What changed in this filing

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Item 1. Financial Statements

2022-11-04 compared with 2022-08-08 · 99 added, 65 removed, 467 unchanged (26% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands, except per share amounts) 2022 2021 2022 2021

33 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2022 2021 2022 2021

3 unchanged sentences

Change in fair value of interest rate swaps, net of tax 1,857 400 6,771 2,063

Other comprehensive income 1,236 2,225 6,020 1,960

Other comprehensive income (loss) 1,149 ( 719 ) 7,169 1,241

Comprehensive income 57,074 64,370 191,738 184,854

4 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share amounts) June 30,

(In thousands, except share amounts) September 30,

2022 December 31,

17 unchanged sentences

Current liabilities:

Checks issued in excess of cash balances $ 6,032 $ —

Accounts payable $ 115,860 $ 93,987

27 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands) 2022 2021

27 unchanged sentences

Proceeds from issuance of long-term debt 250,000 170,000

Change in checks issued in excess of cash balances 6,032 —

Dividends on common stock ( 23,946 ) ( 21,057 )

1 unchanged sentence

Tax withholding related to net share settlements of restricted stock awards ( 3,704 ) ( 3,773 )

Net cash provided by (used in) financing activities ( 97,941 ) 77,847

Other cash flows from financing activities ( 750 ) ( 35 )

Net cash provided by financing activities 7,450 71,869

Effect of exchange rate fluctuations on cash 68 ( 212 )

11 unchanged sentences

Dividends accrued but not yet paid at end of period 8,216 8,026

Redeemable noncontrolling interest associated with acquisition — 35,322

See Notes to Consolidated Financial Statements (Unaudited).

2 unchanged sentences

TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

(In thousands, except share and per share amounts) Common

6 unchanged sentences

Equity Temporary Equity - Redeemable Noncontrolling Interest

BALANCE, March 31, 2022 $ 805 $ 121,157 $ 1,713,046 $ ( 15,820 ) $ ( 477,724 ) $ 1,341,464 $ 37,233

BALANCE, June 30, 2022 $ 805 $ 124,065 $ 1,777,092 $ ( 14,584 ) $ ( 543,506 ) $ 1,343,872 $ 38,552

Net income attributable to Werner — — 55,051 — — 55,051 —

8 unchanged sentences

Non-cash equity compensation expense — 3,035 — — — 3,035 —

BALANCE, June 30, 2022 $ 805 $ 124,065 $ 1,777,092 $ ( 14,584 ) $ ( 543,506 ) $ 1,343,872 $ 38,552

Three Months Ended June 30, 2021

Distribution to noncontrolling interest — — — — — — ( 750 )

BALANCE, September 30, 2022 $ 805 $ 127,046 $ 1,823,927 $ ( 13,435 ) $ ( 551,785 ) $ 1,386,558 $ 38,676

Three Months Ended September 30, 2021

(In thousands, except share and per share amounts) Common

6 unchanged sentences

Equity Temporary Equity - Redeemable Noncontrolling Interest

BALANCE, March 31, 2021 $ 805 $ 114,588 $ 1,478,616 $ ( 23,098 ) $ ( 343,181 ) $ 1,227,730 $ —

BALANCE, June 30, 2021 $ 805 $ 117,069 $ 1,542,497 $ ( 20,873 ) $ ( 342,915 ) $ 1,296,583 $ —

Net income attributable to Werner — — 63,761 — — 63,761 —

Other comprehensive income — — — 2,225 — 2,225 —

Net income attributable to noncontrolling interest — — — — — — 1,328

Other comprehensive loss — — — ( 719 ) — ( 719 ) —

Purchases of 1,049,120 shares of common stock

— — — — ( 47,759 ) ( 47,759 ) —

Dividends on common stock ($ 0.12 per share)

3 unchanged sentences

Non-cash equity compensation expense — 2,750 — — — 2,750 —

BALANCE, June 30, 2021 $ 805 $ 117,069 $ 1,542,497 $ ( 20,873 ) $ ( 342,915 ) $ 1,296,583 $ —

Investment in noncontrolling interest — — — — — — 35,322

Distribution to noncontrolling interest — — — — — — ( 35 )

BALANCE, September 30, 2021 $ 805 $ 119,776 $ 1,598,232 $ ( 21,592 ) $ ( 390,664 ) $ 1,306,557 $ 36,615

See Notes to Consolidated Financial Statements (Unaudited).

2 unchanged sentences

TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST (CONTINUED)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(In thousands, except share and per share amounts) Common

17 unchanged sentences

Non-cash equity compensation expense — 9,120 — — — 9,120 —

BALANCE, June 30, 2022 $ 805 $ 124,065 $ 1,777,092 $ ( 14,584 ) $ ( 543,506 ) $ 1,343,872 $ 38,552

Six Months Ended June 30, 2021

Distribution to noncontrolling interest — — — — — — ( 750 )

BALANCE, September 30, 2022 $ 805 $ 127,046 $ 1,823,927 $ ( 13,435 ) $ ( 551,785 ) $ 1,386,558 $ 38,676

Nine Months Ended September 30, 2021

(In thousands, except share and per share amounts) Common

8 unchanged sentences

Net income attributable to Werner — — 182,285 — — 182,285 —

Net income attributable to noncontrolling interest — — — — — — 1,328

Other comprehensive income — — — 1,241 — 1,241 —

6 unchanged sentences

Non-cash equity compensation expense — 7,999 — — — 7,999 —

BALANCE, June 30, 2021 $ 805 $ 117,069 $ 1,542,497 $ ( 20,873 ) $ ( 342,915 ) $ 1,296,583 $ —

Investment in noncontrolling interest — — — — — — 35,322

Distribution to noncontrolling interest — — — — — — ( 35 )

BALANCE, September 30, 2021 $ 805 $ 119,776 $ 1,598,232 $ ( 21,592 ) $ ( 390,664 ) $ 1,306,557 $ 36,615

See Notes to Consolidated Financial Statements (Unaudited).

14 unchanged sentences

although in management’s opinion, the disclosures are adequate so that the information presented is not misleading.

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

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

In the opinion of management, the information set forth in the accompanying consolidated condensed balance sheets is fairly stated in all material respects in relation to the consolidated balance sheets from which it has been derived.

1 unchanged sentence

New Accounting Pronouncements Adopted

In the first quarter 2022, we adopted Accounting Standards Update (“ASU”) No.

In first quarter 2022, we adopted Accounting Standards Update (“ASU”) No.

2020-04, Reference Rate Reform (Topic 848) , which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting.

6 unchanged sentences

On November 22, 2021, we acquired 100 % of the equity interests in NEHDS Logistics, LLC (“NEHDS”) for a final purchase price of $ 62.3 million after including the impacts of contingent consideration and net working capital changes.

The purchase price allocation for NEHDS is considered final as of March 31, 2022.

The purchase price allocation for NEHDS was considered final as of March 31, 2022.

NEHDS is a final mile residential delivery provider serving customers primarily in the Northeast and Midwest U.S.

1 unchanged sentence

The results of operations for NEHDS are included in our consolidated financial statements beginning November 22, 2021.

Amortization expense on intangible assets was $ 1.4 million and $ 2.7 million for the three and six months ended June 30, 2022 .

Amortization expense on intangible assets was $ 1.4 million and $ 4.1 million for the three and nine months ended September 30, 2022 .

Revenue Recognition

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

A receivable is an unconditional right to consideration and is recognized when shipments have been completed and the related performance obligation has been fully satisfied.

At June 30, 2022 and December 31, 2021, the accounts receivable, trade, net, balance was $ 482.0 million and $ 460.5 million, respectively.

At September 30, 2022 and December 31, 2021, the accounts receivable, trade, net, balance was $ 493.1 million and $ 460.5 million, respectively.

Contract assets represent a conditional right to consideration in exchange for goods or services and are transferred to receivables when the rights become unconditional.

At June 30, 2022 and December 31, 2021, the balance of contract assets was $ 10.2 million and $ 9.0 million, respectively.

At September 30, 2022 and December 31, 2021, the balance of contract assets was $ 9.3 million and $ 9.0 million, respectively.

We have recognized contract assets within the other current assets financial statement caption on the consolidated condensed balance sheets.

1 unchanged sentence

Contract liabilities represent advance consideration received from customers and are recognized as revenues over time as the related performance obligation is satisfied.

The balance of contract liabilities was $ 1.5 million and $ 1.2 million at June 30, 2022 and December 31, 2021, respectively .

The amount of revenues recognized in the six months ended June 30, 2022 that was included in the December 31, 2021 contract liability balance was $ 1.2 million.

The balance of contract liabilities was $ 1.2 million at September 30, 2022 and December 31, 2021 .

The amount of revenues recognized in the nine months ended September 30, 2022 that was included in the December 31, 2021 contract liability balance was $ 1.2 million.

We have recognized contract liabilities within the accounts payable and other current liabilities financial statement captions on the consolidated condensed balance sheets.

4 unchanged sentences

transit times generally average approximately 3 days.

During the six months ended June 30, 2022 and 2021, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.

During the nine months ended September 30, 2022 and 2021, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.

We have entered into operating leases primarily for real estate.

8 unchanged sentences

The following table presents balance sheet and other operating lease information (dollars in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Balance Sheet Classification

6 unchanged sentences

Weighted-average discount rate for operating leases 2.6 % 2.7 %

The following table presents the maturities of operating lease liabilities as of June 30, 2022 (in thousands):

The following table presents the maturities of operating lease liabilities as of September 30, 2022 (in thousands):

Maturity of Lease Liabilities

4 unchanged sentences

Present value of operating lease liabilities $ 34,601

During the six months ended June 30, 2022 and 2021, right-of-use assets of $ 11.2 million and $ 2.1 million, respectively, were recognized as non-cash asset additions that resulted from new operating lease liabilities.

Cash paid for amounts included in the present value of operating lease liabilities was $ 3.8 million and $ 1.9 million for the six months ended June 30, 2022 and 2021, respectively, and are included in operating cash flows.

During the nine months ended September 30, 2022 and 2021, right-of-use assets of $ 12.4 million and $ 3.9 million, respectively, were recognized as non-cash asset additions that resulted from new operating lease liabilities.

Cash paid for amounts included in the present value of operating lease liabilities was $ 5.9 million and $ 3.2 million for the nine months ended September 30, 2022 and 2021, respectively, and are included in operating cash flows.

Operating Lease Expense

Operating lease expense was $ 5.3 million and $ 10.4 million for the three and six months ended June 30, 2022, respectively, and $ 3.5 million and $ 7.1 million for the three and six months ended June 30, 2021, respectively.

This expense included $ 2.3 million and $ 4.4 million for the three and six months ended June 30, 2022, respectively, and $ 1.0 million and $ 2.0 million for the three and six months ended June 30, 2021, respectively, for long-term operating leases, with the remainder for variable and short-term lease expense .

Operating lease expense was $ 5.4 million and $ 15.8 million for the three and nine months ended September 30, 2022, respectively, and $ 4.2 million and $ 11.3 million for the three and nine months ended September 30, 2021, respectively.

This expense included $ 2.2 million and $ 6.6 million for the three and nine months ended September 30, 2022, respectively, and $ 1.3 million and $ 3.3 million for the three and nine months ended September 30, 2021, respectively, for long-term operating leases, with the remainder for variable and short-term lease expense .

Lessor Operating Leases

1 unchanged sentence

We recognize revenue for such leases on a straight-line basis over the term of the lease.

Revenues were $ 3.1 million and $ 6.3 million for the three and six months ended June 30, 2022, respectively, and $ 3.0 million and $ 6.1 million for the three and six months ended June 30, 2021, respectively.

The following table presents information about the maturities of these operating leases as of June 30, 2022 (in thousands):

Revenues were $ 3.3 million and $ 9.6 million for the three and nine months ended September 30, 2022, respectively, and $ 2.9 million and $ 9.0 million for the three and nine months ended September 30, 2021, respectively.

The following table presents information about the maturities of these operating leases as of September 30, 2022 (in thousands):

2022 (remaining) $ 2,486

Thereafter 71

Total $ 8,744

16 unchanged sentences

Hierarchy Fair Value

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Other non-current assets:

17 unchanged sentences

This minority equity investment is being accounted for under ASC 321 using the measurement alternative, and is recorded in other noncurrent assets on the consolidated condensed balance sheets.

As of June 30, 2022 and December 31, 2021, the value of our investment was $ 86.8 million and $ 38.2 million, respectively.

As of September 30, 2022 and December 31, 2021, the value of our investment was $ 86.8 million and $ 38.2 million, respectively.

We record changes in the value of this investment, based on events that occur that would indicate the value of our investment in MLSI has changed, in gain or loss on investments in equity securities on the consolidated statements of income.

During second quarter 2022, investments by third-parties resulted in the remeasurement of our investment in MLSI, and in the three and six months ended June 30, 2022, we recognized an unrealized gain of $ 28.6 million.

No gains or losses were recorded in the three and six months ended June 30, 2021.

At June 30, 2022, cumulative unrealized gains on our investment in MLSI totaled $ 56.8 million.

During second quarter 2022 and third quarter 2021, investments by third-parties resulted in the remeasurements of our investment in MLS, and in the nine months ended September 30, 2022 we recognized an unrealized gain of $ 28.6 million and in the three and nine months ended September 30, 2021 we recognized an unrealized gain of $ 28.2 million on our investment based upon the prices paid by third parties.

No gains or losses were recognized in the three months ended September 30, 2022.

At September 30, 2022, cumulative unrealized gains on our investment in MLSI totaled $ 56.8 million.

Equity Investments with Readily Determinable Fair Values

1 unchanged sentence

We record changes in the value of these investments, based on the share prices reported by Nasdaq, in gain or loss on investments in equity securities on the consolidated statements of income.

We recognized an unrealized loss of $ 4.5 million and $ 14.3 million on these investments for the three and six months ended June 30, 2022, respectively, and an unrealized gain of $ 20.2 million for the three and six months ended June 30, 2021.

We recognized an unrealized gain of $ 0.1 million and an unrealized loss of $ 14.2 million on these investments for the three and nine months ended September 30, 2022, respectively.

We recognized an unrealized loss of $ 12.1 million and an unrealized gain of $ 8.1 million on our investments for the three and nine months ended September 30, 2021, respectively.

For additional information regarding the fair value of these equity investments, see Note 5 – Fair Value.

10 unchanged sentences

(“BMO Harris”), expiring May 14, 2024 (“BMO Line of Credit”).

second amendment increased our BMO Line of Credit from $ 200.0 million to $ 300.0 million and changed the variable interest rate calculation by replacing the LIBOR with the SOFR .

The second amendment increased our BMO Line of Credit from $ 200.0 million to $ 300.0 million and changed the variable interest rate calculation by replacing the LIBOR with the SOFR .

Amounts drawn under the BMO Line of Credit bear interest, for a selected interest period, at a variable rate based on the SOFR plus 0.10 % and a margin ranging between 0.70 % and 1.50 %, based on our ratio of total funded debt to EBITDA, payable at the end of the applicable interest period.

2 unchanged sentences

The outstanding principal balance of the BMO Term Loan bears interest at a fixed rate of 1.28 %, payable quarterly in arrears.

As of June 30, 2022 and December 31, 2021, our outstanding debt totaled $ 445.0 million and $ 427.5 million, respectively.

As of June 30, 2022, we had a total of $ 250.0 million outstanding under our revolving lines of credit, including (i) $ 100.0 million at a weighted average variable interest rate of 2.10 %;

As of September 30, 2022 and December 31, 2021, our outstanding debt totaled $ 573.8 million and $ 427.5 million, respectively.

As of September 30, 2022, we had a total of $ 380.0 million outstanding under our revolving lines of credit, including (i) $ 230.0 million at a weighted average variable interest rate of 3.59 %;

(ii) $ 75.0 million at a variable interest rate of 3.43 %, which is effectively fixed at 2.29 % with an interest rate swap agreement through May 14, 2024 ;

and (iii) $ 75.0 million at a variable interest rate of 3.45 %, which is effectively fixed at 2.34 % with an interest rate swap agreement through May 14, 2024 .

The total borrowing capacity of $ 600.0 million under our revolving lines of credit at June 30, 2022, is further reduced by $ 58.4 million in stand-by letters of credit under which we are obligated.

In addition, as of June 30, 2022, we had $ 100.0 million outstanding under the Wells Term Loan at a variable interest rate of 2.23 % and $ 95.0 million outstanding under the BMO Term Loan at a fixed interest rate of 1.28 %.

Subsequent to the end of the quarter, in October 2022, we borrowed an additional $ 10.0 million under our revolving lines of credit, which will be classified as long-term in the consolidated condensed balance sheets.

The total borrowing capacity of $ 600.0 million under our revolving lines of credit at September 30, 2022, is further reduced by $ 58.4 million in stand-by letters of credit under which we are obligated.

In addition, as of September 30, 2022, we had $ 100.0 million outstanding under the Wells Term Loan at a variable interest rate of 3.77 % and $ 93.8 million outstanding under the BMO Term Loan at a fixed interest rate of 1.28 %.

Availability of such funds under the debt agreements is conditional upon various customary terms and covenants.

Such covenants include, among other things, financial covenants requiring us (i) to exceed a minimum ratio of earnings before interest, income taxes, depreciation and amortization to interest expense and/or (ii) not to exceed a maximum ratio of total funded debt to earnings before interest, income taxes, depreciation and amortization (as such terms are defined in each credit facility).

As of June 30, 2022 we were in compliance with these covenants.

At June 30, 2022, the aggregate future maturities of long-term debt by year are as follows (in thousands):

As of September 30, 2022 we were in compliance with these covenants.

At September 30, 2022, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2022 (remaining) $ 1,250

1 unchanged sentence

(8) Commitments and Contingencies

We have committed to property and equipment purchases of approximately $ 182.4 million at June 30, 2022 .

We have committed to property and equipment purchases of approximately $ 177.1 million at September 30, 2022 .

We are involved in certain claims and pending litigation, including those described herein, arising in the ordinary course of business.

7 unchanged sentences

Under the Company’s insurance policies in effect on the date of this accident, the Company’s maximum liability for this accident is $ 10.0 million (plus pre-judgment and post-judgment interest) with premium-based coverage that exceeds the jury verdict amount.

As a result of this jury verdict, the Company had recorded a liability of $ 31.4 million as of June 30, 2022, and $ 28.8 million as of December 31, 2021.

Under the terms of the Company’s insurance policies, the Company is the primary obligor of the verdict, and as such, the Company has also recorded a $ 79.2 million receivable from its third-party insurance providers in other non-current assets and a corresponding liability of the same amount in the long-term portion of insurance and claims accruals in the consolidated condensed balance sheets as of June 30, 2022 and December 31, 2021.

As a result of this jury verdict, the Company had recorded a liability of $ 32.7 million as of September 30, 2022, and $ 28.8 million as of December 31, 2021.

non-current assets and a corresponding liability of the same amount in the long-term portion of insurance and claims accruals in the consolidated condensed balance sheets as of September 30, 2022 and December 31, 2021.

The Company is pursuing an appeal of this verdict.

No assurances can be given regarding the outcome of any such appeal.

In July 2022, the Hopkins County District Court in Sulphur Springs, Texas approved a $ 150.0 million settlement, voluntarily agreed to by the Company and its insurers, of a motor vehicle accident lawsuit in Texas arising from a May 24, 2020 accident between a Werner tractor-trailer and a passenger vehicle.

As previously disclosed, in July 2022, the Hopkins County District Court in Sulphur Springs, Texas approved a $ 150.0 million settlement, voluntarily agreed to by the Company and its insurers, of a motor vehicle accident lawsuit in Texas arising from a May 24, 2020 accident between a Werner tractor-trailer and a passenger vehicle.

Under the Company’s insurance policies in effect on the date of this accident, the Company’s maximum liability for this accident is $ 10.0 million with premium-based coverage for the remainder of the settlement amount.

As a result of this settlement, the Company recognized $ 9.5 million of insurance and claims expense for the three and six months ended June 30, 2022, and had recorded a liability of $ 10.0 million and $ 0.5 million as of June 30, 2022 and December 31, 2021, respectively.

Under the terms of the Company’s insurance policies, the Company is the primary obligor of the settlement, and as such, the Company has also recorded a $ 140.0 million receivable from its third-party insurance providers in other current assets and a corresponding liability of the same amount in the current portion of insurance and claims accruals in the consolidated condensed balance sheets as of June 30, 2022.

As a result of this settlement, the Company recognized $ 9.5 million of insurance and claims expense for the nine months ended September 30, 2022, and had recorded a liability of $ 0.5 million as of December 31, 2021.

The settlement was paid by the Company and its insurers during third quarter 2022.

We have been involved in class action litigation in the U.S.

7 unchanged sentences

On June 22, 2020, the trial court denied Plaintiffs’ request for a new trial and entered judgment in favor of the Company, dismissing the case with prejudice.

On July 21, 2020, Plaintiffs’ counsel filed a notice of appeal of that dismissal, and that appeal remains pending.

As of June 30, 2022, we have an accrual for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter.

On July 21, 2020, Plaintiffs’ counsel filed a notice of appeal of that dismissal.

On August 3, 2022, the Eighth Circuit Court of Appeals vacated the district court’s judgment and remanded the case, and now the trial court is expected to determine whether the plaintiffs should be granted a new trial on the short break claim.

As of September 30, 2022, we have an accrual for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter.

We are also involved in certain class action litigation in which the plaintiffs allege claims for failure to provide meal and rest breaks, unpaid wages, unauthorized deductions and other items.

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

9 unchanged sentences

These units are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting.

Dedicated provides truckload services dedicated to a specific customer, generally for a retail distribution center or

manufacturing facility, utilizing either dry van or specialized trailers.

Dedicated provides truckload services dedicated to a specific customer, generally for a retail distribution center or manufacturing facility, utilizing either dry van or specialized trailers.

One-Way Truckload is comprised of the following operating fleets:

22 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Total $ 70,397 $ 68,615 $ 206,097 $ 196,431

(11) Subsequent Event

On October 1, 2022, we acquired 100 % of the equity interests in FAB9, Inc., doing business as Baylor Trucking, Inc.

(“Baylor”), for a cash purchase price of $ 80.0 million, before including the impacts of working capital adjustments, cash acquired, and a contingent earnout payment of up to $ 15.0 million based on Baylor achieving certain financial performance goals over a three-year period.

We financed the transaction through existing credit facilities.

Baylor, based in Milan, Indiana, operates 200 trucks and 980 trailers in the east central and south central United States.

The acquisition expands our terminal, fleet, and professional driver presence in these geographic truckload markets and adds two terminals to our network.

The acquisition will be accounted for as a business combination using the acquisition method of accounting under GAAP.

The results of operations for Baylor will be included in our consolidated financial statements, within our TTS segment, beginning October 1, 2022.

Due to the recent timing of this transaction, the initial accounting for the acquisition is not complete.

As a result, we are currently unable to provide purchase price allocation disclosures based on acquisition date fair values of assets acquired and liabilities assumed, as well as other related information.

We plan to include these disclosures in our Annual Report on Form 10-K for the year ending December 31, 2022.

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

What changed 10-Q

Item 1. Financial Statements