the three months ended June 30, 2024 from $124,122 for the three months ended June 30, 2023.

Purchased transportation was 48.9% of Expedited Freight operating revenues for the three months ended June 30, 2024 compared to 46.1% for the same period in 2023.

Expedited Freight purchased transportation increased $10,185, or 7.8%, to $140,035 for the three months ended September 30, 2024 from $129,850 for the three months ended September 30, 2023.

Purchased transportation was 49.2% of Expedited Freight operating revenues for the three months ended September 30, 2024 compared to 46.6% 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.

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.

For the three months ended June 30, 2024, 62.8%, 33.2% and 4.0% 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.

For the three months ended September 30, 2024, 63.5%, 33.1% and 3.4% 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.

This compares to 62.4%, 32.5% and 5.1%, respectively, in the same period in 2023.

Salaries, Wages and Employee Benefits

Expedited Freight salaries, wages and employee benefits increased $6,208, or 10.8%, to $63,845 for the three months ended June 30, 2024 from $57,637 for the three months ended June 30, 2023.

Salaries, wages and employee benefits were 21.9% of Expedited Freight operating revenues for the three months ended June 30, 2024 compared to 21.4% for the same period in 2023.

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.

Expedited Freight salaries, wages and employee benefits increased $2,744, or 4.8%, to $59,426 for the three months ended September 30, 2024 from $56,682 for the three months ended September 30, 2023.

Salaries, wages and employee benefits were 20.9% of Expedited Freight operating revenues for the three months ended September 30, 2024 compared to 20.3% for the same period in 2023.

The increase in salaries, wages and employee benefits expense was primarily due to higher salaries and wages as compared to the same period in 2023.

Operating Leases

Expedited Freight operating leases decreased $1,471, or 9.1%, to $14,730 for the three months ended June 30, 2024 from $16,201 for the three months ended June 30, 2023.

Operating leases were 5.1% of Expedited Freight operating revenues for the three months ended June 30, 2024 compared to 6.0% for the same period in 2023.

The decrease in operating lease expense was primarily due to fewer equipment leases in the second quarter of 2024 as compared to the same period in 2023.

Expedited Freight operating leases increased $1,164, or 8.1%, to $15,556 for the three months ended September 30, 2024 from $14,392 for the three months ended September 30, 2023.

Operating leases were 5.5% of Expedited Freight operating revenues for the three months ended September 30, 2024 compared to 5.2% for the same period in 2023.

The increase in operating lease expense was primarily due to higher leasing costs associated lease renewals in the third quarter of 2024 as compared to the same period in 2023.

Depreciation and Amortization

Expedited Freight depreciation and amortization increased $2,253, or 26.7%, to $10,692 for the three months ended June 30, 2024 from $8,439 for the three months ended June 30, 2023.

Depreciation and amortization was 3.7% of Expedited Freight operating revenues for the three months ended June 30, 2024 compared to 3.1% for the same period in 2023.

The increase in depreciation and amortization expense was primarily as the result of purchasing and placing in service new equipment in the second half of 2023 and in the first half of 2024.

Expedited Freight depreciation and amortization increased $1,459, or 16.2%, to $10,481 for the three months ended September 30, 2024 from $9,022 for the three months ended September 30, 2023.

Depreciation and amortization was 3.7% of Expedited Freight operating revenues for the three months ended September 30, 2024 compared to 3.2% for the same period in 2023.

The increase in depreciation and amortization expense was primarily as the result of purchasing and placing in service new equipment in the second half of 2023 and first half of 2024.

Insurance and Claims

Expedited Freight insurance and claims increased $2,139, or 22.4%, to $11,672 for the three months ended September 30, 2024 from $9,533 for the three months ended September 30, 2023.

Insurance and claims was 4.1% of Expedited Freight operating revenues for the three months ended September 30, 2024 compared to 3.4% for the same period in 2023.

The increase in insurance and claims expense was primarily due to higher vehicle liability claims in the third quarter of 2024 as compared to the same period in 2023.

Expedited Freight fuel expense decreased $841, or 28.5%, to $2,113 for the three months ended September 30, 2024 from $2,954 for the three months ended September 30, 2023.

Fuel expense was 0.7% of Expedited Freight operating revenues for the three months ended September 30, 2024 compared to 1.1% and for the same period in 2023.

Expedited Freight fuel expense decreased primarily from a 10.6% lower average price of fuel in the third quarter of 2024 as compared to the same period in 2023.

Other Operating Expenses

Expedited Freight other operating expenses increased $2,260, or 9.5%, to $26,155 for the three months ended September 30, 2024 from $23,895 for the three months ended September 30, 2023.

Other operating expenses were 9.1% of Expedited Freight operating revenues for the three months ended September 30, 2024 compared to 8.5% 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.

The increase in other operating expenses was primarily due to an increase in software license and subscription fees, and utility and communication fees, partially offset by a decrease in supply parts,and professional fees, in the third quarter of 2024 as compared to the same period in 2023.

Income from Operations

Expedited Freight income from operations decreased $5,117, or 18.9%, to $21,946 for the three months ended June 30, 2024 compared to $27,063 for the three months ended June 30, 2023.

Income from operations was 7.5% of Expedited Freight operating revenues for the three months ended June 30, 2024 compared to 10.0% for the same period in 2023.

The decrease in income from operations as a percentage of operating revenues was driven 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 for the three months ended June 30, 2024 compared to the same period in 2023.

Intermodal - Three Months Ended June 30, 2024 compared to Three Months Ended June 30, 2023

The following table sets forth the financial data of our Intermodal segment for the three months ended June 30, 2024 and 2023 (unaudited and in thousands):

Expedited Freight income from operations decreased $13,278, or 40.8%, to $19,269 for the three months ended September 30, 2024 compared to $32,547 for the three months ended September 30, 2023.

Income from operations was 6.8% of Expedited Freight operating revenues for the three months ended September 30, 2024 compared to 11.7% for the same period in 2023.

The change was due primarily from a decrease in revenue per hundredweight without an offsetting decrease in purchased transportation costs for the three months ended September 30, 2024 compared to the same period in 2023.

Intermodal - Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023

The following table sets forth the financial data of our Intermodal segment for the three months ended September 30, 2024 and 2023 (unaudited and in thousands):

Three Months Ended

June 30, 2024 Percent of Revenue June 30, 2023 Percent of Revenue Change Percent Change

September 30, 2024 Percent of Revenue September 30, 2023 Percent of Revenue Change Percent Change

Operating revenues $ 57,412 100.0 % $ 62,183 100.0 % $ (4,771) (7.7) %

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Three Months Ended

June 30, 2024 June 30, 2023 Percent Change

September 30, 2024 September 30, 2023 Percent Change

Drayage shipments 62,616 68,576 (8.7) %

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Operating Revenues

Intermodal operating revenues decreased $4,952, or 7.7%, to $59,299 for the three months ended June 30, 2024 from $64,251 for the three months ended June 30, 2023.

The decrease in operating revenues was primarily due to a 4.8% decrease in drayage shipments and a decrease in drayage revenue per shipment of 3.2% as compared to the same period in 2023.

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 second quarter of 2024 as compared to the same period in 2023.

Intermodal operating revenues decreased $4,771, or 7.7%, to $57,412 for the three months ended September 30, 2024 from $62,183 for the three months ended September 30, 2023.

The decrease in operating revenues was primarily due to a 8.7% decrease in drayage shipments as compared to the same period in 2023.

The decrease in drayage shipments, lower fuel and storage revenue, 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 third quarter of 2024 as compared to the same period in 2023.

Purchased Transportation

Intermodal purchased transportation increased $1,264, or 7.1%, to $19,173 for the three months ended June 30, 2024 from $17,909 for the three months ended June 30, 2023.

Purchased transportation was 32.3% of Intermodal operating revenues for the three months ended June 30, 2024 compared to 27.9% for the same period in 2023.

Intermodal purchased transportation decreased $645, or 3.4%, to $18,300 for the three months ended September 30, 2024 from $18,945 for the three months ended September 30, 2023.

Purchased transportation was 31.9% of Intermodal operating revenues for the three months ended September 30, 2024 compared to 30.5% 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.

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Salaries, Wages and Employee Benefits

Intermodal salaries, wages and employee benefits decreased $1,751, or 10.5%, to $14,899 for the three months ended June 30, 2024 compared to $16,650 for the three months ended June 30, 2023.

Salaries, wages and employee benefits were 25.1% of Intermodal operating revenues for the three months ended June 30, 2024 compared to 25.9% for the same period in 2023.

Intermodal salaries, wages and employee benefits decreased $1,612, or 10.0%, to $14,506 for the three months ended September 30, 2024 compared to $16,118 for the three months ended September 30, 2023.

Salaries, wages and employee benefits were 25.3% of Intermodal operating revenues for the three months ended September 30, 2024 compared to 25.9% for the same period in 2023.

The decrease in salaries, wages and employee benefits expense was primarily due to fewer Company-employed drivers and office employees in response to the lower volumes, as compared to the same period in 2023.

Operating Leases

Intermodal operating leases decreased $1,919, or 28.7%, to $4,776 for the three months ended June 30, 2024 compared to $6,695 for the three months ended June 30, 2023.

Operating leases were 8.1% of Intermodal operating revenues for the three months ended June 30, 2024 compared to 10.4% for the same period in 2023.

The decrease in operating leases expense was primarily due to lower equipment expense incurred to support decreased accessorial revenues in the second quarter of 2024 as compared to the same period in 2023.

Intermodal operating leases increased $524, or 10.2%, to $5,668 for the three months ended September 30, 2024 compared to $5,144 for the three months ended September 30, 2023.

Operating leases were 9.9% of Intermodal operating revenues for the three months ended September 30, 2024 compared to 8.3% for the same period in 2023.

The increase in operating lease expense was primarily due to higher leasing costs associated lease renewals in the third quarter of 2024 as compared to the same period in 2023.

Depreciation and Amortization

Intermodal depreciation and amortization decreased $605, or 11.7%, to $4,582 for the three months ended September 30, 2024 from $5,187 for the three months ended September 30, 2023.

Depreciation and amortization was 8.0% of Intermodal operating revenues for the three months ended September 30, 2024 compared to 8.3% for the same period in 2023 .

The decrease in depreciation and amortization expense was primarily due to the lower amount of depreciable equipment.

Intermodal fuel expense decreased $950, or 32.8%, to $1,942 for the three months ended September 30, 2024 from $2,892 for the three months ended September 30, 2023.

Fuel expense was 3.4% of Intermodal operating revenues for the three months ended September 30, 2024 compared to 4.7% for the same period in 2023.

Intermodal fuel expense decreased due to lower volumes and a decrease in the average price of fuel as compared to the same period in 2023.

Other Operating Expenses

Intermodal other operating expenses decreased $2,812, or 33.6%, to $5,560 for the three months ended June 30, 2024 from $8,372 for the three months ended June 30, 2023.

Other operating expenses were 9.4% of Intermodal operating revenues for the three months ended June 30, 2024 compared to 13.0% for the same period in 2023.

Intermodal other operating expenses decreased $600, or 9.4%, to $5,795 for the three months ended September 30, 2024 from $6,395 for the three months ended September 30, 2023.

Other operating expenses were 10.0% of Intermodal operating revenues for the three months ended September 30, 2024 compared to 10.3% for the same period in 2023.

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

The decrease in other operating expenses was primarily due to lower accessorial storage costs incurred as a result of decreased accessorial revenues in the second quarter of 2024 compared to the same period in 2023.

The decrease in other operating expenses was primarily due to lower accessorial storage costs incurred as a result of decreased accessorial revenues in the third quarter of 2024 compared to the same period in 2023.

Income from Operations

Intermodal income from operations increased $1,005, or 23.3%, to $5,317 for the three months ended June 30, 2024 compared to $4,312 for the three months ended June 30, 2023.

Income from operations was 9.0% of Intermodal operating revenues for the three months ended June 30, 2024 compared to 6.7% for the same period in 2023.

The increase in income from operations as a percentage of operating revenues was primarily due to lower operating expenses in response to lower volumes.

Other Operations - Three Months Ended June 30, 2024 compared to Three Months Ended June 30, 2023

Other operations included a $17,147 operating loss during the three months ended June 30, 2024 compared to $5,050 of operating income during the three months ended June 30, 2023.

The change in the operating loss was primarily due to $10,018 of professional fees incurred for transaction and integration costs in connection with the Omni Acquisition, incentive compensation and severance costs partially offset by a decrease in the reserves for vehicle liability claims.

Intermodal income from operations decreased $653, or 13.8%, to $4,091 for the three months ended September 30, 2024 compared to $4,744 for the three months ended September 30, 2023.

Income from operations was 7.1% of Intermodal operating revenues for the three months ended September 30, 2024 compared to 7.6% for the same period in 2023.

The decrease in income from operations as a percentage of operating revenues was primarily due to higher rents as compared to revenues.

Other Operations - Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023

Other operations included a $1,799 operating loss during the three months ended September 30, 2024 compared to $25,602 of operating loss during the three months ended September 30, 2023.

The change in the operating loss was primarily due to $549 of professional fees incurred for transaction and integration costs in the third quarter of 2024 as compared to $22,371 in the third quarter of 2023 which included costs in connection with the Omni Acquisition, higher group health insurance claims, and higher reserves for vehicle liability claims.

Results from Operations

The following table sets forth our consolidated financial data for the six months ended June 30, 2024 and 2023 (unaudited and in thousands):

Six Months Ended

June 30, 2024 June 30, 2023 Change Percent Change

The following table sets forth our consolidated financial data for the nine months ended September 30, 2024 and 2023 (unaudited and in thousands):

Nine Months Ended

September 30, 2024 September 30, 2023 Change Percent Change

Operating revenues:

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Other Operations (79,175) (24,344) (54,831) NM

(Loss) income from operations (1,161,487) 73,521 (1,235,008) (1,679.8)

(Loss) income from operations (1,138,791) 85,210 (1,224,001) NM

Other expense:

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Operating Revenues

Operating revenues increased $494,148, or 71.5% to $1,185,479 for the six months ended June 30, 2024 compared to $691,331 for the six months ended June 30, 2023.

Operating revenues increased $809,109, or 78.4% to $1,841,416 for the nine months ended September 30, 2024 compared to $1,032,307 for the nine months ended September 30, 2023.

The increase was primarily due to the inclusion of $871,232 from the Omni Logistics segment and an increase in our Expedited Freight segment revenue of $31,396 due to increased Network revenue, offset by a decrease from our Intermodal segment of $41,600, The results for our reportable segments are discussed in detail in the following sections.

Operating Expenses

Operating expenses increased $1,729,156, or 279.9%, to $2,346,966 for the six months ended June 30, 2024 compared to $617,810 for the six months ended June 30, 2023.

Operating expenses increased $2,033,110, or 214.7%, to $2,980,207 for the nine months ended September 30, 2024 compared to $947,097 for the nine months ended September 30, 2023.

The increase was primarily due to the inclusion of the $2,004,555 of operating expenses from the Omni Logistics segment which includes a goodwill impairment charge of $1,107,465 and a $59,978 increase in operating expenses from the Expedited Freight segment, partially offset by a $34,335 decrease in operating expenses from the Intermodal segment.

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

Income from Operations and Segment Operations

Income from operations decreased $1,235,008, or 1,679.8%, to $1,161,487 for the six months ended June 30, 2024 compared to $73,521 for the six months ended June 30, 2023.

The decrease was primarily driven by a decrease in Omni Logistics segment of $1,134,456 as a result of a goodwill impairment charge of $1,092,714, Other Operations of $78,636, Expedited Freight segment of $15,304, and our Intermodal segment of $6,612.

Loss from Operations and Segment Operations

Loss from operations changed by $1,224,001, to $1,138,791 for the nine months ended September 30, 2024 compared to income of $85,210 for the nine months ended September 30, 2023.

The loss was primarily driven by Omni Logistics segment of $1,133,323 as a result of a goodwill impairment charge of $1,107,465, Other Operations of $54,831, Expedited Freight segment of $28,582, and our Intermodal segment of $7,265.

Interest Expense, net

Interest expense, net was $88,018 for the six months ended June 30, 2024 compared to $4,940 for the six months ended June 30, 2023.

The increase in interest expense was due to higher variable interest rates during the six months ended June 30, 2024 on higher borrowings outstanding under the Revolving Credit Facility as compared to the same period in 2023.

The weighted-average interest rate on the borrowings under the Revolving Credit Facility was 9.56% and 6.05% during the six months ended June 30, 2024 and 2023, respectively.

Interest expense, net was $140,788 for the nine months ended September 30, 2024 compared to $7,595 for the nine months ended September 30, 2023.

The increase in interest expense was due to higher variable interest rates during the nine months ended September 30, 2024 on outstanding debt balances as compared to the same period in 2023.

The weighted-average interest rate on the borrowings under the Revolving Credit Facility was 9.56% and 6.24% during the nine months ended September 30, 2024 and 2023, respectively.

Income Taxes on a Continuing basis

The effective tax rate for the six months ended June 30, 2024 was 15.5% compared to a rate of 25.7% for the six months ended June 30, 2023.

The effective tax rate for the nine months ended September 30, 2024 was 15.0% compared to a rate of 25.9% for the nine months ended September 30, 2023.

The effective tax rate for the current nine months is much lower than historical rate due to the goodwill impairment charge in the current year.

(Loss) Income from Discontinued Operations, net of Tax

Loss from discontinued operations, net of tax increased $10,164 or 192% for the six months ended June 30, 2024 compared to the same period in 2023.

The increase was due to the final net working capital settlement following the sale of our Final Mile business in December 2023.

Loss from discontinued operations of $6,013, net of tax increased, resulted in an unfavorable change of $14,096 or 174% for the nine months ended September 30, 2024 compared to income of $8,083 during the same period in 2023.

The loss was due to final net working capital settlement following the sale of our Final Mile business in December 2023.

Net (Loss) Income

As a result of the foregoing factors, net income decreased $1,116,460, or 1,982.4%, to a loss of $1,060,141 for the six months ended June 30, 2024 compared to $56,319 income for the six months ended June 30, 2023.

Expedited Freight - Six Months Ended June 30, 2024 compared to Six Months Ended June 30, 2023

The following table sets forth the financial data of our Expedited Freight segment for the six months ended June 30, 2024 and 2023:

As a result of the foregoing factors, net income decreased $1,161,083, or 1,769.8%, to a loss of $1,095,476 for the nine months ended September 30, 2024 compared to $65,607 income for the nine months ended September 30, 2023.

Expedited Freight - Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023

The following table sets forth the financial data of our Expedited Freight segment for the nine months ended September 30, 2024 and 2023:

Expedited Freight Segment Information

(unaudited and in thousands)

Six Months Ended

June 30, 2024 Percent of Revenue June 30, 2023 Percent of Revenue Change Percent Change

Nine Months Ended

September 30, 2024 Percent of Revenue September 30, 2023 Percent of Revenue Change Percent Change

Operating revenues:

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Expedited Freight Operating Statistics

Six Months Ended

June 30, 2024 June 30, 2023 Percent Change

Nine Months Ended

September 30, 2024 September 30, 2023 Percent Change

Business days 192 191 0.5 %

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Operating Revenues

Expedited Freight operating revenues increased $25,564, or 4.7%, to $564,577 for the six months ended June 30, 2024 from $539,013 for the six months ended June 30, 2023.

The increase was driven by increased Network revenue.

Expedited Freight operating revenues increased $31,396, or 3.8%, to $849,284 for the nine months ended September 30, 2024 from $817,888 for the nine months ended September 30, 2023.

The increase was driven by increased Network revenue and Truckload revenue.

Network revenue increased due to a 6.2% increase in tonnage, offset by a 1.8% decrease in revenue per hundredweight ex fuel as compared to the same period in the prior year.

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Fuel surcharge revenue increased $5,437, or 5.8% due to an increase in tonnage in the Network.

Truckload revenue increased $4,392, primarily due to increased customer demand for our services as compared to the same period in 2023.

Higher tonnage, higher shipment count, and higher revenue per shipment contributed to the overall increase in operating revenues for the Expedited Freight segment.

Purchased Transportation

Expedited Freight purchased transportation increased $20,956, or 8.4%, to $270,272 for the six months ended June 30, 2024 from $249,316 for the six months ended June 30, 2023.

Purchased transportation was 47.9% of Expedited Freight operating revenue for the six months ended June 30, 2024 compared to 46.3% for the same period in 2023.

Expedited Freight purchased transportation increased $31,141, or 8.2%, to $410,307 for the nine months ended September 30, 2024 from $379,166 for the nine months ended September 30, 2023.

Purchased transportation was 48.3% of Expedited Freight operating revenue for the nine months ended September 30, 2024 compared to 46.4% for the same period in 2023.

The increase in purchased transportation was primarily due to higher volumes in the 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.

For the six months ended June 30, 2024, we purchased 64.0%, 31.7% and 4.3% of our freight capacity from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers, respectively.

For the nine months ended September 30, 2024, we purchased 63.8%, 33.2% and 4.0% of our freight capacity from Leased Capacity Providers, third-party motor carriers and transportation intermediaries and Company-employed drivers, respectively.

This compares to 65.1%, 30.1% and 4.8% in the same period in 2023.

Salaries, Wages, and Employee Benefits

Expedited Freight salaries, wages and employee benefits increased $12,843, or 11.3%, to $126,398 for the six months ended June 30, 2024 from $113,555 for the six months ended June 30, 2023.

Salaries, wages and employee benefits were 22.4% of Expedited Freight operating revenues for the six months ended June 30, 2024 compared to 21.1% for the same period in 2023.

The increase in salaries, wages and employee benefits expense was primarily due to a increase in the reserve for incentive compensation, an increase in Company-employed drivers in response to the higher volumes and an increase in salaries and wages compared to the same period in 2023.

Expedited Freight salaries, wages and employee benefits increased $15,587, or 9.2%, to $185,824 for the nine months ended September 30, 2024 from $170,237 for the nine months ended September 30, 2023.

Salaries, wages and employee benefits were 21.9% of Expedited Freight operating revenues for the nine months ended September 30, 2024 compared to 20.8% for the same period in 2023.

The increase in salaries, wages and employee benefits expense was primarily due to higher Company-employed driver count in response to the higher volumes and an increase in salaries and wage rates compared to the same period in 2023.

Operating Leases

Expedited Freight operating leases decreased $2,227, or 7.0%, to $29,712 for the six months ended June 30, 2024 from $31,939 for the six months ended June 30, 2023.

Operating leases were 5.3% of Expedited Freight operating revenues for the six months ended June 30, 2024 compared to 5.9% for the same period in 2023.

The decrease in operating leases expense was primarily due to fewer equipment leases for the six months ended June 30, 2024, as compared to the same period in 2023.

Expedited Freight operating leases decreased $1,063, or 2.3%, to $45,268 for the nine months ended September 30, 2024 from $46,331 for the nine months ended September 30, 2023.

Operating leases were 5.3% of Expedited Freight operating revenues for the nine months ended September 30, 2024 compared to 5.7% for the same period in 2023.

The decrease in operating leases expense was primarily due to fewer equipment leases for the nine months ended September 30, 2024, as compared to the same period in 2023.

Depreciation and Amortization

Expedited Freight depreciation and amortization increased $4,917, or 30.6%, to $20,982 for the six months ended June 30, 2024 from $16,065 for the six months ended June 30, 2023.

Depreciation and amortization was 3.7% of Expedited Freight operating revenues for the six months ended June 30, 2024 compared to 3.0% for the same period in 2023.

The increase in depreciation and amortization expense was primarily the result of purchasing and placing in service new equipment in 2024.

Expedited Freight depreciation and amortization increased $6,376, or 25.4%, to $31,463 for the nine months ended September 30, 2024 from $25,087 for the nine months ended September 30, 2023.

Depreciation and amortization was 3.7% of Expedited Freight operating revenues for the nine months ended September 30, 2024 compared to 3.1% for the same period in 2023.

The increase in depreciation and amortization expense was primarily the result of purchasing and placing in service new equipment in the second half of 2023 and first half of 2024.

Insurance and Claims

Expedited Freight insurance and claims increased $2,298, or 11.9%, to $21,621 for the six months ended June 30, 2024 from $19,323 for the six months ended June 30, 2023.

Insurance and claims were 3.8% of Expedited Freight operating revenues for the six months ended June 30, 2024 compared to 3.6% for the same period in 2023.

The increase in insurance and claims expense was primarily due to an increase in vehicle liability claims, equipment repair claims, and insurance premiums, for the six months ended June 30, 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.

Expedited Freight insurance and claims increased $4,437, or 15.4%, to $33,293 for the nine months ended September 30, 2024 from $28,856 for the nine months ended September 30, 2023.

Insurance and claims were 3.9% of Expedited Freight operating revenues for the nine months ended September 30, 2024 compared to 3.5% for the same period in 2023.

The increase in insurance and claims expense was primarily due to an increase in equipment repair claims, vehicle liability and cargo claims, and insurance premiums, for the nine months ended September 30, 2024 as compared to the same period in 2023.

Other Operating Expenses

Expedited Freight other operating expenses increased $2,090, or 4.4%, to $49,133 for the six months ended June 30, 2024 from $47,043 for the six months ended June 30, 2023.

Other operating expenses were 8.7% of Expedited Freight operating revenues for the six months ended June 30, 2024 compared to 8.7% for the same period in 2023.

Expedited Freight other operating expenses increased $4,350, or 6.1%, to $75,288 for the nine months ended September 30, 2024 from $70,938 for the nine months ended September 30, 2023.

Other operating expenses were 9.0% of Expedited Freight operating revenues for the nine months ended September 30, 2024 compared to 8.6% 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.

The increase in other operating expenses was primarily driven by an increase in software license and subscription fees, partially offset by a decrease in professional fees and maintenance and repair expense for six months ended June 30, 2024 as compared to the same period in 2023.

The increase in other operating expenses was primarily driven by an increase in software license and subscription fees and utilities and communications expenses, partially offset by a decrease in professional fees, maintenance and repair expense and supply parts, for nine months ended September 30, 2024 as compared to the same period in 2023.

Income from Operations

Expedited Freight income from operations decreased $15,304, or 27.0%, to $41,444 for the six months ended June 30, 2024 compared to $56,748 for the six months ended June 30, 2023.

Income from operations was 7.3% of Expedited Freight operating revenues for six months ended June 30, 2024 compared to 10.5% for the same period in 2023.

Intermodal - Six Months Ended June 30, 2024 compared to Six Months Ended June 30, 2023

The following table sets forth the financial data of our Intermodal segment for the six months ended June 30, 2024 and 2023:

Expedited Freight income from operations decreased $28,582, or 32.0%, to $60,713 for the nine months ended September 30, 2024 compared to $89,295 for the nine months ended September 30, 2023.

Income from operations was 7.1% of Expedited Freight operating revenues for nine months ended September 30, 2024 compared to 10.9% for the same period in 2023.

The decrease in income was primarily a result of 8.2% higher purchased transportation and wage and benefits expenses without sufficient increase in total operating revenue of 3.8% growth.

Intermodal - Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023

The following table sets forth the financial data of our Intermodal segment for the nine months ended September 30, 2024 and 2023:

Intermodal Segment Information

(unaudited and in thousands)

Six Months Ended

June 30, 2024 Percent of Revenue June 30, 2023 Percent of Revenue Change Percent Change

Nine Months Ended

September 30, 2024 Percent of Revenue September 30, 2023 Percent of Revenue Change Percent Change

Operating revenue $ 173,003 100.0 % $ 214,603 100.0 % $ (41,600) (19.4) %

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Intermodal Operating Statistics

Six Months Ended

June 30, 2024 June 30, 2023 Percent Change

Nine Months Ended

September 30, 2024 September 30, 2023 Percent Change

Drayage shipments 190,152 209,221 (9.1) %

1 unchanged sentence

Operating Revenues

Intermodal operating revenues decreased $36,829, or 24.2%, to $115,591 for the six months ended June 30, 2024 from $152,420 for the six months ended June 30, 2023.

Intermodal operating revenues decreased $41,600, or 19.4%, to $173,003 for the nine months ended September 30, 2024 from $214,603 for the nine months ended September 30, 2023.

The decrease in operating revenues was primarily due to a 9.1% decrease in drayage shipments and a decrease in drayage revenue per shipment of 12.4% as compared to the same period in 2023.

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 six months ended June 30, 2024 as compared to the same period in 2023.

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, 2024 as compared to the same period in 2023.

Purchased Transportation

Intermodal purchased transportation decreased $1,307, or 3.4%, to $36,616 for the six months ended June 30, 2024 from $37,923 for the six months ended June 30, 2023.

Purchased transportation was 31.7% of Intermodal operating revenues for the six months ended June 30, 2024 compared to 24.9% for the same period in 2023.

Intermodal purchased transportation decreased $1,952, or 3.4%, to $54,916 for the nine months ended September 30, 2024 from $56,868 for the nine months ended September 30, 2023.

Purchased transportation was 31.7% of Intermodal operating revenues for the nine months ended September 30, 2024 compared to 26.5% 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.

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Salaries, Wages, and Employee Benefits

Intermodal salaries, wages and employee benefits decreased $5,583, or 15.7%, to $29,981 for the six months ended June 30, 2024 compared to $35,564 for the six months ended June 30, 2023.

Salaries, wages and employee benefits were 25.9% of Intermodal operating revenues for the six months ended June 30, 2024 compared to 23.3% for the same period in 2023.

The decrease in salaries, wages and employee benefits expense was primarily due to a decreased reserve for incentive compensation, fewer Company-employed drivers in response to the lower volumes, and lower salaries and wages as compared to the same period in 2023.

Intermodal salaries, wages and employee benefits decreased $7,195, or 13.9%, to $44,487 for the nine months ended September 30, 2024 compared to $51,682 for the nine months ended September 30, 2023.

Salaries, wages and employee benefits were 25.7% of Intermodal operating revenues for the nine months ended September 30, 2024 compared to 24.1% for the same period in 2023.

The decrease in salaries, wages and employee benefits expense was primarily due to fewer Company-employed drivers in response to lower volumes as compared to the same period in 2023.

Operating Leases

Intermodal operating leases decreased $5,562, or 37.0%, to $9,468 for the six months ended June 30, 2024 from $15,030 for the six months ended June 30, 2023.

Operating leases were 8.2% of Intermodal operating revenues for the six months ended June 30, 2024 compared to 9.9% for the same period in 2023.

The decrease in operating leases expense was primarily due to decreased equipment rental expense incurred to support the decreased accessorial revenues for the six months ended June 30, 2024 as compared to the same period in 2023.

Intermodal fuel expense decreased $1,260, or 21.5%, to $4,604 for the six months ended June 30, 2024 from $5,864 for the six months ended June 30, 2023.

Fuel expense was 4.0% of Intermodal operating revenues for the six months ended June 30, 2024 compared to 3.8% for the same period in 2023.

Intermodal fuel expense decreased due to fewer miles driven by Company-employed drivers and a decrease in the average price of fuel for the six months ended June 30, 2024 as compared to the same period in 2023.

Intermodal operating leases decreased $5,038, or 25.0%, to $15,136 for the nine months ended September 30, 2024 from $20,174 for the nine months ended September 30, 2023.

Operating leases were 8.7% of Intermodal operating revenues for the nine months ended September 30, 2024 compared to 9.4% for the same period in 2023.

The decrease in operating leases expense was primarily due to decreased equipment rental expense incurred to support the decreased accessorial revenues for the nine months ended September 30, 2024 as compared to the same period in 2023.

Depreciation and Amortization

Intermodal depreciation and amortization decreased $818, or 5.5%, to $13,921 for the nine months ended September 30, 2024 from $14,739 for the nine months ended September 30, 2023.

Depreciation and amortization was 8.0% of Intermodal operating revenues for the nine months ended September 30, 2023 compared to 6.9% for the same period in 2023 .

The decrease in depreciation and amortization expense was primarily due to minimal new asset additions during the period and some equipment disposals and assets having reached their full depreciable lives.

Intermodal fuel expense decreased $2,210, or 25.2%, to $6,546 for the nine months ended September 30, 2024 from $8,756 for the nine months ended September 30, 2023.

Fuel expense was 3.8% of Intermodal operating revenues for the nine months ended September 30, 2024 compared to 4.1% for the same period in 2023.

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, 2024 as compared to the same period in 2023.

Other Operating Expenses

Intermodal other operating expenses decreased $16,352, or 58.8%, to $11,455 for the six months ended June 30, 2024 compared to $27,807 for the six months ended June 30, 2023.

Other operating expenses were 9.9% of Intermodal operating revenues for the six months ended June 30, 2024 compared to 18.2% for the same period in 2023.

Intermodal other operating expenses decreased $16,953, or 49.6%, to $17,250 for the nine months ended September 30, 2024 compared to $34,203 for the nine months ended September 30, 2023.

Other operating expenses were 10.1% of Intermodal operating revenues for the nine months ended September 30, 2024 compared to 15.9% for the same period in 2023.

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

The decrease in other operating expenses was primarily driven by lower accessorial storage costs incurred to support the decreased accessorial revenues for the six months ended June 30, 2024 as compared to the same period in 2023.

The decrease in other operating expenses was primarily driven by lower accessorial storage costs incurred to support the decreased accessorial revenues for the nine months ended September 30, 2024 as compared to the same period in 2023.

Income from Operations

Intermodal income from operations decreased by $6,612, or 42.6%, to $8,903 for the six months ended June 30, 2024 compared to $15,515 for the six months ended June 30, 2023.

Income from operations was 7.7% of Intermodal operating revenue for the six months ended June 30, 2024 compared to 10.2% for the same period in 2023.

The decrease in income from operations as a percentage of operating revenues was driven by lower drayage revenue per shipment on fewer drayage shipments and lower operating expenses in response to lower volumes.

Other Operations - Six Months Ended June 30, 2024 compared to Six Months Ended June 30, 2023

Other operations included a $77,378 operating loss during the six months ended June 30, 2024 compared to a $1,258 operating loss during the six months ended June 30, 2023.

The change in the operating loss was primarily driven by $71,942 of professional fees incurred for due diligence and transaction costs incurred in connection with the Omni Acquisition, an increase in incentive compensation and severance costs, offset by a decrease in the reserves for vehicle liability claims.

Intermodal income from operations decreased by $7,265, or 35.9%, to $12,994 for the nine months ended September 30, 2024 compared to $20,259 for the nine months ended September 30, 2023.

Income from operations was 7.5% of Intermodal operating revenue for the nine months ended September 30, 2024 compared to 9.4% for the same period in 2023.

The decrease in income from operations as a percentage of operating revenues was driven by 12.4% lower drayage revenue per shipment on 9.1% fewer drayage shipments and 1.90% higher overall operating expenses as a percentage of revenue for the nine month period ended September 30, 2024 as compared to the same period in 2023.

Other Operations - Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023

Other operations included a $79,175 operating loss during the nine months ended September 30, 2024 compared to a $24,344 operating loss during the nine months ended September 30, 2023.

The change in the operating loss was primarily driven by $71,393 of post-acquisition transaction and integration costs incurred in connection with the Omni Acquisition.

Critical Accounting Policies

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The annual test of goodwill was performed for each of the reporting units with goodwill balances as of June 30, 2024.

As a result of the annual test, we recorded goodwill impairment charges totaling $1,092,714 million which all relates to our Omni Logistics reporting unit.

To complete the Omni Logistics goodwill test, we determined the fair value of the reporting unit using the DCF model and a guideline public company approach with 50% of the value determined using the DCF and 50% of the value using the market approach.

As a result of the annual test, we recorded goodwill impairment charges totaling $1,092,714 million which all related to our Omni Logistics reporting unit.

This reporting unit was acquired on January 25, 2024.

Primarily due to a decrease in the market value of the Company’s common stock during the second quarter of 2024, as a result of many factors including, but not limited to, general market factors, credit rating downgrades, and changes in executive leadership, and the inherent uncertainty associated with the combined enterprise, the Omni Logistics reporting unit’s fair value was determined to be less than its carrying value.

As a result, the Company recorded a non-cash impairment charge of $1,092,714 million during the three and six months ended June 30, 2024.

As a result, the Company recorded a non-cash impairment charge of $1,092,714 during the six months ended June 30, 2024.

Due to measurement period adjustments in the three months ended September 30, 2024, an additional $14,751 of goodwill impairment was recorded.

The cumulative goodwill impairment through the nine months ended September 30, 2024 is $1,107,465.

The goodwill impairment expense was recorded in the Impairment of goodwill caption on the Condensed Consolidated Statement of Operations.

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If the forecasted net cash flows are less than the carrying value, then the assets are written down to estimated value.

We did not identify any impairments of definite-lived assets in the three and six months ended June 30, 2024 and 2023.

We did not identify any impairments of definite-lived assets in the three and nine months ended September 30, 2024 and 2023.

Changes in the estimates of forecasted net cash flows may result in future asset impairments that could be material to our results of operations.

2 unchanged sentences

In the first quarter of 2024, our then existing credit facility was repaid and extinguished in tandem with the Omni Acquisition.

We believe that borrowings under the Revolving Credit Facility and our New Term Loans, 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.

We believe that availability of borrowings under the Revolving Credit Facility and our New Term Loans, 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.

As previously disclosed and more fully described below and in Note 4, Acquisitions, to the Condensed Consolidated Financial Statements, we incurred significant indebtedness in connection with the Omni Acquisition.

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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.

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%.

Until delivery of a compliance certificate in respect of the fiscal quarter ending September 30, 2024, the applicable margin for SOFR loans is 4.25% and the applicable margin for base rate loans is 3.25%.

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.

19 unchanged sentences

Continuing Operations

Net cash used in operating activities of continuing operations was $96,924 for the six months ended June 30, 2024 compared to net cash provided by operating activities of $117,454 for the six months ended June 30, 2023.

Net cash used in operating activities of continuing operations was $45,770 for the nine months ended September 30, 2024 compared to net cash provided by operating activities of $142,120 for the nine months ended September 30, 2023.

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.

Net cash used in investing activities was $1,583,406 for the six months ended June 30, 2024 compared to $70,368 for the six months ended June 30, 2023.

Capital expenditures for the first six months of 2024 were $19,396, which primarily related to the purchase of technology and operating equipment.

Capital expenditures for the first six months of 2023 were $16,836, which primarily related to the purchase of technology and operating equipment.

Investing activities of continuing operations for the first six months of 2024 included the Omni Acquisition for a preliminary purchase price of $2,313,653, while investing activities for the first six months of 2023 included the acquisition of Land Air for a preliminary purchase price of $56,567.

Net cash used in financing activities of continuing operations was $162,957 for the six months ended June 30, 2024 compared to $74,627 for the six months ended June 30, 2023.

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.

Net cash used in investing activities was $1,592,878 for the nine months ended September 30, 2024 compared to $75,508 for the nine months ended September 30, 2023.

Capital expenditures for the first nine months of 2024 were $29,810, which primarily related to the purchase of technology and operating equipment.

Capital expenditures for the first nine months of 2023 were $22,080, which also primarily related to the purchase of technology and operating equipment.

Investing activities of continuing operations for the first nine months of 2024 included the Omni Acquisition for a preliminary purchase price of $2,313,653, of which $1,565,242 was cash consideration and the remainder non-cash equity shares.

Further, investing activities for the first nine months of 2023 included the acquisition of Land Air for a preliminary purchase price of $56,567.

Net cash used in financing activities of continuing operations was $169,394 for the nine months ended September 30, 2024 compared to $93,591 for the nine months ended September 30, 2023.

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, payment of finance lease obligations, and payment of an earn-out liability.

Discontinued Operation

Net cash used in operating activities of discontinued operation was $4,876 for the six months ended June 30, 2024 compared to net cash provided by operating activities for discontinued operations of $12,112 for the six months ended June 30, 2023.

Net cash used in operating activities of discontinued operation was $6,013 for the nine months ended September 30, 2024 compared to net cash provided by operating activities for discontinued operations of $17,311 for the nine months ended September 30, 2023.

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.

The sale of Final Mile was completed on December 20, 2023.

Net cash used in investing activities of discontinued operation was $0 for the six months ended June 30, 2024 compared to $739 for the six months ended June 30, 2023.

Net cash used in investing activities of discontinued operation was $0 for the nine months ended September 30, 2024 compared to $1,338 for the nine months ended September 30, 2023.

The change in the net cash used in investing activities of discontinued operation was due to the sale of Final Mile, which was completed on December 20, 2023.

Net cash used in financing activities of discontinued operation was $0 for the six months ended June 30, 2024 compared to $11,373 for the six months ended June 30, 2023.

The change in the net cash used in financing activities of discontinued operation was due to decreased contributions to the parent.

Net cash used in financing activities of discontinued operation was $0 for the nine months ended September 30, 2024 compared to $15,973 for the nine months ended September 30, 2023.

Stock Repurchase Program

During the six months ended June 30, 2024, we did not repurchase any shares of our common stock.

During the six months ended June 30, 2023, we repurchased 759 shares of our common stock for approximately $79,792 through open market transactions.

During the nine months ended September 30, 2024, we did not repurchase any shares of our common stock.

During the nine months ended September 30, 2023, we repurchased 883 shares of our common stock for approximately $93,811, 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 (Deficit) Earnings” in our Condensed Consolidated Balance Sheets.

23 unchanged sentences

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What changed 10-Q

Item 2. Management’s Discussion and Analysis