What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-03-11 compared with 2021-03-05 · 70 added, 220 removed, 194 unchanged (60% of the section changed)

8 unchanged sentences

Repurchases of Equity Securities by the Issuer

The Company’s stock repurchase program has been extended and expanded several times, most recently in April 2017, when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011 authorization.

Since the reauthorization, the Company has repurchased 331,565 shares of its common stock under this repurchase program.

In addition, during 2019 and 2018 the Company repurchased 192,743 shares and 185,597 shares, respectively, through publicly announced Dutch auction tender offers.

The Company’s stock repurchase program has been extended and expanded several times, most recently in November 2021, when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011 authorization.

No shares were repurchased under the Company’s stock repurchase program during the fourth quarter of 2021.

In addition, during 2021, 2020 and 2019 the Company repurchased 272,405 shares, 0 shares and192,743 shares, respectively, through publicly announced Dutch auction tender offers.

See “Item 8.

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The Company did not engage in any tender offers during 2020.

The following table summarizes the Company’s common stock repurchases during the fourth quarter of 2020.

No shares were purchased during the quarter other than through the repurchase program described above, and all purchases were made by or on behalf of the Company and not by any “affiliated purchaser.”

Total number of

shares purchased as

part of publicly

announced plans or

Maximum number of

shares that may yet

be purchased under

October 1-31, 2020

November 1-30, 2020

December 1-31, 2020

The Company’s stock repurchase program does not have an expiration date.

On July 27, 2021, the Company commenced a tender offer to repurchase up to 200,000 shares of the Company’s outstanding common stock at a price of not greater than $37.00 nor less than $32.00 per share.

Following the expiration of the tender offer on August 31, 2021, the Company accepted 272,405 shares, including 72,405 oversubscribed shares tendered, of its common stock (as adjusted for the Company’s 2-for-1 forward split of its common stock in the form of a 100% stock dividend paid on August 16, 2021, to stockholders of record on July 30,2021) for purchase at $37.00 per share, at an aggregate purchase price of approximately $10.1 million, excluding fees and expenses related to the offer.

The Company funded the purchase of the accepted shares tendered with available cash and accounted for the repurchase of these shares as treasury stock on the Company’s condensed consolidated balance sheet as of September 30, 2021.

Securities Authorized for Issuance Under Equity Compensation Plans

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AND THE NASDAQ TRUCKING AND TRANSPORTATION STOCKS INDEX THROUGH DECEMBER 31, 2021

Selected Financial Data.

The following selected financial and operating data should be read in conjunction with the Consolidated Financial Statements and notes thereto included elsewhere in this Report.

Year Ended December 31,

(in thousands, except per share amounts)

Statement of Operations Data:

Operating revenues:

Operating revenues, before fuel surcharge

Fuel surcharge

Total operating revenues

Operating expenses:

Salaries, wages and benefits

Operating supplies and expenses

Rent and purchased transportation

Insurance and claims

Loss (gain) on sale or disposal of property

Total operating expenses

Operating income

Non-operating (expense) income

Interest expense

Income before income taxes

Income tax expense (benefit)

Earnings per common share:

Average common shares outstanding –

Cash dividends declared per common share

Diluted income per share for 2020, 2019, 2018, 2017, and 2016 assumes the exercise/vesting of stock to purchase an aggregate of 20,611, 25,545, 25,516, 50,177, and 39,093 shares of common stock, respectively.

At December 31,

Balance Sheet Data:

(in thousands)

Long-term debt, excluding current portion

Stockholders' equity

Year Ended December 31,

Operating Data:

Operating ratio (1)

Average number of truckloads per week

Average miles per trip

Total miles traveled (in thousands)

Average miles per truck

Average revenue, before fuel surcharge per truck per day

Average revenue, before fuel surcharge per loaded mile

Empty mile factor

At end of period:

Total company-owned/leased trucks (2)

Average age of company-owned trucks (in years)

Total company-owned/leased trailers (3)

Average age of company-owned trailers (in years)

Number of employees and independent contract drivers

Total operating expenses, net of fuel surcharge as a percentage of operating revenues, before fuel surcharge.

Includes the following numbers of independent contractor trucks:

355 in 2020, 553 in 2019, 597 in 2018, 560 in 2017, and 578 in 2016.

Includes the following numbers of leased trailers:

0 in 2020, 56 in 2019, 43 in 2018, zero in 2017, and 232 in 2016.

Management ’

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Insurance and claims

Gain on sale or disposal of property

(Gain) Loss on sale or disposal of property

Total operating expenses

Operating income

Non-operating (expense) income

Non-operating income (expense)

Interest expense

1 unchanged sentence

2021 Compared to 2020

For the year ended December 31, 2021, truckload services revenue, before fuel surcharges, increased 27.3% to $429.6 million as compared to $337.5 million for the year ended December 31, 2020.

The increase relates primarily to a 34.6% increase in our rate per loaded mile, from $1.91 for the year ended December 31, 2020 to $2.58 for the year ended December 31, 2021 and to temporary plant shutdowns in early 2020 experienced by some of our major customers due to COVID-19.

Salaries, wages and benefits decreased from 35.3% of revenues, before fuel surcharges, during 2020 to 30.6% of revenues, before fuel surcharges, during 2021.

The percentage-based decrease relates primarily to the interaction of expenses with fixed-cost characteristics, such as general and administrative wages, maintenance wages, and operations wages with the increase in revenues for the periods compared.

Operating supplies and expenses decreased from 10.7% of revenues, before fuel surcharges, during 2020 to 8.3% of revenues, before fuel surcharges, during 2021.

The decrease relates primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel, due to increased fuel surcharge collections from customers, and to for the year ended December 31, 2021 compared to December 31, 2020.

The decrease also relates to the interaction of expenses with fixed-cost characteristics, such as rents, driver training schools and operating taxes and licenses.

Rent and purchased transportation increased from 23.2% of revenues, before fuel surcharges, during 2020 to 24.3% of revenues, before fuel surcharges, during 2021.

The increase was primarily due to an increase in the rates paid to third-party owner-operators for the year ended December 31, 2021 compared to the year ended December 31, 2020.

Depreciation decreased from 16.5% of revenues, before fuel surcharges, during 2020 to 12.5% of revenues, before fuel surcharges, during 2021.

The decrease relates primarily to the interaction of an increase in operating revenues with the fixed-cost nature of depreciation expense.

Insurance and claims increased from 2.6% of revenues, before fuel surcharges, during 2020 to 4.4% of revenues, before fuel surcharges, during 2021.

This increase relates primarily to an increase in accident and legal reserves, recognized in 2021 as compared to 2020 and to an increase in the premiums paid for auto liability and cargo insurance.

Other expenses decreased from 3.6% of revenues, before fuel surcharges, during 2020 to 2.5% of revenues, before fuel surcharges, during 2021.

This decrease relates primarily to a decrease in outside professional services expenses in 2021 as compared to 2020.

Non-operating income increased from a loss of 0.5% of revenues, before fuel surcharges, during 2020 to a gain of 1.9% of revenues, before fuel surcharges, during 2021.

This increase resulted primarily from an increase in the market value of our marketable equity securities portfolio at December 31, 2021 as compared to December 31, 2020.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 82.3% for 2021 from 92.0% for 2020.

2020 Compared to 2019

For the year ended December 31, 2020, truckload services revenue, before fuel surcharges, decreased 7.2% to $337.5 million as compared to $363.6 million for the year ended December 31, 2019.

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During 2020, the average number of company-owned trailers increased by 634 as compared to 2019.

The Company uses a three-year replacement cycle for trucks it intends to trade back or sell and a five-year life cycle for tractors it intends to place in its lease to own program.

Trailers are on a seven-year replacement cycle.

The cost of new trucks and trailers have increased significantly over the previous three-year and seven-year periods and depreciating higher cost equipment over the same length of time will result in an increase in depreciation expense during the respective period.

Insurance and claims decreased from 9.8% of revenues, before fuel surcharges, during 2019 to 2.6% of revenues, before fuel surcharges, during 2020.

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This decrease resulted primarily from a decrease in the market value of our marketable equity securities portfolio at December 31, 2020 as compared to December 31, 2019.

2019 Compared to 2018

For the year ended December 31, 2019, truckload services revenue, before fuel surcharges, increased 2.0% to $363.6 million as compared to $356.6 million for the year ended December 31, 2018.

The increase related primarily to a 7.8% increase in our rate per loaded mile, from $1.71 for the year ended December 31, 2018 to $1.84 for the year ended December 31, 2019, and to an increase in the average number of trucks in service from 1,901 during 2018 to 2,075 during 2019.

These increases were partially offset by a decrease in the average number of miles travelled per day by our trucks in 2019 compared to 2018, which was a result of a decrease in the average length of haul of shipments offered by our customers.

Salaries, wages and benefits increased from 32.4% of revenues, before fuel surcharges, during 2018 to 34.5% of revenues, before fuel surcharges, during 2019.

The increase related primarily to an increase in company driver wages paid during 2019 compared to 2018.

The increase in driver wages related primarily to route specific raises that were phased in throughout 2019 and to an increase in wages and benefits paid to regional and short-haul drivers.

In addition, the proportion of total miles driven by company drivers increased as the number of company drivers increased year-over-year.

Operating supplies and expenses increased from 1.5% of revenues, before fuel surcharges, during 2018 to 6.5% of revenues, before fuel surcharges, during 2019.

The increase related primarily to an increase in the average surcharge-adjusted fuel price paid per gallon of diesel fuel, which was a result of decreased fuel surcharge collections from customers.

Fuel surcharge collections can fluctuate significantly from period to period as they are generally based on changes in fuel prices from period to period so that, during periods of rising fuel prices, fuel surcharge collections increase, while fuel surcharge collections decrease during periods of falling fuel prices.

Also contributing to the increase was an increase in the proportion of total miles driven by company drivers for the year ended December 31, 2019 compared to December 31, 2018.

This increase in miles driven by company drivers has the effect of increasing our net operating supplies and expenses while decreasing the Rent and purchased transportation category, as fuel surcharge revenue generated from transportation services performed by owner-operators is reflected as a reduction in net operating supplies and expenses, while fuel surcharges paid to owner-operators for their services is reported along with their base rate of pay in the Rent and purchased transportation category.

Rent and purchased transportation decreased from 34.4% of revenues, before fuel surcharges, during 2018 to 28.3% of revenues, before fuel surcharges, during 2019.

The decrease was primarily due to a reduction in the proportion of total miles driven by owner-operators for the year ended December 31, 2019 compared to the year ended December 31, 2018.

Depreciation increased from 13.7% of revenues, before fuel surcharges, during 2018 to 15.0% of revenues, before fuel surcharges, during 2019.

This increase was primarily the result of an increase in the average number of trucks and trailers owned by the company.

During 2019, the average number of company-owned trucks and trailers increased by 199 and 503, respectively, compared to 2018.

The Company uses a three-year replacement cycle for trucks it intends to trade back or sell and a five-year life cycle for tractors it intends to place in its lease to own program.

Trailers are on a seven-year replacement cycle.

The cost of new trucks and trailers had increased significantly over the previous three-year and seven-year periods.

Depreciating higher cost equipment over the same length of time will result in an increase in depreciation expense during the respective period.

Insurance and claims increased from 4.8% of revenues, before fuel surcharges, during 2018 to 9.8% of revenues, before fuel surcharges, during 2019.

This increase was primarily the result of the negative impact of estimated amounts reserved for the settlement of a lawsuit which claims that the Company was in violation of minimum wage laws with regard to certain activities performed by employee drivers and for a similar suit brought against the Company by certain individuals who assert that they were misclassified as owner-operators.

This increase was partially offset by decreases in insurance premiums resulting from the election to become self-insured for certain categories of property damage and liability risk.

The Company became self-insured for property damage on company-owned trucks commencing on September 1, 2018.

Prior to this, the Company paid insurance premiums and was insured for property damage insurance coverage for company-owned trucks through a third-party insurance carrier.

In addition, the Company became self-insured for certain layers of auto liability claims in excess of $1.0 million commencing September 1, 2019.

During the first nine months of 2019, and for the entire year of 2018, the Company paid for auto liability insurance coverage for claims in excess of $1.0 million through various third-party insurance carriers.

Other expenses increased from 3.0% of revenues, before fuel surcharges, during 2018 to 3.6% of revenues, before fuel surcharges, during 2019.

This increase related primarily to an increase in amounts expensed for legal fees and other supplies and expenses.

This increase was partially offset by a decrease for amounts expensed for uncollectible revenue.

Non-operating income increased from a loss of 1.0% of revenues, before fuel surcharges, during 2018 to 1.5% of revenue, before fuel surcharges, during 2019.

This increase resulted primarily from an increase in the market value of our marketable equity securities portfolio at December 31, 2019 compared to December 31, 2018.

The unrealized pre-tax gain in market value for 2019 was approximately $3,698,000 compared to a net unrealized pre-tax loss in market value of approximately $5,763,000 reported as Non-operating expense for 2018.

Interest expense increased from 1.6% of revenues, before fuel surcharges, during 2018 to 2.1% of revenues, before fuel surcharges, during 2019.

This increase was attributable to market increases in interest rates and to increases in amounts financed by the Company for new equipment.

The increase in amounts financed was the result of growth in the number of company-owned trucks and trailers operated within our fleet.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased from 89.7% for 2018 to 97.7% for 2019.

Results of Operations - Logistics and Brokerage Services

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Operating income

Non-operating (expense) income

Non-operating income (expense)

Interest expense

2 unchanged sentences

For the year ended December 31, 2021, logistics and brokerage services revenues, before fuel surcharges, increased 108.6% to $211.7 million as compared to $101.5 million for the year ended December 31, 2020.

The increase was primarily related to a 69.5% increase in the number of loads carried for customers during 2021 as compared to 2020, coupled with a 23.1% increase in revenue per load.

Salaries, wages and benefits decreased from 5.0% of revenues, before fuel surcharges, in 2020 to 4.6% of revenues, before fuel surcharges, in 2021.

The decrease relates primarily to the effect of higher revenues without a corresponding increase in those wages with fixed cost characteristics, such as general and administrative wages.

Rent and purchased transportation decreased from 86.5% of revenues, before fuel surcharges, in 2020 to 82.5% of revenues, before fuel surcharges, in 2021.

The decrease results from paying third-party carriers a smaller percentage of customer revenue.

The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved to 88.7% for 2021 from 93.3% for 2020.

2020 Compared to 2019

For the year ended December 31, 2020, logistics and brokerage services revenues, before fuel surcharges, increased 33.6% to $101.5 million as compared to $75.9 million for the year ended December 31, 2019.

The increase was primarily related to a 36.0% increase in the number of loads carried for customers during 2020 as compared to 2019.

3 unchanged sentences

The increase results from paying third-party carriers a larger percentage of customer revenue.

2019 Compared to 2018

For the year ended December 31, 2019, logistics and brokerage services revenues, before fuel surcharges, decreased 15.0% to $75.9 million as compared to $89.3 million for the year ended December 31, 2018.

The decrease was primarily the result of a decrease in freight rates charged to customers during 2019 as compared to 2018.

Salaries, wages and benefits increased from 4.6% of revenues, before fuel surcharges, in 2018 to 5.8% of revenues, before fuel surcharges, in 2019.

The increase related primarily to the effect of lower revenues without a corresponding decrease in those wages with fixed cost characteristics, such as general and administrative wages.

Rent and purchased transportation decreased from 88.1% of revenues, before fuel surcharges, in 2018 to 86.4% of revenues, before fuel surcharges, in 2019.

The decrease results from paying third-party carriers a smaller percentage of customer revenue.

Results of Operations - Combined Services

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Income tax expense was approximately $26.0 million in 2021, resulting in an effective rate of 25.4%, as compared to approximately $5.6 million, or an effective tax rate of 23.8% in 2020.

The effective tax rate is impacted by the existence of partially non-deductible meal and incidental expense per-diem payments to company drivers.

Per-diem payments may cause a significant difference in the Company’s effective tax rate from period-to-period as the proportion of non-deductible expenses to pre-tax net income increases or decreases.

The effective tax rate is impacted by the effect of state taxes and other factors.

In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of Accounting Standards Codification (“ASC”) 740-10-30, weighs all available evidence, both positive and negative to determine whether, based on the weight of that evidence, a valuation allowance is necessary.

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The combined net income for all divisions was $76.5 million, or 11.9% of revenues, before fuel surcharge, for 2021 as compared to the combined net income for all divisions of $17.8 million or 4.1% of revenues, before fuel surcharge, for 2020.

Diluted earnings per share increased from $1.34 for the year ended December 31, 2019 to $3.09 for the year ended December 31, 2020.

Diluted earnings per share increased to $6.69 for the year ended December 31, 2021 from $1.55 for the year ended December 31, 2020.

2020 Compared to 2019

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The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by taxing authorities, based on the technical merits of the position.

As of December 31, 2019, an adjustment to the Company’s consolidated financial statements for uncertain tax positions was not required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws.

As of December 31, 2020, an adjustment to the Company’s consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws.

The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense.

During 2019 and 2018, the Company did not recognize or accrued any interest or penalties related to uncertain income tax positions.

During 2020 and 2019, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.

The Company and its subsidiaries are subject to U.S.

and Canadian federal income tax laws as well as the income tax laws of multiple state jurisdictions.

The major tax jurisdictions in which we operate generally provide for a deficiency assessment statute of limitation period of three years and as a result, as of December 31, 2019, the Company’s tax years 2016 and forward remained open to examination in those jurisdictions.

The major tax jurisdictions in which we operate generally provide for a deficiency assessment statute of limitation period of three years and as a result, the Company’s tax years 2017 and forward remain open to examination in those jurisdictions.

The combined net income for all divisions was $17.8 million, or 4.1% of revenues, before fuel surcharge, for 2020 as compared to the combined net income for all divisions of $7.9 million or 1.8% of revenues, before fuel surcharge, for 2019.

Diluted earnings per share decreased from $3.90 for the year ended December 31, 2018 to $1.34 for the year ended December 31, 2019.

Quarterly Results of Operations

The following table presents selected consolidated financial information for each of our last eight fiscal quarters through December 31, 2020.

The information has been derived from unaudited consolidated financial statements that, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the quarterly information.

Quarter Ended

(in thousands, except earnings per share data)

Operating revenues

Total operating expenses

Operating income (loss)

Net (loss) income

(Loss) income per common share:

Diluted earnings per share increased to $3.09 for the year ended December 31, 2020 from $1.34 for the year ended December 31, 2019.

Liquidity and Capital Resources

2 unchanged sentences

During 2021, we generated $101.7 million in cash from operating activities compared to $67.6 million and $84.3 million in 2020 and 2019, respectively.

Investing activities used $32.7 million in cash during 2020 compared to $62.3 million and $55.3 million in 2019 and 2018, respectively.

The cash used for investing activities in all three years related primarily to the purchase of revenue equipment such as trucks and trailers and related equipment such as auxiliary power units.

Investing activities generated $9.3 million in cash during 2021 compared to using $32.7 million and $62.3 million in 2020 and 2019, respectively.

The cash used for investing activities relates primarily to the purchase of revenue equipment such as trucks and trailers.

Financing activities used $92.8 million in cash during 2021 compared to using $34.9 million during 2020 and $22.0 million during 2019.

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During 2021, we maintained a revolving line of credit with a borrowing limit of $60.0 million.

Under this credit facility, amounts outstanding under the line bear interest at LIBOR (determined as of the first day of each month) plus 1.25% (1.40% at December 31, 2020), are secured by our trade accounts receivable and mature on July 1, 2022.

Under this credit facility, amounts outstanding under the line bear interest at LIBOR (with a floor of 0.5%, determined as of the first day of each month) plus 1.25% (1.75% at December 31, 2021), are secured by our trade accounts receivable and mature on July 1, 2024.

The credit facility also establishes an “unused fee”

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At December 31, 2021 outstanding advances on the line of credit were approximately $0.4 million, including approximately $0.3 million in letters of credit, with availability to borrow $59.6 million.

During 2020, we borrowed $17.6 million under a ten-year term loan to refinance our purchase during the first quarter of 2020 of a terminal in Laredo, Texas, which was initially financed using funds from our line of credit.

The term loan bears interest at a fixed rate of 3.02% and is secured by a mortgage and assignment of rents on the Laredo terminal property.

In February 2022, we borrowed $35.5 million under a term loan secured by our real estate.

This term loan bears interest at a fixed rate of 2.95%, with principal and interest payable monthly, and matures on January 1, 2032.

The loan is secured by mortgages and assignments of rents on the Company’s principal office and four terminal locations.

Trade accounts receivable increased from $77.7 million at December 31, 2020 to $121.9 million at December 31, 2021.

The increase relates to a general increase in freight revenue and fuel surcharge revenue, which flows through the accounts receivable account, during the fourth quarter of 2021 as compared to the freight revenue and fuel surcharge revenue generated during the fourth quarter of 2020.

Prepaid expenses and deposits increased from $8.7 million at December 31, 2019 to $10.2 million at December 31, 2020.

The increase primarily relates to an increase in prepaid taxes and licenses.

Marketable equity securities at December 31, 2020 decreased approximately $1.6 million as compared to December 31, 2019.

The decrease resulted from sales of marketable equity securities of approximately $2.0 million and a decrease in the market value of the remaining portfolio of approximately $3.5 million, offset by purchases of marketable equity securities of $3.9 million.

Marketable equity securities at December 31, 2021 increased approximately $11.5 million as compared to December 31, 2020.

The increase resulted from purchases of marketable equity securities of approximately $6.4 million and an increase in the market value of the portfolio of approximately $8.2 million, offset by sales of marketable equity securities of $3.1 million.

At December 31, 2021, the remaining marketable equity securities have a combined cost basis of approximately $29.4 million and a combined fair market value of approximately $39.4 million.

2 unchanged sentences

The holding term of these securities depends largely on the general economic environment, the equity markets, borrowing rates, and the Company's cash requirements.

Land increased from $7.2 million at December 31, 2019 to $18.5 million at December 31, 2020.

The increase relates primarily to the purchase of an additional terminal location in Laredo, Texas for approximately $20 million, of which $8.8 million was allocated to land.

In addition, we purchased $2.5 million of land in Nuevo Laredo, Mexico for future growth in our cross border business.

Structures and improvements increased from $20.2 million at December 31, 2019 to $32.3 million at December 31, 2020.

The increase relates primarily to the purchase of an additional terminal location in Laredo, Texas for approximately $20 million, of which $10.9 million was allocated to the terminal buildings.

Revenue equipment at December 31, 2021, which generally consists of trucks, trailers, and revenue equipment accessories such as Qualcomm™

satellite tracking units and auxiliary power units, increased approximately $67.9 million as compared to December 31, 2019.

The increase relates primarily to overall fleet growth of company-owned trucks and trailers utilized by the company at December 31, 2020 compared to December 31, 2019 and to the higher purchase price of new trucks and trailers compared to the trucks and trailers which are being replaced and sold.

Also contributing to the increase was a delay in the surrender of trade trucks in exchange for the new replacement trucks.

These delayed trades will be surrendered when payment is received during 2021 which will reduce the balance in both the Revenue equipment and Accumulated depreciation category.

Accounts payable increased from $16.6 million at December 31, 2019 to $46.1 million at December 31, 2020.

This increase was primarily attributable to extended payment terms with certain suppliers.

Also contributing to the increase was a $8.7 million increase in amounts accrued for fixed asset purchases from $0.4 million at the end of 2019 to $9.1 million at the end of 2020.

In addition, $5.0 million of the increase was related to an increase in bank overdrafts outstanding, from $2.6 million at December 31, 2019 to $7.6 million at December 31, 2020.

satellite tracking units and auxiliary power units, decreased approximately $71.6 million as compared to December 31, 2020.

The decrease relates primarily to a delay in the trade-in or used trade trucks in exchange for the new replacement trucks.

These delayed trades were disposed when payment was received during 2021, which reduced the balance in the Revenue equipment category.

Accounts payable decreased from $46.1 million at December 31, 2020 to $43.4 million at December 31, 2021.

This decrease was primarily attributable to the decrease in amounts accrued for fixed asset purchases from $9.1 million at the end of 2020 to $0.3 million at the end of 2021.

Accounts payable accruals can vary significantly at the end of each reporting period depending on the timing of the actual date of payment in relation to the last day of the reporting period.

Accrued expenses and other liabilities decreased from $26.6 million at December 31, 2020 to $14.1 million at December 31, 2021.

The decrease was primarily related to the payment of certain litigation settlements recorded during 2019 and paid for during 2020.

See “Item 3.

Legal Proceedings”

for more information regarding litigation.

The decrease was primarily related to the use of available cash to pay off the majority of the balance on the Company’s investment margin account.

Current maturities of long term-debt and long-term debt fluctuations are reviewed on an aggregate basis as the classification of amounts in each category are typically affected merely by the passage of time.

Current maturities of long-term debt and long-term debt, on an aggregate basis, at December 31, 2020, increased approximately $44.3 million as compared to December 31, 2019.

The increase was related to additional borrowings on our revolving line of credit and under installment notes entered into during 2020, net of the principal portion of scheduled installment note payments made during 2020.

For 2021, we expect to purchase 125 new trucks while continuing to sell or trade equipment that has reached the end of its life cycle, which we expect to result in net capital expenditures of approximately $20.5 million.

Current maturities of long-term debt and long-term debt, on an aggregate basis, at December 31, 2021, decreased approximately $63.8 million as compared to December 31, 2020.

The decrease relates primarily to the use of available cash to pay down the borrowings on our revolving line of credit and other installment notes.

For 2022, we expect to purchase 400 new trucks and 1,000 trailers while continuing to sell or trade equipment that has reached the end of its life cycle, which we expect to result in net capital expenditures of approximately $95.1 million.

Management believes we will be able to finance our existing needs for working capital over the next twelve months, as well as acquisitions of revenue equipment and any other asset acquisitions or capital transactions during such period, with cash balances, cash flows from operations, and borrowings believed to be available from financing sources.

2 unchanged sentences

Nevertheless, based on our anticipated future cash flows and sources of financing that we expect will be available to us, we do not expect that we will experience any significant liquidity constraints in the foreseeable future.

Contractual Obligations and Commercial Commitments

The following table sets forth the Company's contractual obligations and commercial commitments as of December 31, 2020:

Payments due by period

(in thousands)

Long-term debt (1)

Operating leases (2)

Including interest.

Represents building, facilities, and drop yard operating leases.

Inflation has an impact on most of our operating costs.

Over the past three years, the effect of inflation has been minimal.

If the current rate of inflation persists, inflation, coupled with supply chain issues and international events could continue to result in increased costs for drivers, employee wages, equipment, fuel and other costs.

Adoption of Accounting Policies

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Accounting Policies, Recent Accounting Pronouncements.”

Critical Accounting Policies

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to adopt accounting policies and make significant judgments and estimates that impact the amounts reported in our consolidated financial statements and accompanying notes.

Therefore, the reported amounts of assets, liabilities, revenue, expenses, and associated disclosures of contingent assets and liabilities are affected by judgments and estimates.

In many cases, there are alternative assumptions, policies, or estimation techniques that could be used.

In some cases, there are alternative assumptions, policies, or estimation techniques that could be used.

Management evaluates its assumptions, policies, and estimates on an ongoing basis, utilizing historical experience, and other methods considered reasonable in the particular circumstances.

Nevertheless, actual results may differ significantly from our estimates and assumptions, and it is possible that materially different amounts would be reported using differing estimates or assumptions.

Management considers our critical accounting policies to be those that require more significant judgments and estimates when we prepare our consolidated financial statements.

Our critical accounting policies include the following:

Accounts receivable and current expected credit losses .

Accounts receivable are presented in the Company’s consolidated financial statements net of current expected credit losses.

Management estimates expected credit losses based upon an evaluation of the aging of our customer receivables and historical write-offs, as well as other trends and factors surrounding the credit risk of specific customers.

The Company continually updates the history it uses to make these estimates so as to reflect the most recent trends, factors and other information available.

In order to gather information regarding these trends and factors, the Company also performs ongoing credit evaluations of its customers.

Customer receivables are considered to be past due when payment has not been received by the invoice due date.

Write-offs occur when we determine an account to be uncollectible and could differ from the current expected credit losses estimate as a result of a number of factors, including unanticipated changes in the overall economic environment or factors and risks surrounding a particular customer.

Management believes its methodology for estimating current expected credit losses to be reliable;

however, additional credit losses may be incurred if the financial condition of our customers were to deteriorate and could have a material effect on the Company’s consolidated financial statements.

Depreciation of trucks and trailers .

Management considers our critical accounting estimates to be those that require more significant judgments and estimates when we prepare our consolidated financial statements.

Note 1 in Part II, Item 8 of this Annual Report describes the Company's accounting policies.

The following discussion of accounting estimates should be read in conjunction with Note 1, as it provides additional insight into critical accounting estimates.

Our critical accounting estimates include the following:

Depreciation and Amortization .

Depreciation of trucks and trailers is calculated by the straight-line method over the assets’

estimated useful lives, which range from three to seven years, down to an estimated salvage value at the end of the assets’

estimated useful lives, which generally range from three to ten years, down to an estimated salvage value at the end of the assets’

estimated useful lives.

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Future changes in our estimated useful life or salvage value estimates, or fluctuations in market value that are not reflected in current estimates, could have a material effect on the Company’s consolidated financial statements.

Impairment of long-lived assets.

Long-lived assets are reviewed for impairment in accordance with ASC Topic 360, “Property, Plant, and Equipment.”

This authoritative guidance provides that whenever there are certain significant events or changes in circumstances, the value of long-lived assets or groups of assets must be tested to determine if their value can be recovered from their future cash flows.

In the event that undiscounted cash flows expected to be generated by the asset are less than the carrying amount, the asset or group of assets must be evaluated for impairment.

Impairment exists if the carrying value of the asset exceeds its fair value.

Significantly all of the Company’s cash flows from operations are generated by trucks and trailers, and as such, the cost of other long-lived assets are funded by those operations.

Therefore, management tests for the recoverability of all of the Company’s long-lived assets as a single group at the entity level and examines the forecasted future cash flows generated by trucks and trailers, including their eventual disposition, to determine if those cash flows exceed the carrying value of the long-lived assets.

Forecasted cash flows are estimated using assumptions about future operations.

To the extent that facts and circumstances change in the future, our estimates of future cash flows may also change either positively or negatively.

In light of the Company’s market capitalization during 2020 and net operating profits of the Company for the years ended December 31, 2020 and 2019, no impairment indicators existed which required management to test the Company’s long-lived assets for recoverability as of December 31, 2020.

As such, no impairment losses were recorded during 2020.

Claims accruals .

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The Company specifically reserves for claims that are expected to exceed $2.0 million when fully developed, based on the facts and circumstances of those claims.

Revenue recognition .

Revenue is recognized over time as freight progresses towards its destination and the transportation service obligation is fulfilled.

For loads picked up during the reporting period, but delivered in a subsequent reporting period, revenue is allocated to each period based on the transit time in each period as a percentage of total transit time.

See “Item 8.

Financial Statements and Supplementary Data, Note 2 to the Consolidated Financial Statements –

Revenue Recognition.”

Income Taxes .

The Company’s deferred tax assets and liabilities represent items that will result in taxable income or a tax deduction in future years for which the Company has already recorded the related tax expense or benefit in its consolidated statements of operations.

Deferred tax accounts arise as a result of timing differences between when items are recognized in the Company’s consolidated financial statements compared to when they are recognized in the Company’s tax returns.

In establishing the Company’s deferred income tax assets and liabilities, management makes judgments and interpretations based on the enacted tax laws and published tax guidance that are applicable to its operations.

Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of ASC 740-10-30, weighs all available evidence, both positive and negative to determine whether, based on the weight of that evidence, a valuation allowance is necessary.

If negative conditions exist which indicate a valuation allowance might be necessary, consideration is then given to what effect the future reversals of existing taxable temporary differences and the availability of tax strategies might have on future taxable income to determine the amount, if any, of the required valuation allowance.

Significant management judgment is required as it relates to future taxable income, future capital gains, tax settlements, valuation allowances, and the Company’s ability to utilize tax loss and credit carryforwards.

As of December 31, 2020, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.

Management believes that future tax consequences have been adequately provided for based on the current facts and circumstances and current tax law.

However, should current circumstances change or the Company’s tax positions be challenged, different outcomes could result which could have a material effect on the Company’s consolidated financial statements.

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-K

Item 5. Market for Registrant’s Common Equity