What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-17 compared with 2022-02-18 · 214 added, 200 removed, 865 unchanged (32% of the section changed)

18 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Claims Accruals — Refer to Note 1 to the financial statements

2 unchanged sentences

Claims accruals represent accruals for pending claims, including adverse development of known claims, as well as incurred but not reported claims.

The claims accruals are based on estimated or expected losses for claims considering the nature and severity of each claim, historical trends, advice from third-party administrators and insurers, consultation with actuarial experts, the specific facts of individual cases, the jurisdictions involved for each case, estimates of future claims development, the fluctuations in the number and severity of claims, and the legal and other costs to settle or defend the claims.

The claims accruals are based on estimated or expected losses for claims considering the nature and severity of each claim, historical trends, advice from third-party administrators and insurers, consultation with actuarial experts, the specific facts of individual cases, the jurisdictions involved for each case, estimates of future claims development, and the legal and other costs to settle or defend the claims.

At December 31, 2022 and 2021, the Company had an accrual of $164.9 million and $158.3 million, respectively, for estimated claims net of reinsurance receivables.

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◦ With the assistance of our actuarial specialists, we developed an independent range of estimates of the claims accruals, utilizing loss development factors from the Company’s historical data and industry claim development factors, and compared our estimated range to management’s recorded reserve.

Goodwill Valuation – Midwest Logistics Systems Reporting Unit — Refer to Note 6 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for potential impairment involves comparing the fair value of each reporting unit to its carrying value.

The Company determines the fair value of its reporting units using a combination of (1) an income approach based on the present value of estimated future cash flows and (2) market approaches based on Earnings Before Interest, Taxes, Depreciation & Amortization (“EBITDA”) valuation multiples of comparable companies and transactions.

Determining fair value requires significant estimates and assumptions based on an evaluation of a number of factors, such as marketplace participants, history, future expansion and profitability expectations, amount and timing of future cash flows, and the discount rate applied to the cash flows.

Changes in these estimates, assumptions or judgments could have significant impacts in determining the fair value of reporting units, the amount of any goodwill impairment charge, or both.

The goodwill balance was $228.2 million as of December 31, 2022, of which $104.3 million related to the Midwest Logistics Systems (“MLS”) reporting unit.

As of October 31, 2022 (the date for the Company’s annual quantitative test for goodwill impairment), the fair value of MLS exceeded its carrying value by less than 5% and, therefore, no impairment was recognized.

The subjectivity of management’s estimates and assumptions related to the discount rate, forecasts of future revenues and profitability, and EBITDA valuation multiples requires a high degree of auditor judgement and an increased extent of effort.

This includes the need to involve our fair value specialists when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the selection of the discount rate, forecasts of future revenues and profitability, and EBITDA valuation multiples for the MLS reporting unit included the following, among others:

• We tested the effectiveness of internal controls over management’s goodwill impairment evaluation, including those over the selection of the discount rate, forecasts of future revenues and profitability and EBITDA valuation multiples.

• We evaluated the reasonableness of management’s forecasts for both revenue and profitability by comparing the forecasts to (1) historical results, (2) internal communications to the Board of Directors, (3) forecasted information in industry reports, and evaluated the reasonableness of near-term revenue growth by obtaining signed customer contracts.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate by (1) testing the source information underlying the determination of the discount rate, (2) testing the mathematical accuracy of the calculations, and (3) developing a range of independent estimates and comparing those to the discount rate selected by management.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the EBITDA valuation multiples selected by management, which included assessing the appropriateness of the guideline companies and transactions.

/s/ Deloitte & Touche LLP

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and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in I nternal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 17, 2023, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Midwest Logistics Systems, Ltd., which was acquired on December 31, 2021, and whose financial statements constitute approximately 7.4% of total assets of the Company’s consolidated total assets as of December 31, 2021.

Accordingly, our audit did not include the internal control over financial reporting at Midwest Logistics Systems, Ltd.

Basis for Opinion

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Depreciation and amortization 350.0 296.2 290.5

Operating supplies and expenses 462.4 533.0 530.2

Operating supplies and expenses—net 534.0 462.4 533.0

Insurance and related expenses 103.0 82.4 86.1

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Interest expense 9.6 12.5 13.6

Other expense (income)—net ( 18.7 ) ( 6.5 ) 1.6

Other income—net ( 10.3 ) ( 18.7 ) ( 6.5 )

Total other expenses (income)—net ( 3.6 ) ( 8.3 ) 3.8

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Retained earnings 1,257.8 857.8

Accumulated other comprehensive income — 0.8

Accumulated other comprehensive loss ( 5.0 ) —

Total Shareholders’ Equity

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(Gains) losses on sales of property and equipment—net ( 85.7 ) ( 63.9 ) 6.2

Impairment on assets held for sale — 4.3 14.3

Proceeds from lease receipts 83.5 75.8 69.0

Loss on sale of business 5.0 — —

Deferred income taxes 83.0 2.0 1.7

Long-term incentive and share-based compensation expense (benefit) 14.4 8.9 ( 3.6 )

Gain on investments in equity securities—net ( 21.6 ) ( 8.8 ) —

Long-term incentive and share-based compensation expense 16.5 14.4 8.9

Gains on investments in equity securities—net ( 13.7 ) ( 21.6 ) ( 8.8 )

Noncash restructuring—net — — 1.1

Other noncash items ( 4.4 ) 3.1 3.4

Other noncash items—net ( 15.2 ) ( 4.4 ) 7.4

Changes in operating assets and liabilities:

14 unchanged sentences

Investments in equity securities ( 24.2 ) ( 5.2 ) ( 10.4 )

Acquisition of business ( 271.3 ) — —

Acquisitions and sale of business, net of cash acquired ( 31.7 ) ( 271.3 ) —

Net cash used in investing activities ( 598.8 ) ( 626.4 ) ( 318.7 )

1 unchanged sentence

Payments of debt and finance lease obligations ( 62.0 ) ( 40.8 ) ( 55.6 )

Payment of deferred consideration related to acquisition — — ( 18.7 )

Dividends paid ( 55.7 ) ( 49.6 ) ( 400.0 )

Other financing activities 1.0 — —

Net cash used in financing activities ( 116.7 ) ( 90.4 ) ( 455.6 )

Net (decrease) increase in cash and cash equivalents ( 150.7 ) ( 156.1 ) 172.9

Net increase (decrease) in cash and cash equivalents 140.9 ( 150.7 ) ( 156.1 )

Cash and Cash Equivalents:

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Dividends declared but not yet paid 16.2 14.1 13.6

Sale of assets in exchange for notes receivable 2.3 — —

Cash paid during the period for:

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(in millions, except per share data)

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Total

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total

Balance—December 31, 2019 $ — $ 1,542.7 $ 693.6 $ 0.1 $ 2,236.4

1 unchanged sentence

Other comprehensive income — — — 0.7 0.7

Share-based compensation benefit — ( 0.4 ) — — ( 0.4 )

Share-based compensation expense — 8.6 — — 8.6

Dividends declared at $ 2.26 per share of Class A and B common shares — — ( 402.8 ) — ( 402.8 )

Share issuances — 0.2 — — 0.2

Exercise of employee stock options — 1.6 — — 1.6

Shares withheld for employee taxes — ( 0.9 ) — — ( 0.9 )

1 unchanged sentence

Net income — — 405.4 — 405.4

Other comprehensive income — — — 0.7 0.7

Other comprehensive loss — — — ( 0.8 ) ( 0.8 )

Share-based compensation expense — 14.6 — — 14.6

Dividends declared at $ 2.26 per share of Class A and B common shares — — ( 402.8 ) — ( 402.8 )

Dividends declared at $ 0.28 per share of Class A and Class B common shares — — ( 50.1 ) — ( 50.1 )

Share issuances — 0.9 — — 0.9

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Nature of Operations

We are one of the largest providers of surface transportation and logistics solutions in North America that, through our wholly owned subsidiaries, provides safe, reliable, and innovative truckload, intermodal, and logistics services to a diverse group of customers throughout the continental United States, Canada, and Mexico.

Principles of Consolidation and Basis of Presentation

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Receivables and Allowance

As of January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments , which is codified in ASC 326, for our trade account receivable and allowance, as well as our leases.

Our trade accounts receivable is recorded net of an allowance for doubtful accounts and revenue adjustments.

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Our inventories consist of tractors and trailing equipment owned by our equipment leasing company to be sold or leased to owner-operators, as well as parts, tires, supplies, and fuel for use in our Company operations.

These inventories are valued at the lower of cost or market using specific identification or average cost.

These inventories are valued at the lower of cost or net realizable value using specific identification or average cost.

The following table shows the components of our inventory balances as of the dates shown.

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Other property 3 - 10 years

Salvage values, when applicable, generally don’t exceed 30 % or 25 % of the original cost for tractors and trailing equipment, respectively, and reflect any agreements with tractor suppliers for residual or trade-in values for certain new equipment.

Salvage values, when applicable, generally range from 5 % - 30 % or 0 % - 25 % of the original cost for tractors and trailing equipment, respectively, and reflect any agreements with tractor suppliers for residual or trade-in values for certain new equipment.

Long-lived assets require an impairment review when events or circumstances indicate that the carrying amount may not be recoverable.

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Gains and losses on the sale or other disposition of equipment are based on the difference between the proceeds received less costs to sell and the net book value of the assets disposed.

Gains and losses are recognized at the time of sale or disposition and are classified in operating supplies and expenses in the consolidated statements of comprehensive income.

For the years ending December 31, 2021, 2020, and 2019, we recognized $ 63.9 million of net gains, $ 6.7 million of net losses, and $ 1.8 million of net gains on the sale of property and equipment, respectively.

Included in gains and losses on the sale of property and equipment for the years ended December 31, 2020 and 2019 were net losses of $ 0.5 million and $ 1.5 million related to the shutdown of our FTFM service offering, respectively.

Gains and losses are recognized at the time of sale or disposition and are classified in operating supplies and expenses—net in the consolidated statements of comprehensive income.

For the years ended December 31, 2022, 2021, and 2020, we recognized $ 85.7 million of net gains, $ 63.9 million of net gains, and $ 6.7 million of net losses on the sale of property and equipment, respectively.

Net gains for 2022 were primarily related to the sale of the Company’s Canadian facility.

Included in losses on the sale of property and equipment for the year ended December 31, 2020 was a net loss of $ 0.5 million related to the shutdown of our FTFM service offering.

Assets Held for Sale

Assets held for sale consist of revenue equipment and are included in prepaid expenses and other current assets in the consolidated balance sheets.

Assets held for sale consist of transportation equipment and are included in prepaid expenses and other current assets in the consolidated balance sheets.

Reclassification to assets held for sale occurs when the required criteria, as defined by ASC 360, Property, Plant and Equipment , are satisfied.

Assets held for sale are evaluated for impairment when transferred to held for sale status or as impairment indicators are present.

Assets held for sale are evaluated for impairment when transferred to held for sale status or when impairment indicators are present.

The carrying amount of assets held for sale is not recoverable if the carrying amount exceeds the fair value less estimated costs to sell the asset.

An impairment loss is recorded for the excess of the asset’s carrying amount over the fair value less estimated costs to sell.

Impairment losses are recorded in operating supplies and expenses in the consolidated statements of comprehensive income.

No impairment losses were recorded for the year ended December 31, 2021.

For the years ended December 31, 2020 and 2019, total impairment losses were $ 4.7 million and $ 42.4 million, respectively.

Impairment losses for the year ended December 31, 2019 included a $ 28.1 million impairment related to the shutdown of our FTFM service offering and an $ 11.5 million impairment related to a bulk sale of tractors.

Impairment losses are recorded in operating supplies and expenses—net in the consolidated statements of comprehensive income.

We recorded no significant impairment losses for the years ended December 31, 2022, or 2021, and $ 4.7 million in losses for the year ended December 31, 2020.

Assets held for sale by segment as of December 31, 2022 and 2021 were as follows:

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Total $ 21.8 $ 0.7

(1) As of December 31, 2020, $ 1.6 million related to the shutdown of our FTFM service offering.

Internal Use Software and Cloud Computing Arrangements

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The renewal period is included in the amortization period if determined that the option is reasonably certain to be exercised.

Amortization expense is recorded within operating supplies and expenses on the consolidated statements of comprehensive income, similar to the related hosting fees.

We recorded $ 1.0 million of amortization expense related to CCA implementation costs during the year ended December 31, 2021.

There was no amortization expense related to CCA implementation costs during the year ended December 31, 2020.

Amortization expense is recorded within operating supplies and expenses—net on the consolidated statements of comprehensive income, similar to the related hosting fees.

We recorded $ 1.3 million and $ 1.0 million of amortization expense related to CCA implementation costs during the years ended December 31, 2022, and 2021, respectively.

There was no amortization expense related to CCA implementation during the year ended December 31, 2020.

Capitalized computer costs are evaluated for impairment on an ongoing basis.

If events or changes in circumstances (such as the manner in which the hosting arrangement is expected to be used) indicate that the carrying value may not be recoverable, the Company will evaluate the asset for impairment.

If impairment is identified, it is recorded in operating supplies and expenses—net in the consolidated statements of comprehensive income.

The following table provides information related to our internal use software and CCA implementation costs as of the dates shown.

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Goodwill is tested for impairment annually in October, or more frequently if impairment indicators exist.

The carrying amount of a reporting unit’s goodwill is considered not recoverable, and an impairment loss is recorded if the carrying amount of the reporting unit exceeds the reporting unit’s fair value, as determined based on the combination of an income approach and a market approach.

See Note 6, Goodwill , for more information on our goodwill.

See Note 6, Goodwill and Other Intangible Assets , for more information on our goodwill.

Revenue Recognition

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We account for share-based compensation using the fair value recognition provisions of current accounting standards for share-based payments.

We grant restricted stock units, restricted shares, performance-based restricted stock units, performance-based restricted shares, and non-qualified stock options.

These awards have historically consisted of restricted shares, RSUs, performance-based restricted shares, PSUs, and non-qualified stock options.

We recognize compensation expense over the requisite service periods within each award.

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Claims Accruals

We are self-insured for loss of and damage to our owned and leased revenue equipment.

We are self-insured for loss of and damage to our owned and leased transportation equipment.

We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular accidents, and cargo damage.

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The ultimate cost of a claim develops over time as additional information regarding the nature, timing, and extent of damages claimed becomes available.

Accordingly, we use an actuarial method to develop current claim information to derive an estimate of our ultimate claim liability.

Accordingly, we use an actuarial method to develop current claim information to

derive an estimate of our ultimate claim liability.

This process involves the use of loss-development factors based on our historical claims experience and includes a contractual premium adjustment factor, if applicable.

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At December 31, 2022 and 2021, we had an aggregate prepaid insurance asset of $ 9.2 million and $ 11.0 million, respectively, which represented prefunded premiums and deposits.

Accounting Standards Issued but Not Yet Adopted

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance, to increase the transparency of government assistance.

This standard requires business entities to disclose information about transactions with a government that are accounted for by applying a grant or contribution model by analogy (for example, IFRS guidance in IAS 20 or guidance on contributions for not-for-profit entities in ASC 958-605), including information about the nature of the transaction, including significant terms and conditions, as well as the amounts and specific financial statement line items affected by the transaction.

ASU 2021-10 is effective for us beginning with our December 31, 2022 financial statements, with early adoption permitted.

We do not believe the adoption of this standard will have a material impact on our consolidated financial statements or disclosures.

Sale of Business

On November 30, 2022, the Company entered into a management buyout agreement to sell 100% of its China-based logistics operations to certain members of Asia’s management team, ceasing Schneider’s Asia operations.

The sale resulted in the recognition of a $ 5.0 million loss, which was recorded within operating supplies and expenses—net in the consolidated statements of comprehensive income, and operating results through the date of sale are included within Other.

In conjunction with the management buyout agreement, a $ 4.1 million payment was made and is included within acquisitions and sale of business, net of cash acquired on the consolidated statements of cash flows.

Accounting Standards Recently Adopted

We adopted ASU 2019-12, Simplifying the Accounting for Income Taxes, which reduces complexity in accounting for income taxes by eliminating certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance to improve consistent application among reporting entities, as of January 1, 2021.

We used the modified retrospective or prospective approach, which was based on the specific amendment implemented, when adopting this standard.

We adopted ASU 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance , which increases the transparency of government assistance.

This standard requires businesses to disclose information about transactions with a government that are accounted for by applying a grant or contribution model by analogy (for example, International Financial Reporting Standards guidance in International Accounting Standard 20 or guidance on contributions for not-for-profit entities in ASC 958-605), including information about the nature of the transaction, including significant terms and conditions, as well as the amounts and specific financial statement line items affected by the transaction.

The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures.

We entered into a Securities Purchase Agreement, dated December 31, 2021 (“Acquisition Date”), to acquire 100 % of the outstanding equity of MLS, a dedicated trucking company based in Celina, OH, and certain affiliated entities holding assets comprising substantially all of MLS’s business (the “Acquisition”).

deBoer Transportation, Inc.

We entered into a Securities Purchase Agreement, dated June 7, 2022 , to acquire 100 % of the outstanding equity of deBoer, a regional, dedicated carrier headquartered in Blenker, WI.

The acquisition provided Schneider the opportunity to expand our tractor and trailer fleet primarily within our dedicated Truckload operations, as well as our company driver capacity.

During the second half of 2022, the Company successfully transitioned equipment and employees from deBoer to Schneider, deBoer operations ceased, and drivers and equipment were deployed primarily within our Truckload segment.

The aggregate purchase price of the acquisition was approximately $ 34.6 million inclusive of certain cash and net working capital adjustments, and the assets acquired consisted primarily of rolling stock.

The acquisition was accounted for under the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized on the consolidated balance sheets at their fair values as of the acquisition date.

The fair values of net assets acquired were determined using Level 3 inputs, and the excess of the purchase price over the estimated fair value of the net assets resulted in $ 7.7 million of goodwill being recorded within the Truckload reportable segment at the time of acquisition.

Following the acquisition, $ 1.6 million of purchase price adjustments were made relating to deferred taxes and certain working capital amounts resulting in an adjusted goodwill balance of $ 6.1 million as of December 31, 2022.

Acquisition-related costs, which consisted of fees incurred for advisory, legal, and accounting services, were $ 0.3 million and were included in other general expenses in the Company’s consolidated statements of comprehensive income for the period ended December 31, 2022.

Operating results for deBoer are included in our consolidated results of operations from the acquisition date.

Pro forma information for this acquisition is not provided as it did not have a material impact on the Company’s consolidated operating results.

Midwest Logistics Systems, Ltd.

We entered into a Securities Purchase Agreement, dated December 31, 2021 , to acquire 100 % of the outstanding equity of MLS, a dedicated trucking company based in Celina, OH, and certain affiliated entities holding assets comprising substantially all of MLS’s business.

MLS is a premier dedicated carrier in the central U.S.

that we believe complements our growing dedicated operations.

As of December 31, 2021, MLS had approximately 1,000 associates and operated 900 tractors and 3,600 trailers across 30 owned or leased locations in the U.S.

The aggregate purchase price of the Acquisition was approximately $ 274.5 million inclusive of certain cash and net working capital adjustments and a deferred payment of $ 3.2 million made in January 2022.

The aggregate purchase price of the acquisition was approximately $ 268.8 million inclusive of $ 5.7 million in net working capital and other post-acquisition adjustments received in 2022 and a deferred payment of $ 3.2 million made in January 2022.

Proceeds from the total purchase consideration were used to settle $ 26.9 million of MLS’s outstanding debt as of the acquisition date.

The following table summarizes the purchase price:

Purchase Consideration (in millions)

December 31, 2021

Cash consideration $ 271.3

Deferred cash consideration 3.2

Fair value of total consideration transferred $ 274.5

The acquisition of MLS was accounted for under the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized on the consolidated balance sheets at their fair values as of the acquisition date.

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Key assumptions used in the transportation equipment appraisals were based on the market approach, while key assumptions used in the land, buildings and improvements, and other property and equipment appraisals were based on a combination of the income (direct capitalization) and sales comparison approaches, as appropriate.

The excess of the purchase price over the estimated fair values of assets acquired and liabilities assumed was recorded as goodwill within the Truckload reporting segment.

The excess of the purchase price over the estimated fair values of assets acquired and liabilities assumed was recorded as goodwill within the Truckload reportable segment.

The goodwill is attributable to expected synergies and growth opportunities within our dedicated business and is expected to be deductible for tax purposes.

Acquisition-related costs, which consisted of fees incurred for advisory, legal, and accounting services, were $ 1.9 million and were included in other general expenses in the Company’s consolidated statements of comprehensive income for the period ended December 31, 2021.

Certain amounts recorded in connection with the Acquisition are still considered preliminary as we continue to gather the necessary information to finalize our fair value estimates and provisional amounts.

Provisional amounts include items related to working capital adjustments, intangibles, indemnification assets and liabilities, and leases.

During the measurement period, which is up to one year from the Acquisition Date, we may adjust provisional amounts that were recognized at the Acquisition Date to reflect new information obtained about facts and circumstances that existed as of the Acquisition Date.

We anticipate finalizing the determination of fair value by December 31, 2022.

The preliminary purchase price allocation for MLS, which may be adjusted by material amounts as we finalize our fair value estimates and provisional amounts, was as follows:

The following table summarizes the purchase price allocation for MLS, including any adjustments during the measurement period.

Recognized amounts of identifiable assets acquired and liabilities assumed (in millions)

December 31, 2021

Opening Balance Sheet Adjustments Adjusted December 31, 2021 Opening Balance Sheet

Cash and cash equivalents $ — $ 1.8 $ 1.8

Trade accounts receivable—net of allowance 18.6 ( 6.7 ) 11.9

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Prepaid expenses and other current assets 1.6 — 1.6

Transportation equipment 140.8

Land, buildings, and improvements 7.7

Other property and equipment 0.4

Net property and equipment 148.9 ( 0.8 ) 148.1

Internal use software and other noncurrent assets — 11.7 11.7

Goodwill 122.7 ( 18.4 ) 104.3

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Other current liabilities 7.2 ( 3.9 ) 3.3

Deferred income taxes — ( 1.1 ) ( 1.1 )

Other noncurrent liabilities — 0.3 0.3

Total liabilities assumed 18.2 ( 5.2 ) 13.0

Net assets acquired $ 274.5 $ ( 5.7 ) $ 268.8

Combined unaudited pro forma operating revenues of the Company and MLS would have been approximately $ 5,816.0 million and $ 4,748.0 million for the years ended December 31, 2021 and 2020, respectively, and our earnings for such periods would not have been materially different.

The above adjustments made during the measurement period ended December 31, 2022 were primarily related to working capital, property and equipment, leases, claims accruals, deferred taxes, and intangible assets.

The fair values of identifiable intangible assets, including customer relationships and trademarks, were based on valuations using income-based approaches and Level 3 inputs.

No material statement of comprehensive income effects were identified with these adjustments.

Combined unaudited pro forma operating revenues of the Company and MLS would have been approximately $ 5,816.0 million and $ 4,748.0 million for the years ended December 31, 2021 and 2020, respectively, and our earnings for the same periods would not have been materially different.

REVENUE RECOGNITION

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The majority of our revenues are related to transportation and have similar characteristics.

MLS and deBoer revenues since the acquisition dates are included within Transportation revenues, consistent with the remainder of our Truckload segment.

The following table summarizes our revenues by type of service, which are explained in greater detail below.

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Occasionally we provide freight movements to customers in exchange for non-monetary services.

The fair value of non-monetary consideration on these freight movements is included in operating revenues on the consolidated statements of comprehensive income.

The amount of operating revenues recorded for these services was $ 6.3 million in 2021.

There was no revenue recorded in 2020 or 2019 for freight movements in exchange for non-monetary consideration.

The fair value of non-monetary consideration on these freight movements is included in operating revenues on the consolidated statements of comprehensive income and consists primarily of transportation equipment.

The amount of operating revenues recorded for these services was $ 16.0 million and $ 6.3 million in 2022 and 2021, respectively.

There was no revenue recorded in 2020 for freight movements in exchange for non-monetary consideration.

Transportation orders are short-term in nature generally having terms of significantly less than one year.

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Equity investment in TuSimple (1)

1 $ 0.6 $ 12.7

Marketable securities (2)

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The fair value of the Company’s debt was $ 199.1 million and $ 276.7 million as of December 31, 2022 and 2021, respectively.

The carrying value of the Company’s debt was $ 265.0 million and $ 305.0 million as of December 31, 2021 and 2020, respectively.

The carrying value of the Company’s debt was $ 205.0 million and $ 265.0 million as of December 31, 2022 and 2021,

respectively.

The fair value of our debt was calculated using a fixed rate debt portfolio with similar terms and maturities, which is based on the borrowing rates available to us in the applicable year.

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We measure non-financial assets, such as assets held for sale and other long-lived assets, at fair value when there is an indicator of impairment and only when we recognize an impairment loss.

During 2021 we did not measure any non-financial assets at fair value.

The table below sets forth the Company’s non-financial assets that were measured at fair value on a non-recurring basis during 2022.

During 2021 we did not measure any non-financial assets at fair value.

(in millions) Level in Fair

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Assets held for sale (1)

Non restructuring (1)

Restructuring (2)

Right-of-use lease assets

Non restructuring (3)

Restructuring (2)

(1) Our held for sale revenue equipment is evaluated for impairment using market data upon classification as held for sale or as impairment indicators are present.

(1) Our held for sale transportation equipment is evaluated for impairment using market data upon classification as held for sale or as impairment indicators are present.

If the carrying value of the assets held for sale exceeds the fair value, an impairment is recorded.

Of the $ 17.2 million of assets held for sale not related to the FTFM shutdown as of December 31, 2020, $ 1.8 million were recorded at fair value.

All of the assets held for sale at December 31, 2022 were recorded at fair value.

Refer to Note 1, Summary of Significant Accounting Policies, for further details on impairment charges.

(2) We recognized impairment charges and recorded certain assets held for sale and right-of-use lease assets associated with the shutdown of the FTFM service offering at fair value as of December 31, 2020.

Transportation equipment was measured using market data, while right-of-use lease assets were measured using discounted cash flow analyses.

Of the $ 1.6 million of assets held for sale related to the FTFM shutdown, $ 1.4 million were recorded at fair value.

The discounted cash flow analyses for right-of-use lease assets used a range of discount rates from 3.6 % to 4.0 %, with a weighted average discount rate of 4.0 %.

(3) During 2020, we recognized an impairment on one of our right-of-use lease assets.

The discounted cash flow analysis performed used a discount rate of 4.1 %.

Our ownership interests in PSI and MLSI discussed in Note 5, Investments , do not have readily determinable fair values and are accounted for using the measurement alternative in ASC 321-10-35-2.

As part of the acquisition of MLS on December 31, 2021, certain assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date.

Refer to Note 2, Acquisition, for further details.

As part of the MLS and deBoer acquisitions, certain assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date.

Refer to Note 2, Acquisitions, for further details.

Marketable Securities

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Equity Investments without Readily Determinable Fair Values

The Company’s strategic equity investments without readily determinable fair values include PSI, a provider of telematics and fleet management tools, and MLSI, a transportation technology development company.

The Company’s primary strategic equity investments without readily determinable fair values include Platform Science, Inc., a provider of telematics and fleet management tools, MLSI, a transportation technology development company, and ChemDirect, a business to business digital marketplace for the chemical industry.

These investments are being accounted for under ASC 321, Investments - Equity Securities, using the measurement alternative, and their combined values as of December 31, 2022 and 2021 were $ 86.0 million and $ 36.2 million, respectively.

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Upward adjustments (1)

25.8 13.9 8.8

Cumulative upward adjustments 52.0

(1) Our updated investment value in 2021 was determined using the backsolve method, a valuation approach that uses an option pricing model to value shares based on the price paid for recently issued shares.

(1) Our updated investment values were determined using the backsolve method, a valuation approach that primarily uses an option pricing model to value shares based on the price paid for recently issued shares.

Equity Investments with Readily Determinable Fair Values

On January 12, 2021, the Company purchased a $ 5.0 million non-controlling interest in TuSimple, a global self-driving technology company.

Upon completion of its initial public offering in April 2021, our investment in TuSimple was converted into Class A common shares and is now being accounted for under ASC 321, Investments - Equity Securities .

In the year ended December 31, 2021, the Company recognized a pre-tax net gain of $ 7.7 million on its investment in TuSimple.

Upon completion of its IPO in April 2021, our investment in TuSimple was converted into Class A common shares and is now being accounted for under ASC 321, Investments - Equity Securities .

In the years ended December 31, 2022 and 2021, the Company recognized a pre-tax net loss of $ 12.1 million and a pre-tax net gain of $ 7.7 million, respectively, on its investment in TuSimple.

See Note 4, Fair Value , for additional information on the fair value of our investment in TuSimple.

All of our equity investments are included in other noncurrent assets on the consolidated balance sheets with subsequent gains or losses recognized within other expense (income)—net on the consolidated statements of comprehensive income.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the excess of the purchase price of acquisitions over the fair value of the identifiable net assets acquired.

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Balance at December 31, 2020 $ 103.6 $ 14.2 $ 10.3 $ 128.1

Foreign currency translation adjustment — — 0.6 0.6

Balance at December 31, 2020 103.6 14.2 10.3 128.1

Acquisition (see Note 2) 122.7 — — 122.7

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Balance at December 31, 2021 226.3 14.2 — 240.5

At December 31, 2021 and 2020, we had accumulated goodwill impairment charges of $ 53.2 million and $ 42.6 million, respectively, which consisted of $ 34.6 million and $ 18.6 million in our Truckload reporting segment and Other, as of December 31, 2021, and $ 34.6 million and $ 8.0 million in our Truckload reporting segment and Other, as of December 31, 2020.

Goodwill is tested for impairment at least annually using the discounted cash flow and guideline public company methods to calculate the fair values of our reporting units.

Acquisition (see Note 2) 7.7 — — 7.7

Acquisition adjustments (see Note 2) ( 20.0 ) — — ( 20.0 )

Balance at December 31, 2022 $ 214.0 $ 14.2 $ — $ 228.2

During the year ended December 31, 2022, we recorded goodwill in conjunction with the acquisition of deBoer and made measurement period adjustments related to the acquisitions of deBoer and MLS, both of which were recorded within the Truckload segment.

Goodwill recorded as a result of the Company’s acquisition of MLS represents its own reporting unit, while goodwill recorded as a result of the deBoer acquisition is included in our VTL/Dedicated Services reporting unit as drivers and assets were deployed within this business, and deBoer operations ceased.

Refer to Note 2, Acquisitions, for further details.

At December 31, 2022 and 2021, we had accumulated goodwill impairment charges of $ 53.2 million, which consisted of $ 34.6 million and $ 18.6 million in our Truckload reporting segment and Other, respectively.

Goodwill is tested for impairment at least annually using the discounted cash flow, guideline public company, and guideline transaction methods to calculate the fair values of our reporting units.

Key inputs used in the discounted cash flow approach include growth rates for sales and operating profit, perpetuity growth assumptions, and discount rates.

If interest rates rise, the calculated fair values of our reporting units will decrease, which could impact the results of our goodwill impairment tests.

In the fourth quarter of 2021, annual impairment tests were performed on all three of our reporting units with goodwill as of October 31, 2021, our assessment date.

An impairment loss of $ 10.6 million was recorded for our Asia reporting unit as the discounted cash flows expected to be generated by the reporting unit were not sufficient to recover its carrying value.

Key inputs used in the guideline public company and guideline transaction methods include EBITDA valuation multiples of comparable companies and transactions.

If interest rates rise or EBITDA valuation multiples of comparable companies and transactions decline, the calculated fair values of our reporting units will decrease, which could impact the results of our goodwill impairment tests.

During the fourth quarter of 2022 and 2021, annual impairment tests were performed on all three of our reporting units with goodwill as of October 31, our assessment date.

No impairments resulted as part of the 2022 annual impairment tests.

An impairment loss of $ 10.6 million was recorded for our Asia reporting unit in 2021 as the discounted cash flows expected to be generated by the reporting unit were not sufficient to recover its carrying value.

This represented all of the remaining goodwill related to the Asia reporting unit.

No impairments resulted for our remaining reporting units.

No impairments resulted for our remaining reporting units as part of the 2021 annual impairment tests.

The identifiable finite lived intangible assets other than goodwill listed below are included in internal use software and other noncurrent assets on the consolidated balance sheets and relate to the acquisition of MLS.

Our customer relationships and trademarks are amortized over a weighted-average amortization period of ten years .

Refer to Note 2, Acquisitions, for further details.

December 31, 2022

(in millions) Gross

Amount Accumulated Amortization Net

Customer relationships $ 3.2 $ 0.3 $ 2.9

Trademarks 6.8 0.7 6.1

Total intangible assets $ 10.0 $ 1.0 $ 9.0

Amortization expense for intangible assets was $ 1.0 million for the year ended December 31, 2022.

Estimated future amortization expense related to intangible assets is as follows:

(in millions) December 31, 2022

2028 and thereafter

DEBT AND CREDIT FACILITIES

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Current maturities ( 70.0 ) ( 60.0 )

Debt issuance costs — ( 0.2 )

Long-term debt $ 135.0 $ 205.0

Scheduled principal payments of debt subsequent to December 31, 2021 are as follows:

Scheduled future debt principal payments are as follows:

(in millions) December 31, 2022

Total $ 205.0

Our Credit Agreement (the “2018 Credit Facility”) provides borrowing capacity of $ 250.0 million and allows us to request an increase in total commitment by up to $ 150.0 million, for a total potential commitment of $ 400.0 million through August 2023.

On November 4, 2022, we entered into a new agreement (the “2022 Credit Facility”) which replaces our previous agreement (the “2018 Credit Facility”).

The 2022 Credit Facility provides borrowing capacity of $ 250.0 million and allows us to request an additional increase in total commitment by up to $ 150.0 million, for a total potential commitment of $ 400.0 million through November 2027.

The 2022 agreement also provides a sublimit of $ 100.0 million to be used for the issuance of letters of credit.

We had no outstanding borrowings under this agreement as of December 31, 2021 or 2020.

Standby letters of credit under this agreement amounted to $ 3.9 million at both December 31, 2021 and 2020, and were primarily related to the requirements of certain of our real estate leases.

We had no outstanding borrowings under either of these agreements as of December 31, 2022 or 2021.

Standby letters of credit under these agreements amounted to $ 0.1 million and $ 3.9 million on December 31, 2022 and 2021, respectively, and were primarily related to the requirements of certain of our real estate leases.

On July 30, 2021, we entered into Amendment No.

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We had no outstanding borrowings under this facility at December 31, 2022 or 2021.

At December 31, 2021 and 2020, standby letters of credit under this agreement amounted to $ 70.3 million and were primarily related to the requirements of certain of our insurance obligations.

At December 31, 2022 and 2021, standby letters of credit under this agreement amounted to $ 77.1 million and $ 70.3 million and were primarily related to the requirements of certain of our insurance obligations.

The credit agreements contain various financial and other covenants, including required minimum consolidated net worth, consolidated net debt, limitations on indebtedness, transactions with affiliates, shareholder debt, and restricted payments.

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For our real estate leases, we have elected to apply the recognition requirement to leases of twelve months or less;

therefore, an operating lease right-of-use asset and liability will be recognized for all of these leases.

therefore, a lease right-of-use asset and liability will be recognized for all of these leases.

For our equipment leases, we have elected to not apply the recognition requirements to leases of twelve months or less.

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We have also elected to not separate the different components within the contract for our leases;

therefore, all fixed costs associated with the lease are included in the right-of-use asset and the operating lease liability.

therefore, all fixed costs associated with the lease are included in the right-of-use asset and lease liability.

This often relates to the requirement for us to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other operating costs in addition to a base or fixed rent.

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None of our leases contain restrictions or covenants that restrict us from incurring other financial obligations.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term.

Right-of-use lease assets and liabilities are recognized based on the present value of the future lease payments over the term.

Our incremental borrowing rates are used as the discount rates for leases and are determined based on U.S.

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Operating lease cost

Operating lease cost Operating supplies and expenses $ 31.3 $ 29.5 $ 32.5

Operating lease cost Operating supplies and expenses—net $ 32.9 $ 31.3 $ 29.5

Short-term lease cost (1)

Operating supplies and expenses 3.0 3.1 7.6

Operating supplies and expenses—net 6.3 3.0 3.1

Finance lease cost

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Interest on lease liabilities Interest expense 0.2 0.1 0.1

Variable lease cost Operating supplies and expenses 0.9 2.2 2.6

Sublease income Operating supplies and expenses ( 4.5 ) ( 4.5 ) ( 5.4 )

Variable lease cost Operating supplies and expenses—net 2.9 0.9 2.2

Sublease income Operating supplies and expenses—net ( 3.0 ) ( 4.5 ) ( 4.5 )

Total net lease cost $ 41.5 $ 31.6 $ 30.9

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Operating lease right-of-use assets were $ 63.5 million and $ 68.6 million as of December 31, 2022 and 2021, respectively.

No impairment losses were recorded on our operating lease right-of-use assets for the year ended December 31, 2021.

Total impairment losses on our operating lease right-of-use assets were $ 0.8 million and $ 4.1 million for the years ended December 31, 2020 and 2019, respectively.

For the years ended December 31, 2020 and 2019, $ 0.3 million and $ 3.8 million related to the shutdown of our FTFM service offering, respectively.

Refer to Note 16, Restructuring, for additional details on the impairment loss related to the FTFM service offering shutdown.

We recorded a $ 0.1 million impairment loss on our operating lease right-of-use assets for the year ended December 31, 2022, no impairment losses for 2021, and $ 0.8 million in losses for 2020.

For the year ended December 31, 2020, $ 0.3 million related to the shutdown of our FTFM service offering.

At December 31, 2022, future lease payments under operating and finance leases were as follows:

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2025 12.6 2.5

2025 10.2 1.0

2028 and thereafter

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Future operating lease payments at December 31, 2022 include $ 1.0 million related to options to extend lease terms that we are reasonably certain to exercise.

As of December 31, 2021, we had several leases that were signed but had not yet commenced totaling $ 5.5 million.

These leases will commence in 2022 and have lease terms of one to four years .

As of December 31, 2022, we had several leases that were signed but had not yet commenced totaling $ 24.1 million over their lease terms.

These leases will commence in 2023 and have lease terms of three to seven years .

The consolidated balance sheets include right-of-use assets acquired under finance leases as components of property and equipment as of December 31, 2022 and 2021.

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Given our leases have fully guaranteed residual values and we can take possession of the transportation-related equipment in the event of default, we do not categorize net investment in leases by different credit quality indicators upon origination.

We monitor our lease portfolio weekly by tracking amounts past due, days past due, and outstanding maintenance account balances, including performing subsequent credit checks as needed.

We monitor our lease portfolio weekly by tracking amounts past due, days past due, and outstanding maintenance account balances, including performing

subsequent credit checks as needed.

Our net investment in leases with any portion past due as of December 31, 2022 was $ 64.6 million, which includes both current and future lease payments.

Lease payments are generally due on a weekly basis and are classified as past due when the weekly payment is not received by its due date.

Lease payments on our lease receivables are generally due on a weekly basis and are classified as past due when the weekly payment is not received by its due date.

As of December 31, 2022, our lease payments past due were $ 4.1 million.

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The table below provides additional information on our sales-type leases.

Revenue and cost of goods sold are recorded in operating revenues and operating supplies and expenses in the consolidated statements of comprehensive income, respectively.

Revenue and cost of goods sold are recorded in operating revenues and operating supplies and expenses—net in the consolidated statements of comprehensive income, respectively.

Year Ended December 31,

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Interest income on lease receivable $ 37.0 $ 32.4 $ 26.5

On March 27, 2020, President Trump signed the CARES Act into U.S.

federal law aimed at providing emergency assistance and health care for individuals, families, and businesses affected by COVID-19 and generally supporting the U.S.

The CARES Act included a provision for the deferment of the employer portion of social security taxes through December 31, 2020, among other things, which the Company elected.

As of December 31, 2021, the deferred employer social security taxes have been paid, which totaled $ 30.7 million as of December 31, 2020.

The components of the provision for income taxes for the years ended December 31, 2022, 2021, and 2020 were as follows:

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Federal $ 28.1 $ 112.5 $ 60.4

State and other 22.1 9.1 8.3

Foreign 15.8 — —

State 19.3 22.1 9.1

63.2 134.6 69.5

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State and other 0.2 1.2 3.1

2.0 1.7 ( 0.2 )

Total provision for income taxes $ 146.2 $ 136.6 $ 71.2

Foreign operations of the Company are insignificant in relation to our overall operating results.

For the year ended December 31, 2022, the foreign provision for income taxes is primarily related to the sale of our Canadian facility;

for the years ended December 31, 2021 and 2020, the foreign provision is insignificant in relation to our overall provision.

The provision for income taxes for the years ended December 31, 2022, 2021, and 2020 differed from the amounts computed using the federal statutory rate in effect as follows:

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State tax—net of federal effect 15.4 2.6 18.9 3.5 9.7 3.4

Change in valuation allowance 10.7 1.8 — — — —

Other—net ( 6.7 ) ( 1.2 ) 3.9 0.7 2.1 0.8

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State net operating losses and credit carryforwards 9.4 9.3

Foreign capital loss carryforward 10.7 —

Other 14.9 10.5

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Gross increases—tax positions related to current year 1.0 0.9 0.3

Gross increases (decreases)—tax positions taken in prior years — ( 0.3 ) 0.4

Gross decreases—tax positions taken in prior years ( 0.2 ) — ( 0.3 )

Gross unrecognized tax benefits—end of year $ 6.0 $ 5.2 $ 4.3

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Carryforwards

As of December 31, 2021, we had $ 162.1 million of state net operating loss carryforwards which are subject to expiration from 2022 to 2042.

The deferred tax assets related to carryforwards at December 31, 2021 were $ 9.3 million for state net operating loss carryforwards.

As of December 31, 2022, we had $ 148.5 million of state net operating loss carryforwards which are subject to expiration from 2023 to 2043, and $ 51.5 million in capital loss carryforwards which are subject to expiration from 2023 to 2027.

The deferred tax assets related to carryforwards at December 31, 2022 were $ 9.4 million for state net operating loss carryforwards and $ 10.8 million for the capital loss carryforwards.

Carryforwards are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax-planning strategies, and projections of future taxable income.

At December 31, 2021, we carried a total valuation allowance of $ 2.5 million against state deferred tax assets.

At December 31, 2022, we carried a total valuation allowance of $ 12.8 million, which represented $ 10.7 million against capital loss carryforwards and $ 2.1 million against state deferred tax assets.

COMMON EQUITY

Earnings Per Share

The following table summarizes the computation of basic and diluted earnings per share for the years ended December 31, 2021, 2020, and 2019.

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2022, 2021, and 2020.

Year Ended December 31,

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Our Class B common stock has traded on the NYSE under the symbol “SNDR” since our IPO in April 2017.

Our Class A common stock is held by the Schneider National, Inc.

Voting Trust for the benefit of members of the Schneider family.

Our Class A common stock is held by the Voting Trust for the benefit of members of the Schneider family.

Each share of Class A common stock is convertible into one share of Class B common stock.

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Included in the 2020 amount was a special cash dividend of $ 2.00 per share, totaling $ 354.7 million.

Subsequent Event - Dividends Declared

Subsequent Event - Dividends Declared and Stock Repurchase Program

In January 2023, our Board declared a quarterly cash dividend for the first fiscal quarter of 2023 in the amount of $ 0.09 per share to holders of our Class A and Class B common stock.

The dividend is payable to shareholders of record at the close of business on March 10, 2023 and is expected to be paid on April 10, 2023 .

In January 2023, our Board also announced and approved a share repurchase program under which the Company is authorized to repurchase up to $ 150.0 million of its Class A and/or Class B common stock.

The program does not obligate the Company to repurchase a minimum number of shares and is intended to help offset the dilutive effect of equity grants to employees over time.

Under this program, the Company may repurchase shares in privately negotiated and/or open market transactions.

EMPLOYEE BENEFIT PLANS

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We grant various equity-based awards relating to Class B common stock to employees under our 2017 Omnibus Incentive Plan (“the Plan”).

These awards consist of restricted shares, restricted stock units (“RSUs”), performance-based restricted shares (“performance shares”), performance-based restricted stock units (“PSUs”), and non-qualified stock options.

These awards have historically consisted of restricted shares, RSUs, performance-based restricted shares (“performance shares”), PSUs, and non-qualified stock options.

Performance shares and PSUs granted prior to 2021 are earned based on attainment of threshold performance of earnings and return on capital targets.

Beginning with grants in 2021, in addition to achievement of earnings and return on capital targets, a multiplier will be applied to performance share and PSU achievement based on relative total shareholder return (“rTSR”) against a selected peer group over the performance period.

Beginning with grants in 2021, in addition to achievement of earnings and return on capital targets, a multiplier is applied to performance share and PSU achievement based on rTSR against peers over the performance period.

We account for our restricted shares, RSUs, performance shares, PSUs, and non-qualified stock options granted as equity awards in accordance with the applicable accounting standards for these types of share-based payments.

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Non-qualified stock options 1.4 1.4 0.9

Share-based compensation expense (benefit) $ 13.3 $ 7.3 $ ( 2.3 )

Related tax benefit (expense) $ 3.3 $ 1.8 $ ( 0.6 )

As of December 31, 2021, we had $ 18.9 million of pre-tax unrecognized compensation cost related to outstanding share-based compensation awards that is expected to be recognized over a weighted average period of 2.1 years.

Share-based compensation expense $ 15.8 $ 13.3 $ 7.3

Related tax benefit $ 3.8 $ 3.3 $ 1.8

As of December 31, 2022, we had $ 21.4 million of pre-tax unrecognized compensation cost related to outstanding share-based compensation awards expected to be recognized over a weighted average period of 1.9 years.

Restricted Shares and RSUs

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Unvested at December 31, 2021 679,259 22.84

Granted 341,508 22.61

322,316 25.85

Vested ( 256,779 ) 23.49

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Unvested at December 31, 2022 695,467 $ 23.92

(1) No restricted shares were granted during 2022.

The grant date fair value of restricted shares and RSUs is determined using the closing share price of the Company on the date of grant.

Performance Shares and PSUs

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These awards cliff-vest after a performance period of three years , subject to continued employment through the vesting date or retirement eligibility, with payout ranging from 0 % - 200 % of the target number of shares for both PSUs and performance shares.

The 2021 awards include an additional rTSR component that allows for payout ranging from 0 %- 250 % of the target number of shares.

The 2021 and 2022 awards include an additional rTSR component that allows for payout ranging from 0 % - 250 % of the target number of shares.

Dividend equivalents equal to dividends paid on our common shares during the vesting period are tracked and accumulated for each award.

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Granted 350,525 22.04

Vested ( 44,802 ) 26.80

Forfeited ( 170,422 ) 26.68

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Granted 439,620 24.44

Vested ( 44,802 ) 26.80

Forfeited ( 313,362 ) 22.27

Unvested at December 31, 2021 781,280 23.39

Granted 439,620 24.44

224,455 28.32

Vested ( 304,794 ) 22.04

Forfeited ( 97,942 ) 24.23

Unvested at December 31, 2022 602,999 $ 25.77

We estimated the grant date fair value of the 2021 performance shares and PSUs using a Monte Carlo simulation which requires assumptions for expected term, volatility, dividend yield, and risk-free interest rate.

We used the historical volatility of the peer group to derive the expected volatility of the stock.

(1) No performance shares were granted during 2022.

We estimated the grant date fair value of performance shares and PSUs containing a rTSR component using a Monte Carlo simulation which requires assumptions for expected term, volatility, dividend yield, and risk-free interest rate.

We used the historical volatility of peers to derive the expected volatility of the stock.

The risk-free interest rate was based on the U.S.

Treasury yield curve in effect at the time of the grant taking into consideration the expected term of the awards.

No expected dividend yield was used as the award agreement assumes any dividends distributed during the performance period are reinvested.

Assumptions used in the Monte Carlo simulation for awards granted in 2021 were as follows:

Treasury yield curve in effect at the time of grant taking into consideration the expected term of the awards.

No expected dividend yield was used as the award agreement assumes dividends distributed during the performance period are reinvested.

Assumptions used in the Monte Carlo simulation for awards granted in 2022 and 2021 were as follows:

Weighted-average Monte Carlo value $ 28.32 $ 24.44

Monte Carlo assumptions:

Expected term 2.87 years

Expected term 2.87 years 2.87 years

Expected volatility 45.3 % 45.8 %

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Exercised (2)

( 84,984 ) 19.00 440

Forfeited — —

Outstanding at December 31, 2020 (3)

685,900 20.60 7.1 735

Granted 305,668 22.63

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Outstanding at December 31, 2021 948,664 21.42 7.3 5,208

685,900 20.60 7.1 735

Granted 311,501 25.58

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(1) The aggregate intrinsic value was computed using the closing share price on December 30, 2022 of $ 23.40 , December 31, 2021 of $ 26.91 , and December 31, 2020 of $ 20.70 , as applicable.

(2) Cash received upon exercise of stock options was $ 0.7 million in 2021, $ 1.6 million in 2020, and $ 0 in 2019.

(2) Cash received upon exercise of stock options was $ 3.4 million in 2022, $ 0.7 million in 2021, and $ 1.6 million in 2020.

(3) In November 2020, the exercise price of all outstanding options was adjusted downward by $2.00 to equitably adjust for the special dividend paid by the Company on November 19, 2020.

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Equity awards are granted to each director annually on the date of our annual shareholder meeting and accounted for as equity based in accordance with applicable accounting standards for these types of share-based payments.

Expense related to our director equity based awards was $ 1.3 million in 2021, $ 1.3 million in 2020, and immaterial in 2019.

Expense related to our director equity based awards was $ 1.4 million in 2022, $ 1.3 million in 2021, and $ 1.3 million in 2020.

We also grant equity retainer awards, or shares in lieu of cash, on a quarterly basis to our non-employee directors.

These awards consist of fully vested shares of our Class B common stock or deferred stock units (“DSUs”).

These awards consist of fully vested shares of our Class B common stock or DSUs.

We account for the quarterly director share awards and DSUs as liability based in accordance with the applicable accounting standards for these types of share-based payments and remeasure the DSUs at the end of each reporting period through settlement.

Expense related to our director liability based awards was $ 1.2 million in 2021, $ 0.9 million in 2020, and immaterial in 2019.

OTHER LONG-TERM INCENTIVE COMPENSATION

We maintain legacy long-term cash incentive compensation plans, and the total expense (benefit) recognized for these plans was $ 1.2 million in 2021, $ 1.6 million in 2020, and $( 2.0 ) million in 2019.

Under the 2011 Omnibus Long-term Incentive Plan (the “LTIP”), performance-based Long-Term Cash Awards (“Cash Plan Awards”) and service-based Stock Appreciation Rights (“SARs”) were granted annually to eligible employees, including our executive officers, from 2013-2016 and 2011-2012, respectively.

The final year of expense for Cash Plan Awards was 2020, and as of December 31, 2021 all Cash Plan Awards were paid.

The liability for the Cash Plan Awards was $ 2.9 million as of December 31, 2020.

The 2011 SARs were paid in March of 2021, and the 2012 SARs are fully vested and will be paid on March 15, 2022.

As of December 31, 2021, approximately 0.3 million SARs were outstanding, and the liability was $ 2.1 million and $ 5.3 million at December 31, 2021 and 2020, respectively.

The 2005 Schneider National, Inc.

Long-Term Incentive Plan (the “2005 LTIP”) includes awards of cash-settled retention credits granted to eligible employees, including certain of our named executive officers.

The retention credits are mandatorily deferred time-based cash credits which are fully vested and will be paid out in March following the second anniversary of the employee’s termination of employment, provided the employee has not violated the terms of their restrictive covenant agreements.

The liability for the retention credits was $ 8.7 million and $ 8.8 million at December 31, 2021 and 2020, respectively.

Expense related to our director liability based awards was $ 0.9 million in 2022, $ 1.2 million in 2021, and $ 0.9 million in 2020.

COMMITMENTS AND CONTINGENCIES

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We review our accruals periodically to ensure that the aggregate amounts of our accruals are appropriate at any period after consideration of available insurance coverage.

Although we expect that our claims accruals will continue to vary based on future developments, assuming that we are able to continue to obtain and maintain excess liability insurance coverage for such claims, we do not anticipate that such accruals will, in any period, materially impact our results of operations.

At December 31, 2022, our firm commitments to purchase transportation equipment totaled $ 448.0 million.

A representative of the former owners of WSL has filed a lawsuit in the Delaware Court of Chancery which primarily alleges that we have not fulfilled certain obligations under the purchase and sale agreement relating to the post-closing operations of the business, and as a result, the former owners claim they are entitled to damages including an additional payment of $ 40.0 million under an earn-out arrangement which was a component of the purchase price in the transaction.

The Delaware Court of Chancery completed a remote trial in January 2021.

Post-trial briefs have been filed, and the Court’s decision is pending.

A judgment by the Court against us in this matter could have a material adverse effect on our operating results.

We believe we have presented strong defenses to this claim.

In 2020, the Company recorded $ 12.8 million of expense and paid $ 13.7 million as a result of an adverse tax ruling in a dispute with the IRS over the applicability of excise taxes on certain tractors refurbished during tax years 2011 through 2013 and no longer in service.

In December 2020, the Company filed an appeal with the U.S.

Court of Appeals for the Seventh Circuit, and in August 2021, the Seventh Circuit reversed the District Court and ruled in the Company’s favor on all matters.

In November 2021, after receiving confirmation from the IRS of the refund amount, the Company concluded that recovery was probable and recorded a $ 13.5 million refund receivable for such taxes and related interest.

During the first quarter of 2022, the Company recorded a $ 5.2 million charge as a result of an adverse audit assessment by a state jurisdiction over the applicability of sales tax for prior periods on rolling stock equipment used within that state.

The charge is included within operating supplies and expenses—net on the consolidated statements of comprehensive income for the year ended December 31, 2022.

The Company filed a request for appeal of the audit assessment with the state jurisdiction.

A representative of the former owners of WSL filed a lawsuit alleging that we did not fulfill certain obligations under the purchase and sale agreement and claiming that the former owners of WSL were entitled to damages including an additional payment of $ 40.0 million under an earn-out arrangement.

On April 25, 2022, the Delaware Superior Court entered judgment in favor of the former owners of WSL, awarding $ 40.0 million in compensatory damages, plus prejudgment interest and the former owners’ attorneys’ fees.

The Company settled with the former owners of WSL for a total of $ 57.0 million, which is included within other general expenses on the consolidated statements of comprehensive income for the year ended December 31, 2022.

SEGMENT REPORTING

We have three reportable segments – Truckload, Intermodal, and Logistics – which are based primarily on the services each segment provides.

As of December 31, 2018, our operating segments within the Truckload reportable segment were VTL, FTFM, and Bulk.

On July 29, 2019 the Board approved a structured shutdown of our FTFM service offering, which was included within our FTFM operating segment.

As the shutdown of the FTFM service offering is complete, there are only two remaining operating segments within the Truckload reportable segment, VTL and Bulk, that are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in ASC 280.

As of December 31, 2020, our operating segments within the Truckload reportable segment were VTL and Bulk.

Beginning in 2022, the operating results of MLS, a standalone operating segment, were aggregated into the Truckload reportable segment, resulting in a total of three operating segments.

The operating results of deBoer are also included within the Truckload reportable segment from the date of acquisition through when their operations ceased in July and their assets were deployed throughout the business.

The three operating segments are aggregated because they have similar economic characteristics with our other Truckload operating segments and meet the other aggregation criteria described in ASC 280.

VTL delivers truckload quantities over irregular routes using dry van trailers.

Bulk transports key inputs to manufacturing processes, such as specialty chemicals, using specialty trailers.

MLS provides dedicated truckload services focusing primarily on freight with consistent routes.

The Intermodal reportable segment provides rail intermodal and drayage services to our customers.

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During 2021, the Company combined the Supply Chain Management and Import/Export Services operating segments into one operating segment.

As of December 31, 2021, there are only two remaining operating segments, Brokerage and SCDM, that are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting.

As of December 31, 2022 and 2021, there are only two remaining operating segments, Brokerage and SCDM, that are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting.

In the Logistics segment, we provide additional sources of truck capacity, manage transportation-systems analysis requirements for individual customers, and provide transloading and warehousing services.

We generate other revenues from our leasing and captive insurance businesses which are operated by wholly owned subsidiaries.

We also have operations in Asia that meet the definition of an operating segment.

Through November of 2022 and prior to executing a management buyout agreement to sell that business, the Company had operations in Asia that met the definition of an operating segment.

None of these operations meet the quantitative reporting thresholds, and a result, are grouped in “Other” in the tables below.

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Depreciation and amortization $ 350.0 $ 296.2 $ 290.5

RESTRUCTURING

On July 29, 2019 , the Company’s Board approved a structured shutdown of its FTFM service offering within its Truckload reportable segment which was substantially complete as of August 31, 2019 .

The pre-tax loss from our FTFM service offering was $ 34.4 million for the year ended December 31, 2019.

As of December 31, 2019, FTFM restructuring liabilities totaled $ 5.1 million, of which $ 1.5 million were paid during the year ended December 31, 2020.

The remaining FTFM restructuring liabilities, which totaled $ 4.4 million as of December 31, 2020, were paid during the year ended December 31, 2021.

The activity associated with the shutdown is presented separately on the consolidated statements of comprehensive income within restructuring—net and is summarized below on a cumulative basis from July 29, 2019 through December 31, 2020.

Restructuring activity for the year ended December 31, 2021 was not material.

(in millions) Cumulative

Impairment charges and losses on asset disposals—net $ 47.2

Receivable write-downs—net 3.0

Other costs 14.5

Total restructuring—net $ 64.7

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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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 8. Financial Statements and Supplementary Data