What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-05 · 183 added, 149 removed, 395 unchanged (46% of the section changed)

5 unchanged sentences

Cash and cash equivalents

$ 66,527  

$ 56,995  

126,815  

99,003  

Prepaid expenses and other

22,375  

23,980  

Total current assets

220,034  

186,949  

Property and equipment:

Revenue equipment, buildings and land, office equipment and other

955,760  

956,476  

Accumulated depreciation

Net property and equipment

663,819  

682,277  

Other noncurrent assets

$ 885,398  

$ 870,690  

LIABILITIES AND STOCKHOLDERS’

1 unchanged sentence

Accounts payable

$ 29,158  

$ 20,150  

Insurance and claims accruals

42,592  

42,014  

Accrued and other current liabilities

37,632  

31,395  

Total current liabilities

109,382  

93,559  

Deferred income taxes

126,918  

125,163  

Noncurrent operating lease liabilities

Total liabilities

236,636  

219,013  

Stockholders’

4 unchanged sentences

192,000,000 shares authorized;

81,946,875 shares at March 31, 2022, and 83,034,404 shares at December 31, 2021, issued and outstanding

81,014,564 shares at June 30, 2022, and 83,034,404 shares at December 31, 2021, issued and outstanding

Additional paid-in capital

60,256  

85,718  

Retained earnings

587,687  

565,129  

Total stockholders’

648,762  

651,677  

Total liabilities and stockholders’

$ 885,398  

$ 870,690  

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

1 unchanged sentence

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Ended March 31,

Ended June 30,

(In thousands, except per share information)

22 unchanged sentences

Balance at December 31, 2021

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

Repurchase and retirement of common stock

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

2 unchanged sentences

Balance at March 31, 2022

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

Repurchase and retirement of common stock

Issuance of common stock from share-based payment arrangement exercises

Share-based payment arrangement compensation expense

Dividends on common stock

Balance at June 30, 2022

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

MARTEN TRANSPORT, LTD.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS ’

holders’

(In thousands)

Balance at December 31, 2020

Repurchase and retirement of common stock

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

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

Employee taxes paid in exchange for shares withheld

2 unchanged sentences

Balance at March 31, 2021

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

Balance at June 30, 2021

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

1 unchanged sentence

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Ended March 31,

Ended June 30,

(In thousands)

11 unchanged sentences

Net cash provided by operating activities

Cash flows provided by/(used for) investing activities:

Cash flows used for investing activities:

Revenue equipment additions

1 unchanged sentence

Buildings and land, office equipment and other additions

Net cash provided by/(used for) investing activities

Net cash used for investing activities

Cash flows used for financing activities:

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 31, 2022

SIX MONTHS ENDED JUNE 30, 2022

Consolidated Condensed Financial Statements

6 unchanged sentences

Earnings per Common Share

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

Ended March 31,

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

Ended June 30,

(In thousands, except per share amounts)

4 unchanged sentences

Diluted earnings per common share

Options totaling 452,000 and 193,750 equivalent shares for the three -month periods ended March 31, 2022 and 2021, 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 40,263 equivalent shares for the three -month period ended March 31, 2021 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.

There were no such equivalent shares for the three -month period ended March 31, 2022.

Options totaling 486,000 and 495,500 equivalent shares for the three-month and six-month periods ended June 30, 2022, respectively, and 322,150 equivalent shares for each of the three-month and six-month periods ended June 30, 2021, 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, 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.

There were no such equivalent shares for each of the three-month and six-month periods ended June 30, 2022.

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 March 31, 2022, there was no outstanding principal balance on the facility.

At June 30, 2022, 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 $ 16.1 million and remaining borrowing availability of $ 13.9 million.

2 unchanged sentences

This facility bears interest at a variable rate based on the Term SOFR 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 1.15 % at March 31, 2022.

The interest rate for the facility that would apply to outstanding principal balances was 4.25 % at June 30, 2022.

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.

1 unchanged sentence

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 March 31, 2022 and December 31, 2021.

We were in compliance with all covenants at June 30, 2022 and December 31, 2021.

Related Party Transactions

1 unchanged sentence

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

We paid BBI $ 105,000 in the first three months of 2022 and $ 76,000 in the first three months of 2021 for fuel, tires and related services.

In addition, we paid $ 269,000 in the first three months of 2022 and $ 396,000 in the first three months of 2021 to tire manufacturers for tires that were provided by BBI.

We paid BBI $ 252,000 in the first six months of 2022 and $ 140,000 in the first six months of 2021 for fuel, tires and related services.

In addition, we paid $ 790,000 in the first six months of 2022 and $ 1.0 million in the first six months of 2021 to tire manufacturers for tires that were provided by BBI.

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

( 5 ) Share Repurchase Program and Subsequent Event

In August 2019, our Board of Directors approved and we announced an increase from current availability in our existing share repurchase program providing for the repurchase of up to $ 34 million, or approximately 1.8 million shares, of our common stock, which was increased by our Board of Directors to 2.7 million shares in August 2020 to reflect the three -for- two stock split effected in the form of a stock dividend on August 13, 2020.

Share Repurchase Program

In August 2019, our Board of Directors approved and we announced an increase from current availability in our existing share repurchase program providing for the repurchase of up to $ 34 million, or approximately 1.8 million shares, of our common stock, which was increased by our Board of Director s to 2.7 million shares in August 2020 to reflect the three -for- two stock split effected in the form of a stock dividend on August 13, 2020.

On May 3, 2022, our Board of Directors approved and we announced an additional increase from current availability in our existing share repurchase program providing for the repurchase of up to $ 50.0 million, or approximately 3.1 million shares of our common stock.

The share repurchase program allows purchases on the open market or through private transactions in accordance with Rule 10b-18 of the Exchange Act.

1 unchanged sentence

The repurchase program does not have an expiration date.

We repurchased and retired 1.3 million shares of common stock for $ 25.0 million in the first quarter of 2022.

We repurchased and retired 1.3 million shares of common stock for $ 25.0 million in the first quarter of 2022, and 963,000 shares of common stock for $ 16.8 million in the second quarter of 2022.

We did not repurchase any shares in 2021.

As of March 31, 2022, future repurchases of up to $ 8.4 million, or approximately 1.3 million shares, were available in the share repurchase program.

( 6 ) Dividends

As of June 30, 2022, future repurchases of up to $ 33.2 million, or approximately 2.2 million shares, were available in the share repurchase program.

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 $ 0.06 per share of common stock was paid in the first quarter of 2022 which totaled $ 5.0 million.

A quarterly cash dividend of $ 0.04 per share of common stock was paid in the first quarter of 2021 which totaled $ 3.3 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.

Waivers allowing stock redemptions and dividends in excess of the 25% limitation in total amounts of up to $ 80 million in each of 2022 and 2021 were obtained from the lender in March 2022 and August 2021, respectively.

( 7 ) Accounting for Share-based Payment Arrangement Compensation

A quarterly cash dividend of $ 0.06 per share of common stock was paid in each of the first two quarters of 2022 which totaled $ 9.8 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.

Accounting for Share-based Payment Arrangement Compensation

We account for share-based payment arrangements in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 718, Compensation –

Stock Compensation .

During the first three months of 2022, 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 three months of 2022 and 2021 was $ 369,000 and $ 336,000 , respectively.

( 8 ) Termination of Deferred Compensation Plan

During the first six months of 2022, 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 2022 and 2021 was $ 1.6 million and $ 1.3 million, respectively.

Termination of Deferred Compensation Plan

On May 5, 2020, our Compensation Committee and Board of Directors approved the termination of our Deferred Compensation Plan.

6 unchanged sentences

We are committed to new revenue equipment purchases of $ 42.1 million and building construction obligations of $ 10.1 million through the remainder of 2022.

We also have commitments to purchase $ 23.1 million of new revenue equipment in 2023.

We also have commitments to purchase new revenue equipment of $ 22.0 million in 2023 and $ 13.0 million in 2024.

Operating lease obligation expenditures through 2024 total $ 521,000 .

11 unchanged sentences

Truckload, Dedicated, Intermodal, Brokerage and MRTN de Mexico.

The primary source of our operating revenue is provided by our Truckload segment through a combination of regional short-haul and medium-to-long-haul full-load transportation services.

Our Truckload segment provides a combination of regional short-haul and medium-to-long-haul full-load transportation services.

We transport food and other consumer packaged goods that require a temperature-controlled or insulated environment, along with dry freight, across the United States and into and out of Mexico and Canada.

21 unchanged sentences

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 $ 3.4 million and $ 2.2 million as of March 31, 2022 and December 31, 2021, respectively.

We had no impairment losses on contract assets in the first three months of 2022 or in 2021.

Contract assets for this estimated revenue which are classified within prepaid expenses and other within our consolidated condensed balance sheets were $ 3.5 million and $ 2.2 million as of June 30, 2022 and December 31, 2021, respectively.

We had no impairment losses on contract assets in the first six months of 2022 or in 2021.

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 March 31,

Ended June 30,

(In thousands)

1 unchanged sentence

Truckload revenue, net of fuel surcharge revenue

$ 95,170  

$ 83,919  

Truckload fuel surcharge revenue

17,620  

10,996  

Total Truckload revenue

112,790  

94,915  

Dedicated revenue, net of fuel surcharge revenue

78,421  

66,902  

Dedicated fuel surcharge revenue

18,339  

11,335  

Total Dedicated revenue

96,760  

78,237  

Intermodal revenue, net of fuel surcharge revenue

25,605  

19,446  

Intermodal fuel surcharge revenue

Total Intermodal revenue

31,642  

22,004  

Brokerage revenue

46,089  

27,890  

Total operating revenue

$ 287,281  

$ 223,046  

Operating income:

$ 15,571  

$ 11,415  

10,645  

Total operating income

$ 35,858  

$ 23,998  

Truckload segment depreciation expense was $ 13.0 million and $ 13.2 million, Dedicated segment depreciation expense was $ 11.1 million and $ 10.7 million, Intermodal segment depreciation expense was $ 1.7 million and $ 1.5 million, and Brokerage segment depreciation expense was $ 338,000 and $ 282,000 in the three -month periods ended March 31, 2022 and 2021, respectively.

Truckload segment depreciation expense was $ 13.5 million and $ 12.9 million, Dedicated segment depreciation expense was $ 11.2 million and $ 10.7 million, Intermodal segment depreciation expense was $ 1.9 million and $ 1.6 million, and Brokerage segment depreciation expense was $ 349,000 and $ 298,000 in the three-month periods ended June 30, 2022 and 2021, respectively.

Truckload segment depreciation expense was $ 26.4 million and $ 26.1 million, Dedicated segment depreciation expense was $ 22.3 million and $ 21.4 million, Intermodal segment depreciation expense was $ 3.6 million and $ 3.1 million, and Brokerage segment depreciation expense was $ 687,000 and $ 580,000 in the six-month periods ended June 30, 2022 and 2021, respectively.

Use of Estimates

12 unchanged sentences

Truckload, Dedicated, Intermodal, Brokerage and MRTN de Mexico.

The primary source of our operating revenue is provided by our Truckload segment through a combination of regional short-haul and medium-to-long-haul full-load transportation services.

Our Truckload segment provides a combination of regional short-haul and medium-to-long-haul full-load transportation services.

15 unchanged sentences

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 $64.2 million, or 28.8%, in the first three months of 2022 from the first three months of 2021.

Our operating revenue, net of fuel surcharges, increased $47.1 million, or 23.8%, compared with the first three months of 2021.

Truckload segment revenue, net of fuel surcharges, increased 13.4% from the first three months of 2021 primarily due to an increase in our average revenue per tractor, despite a reduction in our average number of tractors.

Dedicated segment revenue, net of fuel surcharges, increased 17.2% from the first three months of 2021 primarily due to an increase in our average revenue per tractor.

Intermodal segment revenue, net of fuel surcharges, increased 31.7% from the first three months of 2021 primarily due to an increase in revenue per load.

Brokerage segment revenue increased 65.3% primarily due to increases in both the number of loads and in revenue per load in the first three months of 2022.

Fuel surcharge revenue increased to $42.0 million in the first three months of 2022 from $24.9 million in the first three months of 2021, primarily due to higher fuel costs.

Our operating revenue increased $161.4 million, or 35.4%, in the first six months of 2022 from the first six months of 2021.

Our operating revenue, net of fuel surcharges, increased $112.6 million, or 28.0%, compared with the first six months of 2021.

Truckload segment revenue, net of fuel surcharges, increased 17.6% from the first six months of 2021 primarily due to an increase in our average revenue per tractor, despite a slight reduction in our average number of tractors.

Dedicated segment revenue, net of fuel surcharges, increased 21.4% from the first six months of 2021 primarily due to an increase in our average revenue per tractor.

Intermodal segment revenue, net of fuel surcharges, increased 28.5% from the first six months of 2021 primarily due to an increase in revenue per load.

Brokerage segment revenue increased 72.7% primarily due to increases in both the number of loads and in revenue per load in the first six months of 2022.

Fuel surcharge revenue increased to $102.4 million in the first six months of 2022 from $53.7 million in the first six months of 2021, 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.

10 unchanged sentences

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

Our operating income improved 49.4% to $35.9 million in the first three months of 2022 from $24.0 million in the first three months of 2021.

Our operating income improved 46.2% to $76.8 million in the first six months of 2022 from $52.5 million in the first six months of 2021.

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

improved to 87.5% in the first three months of 2022 from 89.2% in the first three months of 2021.

Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 85.4% in the first three months of 2022 from 87.9% in the first three months of 2021.

Our net income improved 52.9% to $27.5 million, or $0.33 per diluted share, in the first three months of 2022 from $18.0 million, or $0.22 per diluted share, in the first three months of 2021.

improved to 87.6% in the first six months of 2022 from 88.5% in the first six months of 2021.

Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 85.1% in the first six months of 2022 from 86.9% in the first six months of 2021.

Our net income improved 50.1% to $59.2 million, or $0.72 per diluted share, in the first six months of 2022 from $39.4 million, or $0.47 per diluted share, in the first six months of 2021.

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

At March 31, 2022, we had $66.5 million of cash and cash equivalents, $648.8 million in stockholders’

At June 30, 2022, we had $68.4 million of cash and cash equivalents, $660.2 million in stockholders’

equity and no long-term debt outstanding.

In the first three months of 2022, net cash flows provided by operating activities of $39.9 million were primarily used to repurchase and retire 1.3 million shares of our common stock for $25.0 million, to pay cash dividends of $5.0 million, and to construct and upgrade regional operating facilities in the amount of $2.5 million, resulting in a $9.5 million increase in cash and cash equivalents.

We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $153 million in the remainder of 2022.

A quarterly cash dividend of $0.06 per share of common stock was paid in the first quarter of 2022 which totaled $5.0 million.

In the first six months of 2022, net cash flows provided by operating activities of $98.7 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $30.3 million, to repurchase and retire 2.3 million shares of our common stock for $41.8 million, to pay cash dividends of $9.8 million, and to construct and upgrade regional operating facilities in the amount of $3.8 million, resulting in an $11.4 million increase in cash and cash equivalents.

We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $128 million for the remainder of 2022.

A quarterly cash dividend of $0.06 per share of common stock was paid in each of the first two quarters of 2022 which totaled $9.8 million.

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

Ended March 31,

Ended June 30,

Truckload Segment:

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

Independent contractors provided 87 and 133 tractors as of March 31, 2022 and 2021, respectively.

Comparison of Three Months Ended March 31, 2022 to Three Months Ended March 31, 2021

Independent contractors provided 85 and 118 tractors as of June 30, 2022 and 2021, respectively.

Comparison of Three Months Ended June 30, 2022 to Three Months Ended June 30, 2021

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:

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Consolidated operating ratio

Represents operating expenses as a percentage of operating revenue.

Operating ratio, net of fuel surcharges:

Consolidated operating ratio, net of fuel surcharges

Our operating revenue increased $97.1 million, or 41.8%, to $329.6 million in the 2022 period from $232.4 million in the 2021 period.

Our operating revenue, net of fuel surcharges, increased $65.5 million, or 32.1%, to $269.1 million in the 2022 period from $203.7 million in the 2021 period.

This increase in the 2022 period was due to an $18.2 million increase in Brokerage revenue, an $11.5 million increase in Dedicated revenue, net of fuel surcharges, an $11.3 million increase in Truckload revenue, net of fuel surcharges, and a $6.2 million increase in Intermodal revenue, net of fuel surcharges.

This increase in the 2022 period was due to a $24.5 million increase in Brokerage revenue, an $18.2 million increase in Truckload revenue, net of fuel surcharges, a $17.2 million increase in Dedicated revenue, net of fuel surcharges, and a $5.7 million increase in Intermodal revenue, net of fuel surcharges.

Fuel surcharge revenue increased by $31.7 million to $60.4 million in the 2022 period from $28.8 million in the 2021 period primarily due to higher fuel costs.

1 unchanged sentence

Truckload segment revenue, net of fuel surcharges, increased $18.2 million, or 21.7%, to $101.8 million in the 2022 period from $83.6 million in the 2021 period.

During the 2022 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 2022 period was primarily due to an increase in our average revenue per tractor due to increased rates with our customers, along with a decrease in depreciation expense and an increase in gain on disposition of revenue equipment, partially offset by increases in both company driver compensation expense and driver recruiting costs.

During the 2022 period, an increase in our average revenue per tractor was partially offset by a slight reduction in our average number of tractors.

The higher operating ratio in the 2022 period was primarily due to increased insurance and claims expense and driver recruiting costs, partially offset by an increase in our average revenue per tractor due to increased rates with our customers.

Dedicated segment revenue increased $30.2 million, or 37.7%, to $110.4 million in the 2022 period from $80.1 million in the 2021 period.

Dedicated segment revenue, net of fuel surcharges, increased 25.5% primarily due to an increase in our average revenue per tractor.

The operating ratio was negatively impacted in the 2022 period by increases in both company driver compensation expense and driver recruiting costs, which were partially offset by an increase in our average revenue per tractor due to increased rates with our customers.

The operating ratio was negatively impacted in the 2022 period by increases in company driver compensation expense, insurance and claims expense and driver recruiting costs, which were partially offset by an increase in our average revenue per tractor due to increased rates with our customers.

Intermodal segment revenue increased $11.4 million, or 44.4%, to $37.0 million in the 2022 period from $25.6 million in the 2021 period.

1 unchanged sentence

The improvement in the operating ratio in the 2022 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 $18.2 million, or 65.3%, to $46.1 million in the 2022 period from $27.9 million in the 2021 period primarily due to increases in both the number of loads and in revenue per load.

The improvement in the operating ratio in the 2022 period was primarily due to increased rates with our customers.

Brokerage segment revenue increased $24.5 million, or 79.5%, to $55.3 million in the 2022 period from $30.8 million in the 2021 period primarily due to an increase in the number of loads.

The improvement in the operating ratio in the 2022 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:

21 unchanged sentences

Salaries, wages and benefits expense increased $21.2 million, or 28.1%, in the 2022 period from the 2021 period.

This increase resulted primarily from additional company driver compensation expense of $11.8 million, a $1.5 million increase in employees’

health insurance expense as a result of higher self-insured medical claims and a $1.5 million increase in bonus compensation expense for our non-driver employees.

This increase resulted primarily from additional company driver compensation expense of $15.0 million, a $1.7 million increase in bonus compensation expense for our non-driver employees and a $930,000 increase in employees’

health insurance expense as a result of higher 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 $22.5 million in total, or 49.9%, in the 2022 period from the 2021 period.

Amounts payable to carriers for transportation services we arranged in our Brokerage segment increased $15.2 million to $38.8 million in the 2022 period from $23.6 million in the 2021 period, primarily due to an increase in the cost per load within the tight freight market and growth in load volume.

Amounts payable to carriers for transportation services we arranged in our Brokerage segment increased $19.9 million to $45.6 million in the 2022 period from $25.7 million in the 2021 period, primarily due to growth in load volume.

Amounts payable to railroads and drayage carriers for transportation services within our Intermodal segment increased $3.6 million to $18.4 million in the 2022 period from $14.8 million in the 2021 period.

2 unchanged sentences

Fuel and fuel taxes increased by $29.3 million, or 91.6%, in the 2022 period from the 2021 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 $236,000, or 3.6%, to $6.9 million in the 2022 period from $6.6 million in the 2021 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 $1.3 million, or 19.0%, to $8.0 million in the 2022 period from $6.8 million in the 2021 period.

Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads increased to $7.1 million from $3.5 million in the 2021 period.

5 unchanged sentences

Supplies and maintenance consist of repairs, maintenance, tires, parts, oil and engine fluids, along with load-specific expenses including loading/unloading, tolls, pallets and trailer hostling.

Our supplies and maintenance expense increased $1.3 million, or 11.8%, from the 2021 period primarily due to higher outside repair, tires and parts costs.

Our supplies and maintenance expense increased $2.2 million, or 19.6%, from the 2021 period primarily due to higher outside repair, parts and tires costs, along with increased tolls and loading/unloading costs.

Insurance and claims consist of the costs of insurance premiums and accruals we make for claims within our self-insured retention amounts, primarily for personal injury, property damage, physical damage to our equipment, cargo claims and workers’

1 unchanged sentence

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 $1.3 million, or 11.0%, increase in insurance and claims in the 2022 period was primarily due to increases in our self-insured auto liability, workers’

compensation and cargo claim costs.

The $4.1 million, or 43.1%, increase in insurance and claims in the 2022 period was primarily due to increases in our self-insured auto liability claim costs and in the cost of physical damage claims related to our revenue equipment.

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 $4.8 million in the 2022 period, down from $5.3 million in the 2021 period primarily due to a decrease in the number of units sold, partially offset by an increase in the average gain for our tractor and trailer sales.

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 $3.5 million increase in other operating expenses in the 2022 period was primarily due to increases in costs associated with driver recruitment and retention along with travel and meals expense.

Our operating income improved 43.5% to $40.9 million in the 2022 period from $28.5 million in the 2021 period as a result of the foregoing factors.

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

was 87.6% in the 2022 period and 87.7% in the 2021 period.

The operating ratio for our Truckload segment was 87.3% in the 2022 period and 86.2% in the 2021 period, for our Dedicated segment was 87.3% in the 2022 period and 86.7% in the 2021 period, for our Intermodal segment was 88.9% in the 2022 period and 92.8% in the 2021 period, and for our Brokerage segment was 87.9% in the 2022 period and 90.7% in the 2021 period.

Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 84.8% in the 2022 period from 86.0% in the 2021 period.

Our effective income tax rate decreased to 22.7% in the 2022 period from 24.9% in the 2021 period due to a change in unrecognized tax benefits for prior periods resulting from resolution of an IRS audit, along with decreases in per diem and other non-deductible expenses.

As a result of the factors described above, net income improved 47.8% to $31.7 million, or $0.39 per diluted share, in the 2022 period from $21.4 million, or $0.26 per diluted share, in the 2021 period.

Comparison of Six Months Ended June 30, 2022 to Six Months Ended June 30, 2021

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:

(Dollars in thousands)

Operating revenue:

Truckload revenue, net of fuel surcharge revenue

Truckload fuel surcharge revenue

Total Truckload revenue

Dedicated revenue, net of fuel surcharge revenue

Dedicated fuel surcharge revenue

Total Dedicated revenue

Intermodal revenue, net of fuel surcharge revenue

Intermodal fuel surcharge revenue

Total Intermodal revenue

Brokerage revenue

Total operating revenue

Operating income:

Total operating income

Operating ratio:

Consolidated operating ratio

Operating ratio, net of fuel surcharges:

Consolidated operating ratio, net of fuel surcharges

Our operating revenue increased $161.4 million, or 35.4%, to $616.8 million in the 2022 period from $455.5 million in the 2021 period.

Our operating revenue, net of fuel surcharges, increased $112.6 million, or 28.0%, to $514.4 million in the 2022 period from $401.8 million in the 2021 period.

This increase in the 2022 period was due to a $42.7 million increase in Brokerage revenue, a $29.4 million increase in Truckload revenue, net of fuel surcharges, a $28.7 million increase in Dedicated revenue, net of fuel surcharges, and an $11.8 million increase in Intermodal revenue, net of fuel surcharges.

Fuel surcharge revenue increased by $48.8 million to $102.4 million in the 2022 period from $53.7 million in the 2021 period primarily due to higher fuel costs.

Truckload segment revenue increased $48.9 million, or 25.6%, to $239.8 million in the 2022 period from $190.9 million in the 2021 period.

Truckload segment revenue, net of fuel surcharges, increased $29.4 million, or 17.6%, to $197.0 million in the 2022 period from $167.6 million in the 2021 period.

During the 2022 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 2022 period was primarily due to an increase in our average revenue per tractor due to increased rates with our customers, partially offset by increases in company driver compensation expense, driver recruiting costs and insurance and claims expense.

Dedicated segment revenue increased $48.8 million, or 30.8%, to $207.1 million in the 2022 period from $158.4 million in the 2021 period.

Dedicated segment revenue, net of fuel surcharges, increased 21.4% primarily due to an increase in our average revenue per tractor.

Intermodal segment revenue increased $21.0 million, or 44.1%, to $68.6 million in the 2022 period from $47.6 million in the 2021 period.

Intermodal segment revenue, net of fuel surcharges, increased 28.5% from the 2021 period primarily due to an increase in revenue per load.

The improvement in the operating ratio in the 2022 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 $42.7 million, or 72.7%, to $101.4 million in the 2022 period from $58.7 million in the 2021 period primarily due to increases in both the number of loads and in revenue per load.

Percentage of

Operating Revenue

(Dollars in thousands)

Operating revenue

Operating expenses (income):

Salaries, wages and benefits

Purchased transportation

Fuel and fuel taxes

Supplies and maintenance

Operating taxes and licenses

Insurance and claims

Communications and utilities

Gain on disposition of revenue equipment

Total operating expenses

Operating income

Income before income taxes

Income taxes expense

Salaries, wages and benefits expense increased $37.5 million, or 25.3%, in the 2022 period from the 2021 period.

This increase resulted primarily from additional company driver compensation expense of $26.8 million, a $3.1 million increase in bonus compensation expense for our non-driver employees and a $2.4 million increase in employees’

health insurance expense as a result of higher self-insured medical claims.

Purchased transportation expense increased $39.0 million in total, or 45.5%, in the 2022 period from the 2021 period.

Amounts payable to carriers for transportation services we arranged in our Brokerage segment increased $35.1 million to $84.4 million in the 2022 period from $49.3 million in the 2021 period, primarily due to an increase in the cost per load within the tight freight market and growth in load volume.

Amounts payable to railroads and drayage carriers for transportation services within our Intermodal segment increased $6.3 million to $33.6 million in the 2022 period from $27.3 million in the 2021 period.

The portion of purchased transportation expense related to independent contractors within our Truckload and Dedicated segments, including fuel surcharges, decreased $2.3 million in the 2022 period.

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

Fuel and fuel taxes increased by $44.8 million, or 73.4%, in the 2022 period from the 2021 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 $1.5 million, or 11.3%, to $14.9 million in the 2022 period from $13.4 million in the 2021 period.

Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads increased to $11.6 million from $6.1 million in the 2021 period.

The DOE national average cost of fuel increased to $4.87 per gallon from $3.06 per gallon in the 2021 period.

Despite this increase, our net fuel expense was 3.6% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, down from 3.9% in the 2021 period.

Our supplies and maintenance expense increased $3.5 million, or 15.7%, from the 2021 period primarily due to higher outside repair, parts and tires costs, along with increased tolls and loading/unloading costs.

The $5.3 million, or 25.5%, increase in insurance and claims in the 2022 period was primarily due to increases in our self-insured auto liability claim costs and in the cost of physical damage claims related to our revenue equipment.

Gain on disposition of revenue equipment was $9.4 million in the 2022 period, up from $7.3 million in the 2021 period primarily due to an increase in the average gain for our tractor and trailer sales, despite a decrease in the number of units sold.

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Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 85.1% in the 2022 period from 86.9% in the 2021 period.

Our effective income tax rate decreased to 23.2% in the 2022 period from 25.0% in the 2021 period primarily due to decreases in per diem and other non-deductible expenses.

Our effective income tax rate decreased to 23.0% in the 2022 period from 25.0% in the 2021 period due to a change in unrecognized tax benefits for prior periods resulting from resolution of an IRS audit, along with decreases in per diem and other non-deductible expenses.

As a result of the factors described above, net income improved 50.1% to $59.2 million, or $0.72 per diluted share, in the 2022 period from $39.4 million, or $0.47 per diluted share, in the 2021 period.

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We have no capital expenditure requirements relating to those drivers who own their tractors or obtain financing through third parties.

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

Ended March 31,

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,

(In thousands)

Net cash flows provided by operating activities

Net cash flows provided by/(used for) investing activities

Net cash flows (used for) investing activities

Net cash flows (used for) financing activities

In August 2019, our Board of Directors approved and we announced an increase from current availability in our existing share repurchase program providing for the repurchase of up to $34 million, or approximately 1.8 million shares, of our common stock, which was increased by our Board of Directors to 2.7 million shares in August 2020 to reflect the three-for-two stock split effected in the form of a stock dividend on August 13, 2020.

On May 3, 2022, our Board of Directors approved and we announced an additional increase from current availability in our existing share repurchase program providing for the repurchase of up to $50.0 million, or approximately 3.1 million shares of our common stock.

The share repurchase program allows purchases on the open market or through private transactions in accordance with Rule 10b-18 of the Exchange Act.

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The repurchase program does not have an expiration date.

We repurchased and retired 1.3 million shares of common stock for $25.0 million in the first quarter of 2022.

We repurchased and retired 1.3 million shares of common stock for $25.0 million in the first quarter of 2022, and 963,000 shares of common stock for $16.8 million in the second quarter of 2022.

We did not repurchase any shares in 2021.

As of March 31, 2022, future repurchases of up to $8.4 million, or approximately 1.3 million shares, were available in the share repurchase program.

On May 3, 2022, our Board of Directors approved and we announced an additional increase from current availability in our existing share repurchase program providing for the repurchase of up to $50.0 million, or approximately 3.1 million shares of our common stock.

In the first three months of 2021, net cash flows provided by operating activities of $43.6 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $16.3 million, to pay cash dividends of $3.3 million, and to upgrade regional operating facilities in the amount of $591,000, resulting in a $22.5 million increase in cash and cash equivalents.

We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $153 million in the remainder of 2022.

As of June 30, 2022, future repurchases of up to $33.2 million, or approximately 2.2 million shares, were available in the share repurchase program.

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.

We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $128 million for the remainder of 2022.

This amount includes commitments to purchase $42.1 million of new revenue equipment and $10.1 million in building construction through the remainder of 2022.

We also have commitments to purchase $23.1 million of new revenue equipment in 2023.

We also have commitments to purchase new revenue equipment of $22.0 million in 2023 and $13.0 million in 2024.

Additionally, operating lease obligations total $521,000 through 2024.

A quarterly cash dividend of $0.06 per share of common stock was paid in the first quarter of 2022 which totaled $5.0 million.

A quarterly cash dividend of $0.04 per share of common stock was paid in the first quarter of 2021 which totaled $3.3 million.

A quarterly cash dividend of $0.06 per share of common stock was paid in each of the first two quarters of 2022 which totaled $9.8 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 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 March 31, 2022, there was no outstanding principal balance on the facility.

At June 30, 2022, 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 $16.1 million and remaining borrowing availability of $13.9 million.

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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 March 31, 2022 and December 31, 2021.

Other than our obligations for revenue equipment and building construction purchases and operating lease expenditures, along with our outstanding standby letters of credit to guarantee settlement of self-insurance claims, which are each mentioned above, we did not have any material off-balance sheet arrangements at March 31, 2022.

We were in compliance with all covenants at June 30, 2022 and December 31, 2021.

Our tractor productivity generally decreases during the winter season because inclement weather impedes operations and some shippers reduce their shipments.

5 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements