What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-10 compared with 2022-08-11 · 150 added, 159 removed, 160 unchanged (66% of the section changed)

24 unchanged sentences

The following discussion of the Company’s financial condition and results of operations should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 and the unaudited Consolidated Financial Statements and related notes contained in this Quarterly Report on Form 10-Q.

COVID-19 Pandemic

The Company remains committed to doing its part to protect its employees, customers, vendors and the general public from the spread of the coronavirus outbreak (COVID-19).

We will continue to adapt our operations as required to ensure safety while continuing to provide a high level of service to our customers.

Impact of COVID-19 and Current Economic Conditions

The ultimate magnitude of COVID-19, including the extent of its impact on the Company’s financial and operating results, which could be material, will be determined by the length of time the pandemic continues, its severity, government regulations imposed in response to the pandemic, and to its general effect on the economy and transportation demand.

While operating cash flows may be negatively impacted by the pandemic, the Company believes we will be able to finance our near term needs for working capital over the next twelve months, as well as any planned capital expenditures during such period, with cash balances, cash flows from operations, and loans and extensions of credit under our credit facilities and on margin against our marketable securities.

Should the impact of the COVID-19 pandemic last longer than anticipated, and/or our cash flow from operations decline more than expected, we may need to obtain additional financing.

Additionally, a prolonged period of inflationary pressures could cause interest rates, equipment, maintenance, labor and other operating costs to continue to increase.

If the Company is unable to offset rising costs through corresponding customer rate increases, such increases could adversely affect our results of operations.

While operating cash flows may be negatively impacted by the pandemic and inflation-driven cost increases, the Company believes we will be able to finance our near term needs for working capital over the next twelve months, as well as any planned capital expenditures during such period, with cash balances, cash flows from operations, and loans and extensions of credit under our credit facilities and on margin against our marketable securities .

Should the impact of the COVID-19 pandemic and/or inflation-driven cost increases last longer than anticipated, and/or our cash flow from operations decline more than expected, we may need to obtain additional financing .

The Company’s ability to fund future operating expenses and capital expenditures, as well as its ability to meet future debt service obligations or refinance indebtedness will depend on future operating performance, which will be affected by general economic, financial, and other factors beyond our control.

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Our truckload, brokerage and intermodal services associated with individual freight shipments coordinated by our agents and company-managed terminals, while our dedicated and value-added services to specific customers on a contractual basis, generally pursuant to contract terms of one year or longer .

The following table sets forth operating revenues resulting from each of these categories for the thirteen weeks and twenty-six weeks ended July 2, 2022 and July 3, 2021, presented as a percentage of total operating revenues:

The following table sets forth operating revenues resulting from each of these categories for the thirteen weeks and thirty-nine weeks ended October 1, 2022 and October 2, 2021, presented as a percentage of total operating revenues:

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

Operating revenues:

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Results of Operations

The following table sets forth items derived from our consolidated statements of income for the thirteen weeks and twenty-six weeks ended July 2, 2022 and July 3, 2021, presented as a percentage of operating revenues:

The following table sets forth items derived from our consolidated statements of income for the thirteen weeks and thirty-nine weeks ended October 1, 2022 and October 2, 2021, presented as a percentage of operating revenues:

Thirteen Weeks Ended

Twenty-six Weeks Ended

Thirty-nine Weeks Ended

Operating revenues:

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Income from operations

Interest and other non-operating income

(expense), net

Interest and other non-operating expense, net

Income before income taxes

Income tax expense

Thirteen Weeks Ended July 2, 2022 Compared to Thirteen Weeks Ended July 3, 2021

Thirteen Weeks Ended October 1, 2022 Compared to Thirteen Weeks Ended October 2, 2021

Operating revenues .

Operating revenues for the thirteen weeks ended July 2, 2022 increased $104.4 million, or 24.7%, to $527.2 million from $422.8 million for the thirteen weeks ended July 3, 2021.

Included in operating revenues are separately-identified fuel surcharges of $46.1 million for the thirteen weeks ended July 2, 2022 compared to $23.0 million for the thirteen weeks ended July 3, 2021.

Consolidated income from operations increased $33.3 million, or 106.5%, to $64.7 million for the second quarter 2022 compared to $31.3 million during the same period last year.

Included in second quarter 2022 operating results was a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period.

During the second quarter 2022, Universal also revised the estimated useful life and salvage value of certain equipment, and these adjustments resulted in additional depreciation expense of $9.7 million during the period.

Second quarter 2021 results include a favorable legal settlement which resulted in a $5.7 million pre-tax gain recorded in other non-operating income.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $52.6 million, or 34.0%, to $207.3 million in the second quarter 2022 compared to $154.8 million in the previous year.

Income from operations in the contract logistics segment increased $13.5 million, or 84.5%, to $29.4 million for the thirteen weeks ended July 2, 2022 compared to $15.9 million in the same period last year.

In the second quarter of 2022, Universal managed 64 value-added programs compared to 60 in the prior year period.

During the recently completed quarter, dedicated transportation load count decreased slightly by 0.1% to 155,899 from 156,119 in the second quarter 2021.

Despite a decline in load count, dedicated transportation revenue grew as the result of new business wins, including a major shuttle operation and repricing existing customer contracts.

Also included in dedicated transportation revenue for the second quarter 2022 were $11.0 million in separately identified fuel surcharges, compared to $5.2 million in the same period last year.

As a percentage of revenue, operating margin in the contract logistics segment for the second quarter 2022 was 14.2% compared to 10.3% during the same period last year.

In the intermodal segment, operating revenues increased $50.3 million to $156.9 million in the second quarter 2022 compared to $106.6 million in the previous year.

Intermodal revenues for the thirteen weeks ended July 2, 2022 included $25.2 million in separately identified fuel surcharges, compared to $11.7 million in the same period last year.

During the second quarter 2022, Universal moved 145,916 intermodal loads compared to 169,441 in the second quarter 2021, a decrease of 13.9%, while its average operating revenue per load, excluding fuel surcharges increased 42.1% to $696 from $490.

Intermodal segment revenues also include accessorial charges such as detention, demurrage and storage which totaled $33.6 million during the second quarter 2022, compared to $15.0 million one year earlier.

Income from operations in the intermodal segment increased $15.2 million to $21.4 million for the thirteen weeks ended July 2, 2022 compared to $6.2 million in the second quarter 2021.

As a percentage of revenue, operating margin in the intermodal segment for the second quarter 2022 was 13.6%, compared to 5.8% during the same period last year.

In the trucking segment, operating revenues increased $6.8 million to $106.5 million in the second quarter 2022 compared to $99.8 million in the prior year period.

Included in trucking segment revenues for the second quarter 2022 were $9.9 million in separately identified fuel surcharges compared to $6.0 million during the second quarter 2021.

Income from operations in the trucking segment increased $3.1 million to $9.6 million for the second quarter 2022 compared to $6.5 million in the same period last year.

Operating revenues for the thirteen weeks ended October 1, 2022 increased $60.1 million, or 13.5%, to $505.7 million from $445.6 million for the thirteen weeks ended October 2, 2021.

Included in operating revenues are separately-identified fuel surcharges of $46.8 million for the thirteen weeks ended October 1, 2022 compared to $24.9 million for the thirteen weeks ended October 2, 2021.

Consolidated income from operations increased $53.1 million, or 317.4%, to $69.8 million for the third quarter 2022 compared to $16.7 million during the same period last year.

Results for the thirteen weeks ended October 2, 2021 include $5.8 million in litigation related charges and $7.1 million of losses incurred in connection with a recent contract logistics program launch.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $52.6 million, or 33.5%, to $209.5 million in the third quarter 2022 compared to $156.9 million in the previous year.

Income from operations in the contract logistics segment increased $29.4 million, or 492.4%, to $35.4 million for the thirteen weeks ended October 1, 2022 compared to $6.0 million in the same period last year.

In the third quarter of 2022, Universal managed 63 value-added programs compared to 61 in the prior year period.

During the recently completed quarter, dedicated transportation load count increased 11.4% to 152,734 from 137,127 in the third quarter 2021.

Also included in contract logistics revenue for the third quarter 2022 were $11.3 million in separately identified fuel surcharges, compared to $5.1 million in the same period last year.

Third quarter 2021 contract logistics segment results included $7.1 million of losses incurred in connection with a previously announced program launch.

As a percentage of revenue, operating margin in the contract logistics segment for the third quarter 2022 was 16.9% compared to 3.8% during the same period last year.

In the intermodal segment, operating revenues increased $33.4 million to $154.4 million in the third quarter 2022 compared to $121.0 million in the previous year.

Intermodal revenues for the thirteen weeks ended October 1, 2022 included $26.4 million in separately identified fuel surcharges, compared to $13.2 million in the same period last year.

During the third quarter 2022, Universal moved 135,800 intermodal loads compared to 159,428 in the third quarter 2021, a decrease of 14.8%, while its average operating revenue per load, excluding fuel surcharges increased 35.2% to $726 from $537.

Intermodal segment revenues also include accessorial charges such as detention, demurrage and storage which totaled $31.3 million during the third quarter 2022, compared to $23.3 million one year earlier.

Income from operations in the intermodal segment increased $26.2 million to $28.1 million for the thirteen weeks ended October 1, 2022 compared to $1.9 million in the third quarter 2021.

Third quarter 2021 intermodal segment results included legal charges of $5.8 million.

As a percentage of revenue, operating margin in the intermodal segment for the third quarter 2022 was 18.2%, compared to 1.6% during the same period last year.

In the trucking segment, operating revenues decreased $7.6 million to $99.6 million in the third quarter 2022 compared to $107.2 million in the prior year period.

Included in trucking segment revenues for the third quarter 2022 were $9.1 million in separately identified fuel surcharges compared to $6.5 million during the third quarter 2021.

Income from operations in the trucking segment decreased $2.0 million to $4.8 million for the third quarter 2022 compared to $6.8 million in the same period last year.

During the recently completed quarter, Universal’s average operating revenue per load, excluding fuel surcharges, increased 26.6% to $1,794 from $1,417 in the prior year period;

however, this increase was partially offset by a 30.0% decrease in load volumes.

During the second quarter 2022, Universal moved 52,986 loads compared to 75,645 during the same period last year.

As a percentage of revenue, operating margin in the trucking segment for the second quarter 2022 was 9.0%, compared to 6.5% during the same period last year.

Included in the trucking segment’s second quarter 2022 operating results was a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period.

This credit favorably impacted the trucking segment’s operating margin by 282 basis points.

In the company-managed brokerage segment, operating revenues decreased $5.3 million, or 8.8%, to $55.1 million in the thirteen weeks ending July 2, 2022 compared to $60.4 million in the thirteen weeks ending July 3, 2021.

During the recently completed quarter, the average operating revenue per load, excluding fuel surcharges, increased 6.8% to $2,006 from $1,879 in the second quarter 2021;

however, load volumes fell 26.8% to 22,701 from 31,006.

As a percentage of revenue, operating margin for the company-managed brokerage segment was 7.5% for the second quarter 2022 compared to 4.0% in the same period last year.

however, this increase was offset by a 30.2% decrease in load volumes as we rationalized underperforming operations in this segment.

During the third quarter 2022, Universal moved 50,614 loads compared to 72,549 during the same period last year.

As a percentage of revenue, operating margin in the trucking segment for the third quarter 2022 was 4.8%, compared to 6.4% during the same period last year.

In the company-managed brokerage segment, operating revenues decreased $18.6 million, or 31.4%, to $40.6 million in the thirteen weeks ending October 1, 2022 compared to $59.2 million in the thirteen weeks ending October 2, 2021.

During the recently completed quarter, the average operating revenue per load, excluding fuel surcharges, decreased 8.2% to $1,659 from $1,808 in the third quarter 2021 and load volumes fell 31.0% to 21,141 from 30,619.

As a percentage of revenue, operating margin for the company-managed brokerage segment was 2.7% for the third quarter 2022 compared to 3.0% in the same period last year.

Purchased transportation and equipment rent .

Purchased transportation and equipment rental costs for the second quarter 2022 increased $29.2 million, or 14.7%, to $227.2 million from $198.0 million during the same period last year.

Purchased transportation and equipment rental costs for the third quarter 2022 decreased $4.0 million, or 1.9%, to $208.9 million from $212.9 million during the same period last year.

Purchased transportation and equipment rent generally increases or decreases in proportion to the revenues generated through owner-operators and other third party providers.

The increases or decreases are generally correlated with changes in demand for transportation-related services, which includes truckload, brokerage, intermodal and to a lesser extent, dedicated services, which uses a higher mix of company-drivers compared to owner-operators.

The absolute increase in purchased transportation and equipment rental costs was primarily the result of an overall increase in transportation-related services.

Second quarter 2022 transportation-related service revenues increased 25.4% compared to the second quarter of 2021.

As a percentage of operating revenues, purchased transportation and equipment rent expense

decreased to 43.1% compared to 46.8% during the same period last year was due to a decrease in the mix of brokerage services revenue, where the cost of transportation is typically higher than our other transportation businesses.

As a percentage of total revenues, brokerage services revenue decreased to 19.3% for 2021 compared to 24.3% in the same period last year.

As a percentage of operating revenues, purchased transportation and equipment rent expense decreased to 41.3% compared to 47.8% during the same period last year.

The decrease in purchased transportation and equipment rental costs was due to a decrease in brokerage services revenue, where the cost of transportation is typically higher than our other transportation businesses.

As a percentage of total revenues, brokerage services revenues decreased to 16.5% in the third quarter of 2022 compared to 22.9% in the same period last year.

Direct personnel and related benefits .

Direct personnel and related benefits for the thirteen weeks ended July 2, 2022 increased by $16.3 million, or 14.7%, to $127.3 million compared to $111.0 million during the same period last year.

Direct personnel and related benefits for the thirteen weeks ended October 1, 2022 increased by $9.4 million, or 7.9%, to $127.7 million compared to $118.4 million during the same period last year.

Trends in these expenses are generally correlated with changes in operating facilities and headcount requirements and, therefore, increase and decrease with the level of demand for our staffing needs in our contract logistics segment, which includes value-added services and dedicated transportation.

The increase was due to the launch of new business wins and improved volumes experienced at our contract logistics operations during the current quarter.

As a percentage of operating revenues, personnel and related benefits decreased to 24.2% for the thirteen weeks ended July 2, 2022, compared to 26.3% for the thirteen weeks ended July 3, 2021.

The increase was due to the launch of new business wins and robust volumes experienced at our contract logistics operations during the current quarter.

As a percentage of operating revenues, personnel and related benefits decreased to 25.3% for the thirteen weeks ended October 1, 2022, compared to 26.6% for the thirteen weeks ended October 2, 2021.

The percentage is derived on an aggregate basis from both existing and new programs, and from customer operations at various stages in their lifecycles.

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Operating supplies and expenses .

Operating supplies and expenses increased by $13.3 million, or 40.7%, to $46.0 million for the thirteen weeks ended July 2, 2022 compared to $32.7 million for the thirteen weeks ended July 3, 2021.

Operating supplies and expenses increased by $0.9 million, or 2.1%, to $44.7 million for the thirteen weeks ended October 1, 2022 compared to $43.8 million for the thirteen weeks ended October 2, 2021.

These expenses include items such as fuel, maintenance, cost of materials, communications, utilities and other operating expenses, and generally relate to fluctuations in customer demand.

The main elements driving the change were increases of $8.2 million in fuel expense on company tractors, $3.1 million in vehicle and other maintenance, and $2.7 million in bad debt expense.

These increases were partially offset by a $1.4 million decrease in professional fees.

The main elements driving the change were increases of $4.8 million in fuel expense on company tractors and $1.5 million in vehicle and other maintenance.

These increases were partially offset by a $5.7 million decrease in legal charges professional fees.

Commission expense .

Commission expense for the second quarter 2022 increased by $2.2 million, or 25.5%, to $10.8 million from $8.6 million for the second quarter 2021.

Commission expense for the third quarter 2022 increased by $1.5 million, or 17.0%, to $10.6 million from $9.1 million for the third quarter 2021.

Commission expense increased due to increased revenue in the agency based truckload business.

As a percentage of operating revenues, commission expense was unchanged at 2.0%.

As a percentage of operating revenues, commission expense increased to 2.1% compared to 2.0% in the third quarter 2021.

Occupancy expense .

Occupancy expenses increased by $0.6 million, or 6.5%, to $10.0 million for the thirteen weeks ended July 2, 2022.

This compares to $9.4 million for the thirteen weeks ended July 3, 2021.

The increase was primarily attributable to an increase in building rents.

Occupancy expenses increased by $0.8 million, or 8.7%, to $10.2 million for the thirteen weeks ended October 1, 2022.

This compares to $9.3 million for the thirteen weeks ended October 2, 2021.

The increase was attributable to an increase in building rents and property taxes.

General and administrative .

General and administrative expense for the thirteen weeks ended July 2, 2022 increased by $1.8 million to $11.5 million from $9.7 million in the thirteen weeks ended July 3, 2021.

General and administrative expense for the thirteen weeks ended October 1, 2022 increased by $2.0 million to $13.0 million from $11.0 million in the thirteen weeks ended October 2, 2021.

The increase was primarily attributable to an increase in salaries, wages, and benefits.

As a percentage of operating revenues, general and administrative expense was 2.2% for the second quarter 2022 compared to 2.3% for the second quarter 2021.

As a percentage of operating revenues, general and administrative expense was 2.6% for the third quarter 2022 compared to 2.5% for the third quarter 2021.

Insurance and claims .

Insurance and claims expense for the second quarter 2022 decreased by $3.1 million to $2.6 million from $5.7 million in the second quarter 2021.

As a percentage of operating revenues, insurance and claims decreased to 0.5% for the thirteen weeks ending July 2, 2022 compared to 1.4% for the second quarter 2021.

The decrease was attributable to a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period.

Insurance and claims expense for the third quarter 2022 decreased by $2.2 million to $5.7 million from $7.9 million in the third quarter 2021.

As a percentage of operating revenues, insurance and claims decreased to 1.1% for the thirteen weeks ending October 1, 2022 compared to 1.8% for the third quarter 2021.

The decrease was attributable to a decrease in auto liability premiums and cargo and service failure claims.

Depreciation and amortization .

Depreciation and amortization expense for the thirteen weeks ended July 2, 2022 increased by $10.7 million, or 65.6%, to $27.1 million from $16.3 million for 2021.

Depreciation expense increased $10.7 million and amortization expense was unchanged.

During the second quarter of 2022, Universal revised the estimated useful life and salvage value of certain equipment, and these adjustments resulted in additional depreciation expense of $9.7 million during the period.

Depreciation and amortization expense for the thirteen weeks ended October 1, 2022 decreased by $1.4 million, or 8.6%, to $15.0 million from $16.5 million for 2021.

Depreciation expense decreased $1.5 million and amortization expense increased $0.1 million.

Interest expense, net .

Net interest expense was $3.9 million for the thirteen weeks ended July 2, 2022 compared to $2.9 million for the thirteen weeks ended July 3, 2021.

Net interest expense was $4.5 million for the thirteen weeks ended October 1, 2022 compared to $3.0 million for the thirteen weeks ended October 2, 2021.

The increase in net interest expense reflects an increase in interest rates on our outstanding borrowings.

As of July 3, 2022, our outstanding borrowings totaled $417.3 million compared to $433.5 million at the same time last year.

As of October 1, 2022, our outstanding borrowings totaled $393.7 million compared to $444.8 million at the same time last year.

Other non-operating income (expense) .

Other non-operating expense was $0.8 million for the second quarter 2022 compared to other non-operating income of $6.1 million in the prior year.

Other non-operating expense for the second quarter 2022 includes a $0.9 million pre-tax holding loss on marketable securities due to changes in fair value recognized in income compared to a $0.4 million gain in the second quarter 2021.

Other non-operating income for the second quarter of 2021 includes a $5.7 million pre-tax gain from a favorable legal settlement.

Other non-operating expense was $0.5 million for the third quarter 2022 compared to $0.1 million in the prior year.

Other non-operating expense for the third quarter 2022 includes a $0.5 million pre-tax holding loss on marketable securities due to changes in fair value recognized in income compared to $0.1 million in the third quarter 2021.

Income tax expense .

Income tax expense for the second quarter 2022 was $15.2 million, compared to $8.9 million for the second quarter 2021, based on an effective tax rate of 25.4% and 25.7% respectively.

The increase in income taxes in 2022 is the result of an increase in taxable income for the thirteen weeks ended July 2, 2022 compared to the thirteen weeks ended July 3, 2021.

Twenty-six Weeks Ended July 2, 2022 Compared to Twenty-six Weeks Ended July 3, 2021

Income tax expense for the third quarter 2022 was $16.3 million, compared to $3.3 million for the third quarter 2021, based on an effective tax rate of 25.2% and 24.5% respectively.

The increase in income taxes in 2022 is the result of an increase in taxable income for the thirteen weeks ended October 1, 2022 compared to the thirteen weeks ended October 2, 2021.

Thirty-nine Weeks Ended October 1, 2022 Compared to Thirty-nine Weeks Ended October 2, 2021

Operating revenues .

Operating revenues for the twenty-six weeks ended July 2, 2022 increased $213.0 million, or 25.4%, to $1,051.0 million from $838.0 million for the twenty-six weeks ended July 3, 2021.

Included in operating revenues are separately-identified fuel surcharges of $80.7 million for the twenty-six weeks ended July 2, 2022 compared to $43.1 million for the twenty-six weeks ended July 3, 2021.

Consolidated income from operations increased $60.0 million, or 96.1%, to $122.5 million for the first half 2022 compared to $62.5 million during the same period last year.

First half 2022 results include a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period as well as $9.7 million in additional depreciation expense due to the revision of the useful life and salvage value of certain equipment.

First half 2021 results include a favorable legal settlement which resulted in a $5.7 million pre-tax gain.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $99.3 million, or 32.1%, to $408.9 million in the first half 2022 compared to $309.7 million in the previous year.

Income from operations in the contract logistics segment increased $20.1 million, or 61.4%, to $52.9 million for the twenty-six weeks ended July 2, 2022 compared to $32.8 million in the same period last year.

In the first half of 2022, Universal managed 64 value-added programs compared to 60 in the prior year period.

During the first half of 2022, dedicated transportation load count increased 0.5% to 314,118 from 312,494 in the first half 2021.

Dedicated transportation also grew as the result of new business wins, including a major shuttle operation, as well as repricing existing customer contracts.

Also included in dedicated transportation revenue for the first half 2022 were $19.8 million in separately identified fuel surcharges, compared to $10.1 million in the same period last year.

As a percentage of revenue, operating margin in the contract logistics segment for the first half 2022 was 12.9% compared to 10.6% during the same period last year.

In the intermodal segment, operating revenues increased $104.2 million to $314.5 million in the first half 2022 compared to $210.3 million in the previous year.

Intermodal revenues for the twenty-six weeks ended July 2, 2022 included $43.5 million in separately identified fuel surcharges, compared to $21.9 million in the same period last year.

During the first half 2022, Universal moved 300,123 intermodal loads compared to 348,924 in the first half 2021, a decrease of 14.0%, while its average operating revenue per load, excluding fuel surcharges increased 44.2% to $697 from $483.

Intermodal segment revenues also include accessorial charges such as detention, demurrage and storage which totaled $69.8 million during the first half 2022, compared to $26.0 million one year earlier.

Income from operations in the intermodal segment increased $29.7 million to $44.4 million for the twenty-six weeks ended July 2, 2022 compared to $14.6 million in the first half 2021.

As a percentage of revenue, operating margin in the intermodal segment for the first half 2022 was 14.1%, compared to 7.0% during the same period last year.

In the trucking segment, operating revenues increased $9.4 million to $204.0 million in the first half 2022 compared to $194.7 million in the prior year period.

Included in trucking segment revenues for the first half 2022 were $17.5 million in separately identified fuel surcharges compared to $11.1 million during the first half 2021.

Income from operations in the trucking segment increased $5.4 million to $17.0 million for the first half 2022 compared to $11.7 million in the same period last year.

During the first half of 2022, Universal’s average operating revenue per load, excluding fuel surcharges, increased 42.5% to $1,804 from $1,266 in the prior year period;

however, this increase was partially offset by a 30.0% decrease in load volumes.

During the first half 2022, Universal moved 103,846 loads compared to 148,389 during the same period last year.

As a percentage of revenue, operating margin in the trucking segment for the first half 2022 was 8.3%, compared to 6.0% during the same period last year.

Included in the trucking segment’s first half 2022 operating results was a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period.

This credit favorably impacted the trucking segment’s operating margin by 147 basis points.

In the company-managed brokerage segment, operating revenues decreased $1.2 million, or 1.0%, to $120.3 million in the twenty-six weeks ending July 2, 2022 compared to $121.5 million in the twenty-six weeks ending July 3, 2021.

During the first half of 2022, the average operating revenue per load, excluding fuel surcharges, increased 16.0% to $2,094 from $1,806 in the first half 2021;

Operating revenues for the thirty-nine weeks ended October 1, 2022 increased $273.1 million, or 21.3%, to $1,556.7 million from $1,283.6 million for the thirty-nine weeks ended October 2, 2021.

Included in operating revenues are separately-identified fuel surcharges of $127.5 million for the thirty-nine weeks ended October 1, 2022 compared to $68.0 million for the thirty-nine weeks ended October 2, 2021.

Consolidated income from operations increased $113.1 million, or 142.8%, to $192.3 million for the thirty-nine weeks ending October 1, 2022 compared to $79.2 million during the same period last year.

Results for the thirty-nine weeks ending October 1, 2022 include a $2.8 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period as well as $9.7 million in additional depreciation expense due to the revision of the useful life and salvage value of certain equipment.

Results for the thirty-nine weeks ended October 2, 2021 include a favorable legal settlement which resulted in a $5.7 million pre-tax gain, $7.6 million in unrelated legal charges, and $13.9 million of losses incurred in connection with a contract logistics program launch.

In the contract logistics segment, which includes value-added and dedicated services, operating revenues increased $151.9 million, or 32.6%, to $618.4 million in the thirty-nine weeks ending October 1, 2022 compared to $466.6 million in the previous year.

Income from operations in the contract logistics segment increased $49.6 million, or 127.9%, to $88.3 million for the thirty-nine weeks ended October 1, 2022 compared to $38.7 million in the same period last year.

In the thirty-nine weeks ending October 1, 2022, Universal managed 63 value-added programs compared to 61 in the prior year period.

During the thirty-nine weeks ending October 1, 2022, dedicated transportation load count increased 3.8% to 466,852 from 449,621 in the thirty-nine weeks ending October 2, 2021.

Also included in dedicated transportation revenue for the thirty-nine weeks ending October 1, 2022 were $31.1 million in separately identified fuel surcharges, compared to $15.3 million in the same period last year.

Contract logistics segment results for the thirty-nine weeks ending October 2, 2021 included $13.9 million of losses incurred in connection with a previously announced program launch.

As a percentage of revenue, operating margin in the contract logistics segment for the thirty-nine weeks ending October 1, 2022 was 14.3% compared to 8.3% during the same period last year.

In the intermodal segment, operating revenues increased $137.5 million to $468.9 million in the thirty-nine weeks ending October 1, 2022 compared to $331.3 million in the previous year.

Intermodal revenues for the thirty-nine weeks ended October 1, 2022 included $69.8 million in separately identified fuel surcharges, compared to $35.2 million in the same period last year.

During the thirty-nine weeks ending October 1, 2022, Universal moved 435,923 intermodal loads compared to 508,352 in the thirty-nine weeks ending October 2, 2021, a decrease of 14.2%, while its average operating revenue per load, excluding fuel surcharges increased 41.2% to $706 from $500.

Intermodal segment revenues also include accessorial charges such as detention, demurrage and storage which totaled $101.1 million during the thirty-nine weeks ending October 1, 2022, compared to $49.3 million one year earlier.

Income from operations in the intermodal segment increased $55.9 million to $72.5 million for the thirty-nine weeks ended October 1, 2022 compared to $16.6 million in the thirty-nine weeks ending October 2, 2021.

Intermodal segment results included litigation related charges totaling $7.6 million in the thirty-nine weeks ending October 2, 2021.

As a percentage of revenue, operating margin in the intermodal segment for the thirty-nine weeks ending October 1, 2022 was 15.5%, compared to 5.0% during the same period last year.

In the trucking segment, operating revenues increased $1.8 million to $303.6 million in the thirty-nine weeks ending October 1, 2022 compared to $301.8 million in the prior year period.

Included in trucking segment revenues for the thirty-nine weeks ending October 1, 2022 were $26.5 million in separately identified fuel surcharges compared to $17.6 million during the thirty-nine weeks ending October 2, 2021.

Income from operations in the trucking segment increased $3.3 million to $21.8 million for the thirty-nine weeks ending October 1, 2022 compared to $18.5 million in the same period last year.

During the thirty-nine weeks ending October 1, 2022, Universal’s average operating revenue per load, excluding fuel surcharges, increased 36.4% to $1,799 from $1,319 in the prior year period;

however, this increase was partially offset by a 30.1% decrease in load volumes as we rationalized underperforming operations in this segment.

During the thirty-nine weeks ending October 1, 2022, Universal moved 154,479 loads compared to 220,938 during the same period last year.

As a percentage of revenue, operating margin in the trucking segment for the thirty-nine weeks ending October 1, 2022 was 7.2%, compared to 6.1% during the same period last year.

In the company-managed brokerage segment, operating revenues decreased $19.8 million, or 11.0%, to $160.9 million in the thirty-nine weeks ending October 1, 2022 compared to $180.8 million in the thirty-nine weeks ending October 2, 2021.

During the thirty-nine weeks ending October 1, 2022, the average operating revenue per load, excluding fuel surcharges, increased 8.5% to $1,960 from $1,807 in the thirty-nine weeks ending October 2, 2021;

however, load volumes fell 27.6% to 68,453 from 94,510.

As a percentage of revenue, operating margin for the company-managed brokerage segment was 6.7% for the first half 2022 compared to 2.4% in the same period last year.

As a percentage of revenue, operating margin for the company-managed brokerage segment was 5.7% for the thirty-nine weeks ending October 1, 2022 compared to 2.6% in the same period last year.

Purchased transportation and equipment rent .

Purchased transportation and equipment rental costs for the first half 2022 increased $72.0 million, or 18.6%, to $459.3 million from $387.4 million during the same period last year.

Purchased transportation and equipment rental costs for the thirty-nine weeks ending October 1, 2022 increased $67.9 million, or 11.3%, to $668.2 million from $600.3 million during the same period last year.

Purchased transportation and equipment rent generally increases or decreases in proportion to the revenues generated through owner-operators and other third party providers.

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The absolute increase in purchased transportation and equipment rental costs was primarily the result of an overall increase in transportation-related services.

First half 2022 transportation-related service revenues increased 27.2%

compared to the first half of 2021.

As a percentage of operating revenues, purchased transportation and equipment rent expense decreased to 43.7% compared to 46.2% during the same period last year due to a decrease in the mix of brokerage services revenue, where the cost of transportation is typically higher than our other transportation businesses.

During the t hirty-nine weeks ending October 1, 2022 transportation-related service revenues increased 22.0% compared to the same period last year .

As a percentage of operating revenues, purchased transportation and equipment rent expense decreased to 42.9% compared to 46.8% during the third quarter of 2021 due to a decrease in the mix of brokerage services revenue, where the cost of transportation is typically higher than our other transportation businesses.

As a percentage of total revenues, brokerage services revenue decreased to 18.8% for 2021 compared to 23.5% in the same period last year.

Direct personnel and related benefits .

Direct personnel and related benefits for the twenty-six weeks ended July 2, 2022 increased by $45.5 million, or 20.8%, to $264.0 million compared to $218.6 million during the same period last year.

Direct personnel and related benefits for the thirty-nine weeks ended October 1, 2022 increased by $54.8 million, or 16.3%, to $391.7 million compared to $336.9 million during the same period last year.

The increase was due to the launch of new business wins and robust volumes experienced at our contract logistics operations during the first half of 2022.

As a percentage of operating revenues, personnel and related benefits decreased to 25.1% for the twenty-six weeks ended July 2, 2022, compared to 26.1% for the twenty-six weeks ended July 3, 2021.

The increase was due to the launch of new business wins and robust volumes experienced at our contract logistics operations during the thirty-nine weeks ending October 1, 2022.

As a percentage of operating revenues, personnel and related benefits decreased to 25.2% for the thirty-nine weeks ended October 1, 2022, compared to 26.2% for the thirty-nine weeks ended October 2, 2021.

The percentage is derived on an aggregate basis from both existing and new programs, and from customer operations at various stages in their lifecycles.

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Operating supplies and expenses .

Operating supplies and expenses increased by $18.3 million, or 26.3%, to $88.2 million for the twenty-six weeks ended July 2, 2022 compared to $69.8 million for the twenty-six weeks ended July 3, 2021.

Operating supplies and expenses increased by $19.3 million, or 17.0%, to $132.9 million for the thirty-nine weeks ended October 1, 2022 compared to $113.6 million for the thirty-nine weeks ended October 2, 2021.

These expenses include items such as fuel, maintenance, cost of materials, communications, utilities and other operating expenses, and generally relate to fluctuations in customer demand.

The main elements driving the change were increases of $16.0 million in fuel expense on company tractors, $3.0 million in vehicle and other maintenance, $2.9 million in bad debt expense, and $1.3 million in professional fees.

These increases were partially offset by decreases of $1.9 million in operating supplies and material costs in operations supporting heavy truck programs and $2.0 million in additional gains on sales of property, plant and equipment compared to the same period last year.

The main elements driving the change were increases of $20.8 million in fuel expense on company tractors, $4.5 million in vehicle and other maintenance, and $3.1 million in bad debt expense.

These increases were partially offset by decreases of $4.5 million in professional fees including legal charges and $1.8 million in travel and entertainment expense.

Commission expense .

Commission expense for the first half 2022 increased by $4.9 million, or 30.7%, to $20.8 million from $15.9 million for the first half 2021.

Commission expense for the thirty-nine weeks ending October 1, 2022 increased by $6.4 million, or 25.7%, to $31.4 million from $25.0 million for the thirty-nine weeks ending October 2, 2021.

Commission expense increased due to increased revenue in the agency based truckload business.

As a percentage of operating revenues, commission expense increased to 2.0% for the first half of 2022, compared to 1.9% in the same period last year.

As a percentage of operating revenues, commission expense increased to 2.0% for the thirty-nine weeks ending October 1, 2022, compared to 1.9% in the same period last year.

Occupancy expense .

Occupancy expenses increased by $2.6 million, or 15.0%, to $20.2 million for the twenty-six weeks ended July 2, 2022.

This compares to $17.6 million for the twenty-six weeks ended July 3, 2021.

The increase was primarily attributable to an increase in building rents.

Occupancy expenses increased by $3.4 million, or 12.8%, to $30.3 million for the thirty-nine weeks ended October 1, 2022.

This compares to $26.9 million for the thirty-nine weeks ended October 2, 2021.

The increase was attributable to an increase in building rents and property taxes.

General and administrative .

General and administrative expense for the twenty-six weeks ended July 2, 2022 increased by $2.7 million to $21.6 million from $18.9 million in the twenty-six weeks ended July 3, 2021.

General and administrative expense for the thirty-nine weeks ended October 1, 2022 increased by $4.8 million to $34.6 million from $29.9 million in the thirty-nine weeks ended October 2, 2021.

The increase was primarily attributable to an increase in salaries, wages, and benefits.

As a percentage of operating revenues, general and administrative expense was 2.1% for the first half 2022 compared to 2.3% for the first half 2021.

As a percentage of operating revenues, general and administrative expense was 2.2% for the thirty-nine weeks ending October 1, 2022 compared to 2.3% for the thirty-nine weeks ending October 2, 2021.

Insurance and claims .

Insurance and claims expense for the first half 2022 decreased by $0.9 million to $11.2 million from $12.1 million in the first half 2021.

As a percentage of operating revenues, insurance and claims decreased to 1.1% for the twenty-six weeks ending July 2, 2022 compared to 1.4% for the first half 2021.

The decrease was attributable to a $3.0 million credit to insurance and claims expense resulting from the favorable settlement of certain auto liability claims during the period as well as a $1.5 million decrease in auto liability insurance premiums.

The decrease was partially offset by a $3.2 million increase in cargo and service failure claims.

Insurance and claims expense for the thirty-nine weeks ending October 1, 2022 decreased by $3.1 million to $16.9 million from $20.0 million in the thirty-nine weeks ending October 2, 2021.

As a percentage of operating revenues, insurance and claims decreased to 1.1% for the thirty-nine weeks ending October 1, 2022 compared to 1.6% for the thirty-nine weeks ending October 2, 2021.

The decrease was attributable to decrease in auto liability insurance premiums and auto liability claims and included a $2.8 million credit resulting from the favorable settlement of certain auto liability claims during the period.

The decrease was partially offset by an increase in cargo and service failure claims.

Depreciation and amortization .

Depreciation and amortization expense for the twenty-six weeks ended July 2, 2022 increased by $7.9 million, or 22.2%, to $43.3 million from $35.4 million for 2021.

Depreciation and amortization expense for the thirty-nine weeks ended October 1, 2022 increased by $6.5 million, or 12.4%, to $58.3 million from $51.9 million during the same period in 2021.

Depreciation expense increased $6.3 million and amortization expense increased $0.2 million.

During the first half of 2022, Universal revised the estimated useful life and salvage value of certain equipment, and these adjustments resulted in additional depreciation expense of $9.7 million during the period.

During the thirty-nine weeks ending October 1, 2022, Universal revised the estimated useful life and salvage value of certain equipment, and these adjustments resulted in additional depreciation expense of $9.7 million during the period.

Interest expense, net .

Net interest expense was $6.4 million for the twenty-six weeks ended July 2, 2022 compared to $6.1 million for the twenty-six weeks ended July 3, 2021.

Net interest expense was $10.8 million for the thirty-nine weeks ended October 1, 2022 compared to $9.1 million for the thirty-nine weeks ended October 2, 2021.

The increase in net interest expense reflects an increase in interest rates on our outstanding borrowings.

As of July 3, 2022, our outstanding borrowings totaled $417.3 million compared to $433.5 million at the same time last year.

As of October 1, 2022, our outstanding borrowings totaled $393.7 million compared to $444.8 million at the same time last year.

Other non-operating income (expense) .

Other non-operating income was $0.1 million for the first half 2022 compared to $7.1 million in the prior year.

Other non-operating income for the first half 2022 includes a $0.1 million pre-tax holding gain on marketable

securities due to changes in fair value recognized in income .

Other non-operating income for the first half of 2021 includes a $5.7 million pre-tax gain from a favorable legal settlement and a $1.4 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income.

Other non-operating expense was $0.3 million for the thirty-nine weeks ending October 1, 2022 compared to $7.0 million of non-operating income in the prior year.

Other non-operating income for the thirty-nine weeks ending October 1, 2022 includes a $0.4 million pre-tax holding loss on marketable securities due to changes in fair value recognized in income.

Other non-operating income for the thirty-nine weeks ending October 2, 2021 includes a $5.7 million pre-tax gain from a favorable legal settlement and a $1.2 million pre-tax holding gain on marketable securities due to changes in fair value recognized in income.

Income tax expense .

Income tax expense for the first half 2022 was $29.6 million, compared to $16.2 million for the first half 2021, based on an effective tax rate of 25.4% and 25.5% respectively.

The increase in income taxes in 2022 is the result of an increase in taxable income for the twenty-six weeks ended July 2, 2022 compared to the twenty-six weeks ended July 3, 2021.

Income tax expense for the thirty-nine weeks ending October 1, 2022 was $45.9 million, compared to $19.5 million for the thirty-nine weeks ending October 2, 2021, based on an effective tax rate of 25.4% compared to 25.3% in the prior year period.

The increase in income tax expense in 2022 is the result of an increase in taxable income for the thirty-nine weeks ended October 1, 2022 compared to the thirty-nine weeks ended October 2, 2021.

Liquidity and Capital Resources

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As a result, our capital expenditure requirements are limited in comparison to most large transportation and logistics service providers, which maintain significant properties and sizable fleets of owned tractors and trailers.

During the twenty-six weeks ended July 2, 2022, our capital expenditures totaled $37.5 million.

During the thirty-nine weeks ended October 1, 2022, our capital expenditures totaled $85.8 million.

These expenditures primarily consisted of transportation equipment and investments in support of our value-added service operations.

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The Board of directors did not declare a special dividend in the first quarter of 2022.

On July 28, 2022, our Board of Directors did declare the regular quarterly cash dividend of $0.105 per share of common stock payable October 3, 2022 to shareholders of record at the close of business September 5, 2022.

On October 27, 2022, our Board of Directors did declare the regular quarterly cash dividend of $0.105 per share of common stock payable January 3, 2023 to shareholders of record at the close of business December 5, 2022.

During the year ended December 31, 2021, we paid a total of $0.42 per common share, or $11.3 million.

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We paid for the accepted shares with available cash and funds borrowed under our existing line of credit.

While operating cash flows may be negatively impacted by a prolonged pandemic, the Company believes we will be able to finance our near term needs for working capital over the next twelve months, as well as any planned capital expenditures during such period, with cash balances, cash flows from operations, and loans and extensions of credit under our credit facilities and on margin against our marketable securities.

Should the impact of the COVID-19 pandemic last longer than anticipated, and/or our cash flow from operations decline more than expected, we may need to obtain additional financing.

We expect that our cash flow from operations, working capital and available borrowings will be sufficient to meet our capital commitments, to fund our operational needs for at least the next twelve months, and to fund mandatory debt repayments.

Based on the availability of borrowings under our credit facilities, against our marketable security portfolio and other financing sources, and assuming the continuation of our current level of profitability, we do not expect that we will experience any liquidity constraints in the foreseeable future.

We continue to evaluate business development opportunities, including potential acquisitions that fit our strategic plans.

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Revolving Credit, Promissory Notes and Term Loan Agreements

Our revolving credit facility (the “Revolving Credit Facility”) provides for a $200 million revolver at a variable rate of interest based on LIBOR or a base rate and matures on November 26, 2023.

Our revolving credit facility (the “Revolving Credit Facility”) provides for a $400 million revolver at a variable rate of interest based on index-adjusted SOFR or a base rate and matures on September 30, 2027.

The Revolving Credit Facility, which is secured by cash, deposits, accounts receivable, and selected other assets of the applicable borrowers, includes customary affirmative and negative covenants and events of default, as well as financial covenants requiring minimum fixed charge coverage and leverage ratios, and customary mandatory prepayments provisions.

Our Revolving Credit Facility includes an accordion feature which allows us to increase availability by up to $200 million upon our request.

At July 2, 2022, we were in compliance with all its covenants, and $49.5 million was available for borrowing.

At October 1, 2022, we were in compliance with all its covenants, and $384.6 million was available for borrowing.

Our UACL Credit and Security Agreement (the “UACL Credit Agreement”) provides for maximum borrowings of $90 million in the form of an $80 million term loan and a $10 million revolver at a variable rate of interest based on index-adjusted SOFR or a base rate and matures on September 30, 2027.

The UACL Credit Agreement, which is secured by cash, deposits, accounts receivable, and selected other assets of the applicable borrowers, includes customary affirmative and negative covenants and events of default, as well as financial covenants requiring minimum fixed charge coverage and leverage ratios, and customary mandatory prepayments provisions.

Our UACL Credit Agreement includes an accordion feature which allows us to increase availability by up to $30 million upon our request.

At October 1, 2022, we were in compliance with all its covenants, and $10.0 million was available for borrowing.

A wholly owned subsidiary issued a series of promissory notes in order to finance transportation equipment (the “Equipment Financing”).

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The facility bears interest at Term SOFR, plus an applicable margin equal to 2.12%.

At July 2, 2022, we were in compliance with all covenants under the facility.

At October 1, 2022, we were in compliance with all covenants under the facility.

We also maintain a short-term line of credit secured by our portfolio of marketable securities (the “Margin Facility”).

It bears interest at LIBOR plus 1.10%.

It bears interest at Term SOFR plus 1.10%.

The amount available under the Margin Facility is based on a percentage of the market value of the underlying securities.

We did not have any amounts advanced against the line as of July 2, 2022, and the maximum available borrowings were $4.6 million.

We did not have any amounts advanced against the line as of October 1, 2022, and the maximum available borrowings were $5.0 million.

Discussion of Cash Flows

At July 2, 2022, we had cash and cash equivalents of $14.7 million compared to $13.9 million at December 31, 2021.

Operating activities provided $69.3 million in net cash, and we used $32.1 million in financing activities and $35.5 million in investing activities.

The $69.3 million in net cash provided by operations was primarily attributed to $86.7 million of net income, which reflects non-cash depreciation and amortization, noncash lease expense, gain on marketable equity securities, gains on equipment sales, amortization and write-off of debt issuance costs, stock-based compensation, and provisions for doubtful accounts totaling $61.4 million, net.

At October 1, 2022, we had cash and cash equivalents of $14.6 million compared to $13.9 million at December 31, 2021.

Operating activities provided $144.5 million in net cash, and we used $76.4 million in investing activities and $64.6 million in financing activities.

The $144.5 million in net cash provided by operations was primarily attributed to $135.2 million of net income, which reflects non-cash depreciation and amortization, noncash lease expense, losses on marketable equity securities, gains on equipment sales, amortization and write-off of debt issuance costs, stock-based compensation, and provisions for doubtful accounts totaling $84.4 million, net.

Net cash provided by operating activities also reflects an aggregate increase in net working capital totaling $75.1 million.

The primary drivers behind the increase in working capital were principal reductions in operating lease liabilities during the period, increases in trade and other accounts receivable and in prepaid expenses and other assets, and decreases in accruals for insurance and claims other long-term liabilities.

These were partially offset by increases in trade accounts payable, accrued expenses and other current liabilities, and income taxes payable.

Affiliate transactions decreased net cash provided by operating activities by $4.2 million.

The decrease in net cash resulted from a decrease in accounts payable to affiliates of $3.6 million and a decrease in accounts receivable from affiliates of $0.6 million.

The primary drivers behind the increase in working capital were principal reductions in operating lease liabilities during the period, an increase in trade accounts receivable, and decreases in trade accounts payable, accruals for insurance and claims, accrued expenses and other current liabilities, and in other long-term liabilities.

These were partially offset by decreases in other receivables and in

prepaid expenses and other assets, and a n increase in income taxes payable.

Affiliate transactions increased net cash provided by operating activities by $4.9 million primarily resulting from a n in crease in accounts payable to affiliates.

The $76.4 million in net cash used in investing activities consisted of $85.8 million in capital expenditures and $0.9 million in marketable securities purchases.

These uses were partially offset by $10.4 million in proceeds from the sale of equipment.

We used $35.5 million in financing activities during the twenty-six weeks ended July 2, 2022.

We used $64.6 million in financing activities during the thirty-nine weeks ended October 1, 2022.

During the period we paid cash dividends of $11.2 million, $14.3 million for purchases of common stock and $4.4 million in capitalized financing costs.

We had outstanding borrowings totaling $417.3 million at July 2, 2022 compared to $428.4 million at December 31, 2021.

During the period we made net repayments on our revolving lines of credit totaling $12.8 million and term loan, and equipment and real estate note payments totaling $192.3 million.

We had outstanding borrowings totaling $393.7 million at October 1, 2022 compared to $428.4 million at December 31, 2021.

During the period also we made net repayments on our revolving lines of credit totaling $147.9 million and term loan, and equipment and real estate note payments totaling $205.5 million.

We also borrowed $318.7 million during the period to repay outstanding balances under a then-existing term loan and certain other real estate notes, and for new equipment.

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A summary of critical accounting policies is presented in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies," of our Form 10-K for the year ended December 31, 2021.

There have been no changes in our accounting policies during the thirteen weeks ended July 2, 2022.

There have been no changes in our accounting policies during the thirteen weeks ended October 1, 2022.

Generally, demand for our value-added services delivered to existing customers increases during the second calendar quarter of each year as a result of the automotive industry’s spring selling season.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have not been any material changes to the Company’s market risk during the thirteen weeks ended July 2, 2022.

There have not been any material changes to the Company’s market risk during the thirteen weeks ended October 1, 2022.

For additional information, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis