What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-23 compared with 2023-02-17 · 230 added, 143 removed, 936 unchanged (28% of the section changed)

27 unchanged sentences

At December 31, 2023 and 2022, the Company had an accrual of $178.4 million and $164.9 million, respectively, for estimated claims net of reinsurance receivables.

The subjectivity of estimating the claims accruals for pending claims and incurred but not reported claims, requires a high degree of auditor judgement and an increased extent of effort.

This includes the need to involve our actuarial specialists when performing audit procedures to evaluate whether claims accruals are appropriately stated as of December 31, 2022.

The subjectivity of estimating the claims accruals for pending claims and incurred but not reported claims requires a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists, when performing audit procedures to evaluate whether claims accruals are appropriately stated as of December 31, 2023.

How the Critical Audit Matter Was Addressed in the Audit

2 unchanged sentences

• We evaluated the methods and assumptions used by management to estimate claims accruals by:

◦ Testing the underlying data that served as the basis for the actuarial analysis, including reconciling the claims data to the Company’s actuarial analysis, testing the annual exposure data, and testing current year claims and payment data.

◦ Testing the underlying data and inputs for completeness and accuracy that served as the basis for the actuarial analysis, including reconciling the claims data to the Company’s actuarial analysis, testing the annual exposure data, and testing current year claims and payment data.

◦ Comparing management’s selected claims accrual estimates to the range provided by their third-party actuary and to historical trends.

◦ 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

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

Critical Audit Matter Description

1 unchanged sentence

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.

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

Significant judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate future cash flows.

Assumptions used in impairment evaluations, such as forecasted growth rates and cost of capital could have significant impacts in determining the fair value of reporting units, the amount of any goodwill impairment charge, or both.

Prior to the Company’s segment realignment on October 31, 2023, management tested the Midwest Logistics Systems (“MLS”) reporting unit goodwill balance, which was $104.3 million, in which the fair value of MLS exceeded its carrying value, 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, including 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

1 unchanged sentence

• 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.

• 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 (4) obtaining long-term customer contracts which support near-term revenue growth projections.

• 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.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the EBITDA valuation multiples selected by (1) testing the source information underlying the determination of the discount rate, (2) testing the mathematical accuracy of the calculations, and (3) assessing the appropriateness of the guideline companies and transactions.

/s/ Deloitte & Touche LLP

7 unchanged sentences

and subsidiaries (the “Company”) as of December 31, 2023, 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, 2022, based on criteria established in I nternal 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, 2023, based on criteria established in Internal 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, 2023, of the Company and our report dated February 23, 2024, 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 M&M Transport Services, LLC, which was acquired on August 1, 2023, and whose financial statements constitute 5.7% of total assets of the consolidated financial statement total assets and 1.3% of operating revenues of the consolidated financial statement operating revenues as of and for the year ended December 31, 2023.

Accordingly, our audit did not include the internal control over financial reporting at M&M Transport Services, LLC.

Basis for Opinion

32 unchanged sentences

Goodwill impairment charge — — 10.6

Restructuring—net — — 1.0

Total operating expenses 5,202.5 6,004.0 5,075.0

4 unchanged sentences

Other income—net ( 16.9 ) ( 10.3 ) ( 18.7 )

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

Total other income—net ( 9.7 ) ( 3.6 ) ( 8.3 )

Income before income taxes 306.1 604.0 542.0

22 unchanged sentences

Current portion of lease receivables—net of allowance of $ 1.0 million and $ 1.3 million, respectively

Inventories 53.0 27.4

Inventories—net 117.9 53.0

Prepaid expenses and other current assets 102.5 89.5

36 unchanged sentences

Accumulated other comprehensive loss ( 3.4 ) ( 5.0 )

Treasury stock at cost ( 2,505,267 and no shares)

Total Shareholders’ Equity

4 unchanged sentences

SCHNEIDER NATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)

Year Ended December 31,

5 unchanged sentences

Goodwill impairment — — 10.6

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

Gains on sales of property and equipment—net ( 28.7 ) ( 85.7 ) ( 63.9 )

Proceeds from lease receipts 74.9 83.5 75.8

3 unchanged sentences

Gains on investments in equity securities—net ( 19.7 ) ( 13.7 ) ( 21.6 )

Noncash restructuring—net — — 1.1

Other noncash items—net 0.5 ( 15.2 ) ( 4.4 )

3 unchanged sentences

Payables ( 32.6 ) ( 42.2 ) 70.2

Claims reserves and other receivables—net 8.5 6.8 3.8

Claims reserves and receivables—net 9.4 8.5 6.8

Other liabilities ( 37.6 ) 0.7 ( 17.4 )

6 unchanged sentences

Purchases of lease equipment ( 105.2 ) ( 105.6 ) ( 91.7 )

Proceeds from government grants 14.6 — —

Proceeds from marketable securities 6.2 6.2 14.6

Purchases of marketable securities ( 16.2 ) ( 7.6 ) ( 18.7 )

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

Investments in equity securities and equity method investment ( 17.6 ) ( 24.2 ) ( 5.2 )

Investment in note receivable ( 10.0 ) — —

Acquisitions and sale of business, net of cash acquired ( 240.2 ) ( 31.7 ) ( 271.3 )

1 unchanged sentence

Financing Activities:

Proceeds under revolving credit agreements 186.0 — —

Payments under revolving credit agreements ( 81.0 ) — —

Proceeds from long-term debt 50.0 — —

Payments of debt and finance lease obligations ( 73.9 ) ( 62.0 ) ( 40.8 )

Dividends paid ( 63.6 ) ( 55.7 ) ( 49.6 )

Repurchases of common stock ( 66.9 ) — —

Other financing activities ( 6.3 ) 1.0 —

8 unchanged sentences

Dividends declared but not yet paid 16.9 16.2 14.1

Noncash equity method investment 3.3 — —

Sale of assets in exchange for notes receivable — 2.3 —

6 unchanged sentences

(in millions, except per share data)

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

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

Balance—December 31, 2020 $ — $ 1,552.2 $ 502.5 $ 0.8 $ — $ 2,055.5

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

11 unchanged sentences

Net income — — 238.5 — — 238.5

Other comprehensive loss — — — ( 5.0 ) ( 5.0 )

Other comprehensive income — — — 1.6 — 1.6

Share-based compensation expense — 17.0 — — — 17.0

Dividends declared at $ 0.36 per share of Class A and Class B common shares — — ( 64.4 ) — — ( 64.4 )

Repurchases of common stock — — — — ( 66.9 ) ( 66.9 )

Share issuances — 0.1 — — — 0.1

37 unchanged sentences

While our intent is to hold our securities to maturity, sudden changes in the market or to our liquidity needs may cause us to sell certain securities in advance of their maturity date.

We adopted ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments , which is codified in ASC 326, as of January 1, 2020.

Our marketable securities are accounted for under ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments .

Under this guidance, credit losses are recorded through an allowance for credit losses rather than as a direct write-down to the security, and unrealized gains and losses, net of tax, are included as a component of accumulated other comprehensive income on the consolidated balance sheets, unless we determine that the amortized cost basis is not recoverable.

2 unchanged sentences

Cost basis is determined using the specific identification method.

When adopting this standard, we elected to continue to present the accrued interest receivable balance associated with our investments in marketable securities separate from the marketable securities line in the consolidated balance sheets.

We elected to continue to present the accrued interest receivable balance associated with our investments in marketable securities separate from the marketable securities line in the consolidated balance sheets.

In addition, we elected the practical expedient provided under the guidance to exclude the applicable accrued interest from the amortized cost basis disclosure of our marketable securities.

15 unchanged sentences

Other property 3 - 10 years

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.

Salvage values, when applicable, generally range from 0 % - 30 % or 0 % - 25 % of the original cost for tractors and trailing equipment, respectively, and reflect 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.

4 unchanged sentences

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.

For the years ended December 31, 2023, 2022, and 2021, we recognized $ 28.7 million of net gains, $ 85.7 million of net gains, and $ 63.9 million of net gains 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

3 unchanged sentences

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.

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

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.

We recorded no significant impairment losses for the years ended December 31, 2023, 2022, or 2021.

Assets held for sale by segment as of December 31, 2023 and 2022 were as follows:

8 unchanged sentences

We recorded $ 25.2 million, $ 24.5 million, and $ 20.2 million of amortization expense related to internal use software during the years ended December 31, 2023, 2022, and 2021, respectively.

Additionally, with the adoption of ASU 2018-15 on January 1, 2020, we capitalize certain implementation costs for internal use software incurred in a CCA that is a service contract.

Under ASU 2018-15, we capitalize certain implementation costs for internal use software incurred in a CCA that is a service contract.

CCA implementation costs are amortized on a straight-line basis over the term of the related hosting agreement, taking into consideration renewal options, if any.

1 unchanged sentence

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.

We recorded $ 4.7 million, $ 1.3 million, and $ 1.0 million of amortization expense related to CCA implementation costs during the years ended December 31, 2023, 2022, and 2021, respectively.

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

9 unchanged sentences

Net CCA implementation costs (1)

$ 28.9 $ 24.9

(1) On the consolidated balance sheets, the current portion of CCA implementation costs are included within prepaid expenses and other current assets and amounted to $ 6.7 million and $ 1.3 million for the years ended December 31, 2023 and 2022, respectively, and the noncurrent portion is included in internal use software and other noncurrent assets and amounted to $ 22.2 million and $ 23.5 million for the years ended December 31, 2023 and 2022, respectively.

20 unchanged sentences

Awards that would have an anti-dilutive impact are excluded from the calculation.

Treasury Stock

In 2023, the Company approved a stock repurchase program (the “Share Repurchase Program”) in which it periodically purchases its own common stock to offset the dilutive effects of equity grants to employees over time.

The Inflation Reduction Act of 2022 subjects repurchases to a 1% nondeductible excise tax, which is included in the cost.

The repurchased stock is classified as treasury stock on the consolidated balance sheets and is held at cost.

Share-based Compensation

8 unchanged sentences

Certain insurance arrangements include a level of self-insurance (deductible) coverage applicable to each claim.

We have excess policies to limit our exposure to catastrophic claim costs.

We have excess policies to limit our exposure

to catastrophic claim costs.

The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates, and claim type.

1 unchanged sentence

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.

4 unchanged sentences

At December 31, 2023 and 2022, we had an aggregate prepaid insurance asset of $ 9.6 million and $ 9.2 million, respectively, which represented prefunded premiums and deposits.

Government Grants

We have received grants from various California state organizations to be used towards the electrification of our fleet, inclusive of BEVs and charging stations.

As there is no specific guidance under GAAP, we have elected to account for such grants under IAS 20, Accounting for Government Grants and Disclosure of Government Assistance , using the gross presentation model for the balance sheet and the net presentation model for the income statement.

In accordance with IAS 20’s net presentation model, government grants can be offset against the related expenditures on the income statement when there is reasonable assurance that (1) the recipient will comply with the relevant conditions and (2) the grant will be received.

During 2023, the Company placed assets in service that were purchased using grants from the EPA’s Targeted Airshed Grant (administered by the CARB) and the South Coast Air Quality Management District’s Joint Electric Truck Scaling Initiative.

As of December 31, 2023, the Company believes the above conditions have been met, and for the year ended December 31, 2023, depreciation and amortization expense was reduced by $ 1.3 million in the consolidated statements of comprehensive income.

As of December 31, 2023, the Company’s consolidated balance sheets included $ 2.1 million of grant receivables within other receivables and $ 2.4 million and $ 13.5 million in deferred grant income within other current liabilities and other noncurrent liabilities, respectively.

Sale of Business

2 unchanged sentences

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 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.

Accounting Standards Issued but Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) .

This standard requires entities to disclose significant segment expenses that are regularly provided to the CODM, an amount and description of other segment items by reportable segment, all annual disclosures currently required under ASC 280 on an interim basis, if the CODM uses more than one measure of a segment’s profit or loss, at least one of the reported measures should be the measure most consistent with the measurement principle used in the consolidated financial statements, disclosure of title and position of CODM, as well as an explanation of how the CODM uses the reported measures in accessing performance and allocating resources, and a requirement for an entity with a single reportable segment to provide all of the disclosures required by this standard.

This standard is effective for fiscal years beginning after December 15, 2023 with the interim requirement beginning within fiscal years beginning after December 15, 2024.

We are currently evaluating the potential impacts of this update.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures .

This standard requires additional income tax disclosures to enhance the transparency and decision usefulness of income tax disclosures.

ASU 2023-09 requires entities to disclose information on revised quantitative thresholds and to disaggregate taxes by federal, state, and local jurisdictions.

This is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the potential impacts of this update.

M&M Transport Services, LLC

On August 1, 2023 (“Acquisition Date”), we acquired 100 % of the membership interest in M&M for $ 243.8 million, inclusive of cash and other working capital adjustments.

M&M is a dedicated trucking company located primarily in New England with nearly 500 tractors and 1,900 trailers which we believe complements our dedicated operations.

The acquisition of M&M 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 value as of the Acquisition Date.

Fair value estimates of acquired transportation equipment were based on an independent appraisal, giving consideration to the highest and best use of the assets with key assumptions based on the market approach.

These inputs represent Level 3 measurements in the fair value hierarchy and required significant judgments and estimates at the time of valuation.

The assistance of an independent third-party valuation firm was used to determine the estimated fair values and useful lives of finite-lived intangible assets including customer relationships and trademarks.

Valuation methods used were the multi-period excess earnings method and relief from royalty method for customer relationships and trademarks, respectively.

Non-compete agreements were recorded based on the amount paid at closing.

The excess of the purchase price over the estimated fair values of assets acquired and liabilities assumed was recorded as goodwill within the Truckload 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 consist of fees incurred for advisory, legal, and accounting services were $ 0.9 million and were included in other general expenses in the Company’s consolidated statements of comprehensive income for the period ended December 31, 2023.

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 indemnification assets and liabilities and deferred taxes.

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 no later than July 31, 2024.

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

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

August 1, 2023

Opening Balance Sheet Adjustments Adjusted

August 1, 2023

Opening Balance Sheet

Cash and cash equivalents $ 3.6 $ — $ 3.6

Trade accounts receivable—net of allowance 15.1 — 15.1

Prepaid expenses and other current assets 3.0 — 3.0

Net property and equipment 77.8 — 77.8

Internal use software and other noncurrent assets 56.9 0.5 57.4

Goodwill 104.6 ( 1.1 ) 103.5

Total assets acquired 261.0 ( 0.6 ) 260.4

Trade accounts payable 1.4 — 1.4

Accrued salaries, wages, and benefits 5.3 — 5.3

Claims accruals—current 1.8 — 1.8

Other current liabilities 4.2 ( 1.3 ) 2.9

Other noncurrent liabilities 5.2 — 5.2

Total liabilities assumed 17.9 ( 1.3 ) 16.6

Net assets acquired $ 243.1 $ 0.7 $ 243.8

The above adjustments made during the measurement period were primarily related to working capital, accrued taxes, and intangible assets.

The following unaudited pro forma revenues give effect to the acquisition had it been effective January 1, 2021.

Combined unaudited pro forma operating revenues of the Company and M&M would have been approximately $ 5,569.6 million during the year ended December 31, 2023, $ 6,729.6 million during the year ended December 31, 2022, and $ 5,720.5 million during the year ended December 31, 2021, and our earnings for the same periods would not have been materially different.

deBoer Transportation, Inc.

1 unchanged sentence

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.

During the second half of 2022, the Company successfully transitioned equipment and employees from deBoer to Schneider, deBoer operations ceased, and equipment and drivers 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.

Following the acquisition, purchase price adjustments of $ 1.6 million 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.

11 unchanged sentences

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 reportable 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 segment.

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

23 unchanged sentences

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.

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

REVENUE RECOGNITION

1 unchanged sentence

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.

M&M, 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.

11 unchanged sentences

The economic factors that impact our transportation revenue are generally consistent across these modes given the relatively short-term nature of each contract.

For the majority of our transportation business, the “contract with a customer” is identified as an individual order under a negotiated agreement.

For the majority of our transportation business, the “contract with a customer” is identified

as an individual order under a negotiated agreement.

Some consideration is variable in that a final transaction price is uncertain and is susceptible to factors outside of the Company’s influence, such as the weather or the accumulation of accessorial charges.

2 unchanged sentences

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 2023 for freight movements in exchange for non-monetary consideration.

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

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

1 unchanged sentence

A small portion of revenues in our transportation business relate to fixed payments in our Truckload segment.

These payments are due regardless of volumes, and in these arrangements, the master agreement rather than the individual order may be considered the “contract.” Refer to the Remaining Performance Obligations table below for more information on these fixed payments.

These payments are due regardless of volumes, and in these arrangements, the master agreement rather than the individual order may be considered the “contract”.

Refer to the Remaining Performance Obligations table below for more information on these fixed payments.

Under ASC 606, we recognize revenue over the period transportation services are provided to the customer, including service performed as of the end of the reporting period for loads currently in transit, in order to recognize the value transferred to a customer over the course of the transportation service.

52 unchanged sentences

See Note 5, Investments , for additional information.

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 $ 205.0 million and $ 265.0 million as of December 31, 2022 and 2021,

respectively.

The fair value of the Company’s unsecured debt was $ 183.2 million and $ 199.1 million as of December 31, 2023 and 2022, respectively.

The carrying value of the Company’s debt was $ 185.0 million and $ 205.0 million as of December 31, 2023 and 2022, 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.

This valuation used Level 2 inputs.

The recorded value of cash, trade accounts receivable, lease receivables, and trade accounts payable approximates fair value.

The recorded values of cash, trade accounts receivable, lease receivables, trade accounts payable, and amounts outstanding under revolving credit agreements approximate fair values.

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.

The table below sets forth the Company’s non-financial assets that were measured at fair value on a non-recurring basis during 2023.

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

(in millions) Level in Fair

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

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.

As part of our 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.

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Equity Investments without Readily Determinable Fair Values

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.

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, 2023 and 2022 were $ 121.8 million and $ 86.0 million, respectively.

If the Company identifies observable price changes for identical or similar securities of the same issuer, the equity security is measured at fair value as of the date the observable transaction occurred using Level 3 inputs.

In addition to our investment in MLSI, we also hold a $ 10.0 million note receivable from MLSI as of December 31, 2023.

The note was funded during the first quarter of 2023, is subject to interest over its term, and matures in March 2030.

The following table summarizes the activity related to these equity investments during the periods presented.

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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 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.

Our non-controlling interest in TuSimple is accounted for under ASC 321, Investments - Equity Securities .

In the years ended December 31, 2023 and 2022, the Company recognized pre-tax net losses of $ 0.3 million and $ 12.1 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.

Equity Method Investment

In the second quarter of 2023, the Company invested $ 5.0 million consisting primarily of internal use software and cash in exchange for a 50 % non-controlling ownership interest in Scope 23 LLC, an entity that provides a platform for shippers to track and manage their greenhouse gas emissions.

Our interest is being accounted for under ASC 323, Investments - Equity Method and Joint Ventures.

For the year ended December 31, 2023, we recorded losses in the amount of $ 0.1 million related to our investment, and the carrying value of our investment was $ 4.9 million as of December 31, 2023.

All of our equity investments, as well as our note receivable from MLSI, are included in internal use software and other noncurrent assets on the consolidated balance sheets.

Gains or losses on our equity investments are recognized within other expenses (income)—net on the consolidated statements of comprehensive income.

GOODWILL AND OTHER INTANGIBLE ASSETS

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The following table shows changes to our goodwill balances by segment during the years ended December 31, 2023 and 2022.

(in millions) Truckload Logistics Other Total

(in millions) Truckload Logistics Total

Balance at December 31, 2021 $ 226.3 $ 14.2 $ 240.5

Acquisition (see Note 2) 7.7 — 7.7

Goodwill impairment charge — — ( 10.6 ) ( 10.6 )

Foreign currency translation adjustment — — 0.3 0.3

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

Balance at December 31, 2022 214.0 14.2 228.2

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Balance at December 31, 2023 $ 317.5 $ 14.2 $ 331.7

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.

During the year ended December 31, 2023, we recorded goodwill and made measurement period adjustments in conjunction with the acquisition of M&M which was recorded within the Truckload segment.

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.

At December 31, 2023 and 2022, our Truckload segment had accumulated goodwill impairment charges of $ 34.6 million.

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.

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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 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 .

If interest rates rise, growth rates decrease, 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 2023 and 2022, annual impairment tests were performed for our reporting units with goodwill as of October 31, our assessment date.

In 2023, as a result of reorganizing the operating segments within Truckload, two goodwill impairment tests were performed within our Truckload segment, one before the operating segment reorganization and one after the operating segment reorganization.

Refer to Note 14, Segment Reporting, for further details on the segment reorganization.

No impairments resulted as part of the 2023 or 2022 annual impairment tests.

During the year ended December 31, 2023, we recorded $ 40.3 million of customer relationships, $ 4.1 million of trademarks, and $ 5.4 million of non-compete agreements related to the acquisition of M&M.

The weighted-average amortization period is 15.0 years for customer relationships and trademarks and 5.0 years for non-compete agreements for a total weighted-average amortization period of 13.9 years.

Refer to Note 2, Acquisitions, for further details.

December 31, 2022

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.

December 31, 2023 December 31, 2022

(in millions) Gross

Amount Accumulated Amortization Net

Customer relationships $ 43.5 $ 1.8 $ 41.7 $ 3.2 $ 0.3 $ 2.9

Trademarks 10.9 1.5 9.4 6.8 0.7 6.1

Non-compete agreements 5.4 0.4 5.0 — — —

Total intangible assets $ 59.8 $ 3.7 $ 56.1 $ 10.0 $ 1.0 $ 9.0

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

Amortization expense for intangible assets was $ 2.7 million and $ 1.0 million for the year ended December 31, 2023 and December 31, 2022, respectively.

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

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$ 185.0 $ 205.0

Credit agreement:

matures November 2027;

variable rate interest payments due monthly based on the Term SOFR;

weighted-average interest rate of 6.43 % for 2023.

Receivables purchase agreement:

matures July 2024;

variable rate interest payments due monthly based on the Term SOFR;

weighted-average interest rate of 6.28 % for 2023.

Total debt and credit facilities 290.0 205.0

Current maturities ( 100.0 ) ( 70.0 )

Long-term debt $ 135.0 $ 205.0

Long-term debt and credit facilities $ 190.0 $ 135.0

Scheduled future debt principal payments are as follows:

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Total $ 290.0

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 either of these agreements as of December 31, 2022 or 2021.

Our Credit Agreement (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 Credit Facility also provides a sublimit of $ 100.0 million to be used for the issuance of letters of credit.

Standby letters of credit under these agreements amounted to $ 0.4 million and $ 0.1 million on December 31, 2023 and 2022, respectively, and were primarily related to the requirements of certain of our real estate leases.

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

3 to our Amended and Restated Receivables Purchase Agreement (the “2021 Receivables Purchase Agreement”), which allows us to borrow funds against qualifying trade receivables at rates based on one-month LIBOR up to $ 150.0 million and provides for the issuance of standby letters of credit through July 2024.

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

Our Receivables Purchase Agreement (the “2021 Receivables Purchase Agreement”) allows us to borrow funds against qualifying trade receivables at rates based on the Term SOFR up to $ 150.0 million and provides for the issuance of standby letters of credit through July 2024.

At December 31, 2023 and 2022, standby letters of credit under this agreement amounted to $ 81.4 million and $ 77.1 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.

On August 30, 2023, Schneider National Leasing, Inc.

(“SNL”), a wholly-owned subsidiary of the Company, issued and sold $ 50.0 million in notes pursuant to the Private Shelf Agreement to certain affiliates of PGIM, Inc.

(“Prudential”).

The notes represent senior promissory notes of SNL, bear interest of 5.63 % per year, are payable semiannual ly, and will mature on August 30, 2028.

The credit agreements and the guaranty agreements relating to the unsecured senior notes 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.

The credit agreements and senior notes contain change of control provisions pursuant to which a change of control is defined to mean the Schneider family no longer owns more than 50 % of the combined voting power of our capital shares.

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Schneider uses multiple discount rates based on lease terms.

In conjunction with our acquisition of M&M, the Company entered into nine related party leases.

The leases are for the use of shop, warehouse, office, and drop yard locations throughout the country.

The leases run through 2026 and the related lease payments are not material.

The following table presents our net lease costs for the years ended December 31, 2023, 2022, and 2021.

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Operating lease right-of-use assets were $ 82.9 million and $ 63.5 million as of December 31, 2023 and 2022, respectively.

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.

We recorded no impairment losses on our operating lease right-of-use assets for the years ended December 31, 2023 or 2021, and a $ 0.1 million impairment loss for 2022.

At December 31, 2023, future lease payments under operating and finance leases were as follows:

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Future operating lease payments at December 31, 2023 include $ 1.0 million related to options to extend lease terms that we are reasonably certain to exercise.

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 .

As of December 31, 2023, we had leases that were signed but had not yet commenced totaling $ 0.5 million over their lease terms.

These leases will commence in 2024 and have lease terms of three to five years .

The consolidated balance sheets include right-of-use assets acquired under finance leases as components of property and equipment as of December 31, 2023 and 2022.

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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, 2023 was $ 71.0 million, which includes both current and future lease payments.

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State and other 8.1 0.2 1.2

55.8 83.0 2.0

Total provision for income taxes $ 67.6 $ 146.2 $ 136.6

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.

For the years ended December 31, 2023 and 2022, the foreign (benefit) provision for income taxes is primarily related to the finalization of the tax impact on the sale of our Canadian facility;

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

The provision for income taxes for the years ended December 31, 2023, 2022, and 2021 differed from the amounts computed using the federal statutory rate in effect as follows:

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Gross decreases—tax positions taken in prior years ( 0.5 ) ( 0.2 ) —

Settlements ( 1.1 ) — —

Gross unrecognized tax benefits—end of year $ 4.4 $ 6.0 $ 5.2

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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.

As of December 31, 2023, we had $ 169.8 million of state net operating loss carryforwards which are subject to expiration from 2024 to 2044.

We also had state credit carryforwards of $ 1.2 million, which are subject to expiration from 2027 to 2038, and no capital loss carryforwards.

The deferred tax assets related to carryforwards at December 31, 2023 were $ 9.4 million for state net operating loss carryforwards and $ 0.4 million for state credit 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, 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.

At December 31, 2023, we carried a total valuation allowance of $ 0.9 million, which was against state deferred tax assets.

COMMON EQUITY

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Weighted average diluted common shares outstanding (1)

178.2 178.8 178.1

Basic earnings per common share $ 1.35 $ 2.57 $ 2.28

Diluted earnings per common share 1.34 2.56 2.28

(1) Weighted average diluted common shares outstanding may not sum due to rounding.

The calculation of diluted earnings per share excluded 0.2 million, 0.3 million, and 0.8 million share-based awards and options that had an anti-dilutive effect for the years ended December 31, 2023, 2022, and 2021, respectively.

Common Shares Outstanding

As of December 31, 2023, 2022, and 2021, we had 83,029,500 shares of Class A common stock outstanding.

There were no changes to the number of shares of Class A common stock outstanding for the years ended December 31, 2023, 2022, and 2021.

The following table shows changes to our Class B common shares outstanding for the years ended December 31, 2023, 2022, and 2021.

Year Ended December 31,

2023 2022 2021

Outstanding at beginning of period 94,993,144 94,626,740 94,311,653

Repurchases of common stock ( 2,505,267 ) — —

Share issuances 681,642 306,071 370,226

Exercise of employee stock options 6,000 150,692 42,904

Shares withheld for employee taxes ( 244,277 ) ( 90,359 ) ( 98,043 )

Outstanding at end of period 92,931,242 94,993,144 94,626,740

In January 2023, our Board 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 shares.

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.

As of December 31, 2023, the Company had repurchased $ 66.2 million of the $ 150.0 million authorized under the repurchase program.

Capital Stock and Rights

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During 2023, 2022, and 2021, the Company declared cash dividends totaling $ 0.36 , $ 0.32 , and $ 0.28 per share, respectively.

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

Subsequent Event - Dividends Declared and Stock Repurchase Program

Subsequent Event - Dividends Declared

In January 2024, our Board declared a quarterly cash dividend for the first fiscal quarter of 2024 in the amount of $ 0.095 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 8, 2024 and is expected to be paid on April 9, 2024 .

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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Restricted Shares and RSUs

Under the Plan, the majority of the restricted shares and RSUs granted vest ratably over a period of four years beginning approximately one year after the date of grant and are subject to continued employment through the vesting date or retirement eligibility.

Under the Plan, RSUs granted in 2023 vest ratably over a period of three years while the majority of the restricted shares and RSUs granted prior to 2023 vest ratably over a period of four years beginning approximately one year after the date of grant and are subject to continued employment through the vesting date or retirement eligibility.

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

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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, 2023 747,557 $ 26.24

(1) No restricted shares were granted during 2022.

(1) No restricted shares were granted during 2022 or 2023.

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

Performance shares and PSUs include a performance period of three years with vesting based on attainment of threshold performance of earnings and return on capital targets.

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

Performance shares and PSUs cliff-vest at the end of a performance period of three years with vesting based on attainment of threshold performance of earnings and return on capital targets.

These awards are 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.

Awards granted since 2021 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 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

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Unvested at December 31, 2023 400,555 $ 30.07

(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.

(1) No performance shares were granted during 2022 or 2023.

We estimate 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 use the historical volatility of peers to derive the expected volatility of the stock.

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

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.

No expected dividend yield is 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 2023, 2022, and 2021 were as follows:

2023 2022 2021

Weighted-average Monte Carlo value $ 31.60 $ 28.32 $ 24.44

Monte Carlo assumptions:

Expected term 2.87 years 2.87 years

Expected term 2.87 years 2.87 years 2.87 years

Expected volatility 39.3 % 45.3 % 45.8 %

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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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Outstanding at December 31, 2022 1,038,643 22.39 7.6 1,794

Granted 311,501 25.58

Exercised (2)

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(2) Cash received upon exercise of stock options was $ 0.1 million in 2023, $ 3.4 million in 2022, and $ 0.7 million in 2021.

(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.

(3) No NQSOs were granted in 2023.

Unvested Non-qualified Stock Options Number of Awards Weighted Average Grant Date Fair Value

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Unvested at December 31, 2022 635,698 6.65

Granted 311,501 7.32

Vested ( 233,226 ) 6.59

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Unvested at December 31, 2023 340,526 $ 6.69

We estimated the grant date fair value of option awards using the Black-Scholes option pricing model which uses assumptions over the expected term of the options.

We used volatility analysis of comparable companies to determine the expected volatility of the stock and market data to estimate option exercise and employee termination within the valuation model.

The expected term of options granted was based on the average of the contractual term and the weighted average of the vesting term, and it represents the average period of time that options granted are expected to be outstanding.

(1) No NQSOs were granted during 2023.

We estimate the grant date fair value of option awards using the Black-Scholes option pricing model which uses assumptions over the expected term of the options.

We use volatility analysis of comparable companies to determine the expected volatility of the stock and market data to estimate option exercise and employee termination within the valuation model.

The expected term of options granted is based on the average of the contractual term and the weighted average of the vesting term, and it represents the average period of time that options granted are expected to be outstanding.

The risk-free rate for periods within the contractual life of the option is based on the U.S.

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Assumptions used in calculating the Black-Scholes value of options granted during 2022 and 2021 were as follows:

2022 2021 2020

Weighted-average Black-Scholes value $ 7.32 $ 5.86

Black-Scholes assumptions:

Expected term 6.25 years 6.25 years 6.25 years

Expected term 6.25 years 6.25 years

Expected volatility 30.0 % 30.0 %

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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 DSUs.

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

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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.

The Company filed a request for appeal of the audit assessment with the state jurisdiction, and during 2023, a ruling was made in favor of the state resulting in an additional $ 2.9 million in interest and penalties being recorded by the Company.

A denial was received from the state during the fourth quarter of 2023 in response to the appeal, and as a result, the Company filed a petition request with the state Appellate Tax Board in January of 2024.

Both the initial charge and the additional interest and penalties incurred are recorded within operating supplies and expenses—net on the consolidated statements of comprehensive income.

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.

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

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.

As of December 31, 2022, our three operating segments within the Truckload reportable segment were:

VTL, Bulk, and MLS.

As a result of expanding our dedicated business through recent acquisitions, in the fourth quarter of 2023, we reorganized the operating segments within Truckload into Dedicated, which includes MLS and M&M;

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.

Dedicated provides truckload services primarily focused on freight with consistent routes often based on long-term contracts, Van Network which consists of irregular routes, and Bulk which delivers key inputs for manufacturing processes, such as specialty chemicals using specialty trailers.

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

Company-owned containers, chassis, and dray tractors are used to provide these transportation services.

As of December 31, 2020, our operating segments within the Logistics reportable segment were Brokerage, Supply Chain Management, and Import/Export Services.

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

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.

The Company has two operating segments within the Logistics reportable segment, Brokerage and SCDM, which 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.

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The following tables summarize our segment information.

Inter-segment revenues were immaterial for all segments, with the exception of Other, which included revenues from insurance premiums charged to other segments for workers’ compensation, auto, and other types of insurance.

Inter-segment revenues included in Other revenues below were $ 73.5 million, $ 62.4 million, and $ 62.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Inter-segment revenues within Other include revenues from insurance premiums charged to other segments for workers’ compensation, auto, and other types of insurance and were $ 77.5 million, $ 73.5 million, and $ 62.4 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Revenues by Segment Year Ended December 31,

24 unchanged sentences

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What changed 10-K

Item 8. Financial Statements and Supplementary Data