What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-08 compared with 2021-08-06 · 158 added, 217 removed, 596 unchanged (39% of the section changed)

2 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

September 30,

(In thousands, except share information)

33 unchanged sentences

24,497  

Accrued dividends

44,789  

Total current liabilities

14 unchanged sentences

192,000,000 shares authorized;

82,880,930 shares at June 30, 2021, and 82,705,005 shares at December 31, 2020, issued and outstanding

82,942,839 shares at September 30, 2021, and 82,705,005 shares at December 31, 2020, issued and outstanding

Additional paid-in capital

13 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Ended June 30,

Ended September 30,

(In thousands, except per share information)

Operating revenue

$ 232,442  

$ 212,384  

$ 455,488  

$ 431,030  

Operating expenses (income):

Salaries, wages and benefits

75,296  

73,476  

148,294  

146,237  

Purchased transportation

45,003  

36,165  

85,768  

76,610  

Fuel and fuel taxes

32,007  

20,868  

60,944  

49,165  

Supplies and maintenance

11,167  

11,833  

22,182  

24,061  

25,540  

25,972  

51,227  

51,399  

Operating taxes and licenses

Insurance and claims

11,633  

20,837  

23,917  

Communications and utilities

Gain on disposition of revenue equipment

11,474  

10,908  

Gain on disposition of facility

Total operating expenses

203,924  

187,128  

402,972  

387,742  

Operating income

28,518  

25,256  

52,516  

43,288  

Income before income taxes

28,527  

25,269  

52,535  

43,398  

Income taxes expense

13,111  

11,546  

$ 21,418  

$ 18,134  

$ 39,424  

$ 31,852  

Basic earnings per common share

$ 0.26  

$ 0.22  

$ 0.48  

$ 0.39  

Diluted earnings per common share

$ 0.26  

$ 0.22  

$ 0.47  

$ 0.38  

Dividends paid per common share

Dividends declared per common share

$ 0.04  

$ 0.027  

$ 0.08  

$ 0.053  

The accompanying notes are an integral part of these consolidated condensed financial statements.

4 unchanged sentences

Balance at December 31, 2020

82,705  

$ 85,070  

$ 534,436  

$ 620,333  

18,006  

Issuance of common stock from share-based payment arrangement exercises and vesting of performance unit awards

1 unchanged sentence

Share-based payment arrangement compensation expense

Dividends on common stock

Dividends paid on common stock

Balance at March 31, 2021

82,775  

85,019  

549,131  

634,978  

21,418  

Issuance of common stock from share-based payment arrangement exercises and vesting of performance unit awards

Issuance of common stock from share-based payment arrangement exercises, deferred compensation plan distributions and vesting of performance unit awards

Employee taxes paid in exchange for shares withheld

Share-based payment arrangement compensation expense

Dividends on common stock

Dividends paid on common stock

Balance at June 30, 2021

82,881  

$ 85,578  

$ 567,234  

$ 653,641  

Issuance of common stock from share-based payment arrangement exercises, deferred compensation plan distributions and vesting of performance unit awards

Employee taxes paid in exchange for shares withheld

Share-based payment arrangement compensation expense

Accrued dividends on common stock

Balance at September 30, 2021

The accompanying notes are an integral part of these consolidated condensed financial statements.  

4 unchanged sentences

Balance at December 31, 2019

82,055  

$ 79,465  

$ 517,303  

$ 597,589  

13,718  

Repurchase and retirement of common stock

2 unchanged sentences

Share-based payment arrangement compensation expense

Dividends on common stock

Dividends paid on common stock

Balance at March 31, 2020

82,261  

79,730  

528,827  

609,380  

18,134  

Issuance of common stock from share-based payment arrangement exercises and vesting of performance unit awards

Share-based payment arrangement compensation expense

Dividends on common stock

Dividends paid on common stock

Balance at June 30, 2020

82,662  

$ 83,816  

$ 544,755  

$ 629,398  

Issuance of common stock from share-based payment arrangement exercises and vesting of performance unit awards

Share-based payment arrangement compensation expense

Dividends paid on common stock

Balance at September 30, 2020

The accompanying notes are an integral part of these consolidated condensed financial statements.  

1 unchanged sentence

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Ended June 30,

Ended September 30,

(In thousands)

Cash flows provided by operating activities:

$ 39,424  

$ 31,852  

Adjustments to reconcile net income to net cash provided by operating activities:

51,227  

51,399  

Tires in service amortization

Gain on disposition of revenue equipment

Gain on disposition of facility

Deferred income taxes

1 unchanged sentence

Changes in other current operating items:

14,764  

Prepaid expenses and other

3 unchanged sentences

Net cash provided by operating activities

83,365  

104,067  

Cash flows used for investing activities:

1 unchanged sentence

Proceeds from revenue equipment dispositions

38,995  

19,788  

Buildings and land, office equipment and other additions

Proceeds from buildings and land, office equipment and other dispositions

Net cash used for investing activities

Cash flows used for financing activities:

Dividends on common stock

Dividends paid on common stock

Repurchase and retirement of common stock

Issuance of common stock from share-based payment arrangement exercises

Issuance of common stock from share-based payment arrangement exercises, deferred compensation plan distributions and vesting of performance unit awards

Employee taxes paid in exchange for shares withheld

1 unchanged sentence

Net change in cash and cash equivalents

14,545  

43,862  

Cash and cash equivalents:

Beginning of period

66,127  

31,461  

End of period

$ 80,672  

$ 75,323  

Supplemental non-cash disclosure:

Dividends declared and not yet paid

Change in property and equipment not yet paid

$ 10,585  

Operating lease assets and liabilities acquired

1 unchanged sentence

Cash paid for:

$ 8,319  

The accompanying notes are an integral part of these consolidated condensed financial statements.

1 unchanged sentence

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2021

NINE MONTHS ENDED SEPTEMBER 30, 2021

( 1 ) Consolidated Condensed Financial Statements

7 unchanged sentences

Basic and diluted earnings per common share were computed as follows:  

Ended June 30,

Ended September 30,

(In thousands, except per share amounts)

24 unchanged sentences

$ 0.60  

Options totaling 322,150 equivalent shares for each of the three -month and six -month periods ended June 30, 2021, and 280,950 and 301,350 equivalent shares for the three -month and six -month periods ended June 30, 2020, respectively, were outstanding but were not included in the calculation of diluted earnings per share because including the options in the denominator would be antidilutive, or decrease the number of weighted-average shares, due to their exercise prices exceeding the average market price of the common shares, or because inclusion of average unrecognized compensation expense in the calculation would cause the options to be antidilutive.

Unvested performance unit awards totaling 66,912 and 109,371 equivalent shares for the three -month and six -month periods ended June 30, 2021, respectively, and 99,987 equivalent shares for each of the three -month and six -month periods ended June 30, 2020, were considered outstanding but were not included in the calculation of diluted earnings per share because inclusion of average unrecognized compensation expense in the calculation would cause the performance units to be antidilutive.

( 3 ) Stock Split

On August 13, 2020, we effected a three -for- two stock split of our common stock, $.01 par value, in the form of a 50 % stock dividend.

Our consolidated condensed financial statements, related notes, and other financial data contained in this report have been adjusted to give retroactive effect to the stock split for all periods presented.

Options totaling 339,450 and 328,550 equivalent shares for the three -month and nine -month periods ended September 30, 2021, respectively, and 181,650 and 288,150 equivalent shares for the three -month and nine -month periods ended September 30, 2020, respectively, were outstanding but were not included in the calculation of diluted earnings per share because including the options in the denominator would be antidilutive, or decrease the number of weighted-average shares, due to their exercise prices exceeding the average market price of the common shares, or because inclusion of average unrecognized compensation expense in the calculation would cause the options to be antidilutive.

Unvested performance unit awards totaling 66,912 equivalent shares for each of the three -month and nine -month periods ended September 30, 2021, and 43,923 and 96,423 equivalent shares for the three -month and nine -month periods ended September 30, 2020, respectively, were considered outstanding but were not included in the calculation of diluted earnings per share because inclusion of average unrecognized compensation expense in the calculation would cause the performance units to be antidilutive.

( 3 ) Long-Term Debt

We maintain a credit agreement that provides for an unsecured committed credit facility with an aggregate principal amount of $ 30.0 million which matures in August 2023.

At June 30, 2021, there was no outstanding principal balance on the facility.

At September 30, 2021, there was no outstanding principal balance on the facility.

As of that date, we had outstanding standby letters of credit to guarantee settlement of self-insurance claims of $ 18.5 million and remaining borrowing availability of $ 11.5 million.

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This facility bears interest at a variable rate based on the London Interbank Offered Rate or the lender’s Prime Rate, in each case plus/minus applicable margins.

The interest rate for the facility that would apply to outstanding principal balances was 0.78 % at June 30, 2021.

The interest rate for the facility that would apply to outstanding principal balances was 0.78 % at September 30, 2021.

Our credit facility prohibits us from paying, in any fiscal year, stock redemptions and dividends in excess of 25 % of our net income from the prior fiscal year.

A waiver allowing stock redemptions and dividends in excess of the 25% limitation in a total amount of up to $ 60 million in 2020 was obtained from the lender in November 2020.

Waivers allowing stock redemptions and dividends in excess of the 25% limitation in total amounts of up to $ 80 million in 2021 and of up to $ 60 million in 2020 were obtained from the lender in August 2021 and November 2020, respectively.

This facility also contains restrictive covenants which, among other matters, require us to maintain compliance with cash flow leverage and fixed charge coverage ratios.

We were in compliance with all covenants at June 30, 2021 and December 31, 2020.

We were in compliance with all covenants at September 30, 2021 and December 31, 2020.

( 4 ) Related Party Transactions

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Bauer, the chairman of the board and chief executive officer of BBI, is one of our directors.

We paid BBI $ 140,000 in the first six months of 2021 and $ 124,000 in the first six months of 2020 for fuel, tires and related services.

In addition, we paid $ 1.0 million in the first six months of 2021 and $ 1.2 million in the first six months of 2020 to tire manufacturers for tires that were provided by BBI.

We paid BBI $ 234,000 in the first nine months of 2021 and $ 166,000 in the first nine months of 2020 for fuel, tires and related services.

In addition, we paid $ 1.5 million in the first nine months of 2021 and $ 1.7 million in the first nine months of 2020 to tire manufacturers for tires that were provided by BBI.

BBI received commissions from the tire manufacturers related to these purchases.

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We repurchased and retired 53,064 shares of common stock for $ 597,000 in the first quarter of 2020.

We did not repurchase any shares in the rest of 2020 or in the first six months of 2021.

As of June 30, 2021, future repurchases of up to $ 33.4 million, or approximately 2.6 million shares, were available in the share repurchase program.

We did not repurchase any shares in the rest of 2020 or in the first nine months of 2021.

As of September 30, 2021, future repurchases of up to $ 33.4 million, or approximately 2.6 million shares, were available in the share repurchase program.

( 6 ) Dividends

In 2010, we announced that our Board of Directors approved a regular cash dividend program to our stockholders, subject to approval each quarter.

A quarterly cash dividend of $ 0.04 per share of common stock was declared in each of the first two quarters of 2021 which totaled $ 6.6 million.

A quarterly cash dividend of $ 0.027 per share of common stock was declared in each of the first two quarters of 2020 which totaled $ 4.4 million.

A quarterly cash dividend of $ 0.04 per share of common stock was paid in each of the first two quarters of 2021 which totaled $ 6.6 million.

We declared cash dividends in August 2021 which were paid in October 2021 totaling $ 44.8 million which consisted of a special dividend of $ 0.50 per common share, along with a quarterly cash dividend of $ 0.04 per share of common stock.

In 2020, we paid quarterly cash dividends of $ 0.027 per share of common stock in each of the first two quarters and of $ 0.04 per share of common stock in the third quarter which totaled $ 7.7 million.

Our ability to pay cash dividends is currently limited by restrictions contained in our revolving credit facility, which prohibits us from paying, in any fiscal year, stock redemptions and dividends in excess of 25 % of our net income from the prior fiscal year.

A waiver allowing stock redemptions and dividends in excess of the 25% limitation in a total amount of up to $ 60 million in 2020 was obtained from the lender in November 2020.

( 7 ) Accounting for Share-based Payment Arrangement Compensation

1 unchanged sentence

Stock Compensation .

During the first six months of 2021, there were no significant changes to the structure of our stock-based award plans.

Pre-tax compensation expense related to stock options and performance unit awards recorded in the first six months of 2021 and 2020 was $ 1.3 million and $ 972,000 , respectively.

During the first nine months of 2021, there were no significant changes to the structure of our stock-based award plans.

Pre-tax compensation expense related to stock options and performance unit awards recorded in the first nine months of 2021 and 2020 was $ 1.8 million and $ 1.4 million, respectively.

( 8 ) Termination of Deferred Compensation Plan

6 unchanged sentences

( 10 ) Commitments and Contingencies

We are committed to new revenue equipment purchases of $ 52.1 million through the remainder of 2021.

We are committed to new revenue equipment purchases of $ 16.5 million and a building construction obligation of $ 2.9 million through the remainder of 2021.

Operating lease obligation expenditures through 2025 total $ 670,000 .

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Our Intermodal segment transports our customers’

freight within the United States utilizing our temperature-controlled trailers and, beginning in September 2019, our refrigerated containers, each on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers.

freight within the United States utilizing our refrigerated containers and our temperature-controlled trailers, each on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers.

The main factors that affect our Intermodal revenue are the rate per mile and other charges we receive from our customers.

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We base our calculation of the amount of revenue to record in each period for individual loads picking up in one period and delivering in the following period using the number of hours estimated to be incurred within each period applied to each estimated transaction price.

Contract assets for this estimated revenue which are classified within prepaid expenses and other within our consolidated condensed balance sheets were $ 2.5 million and $ 1.5 million as of June 30, 2021 and December 31, 2020, respectively.

We had no impairment losses on contract assets in the first six months of 2021 or in 2020.

Contract assets for this estimated revenue which are classified within prepaid expenses and other within our consolidated condensed balance sheets were $ 2.6 million and $ 1.5 million as of September 30, 2021 and December 31, 2020, respectively.

We had no impairment losses on contract assets in the first nine months of 2021 or in 2020.

We bill our customers for loads after delivery is complete with standard payment terms of 30 days.

6 unchanged sentences

We do not prepare separate balance sheets by segment and, as a result, assets are not separately identifiable by segment.

Ended June 30,

Ended September 30,

(In thousands)

34 unchanged sentences

Intermodal fuel surcharge revenue

10,150  

Total Intermodal revenue

27 unchanged sentences

$ 67,688  

Truckload segment depreciation expense was $ 12.9 million and $ 14.0 million, Dedicated segment depreciation expense was $ 10.7 million and $ 10.3 million, Intermodal segment depreciation expense was $ 1.6 million and $ 1.3 million, and Brokerage segment depreciation expense was $ 298,000 and $ 306,000 in the three -month periods ended June 30, 2021 and 2020, respectively.

Truckload segment depreciation expense was $ 26.1 million and $ 27.8 million, Dedicated segment depreciation expense was $ 21.4 million and $ 20.2 million, Intermodal segment depreciation expense was $ 3.1 million and $ 2.7 million, and Brokerage segment depreciation expense was $ 580,000 and $ 667,000 in the six -month periods ended June 30, 2021 and 2020, respectively.

Truckload segment depreciation expense was $ 12.9 million and $ 13.4 million, Dedicated segment depreciation expense was $ 10.6 million and $ 10.5 million, Intermodal segment depreciation expense was $ 1.6 million and $ 1.4 million, and Brokerage segment depreciation expense was $ 260,000 and $ 271,000 in the three -month periods ended September 30, 2021 and 2020, respectively.

Truckload segment depreciation expense was $ 39.0 million and $ 41.3 million, Dedicated segment depreciation expense was $ 32.0 million and $ 30.7 million, Intermodal segment depreciation expense was $ 4.7 million and $ 4.1 million, and Brokerage segment depreciation expense was $ 840,000 and $ 939,000 in the nine -month periods ended September 30, 2021 and 2020, respectively.

( 12 ) Use of Estimates

4 unchanged sentences

Ultimate results could differ from these estimates.

( 13 ) Subsequent Event

On October 3, 2021, we detected a cyberattack that accessed and encrypted files on servers utilized in the provision of our business.

The unauthorized access also included the download of certain data files.

Promptly upon discovery of the incident, we launched an investigation and engaged legal counsel and industry-leading incident response professionals.

We have notified law enforcement and will provide any notices that may be required by applicable law.

While the investigation of the incident is ongoing, we have implemented a series of containment and remediation measures to address this situation and reinforce the security of our information technology systems.

As a result, we were able to restore full functionality to our information technology systems quickly with minimal disruptions to our operations.

Based on our preliminary assessment and on the information currently known, we do not believe the incident will have a material impact on our business, operations or financial results.

Nonetheless, the investigation indicates that certain employee data may have been at risk during the event and, out of an abundance of caution, we are offering our employees with credit monitoring and identity restoration services at no cost for two years.

Management ’

17 unchanged sentences

Our Intermodal segment transports our customers’

The main factors that affect our Intermodal revenue are the rate per mile and other charges we receive from our customers.

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In addition to the factors discussed above, our operating revenue is also affected by, among other things, the United States economy, inventory levels, the level of truck and rail capacity in the transportation market, a contracting driver market, severe weather conditions and specific customer demand.

Our operating revenue increased $24.5 million, or 5.7%, in the first six months of 2021 from the first six months of 2020.

Our operating revenue, net of fuel surcharges, increased $14.4 million, or 3.7%, compared with the first six months of 2020.

Truckload segment revenue, net of fuel surcharges, decreased 1.3% from the first six months of 2020 due to a reduction in our average number of tractors, despite an increase in our average revenue per tractor.

Dedicated segment revenue, net of fuel surcharges, increased 2.2% from the first six months of 2020 primarily due to an increase in our average number of tractors partially offset by a decrease in our average revenue per tractor.

Intermodal segment revenue, net of fuel surcharges, increased 6.0% from the first six months of 2020 primarily due to an increase in revenue per load.

Brokerage segment revenue increased 24.2% primarily due to an increase in revenue per load in the first six months of 2021.

Fuel surcharge revenue increased to $53.7 million in the first six months of 2021 from $43.6 million in the first six months of 2020, primarily due to higher fuel costs.

Our operating revenue increased $59.7 million, or 9.2%, in the first nine months of 2021 from the first nine months of 2020.

Our operating revenue, net of fuel surcharges, increased $39.4 million, or 6.8%, compared with the first nine months of 2020.

Truckload segment revenue, net of fuel surcharges, decreased 0.2% from the first nine months of 2020 due to a reduction in our average number of tractors, despite an increase in our average revenue per tractor.

Dedicated segment revenue, net of fuel surcharges, increased 1.4% from the first nine months of 2020 primarily due to an increase in our average number of tractors.

Intermodal segment revenue, net of fuel surcharges, increased 8.6% from the first nine months of 2020 primarily due to an increase in revenue per load.

Brokerage segment revenue increased 46.3% primarily due to an increase in revenue per load in the first nine months of 2021.

Fuel surcharge revenue increased to $83.7 million in the first nine months of 2021 from $63.5 million in the first nine months of 2020, primarily due to higher fuel costs.

Our profitability is impacted by the variable costs of transporting freight for our customers, fixed costs, and expenses containing both fixed and variable components.

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This expense is included within purchased transportation in our consolidated condensed statements of operations.

Our operating income improved 21.3% to $52.5 million in the first six months of 2021 from $43.3 million in the first six months of 2020.

Our operating income improved 19.7% to $81.0 million in the first nine months of 2021 from $67.7 million in the first nine months of 2020.

Our operating expenses as a percentage of operating revenue, or “operating ratio,”

improved to 88.5% in the first six months of 2021 from 90.0% in the first six months of 2020.

Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 86.9% in the first six months of 2021 from 88.8% in the first six months of 2020.

Our net income improved 23.8% to $39.4 million, or $0.47 per diluted share, in the first six months of 2021 from $31.9 million, or $0.38 per diluted share, in the first six months of 2020.

improved to 88.5% in the first nine months of 2021 from 89.5% in the first nine months of 2020.

Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 87.0% in the first nine months of 2021 from 88.4% in the first nine months of 2020.

Our net income improved 21.6% to $60.7 million, or $0.73 per diluted share, in the first nine months of 2021 from $49.9 million, or $0.60 per diluted share, in the first nine months of 2020.

Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers.

At June 30, 2021, we had $80.7 million of cash and cash equivalents, $653.6 million in stockholders’

At September 30, 2021, we had $83.9 million of cash and cash equivalents, $630.1 million in stockholders’

equity and no long-term debt outstanding.

In the first six months of 2021, net cash flows provided by operating activities of $83.4 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $59.9 million, to pay cash dividends of $6.6 million, and to construct and upgrade regional operating facilities in the amount of $1.0 million, resulting in a $14.5 million increase in cash and cash equivalents.

In the first nine months of 2021, net cash flows provided by operating activities of $127.9 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $98.8 million, to pay cash dividends of $6.6 million, and to construct and upgrade regional operating facilities in the amount of $2.4 million, resulting in a $17.8 million increase in cash and cash equivalents.

We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $35 million for the remainder of 2021.

A quarterly cash dividend of $0.04 per share of common stock was paid in each of the first two quarters of 2021 which totaled $6.6 million.

We declared cash dividends in August 2021 which were paid in October 2021 totaling $44.8 million which consisted of a special dividend of $0.50 per common share, along with a quarterly cash dividend of $0.04 per share of common stock.

We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months.

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Pursuant to Item 10(e) of Regulation S-K, we have included the amounts necessary to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures of operating revenue, operating expenses divided by operating revenue, and fuel and fuel taxes.

On August 13, 2020, we effected a three-for-two stock split of our common stock, $.01 par value, in the form of a 50% stock dividend.

Results of Operations

The following table sets forth for the periods indicated certain operating statistics regarding our revenue and operations:

Ended June 30,

Ended September 30,

Truckload Segment:

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Includes tractors driven by both company-employed drivers and independent contractors.

Independent contractors provided 118 and 124 tractors as of June 30, 2021 and 2020, respectively.

Comparison of Three Months Ended June 30, 2021 to Three Months Ended June 30, 2020

Independent contractors provided 101 and 132 tractors as of September 30, 2021 and 2020, respectively.

Comparison of Three Months Ended September 30, 2021 to Three Months Ended September 30, 2020

The following table sets forth for the periods indicated our operating revenue, operating income and operating ratio by segment, along with the change for each component:

September 30,

(Dollars in thousands)

18 unchanged sentences

Our operating revenue, net of fuel surcharges, increased $25.0 million, or 12.8%, to $221.2 million in the 2021 period from $196.1 million in the 2020 period.

This increase was due to an $8.3 million increase in Brokerage revenue, a $3.5 million increase in Intermodal revenue, net of fuel surcharges, and a $151,000 increase in Dedicated revenue, net of fuel surcharges, partially offset by a $2.3 million decrease in Truckload revenue, net of fuel surcharges.

This increase was due to a $20.7 million increase in Brokerage revenue, a $2.7 million increase in Intermodal revenue, net of fuel surcharges, and a $1.8 million increase in Truckload revenue, net of fuel surcharges, partially offset by a $176,000 decrease in Dedicated revenue, net of fuel surcharges.

Fuel surcharge revenue increased by $10.2 million to $30.1 million in the 2021 period from $19.9 million in the 2020 period.

Truckload segment revenue increased $6.0 million, or 6.4%, to $99.6 million in the 2021 period from $93.6 million in the 2020 period.

Truckload segment revenue, net of fuel surcharges, decreased $2.3 million, or 2.7%, to $83.6 million in the 2021 period from $86.0 million in the 2020 period.

During the 2021 period, an increase in our average revenue per tractor was more than offset by a reduction in our average number of tractors.

The improvement in the operating ratio in the 2021 period was primarily due to an increase in our average revenue per tractor due to increased rates with our customers, a reduction in insurance and claims expense and an increase in gain on disposition of revenue equipment, partially offset by increased net fuel expense.

Truckload segment revenue, net of fuel surcharges, increased $1.8 million, or 2.1%, to $86.9 million in the 2021 period from $85.1 million in the 2020 period.

During the 2021 period, an increase in our average revenue per tractor was partially offset by a reduction in our average number of tractors.

The improvement in the operating ratio in the 2021 period was primarily due to an increase in our average revenue per tractor due to increased rates with our customers and an increase in gain on disposition of revenue equipment, partially offset by increased company driver compensation expense.

Dedicated segment revenue increased $3.8 million, or 4.9%, to $82.2 million in the 2021 period from $78.3 million in the 2020 period.

Dedicated segment revenue, net of fuel surcharges, increased 0.2% primarily due to an increase in our average number of tractors partially offset by a decrease in our average revenue per tractor.

The operating ratio was negatively impacted in the 2021 period by a decrease in our average revenue per tractor and higher net fuel and depreciation costs.

Dedicated segment revenue, net of fuel surcharges, decreased 0.3% primarily due to a decrease in our average number of tractors partially offset by an increase in our average revenue per tractor.

The operating ratio was negatively impacted in the 2021 period by increases in both company driver compensation expense and driver recruiting costs.

Intermodal segment revenue increased $4.8 million, or 21.7%, to $26.7 million in the 2021 period from $22.0 million in the 2020 period.

1 unchanged sentence

The improvement in the operating ratio in the 2021 period was primarily due to increased rates with our customers and a decrease in the amounts payable to railroads as a percentage of our revenue.

Brokerage segment revenue increased $8.3 million, or 37.1%, to $30.8 million in the 2021 period from $22.5 million in the 2020 period primarily due to an increase in revenue per load.

The improvement in the operating ratio in the 2021 period was primarily due to decreases in various cost components across the segment and increased rates with our customers.

Brokerage segment revenue increased $20.7 million, or 93.7%, to $42.8 million in the 2021 period from $22.1 million in the 2020 period primarily due to increases in both the number of loads and in revenue per load.

The improvement in the operating ratio in the 2021 period was primarily due to increased rates with our customers and a decrease in the amounts payable to carriers for transportation services which we arranged as a percentage of our Brokerage revenue.

The following table sets forth for the periods indicated the dollar and percentage increase or decrease of the items in our unaudited consolidated condensed statements of operations, and those items as a percentage of operating revenue:

1 unchanged sentence

Operating Revenue

September 30,

(Dollars in thousands)

9 unchanged sentences

Gain on disposition of revenue equipment

Gain on disposition of facility

Total operating expenses

7 unchanged sentences

Salaries, wages and benefits expense increased $6.3 million, or 8.4%, in the 2021 period from the 2020 period.

Along with other smaller increases in the components of salaries, wages and benefits, employees’

health insurance expense increased by $939,000 in the 2021 period as a result of higher self-insured medical claims.

This increase resulted primarily from additional company driver compensation expense of $5.1 million.

Other smaller increases in the components of salaries, wages and benefits, were partially offset by a decrease in employees’

health insurance expense of $415,000 in the 2021 period as a result of lower self-insured medical claims.

Purchased transportation consists of amounts payable to railroads and carriers for transportation services we arrange in connection with Brokerage and Intermodal operations and to independent contractor providers of revenue equipment.

1 unchanged sentence

Purchased transportation expense increased $15.8 million in total, or 42.6%, in the 2021 period from the 2020 period.

Amounts payable to railroads and drayage carriers for transportation services within our Intermodal segment increased $1.4 million to $14.8 million in the 2021 period from $13.3 million in the 2020 period, primarily due to increased fuel surcharges from the railroads.

Amounts payable to carriers for transportation services we arranged in our Brokerage segment increased $7.0 million to $25.7 million in the 2021 period from $18.7 million in the 2020 period, primarily due to an increase in the cost per load within the tight freight market.

The portion of purchased transportation expense related to independent contractors within our Truckload and Dedicated segments, including fuel surcharges, increased $438,000 in the 2021 period.

Amounts payable to railroads and drayage carriers for transportation services within our Intermodal segment increased $182,000 to $14.1 million in the 2021 period from $13.9 million in the 2020 period.

Amounts payable to carriers for transportation services we arranged in our Brokerage segment increased $16.2 million to $34.9 million in the 2021 period from $18.7 million in the 2020 period, primarily due to an increase in the cost per load within the tight freight market and growth in load volume.

The portion of purchased transportation expense related to independent contractors within our Truckload and Dedicated segments, including fuel surcharges, decreased $613,000 in the 2021 period.

We expect our purchased transportation expense to increase as we grow our Intermodal and Brokerage segments.

Fuel and fuel taxes increased by $9.6 million, or 39.7%, in the 2021 period from the 2020 period.

Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) increased $2.1 million, or 44.2%, to $6.8 million in the 2021 period from $4.7 million in the 2020 period.

Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) increased $671,000, or 10.2%, to $7.3 million in the 2021 period from $6.6 million in the 2020 period.

Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads increased to $3.5 million from $2.2 million in the 2020 period.

The United States Department of Energy, or DOE, national average cost of fuel increased to $3.36 per gallon from $2.43 per gallon in the 2020 period.

Net fuel expense increased to 3.9% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, from 2.7% in the 2020 period.

This increase was a primary factor in our net fuel expense increasing to 4.1% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, from 3.8% in the 2020 period.

We have worked diligently to control fuel usage and costs by improving our volume purchasing arrangements and optimizing our drivers’

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Depreciation relates to owned tractors, trailers, containers, auxiliary power units, communication units, terminal facilities and other assets.

The $432,000, or 1.7%, decrease in depreciation in the 2021 period was primarily due to a decrease in the size of our fleet of tractors.

The $209,000, or 0.8%, decrease in depreciation in the 2021 period was primarily due to a decrease in the size of our fleet of tractors partially offset by increased depreciation for our refrigerated containers.

We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment, which will result in greater depreciation over the useful life.

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These expenses will vary primarily based upon the frequency and severity of our accident experience, our self-insured retention levels and the market for insurance.

The $2.2 million, or 19.3%, decrease in insurance and claims in the 2021 period was primarily due to decreases in the cost of our physical damage claims related to our revenue equipment and our self-insured auto liability claims, partially offset by increased insurance premiums.

The $742,000, or 6.6%, decrease in insurance and claims in the 2021 period was primarily due to decreases in the cost of our physical damage claims related to our revenue equipment and our self-insured workers’

compensation claims.

Our significant self-insured retention exposes us to the possibility of significant fluctuations in claims expense between periods which could materially impact our financial results depending on the frequency, severity and timing of claims.

Gain on disposition of revenue equipment was $5.3 million in the 2021 period, up from $2.2 million in the 2020 period primarily due to an increase in the number of tractors and trailers sold along with an increase in the average gain for the sales.

Gain on disposition of revenue equipment was $4.5 million in the 2021 period, up from $2.1 million in the 2020 period primarily due to an increase in the average gain for the tractor and trailer sales along with an increase in the number of trailers sold.

Future gains or losses on dispositions of revenue equipment will be impacted by the market for used revenue equipment, which is beyond our control.

The $1.3 million increase in other operating expenses in the 2021 period was primarily due to increased costs associated with driver recruitment and chassis rental.

Gain on disposition of facility was $1.7 million in the 2020 period.

The disposition of the facility, located in Forest Park, GA, was part of our long-term program to expand and update the footprint of our facilities throughout the United States.

We held the facility as rental property since 2011 after constructing a larger facility in the area.

The $1.8 million increase in other operating expenses in the 2021 period was primarily due to increased costs associated with driver recruitment and retention.

Our operating income improved 16.8% to $28.5 million in the 2021 period from $24.4 million in the 2020 period as a result of the foregoing factors.

Our operating expenses as a percentage of operating revenue, or “operating ratio,”

improved to 87.7% in the 2021 period from 88.1% in the 2020 period.

were 88.7% in each of the 2021 and 2020 periods.

The operating ratio for our Truckload segment was 88.3% in the 2021 period and 88.7% in the 2020 period, for our Dedicated segment was 89.6% in the 2021 period and 85.9% in the 2020 period, for our Intermodal segment was 89.4% in the 2021 period and 94.1% in the 2020 period, and for our Brokerage segment was 87.2% in the 2021 period and 93.1% in the 2020 period.

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Our effective income tax rate decreased to 25.4% in the 2021 period from 26.1% in the 2020 period.

The 2020 period included additional income tax expense of $1.1 million to adjust for certain discrete tax benefit reserves, which we evaluate based on the current facts, circumstances and information available.

As a result of the factors described above, net income improved 17.9% to $21.3 million, or $0.26 per diluted share, in the 2021 period from $18.0 million, or $0.22 per diluted share, in the 2020 period.

Comparison of Six Months Ended June 30, 2021 to Six Months Ended June 30, 2020

Comparison of Nine Months Ended September 30, 2021 to Nine Months Ended September 30, 2020

The following table sets forth for the periods indicated our operating revenue, operating income and operating ratio by segment, along with the change for each component:

September 30,

(Dollars in thousands)

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Our operating revenue, net of fuel surcharges, increased $39.4 million, or 6.8%, to $623.0 million in the 2021 period from $583.6 million in the 2020 period.

This increase was due to an $11.4 million increase in Brokerage revenue, a $2.9 million increase in Dedicated revenue, net of fuel surcharges, and a $2.3 million increase in Intermodal revenue, net of fuel surcharges, partially offset by a $2.3 million decrease in Truckload revenue, net of fuel surcharges.

This increase was due to a $32.1 million increase in Brokerage revenue, a $5.1 million increase in Intermodal revenue, net of fuel surcharges, and a $2.7 million increase in Dedicated revenue, net of fuel surcharges, partially offset by a $456,000 decrease in Truckload revenue, net of fuel surcharges.

Fuel surcharge revenue increased to $83.7 million in the 2021 period from $63.5 million in the 2020 period, primarily due to higher fuel costs.

Truckload segment revenue increased $7.5 million, or 2.7%, to $290.5 million in the 2021 period from $283.0 million in the 2020 period.

Truckload segment revenue, net of fuel surcharges, decreased $2.3 million, or 1.3%, to $167.6 million in the 2021 period from $169.8 million in the 2020 period.

Truckload segment revenue, net of fuel surcharges, decreased $456,000, or 0.2%, to $254.4 million in the 2021 period from $254.9 million in the 2020 period.

The decrease was due to a reduction in our average number of tractors, despite an increase in our average revenue per tractor.

The improvement in the operating ratio in the 2021 period was primarily due to an increase in our average revenue per tractor due to increased rates with our customers, along with reductions in insurance and claims expense, supplies and maintenance expense, depreciation expense and an increase in gain on disposition of revenue equipment, partially offset by increased company driver compensation expense and net fuel expense.

Dedicated segment revenue increased $11.7 million, or 5.1%, to $240.5 million in the 2021 period from $228.8 million in the 2020 period.

Dedicated segment revenue, net of fuel surcharges, increased 2.2% primarily due to an increase in our average number of tractors partially offset by a decrease in our average revenue per tractor.

The increase in the operating ratio was primarily due to a decrease in our average revenue per tractor and higher net fuel and depreciation costs in the 2021 period.

Dedicated segment revenue, net of fuel surcharges, increased 1.4% primarily due to an increase in our average number of tractors.

The increase in the operating ratio was primarily due to higher company driver compensation expense, increased driver recruiting costs and higher net fuel expense, partially offset by lower insurance and claims expense in the 2021 period.

Intermodal segment revenue increased $8.4 million, or 12.7%, to $74.3 million in the 2021 period from $66.0 million in the 2020 period.

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Brokerage segment revenue increased $32.1 million, or 46.3%, to $101.4 million in the 2021 period from $69.3 million in the 2020 period primarily due to an increase in revenue per load.

The improvement in the operating ratio in the 2021 period was primarily due to decreases in various cost components across the segment and increased rates with our customers.

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Operating Revenue

September 30,

(Dollars in thousands)

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Gain on disposition of revenue equipment

Gain on disposition of facility

Total operating expenses

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Salaries, wages and benefits expense increased $8.4 million, or 3.8%, in the 2021 period from the 2020 period.

Bonus compensation expense for our non-driver employees increased by $797,000 and company driver compensation expense increased by $621,000 in the 2021 period.

This increase resulted primarily from additional company driver compensation expense of $5.7 million and bonus compensation expense for our non-driver employees of $1.2 million.

These increases, along with other smaller increases in the components of salaries, wages and benefits, were partially offset by a $865,000 decrease in employees’

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Purchased transportation expense increased $25.0 million in total, or 22.0%, in the 2021 period from the 2020 period.

Amounts payable to railroads and drayage carriers for transportation services within our Intermodal segment decreased $1.8 million to $27.3 million in the 2021 period from $29.1 million in the 2020 period, primarily due to a decrease in the volume of loads moved on the rail.

Amounts payable to railroads and drayage carriers for transportation services within our Intermodal segment decreased $1.6 million to $41.4 million in the 2021 period from $43.0 million in the 2020 period, primarily due to a decrease in the volume of loads moved on the rail, partially offset by higher fuel surcharges from the railroads.

Amounts payable to carriers for transportation services we arranged in our Brokerage segment increased $25.7 million to $84.2 million in the 2021 period from $58.5 million in the 2020 period, primarily due to an increase in the cost per load within the tight freight market.

The portion of purchased transportation expense related to independent contractors within our Truckload and Dedicated segments, including fuel surcharges, increased $1.5 million in the 2021 period as the rates paid for independent contractors’

The portion of purchased transportation expense related to independent contractors within our Truckload and Dedicated segments, including fuel surcharges, increased $914,000 in the 2021 period as the rates paid for independent contractors’

services rose.

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The DOE national average cost of fuel increased to $3.16 per gallon from $2.58 per gallon in the 2020 period.

Net fuel expense increased to 3.9% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, from 3.2% in the 2020 period.

Our supplies and maintenance expense decreased $1.9 million, or 7.8%, from the 2020 period primarily due to lower parts, tires, outside repair and loading/unloading costs.

Our depreciation expense decreased $172,000, or 0.3%, in the 2021 period primarily due to a decrease in the size of our fleet of tractors.

This increase was a primary factor in our net fuel expense increasing to 4.0% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, from 3.4% in the 2020 period.

Our supplies and maintenance expense decreased $2.6 million, or 7.2%, from the 2020 period primarily due to lower parts, outside repair and loading/unloading costs.

Our depreciation expense decreased $381,000, or 0.5%, in the 2021 period primarily due to a decrease in the size of our fleet of tractors partially offset by increased depreciation for our refrigerated containers.

Our insurance and claims expense decreased $3.8 million, or 10.9%, in the 2021 period primarily due to decreases in the cost of our self-insured auto liability claims and our physical damage claims related to our revenue equipment, partially offset by increased insurance premiums.

Gain on disposition of revenue equipment was $7.3 million in the 2021 period, up from $3.8 million in the 2020 period primarily due to an increase in the number of tractors and trailers sold along with an increase in the average gain for the sales.

Gain on disposition of revenue equipment was $11.9 million in the 2021 period, up from $5.9 million in the 2020 period primarily due to an increase in the average gain for the tractor and trailer sales and an increase in the number of tractors and trailers sold.

Future gains or losses on dispositions of revenue equipment will be impacted by the market for used revenue equipment, which is beyond our control.

Gain on disposition of facility was $1.7 million in the 2020 period.

The disposition of the facility, located in Forest Park, GA, was part of our long-term program to expand and update the footprint of our facilities throughout the United States.

We held the facility as rental property since 2011 after constructing a larger facility in the area.

The $2.4 million increase in other operating expenses in the 2021 period was primarily due to increased costs associated with driver recruitment and retention.

Our operating income improved 19.7% to $81.0 million in the 2021 period from $67.7 million in the 2020 period as a result of the foregoing factors.

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The table below reflects our net cash flows provided by operating activities, net cash flows used for investing activities and net cash flows used for financing activities for the periods indicated.

Ended June 30,

Ended September 30,

(In thousands)

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We repurchased and retired 53,064 shares of common stock for $597,000 in the first quarter of 2020.

We did not repurchase any shares in the rest of 2020 or in the first six months of 2021.

As of June 30, 2021, future repurchases of up to $33.4 million, or approximately 2.6 million shares, were available in the share repurchase program.

In the first six months of 2020, net cash flows provided by operating activities of $104.1 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $55.7 million, to pay cash dividends of $4.4 million, and to upgrade regional operating facilities in the amount of $2.2 million, resulting in a $43.9 million increase in cash and cash equivalents.

We did not repurchase any shares in the rest of 2020 or in the first nine months of 2021.

As of September 30, 2021, future repurchases of up to $33.4 million, or approximately 2.6 million shares, were available in the share repurchase program.

In the first nine months of 2020, net cash flows provided by operating activities of $154.7 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $91.6 million, to pay cash dividends of $7.7 million, and to upgrade regional operating facilities in the amount of $3.3 million, resulting in a $56.8 million increase in cash and cash equivalents.

Beginning in 2018, our net cash flows have been increased by the new tax laws established by the Tax Cuts and Jobs Act of 2017, which reduces the federal corporate statutory income tax rate and establishes bonus depreciation that allows for full expensing of qualified assets.

We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $35 million for the remainder of 2021.

A quarterly cash dividend of $0.04 per share of common stock was declared in each of the first two quarters of 2021 which totaled $6.6 million.

A quarterly cash dividend of $0.027 per share of common stock was declared in each of the first two quarters of 2020 which totaled $4.4 million.

A quarterly cash dividend of $0.04 per share of common stock was paid in each of the first two quarters of 2021 which totaled $6.6 million.

We declared cash dividends in August 2021 which were paid in October 2021 totaling $44.8 million which consisted of a special dividend of $0.50 per common share, along with a quarterly cash dividend of $0.04 per share of common stock.

In 2020, we paid quarterly cash dividends of $0.027 per share of common stock in each of the first two quarters and of $0.04 per share of common stock in the third quarter which totaled $7.7 million.

We currently expect to continue to pay quarterly cash dividends in the future.

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We maintain a credit agreement that provides for an unsecured committed credit facility with an aggregate principal amount of $30.0 million which matures in August 2023.

At June 30, 2021, there was no outstanding principal balance on the facility.

At September 30, 2021, there was no outstanding principal balance on the facility.

As of that date, we had outstanding standby letters of credit to guarantee settlement of self-insurance claims of $18.5 million and remaining borrowing availability of $11.5 million.

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Our credit facility prohibits us from paying, in any fiscal year, stock redemptions and dividends in excess of 25% of our net income from the prior fiscal year.

A waiver allowing stock redemptions and dividends in excess of the 25% limitation in a total amount of up to $60 million in 2020 was obtained from the lender in November 2020.

Waivers allowing stock redemptions and dividends in excess of the 25% limitation in total amounts of up to $80 million in 2021 and of up to $60 million in 2020 were obtained from the lender in August 2021 and November 2020, respectively.

This facility also contains restrictive covenants which, among other matters, require us to maintain compliance with cash flow leverage and fixed charge coverage ratios.

We were in compliance with all covenants at June 30, 2021 and December 31, 2020.

The following is a summary of our contractual obligations as of June 30, 2021.

We were in compliance with all covenants at September 30, 2021 and December 31, 2020.

The following is a summary of our contractual obligations as of September 30, 2021.

Payments Due by Period

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Purchase obligations for revenue equipment

Building construction obligation

Operating lease obligations

The obligation to issue shares of our common stock under our nonqualified deferred compensation plan at June 30, 2021 of 296,957 shares of Company common stock with a value of $4.9 million has been excluded from the above table.

The obligation to issue shares of our common stock under our nonqualified deferred compensation plan at September 30, 2021 of 197,970 shares of Company common stock with a value of $3.1 million has been excluded from the above table.

Off-balance Sheet Arrangements

Other than standby letters of credit maintained in connection with our self-insurance programs in the amount of $18.5 million along with purchase obligations and operating leases summarized above in our summary of contractual obligations, we did not have any other material off-balance sheet arrangements at June 30, 2021.

Inflation and Fuel Costs

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in our Annual Report on Form 10-K for the year ended December 31, 2020.

We have reviewed and determined that those critical accounting policies remain our critical accounting policies as of and for the six months ended June 30, 2021, and that there have been no material changes to our critical accounting policies during this period.

We have reviewed and determined that those critical accounting policies remain our critical accounting policies as of and for the nine months ended September 30, 2021, and that there have been no material changes to our critical accounting policies during this period.

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

What changed 10-Q

Item 1. Financial Statements