What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-10-28 compared with 2022-08-05 · 192 added, 330 removed, 625 unchanged (46% of the section changed)

4 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current assets:

8 unchanged sentences

12,002  

10,962  

Marketable equity securities

57 unchanged sentences

22,280,187 and 34,574,807 shares issued;

22,269,157 and 22,348,022 shares outstanding at June 30, 2022 and December 31, 2021, respectively

22,187,063 and 22,348,022 shares outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

2 unchanged sentences

Treasury stock, at cost;

0 and 12,226,785 shares at June 30, 2022 and December 31, 2021, respectively

93,124 and 12,226,785 shares at September 30, 2022 and December 31, 2021, respectively

( 2,877 )  

Retained earnings

8 unchanged sentences

See notes to condensed consolidated financial statements.

All prior period share and per share data has been retroactively adjusted to reflect the stock split effective March 29, 2022.

All prior period share and per share data has been retroactively adjusted to reflect the stock splits effective August 16, 2021 and March 29, 2022, respectively.

TRANSPORTATION SERVICES, INC.

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

OPERATING REVENUES:

Revenue, before fuel surcharge

$ 202,739  

$ 145,175  

$ 398,828  

$ 280,316  

Fuel surcharge

34,429  

16,088  

57,788  

29,806  

Total operating revenues

237,168  

161,263  

456,616  

310,122  

OPERATING EXPENSES AND COSTS:

Salaries, wages and benefits

42,947  

33,841  

82,222  

67,237  

Operating supplies and expenses

43,454  

25,107  

75,101  

48,663  

Rent and purchased transportation

88,643  

61,676  

180,019  

119,689  

15,481  

14,334  

30,358  

28,686  

Insurance and claims

14,132  

Gain on disposition of equipment

( 1,214 )  

( 602 )  

( 1,361 )  

Total operating expenses and costs

200,485  

140,244  

388,589  

275,450  

OPERATING INCOME

36,683  

21,019  

68,027  

34,672  

NON-OPERATING (EXPENSE) INCOME

( 2,872 )  

( 943 )  

INTEREST EXPENSE

( 1,998 )  

( 2,193 )  

( 3,665 )  

INCOME BEFORE INCOME TAXES

31,813  

20,943  

63,419  

37,016  

FEDERAL AND STATE INCOME TAX EXPENSE:

Total federal and state income tax expense

15,295  

$ 24,182  

$ 15,317  

$ 48,124  

$ 27,266  

INCOME PER COMMON SHARE:

$ 1.09  

$ 0.67  

$ 2.16  

$ 1.19  

$ 1.08  

$ 0.67  

$ 2.14  

$ 1.18  

AVERAGE COMMON SHARES OUTSTANDING:

22,268  

22,905  

22,283  

22,903  

22,445  

23,020  

22,474  

23,010  

See notes to condensed consolidated financial statements.

All prior period share and per share data has been retroactively adjusted to reflect the stock split effective March 29, 2022.

All prior period share and per share data has been retroactively adjusted to reflect the stock splits effective August 16, 2021 and March 29, 2022, respectively.

TRANSPORTATION SERVICES, INC.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

OPERATING ACTIVITIES:

$ 48,124  

$ 27,266  

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

30,358  

28,686  

Bad debt expense

3 unchanged sentences

Gain on sale or disposition of equipment

( 1,360 )  

Changes in operating assets and liabilities:

Accounts receivable

( 22,887 )  

Prepaid expenses, deposits, inventories, and other assets

( 683 )  

Income taxes payable

( 4,125 )  

Trade accounts payable

Accrued expenses and other liabilities

10,378  

Net cash provided by operating activities

74,868  

51,308  

INVESTING ACTIVITIES:

Purchases of property and equipment

( 22,341 )  

Acquisition of business, net of cash acquired

(64.317 )  

Proceeds from disposition of equipment

25,197  

Sales of marketable equity securities

Purchases of marketable equity securities, net of return of capital

( 113 )  

Net cash (used in) provided by investing activities

( 81,389 )  

21,508  

FINANCING ACTIVITIES:

Borrowings under line of credit

495,871  

276,626  

Repayments under line of credit

( 495,871 )  

Borrowings of long-term debt

47,222  

Repayments of long-term debt

( 39,072 )  

Borrowings under margin account

Repayments under margin account

( 707 )  

Repurchases of common stock

( 3,000 )  

Net cash provided by (used in) financing activities

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

( 1,945 )  

22,695  

Net cash used in financing activities

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH -Beginning of period

18,509  

CASH, CASH EQUIVALENTS AND RESTRICTED CASH -End of period

$ 16,564  

$ 23,032  

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

$ 3,581  

$ 4,514  

$ 9,857  

NONCASH INVESTING AND FINANCING ACTIVITIES:

8 unchanged sentences

Balance at January 1, 2022

22,348  

$ 84,472  

$ ( 169,946 )  

$ 301,350  

$ 216,110  

23,942  

( 111 )  

Treasury stock repurchases

( 83 )  

( 3,000 )  

Retirement of Treasury Shares

( 122 )  

( 44,289 )  

172,946  

( 128,535 )  

Stock based compensation

Balance at March 31, 2022

22,265  

$ 40,209  

$ 196,757  

$ 237,189  

24,182  

Exercise of stock awards-shares issued including tax benefits

1 unchanged sentence

Balance at June 30, 2022

22,269  

$ 40,425  

$ 220,939  

$ 261,587  

Restricted stock issued

Restricted stock net settlement

Stock based compensation

Treasury stock repurchases

Balance at September 30, 2022

Shares / Amount

1 unchanged sentence

Balance at January 1, 2021

22,912  

$ 84,148  

$ ( 159,118 )  

$ 224,834  

$ 149,981  

11,949  

Treasury stock repurchases

( 12 )  

( 144 )  

Stock based compensation

Balance at March 31, 2021

22,900  

$ 84,227  

$ ( 159,262 )  

$ 236,783  

$ 161,865  

15,317  

Exercise of stock awards-shares issued including tax benefits

1 unchanged sentence

Balance at June 30, 2021

22,903  

$ 117 (1)  

$ 84,401 (1)  

$ ( 159,262 )  

$ 252,100  

$ 177,356  

Treasury stock repurchases

Stock based compensation

Balance at September 30, 2021

See notes to condensed consolidated financial statements.

All prior period share and per share data has been retroactively adjusted to reflect the stock split effective March 29, 2022.

All prior period share and per share data has been retroactively adjusted to reflect the stock splits effective August 16, 2021 and March 29, 2022, respectively.

Common stock par value and additional paid-in capital dollar values are not retroactively adjusted for the stock split effective March 29, 2022.

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements (unaudited)

June 30, 2022

September 30, 2022

BASIS OF PRESENTATION

9 unchanged sentences

and its consolidated subsidiaries.

The consolidated financial results for the three and six months ended 

June 30, 2022, include the results of our newly formed subsidiaries, Met Express, Inc.

The consolidated financial results for the three and nine months ended 

September 30, 2022, include the results of our newly formed subsidiaries, Met Express, Inc.

and Costar Equipment, Inc., from June 14, 2022, the date of the acquisition of substantially all of the assets and certain liabilities of Metropolitan Trucking, Inc.

and its related entities, through 

June 30, 2022.

September 30, 2022.

All material intercompany items and transactions have been eliminated in consolidation.

3 unchanged sentences

The consolidated balance sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Operating results for the three and six -month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three and nine -month periods ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

For further information, refer to the consolidated financial statements and the footnotes thereto included in the Company’s annual report on Form 10 -K for the year ended December 31, 2021.

On March 8, 2022, our Board of Directors declared a 2 -for- 1 forward stock split of the shares of our common stock, which was effected in the form of a 100% stock dividend.

The stock split entitled each shareholder of record at the close of business on March 18, 2022, to receive one additional share of common stock for each share of common stock owned as of that date and was paid on March 29, 2022.

Upon the completion of the stock split, our outstanding shares increased from approximately 11.1 million shares to approximately 22.2 million shares.

All share and per share amounts in this quarterly report on Form 10 -Q give effect to the stock split and have been adjusted retrospectively, where applicable, for all periods presented.

On July 13, 2021 and March 8, 2022, our Board of Directors declared 2 -for- 1 forward stock splits of the shares of our common stock, each of which was effected in the form of a 100% stock dividend.

The stock splits entitled each shareholder of record at the close of business on July 30, 2021 and March 18, 2022, respectively, to receive one additional share of common stock for each share of common stock owned as of that date.

The stock splits were paid on August 16, 2021 and March 29, 2022, respectively.

Upon the completion of the August 2021 stock split, our outstanding shares increased from approximately 5.7 million shares to approximately 11.4 million shares.

Upon the completion of the March 2022 stock split, our outstanding shares increased from approximately 11.1 million shares to approximately 22.2 million shares.

All share and per share amounts in this quarterly report on Form 10 -Q give effect to these stock splits and have been adjusted retrospectively, where applicable, for all periods presented.

RECENT ACCOUNTING PRONOUNCEMENTS

10 unchanged sentences

 The Company has evaluated the provisions of this standard and determined that it is applicable to our line of credit and investment margin account.

The London Interbank Offered Rate (“LIBOR”) is the basis for interest charges on outstanding borrowings for our line of credit.

The London Interbank Offered Rate (“LIBOR”) was the basis for interest charges on outstanding borrowings for our line of credit.

During the year 2021, the index for interest charges on the Company’s investment margin accounts was transitioned to the Secured Overnight Financing Rate (“SOFR”).

The new index rate did not vary materially from LIBOR at the time of transition.

The scheduled discontinuation of LIBOR is not expected to materially alter any provisions of either of these debt instruments, except for the identification of a replacement reference rate for our line of credit.

The Company has evaluated the new guidance and does not expect it to have a material impact on its financial condition, results of operations, or cash flows.

During the third quarter of 2022, the index for interest charges on the Company’s line of credit was transitioned to the Secured Overnight Financing Rate (“SOFR”).

The discontinuation of LIBOR did not materially alter any provisions of either of these debt instruments.

The adoption of the new guidance did not have a material impact on the Company’s financial condition, results of operations, or cash flows.

REVENUE RECOGNITION

30 unchanged sentences

The fair value of marketable equity securities is determined based on quoted market prices in active markets, as described in Note J.

The following table sets forth market value, cost, and unrealized gains on equity securities as of June 30, 2022 and December 31, 2021.

June 30, 2022

The following table sets forth market value, cost, and unrealized gains on equity securities as of September 30, 2022 and December 31, 2021.

September 30, 2022

December 31, 2021

8 unchanged sentences

$ 10,039  

The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities as of June 30, 2022 and December 31, 2021.

June 30, 2022

The following table sets forth the gross unrealized gains and losses on the Company’s marketable securities as of September 30, 2022 and December 31, 2021.

September 30, 2022

December 31, 2021

7 unchanged sentences

$ 10,039  

The following table shows the Company’s net realized gains during the three and six months ending on June 30, 2022 and 2021, respectively, on certain marketable equity securities.

The following table shows the Company’s net realized gains during the three and nine months ending on September 30, 2022 and 2021, respectively, on certain marketable equity securities.

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

2 unchanged sentences

Cost of securities sold

Realized gain / (loss)

For the quarter ended June 30, 2022, the Company recognized dividends received of approximately $ 357,000 in non-operating income in its condensed consolidated statements of operations.

For the quarter ended June 30, 2021, the Company recognized dividends received of approximately $ 309,000 in non-operating income in its condensed consolidated statements of operations.

For the six months ended June 30, 2022, the Company recognized dividends received of approximately $ 666,000 in non-operating income in its condensed consolidated statements of operations.

For the six months ended June 30, 2021, the Company recognized dividends received of approximately $ 660,000 in non-operating income in its condensed consolidated statements of operations.

Realized gain

For the quarter ended September 30, 2022, the Company recognized dividends received of approximately $ 428,000 in non-operating income in its condensed consolidated statements of operations.

For the quarter ended September 30, 2021, the Company recognized dividends received of approximately $ 335,000 in non-operating income in its condensed consolidated statements of operations.

For the nine months ended September 30, 2022, the Company recognized dividends received of approximately $ 1,095,000 in non-operating income in its condensed consolidated statements of operations.

For the nine months ended September 30, 2021, the Company recognized dividends received of approximately $ 995,000 in non-operating income in its condensed consolidated statements of operations.

The Company’s equity securities are periodically used as collateral against any outstanding margin account borrowings.

As of June 30, 2022, and December 31, 2021, the Company had outstanding borrowings of approximately $ 640,000 and $ 1,214,000 , respectively, under its margin account.

As of September 30, 2022, and December 31, 2021, the Company had outstanding borrowings of approximately $ 1,035,000 and $ 1,214,000 , respectively, under its margin account.

Margin account borrowings are used for the purchase of marketable equity securities and as a source of short-term liquidity and are included in accrued expenses and other liabilities on our condensed consolidated balance sheets.

Our marketable equity securities portfolio had a net unrealized pre-tax loss in market value of approximately $ 3,349,000 during the second quarter of 2022, and a net unrealized pre-tax gain in market value of approximately $ 1,632,000 during the second quarter of 2021, which were reported as non-operating income in its condensed consolidated statements of operations for the respective periods.

Our marketable equity securities portfolio had a net unrealized pre-tax loss in market value of approximately $ 2,387,000 during the third quarter of 2022, and a net unrealized pre-tax loss in market value of approximately $ 456,000 during the third quarter of 2021, which were reported as non-operating income in its condensed consolidated statements of operations for the respective periods.

STOCK-BASED COMPENSATION

9 unchanged sentences

This stock award had a grant date fair value of $ 27.68 per share, based on the closing price of the Company’s stock on the date of grant, and vests in 25 % increments over four years, beginning one year from the anniversary date of the grant.

The total grant date fair value of stock vested during the first six months of 2022 was approximately $ 93,000 .

The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during the first six months of 2022, was approximately $ 353,000 and includes approximately $ 55,000 recognized as a result of the grant of shares to certain non-employee directors.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $ 0.01 during the first six months of 2022.

As of June 30, 2022, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $ 2,776,000 , which is being amortized on a straight-line basis over the remaining vesting period.

The total grant date fair value of stock vested during the first nine months of 2022 was approximately $ 269,000 .

The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during the first nine months of 2022, was approximately $ 528,000 and includes approximately $ 55,000 recognized as a result of the grant of shares to certain non-employee directors.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $ 0.01 during the first nine months of 2022.

As of September 30, 2022, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $ 2,601,000 , which is being amortized on a straight-line basis over the remaining vesting period.

As a result, the Company expects to recognize approximately $ 187,000 in additional compensation expense related to unvested stock awards during the remainder of 2022 and to recognize approximately $ 649,000 , $ 641,000 , $ 670,000 , $ 343,000 , and $ 111,000 in additional compensation expense related to unvested stock awards during the years 2023, 2024, 2025, 2026, and 2027, respectively.

The total grant date fair value of stock vested during the first six months of 2021 was approximately $ 80,000 .

The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during the first six months of 2021, was approximately $ 253,000 and includes approximately $ 80,000 recognized as a result of the grant of 326 split-adjusted shares to each non-employee director.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $ 0.03 during the first six months of 2021.

As of June 30, 2021, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $ 2,035,000 , which is being amortized on a straight-line basis over the remaining vesting period.

A summary of the status of the Company’s non-vested restricted stock as of June 30, 2022, and changes during the six months ended June 30, 2022, is as follows:

The total grant date fair value of stock vested during the first nine months of 2021 was approximately $ 80,000 .

The total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during the first nine months of 2021, was approximately $ 347,000 and includes approximately $ 80,000 recognized as a result of the grant of 326 shares to each non-employee director.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $ 0.02 during the first nine months of 2021.

As of September 30, 2021, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $ 1,941,000 , which was being amortized on a straight-line basis over the remaining vesting period.

A summary of the status of the Company’s non-vested restricted stock as of September 30, 2022, and changes during the nine months ended September 30, 2022, is as follows:

Restricted Stock

7 unchanged sentences

( 24,355 )  

Non-vested at June 30, 2022

Non-vested at September 30, 2022

249,332  

5 unchanged sentences

Truckload Services revenues and Brokerage and Logistics Services revenues, each before fuel surcharges, were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

17 unchanged sentences

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.

As of June 30, 2022, there remain 458,390 shares of common stock authorized for repurchase under this plan.

During the first quarter of 2022, prior to the stock split, we retired 12,268,395 shares of our treasury stock.

As of September 30, 2022, there remain 365,266 shares of common stock authorized for repurchase under this plan.

During the first quarter of 2022, prior to the March 2022 stock split, we retired 12,268,395 shares of our treasury stock.

Upon retirement of the treasury shares, we allocated the excess of the repurchase price over the par value of shares acquired to both retained earnings and paid-in capital.

2 unchanged sentences

The Company accounts for treasury stock using the cost method.

As of June 30, 2022, there were no shares held in the treasury.

As of September 30, 2022, 93,124 shares were held in the treasury at an aggregate cost of approximately $ 2,877,000 .

EARNINGS PER SHARE

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands, except per share data)

29 unchanged sentences

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.

As of June 30, 2022, 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.

As of September 30, 2022, 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.

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 June 30, 2022, an adjustment to the Company’s condensed 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.

As of September 30, 2022, an adjustment to the Company’s condensed 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 the six months ended June 30, 2022 and 2021, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.

The Company’s effective income tax rates were 24.1 % and 26.3 % for the six months ended June 30, 2022 and 2021, respectively.

Our effective tax rate for the six months ended June 30, 2022 differs from amounts computed by applying the United States federal statutory rates to pre-tax income primarily due to state income taxes and the tax benefits related to stock compensation.

During the nine months ended September 30, 2022 and 2021, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.

The Company’s effective income tax rates were 23.6 % and 26.3 % for the nine months ended September 30, 2022 and 2021, respectively.

Our effective tax rate for the nine months ended September 30, 2022 differs from amounts computed by applying the United States federal statutory rates to pre-tax income primarily due to state income taxes and the tax benefits related to stock compensation.

FAIR VALUE OF FINANCIAL INSTRUMENTS

10 unchanged sentences

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

At June 30, 2022, the following items are measured at fair value on a recurring basis:

At September 30, 2022, the following items are measured at fair value on a recurring basis:

(in thousands)

6 unchanged sentences

For long-term debt other than the lines of credit, the fair values are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

The carrying value and estimated fair value of this other long-term debt at June 30, 2022 was as follows:

The carrying value and estimated fair value of this other long-term debt at September 30, 2022 was as follows:

(in thousands)

4 unchanged sentences

NOTES PAYABLE

During the first six months of 2022, the Company’s subsidiaries entered into installment obligations totaling approximately $ 53.8 million for the purpose of purchasing revenue equipment.

During the first nine months of 2022, the Company’s subsidiaries entered into installment obligations totaling approximately $ 76.8 million, including $ 35.5 million for the financing of real estate and $ 41.3 million for the purpose of purchasing revenue equipment and other assets.

These obligations are payable in monthly installments and are recorded in long term debt and current maturities on the condensed consolidated balance sheets.

1 unchanged sentence

In addition, during June 2022 the Company’s subsidiaries assumed approximately $ 12.3 million of installment obligations as part of a business acquisition.

The terms of these obligations vary from 1 month to 36 months for trucks acquired and from 24 months to 34 months for trailers acquired.

The terms of these obligations varied from 1 month to 36 months for trucks acquired and from 24 months to 34 months for trailers acquired.

We are involved in certain claims and pending litigation arising from the ordinary conduct of business.

11 unchanged sentences

Management has determined that any losses under this claim will not be covered by existing insurance policies.

The settlement has been fully reserved as of June 30, 2022.

This settlement has been fully reserved as of September 30, 2022.

The Company currently leases shop, office and parking spaces in various locations in the United States and Mexico.

10 unchanged sentences

The Company is party to operating leases which include initial terms ranging from three to five years and which do not include an option for early cancellation.

In accordance with the provisions of ASC Topic 842, these leases resulted in the recognition of right-of-use assets and corresponding operating lease liabilities, respectively, valued at $ 0.7 million as of June 30, 2022.

These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using the Company’s incremental borrowing rate as of the respective dates of lease inception, as the rate implicit in each lease is not readily determinable.

2 unchanged sentences

While these lease agreements may contain provisions to extend after the initial term for an additional five years, the Company is not reasonably certain these extension options will be exercised.

Therefore, potential lease payments that might occur under this extension period are not included in amounts recorded in our condensed consolidated balance sheets as of June 30, 2022.

Scheduled amounts and timing of cash flows arising from future right-of-use operating lease payments at June 30, 2022, are:

Therefore, potential lease payments that might occur under this extension period are not included in amounts recorded in our condensed consolidated balance sheets as of September 30, 2022.

Scheduled amounts and timing of cash flows arising from future right-of-use operating lease payments at September 30, 2022, are:

Maturity of Lease Liabilities

11 unchanged sentences

Other Information

Weighted-average remaining lease term for operating leases (in years)

Weighted-average remaining lease term for operating leases (years)

Weighted-average discount rate for operating leases

No new right-of-use assets were recognized as a non-cash asset addition that resulted from new operating lease liabilities during the three and six months ended June 30, 2022.

Cash paid for amounts included in the present value of operating lease liabilities was $ 0.2 million during the three months ended June 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows.

Cash paid for amounts included in the present value of operating lease liabilities was $ 0.3 million during the six months ended June 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows.

No new right-of-use assets were recognized as a non-cash asset addition that resulted from new operating lease liabilities during the three and nine months ended September 30, 2022.

Cash paid for amounts included in the present value of operating lease liabilities was $ 0.1 million during the three months ended September 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows.

Cash paid for amounts included in the present value of operating lease liabilities was $ 0.4 million during the nine months ended September 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows.

Operating Lease Costs

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

12 unchanged sentences

In the event that an independent contractor defaults on their lease, the Company generally leases the truck to another independent contractor.

As of June 

30, 2022, the gross carrying value of trucks underlying these leases was $ 55.9 million and accumulated depreciation was $ 34.2 million.

As of September 30, 2022, the gross carrying value of trucks underlying these leases was $ 55.2 million and accumulated depreciation was $ 35.0 million.

Depreciation is calculated on a straight-line basis over the estimated useful life of the equipment, down to an estimated salvage value.

1 unchanged sentence

In other cases, where salvage values are not guaranteed, estimates of salvage value are based on the expected market values of equipment at the time of disposal.

During the quarter ended June 30, 2022, the Company incurred $ 1.9 million of depreciation expense for these assets.

The Company leases dock space to a related party at our Laredo, Texas terminal and warehouse and office space to an unrelated lessee at a second Laredo, Texas terminal.

The dock space and the warehouse and office space leased are depreciated in conjunction with the structures and improvements for the entire Laredo terminals on a straight-line basis over the estimated useful life of the assets.

During the quarter ended September 30, 2022, the Company incurred $ 1.6 million of depreciation expense for these assets.

The Company leases dock space to a related party at our Laredo, Texas terminal.

The dock space is depreciated in conjunction with the structures and improvements for the entire Laredo terminal on a straight-line basis over the estimated useful life of the assets.

Lease income is recorded as a component of non-operating income in our condensed consolidated statements of operations.

Lease Receivables

Future minimum operating lease payments receivable at June 30, 2022:

Future minimum operating lease payments receivable at September 30, 2022:

(in thousands)

9 unchanged sentences

Because we have a significant concentration of customers within the automotive industry, our freight volumes and revenues were significantly affected by the closure of North American automotive manufacturing facilities beginning in late March of 2020.

Our automotive customers resumed operations during the second quarter of 2020 and have not been materially disrupted during 2021 or the first six months of 2022.

Our automotive customers resumed operations during the second quarter of 2020 and have not been materially disrupted during 2021 or the first nine months of 2022.

Any future delays or interruptions of automotive production and other consumer activity affecting our customers that could result from any future wave of the virus or other similar outbreaks could further adversely affect our business.

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NONCASH INVESTING AND FINANCING ACTIVITIES

The Company financed approximately $ 6.6 million in equipment purchases during the first six months of 2022 utilizing noncash financing.

The Company financed approximately $ 16.9 million in equipment purchases during the first nine months of 2022 utilizing noncash financing.

ACQUISITION OF METROPOLITAN TRUCKING

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Metropolitan Trucking, Inc.

is a truckload carrier headquartered in Saddle Brook, New Jersey, providing asset-based dry van truckload transportation services, including local, regional, and dedicated services.

was a truckload carrier headquartered in Saddle Brook, New Jersey, providing asset-based dry van truckload transportation services, including local, regional, and dedicated services.

The acquisition has been determined to be a business combination.

Pursuant to the Asset Purchase Agreement, the Buyer acquired substantially all the assets and certain specified liabilities of Metropolitan Trucking, Inc., and its related entities (the “Transaction”).

Pursuant to the Asset Purchase Agreement, the Buyer acquired substantially all the assets and assumed certain specified liabilities of Metropolitan Trucking, Inc., and its related entities (the “Transaction”).

The Buyer paid $ 79.9 million of total consideration, including cash and certain assumed indebtedness of Metropolitan Trucking, Inc., and its related entities.

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The Asset Purchase Agreement contains customary representations, warranties, covenants, escrow, and indemnification provisions.

The results of the acquired business have been included in the consolidated financial statements since the date of acquisition and represented 12.6 % of consolidated total assets as of June 30, 2022 and represented 2.6 % and 1.3 % of operating revenue for the three and six months ended June 30, 2022, respectively.

Acquisition related expenses of $ 0.4 million are included in the condensed consolidated statements of operations for the three and six months ended June 30, 2022.

The results of the acquired business have been included in the consolidated financial statements since the date of acquisition and represented 14.1 % of consolidated total assets as of September 30, 2022 and represented 9.4 % and 4.1 % of operating revenue for the three and nine months ended September 30, 2022, respectively.

Acquisition related expenses of $ 0.4 million are included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022.

The allocation of the purchase price is detailed in the tables below.

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Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.

Potential risks and uncertainties include, but are not limited to, ongoing and potential future economic, business and operational disruptions and uncertainties due to the COVID-19 pandemic, including from any future spikes or outbreaks of the virus, or other public health crises, as well as from the implementation of government actions taken in response to the pandemic;

excess capacity in the trucking industry;

Potential risks and uncertainties include, but are not limited to, excess capacity in the trucking industry;

surplus inventories;

recessionary economic cycles and downturns in customers' business cycles;

increases or rapid fluctuations in fuel prices, interest rates, fuel taxes, tolls, and license and registration fees;

ongoing and potential future economic, business and operational disruptions and uncertainties due to the COVID-19 pandemic, including from any future spikes or outbreaks of the virus, or other public health crises, as well as from the implementation of government actions taken in response to the pandemic;

increases or rapid fluctuations in fuel prices, inflation, interest rates, fuel taxes, tolls, and license and registration fees;

the resale value of the Company's used equipment and the price of new equipment;

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the ability to identify acceptable acquisition candidates, consummate acquisitions, and integrate acquired operations;

the risk that the benefits from the business combination transaction involving the Company and Metropolitan Trucking, Inc.

and related entities may not be fully realized or may take longer to realize than expected, including as a result of any of the factors described in this paragraph;

the reaction to the transaction of the companies’

customers, employees and counterparties;

diversion of management time on acquisition-related issues;

our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems;

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These aspects of our business are carefully managed, and efforts are continuously underway to achieve favorable results.

Truckload services revenues, excluding fuel surcharges, represented 66.4% and 67.5% of total revenues, excluding fuel surcharges, for the three months ended June 30, 2022 and 2021, respectively.

Truckload services revenues, excluding fuel surcharges, represented 65.1% and 67.2% of total revenues, excluding fuel surcharges, for the six months ended June 30, 2022 and 2021, respectively.

Truckload services revenues, excluding fuel surcharges, represented 67.0% and 66.4% of total revenues, excluding fuel surcharges, for the three months ended September 30, 2022 and 2021, respectively.

Truckload services revenues, excluding fuel surcharges, represented 65.8% and 66.9% of total revenues, excluding fuel surcharges, for the nine months ended September 30, 2022 and 2021, respectively.

The remaining revenues, excluding fuel surcharges, were generated from brokerage and logistics services.

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In discussing our results of operations, we use revenue, before fuel surcharge (and fuel expense, net of fuel surcharge), because management believes that eliminating the impact of this sometimes volatile source of revenue allows a more consistent basis for comparing our results of operations from period to period.

During the three months ended June 30, 2022 and 2021, approximately $34.4 million and $16.1 million, respectively, of the Company’s total revenue was generated from fuel surcharges.

During the six months ended June 30, 2022 and 2021, approximately $57.8 million and $29.8 million, respectively, of the Company’s total revenue was generated from fuel surcharges.

During the three months ended September 30, 2022 and 2021, approximately $36.2 million and $16.8 million, respectively, of the Company’s total revenue was generated from fuel surcharges.

During the nine months ended September 30, 2022 and 2021, approximately $93.9 million and $46.6 million, respectively, of the Company’s total revenue was generated from fuel surcharges.

We may also discuss certain changes in our expenses as a percentage of revenue, before fuel surcharge, rather than absolute dollar changes.

We do this because we believe the variable cost nature of certain expenses makes a comparison of changes in expenses as a percentage of revenue more meaningful than absolute dollar changes.

On March 8, 2022, the Company’s Board of Directors declared a 2-for-1 forward stock split of its common stock in the form of a 100% stock dividend, payable on March 29, 2022, to stockholders of record on March 18, 2022.

All share and per share amounts in this quarterly report on Form 10-Q give effect to the stock split and have been adjusted retroactively, where applicable, for all periods presented.

On July 13, 2021 and March 8, 2022, our Board of Directors declared 2-for-1 forward stock splits of the shares of our common stock, each of which was effected in the form of a 100% stock dividend.

The stock splits were paid on August 16, 2021 and March 29, 2022, respectively.

Upon the completion of the August 2021 stock split, our outstanding shares increased from approximately 5.7 million shares to approximately 11.4 million shares.

Upon the completion of the March 2022 stock split, our outstanding shares increased from approximately 11.1 million shares to approximately 22.2 million shares.

All share and per share amounts in this quarterly report on Form 10-Q give effect to these stock splits and have been adjusted retrospectively, where applicable, for all periods presented.

See Note A to the condensed consolidated financial statements for additional information on the stock split.

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and related entities (“Metropolitan”).

Metropolitan was a 320-truck dry van truckload carrier headquartered near New York City, New York, with the East Coast serving as its primary operating territory.

Metropolitan was a 320-truck dry van truckload carrier, with the East Coast serving as its primary operating territory.

The purchase price paid at closing included approximately $15.5 million in assumed debt and $64.3 million paid using available cash balances.

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Any future waves or outbreaks of alternative strains of the virus could adversely impact our future operations and financial results.

On September 9, 2021, President Biden announced that he directed the Occupational Safety and Health Administration (OSHA) to develop an Emergency Temporary Standard (ETS) mandating either the full vaccination or weekly testing of employees for employers with 100 or more employees.

On January 13, 2022, the Supreme Court ruled that the mandate could not be enforced.

We continue to monitor new regulations for any potential impacts to our operations.

The ultimate extent of the pandemic’s impact on the Company’s financial and operating results, which could be material, will be determined by the length of time the pandemic continues, its continued severity, further government regulations imposed in response to the pandemic and the pandemic’s continued effect on the economy and transportation demand.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(percentages)

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Income before income taxes

THREE MONTHS ENDED JUNE 30, 2022 VS.

THREE MONTHS ENDED JUNE 30, 2021

During the second quarter of 2022, truckload services revenue, before fuel surcharges, increased 37.4% to $134.7 million as compared to $98.0 million during the second quarter of 2021.

The increase in revenue was primarily the result of increases in the average rate per mile charged to our customers and in the average number of trucks in our fleet during the second quarter of 2022 compared to the second quarter of 2021.

These increases were partially offset by a decrease in the total number of miles driven per truck for the second quarter of 2022 compared to the second quarter of 2021.

Salaries, wages and benefits decreased from 32.3% of revenues, before fuel surcharges, in the second quarter of 2021 to 29.6% of revenues, before fuel surcharges, during the second quarter of 2022.

This percentage-based decrease is primarily a result of the interaction of expenses with fixed-cost characteristics, such as general and administrative wages, maintenance wages, and operations wages with an increase in revenues for the periods compared.

Operating supplies and expenses decreased from 9.1% of revenues, before fuel surcharges, during the second quarter of 2021 to 6.6% of revenues, before fuel surcharges, during the second quarter of 2022.

The decrease relates primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel, which was a result of increased 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.

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.

These categorizations have the effect of reducing our net operating supplies and expenses while increasing the Rent and purchased transportation category, as discussed below.

Rent and purchased transportation increased from 23.1% of revenues, before fuel surcharges, during the second quarter of 2021 to 25.5% of revenues, before fuel surcharges, during the second quarter of 2022.

The increase was primarily due to an increase in the rates charged by third-party carriers during the second quarter of 2022 compared to the second quarter of 2021.

Also contributing to the increase were an increase in the average number of owner-operators under contract from 370 during the second quarter of 2021 to 381 during the second quarter of 2022, as well as an increase in the average rate per mile, including fuel surcharges, paid to owner-operators during the respective periods.

Depreciation decreased from 14.5% of revenues, before fuel surcharges, during the second quarter of 2021 to 11.2% of revenues, before fuel surcharges, during the second quarter of 2022.

This percentage-based decrease is primarily a result of the interaction of an increase in operating revenues with the fixed-cost nature of depreciation expense.

Due to the fixed-cost nature of depreciation, an increase in operating revenues, before fuel surcharge, without a corresponding proportional increase in depreciation, decreases depreciation expense as a percentage of operating revenues.

Insurance and claims increased from 3.2% of revenues, before fuel surcharges, during the second quarter 2021 to 5.4% of revenues, before fuel surcharges, during the second quarter 2022.

This increase as a percentage of revenue, before fuel surcharges, is largely attributable to an increase in litigation reserves due to a preliminary settlement agreement regarding the minimum wage lawsuit discussed in Note L to our condensed consolidated financial statements.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved from 84.0% for the second quarter of 2021 to 79.7% for the second quarter of 2022.

Non-operating income (expense) decreased from income of 1.8% of revenues, before fuel surcharges, during the second quarter of 2021 to expense of 1.6% of revenues, before fuel surcharges, during the second quarter of 2022.

THREE MONTHS ENDED SEPTEMBER 30, 2022 VS.

THREE MONTHS ENDED SEPTEMBER 30, 2021

During the third quarter of 2022, truckload services revenue, before fuel surcharges, increased 31.3% to $145.0 million as compared to $110.4 million during the third quarter of 2021.

The increase in revenue was primarily the result of increases in the total number of miles driven during the third quarter of 2022 compared to the third quarter of 2021.

The average number of trucks in our fleet during the third quarter of 2022 increased compared to the third quarter of 2021 due to the acquisition of the assets of Metropolitan Trucking, Inc.

and to organic fleet growth.

Salaries, wages and benefits increased from 29.2% of revenues, before fuel surcharges, in the third quarter of 2021 to 32.8% of revenues, before fuel surcharges, during the third quarter of 2022.

This percentage-based increase is primarily a result of an increase in average driver pay, an increase in the percentage of total miles driven by company drivers in lieu of owner-operators and the organic growth of our driver fleet during the third quarter of 2022, coupled with the addition of employees due to the acquisition of Metropolitan Trucking, Inc.

during the second quarter of 2022.

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 77.9% for the third quarter of 2021 to 82.6% for the third quarter of 2022.

Non-operating income (expense) decreased from income of 0.1% of revenues, before fuel surcharges, during the third quarter of 2021 to expense of 0.9% of revenues, before fuel surcharges, during the third quarter of 2022.

This decrease primarily resulted from the change in the market values of our portfolio of marketable equity securities.

The Company recorded a $3.2 million decrease in the market value of our marketable equity securities in non-operating income (expense) during the second quarter of 2022, compared to a $1.6 million increase in the market value of our marketable equity securities during the second quarter of 2021.

SIX MONTHS ENDED JUNE 30, 2022 VS.

SIX MONTHS ENDED JUNE 30, 2021

For the six months ended June 30, 2022, truckload services revenue, before fuel surcharges, increased 37.8% to $259.7 million as compared to $188.4 million for the six months ended June 30, 2021.

The increase in revenue was primarily the result of an increase in the average rate per mile charged to our customers during the first six months of 2022 compared to first six months of 2021.

The increase in rates was partially offset by a decrease in average miles driven per truck for the first six months of 2022 compared to the first six months of 2021.

Salaries, wages and benefits decreased from 33.5% of revenues, before fuel surcharges, in the first six months of 2021 to 29.2% of revenues, before fuel surcharges, during the first six months of 2022.

The Company recorded a $2.4 million decrease in the market value of our marketable equity securities in non-operating income (expense) during the third quarter of 2022, compared to a $0.5 million decrease in the market value of our marketable equity securities during the third quarter of 2021.

NINE MONTHS ENDED SEPTEMBER 30, 2022 VS.

NINE MONTHS ENDED SEPTEMBER 30, 2021

For the nine months ended September 30, 2022, truckload services revenue, before fuel surcharges, increased 35.4% to $404.7 million as compared to $298.8 million for the nine months ended September 30, 2021.

The increase in revenue was primarily the result of an increase in the average rate per mile charged to our customers during the first nine months of 2022 compared to first nine months of 2021.

Also contributing to the increase was an increase in total miles driven for the first nine months of 2022 compared to the first nine months of 2021.

Salaries, wages and benefits decreased from 31.9% of revenues, before fuel surcharges, in the first nine months of 2021 to 30.5% of revenues, before fuel surcharges, during the first nine months of 2022.

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

Operating supplies and expenses decreased from 9.9% of revenues, before fuel surcharges, during the first six months of 2021 to 6.5% of revenues, before fuel surcharges, during the first six months of 2022.

Operating supplies and expenses decreased from 9.2% of revenues, before fuel surcharges, during the first nine months of 2021 to 7.1% of revenues, before fuel surcharges, during the first nine months of 2022.

The percentage-based decrease relates primarily to a decrease in the average surcharge-adjusted fuel price paid per gallon of diesel fuel, which decreased as a result of increased fuel surcharge collections from customers.

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These categorizations have the effect of reducing our net operating supplies and expenses while increasing the rent and purchased transportation category, as discussed below.

Rent and purchased transportation increased from 22.9% of revenues, before fuel surcharges, during the first six months of 2021 to 25.9% of revenues, before fuel surcharges, during the first six months of 2022.

The increase was primarily due an increase in the rates charged by third-party carriers during the first six months of 2022 compared to the first six months of 2021.

Also contributing to the increase were an increase in the average number of owner-operators under contract from 369 during the first six months of 2021 to 385 during the first six months of 2022, as well as an increase in the average rate per mile, including fuel surcharges, paid to owner-operators during the respective periods.

Depreciation decreased from 15.1% of revenues, before fuel surcharges, during the first six months of 2021 to 11.3% of revenues, before fuel surcharges, during the first six months of 2022.

Rent and purchased transportation increased from 23.4% of revenues, before fuel surcharges, during the first nine months of 2021 to 25.7% of revenues, before fuel surcharges, during the first nine months of 2022.

The increase was primarily due an increase in the rates charged by third-party carriers during the first nine months of 2022 compared to the first nine months of 2021.

Also contributing to the increase were an increase in the average number of owner-operators under contract from 374 during the first nine months of 2021 to 391 during the first nine months of 2022, as well as an increase in the average rate per mile, including fuel surcharges, paid to owner-operators during the respective periods.

Depreciation decreased from 13.7% of revenues, before fuel surcharges, during the first nine months of 2021 to 11.2% of revenues, before fuel surcharges, during the first nine months of 2022.

This decrease is primarily a result of the interaction of an increase in operating revenues with the fixed-cost nature of depreciation expense.

Insurance and claims expense increased from 3.4% of revenues, before fuel surcharges, during the first six months of 2021 to 5.4% of revenues before fuel surcharges, during the first six months of 2022.

This increase resulted from an increase in litigation reserves due to a preliminary settlement agreement regarding the minimum wage lawsuit discussed in Note L to our condensed consolidated financial statement and to increases in loss reserves.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved from 86.9% for the first six months of 2021 to 80.5% for the first six months of 2022.

Non-operating income (expense) decreased from income of 2.9% of revenues, before fuel surcharges, during the first six months of 2021 to expense of 0.3% of revenues, before fuel surcharges, during the first six months of 2022.

This decrease primarily resulted from the change in the market values of our portfolio of marketable equity securities.

The Company recorded a $2.0 million decrease in the market value of our marketable equity securities in non-operating income (expense) during the first six months of 2022, compared to a $5.8 million increase in the market value of our marketable equity securities during the first six months of 2021.

Insurance and claims expense increased from 3.3% of revenues, before fuel surcharges, during the first nine months of 2021 to 4.8% of revenues before fuel surcharges, during the first nine months of 2022.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, improved from 83.6% for the first nine months of 2021 to 81.3% for the first nine months of 2022.

RESULTS OF OPERATIONS –

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(percentages)

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Income before income taxes

THREE MONTHS ENDED JUNE 30, 2022 VS.

THREE MONTHS ENDED JUNE 30, 2021

During the second quarter of 2022, logistics and brokerage services revenue, before fuel surcharges, increased 44.3% to $68.0 million as compared to $47.1 million during the second quarter of 2021.

The increase relates to an increase in the number of loads serviced and to an increase in the average rates charged to customers during the second quarter of 2022 as compared to the second quarter of 2021.

Rents and purchased transportation decreased from 82.7% of revenues, before fuel surcharges, during the second quarter of 2021 to 79.7% of revenues, before fuel surcharges, during the second quarter of 2022.

THREE MONTHS ENDED SEPTEMBER 30, 2022 VS.

THREE MONTHS ENDED SEPTEMBER 30, 2021

During the third quarter of 2022, logistics and brokerage services revenue, before fuel surcharges, increased 27.9% to $71.5 million as compared to $55.9 million during the third quarter of 2021.

The increase relates to an increase in the number of loads serviced and to an increase in the average rates charged to customers during the third quarter of 2022 as compared to the third quarter of 2021.

Rents and purchased transportation decreased from 83.0% of revenues, before fuel surcharges, during the third quarter of 2021 to 80.4% of revenues, before fuel surcharges, during the third quarter of 2022.

The decrease resulted 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 from 88.7% for the second quarter of 2021 to 86.2% for the second quarter of 2022.

SIX MONTHS ENDED JUNE 30, 2022 VS.

SIX MONTHS ENDED JUNE 30, 2021

During the first six months of 2022, logistics and brokerage services revenue, before fuel surcharges, increased 51.4% to $139.2 million as compared to $91.9 million during the first six months of 2021.

The increase relates to an increase in the number of loads serviced and in the average rates charged to customers during the first six months of 2022 as compared to the first six months of 2021.

Rents and purchased transportation decreased from 83.2% of revenues, before fuel surcharges, during the first six months of 2021 to 81.0% of revenues, before fuel surcharges, during the first six months of 2022.

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 from 88.6% for the third quarter of 2021 to 85.7% for the third quarter of 2022.

NINE MONTHS ENDED SEPTEMBER 30, 2022 VS.

NINE MONTHS ENDED SEPTEMBER 30, 2021

During the first nine months of 2022, logistics and brokerage services revenue, before fuel surcharges, increased 42.5% to $210.6 million as compared to $147.8 million during the first nine months of 2021.

The increase relates to an increase in the number of loads serviced and in the average rates charged to customers during the first nine months of 2022 as compared to the first nine months of 2021.

Rents and purchased transportation decreased from 83.5% of revenues, before fuel surcharges, during the first nine months of 2021 to 81.5% of revenues, before fuel surcharges, during the first nine months of 2022.

The decrease resulted 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 from 89.1% for the first six months of 2021 to 87.4% for the first six months of 2022.

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 from 88.9% for the first nine months of 2021 to 86.9% for the first nine months of 2022.

RESULTS OF OPERATIONS –

COMBINED SERVICES

THREE MONTHS ENDED JUNE 30, 2022 VS.

THREE MONTHS ENDED JUNE 30, 2021

Net income for all divisions was approximately $24.2 million, or 11.9% of revenues, before fuel surcharges for the second quarter of 2022 as compared to net income of $15.3 million, or 10.6% of revenues, before fuel surcharges for the second quarter of 2021.

The increase in net income resulted in diluted earnings per share of $1.08 for the second quarter of 2022 as compared to diluted earnings per share of $0.67 for the second quarter of 2021.

SIX MONTHS ENDED JUNE 30, 2022 VS.

SIX MONTHS ENDED JUNE 30, 2021

Net income for all divisions was approximately $48.1 million, or 12.1% of revenues, before fuel surcharges for the first six months of 2022 as compared to net income of $27.3 million, or 9.7% of revenues, before fuel surcharges for the first six months of 2021.

The increase in net income resulted in a diluted earnings per share of $2.14 for the first six months of 2022 as compared to diluted earnings per share of $1.18 for the first six months of 2021.

THREE MONTHS ENDED SEPTEMBER 30, 2022 VS.

THREE MONTHS ENDED SEPTEMBER 30, 2021

Net income for all divisions was approximately $24.6 million, or 11.3% of revenues, before fuel surcharges for the third quarter of 2022 as compared to net income of $21.4 million, or 12.8% of revenues, before fuel surcharges for the third quarter of 2021.

The increase in net income resulted in diluted earnings per share of $1.09 for the third quarter of 2022 as compared to diluted earnings per share of $0.93 for the third quarter of 2021.

NINE MONTHS ENDED SEPTEMBER 30, 2022 VS.

NINE MONTHS ENDED SEPTEMBER 30, 2021

Net income for all divisions was approximately $72.7 million, or 11.8% of revenues, before fuel surcharges for the first nine months of 2022 as compared to net income of $48.6 million, or 10.9% of revenues, before fuel surcharges for the first nine months of 2021.

The increase in net income resulted in a diluted earnings per share of $3.24 for the first nine months of 2022 as compared to diluted earnings per share of $2.12 for the first nine months of 2021.

LIQUIDITY AND CAPITAL RESOURCES

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Our primary sources of liquidity have been funds provided by operations, proceeds from the sales of revenue equipment, and borrowings under our credit facilities, installment notes, and investment margin account.

During the first six months of 2022, we generated $74.9 million in cash from operating activities.

Investing activities used $81.4 million in cash in the first six months of 2022.

Financing activities generated $4.6 million in cash in the first six months of 2022.

During the first nine months of 2022, we generated $120.1 million in cash from operating activities.

Investing activities used $95.6 million in cash in the first nine months of 2022.

Financing activities generated $0.2 million in cash in the first nine months of 2022.

Our primary use of funds is for the purchase of revenue equipment.

We typically use installment notes, our existing line of credit on an interim basis, proceeds from the sale or trade of equipment, and cash flows from operations to finance capital expenditures and repay long-term debt.

During the first six months of 2022, we utilized cash on hand, installment notes, and our line of credit to finance purchases of revenue equipment and other assets of approximately $86.7 million, including the purchase of assets associated with the Metropolitan business acquisition.

During the first nine months of 2022, we utilized cash on hand, installment notes, and our line of credit to finance purchases of revenue equipment and other assets of approximately $107.3 million, including the purchase of assets associated with the Metropolitan business acquisition.

We commonly finance the acquisition of revenue equipment through installment notes with fixed interest rates and terms ranging from 36 to 84 months.

During the first six months of 2022, the Company’s subsidiary, P.A.M.

During the first nine months of 2022, the Company’s subsidiary, P.A.M.

Transport, Inc., entered into installment obligations totaling approximately $76.8 million, including $35.5 million for the financing of real estate and $41.3 million for the purpose of purchasing revenue equipment and other assets.

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We currently intend to retain our future earnings to finance our growth and do not anticipate paying cash dividends in the foreseeable future.

During the first six months of 2022, we maintained a revolving line of credit.

Amounts outstanding under the line bear interest at LIBOR (determined as of the first day of each month and assuming a floor of 0.50%) plus 1.25% (2.37% at June 30, 2022), are secured by our trade accounts receivable and mature on July 1, 2024.

During the first nine months of 2022, we maintained a revolving line of credit.

Amounts outstanding under the line bear interest at Term SOFR plus 1.35% (4.33% at September 30, 2022), are secured by our trade accounts receivable and mature on July 1, 2024.

An “unused fee”

of 0.25% is charged if average borrowings are less than $18.0 million.

At June 30, 2022 outstanding advances on the line of credit were approximately $0.4 million, consisting of letters of credit, with availability to borrow $59.6 million.

Trade accounts receivable increased from $121.9 million at December 31, 2021 to $155.9 million at June 30, 2022.

The increase resulted from an increase in freight revenues, which flow through accounts receivable, during the second quarter of 2022 as compared to the fourth quarter of 2021.

Prepaid expenses and deposits decreased from $11.0 million at December 31, 2021 to $9.6 million at June 30, 2022.

The decrease relates to the normal amortization of items prepaid as of December 31, 2021.

Revenue equipment increased from $520.8 million at December 31, 2021 to $608.0 million at June 30, 2022.

The increase is due to the acquisition of trucks and trailers as part of the acquisition of Metropolitan Trucking during the second quarter of 2022.

Marketable equity securities decreased from $39.4 million at December 31, 2021 to $37.6 million at June 30, 2022.

The $1.8 million decrease was due to a decrease in the market value of held marketable equity securities of $1.9 million and the purchase of marketable equity securities with a combined purchase cost of approximately $0.1 million during the first six months of 2022.

Accounts payable increased from $43.3 million at December 31, 2021 to $51.2 million at June 30, 2022.

This increase was primarily attributable to an increase in the amount due to third-party carriers as of June 30, 2022.

Accrued expenses and other liabilities increased from $14.1 million at December 31, 2021 to $23.8 million at June 30, 2022.

The increase is largely due to accruals of legal reserves during the first six months of 2022.

At September 30, 2022 outstanding advances on the line of credit were approximately $0.4 million, consisting of letters of credit, with availability to borrow $59.6 million.

Trade accounts receivable increased from $121.9 million at December 31, 2021 to $155.2 million at September 30, 2022.

The increase resulted from an increase in freight revenues, which flow through accounts receivable, during the third quarter of 2022 as compared to the fourth quarter of 2021.

Prepaid expenses and deposits increased from $11.0 million at December 31, 2021 to $12.0 million at September 30, 2022.

The decrease relates to the prepayment of policy renewals during the third quarter of 2022, offset by the normal amortization of items prepaid as of December 31, 2021.

Revenue equipment increased from $520.8 million at December 31, 2021 to $625.6 million at September 30, 2022.

The increase is primarily due to the acquisition of trucks and trailers as part of the acquisition of Metropolitan Trucking during the second quarter of 2022.

Marketable equity securities decreased from $39.4 million at December 31, 2021 to $36.0 million at September 30, 2022.

The $3.4 million decrease was due to a decrease in the market value of held marketable equity securities of $4.3 million and the purchase of marketable equity securities with a combined purchase cost of approximately $0.9 million during the first nine months of 2022.

Accounts payable increased from $43.4 million at December 31, 2021 to $54.7 million at September 30, 2022.

This increase was primarily attributable to an increase in the amount due to third-party carriers as of September 30, 2022.

Accrued expenses and other liabilities increased from $14.1 million at December 31, 2021 to $24.8 million at September 30, 2022.

The increase is primarily due to accruals of legal reserves during the first nine months of 2022.

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

Long-term debt and current maturities of long-term debt, on an aggregate basis, increased from $222.3 million at December 31, 2021 to $249.3 million at June 30, 2022.

Long-term debt and current maturities of long-term debt, on an aggregate basis, increased from $222.3 million at December 31, 2021 to $257.3 million at September 30, 2022.

The increase was primarily related to the financing of certain real estate holdings to generate $35.5 million in available cash during the first three months of 2022 and to the assumption of $12.6 million of installment debt associated with the acquisition of Metropolitan Trucking during the second quarter of 2022.

2 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