UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 20172022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 000-22490

corplogoa06.jpg

fwrd-20220930_g1.jpg
FORWARD AIR CORPORATION
(Exact name of registrant as specified in its charter)

TennesseeTennessee62-1120025
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)
1915 Snapps Ferry Road
Building N
Greeneville, Tennessee
GreenevilleTN37745
(Address of principal executive offices)(Zip Code)
 
Registrant’s telephone number, including area code: (423) 636-7000
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueFWRDThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Yes x No ¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x  No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “smaller reportingemerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx
x
Accelerated filero
¨
Non-accelerated filero
¨
Smaller reporting companyo
Emerging growth companyo


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨  No x
Yes o No x
The number of shares outstanding of the registrant’s common stock, $0.01 par value, as of October 24, 2017 of November 3, 2022 was 29,772,242.

26,589,697.



Table of Contents
Forward Air Corporation
Page
Number
Part I.I: Financial Information
Item 1.Financial Statements (Unaudited)
Item 2.
Item 3.
Item 4.
Part II.II: Other Information
Item 1.
Item 1A.2.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


2

Table of Contents

Part I.Financial Information
Item 1.Financial Statements (Unaudited).
Forward Air Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
 September 30,
2017
 December 31,
2016
Assets   
Current assets:   
Cash$12,423
 $8,511
Accounts receivable, less allowance of $2,898 in 2017 and $1,714 in 2016132,100
 116,602
Other current assets13,319
 11,157
Total current assets157,842
 136,270
    
Property and equipment383,890
 379,021
Less accumulated depreciation and amortization192,109
 178,816
Total property and equipment, net191,781
 200,205
Goodwill and other acquired intangibles: 
  
Goodwill191,535
 184,675
Other acquired intangibles, net of accumulated amortization of $68,971 in 2017 and $61,334 in 2016113,562
 106,650
Total net goodwill and other acquired intangibles305,097
 291,325
Other assets14,448
 13,491
Total assets$669,168
 $641,291
    
    
Liabilities and Shareholders’ Equity   
Current liabilities:   
Accounts payable$22,377
 $18,012
Accrued expenses35,354
 31,903
Current portion of debt and capital lease obligations466
 28,012
Total current liabilities58,197
 77,927
    
Long-term debt and capital lease obligations, less current portion40,696
 725
Other long-term liabilities22,681
 21,699
Deferred income taxes42,004
 41,871
    
Shareholders’ equity: 
  
Preferred stock
 
Common stock, $0.01 par value: Authorized shares - 50,000,000, Issued and outstanding shares - 29,532,362 in 2017 and 30,090,335 in 2016295
 301
Additional paid-in capital191,352
 179,512
Retained earnings313,943
 319,256
Total shareholders’ equity505,590
 499,069
Total liabilities and shareholders’ equity$669,168
 $641,291
    
The accompanying notes are an integral part of the financial statements.


Forward Air Corporation
Condensed Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)
      
 Three months ended Nine months ended
 September 30,
2017
 September 30,
2016
 September 30,
2017
 September 30,
2016
Operating revenue$280,201
 $249,552
 $794,700
 $717,737
        
Operating expenses:     
  
Purchased transportation123,326
 105,039
 342,017
 300,783
Salaries, wages and employee benefits64,882
 60,161
 191,282
 175,857
Operating leases16,809
 16,215
 47,205
 44,684
Depreciation and amortization10,326
 9,399
 30,578
 28,409
Insurance and claims7,844
 7,170
 21,379
 19,213
Fuel expense4,096
 3,416
 11,448
 9,375
Other operating expenses26,020
 23,452
 70,895
 65,218
Impairment of goodwill, intangibles and other assets
 
 
 42,442
Total operating expenses253,303
 224,852
 714,804
 685,981
Income from operations26,898
 24,700
 79,896
 31,756
        
Other income (expense):     
  
Interest expense(288) (216) (806) (1,230)
Other, net(2) (4) (11) (149)
Total other income (expense)(290) (220) (817) (1,379)
Income before income taxes26,608
 24,480
 79,079
 30,377
Income tax expense8,453
 12,549
 27,131
 15,413
Net income and comprehensive income$18,155

$11,931
 $51,948
 $14,964
        
Net income per share:     
  
Basic$0.60
 $0.39
 $1.72
 $0.49
Diluted$0.60
 $0.39
 $1.71
 $0.49
        
Dividends per share:$0.15
 $0.12
 $0.45
 $0.36

Forward Air Corporation
Condensed Consolidated Balance Sheets
(unaudited and in thousands, except share and per share amounts)
 September 30,
2022
December 31,
2021
Assets
Current assets:  
Cash and cash equivalents$46,846 $37,316 
Accounts receivable, less allowance of $3,477 in 2022 and $3,260 in 2021247,730 208,085 
Other receivables, less allowance of $235 in 2022 and $— in 2021— 8,097 
Other current assets18,391 29,309 
Total current assets312,967 282,807 
Property and equipment, net of accumulated depreciation and amortization of $214,039 in 2022 and $200,867 in 2021230,924 219,095 
Operating lease right-of-use assets147,283 148,198 
Goodwill288,496 266,752 
Other acquired intangibles, net of accumulated amortization of $119,453 in 2022 and $107,336 in 2021155,161 154,717 
Other assets51,228 46,254 
Total assets$1,186,059 $1,117,823 
Liabilities and Shareholders’ Equity 
Current liabilities:  
Accounts payable$50,666 $44,837 
Accrued expenses67,980 61,621 
Other current liabilities4,411 4,614 
Current portion of debt and finance lease obligations7,891 6,088 
Current portion of operating lease liabilities48,611 47,532 
Total current liabilities179,559 164,692 
Finance lease obligations, less current portion11,134 9,571 
Long-term debt, less current portion and debt issuance costs106,934 155,466 
Operating lease liabilities, less current portion102,889 101,409 
Other long-term liabilities57,476 49,624 
Deferred income taxes45,369 43,407 
Shareholders’ equity:  
Preferred stock, $0.01 par value: Authorized shares - 5,000,000; no shares issued or outstanding in 2022 and 2021— — 
Common stock, $0.01 par value: Authorized shares - 50,000,000; issued and outstanding shares - 26,589,697 in 2022 and 26,968,788 in 2021266 270 
Additional paid-in capital267,809 258,474 
Retained earnings414,623 334,910 
Total shareholders’ equity682,698 593,654 
Total liabilities and shareholders’ equity$1,186,059 $1,117,823 
The accompanying notes are an integral part of the condensed consolidated financial statements.

3
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
  
 Nine months ended
 September 30,
2017
 September 30,
2016
  
Operating activities:   
Net income$51,948
 $14,964
Adjustments to reconcile net income to net cash provided by operating activities   
Depreciation and amortization30,578
 28,409
Impairment of goodwill, intangible and other assets

 42,442
Share-based compensation5,965
 6,204
Loss on disposal of property and equipment701
 201
Provision for loss on receivables1,788
 268
Provision for revenue adjustments2,131
 1,570
Deferred income tax132
 661
Excess tax benefit for stock options exercised
 (137)
Changes in operating assets and liabilities   
Accounts receivable(19,417) (8,000)
Other current assets(1,411) (1,354)
Accounts payable and accrued expenses5,296
 9,380
Net cash provided by operating activities77,711
 94,608
    
Investing activities:   
Proceeds from disposal of property and equipment1,497
 1,795
Purchases of property and equipment(13,610) (28,725)
Acquisition of business, net of cash acquired(22,500) (11,800)
Other(73) (673)
Net cash used in investing activities(34,686) (39,403)
    
Financing activities:   
Payments of debt and capital lease obligations(42,715) (41,825)
Proceeds from senior credit facility55,000
 
Proceeds from exercise of stock options5,642
 7,041
Payments of cash dividends(13,584) (10,987)
Repurchase of common stock (repurchase program)(41,983) (29,986)
Common stock issued under employee stock purchase plan226
 215
Excess tax benefit for stock options exercised
 137
Cash settlement of share-based awards for tax withholdings(1,699) (1,800)
Net cash used in financing activities(39,113) (77,205)
Net increase (decrease) in cash3,912
 (22,000)
Cash at beginning of period8,511
 33,312
Cash at end of period$12,423
 $11,312

Table of Contents

    
Forward Air Corporation
Condensed Consolidated Statements of Comprehensive Income
(unaudited and in thousands, except per share amounts)
 Three Months Ended
 September 30,
2022
September 30,
2021
Operating revenues$510,023 $419,625 
Operating expenses: 
Purchased transportation229,326 205,474 
Salaries, wages and employee benefits90,755 84,410 
Operating leases24,965 20,536 
Depreciation and amortization12,269 9,416 
Insurance and claims12,093 9,984 
Fuel expense6,772 4,457 
Other operating expenses62,178 42,872 
Total operating expenses438,358 377,149 
Income from continuing operations71,665 42,476 
Other expense: 
Interest expense(1,544)(973)
Total other expense(1,544)(973)
Income before income taxes70,121 41,503 
Income tax expense17,988 11,000 
Net income from continuing operations52,133 30,503 
Loss from discontinued operation, net of tax— (6,967)
Net income and comprehensive income$52,133 $23,536 
Basic net income (loss) per share
Continuing operations$1.94 $1.12 
Discontinued operation— (0.26)
Net income per basic share$1.94 $0.86 
Diluted net income (loss) per share
Continuing operations$1.93 $1.12 
Discontinued operation— (0.26)
Net income per diluted share$1.93 $0.86 
Dividends per share$0.24 $0.21 


The accompanying notes are an integral part of the condensed consolidated financial statements.





5
4

Table of Contents

Forward Air Corporation
Condensed Consolidated Statements of Comprehensive Income
(unaudited and in thousands, except per share amounts)
 Nine Months Ended
 September 30,
2022
September 30,
2021
Operating revenues$1,492,203 $1,202,498 
Operating expenses:
Purchased transportation693,648 605,299 
Salaries, wages and employee benefits263,194 243,948 
Operating leases71,097 60,073 
Depreciation and amortization34,994 28,067 
Insurance and claims37,257 30,616 
Fuel expense20,951 12,218 
Other operating expenses166,501 114,953 
Total operating expenses1,287,642 1,095,174 
Income from continuing operations204,561 107,324 
Other expense:
Interest expense(3,521)(3,461)
Total other expense(3,521)(3,461)
Income before income taxes201,040 103,863 
Income tax expense50,791 25,969 
Net income from continuing operations150,249 77,894 
Loss from discontinued operation, net of tax— (12,500)
Net income and comprehensive income$150,249 $65,394 
Basic net income (loss) per share
Continuing operations$5.56 $2.84 
Discontinued operation— (0.46)
Net income per basic share1
$5.56 $2.39 
Diluted net income (loss) per share
Continuing operations$5.53 $2.83 
Discontinued operation— (0.46)
Net income per diluted share$5.53 $2.37 
Dividends per share$0.72 $0.63 
1 Rounding may impact summation of amounts.


The accompanying notes are an integral part of the condensed consolidated financial statements.
5

Table of Contents

Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(unaudited and in thousands)
 Nine Months Ended
 September 30,
2022
September 30,
2021
 
Operating activities:
Net income from continuing operations$150,249 $77,894 
Adjustments to reconcile net income of continuing operations to net cash provided by operating activities of continuing operations
Depreciation and amortization34,994 28,067 
Change in fair value of earn-out liability(294)(385)
Share-based compensation expense8,743 8,179 
Provision for revenue adjustments7,302 5,504 
Deferred income tax expense (benefit)1,962 (1,384)
Other417 406 
Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses:
Accounts receivable(43,172)(49,086)
Other receivables8,097 (14,218)
Other current and noncurrent assets6,743 8,198 
Accounts payable, accrued expenses and other long-term liabilities21,773 19,577 
Net cash provided by operating activities of continuing operations196,814 82,752 
Investing activities:
Proceeds from sale of property and equipment1,423 2,339 
Purchases of property and equipment(25,401)(23,015)
Purchases of a business, net of cash acquired(40,433)(23,053)
Net cash used in investing activities of continuing operations(64,411)(43,729)
Financing activities:
Repayments of finance lease obligations(4,209)(1,445)
Proceeds from credit facility— 45,000 
Payments on credit facility(48,625)— 
Payment of debt issuance costs— (119)
Payment of earn-out liability(91)(6,519)
Proceeds from issuance of common stock upon stock option exercises206 3,563 
Payments of dividends to shareholders(19,461)(17,270)
Repurchases and retirement of common stock(47,774)(48,989)
Proceeds from common stock issued under employee stock purchase plan374 388 
Payment of minimum tax withholdings on share-based awards(3,293)(3,074)
Contributions from subsidiary held for sale— 1,118 
Net cash used in financing activities from continuing operations(122,873)(27,347)
Net increase in cash and cash equivalents of continuing operations9,530 11,676 
Cash from discontinued operation:
Net cash used in operating activities of discontinued operation— (6,902)
Net cash provided by investing activities of discontinued operation— 8,020 
Net cash used in financing activities of discontinued operation— (1,118)
Net increase in cash and cash equivalents9,530 11,676 
Cash and cash equivalents at beginning of period of continuing operations37,316 40,254 
Cash at beginning of period of discontinued operation— — 
Net increase in cash and cash equivalents9,530 11,676 
Less: cash at end of period of discontinued operation— — 
Cash and cash equivalents at end of period of continuing operations$46,846 $51,930 

The accompanying notes are an integral part of the condensed consolidated financial statements.
6

Table of Contents

Forward Air Corporation
Condensed Consolidated Statements of Shareholders’ Equity
(unaudited and in thousands)
 Common StockAdditional Paid-in
Capital
Retained EarningsTotal Shareholders’ Equity
 SharesAmount
Balance at December 31, 202126,969 $270 $258,474 $334,910 $593,654 
Net income— — — 42,686 42,686 
Stock options exercised— 206 — 206 
Share-based compensation expense— — 2,761 — 2,761 
Payment of dividends to shareholders— — (6,506)(6,502)
Payment of minimum tax withholdings on share-based awards(30)— — (3,254)(3,254)
Repurchases and retirement of common stock(176)(2)— (17,778)(17,780)
Issuance of share-based awards96 (1)— — 
Balance at March 31, 202226,862 $269 $261,444 $350,058 $611,771 
Net income— — — 55,430 55,430 
Common stock issued under employee stock purchase plan— 374 — 374 
Share-based compensation expense— — 3,306 — 3,306 
Payment of dividends to shareholders— — (6,497)(6,492)
Payment of minimum tax withholdings on share-based awards(1)— — (39)(39)
Issuance of share-based awards14 — — — — 
Balance at June 30, 202226,880 $269 $265,129 $398,952 $664,350 
Net income— — — 52,133 52,133 
Share-based compensation expense— — 2,676 — 2,676 
Payment of dividends to shareholders— — (6,471)(6,467)
Repurchases and retirement of common stock(290)(3)— (29,991)(29,994)
Balance at September 30, 202226,590 $266 $267,809 $414,623 $682,698 
7

Table of Contents

 Common StockAdditional Paid-in
Capital
Retained EarningsTotal Shareholders’ Equity
 SharesAmount
Balance at December 31, 202027,316 $273 $242,916 $304,140 $547,329 
Net income— — — 11,181 11,181 
Stock options exercised40 — 2,147 — 2,147 
Share-based compensation expense— — 2,613 — 2,613 
Payment of dividends to shareholders— — (5,800)(5,797)
Payment of minimum tax withholdings on share-based awards(35)— — (2,744)(2,744)
Repurchases and retirement of common stock(114)(1)— (9,997)(9,998)
Issuance of share-based awards111 (1)— — 
Balance at March 31, 202127,318 $273 $247,678 $296,780 $544,731 
Net income— — — 30,677 30,677 
Stock options exercised26 — 1,416 — 1,416 
Common stock issued under employee stock purchase plan— 388 — 388 
Share-based compensation expense— — 2,981 — 2,981 
Payment of dividends to shareholders— — (5,771)(5,768)
Payment of minimum tax withholdings on share-based awards(1)— — (82)(82)
Repurchases and retirement of common stock(252)(2)— (23,992)(23,994)
Issuance of share-based awards24 — — — — 
Balance at June 30, 202127,120 $271 $252,466 $297,612 $550,349 
Net income— — — 23,536 23,536 
Share-based compensation expense— — 2,601 — 2,601 
Payment of dividends to shareholders— — (5,709)(5,705)
Payment of minimum tax withholdings on share-based awards(3)— — (248)(248)
Repurchases and retirement of common stock(169)(1)— (14,996)(14,997)
Issuance of share-based awards10 — — — — 
Balance at September 30, 202126,958 $270 $255,071 $300,195 $555,536 
The accompanying notes are an integral part of the condensed consolidated financial statements.
8

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022



1.    Description of Business and Basis of Presentation


Basis of Presentation and Principles of Consolidation

Forward Air Corporation and its subsidiaries (“Forward Air” or the “Company) is a leading asset-light freight and logistics company. Forward Air Corporation's ("the Company", "We", "Our") services can be classified into four principalThe Company has two reportable segments: Expedited LTL, Truckload Premium Services ("TLS"), IntermodalFreight and Pool Distribution ("Pool") (See note 11).Intermodal. The Company conducts business in the United States and Canada.

Through theThe Expedited LTLFreight segment we operate a comprehensive national network to provideprovides expedited regional, inter-regional and national less-than-truckload ("LTL"(“LTL), truckload and final mile services. Expedited LTLFreight also offers customers local pick-up and delivery and other services including shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.


Through our TLS segment, we provide expedited truckload brokerage, dedicated fleet services, as well as high security and temperature-controlled logistics services in the United States and Canada.

OurThe Intermodal segment provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads. Intermodal also offers dedicated contract and container freight station (“CFS) warehouse and handling services. Today, Intermodal operates primarily

The Company’s condensed consolidated financial statements include Forward Air Corporation and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

The condensed consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Midwest and Southeast, withCompany’s Annual Report on Form 10-K for the year ended December 31, 2021. Results for interim periods are not necessarily indicative of the results for the year.

On April 23, 2020, the Board of Directors (the “Board”) of the Company approved a smaller operational presence instrategy to divest the Southwest.

In our Pool Distribution segment, we providebusiness (“Pool), and the sale of Pool was completed on February 12, 2021. Pool provided high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region. We offer this service throughoutAs a result of the Mid-Atlantic, Southeast, Midweststrategy to divest of Pool, the results of operations for Pool were presented as a discontinued operation in the Condensed Consolidated Statements of Comprehensive Income for the prior period. Unless otherwise noted, amounts, percentages and Southwest United States.discussion for the prior period reflect the results of operations, financial condition and cash flows from the Company’s continuing operations. Refer to Note 3, Discontinued Operation, for further discussion.


The accompanying unaudited condensed consolidated financial statements have been prepared
2.     Revenue Recognition

Revenue is recognized when the Company satisfies the performance obligation by the delivery of a shipment in accordance with United States generally accepted accounting principles for interim financial informationcontractual agreements, bills of lading (“BOLs”) and withgeneral tariff provisions. The amount of revenue recognized is measured as the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by United States generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Company’s operating results are subject to seasonal trends when measured on a quarterly basis; therefore operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. For further information, refer to the consolidated financial statements and notes thereto included in the Forward Air Corporation Annual Report on Form 10-K for the year ended December 31, 2016.

The accompanying unaudited condensed consolidated financial statements ofconsideration the Company include Forward Air Corporation and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to the prior period financial information to conform to the current year presentation.

2.    Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board ("FASB") issued guidance that changes the accounting for certain aspects of share-based payments to employees. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital ("APIC") pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for, and we elected, to account for forfeitures as they occur rather than on an estimated basis. We adopted this guidance in January 2017 and the elimination of APIC pools resulted in approximately $147 of income tax benefit during the nine months ended September 30, 2017. This guidance has been applied prospectively and no prior periods have been adjusted.

In February 2016, the FASB, issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The guidance will be effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. We are evaluating the impact of the future adoption of this standard on our consolidated financial statements.
In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled toreceive in exchange for those services pursuant to a contract with a customer. A contract exists once the Company enters into a contractual agreement with a customer. The Company does not recognize revenue in cases where collectibility is not probable, and defers recognition until collection is probable or payment is received.


The Company generates revenue from the delivery of a shipment and the completion of related services. Revenue for the delivery of a shipment is recorded over time to coincide with when customers simultaneously receive and consume the benefits of the delivery services. Accordingly, revenue billed to a customer for the transportation of freight are recognized over the transit period as the performance obligation to the customer is satisfied. The Company determines the transit period for a shipment based on the pick-up date and the delivery date, which may be estimated if delivery has not occurred as of a reporting period. The determination of the transit period and how much of it has been completed as of a given reporting date may require the Company to make judgments that impact the timing of revenue recognized. For delivery of shipments with a pick-up date in one reporting period and a delivery date in another reporting period, the Company recognizes revenue based on relative transit
6
9

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022

goods or services. The guidance provides a five-step analysistime in each reporting period. A portion of transactions to determine when and howthe total revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be billed to the customer after completion of a delivery is recognized before contingenciesin each reporting period based on the percentage of total transit time that has been completed at the end of the applicable reporting period. Upon delivery of a shipment or related service, customers are resolved in certain circumstances. The guidance also requires enhanced disclosures regardingbilled according to the applicable payment terms. Related services are a separate performance obligation and include accessorial charges such as terminal handling, storage, equipment rentals and customs brokerage.

Revenue is classified based on the line of business as the Company believes that best depicts the nature, amount, timing and uncertaintyamount of revenue and cash flows arising from an entity’s contracts with customers. The guidanceflows. For all lines of business, the Company records revenue on a gross basis as it is effectivethe principal in the transaction as the Company has discretion to determine the amount of consideration. Additionally, the Company has the discretion to select drivers and other vendors for the interimservices provided to customers. These factors, discretion in the amount of consideration and annual periods beginning on or after December 15, 2017. The guidance permits the useselection of either a full retrospective or modified retrospective adoption approach with a cumulative effect adjustment recorded in either scenario as necessary upon transition.

As permitted by the guidance, we will implement the use of full retrospective presentation. While evaluating principal versus agent relationships under the new standard, we determined that we will transition certaindrivers and other vendors, support revenue streams from an agent to principal relationship. This will cause these revenue streams and their associated costs to be recognized on a gross basis that have historically been netted. This would increase revenuebasis.

3.    Discontinued Operation

As previously disclosed, on April 23, 2020, the Company made a decision to divest of Pool and expenses by approximately $46,000the sale was completed on February 12, 2021. As a result, the results of Pool were classified to “Loss from discontinued operation, net of tax” in the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 20172021. Certain corporate overhead and $33,000other costs previously allocated to Pool for segment reporting purposes did not qualify for classification within discontinued operation and were allocated to continuing operations. These costs were classified to the eliminations column in the segment reconciliation in Note 13, Segment Reporting.
Transition Services Agreement
On February 12, 2021, the Company entered into a Transition Services Agreement (“TSA) with TOG FAS Holdings LLC, the buyer of the Pool business. Under the TSA, the Company performed certain services on an interim basis in order to facilitate the orderly transition of the Pool business. The effective date of the TSA was February 12, 2021 and remained in effect until the date all services were completed, but no more than six months following the effective date. The TSA provided the right to extend the term of the TSA with no limit on the number of the mutually agreed upon extensions. In exchange for the same periodservices performed by the Company under the TSA, the Company received a monthly service charge. For the three and nine months ended September 30, 2021, the Company recognized $229 and $641, respectively, in “Other operating expenses in the Condensed Consolidated Statements of 2016Comprehensive Income, for the services performed under the TSA. The TSA ended in October 2021 when all services were completed.

Additionally, under the TSA, the Company remitted payments to outside vendors on behalf of TOG FAS Holdings LLC for expenses incurred by the Pool business up to a limit of $18,000. The Company was reimbursed by TOG FAS Holdings LLC within 60 days from the end of the month in which the payment was remitted. As of September 30, 2022 and would have no impact on operating income.

In addition, based onDecember 31, 2021, the Company recorded a reviewnet receivable in the amount of our customer shipping arrangements, we currently believezero and $8,097 respectively, in “Other receivables in the implementation of this standard will change our revenue recognition policy from recognizing revenue upon shipment completion to recognizing revenue over time based onCondensed Consolidated Balance Sheets for the progress toward completion of shipments in transit at each period end.  While the timing of revenue recognition will be accelerated,reimbursement due to the short duration of our transit times and relatively low dollar value of individual shipments,Company. The Company evaluates the anticipated impact on our consolidated financial position, revenue and results from operations is not expected to be significant. 




3.    Acquisitions and Goodwill

Acquisition of Atlantic, Triumph and Ace

As partcollectability of the Company's strategyreceivable at least quarterly and if the Company is aware of the inability of TOG FAS Holdings LLC to expandmeet its Intermodal operations,financial obligations to the Company, the Company will record a specific reserve in May 2017, we acquired certain assetsorder to reduce the receivable to the amount the Company reasonably believes will be collected. As of Atlantic TruckingSeptember 30, 2022, the Company Inc., Heavy Duty Equipment Leasing, LLC, Atlantic Logistics, LLC and Transportation Holdings, Inc. (together referred to as “Atlantic” in this note) for $22,500 andrecorded a potential earnout of $1,000. The acquisition was funded by a combination of cash on hand and funds from our revolving credit facility. Atlantic was a privately held provider of intermodal, drayage and related services headquartered in Charleston, South Carolina. It also has terminal operations in Atlanta, Charlotte, Houston, Jacksonville, Memphis, Nashville, Norfolk and Savannah. These locations allow Intermodal to significantly expand its footprintspecific reserve in the southeastern region. Duringamount of $235 in order to reduce the year ended December 31, 2016, Atlantic generated approximately $62,300 in revenue.
In August 2016, we also acquired certain assets of Triumph Transport, Inc. and Triumph Repair Service, Inc. (together referredreceivable to as “Triumph”) for $10,100 and an earnout of $1,250 paid in September 2017. The assets, liabilities, and operating results of Triumph have been included in the Company's consolidated financial statements from the date of acquisition and have been assigned to the Intermodal reportable segment. In January 2016,amount the Company also acquired certain assets of Ace Cargo, LLC ("Ace") for $1,700.reasonably believes will be collected.
The assets, liabilities, and operating results of Atlantic, Triumph and Ace have been included in the Company's consolidated financial statements from the respective dates of acquisition and have been assigned to the Intermodal reportable segment. During the third quarter of 2017, Atlantic contributed $14,745 in revenue and $1,119 in operating income.
Allocations of Purchase Prices
The following table presents the allocations of the Atlantic, Triumph and Ace purchase prices to the assets acquired and liabilities assumed based on their estimated fair values and resulting residual goodwill (in thousands):


7
10

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)September 30, 2022
Summarized Discontinued Operation Financial Information

A summary of the results of operations classified as a discontinued operation, net of tax, in the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 is as follows:

 Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
Operating revenue$— $17,087 
Operating expenses:
Purchased transportation— 4,290 
Salaries, wages and employee benefits— 9,674 
Operating leases— 2,907 
Depreciation and amortization— — 
Insurance and claims— 929 
Fuel expense— 644 
Other operating expenses— 2,087 
   Impairment charge6,967 6,967 
Total operating expenses6,967 27,498 
Loss from discontinued operation(6,967)(10,411)
Loss on sale of business— (2,860)
Loss from discontinued operation before income taxes(6,967)(13,271)
Income tax benefit— (771)
Loss from discontinued operation, net of tax$(6,967)$(12,500)

4.    Acquisitions

Intermodal Acquisitions

In February 2021, the Company acquired certain assets and liabilities of Proficient Transport Incorporated and Proficient Trucking, Inc. (together “Proficient Transport) for $16,339 and a potential earn-out of up to $2,000.

The purchase agreement for Proficient Transport included an earn-out up to $2,000 based on the achievement of certain revenue milestones over a one-year period, beginning March 1, 2021. The estimated fair value of the earn-out liability on the date of acquisition was $829. The fair value was based on the estimated one-year performance of the acquired customer revenue and was calculated using the option pricing method.

The fair value of the earn-out liability was adjusted at each reporting period based on changes in the expected cash flows and related assumptions used in the option pricing method. During the three and nine months ended September 30, 2022, the fair value of the earn-out changed by zero and ($294) respectively, and the change in fair value was recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income. During the three and nine months ended September 30, 2021, the fair value of the earn-out changed by zero and ($333) respectively, and the change in fair value was recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income. The one-year period ended in the first quarter of 2022 and the Company paid $91 in the second quarter of 2022 based on the terms of the purchase agreement. As of December 31, 2021, the fair value of the earn-out liability was $385, which was reflected in “Other current liabilities” in the Condensed Consolidated Balance Sheets.

11

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited and in thousands, except per share data)
September 30, 20172022


AtlanticTriumph & Ace

May 7, 20172016
Tangible assets: 

Property and equipment$1,821
$1,294
Total tangible assets1,821
1,294
Intangible assets: 

Non-compete agreements1,150
139
Customer relationships13,400
5,335
Goodwill6,860
6,282
Total intangible assets21,410
11,756
Total assets acquired23,231
13,050

 
Liabilities assumed: 
Other liabilities590
1,250
Debt and capital lease obligations141

Total liabilities assumed731
1,250
Net assets acquired$22,500
$11,800
The above purchase price allocation for Atlantic is preliminary, asIn November 2021, the Company is still in the process of finalizing the valuation of the acquired certain assets and liabilities assumed.of BarOle Trucking, Inc. (“BarOle”) for $35,436. BarOle is an intermodal drayage company headquartered in Roseville, Minnesota. The above estimated fair valuesacquisition of BarOle provides additional capacity and resources to meet customer demands in the intermodal market, and extends the service footprint to the Minneapolis-Saint Paul, Minnesota area. In addition, BarOle has a larger terminal location, which allows for further expansion in the future. The acquisition was financed by cash flows from operations. The results of BarOle have been included in the Company’s Condensed Consolidated Financial Statements as of and from the date of acquisition. The associated goodwill has been included in the Company’s Intermodal reportable segment.

In May 2022, the Company acquired certain assets and liabilities of Edgmon Trucking, LLC (“Edgmon”) for $40,433 and a potential earn-out of up to $5,000, based on the achievement of certain profit contribution milestones over a nineteen month period, beginning May 30, 2022. Edgmon, headquartered in Kent, Washington, operates a terminal in Kent and a yard in Seattle, servicing both the Port of Seattle and the Port of Tacoma. The acquisition of Edgmon marks the Company’s first Intermodal location on the West Coast, a key area of expansion in the Intermodal strategic growth plan. The acquisition was financed by cash flows from operations. The results of Edgmon have been included in the Company’s Condensed Consolidated Financial Statements as of and from the date of acquisition. The associated goodwill has been included in the Company’s Intermodal reportable segment.

Fair Value of Assets Acquired and Liabilities Assumed

Assets acquired and liabilities assumed as of the acquisition date are presented in the following table:
BarOleEdgmon
November 30, 2021May 30, 2022
Tangible assets:
Accounts receivable$2,481 $4,831 
Property and equipment6,464 613 
Total tangible assets8,945 5,444 
Intangible assets:
Customer relationships11,120 17,950 
Non-compete agreements221 465 
Goodwill15,418 17,003 
Total intangible assets26,759 35,418 
Total assets acquired35,704 40,862 
Liabilities assumed:
Current liabilities268 429 
Total liabilities assumed268 429 
Net assets acquired$35,436 $40,433 

The preliminary purchase price for BarOle and Edgmon has been allocated to assets acquired and liabilities assumed for Atlantic are based on the Company’s best estimates and assumptions using the information that was available as of the acquisition date through the date of this filing. The provisional measurements of identifiable assets and liabilities, and the resulting goodwill related to these acquisitions, are subject to adjustments in subsequent periods as the Company finalizes its purchase price allocations, including the third-party valuations. During the nine months ended September 30, 2022, the Company recorded measurement period adjustments to the provisional amounts initially recorded for acquired definite-lived intangible assets have the following useful lives:

Useful Lives

AtlanticTriumph & Ace
Customer relationships15 years15 years
Non-compete agreements5 years5 years
The fair value of theproperty and equipment and acquired customer relationships and non-compete agreements related to the BarOle acquisition. The measurement period adjustments resulted in a $1,113 increase to acquired property and equipment and a combined $5,854 decrease to acquired customer relationships assets were estimated using an income approach (level 3). Under this method, an intangible asset's fair value is equaland non-compete agreements, with a corresponding net increase to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To estimate fair value, the Company used cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset.goodwill. The Company believes thatexpects to finalize the level and timing of cash flows appropriately reflect market participant assumptions. Cash flows were assumed to extend throughvaluations as soon as practicable, but no later than one year from the remaining economic useful life of each class of intangible asset.
Escrow Funds

In 2015, the Company acquired CLP Towne Inc. (“Towne”) resulting in Towne becoming an indirect, wholly-owned subsidiary of the Company. At the time ofrespective acquisition $16,500 of the total purchase price was placed into an escrow account, to settle any shortfall in Towne’s net working capital and to be available for a period of time to settle certain possible claims against Towne’s common stockholders for indemnification. During the second quarter of 2017, we received $2,525 from this escrow for reimbursement of various claims. Approximately $1,621 was credited to operating leases and other operating expenses to offset related costs incurred in previous periods. The remaining $904 was used to establish reserves for various pending claims.

Goodwill

The Company conducted its annual impairment assessments and tests of goodwill for each reporting unit as of June 30, 2017 and no impairment charges were required. The first step of the goodwill impairment test is the Company's assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, including goodwill. When performing the qualitative assessment, the Company considers the impact of factors including, but not limited to, macroeconomic and industry conditions, overall financial performance of each reporting unit, litigation and new legislation. If based on the qualitative assessments, the Company believes it more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, or periodically as deemed appropriate by management, the Company

dates.
8
12

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022


will prepare an estimationThe estimated useful lives of the respective reporting unit's fair value utilizing a quantitative approach.  If a quantitative fair value estimation is required, the Company estimates the fair value of the applicable reporting units, using a combination of discounted projected cash flows and market valuations for comparable companiesacquired intangible assets as of the valuation date.  The Company's inputs into the fair value estimates for goodwillacquisition date are classified within level 3 of the fair value hierarchy as definedsummarized in the FASB Accounting Standards Codificationfollowing table:
Estimated Useful Lives
BarOleEdgmon
Customer relationships8 years7 years
Non-compete agreements5 years5 years

5.    Goodwill and Intangible Assets

Goodwill

Changes in the Hierarchy of Generally Accepted Accounting Principles (“the FASB Codification”). If this estimation of fair value indicates that impairment potentially exists, the Company will then measure thecarrying amount of the impairment, if any.  Goodwill impairment exists when the estimated implied fair value of goodwill is less than its carrying value.  Changes in strategy or market conditions could significantly impact these fair value estimates and require adjustments to recorded asset balances.

We have five reporting units - Expedited LTL, TLX Forward Air, Intermodal, Pool Distribution and Total Quality, Inc. ("TQI"). The TLX Forward Air and the TQI reporting units are assigned to the Truckload Premium Services reporting segment. Currently, there is no goodwill assigned to the TLX Forward Air reporting unit.

In 2016, due to the financial performance of the Total Quality, Inc. ("TQI") reporting unit falling notably short of previous projections, declining revenue from significant customers and strategic initiatives not having the required impact on financial results, the Company reduced TQI's projected cash flows and as a result the estimate of TQI's fair value no longer exceeded the respective carrying value. As a result of these assessments, the Company concluded that an impairment loss was probable and could be reasonably estimated for the TQI reporting unit, which is included in the TLS reportable segment. Consequently, the Company recorded a goodwill impairment charge of $25,686 for the TQI reporting unit during the three months ended June 30, 2016.

The following is a summary of the changes to goodwill for the nine months ended September 30, 2017. Approximately $112,3912022 are summarized as follows:

Expedited FreightIntermodalConsolidated
Balance as of December 31, 2021$169,288 $97,464 $266,752 
Acquisition— 17,003 17,003 
Acquisition adjustment— 4,741 4,741 
Balance as of September 30, 2022$169,288 $119,208 $288,496 

The Company’s accumulated goodwill impairment is $25,686 related to impairment charges the Company recorded during 2016 pertaining to its Truckload Services reporting unit. The Truckload Services reporting unit operates within the Expedited Freight reportable segment. As of September 30, 2022, approximately $209,353 of goodwill is deductible for tax purposes.

 Expedited LTL TLS Pool Distribution Intermodal Total
  Accumulated  Accumulated  Accumulated  Accumulated  
 GoodwillImpairment GoodwillImpairment GoodwillImpairment GoodwillImpairment Net
Beginning balance, December 31, 2016$97,593
$

$45,164
$(25,686)
$12,359
$(6,953)
$62,198
$

$184,675
Atlantic Acquisition








6,860


6,860
Ending balance, September 30, 2017$97,593
$

$45,164
$(25,686)
$12,359
$(6,953)
$69,058
$

$191,535
Intangibles and Other Long-Lived Assets
Additionally, the Company reviews its long-lived assetsGoodwill is tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is recognized on assets classifiedan annual basis and more often if indications of impairment exist. The Company conducts its annual impairment analyses as held and used when the sum of undiscounted estimated cash flows expected to result from the use of the asset is less than the carrying value. If such measurement indicates a possible impairment, the estimated fair value of the asset is compared to its net book value to measure the impairment charge, if any. In conjunction with the June 30 2016 TQI goodwilleach year. There have been no indicators of impairment assessment, the Company determined there were indicators that TQI's customer relationship and non-compete intangible assets were impaired as the undiscounted cash flows associated with the applicable assets no longer exceeded the related assets' net book values. The Company then estimated the current market values of the customer relationship and non-compete assets using an income approach (level 3). As a result of these estimates the Company recorded an impairment charge of $16,501 related to TQI customer relationships during the three months ended JuneSeptember 30, 2016.2022.

In addition, during the three months ended June 30, 2016, the Company also discontinued use of an owned maintenance facility and began efforts to sell the property. In conjunction with these actions, the Company incurred a $255 impairment charge that was estimated using current offers received to sell the property less estimated cost to sell the facility.







9
13

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022

Other Intangible Assets
4.    Share-Based Payments

Changes in the carrying amount of acquired intangible assets during the nine months ended September 30, 2022 are summarized as follows:

Gross Carrying Amount
Customer Relationships1
Non-Compete AgreementsTrade NamesTotal
Balance as of December 31, 2021$251,377 $9,176 $1,500 $262,053 
Acquisition17,950 465 — 18,415 
Acquisition adjustment(5,162)(692)— (5,854)
Balance as of September 30, 2022$264,165 $8,949 $1,500 $274,614 

Accumulated Amortization
Customer Relationships1
Non-Compete AgreementsTrade NamesTotal
Balance as of December 31, 2021$99,093 $6,743 $1,500 $107,336 
Amortization expense11,507 610 — 12,117 
Balance as of September 30, 2022$110,600 $7,353 $1,500 $119,453 
1Carrying value as of September 30, 2022 and December 31, 2021 is inclusive of $16,501 of accumulated impairment.


6.    Stock Incentive Plans

Stock Incentive Plan

The Company’s general practice has been to make a single annual grant ofCompany recorded share-based compensation to key employeesexpense as follows for the three and to make other employee grants only in connection with new employment or promotions.  Forms of share-based compensation granted to employees bynine months ended September 30, 2022 and 2021:

Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Salaries, wages and employee benefits - continuing operations$2,355 $2,283 $7,661 $7,015 
Salaries, wages and employee benefits - discontinued operation— — — 16 
Total share-based compensation expense$2,355 $2,283 $7,661 $7,031 

In May 2016, the Company includeadopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) for the issuance of up to 2,000 common shares to employees. As of September 30, 2022, approximately 693 shares remain available for grant under the Omnibus Plan.

Stock Options
Certain executives are eligible to receive grants of stock options. Stock options non-vested sharesvest over a three-year period from the date of common stock (“non-vested share”), and performance shares.grant. Share-based compensation expense associated with these awards is amortized ratably over the vesting period. The Company also typically makes a single annual grant of non-vested shares to non-employee directors in conjunction withestimates the annual election of non-employee directors to the Board of Directors.  Share-based compensation is based on the grant date fair value of the instrument and is recognized ratably over the requisite service period, or vesting period. All share-based compensation expense is recognized in salaries, wages and employee benefits.

Employee Activity - Stock Options
Stock option grants to employees generally expire seven years from the grant date and typically vest ratably over a three-year period.  The Company usedusing the Black-Scholes option-pricing model to estimate the grant-date fair value of options granted.  The weighted-average fair value of options granted and assumptions used to estimate their fair value during the nine months ended September 30, 2017 and 2016 were as follows:model.


14
    

Three months ended

September 30,
2017

September 30,
2016
Expected dividend yield1.3%
%
Expected stock price volatility28.7%
%
Weighted average risk-free interest rate2.0%
%
Expected life of options (years)6.0

0
Weighted average grant date fair value$14

$
    

Nine months ended

September 30,
2017

September 30,
2016
Expected dividend yield1.3%
1.0%
Expected stock price volatility28.7%
29.0%
Weighted average risk-free interest rate2.0%
1.3%
Expected life of options (years)6.0

6.0
Weighted average grant date fair value$13

$12


10

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022

Stock option transactions during the nine months ended September 30, 2022 on a continuing operations basis were as follows:

Stock OptionsWeighted-Average Exercise Price
Outstanding as of January 1342 $58.44 
Granted64 106.13 
Exercised(3)60.42 
Forfeited(6)106.29 
Outstanding as of September 30397 $65.32 

As of September 30, 2022, the total share-based compensation expense related to unvested stock options not yet recognized was $1,687, and the weighted-average period over which it is expected to be recognized is approximately two years.

Restricted Shares

The following tables summarizeCompany’s primary long-term incentive plan is a restricted share award plan that entitles employees to receive shares of the Company’s employeecommon stock option activitysubject to vesting requirements based on continued employment. Shares granted under the restricted share award plan are restricted from sale or transfer until vesting, and related information:the restrictions lapse in three equal installments beginning one year after the date of grant. Dividends are paid in cash on a current basis throughout the vesting period. Share-based compensation expense associated with these awards is amortized ratably over the requisite service period.



Three months ended September 30, 2017







Weighted-



Weighted-
Aggregate
Average



Average
Intrinsic
Remaining

Options
Exercise
Value
Contractual

(000)
Price
(000)
Term
Outstanding at June 30, 2017507

$44




Granted5

54




Exercised(18)
41




Forfeited(22)
47




Outstanding at September 30, 2017472

$44

$3,963

4.5
Exercisable at September 30, 2017255

$42

$2,671

3.3

Three months ended

September 30,
2017

September 30,
2016
Share-based compensation for options$294

$377
Tax benefit for option compensation$105

$140
Unrecognized compensation cost for options, net of estimated forfeitures$1,909

$2,036
Weighted average period over which unrecognized compensation will be recognized (years)1.9


        

Nine months ended September 30, 2017







Weighted-



Weighted-
Aggregate
Average



Average
Intrinsic
Remaining

Options
Exercise
Value
Contractual

(000)
Price
(000)
Term
Outstanding at December 31, 2016564

$41




Granted123

48




Exercised(169)
34




Forfeited(46)
46




Outstanding at September 30, 2017472

$44

$3,963

4.5
Exercisable at September 30, 2017255

$42

$2,671

3.3
    

Nine months ended

September 30,
2017

September 30,
2016
Share-based compensation for options$993

$1,101
Tax benefit for option compensation$354

$407
Unrecognized compensation cost for options, net of estimated forfeitures$1,909

$2,036
Weighted average period over which unrecognized compensation will be recognized (years)1.9
  

11

Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, exceptRestricted share and per share data)
(Unaudited)
transactions during the nine months ended September 30, 2017
2022 on a continuing operations basis were as follows:

Restricted SharesWeighted-Average Grant Date Fair Value
Outstanding as of January 1191 $69.84 
Granted80 105.66 
Vested(91)67.36 
Forfeited(25)84.20 
Outstanding as of September 30155 $87.42 
Employee Activity - Non-vested Shares

Non-vested share grants to employees vest ratably over a three-year period.  The non-vested shares’ fair values were estimated using closing market prices on the dayAs of grant. The following tables summarize the Company’s employee non-vested share activity and related information:


Three months ended September 30, 2017



Weighted-
Aggregate

Non-vested
Average
Grant Date

Shares
Grant Date
Fair Value

(000)
Fair Value
(000)
Outstanding and non-vested at June 30, 2017232

$47


Granted1

54


Vested




Forfeited(4)
47


Outstanding and non-vested at September 30, 2017229

$47

$10,658


Three months ended

September 30,
2017

September 30,
2016
Share-based compensation for non-vested shares$1,243

$1,176
Tax benefit for non-vested share compensation$444

$434
Unrecognized compensation cost for non-vested shares, net of estimated forfeitures$7,410

$7,147
Weighted average period over which unrecognized compensation will be recognized (years)1.9


      

Nine months ended September 30, 2017



Weighted-
Aggregate

Non-vested
Average
Grant Date

Shares
Grant Date
Fair Value

(000)
Fair Value
(000)
Outstanding and non-vested at December 31, 2016222

$45


Granted127

48


Vested(104)
45


Forfeited(16)
47


Outstanding and non-vested at September 30, 2017229

$47

$10,658
    

Nine months ended

September 30,
2017

September 30,
2016
Share-based compensation for non-vested shares$3,762

$3,434
Tax benefit for non-vested share compensation$1,343

$1,270
Unrecognized compensation cost for non-vested shares, net of estimated forfeitures$7,410

$7,147
Weighted average period over which unrecognized compensation will be recognized (years)1.9
  

12

Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2017
2022, the total share-based compensation expense related to restricted shares not yet recognized was $9,402, and the weighted-average period over which it is expected to be recognized is approximately two years.


Employee Activity - Performance SharesAwards


The Company annually grants performance shares to key employees.  Under the terms of the performance share agreements, following the end of a three-year performance period, the Company will issue to the employees a calculated number of common stock sharesPerformance awards are based on the three year performance ofachieving certain financial targets, such as targets for earnings before interest, taxes, depreciation and amortization, and the Company’s total shareholder return as compared to the total shareholder return of a selected peer group.  No shares may be issued ifgroup, as determined by the Company's total shareholder return outperforms 30% or lessBoard. Performance targets are set at the beginning of each three-year measurement period. Share-based compensation expense associated with these awards is amortized ratably over the vesting period. Depending on the financial target, the compensation expense is determined based on the projected assessment of the peer group, butlevel of performance that will be achieved. The Company estimates the number of shares issued may be doubled if the Company's total shareholder return performs better than 90% of the peer group.  The fair value of the performance shares was estimatedgrants with a financial target based on the Company’s total shareholder return using a Monte Carlo simulation. The weighted average assumptions used in the Monte Carlo estimate were as follows:simulation model.


15

Nine months ended

September 30,
2017

September 30,
2016
Expected stock price volatility24.7%
22.3%
Weighted average risk-free interest rate1.4%
0.8%

The following tables summarize the Company’s employee performance share activity, assuming median share awards, and related information:

Three months ended September 30, 2017



Weighted-
Aggregate

Performance
Average
Grant Date

Shares
Grant Date
Fair Value

(000)
Fair Value
(000)
Outstanding and non-vested at June 30, 201772

$57


Granted1

54


Forfeited(4)
$57


Outstanding and non-vested at September 30, 201769

$57

$3,956


Three months ended

September 30,
2017

September 30,
2016
Share-based compensation for performance shares$249

$367
Tax benefit for performance share compensation$88

$136
Unrecognized compensation cost for performance shares, net of estimated forfeitures$1,740

$2,076
Weighted average period over which unrecognized compensation will be recognized (years)1.8



13

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022

Performance award transactions during the nine months ended September 30, 2022 on a continuing operations basis were as follows assuming target levels of performance:
Performance AwardsWeighted-Average Grant Date Fair Value
Outstanding as of January 179 $75.61 
Granted14 127.29 
Earned(7)63.40 
Forfeited or unearned(16)74.79 
Outstanding as of September 3070 $87.74 
      

Nine months ended September 30, 2017



Weighted-
Aggregate

Performance
Average
Grant Date

Shares
Grant Date
Fair Value

(000)
Fair Value
(000)
Outstanding and non-vested at December 31, 201680

$55


Granted26

56


Additional shares awarded based on performance




Vested




Forfeited(37)
51


Outstanding and non-vested at September 30, 201769

$57

$3,956

As of September 30, 2022, the total share-based compensation expense related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was $3,448, and the weighted-average period over which it is expected to be recognized is approximately two years.
    

Nine months ended

September 30,
2017

September 30,
2016
Share-based compensation for performance shares$689

$1,080
Tax benefit for performance share compensation$246

$400
Unrecognized compensation cost for performance shares, net of estimated forfeitures$1,740

$2,076
Weighted average period over which unrecognized compensation will be recognized (years)1.8
  


Employee Activity - Employee Stock Purchase Plan

Under the 2005 Employee Stock Purchase Plan (the “ESPP”), which has been approved by shareholders, the Company is authorized to issue up to a remaining 376,625318 shares of common stock to employees of the Company.employees. These shares may be issued at a price equal to 90% of the lesser of the market value on thethe first day or the last day of each six monthsix-month purchase period. Common stock purchases are paid for through periodic payroll deductions and/or up to two large lump sum contributions. For

Employee stock purchase plan activity and related information was as follows on a continuing operations basis:

Nine Months Ended
September 30,
2022
September 30,
2021
Shares purchased by participants under the ESPP
Average purchase price$82.76 $68.76 
Weighted-average fair value of each purchase right under the ESPP granted¹$9.20 $20.99 
Share-based compensation expense for ESPP$42 $118 
¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period.

Director Restricted Shares

Under the nine months endedAmended and Restated Non-Employee Director Stock Plan (the “Amended Plan”), approved in May 2007 and further amended in February 2013 and January 2016, up to 360 of common shares may be issued. As of September 30, 2017, participants2022, approximately 60 shares remain available for grant under the plan purchased 5,188Amended Plan. Under the Amended Plan, each non-employee director receives an annual grant of restricted shares at an average price of $43.59 per share. For the nine months ended September 30, 2016, participants underCompany’s common stock. The restricted shares vest on the plan purchased 5,592 shares at an average priceeither of $38.50 per share. The weighted-average fair value of each purchase right under(a) the ESPP granted for the nine months ended September 30, 2017, which is equalday immediately prior to the discount fromfirst annual shareholder meeting that occurs after the market value ofgrant date or (b) one year after the common stock at the end of each six month purchase period, was $9.69 per share. The weighted-average fair value of each purchase right under the ESPP granted for the nine months ended September 30, 2016, which is equal to the discount from the market value of the common stock at the end of each six month purchase period, was $6.03 per share. Share-based compensation expense of $51 and $34 was recognized during the nine months ended September 30, 2017 and 2016, respectively.grant date.



14
16

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022

Director restricted share transactions during the nine months ended September 30, 2022 were as follows:
Non-employee Director Activity - Non-vested Shares
Director Restricted SharesWeighted-Average Grant Date Fair Value
Outstanding as of January 115 $93.46 
Granted15 93.70 
Vested(15)93.46 
Forfeited— — 
Outstanding as of September 3015 $93.70 


GrantsFor the three and ninemonths ended September 30, 2022, the Company recorded $321 and $1,040, respectively, of non-vested shares to non-employee directors vest ratably overshare-based compensation expense associated with these grants. For the elected termthree and ninemonths ended September 30, 2021, the Company recorded $318 and $1,046, respectively, of share-based compensation expense associated with these grants. As of September 30, 2022, the total share-based compensation expense related to the Board of Directors, orrestricted shares not yet recognized was $841, and the weighted-average period over which it is expected to be recognized is approximately less than one year.  The following tables summarize the Company’s non-employee non-vested share activity and related information:


17

Three months ended September 30, 2017



Weighted-
Aggregate

Non-vested
Average
Grant Date

Shares
Grant Date
Fair Value

(000)
Fair Value
(000)
Outstanding and non-vested at June 30, 201710

$51


Granted4

54


Vested




Forfeited(1)
$51


Outstanding and non-vested at September 30, 201713

$52

$656


Three months ended

September 30,
2017

September 30,
2016
Share-based compensation for non-vested shares$153

$173
Tax benefit for non-vested share compensation$54

$64
Unrecognized compensation cost for non-vested shares, net of estimated forfeitures$430

$419
Weighted average period over which unrecognized compensation will be recognized (years)0.6


      

Nine months ended September 30, 2017



Weighted-
Aggregate

Non-vested
Average
Grant Date

Shares
Grant Date
Fair Value

(000)
Fair Value
(000)
Outstanding and non-vested at December 31, 201616

$44


Granted14

52


Vested(16)
44


Forfeited(1)
51


Outstanding and non-vested at September 30, 201713

$52

$656
    

Nine months ended

September 30,
2017

September 30,
2016
Share-based compensation for non-vested shares$470

$555
Tax benefit for non-vested share compensation$167

$198
Unrecognized compensation cost for non-vested shares, net of estimated forfeitures$430

$419
Weighted average period over which unrecognized compensation will be recognized (years)0.6
  



15

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022

7.    Indebtedness
5.    Senior Credit Facility

Long-term debt consisted of the following as of September 30, 2022 and December 31, 2021:
On
September 30,
2022
December 31,
2021
Credit facility, expires 2026$108,875 $157,500 
Debt issuance costs(447)(534)
108,428 156,966 
Less: Current portion of long-term debt(1,494)(1,500)
Total long-term debt, less current portion$106,934 $155,466 

In September 29, 2017, the Company entered into a five-year senior unsecured revolving credit facility (the “Facility”) with a maximum aggregate principal amount of $150,000, with a sublimit of $30,000 for letters of credit and a sublimit of $30,000 for swing line loans. The maturity date of the Facility may bewas September 29, 2022. In April 2020, the Company entered into the first amendment to the Facility, which increased the maximum aggregate principal amount to $225,000. The Facility could have been increased by up to $100,000$25,000 to a maximum aggregate principal amount of $250,000 pursuant to the terms of the amended credit agreement, subject to the lenders’ agreement to increase their commitments or the addition of new lenders extending such commitments. In July 2021, the Company entered into the second amendment to the Facility, which extended the maturity date to July 20, 2026 and changed the interest rate options available under the Facility. In December 2021, the Company entered into the third amendment to the Facility, which increased the amount available for borrowing under the Facility to $450,000, consisting of a $300,000 revolving line of credit and a term loan of $150,000. In connection with the third amendment, the Company borrowed $150,000 under the term loan and simultaneously repaid $150,000 on the revolving line of credit from the borrowings received. Under the third amendment, the Facility may be increased by up to $75,000 to a maximum aggregate principal amount of $525,000 pursuant to the terms of the amended credit agreement, subject to the lenders’ agreement to increase their commitments or the addition of new lenders extending such commitments. Such increases to the Facility may be in the form of additional revolving credit loans, term loans or a combination thereof, and are contingent upon there being no events of default under the FacilityFacility. As of September 30, 2022 and satisfactionDecember 31, 2021, the Company had $279,966 and $272,466 respectively, of other conditions precedent and are subject toavailable borrowing capacity under the other limitations set forth in the credit agreement.Facility.


The Facility is scheduled to mature in September 2022 and may be used to refinance existing indebtedness of the Company and for working capital, capital expenditures and other general corporate purposes. The Facility refinances the Company’s existing obligations for its unsecured credit facility under the credit agreement dated as of February 4, 2015, as amended, which has been terminated as of the date of the new Facility.

Unless the Company elects otherwise under the credit agreement, interest on borrowings under the Facility is based on the highest of (a) the federal funds rate (not less than 0%) plus 0.5%, (b) the administrative agent's prime rate and (c) the LIBOR Rate plus 1.0%, in each case plus a margin that can range from 0.3% to 0.8% with respect to the Facility depending on the Company’s ratio of consolidated funded indebtedness to earnings before interest, taxes, depreciation and amortization, as set forth in the credit agreement. The Facility contains financial covenants and other covenants that, among other things, restrict the ability of the Company, and its subsidiaries, without the approval of the required lenders, to engage in certain mergers, consolidations, asset sales, dividends and stock repurchases, investments, and other transactions or to incur liens or indebtedness in excess of agreed thresholds, as set forth in the credit agreement. The Company also has to fulfill financial covenants with respect to a leverage ratio and an interest coverage ratio. As of September 30, 2017, we had $40,5002022, the Company was in borrowingscompliance with the aforementioned covenants.

Under the amended Facility, interest accrues on the amounts outstanding under the revolving credit facility, $8,677 utilizedFacility at the Company’s option, at either (1) Bloomberg Short-Term Bank Yield Index rate (the “BSBY Rate”), which cannot be less than zero, plus a margin ranging from 1.25% to 1.75% based on the Company’s leverage ratio, or (2) the base rate, which cannot be less than 2.00%. The base rate is the highest of (i) the federal funds rate, which cannot be less than zero, plus 0.50%, (ii) the administrative agent’s prime rate and (iii) the BSBY Rate, which cannot be less than zero, plus 1.00%, plus a margin ranging from 0.00% to 0.50% based on the Company’s leverage ratio. Interest is payable in arrears for outstanding letterseach loan that is based on the BSBY rate on the last day of the interest period applicable to each loan, and interest is payable in arrears on loans not based on the BSBY rate on the last day of credit and $100,823 of available borrowing capacity under the revolving credit facility.each quarter. The interest rate on the outstanding borrowingborrowings under the revolving credit facilityFacility was 2.6% at3.33% as of September 30, 2017.

Our new facility is replacing our previously existing unsecured credit facility, which had a maximum aggregate principal amount2022 and 1.35% as of $275,000, including a revolving credit facility of $150,000 and a term loan facility of $125,000. The previous revolving credit facility was scheduled to expire in February 2020.



6.    Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share:September 30, 2021.
18
  Three months ended Nine months ended
  September 30,
2017
 September 30,
2016
 September 30,
2017
 September 30,
2016
Numerator:        
Net income and comprehensive income $18,155
 $11,931

$51,948

$14,964
Income allocated to participating securities (145) (93)
(419)
(114)
Numerator for basic and diluted income per share - net income $18,010
 $11,838
 $51,529
 $14,850
Denominator (in thousands):  
  
    
Denominator for basic income per share - weighted-average shares 29,855
 30,191
 29,977
 30,316
Effect of dilutive stock options (in thousands) 52
 117
 62
 151
Effect of dilutive performance shares (in thousands) 33
 30
 30
 29
Denominator for diluted income per share - adjusted weighted-average shares 29,940
 30,338
 30,069
 30,496
Basic net income per share $0.60
 $0.39
 $1.72
 $0.49
Diluted net income per share $0.60
 $0.39
 $1.71
 $0.49


16

Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)September 30, 2022
Letters of Credit

The Company has an arrangement under the Facility to issue letters of credit, which guarantee the Company’s obligations for potential claims exposure for insurance coverage. As of both September 30, 2022 and December 31, 2021, outstanding letters of credit totaled $20,034.

8.    Net Income (Loss) Per Share

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during each period. Restricted shares have non-forfeitable rights to dividends and as a result, are considered participating securities for purposes of computing net income (loss) per common share pursuant to the two-class method. Diluted net income (loss) per common share assumes the exercise of outstanding stock options and the vesting of performance share awards using the treasury stock method when the effects of such assumptions are dilutive.

19

Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited and in thousands, except per share data)
September 30, 20172022

A reconciliation of net income (loss) attributable to Forward Air and weighted-average common shares outstanding for purposes of calculating basic and diluted net income (loss) per share during the three and nine months ended September 30, 2022 and 2021 is as follows:
 Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Numerator:  
Net income and comprehensive income from continuing operations$52,133 $30,503 $150,249 $77,894 
Net loss and comprehensive loss from discontinued operation— (6,967)— (12,500)
Net income attributable to Forward Air$52,133 $23,536 $150,249 $65,394 
Income allocated to participating securities from continuing operations(325)(235)(838)(541)
Loss allocated to participating securities from discontinued operation— — — — 
Income allocated to participating securities(325)(235)(838)(541)
Numerator for basic and diluted net income per share for continuing operations$51,808 $30,268 $149,411 $77,353 
Numerator for basic and diluted net loss per share for discontinued operation$— $(6,967)$— $(12,500)
Denominator:  
Denominator for basic net income per share - weighted-average number of common shares outstanding26,769 27,034 26,864 27,217 
Dilutive stock options and performance share awards133 110 135 134 
Denominator for diluted net income per share - weighted-average number of common shares and common share equivalents outstanding26,902 27,144 26,999 27,351 
Basic net income (loss) per share:
     Continuing operations$1.94 $1.12 $5.56 $2.84 
     Discontinued operation— (0.26)— (0.46)
Net income per basic share1
$1.94 $0.86 $5.56 $2.39 
Diluted net income (loss) per share:
     Continuing operations$1.93 $1.12 $5.53 $2.83 
     Discontinued operation— (0.26)— (0.46)
Net income per diluted share$1.93 $0.86 $5.53 $2.37 
1 Rounding may impact summation of amounts.

20

Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited and in thousands, except per share data)
September 30, 2022
The number of instruments that could potentially dilute net income per basic share in the future, butshares that were not included in the computationcalculation of net income (loss) per diluted share because to do so would have been anti-dilutive for the periods presented,three and nine months ended September 30, 2022 and 2021 are as follows:
Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Anti-dilutive stock options57 39 49 39 
Anti-dilutive performance shares13 — 11 — 
Anti-dilutive restricted shares and deferred stock units— — — — 
Total anti-dilutive shares70 39 60 39 


 September 30,
2017
 September 30,
2016
Anti-dilutive stock options (in thousands)172
 309
Anti-dilutive performance shares (in thousands)
 
Anti-dilutive non-vested shares and deferred stock units (in thousands)
 
Total anti-dilutive shares (in thousands)172
 309

7.9.    Income Taxes


For the nine months ended September 30, 2022 and 2021, the Company recorded income tax expense of $50,791 and $25,969, respectively, for continuing operations. The effective tax rate of 25.3% for the nine months ended September 30, 2022 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards. The effective tax rate of 25.0% for the nine months ended September 30, 2021 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards.

The Company or one of its subsidiaries filesrecognizes income tax returns inbenefits from uncertain tax positions where the U.S. federal jurisdiction, various statesrealization of the ultimate benefit is uncertain. As of both September 30, 2022 and Canada.December 31, 2021, the Company had $241 of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized. As of both September 30, 2022 and December 31, 2021, the Company had accrued interest and penalties related to unrecognized tax benefits of $88. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or Canadian examinations by tax authorities for years before 2010.2014.


ForThe sale of Pool resulted in a capital loss in the threeamount of $4,230, which expires in 2026. The Company concluded that it was more likely than not the capital loss carryforward will not be realized and nine months ended September 30, 2017 and 2016, the effective income tax rates varied from the statutory federal income tax ratetherefore, established a valuation allowance of 35.0%, primarily as$4,230 to reserve against its capital loss carryforward. The Company also maintains a resultvaluation allowance to reserve against its state net operating loss carryforwards of $395. A valuation allowance is established when it is more likely than not that some portion or all of the effect of statedeferred tax assets will not be realized. The Company assessed the likelihood that its deferred tax assets would be recovered from estimated future taxable income taxes,and available tax planning strategies. In making this assessment, all available evidence was considered including economic climate, as well as reasonable tax planning strategies. The Company believes it is more likely than not that it will realize its remaining net deferred tax assets, net of the federal benefit, and permanent differences between book and tax net income. The combined federal and state effective tax rate for the nine months ended September 30, 2017 was 34.3% compared to a rate of 50.7%for the same periodvaluation allowance, in 2016.  The higher effective tax rate for the first nine months of 2016 was primarily due to the TQI goodwill impairment (Note 3) that was not deductible for tax purposes. The effective tax rate for 2017 was also lower due to a change in the estimated tax benefit from a technology credit and the implementation of new FASB guidance that requires we recognize the income tax effects of awards when the awards vest or are settled. Previously any income tax effect was recognized in additional paid in capital. See further discussion in the "Impact of Recent Accounting Pronouncements" section of this document.future years.


8.    Financial Instruments

10.    Fair Value of Financial Instruments


The following methodsCompany categorizes its assets and liabilities into one of three levels based on the assumptions were used byin valuing the Company in estimating itsasset or liability. Estimates of fair value disclosures for financial instruments:

Accounts receivableassets and accounts payable: The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximate theirliabilities are based on a fair value based on their short-term nature.
The Company’s revolving credit facility and term loan bear variable interest rates plus additional basis points based upon covenants relatedhierarchy that prioritizes the inputs to total indebtednessvaluation techniques used to earnings.  As the revolving credit facility bears a variable interest rate, the carrying value approximatesmeasure fair value. Using interest rate quotes and discounted cash flows, the Company estimated theObservable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with this guidance, fair value of its outstanding capital lease obligations as follows:
  September 30, 2017
  Carrying Value Fair Value
Capital leases $954
 $935

The Company's fair value estimates for the above financial instrumentsmeasurements are classified within level 3under the following hierarchy:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the fair value hierarchy.assets or liabilities.

9.    Shareholders' Equity

During the fourth quarter of 2016 and each quarter of 2017, our Board of Directors declared a cash dividend of $0.15 per share of common stock. During the first, second and third quarters of 2016, the Company's Board of Directors declared a cash dividend of $0.12 per share of common stock. The Company expects to continue to pay regular quarterly cash dividends, though each subsequent quarterly dividend is subject to review and approval by the Board of Directors.


17
21

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022

Level 3 - Model-derived valuations in which one or more significant inputs are unobservable.


On July 21, 2016, ourAs previously discussed in Note 4, Acquisitions, the estimated fair value of the earn-out liability was determined using the option pricing method. The significant inputs used to calculate the estimated fair value are derived from a combination of observable and unobservable market data. Observable inputs used in the option pricing method include the risk-free rate and the revenue volatility while unobservable inputs include the revenue discount rate and the estimated revenue projections.
Assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 are summarized below:

As of September 30, 2022
Level 1Level 2Level 3Total
Earn-out liability$— $— $— $— 
As of December 31, 2021
Level 1Level 2Level 3Total
Earn-out liability$— $— $385 $385 

Cash and cash equivalents, accounts receivable, other receivables, and accounts payable are valued at their carrying amounts in the Company’s Condensed Consolidated Balance Sheets, due to the immediate or short-term maturity of these financial instruments.

The carrying amount of long-term debt under the Company’s credit facility approximates fair value based on the borrowing rates currently available to the Company for a loan with similar terms and average maturity.

As of September 30, 2022, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $16,923, compared to its carrying value of $17,531. As of December 31, 2021, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $14,312, compared to its carrying value of $14,159.

11.    Shareholders’ Equity

Cash Dividends

During the first, second and third quarters of 2022, the Board declared and the Company has paid a quarterly cash dividend of $0.24 per common share. During each quarter of 2021, the Company’s Board of Directors declared and the Company has paid a quarterly cash dividend of $0.21 per common share.

On October 25, 2022, the Board declared a quarterly cash dividend of $0.24 per common share that will be paid in the fourth quarter of 2022.

Share Repurchase Program

On February 5, 2019, the Board approved a stock repurchase authorization forplan authorizing the repurchase of up to three million5,000 shares of the Company’s common stock. Duringstock (the “2019 Repurchase Plan”). The 2019 Repurchase Plan expires when the three months ended shares authorized for repurchase are exhausted or the 2019 Repurchase Plan is canceled.





22

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited and in thousands, except per share data)
September 30, 2017, we repurchased 579,769 for $29,988, or $51.72 per share. 2022

During the nine months ended September 30, 2017, we2022, the Company repurchased 826,633through open market transactions 466 shares of common stock for $41,983,$47,774, or $50.79an average of $102.44 per share. During the three months ended September 30, 2016, we repurchased 222,388 for $9,996, or $44.95 per share. Duringshare, and during the nine months ended September 30, 2016, we2021, the Company repurchased 676,773through open market transactions 535 shares of common stock for $29,986,$48,989, or an average of $44.31$91.46 per share. The repurchases made forAll shares received were retired upon receipt, and the three and nine months ended September 30, 2016 were made under a previousexcess of the purchase price over the par value per share repurchase plan approved by our Board of Directors on February 7, 2014. This plan was canceled and replaced on July 21, 2016. recorded to “Retained Earnings in the Condensed Consolidated Balance Sheets.

As of September 30, 2017, 1,939,8512022, the remaining shares remainpermitted to be purchasedrepurchased under the 2016 Plan.2019 Repurchase Plan were approximately 2,366 shares.


10.12.    Commitments and Contingencies


From time to time, theContingencies

The Company is party to ordinary, routine litigationvarious legal claims and actions incidental to its business, including claims related to vehicle liability, workers’ compensation, property damage and arising in the normal course of business.employee medical benefits. The Company doesaccrues for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Based on the knowledge of the facts, the Company believes the resolution of claims and pending litigation, taking into account existing reserves, will not believe that any of these pending actions, individually or in the aggregate, will have a material adverse effect on its business, financial condition orCondensed Consolidated Financial Statements. Moreover, the results of operations.

The primary claimscomplex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the Company’s business relate to workers’ compensation, property damage, vehicle liabilityfuture as the litigation and medical benefits. Most of the Company’s insurancerelated events unfold.

Insurance coverage provides for self-insurance levelsthe Company with primary and excess coverage which management believes is sufficientfor claims related to adequately protectvehicle liability, workers’ compensation, property damage and employee medical benefits.

For vehicle liability, the Company retains a portion of the risk. Below is a summary of the Company’s risk retention on vehicle liability insurance coverage maintained by the Company through $10,000:

Company
Risk Retention
FrequencyLayerPolicy Term
Expedited Freight¹
LTL business$3,000 Occurrence/Accident²$0 to $3,00010/1/2021 to 10/1/2022
Truckload business$2,000 Occurrence/Accident²$0 to $2,00010/1/2021 to 10/1/2022
LTL business$6,000 Policy Term Aggregate³$3,000 to $5,00010/1/2021 to 10/1/2022
LTL, Truckload and Intermodal businesses$2,500 Policy Term Aggregate³$5,000 to $10,00010/1/2021 to 10/1/2022
Intermodal$1,000 Occurrence/Accident²$0 to $1,00010/1/2021 to 10/1/2022
¹ Excluding the Final Mile business, which is primarily a brokered service.
² For each and every accident, the Company is responsible for damages and defense up to these amounts, regardless of the number of claims associated with any accident.
³ During the Policy Term, the Company is responsible for damages and defense within the stated Layer up to the stated, aggregate amount of Company Risk Retention before insurance will respond.

Also, from catastrophic claims. Intime to time, when brokering freight, the opinionCompany may face claims for the “negligent selection” of outside, contracted carriers that are involved in accidents, and the Company maintains third-party liability insurance coverage with a $100 deductible per occurrence for most of its brokered services. Additionally, the Company maintains workers’ compensation insurance with a self-insured retention of $500 per occurrence.

Insurance coverage in excess of the self-insured retention limit is an important part of the Company’s risk management adequate provision has been madeprocess. The Company accrues for the costs of the uninsured portion of pending claims within the self-insured retention based on the nature and severity of individual claims and historical claims development trends. The Company believes the recorded
23

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited and in thousands, except per share data)
September 30, 2022
reserves are sufficient for all incurred claims up to the self-insured retention limits, including provisionan estimate for estimated claims incurred but not reported.
The However, estimating the number and severity of claims, as well as related judgment or settlement amounts is inherently difficult, and the Company estimates its self-insurance loss exposure by evaluating the meritsmay fail to establish sufficient insurance reserves and circumstances surrounding individual known claims and by performing hindsight and actuarial analysis to determine anadequately estimate of probable losses on claims incurred but not reported.  Such losses should be realized immediately as the events underlying the claims have already occurred as of the balance sheet dates. 

Because of the uncertainty offor future insurance claims. Since the ultimate resolution of outstanding claims as well as uncertainty regarding claims incurred but not reported is uncertain, it is possible that management’s provisionthe reserves recorded for these losses could change materially in the near term. However, noAlthough, an estimate can currentlycannot be made of the range of additional loss that is at least reasonably possible.


11.13.    Segment Reporting


The Company operates in fourhas two reportable segmentssegments: Expedited Freight and Intermodal. The Company evaluates segment performance based on information available to and used by the chief operating decision maker.  Expedited LTL operates a comprehensive national network that provides expedited regional, inter-regional and national LTL services.  The TLS segment provides expedited truckload brokerage, dedicated fleet services and high security and temperature-controlled logistics services. The Intermodal segment primarily provides first- and last-mile high value intermodal container drayage services both to andincome from seaports and railheads. Pool Distribution provides high-frequency handling and distribution of time sensitive product to numerous destinations.

Except for certain insurance activity, the accounting policies of the segments are the same as those described in the summary of significant accounting policies disclosed in Note 1 of the Forward Air Corporation Annual Report on Form 10-K for the year ended December 31, 2016. For workers compensation and vehicle claims each segment is charged an insurance premium and is also charged a deductible that corresponds with our corporate deductibles. However, any losses beyond our deductibles and any loss development factors applied to our outstanding claims as a result of actuarial analysis are not passed to the segments, but reported at the corporate level.

operations. Segment data includesresults include intersegment revenues and shared costs.  Costs ofrelated to the corporate headquarters, shared services and shared assets, such as trailers, are allocated to the segmentseach segment based on usage. The cost basis of sharedShared assets are not allocated.  Beginningallocated to each segment, but rather the shared assets, such as trailers, are allocated to the Expedited Freight segment. Corporate includes revenues and expenses as well as assets that are not attributable to any of the Company’s reportable segments.

The accounting policies applied to each segment are the same as those described in the first quarterSummary of 2017, a trailer expense allocation was includedSignificant Accounting Policies as disclosed in Pool's 2017 results from operations. The Company evaluatesNote 1 to the performance of its segments basedAnnual Report on income from operations.   The Company’s businessForm 10-K for the year ended December 31, 2021, except for certain self-insurance loss reserves related to vehicle liability and workers’ compensation. Each segment is conductedallocated an insurance premium and deductible that corresponds to the self-insured retention limit for that particular segment. Any self-insurance loss exposure beyond the deductible allocated to each segment is recorded in the U.S. and Canada.


Corporate.
18
24

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022

The following tables summarize segment information aboutSegment results from operations and assets used by the chief operating decision maker of the Company in making decisions regarding allocation of assets and resources as of and for the three and nine months ended September 30, 20172022 and 2016.2021 are as follows:
 Three Months Ended September 30, 2022
 Expedited FreightIntermodalCorporateEliminationsConsolidated - Continuing Operations
External revenues$395,607 $114,416 $— $— $510,023 
Intersegment revenues28 — (33)— 
Depreciation6,331 1,782 — — 8,113 
Amortization1,809 2,347 — — 4,156 
Income (loss) from continuing operations56,304 16,610 (1,249)— 71,665 
Purchases of property and equipment6,434 294 — — 6,728 
 Three Months Ended September 30, 2021
 Expedited FreightIntermodalCorporateEliminationsConsolidated - Continuing Operations
External revenues$341,461 $78,164 $— $— $419,625 
Intersegment revenues96 — (105)— 
Depreciation4,942 841 16 — 5,799 
Amortization1,842 1,775 — — 3,617 
Income (loss) from continuing operations34,636 8,712 (872)— 42,476 
Purchases of property and equipment13,769 671 — — 14,440 
Nine Months Ended September 30, 2022
Expedited FreightIntermodalCorporateEliminationsConsolidated - Continuing Operations
External revenues$1,180,947 $311,256 $— $— $1,492,203 
Intersegment revenues136 16 — (152)— 
Depreciation18,010 4,766 101 — 22,877 
Amortization5,428 6,689 — — 12,117 
Income (loss) from continuing operations167,091 43,005 (5,535)— 204,561 
Purchases of property and equipment24,155 1,246 — — 25,401 
Nine Months Ended September 30, 2021
Expedited FreightIntermodalCorporateEliminationsConsolidated - Continuing Operations
External revenues$996,769 $205,786 $— $— $1,202,555 
Intersegment revenues709 34 — (800)(57)
Depreciation14,924 2,475 42 — 17,441 
Amortization5,437 5,189 — — 10,626 
Income (loss) from continuing operations93,854 21,607 (8,137)— 107,324 
Purchases of property and equipment21,905 1,110 — — 23,015 
25
  Three months ended September 30, 2017
  Expedited LTL Truckload Premium Pool Distribution Intermodal Eliminations & other Consolidated
External revenues $155,006
 $43,865
 $39,122
 $42,208
 $
 $280,201
Intersegment revenues 697
 2,076
 58
 84
 (2,915) 
Depreciation and amortization 5,438
 1,546
 1,652
 1,690
 
 10,326
Share-based compensation expense 1,604
 101
 90
 144
 
 1,939
Interest expense 1
 
 
 12
 275
 288
Income from operations 23,204
 136
 681
 3,480
 (603) 26,898
Total assets 633,914
 59,657
 53,201
 145,394
 (222,998) 669,168
Capital expenditures 8,372
 7
 239
 330
 
 8,948
             
  Three months ended September 30, 2016
  Expedited LTL Truckload Premium Pool Distribution Intermodal Eliminations & other Consolidated
External revenues $143,753
 $41,927
 $36,305
 $27,567
 $
 $249,552
Intersegment revenues 584
 283
 132
 12
 (1,011) 
Depreciation and amortization 5,470
 1,470
 1,472
 987
 
 9,399
Share-based compensation expense 1,792
 98
 84
 119
 
 2,093
Interest expense 385
 
 
 12
 (181) 216
Income (loss) from operations 21,014
 2,038
 66
 3,041
 (1,459) 24,700
Total assets 634,028
 52,465
 46,327
 128,048
 (219,355) 641,513
Capital expenditures 11,915
 36
 722
 11
 
 12,684


19

Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(Inunaudited and in thousands, except share and per share data)
(Unaudited)
September 30, 20172022

Total Assets
As of September 30, 2022$698,313 $304,378 $183,409 $(41)$1,186,059 
As of December 31, 2021777,987 249,467 90,588 (219)1,117,823 

A reconciliation from the segment information to the consolidated balances for revenues is set forth below:

Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Intersegment revenues - continuing operations$— $— $— $(57)
Intersegment revenues - discontinued operation— — — 57 
Consolidated intersegment revenues$— $— $— $— 

Revenue from the individual services within the Expedited Freight segment for the three and nine months ended September 30, 2022 and 2021 are as follows:

 Three Months EndedNine Months Ended
 September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Expedited Freight revenues:  
Network$240,482 $199,360 $726,054 $579,373 
Truckload55,607 53,651 171,659 162,999 
Final Mile76,822 71,355 215,608 203,494 
Other22,724 17,191 67,762 51,612 
Total$395,635 $341,557 $1,181,083 $997,478 


26
             
  Nine months ended September 30, 2017
  Expedited LTL Truckload Premium Pool Distribution Intermodal Eliminations & other Consolidated
External revenues $446,658
 $128,666
 $113,639
 $105,737
 $
 $794,700
Intersegment revenues 1,913
 4,246
 199
 116
 (6,474) 
Depreciation and amortization 16,521
 4,694
 5,067
 4,296
 
 30,578
Share-based compensation expense 4,980
 281
 297
 407
 
 5,965
Interest expense 2
 
 
 36
 768
 806
Income (loss) from operations 64,596
 3,699
 3,672
 9,133
 (1,204) 79,896
Total assets 633,914
 59,657
 53,201
 145,394
 (222,998) 669,168
Capital expenditures 12,640
 15
 524
 431
 
 13,610
             
  Nine months ended September 30, 2016
  Expedited LTL Truckload Premium Pool Distribution Intermodal Eliminations & other Consolidated
External revenues $421,194
 $119,574
 $100,726
 $76,243
 $
 $717,737
Intersegment revenues 2,216
 696
 427
 148
 (3,487) 
Depreciation and amortization 16,278
 4,944
 4,434
 2,753
 
 28,409
Share-based compensation expense 5,353
 260
 251
 340
 
 6,204
Interest expense 1,345
 
 
 66
 (181) 1,230
Income (loss) from operations 63,026
 (36,679) (191) 8,170
 (2,570) 31,756
Total assets 634,028
 52,465
 46,327
 128,048
 (219,355) 641,513
Capital expenditures 24,487
 1,821
 2,275
 142
 
 28,725





Item 2.Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations.


Overview and Executive Summary
 
Forward Air Corporation isWe are a leading asset-light freight provider of transportation services, including less-than-truckload (“LTL), truckload, final mile and logistics company. intermodal drayage services across the United States and in Canada. We offer premium services that typically require precision execution, such as expedited transit, delivery during tight time windows and special handling. We utilize an asset-light strategy to minimize our investments in equipment and facilities and to reduce our capital expenditures.

Our services are classified into fourtwo reportable segments: Expedited LTL, Truckload Premium Services ("TLS"), IntermodalFreight and Pool Distribution ("Pool").Intermodal.

Through theOur Expedited LTLFreight segment we operate a comprehensive national network to provideprovides expedited regional, inter-regional and national LTL services. Expedited LTLFreight also offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling. Because ofWe plan to grow our roots in serving the deferred air freight market, our terminal network is located at or near airports in the United StatesLTL and Canada.

Through our TLS segment, we provide expedited truckload brokerage, dedicated fleet services,final mile geographic footprints through greenfield start-ups as well as high security and temperature-controlled logistics services in the United States and Canada.through acquisitions.


Our Intermodal segment provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads. Intermodal also offers dedicated contract and Container Freight Station (“CFS) warehouse and handling services. Intermodal operates primarilyservices, and in the Midwestselect locations, linehaul and Southeast, with a smaller operational presence in the Southwest.LTL services. We plan to grow Intermodal’sour Intermodal geographic footprint through acquisitions as well as through greenfield start-ups where we do not have an acceptableno suitable acquisition target.is available.

In our Pool Distribution segment, we provide high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region. We offer this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest United States.


Our operations, particularly our network of hubs and terminals, represent substantial fixed costs. Consequently, our ability to increase our earnings depends in significant part on our ability to increase the amount of freight and the revenue per pound or shipment for the freight shipped or moved through our networks and to grownetwork. Additionally, our earnings depend on the growth of other lines of businesses,services, such as TLS, IntermodalLTL pickup and Pool Distribution,delivery, which will allow us to maintain revenue growth in a challenging shipping environments.freight environment. We continue to execute synergies across our services, particularly with services offered in the Expedited Freight reportable segment. Synergistic opportunities include the ability to share resources, in particular our fleet resources.


We monitor and analyze a number of key operating statistics in order to manage our business and evaluate our financial and operating performance. These key operating statistics are defined below and are referred to throughout the discussion of the financial results of our Expedited Freight and Intermodal reportable segments. Our key operating statistics should not be interpreted as better measurements of our results than income from operations as determined under U.S. generally accepted accounting principles.

Within our Expedited Freight reportable segment, our primary revenue focus is to increase density, which is shipment and tonnage growth within our existing LTL network. Increases in density allow us to maximize our asset utilization and labor productivity, which we measure over many different functional areas of our operations including linehaul load factor, pickup and delivery (“P&D”) stops per hour, P&D shipments per hour and door pounds handled per hour. In addition to our focus on density and operating efficiencies, it is critical for us to obtain an appropriate yield, which is measured as revenue per hundredweight, on the shipments we handle to offset our cost inflation and support our ongoing investments in capacity and technology. Revenue per hundredweight is also a commonly-used indicator for general pricing trends in the LTL industry and can be influenced by many other factors, such as changes in fuel surcharges, weight per shipment and length of haul. Therefore, changes in revenue per hundredweight may not necessarily indicate actual changes in underlying base rates. We regularly monitor the components of our pricing, including base freight rates, accessorial charges and fuel surcharges. The fuel surcharge is generally designed to offset fluctuations in the cost of our petroleum-based products and is indexed to diesel fuel prices published by the U.S. Department of Energy. We believe our yield management process focused on account level profitability, and ongoing improvements in operating efficiencies, are both key components of our ability to grow profitably.

The key operating statistics necessary to understand the operating results of our Expedited Fright reportable segment are described below in more detail:

Tonnage - Total weight of shipments in pounds. The level of freight tonnage is affected by economic cycles and conditions, customers’ business cycles, changes in customers’ business practices and capacity in the truckload market.

Weight Per Shipment - Total pounds divided by the number of shipments. Fluctuations in weight per shipment can indicate changes in the mix of freight we receive from our customers, as well as changes in the number of units included in a shipment. Generally, increases in weight per shipment indicate higher demand and overall increased economic activity. Changes in weight per shipment can also be influenced by shifts between LTL and other modes of
27


transportation, such as truckload, in response to capacity, service and pricing issues. Fluctuations in weight per shipment generally have an inverse effect on our revenue per hundredweight, as a decrease in weight per shipment will typically cause an increase in revenue per hundredweight.

Revenue Per Hundredweight - Network revenue per every 100 pounds of shipment weight. Our LTL transportation services are generally priced based on weight, commodity, and distance. Our pricing policies are reflective of the services we provide, and can be influenced by competitive market conditions. Changes in the freight profile factors such as average shipment size, average length of haul, freight density, and customer and geographic mix can impact the revenue per hundredweight. Fuel surcharges and intercompany revenue between Network and Truckload are included in this measurement.

Revenue Per Shipment - Network revenue divided by the number of shipments. Fuel surcharges and intercompany revenue between Network and Truckload are included in this measurement.

Average Length of Haul - Total miles between origin and destination service centers for all shipments, with miles based on the size of shipments. Length of haul is used to analyze our tonnage and pricing trends for shipments with similar characteristics. Changes in length of haul generally have a direct effect on our revenue per hundredweight, as an increase in length of haul will typically cause an increase in revenue per hundredweight.

Within our Intermodal reportable segment, our primary revenue focus is to increase the number of shipments. The key operating statistic necessary to understand the operating results of our Intermodal reportable segment is described below in more detail:

Drayage Revenue Per Shipment - Intermodal revenue divided by the number of drayage shipments. Revenue derived from container freight station warehouse and handling, and linehaul and LTL services is excluded from this measurement. Fuel surcharges and accessorial charges are included in this measurement.

On April 23, 2020, our Board of Directors (the “Board”) approved a strategy to divest of the Pool Distribution business (“Pool), and the sale of Pool was completed on February 12, 2021. Pool provided high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region. As a result of the strategy to divest of Pool, the results of operations for Pool were presented as a discontinued operation in our Condensed Consolidated Statements of Comprehensive Income for the prior period. Unless otherwise noted, amounts, percentages and discussion for the prior period reflect the results of operations, financial condition and cash flows from our continuing operations. Refer to Note 3, Discontinued Operation, to our Condensed Consolidated Financial Statements for further discussion.

Trends and Developments


AcquisitionsCOVID-19


Our business is highly susceptible to changes in economic conditions. Our products and services are directly tied to the production and sale of goods and, more generally, to the North American economy. The COVID-19 pandemic adversely impacted economic activity and conditions worldwide and created significant volatility and disruption to the financial markets. Efforts to control the spread of COVID-19 led governments and other authorities to impose restrictions which resulted in business closures and disrupted supply chains worldwide. As a result, transportation and supply chain companies such as ours experienced slowdowns and reduced demand for our services.

Although our business and operations have returned to pre-COVID levels, the situation surrounding COVID-19 and its variants remains fluid and may be further impacted by the policies of President Biden’s administration, the availability and success of a vaccine and vaccination rates. The extent to which outbreaks of COVID-19 and its variants impacts our business, results of operations and financial condition in 2022 will depend on future developments, which are highly uncertain and cannot be predicted by, including, but not limited to the duration, spread, severity and impact of the COVID-19 outbreak, including the new variants, the effects of the outbreak on our customers and suppliers and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume.

In August 2016,addition, although we believe we have sufficient capital and liquidity to manage our Intermodal segment acquiredbusiness over the short- and long-term, our liquidity may be materially affected if conditions in the credit and financial markets deteriorate as a result of COVID-19 including failure by us or our customers to secure any necessary financing in a timely manner.


28


Labor Shortages

Like many other businesses affected by current macroeconomic conditions, we are experiencing a labor shortage relating to our employee drivers, terminal and dock workers and otherwise throughout our business and operations. We are also operating in an environment where competition is intense for independent fleet owner-operators, creating shortages in the marketplace. These factors have adversely affected our operations, by increasing our operational costs for labor and purchased transportation. The steps we have taken to address these shortages include paying sign-on bonuses, and offering enhanced wages in select competitive markets. These measures have increased costs in certain assetsareas of Triumphour business. We will continue our efforts to mitigate the effects of the labor shortages and other inflationary conditions through similar actions.

Fuel

We depend heavily upon the availability of adequate diesel fuel supplies, and recently, fuel availability and prices have fluctuated significantly. Fuel availability and prices can be impacted by factors beyond our control, such as natural or man-made disasters, adverse weather conditions, political events, economic sanctions imposed against oil-producing countries or specific industry participants, disruptions or failure of technology or information systems, price and supply decisions by oil producing countries and cartels, terrorist activities, armed conflict, tariffs, sanctions, other changes to trade agreements and world supply and demand imbalance. Through our fuel surcharge programs, we have been able to mitigate the impact of fluctuations in fuel prices. Our fuel surcharge rates are set weekly based on the national average for $10.1 millionfuel prices as published by the U.S. Department of Energy and our fuel surcharge table. In periods of changing fuel prices, our fuel surcharges vary by different degrees and may not fully offset fuel price fluctuations or may result in higher than expected increases in revenue. Fuel shortages, changes in fuel prices, and the potential volatility in fuel surcharge revenue may impact our results of operations and overall profitability. Fuel surcharge revenue as a potential earnoutpercentage of $1.3 million. In May 2017,operating revenues increased to 17.7% for the three months ended September 30, 2022 compared to 11.6% for the three months ended September 30, 2021, as a result of the changes in fuel prices.

Environmental Protection and Community Support

We embrace a comprehensive definition of sustainability that addresses Environmental, Social, and Governance factors (“ESG”). To our Intermodal segment acquired certain assets of Atlantic for $22.5 millionemployees, our communities, our customers, our suppliers, and a potential earnout of $1.0 million. These acquisitions provide an opportunityour investors, each impact area matters.

The following are the ten ESG topic priority areas we identified relevant to our business and the foundation for our Intermodal segmentsustainability approach:

Roadway Health and Safety; Workplace Health and Safety; Independent Contractor Practices; Diversity and Inclusion Practices; Community Impact and Partnerships; Measure and Disclose; Information Security; Responsible Supplier Practices; Green House Gas (“GHG”) Emissions Reduction Practices; and Air Quality Practices

We are committed to expand into additional geographic markets or add volumessupporting and giving back to the communities where we live and work, particularly through the support of our existing locations.employee Veterans, and to the community of Veterans in North America. We continue to support our Veterans through our charitable organization, Operation: Forward Freedom, a manifestation of our ongoing commitment to Veteran-related causes. Operation Forward Freedom’s largest fundraising event was The Inaugural Drive for Hope Golf tournament. The Drive For Hope Golf Tournament which took place on May 19, 2022 was a huge success, raising $375,000 for injured service members and veterans.



In addition, we partner with non-profit organizations that positively impact our communities and our industry. Through our partnership with Truckers Against Trafficking, we have conducted training for over-the-road drivers to educate and equip them with the tools needed to combat human trafficking. We also partner with Women in Trucking to encourage and promote the employment of women within our industry. Our team of drivers is currently comprised of 15% women, roughly twice the U.S. industry average, and we continue to seek opportunities to improve upon that percentage.


We are committed to promoting a healthier natural environment by striving for continuous environmental improvements in all aspects of our business. We are currently reducing emissions and energy consumption through several ongoing programs and are committed to tracking and reducing our GHG emissions and improving energy efficiency. We are also aligning with industry certifications, continuing to be a SmartWay certified company. SmartWay is a certification from the U.S. Environmental Protection Agency (“EPA”) verifying company compliance with EPA regulations, including fuel efficiency ranges and emission standards.
29



In 2021, we published our first ESG Report outlining our commitments and associated focus areas. Since publication, we have been focused on data aggregation. In our future reporting, we will incorporate data requirements identified by widely accepted sustainability frameworks and set measurable targets and goals for our priority areas. We are committed to making our results count across the country and will continue to update our future disclosures accordingly.

30

Results from Operations

The following table sets forth our consolidated historical financial data for the three months ended September 30, 20172022 and 2016 (in millions)2021 (unaudited and in thousands):

Three Months Ended
September 30,
2022
September 30,
2021
ChangePercent Change
Operating revenues:
Expedited Freight$395,635 $341,557 $54,078 15.8 %
Intermodal114,421 78,173 36,248 46.4 
Eliminations and other operations(33)(105)72 (68.6)
Operating revenues510,023 419,625 90,398 21.5 
Operating expenses:
Purchased transportation229,326 205,474 23,852 11.6 
Salaries, wages, and employee benefits90,755 84,410 6,345 7.5 
Operating leases24,965 20,536 4,429 21.6 
Depreciation and amortization12,269 9,416 2,853 30.3 
Insurance and claims12,093 9,984 2,109 21.1 
Fuel expense6,772 4,457 2,315 51.9 
Other operating expenses62,178 42,872 19,306 45.0 
Total operating expenses438,358 377,149 61,209 16.2 
Income (loss) from continuing operations:
Expedited Freight56,304 34,636 21,668 62.6 
Intermodal16,610 8,712 7,898 90.7 
Other Operations(1,249)(872)(377)43.2 
Income from continuing operations71,665 42,476 29,189 68.7 
Other expense:
Interest expense(1,544)(973)(571)58.7 
Total other expense(1,544)(973)(571)58.7 
Income from continuing operations before income taxes70,121 41,503 28,618 69.0 
Income tax expense17,988 11,000 6,988 63.5 
Net income from continuing operations52,133 30,503 21,630 70.9 
Loss from discontinued operation, net of tax— (6,967)6,967 — 
Net income and comprehensive income$52,133 $23,536 $28,597 121.5 %

31

 Three months ended September 30
 2017 2016 Change Percent Change
Operating revenue:       
Expedited LTL$155.7
 $144.3
 $11.4
 7.9 %
Truckload Premium Services45.9
 42.2
 3.7
 8.8
Pool Distribution39.2
 36.4
 2.8
 7.7
Intermodal42.3
 27.6
 14.7
 53.3
Eliminations and other operations(2.9) (1.0) (1.9) 190.0
Operating revenue280.2
 249.5
 30.7
 12.3
Operating expenses:       
   Purchased transportation123.3
 105.0
 18.3
 17.4
   Salaries, wages, and employee benefits64.9
 60.2
 4.7
 7.8
   Operating leases16.8
 16.2
 0.6
 3.7
   Depreciation and amortization10.3
 9.4
 0.9
 9.6
   Insurance and claims7.9
 7.2
 0.7
 9.7
   Fuel expense4.1
 3.4
 0.7
 20.6
   Other operating expenses26.0
 23.4
 2.6
 11.1
      Total operating expenses253.3
 224.8
 28.5
 12.7
Income from operations:       
Expedited LTL23.2
 21.0
 2.2
 10.5
Truckload Premium Services0.1
 2.0
 (1.9) (95.0)
Pool Distribution0.7
 0.1
 0.6
 600.0
Intermodal3.5
 3.0
 0.5
 16.7
Other operations(0.6) (1.4) 0.8
 (57.1)
Income from operations26.9
 24.7
 2.2
 8.9
Other expense:       
   Interest expense(0.3) (0.2) (0.1) 50.0
      Total other expense(0.3) (0.2) (0.1) 50.0
Income before income taxes26.6
 24.5
 2.1
 8.6
Income taxes8.4
 12.6
 (4.2) (33.3)
Net income$18.2
 $11.9
 $6.3
 52.9 %
Operating Revenues
During the three months ended September 30, 2017, we experienced a 12.3% increase in our consolidated
Operating revenues compared to the three months ended September 30, 2016. Operating income increased $2.2 million,$90,398, or 8.9%21.5%, to $26.9 million$510,023 for the three months ended September 30, 2017 from $24.7 million for the same period of 2016.

Segment Operations

Expedited LTL's revenue increased $11.4 million, or 7.9%, and operating income increased $2.2 million, or 10.5%2022 compared to $419,625 for the three months ended September 30, 2017, compared to the same period in 2016.2021. The increase of Expedited LTL's revenue was the result of higher LTL volumes, increased pick up and delivery shipments and increased net fuel surcharge revenue as a result of theprimarily due to an increase in fuel prices since the third quarterour Expedited Freight segment of 2016. Improvement$54,078 driven by Network, Truckload and Final Mile revenue, and in income from operations was causedour Intermodal segment of $36,248, driven by the increase in revenue. Also contributingincreased drayage and accessorial revenues.

Operating Expenses
Operating expenses increased $61,209, or 16.2%, to the improvement were decreases in insurance liability reserves and dock and network efficiencies partly offset by an increased utilization of third party providers.

TLS revenue increased $3.7 million, or 8.8% while operating income decreased $1.9 million$438,358 for the three months ended September 30, 2017,2022 compared to the same period in 2016. The increase in revenue was due to an increase in overall miles, an


increase in revenue per mile and new business wins. The decrease of TLS operating income was due to increased utilization of third party providers and a large increase to vehicle claim reserves.

Pool Distribution revenue increased $2.8 million, or 7.7%, and operating results increased $0.6 million$377,149 for the three months ended September 30, 2017, compared2021. The increase was primarily due to an increase in purchased transportation expense of $23,852, salaries, wages and employee benefits of $6,345 and other operating expenses of $19,306 in both our Expedited Freight and Intermodal segments. Purchased transportation expense includes our independent contractor fleet owners and owner-operators, who lease their equipment to our motor carrier (“Leased Capacity Providers”) and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. Purchased transportation expense increased due to higher Leased Capacity Provider and third party carrier costs, partially offset by the change in the mix of freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers. Salaries, wages and employee benefits increased primarily due to the same periodadditional employees hired in 2016.  The revenueresponse to the increase wasin volumes for the third quarter of 2022, and an increase in the reserve for incentive compensation. Other operating expenses increased due to new business, rate increaseshigher travel expenses, maintenance costs, and terminal and office expenses. Other operating expenses also increased volumes from existing customers and lanes. The increasedue to additional expenses incurred in operating income was the result of improved leverage on fixed costs as a resultsupport of the rate increaseshigher accessorial revenues as noted above for the Intermodal segment.
Income from Continuing Operations and the additional revenue.Segment Operations

Intermodal revenueIncome from continuing operations increased $14.7 million,$29,189, or 53.3%68.7%, and operating income increased $0.5 million, or 16.7%,to $71,665 for the three months ended September 30, 2017,2022 compared to the same period in 2016. The increases in operating revenue and income were primarily attributable to the Atlantic and Triumph acquisitions and the positive impact of increased fuel surcharges.

Fuel Surcharge

Our net fuel surcharge revenue is the result of our fuel surcharge rates, which are set weekly using the national average$42,476 for diesel price per gallon, and volume transiting our network.  During the three months ended September 30, 2017, total net fuel surcharge revenue increased 27.5%2021. The increase was primarily driven by an increase in income from continuing operations in our Expedited Freight segment and Intermodal segment of $21,668 and $7,898, respectively. The results of our two reportable segments are discussed below in more detail.

Interest Expense

Interest expense was $1,544 for the three months ended September 30, 2022 compared to $973 for the three months ended September 30, 2021. The increase in interest expense was due to a higher variable interest rate during the third quarter of 2022 as compared to the same period in 2016, mostly due to increased fuel pricesthe prior year. The weighted-average interest rate on the outstanding borrowings under our credit facility was 3.33% and increased volumes in1.35% during the Expedited LTLthree months ended September 30, 2022 and Pool Distribution segment.2021, respectively.


Interest ExpenseIncome Taxes on a Continuing Basis


Interest expense was $0.3 millionThe effective tax rate on a continuing basis for the three months ended September 30, 20172022 was 25.7% compared to $0.2 million26.5% for the three months ended September 30, 2021. The lower effective tax rate for the three months ended September 30, 2022 was primarily due to a return to provision expense adjustment recorded in the third quarter of 2021. A similar adjustment was not recorded in the third quarter of 2022.

Net Income

As a result of the foregoing factors, net income increased $28,597, or 121.5%, to $52,133 for the three months ended September 30, 2022 compared to $23,536 for the three months ended September 30, 2021.

32


Expedited Freight - Three Months Ended September 30, 2022 compared to Three Months Ended September 30, 2021

The following table sets forth the financial data of our Expedited Freight segment for the three months ended September 30, 2022 and 2021 (unaudited and in thousands):

Three Months Ended
 September 30,
2022
Percent of RevenueSeptember 30,
2021
Percent of RevenueChangePercent Change
Operating revenues:
Network1
$240,482 60.8 %$199,360 58.4 %$41,122 20.6 %
Truckload55,607 14.1 53,651 15.7 1,956 3.6 
Final Mile76,822 19.4 71,355 20.9 5,467 7.7 
Other22,724 5.7 17,191 5.0 5,533 32.2 
Total operating revenues395,635 100.0 341,557 100.0 54,078 15.8 
Operating expenses:
Purchased transportation200,783 50.7 182,596 53.5 18,187 10.0 
Salaries, wages and employee benefits71,543 18.1 65,898 19.3 5,645 8.6 
Operating leases15,819 4.0 14,687 4.3 1,132 7.7 
Depreciation and amortization8,140 2.1 6,784 2.0 1,356 20.0 
Insurance and claims9,196 2.3 8,074 2.4 1,122 13.9 
Fuel expense2,873 0.7 2,225 0.7 648 29.1 
Other operating expenses30,977 7.8 26,657 7.8 4,320 16.2 
Total operating expenses339,331 85.8 306,921 89.9 32,410 10.6 
Income from operations$56,304 14.2 %$34,636 10.1 %$21,668 62.6 %
1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.



33

Expedited Freight Operating Statistics
Three Months Ended
September 30,
2022
September 30,
2021
Percent Change
Business days64 64 — %
Tonnage1,2
    Total pounds698,004 687,816 1.5 
    Pounds per day10,906 10,747 1.5 
Shipments1,2
    Total shipments916 845 8.4 
    Shipments per day14.3 13.2 8.3 
Weight per shipment762 814 (6.4)
Revenue per hundredweight3
$34.70 $29.32 18.3 
Revenue per hundredweight, ex fuel3
$26.05 $24.34 7.0 
Revenue per shipment3
$264.30 $238.68 10.7 
Revenue per shipment, ex fuel3
$198.39 $198.18 0.1 
1 In thousands
2 Excludes accessorial, Truckload and Final Mile products
3 Includes intercompany revenue between the Network and Truckload revenue streams


34

Operating Revenues
Expedited Freight operating revenues increased $54,078, or 15.8%, to $395,635 for the three months ended September 30, 2022 from $341,557 for the three months ended September 30, 2021. The increase was attributable to higher Network, Truckload and Final Mile revenue. Network revenue increased due to a 1.5% increase in tonnage and a 7.0% increase in revenue per hundredweight ex fuel as compared to the same period in the prior year. The increase in tonnage reflects a decrease in weight per shipment of 6.4% on 8.4% higher number of shipments. The decrease in the weight per shipment was the result of a change in the mix of freight in our network. The increase in the revenue per hundredweight ex fuel was driven by the execution of our revenue growth strategies, pricing initiatives, including our general rate increase, and continued strong demand for our services. Network fuel surcharge revenue increased $26,195, or 76.6% as a result of the rise in the average price of fuel and an increase in tonnage. Truckload and Final Mile revenue increased $1,956 and $5,467, respectively, primarily due to continued strong demand for our services. Other revenue, which includes warehousing and terminal handling, increased $5,533 due to the higher number of shipments and pricing initiatives.
Purchased Transportation
Expedited Freight purchased transportation increased $18,187, or 10.0%, to $200,783 for the three months ended September 30, 2022 from $182,596 for the three months ended September 30, 2021. Purchased transportation was 50.7% of Expedited Freight operating revenues for the three months ended September 30, 2022 compared to 53.5% for the same period in 2021. Expedited Freight purchased transportation includes Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. The increase in purchased transportation expense was primarily due to higher Leased Capacity Provider and third party carrier costs, partially offset by the change in the mix of 2016.freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers for Network and Truckload services. In the third quarter of 2022, we purchased 68.3%, 28.1% and 3.6% of our freight capacity from Leased Capacity Providers, third party carriers and Company-employed drivers, respectively. This compares to 66.0%, 30.2% and 3.8% in the same period in 2021.
Salaries, Wages and Employee Benefits
Expedited Freight salaries, wages and employee benefits increased $5,645, or 8.6%, to $71,543 for the three months ended September 30, 2022 from $65,898 for the three months ended September 30, 2021. Salaries, wages and employee benefits were 18.1% of Expedited Freight operating revenues for the three months ended September 30, 2022 compared to 19.3% for the same period in 2021. The increase in salaries, wages and employee benefits expense was primarily due to additional employees hired in response to the increased volumes in the third quarter of 2022, higher salaries and wages, and an increase in the reserve for incentive compensation compared to the same period in 2021.
Operating Leases
Expedited Freight operating leases increased $1,132, or 7.7%, to $15,819 for the three months ended September 30, 2022 from $14,687 for the three months ended September 30, 2021. Operating leases were 4.0% of Expedited Freight operating revenues for the three months ended September 30, 2022 compared to 4.3% for the same period in 2021. The increase in operating leases expense was primarily due to higher facility expense in the third quarter of 2022 as compared to the same period in 2021.
Depreciation and Amortization
Expedited Freight depreciation and amortization increased $1,356, or 20.0%, to $8,140 for the three months ended September 30, 2022 from $6,784 for the three months ended September 30, 2021.  Depreciation and amortization was 2.1% of Expedited Freight operating revenues for the three months ended September 30, 2022 compared to 2.0% for the same period in 2021. The increase in depreciation and amortization expense was primarily due to an increase in equipment depreciation in the third quarter of 2022 as compared to the same period in 2021.
Insurance and Claims
Expedited Freight insurance and claims increased $1,122, or 13.9%, to $9,196 for the three months ended September 30, 2022 from $8,074 for the three months ended September 30, 2021.  Insurance and claims was 2.3% of Expedited Freight operating revenues for the three months ended September 30, 2022 compared to 2.4% for the same period in 2021. The increase in insurance and claims expense was primarily due to an increase in insurance premiums and vehicle repairs offset by a decrease in cargo claims in the third quarter of 2022 as compared to the same period in 2021. See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations section below.
35

Fuel Expense

Expedited Freight fuel expense increased $648, or 29.1%, to $2,873 for the three months ended September 30, 2022 from $2,225 for the three months ended September 30, 2021. Fuel expense was 0.7% of Expedited Freight operating revenues for both the three months ended September 30, 2022 and 2021. Fuel expense increased primarily due to a rise in the average price of fuel in the third quarter of 2022 as compared to the same period in 2021.
Other Operating Expenses
Expedited Freight other operating expenses increased $4,320, or 16.2%, to $30,977 for the three months ended September 30, 2022 from $26,657 for the three months ended September 30, 2021.  Other operating expenses were 7.8% of Expedited Freight operating revenues for both the three months ended September 30, 2022 and 2021. Other operating expenses include equipment maintenance, facility expenses, legal and professional fees, and other over-the-road costs. The increase in other operating expenses was primarily due to an increase in maintenance costs, terminal and office expenses, and travel expenses in the third quarter of 2022 as compared to the same period in 2021.
Income from Operations
Expedited Freight income from operations increased $21,668, or 62.6%, to $56,304 for the three months ended September 30, 2022 compared to $34,636 for the three months ended September 30, 2021.  Income from operations was 14.2% of Expedited Freight operating revenues for the three months ended September 30, 2022 compared to 10.1% for the same period in 2021. The increase in income from operations as a percentage of operating revenues was primarily due to increased tonnage and revenue per hundredweight ex fuel combined with higher fuel surcharge revenue, partially offset by higher Leased Capacity Provider and third party carrier costs.


36

Intermodal - Three Months Ended September 30, 2022 compared to Three Months Ended September 30, 2021

The following table sets forth the financial data of our Intermodal segment for the three months ended September 30, 2022 and 2021 (unaudited and in thousands):

Three Months Ended
 September 30,
2022
Percent of RevenueSeptember 30,
2021
Percent of RevenueChangePercent Change
Operating revenues$114,421 100.0 %$78,173 100.0 %$36,248 46.4 %
Operating expenses:
Purchased transportation28,610 25.0 22,984 29.4 5,626 24.5 
Salaries, wages and employee benefits17,945 15.7 17,596 22.5 349 2.0 
Operating leases9,146 8.0 5,856 7.5 3,290 56.2 
Depreciation and amortization4,129 3.6 2,616 3.3 1,513 57.8 
Insurance and claims2,241 2.0 2,708 3.5 (467)(17.2)
Fuel expense3,899 3.4 2,231 2.9 1,668 74.8 
Other operating expenses31,841 27.8 15,470 19.8 16,371 105.8 
Total operating expenses97,811 85.5 69,461 88.9 28,350 40.8 
Income from operations$16,610 14.5 %$8,712 11.1 %$7,898 90.7 %

Intermodal Operating Statistics
Three Months Ended
September 30,
2022
September 30,
2021
Percent Change
Drayage shipments89,236 91,774 (2.8)%
Drayage revenue per shipment1
$1,203 $742 62.1 
1 Excludes revenue derived from container freight station warehouse and handling, and linehaul and LTL services.


37

Operating Revenues

Intermodal operating revenues increased $36,248, or 46.4%, to $114,421 for the three months ended September 30, 2022 from $78,173 for the three months ended September 30, 2021. The increase in operating revenue was primarily due to a 62.1% increase in drayage revenue per shipment as compared to the same period in 2021. The increase in drayage revenue per shipment was driven by the execution of our pricing initiatives, the acquisitions of BarOle in November 2021 and Edgmon in May 2022, higher accessorial revenue in support of our customers and continued strong demand for our services. In addition, fuel surcharge revenue increased $8,317, or 114.3% as a result of the rise in the average price of fuel.

Purchased Transportation

Intermodal purchased transportation increased $5,626, or 24.5%, to $28,610 for the three months ended September 30, 2022 from $22,984 for the three months ended September 30, 2021.  Purchased transportation was 25.0% of Intermodal operating revenues for the three months ended September 30, 2022 compared to 29.4% for the same period in 2021.  Intermodal purchased transportation includes Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. The increase in purchased transportation costs was primarily due to higher Leased Capacity Provider and third party carrier costs, and the change in the mix of freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers.

Salaries, Wages and Employee Benefits

Intermodal salaries, wages and employee benefits increased $349, or 2.0%, to $17,945 for the three months ended September 30, 2022 compared to $17,596 for the three months ended September 30, 2021.�� Salaries, wages and employee benefits were 15.7% of Intermodal operating revenues for the three months ended September 30, 2022 compared to 22.5% for the same period in 2021. The increase in salaries, wages and employee benefits expense was primarily due to additional employees hired in the third quarter of 2022 and higher salaries and wages as compared to the same period in 2021.

Operating Leases

Intermodal operating leases increased $3,290, or 56.2%, to $9,146 for the three months ended September 30, 2022 compared to $5,856 for the three months ended September 30, 2021.  Operating leases were 8.0% of Intermodal operating revenues for the three months ended September 30, 2022 compared to 7.5% for the same period in 2021. The increase in operating leases expense was due to higher facility expense and additional equipment leases in the third quarter of 2022 as compared to the same period in 2021.

Depreciation and Amortization

Intermodal depreciation and amortization increased $1,513, or 57.8%, to $4,129 for the three months ended September 30, 2022 from $2,616 for the three months ended September 30, 2021. Depreciation and amortization was 3.6% of Intermodal operating revenues for the three months ended September 30, 2022 compared to 3.3% for the same period in 2021. The increase in depreciation and amortization expense was primarily due to the equipment and intangible assets acquired in connection with the acquisitions completed in the fourth quarter of 2021 and the second quarter of 2022.

Insurance and Claims

Intermodal insurance and claims decreased $467, or 17.2%, to $2,241 for the three months ended September 30, 2022 from $2,708 for the three months ended September 30, 2021.  Insurance and claims were 2.0% of Intermodal operating revenues for the three months ended September 30, 2022 compared to 3.5% for the same period in 2021. The decrease in insurance and claims expense was primarily due to the decrease in insurance premiums and vehicle liability claims, offset by an increase in vehicle repairs during the third quarter of 2022 as compared to the same period in 2021. See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations section below.

Fuel Expense

Intermodal fuel expense increased $1,668, or 74.8%, to $3,899 for the three months ended September 30, 2022 from $2,231 for the three months ended September 30, 2021.  Fuel expense was 3.4% of Intermodal operating revenues for the three months ended September 30, 2022 compared to 2.9% for the same period in 2021.  Intermodal fuel expense increased primarily due to the rise in the average price of fuel in the third quarter of 2022 as compared to the same period in 2021.
38


Other Operating Expenses

Intermodal other operating expenses increased $16,371, or 105.8%, to $31,841 for the three months ended September 30, 2022 from $15,470 for the three months ended September 30, 2021.  Other operating expenses were 27.8% of Intermodal operating revenues for the three months ended September 30, 2022 compared to 19.8% for the same period in 2021. The increase in Intermodal other operating expenses was primarily due to additional expenses incurred in support of the increased accessorial revenues, and maintenance costs in the third quarter of 2022 as compared to the same period in 2021.
Income from Operations

Intermodal income from operations increased $7,898, or 90.7%, to $16,610 for the three months ended September 30, 2022 compared to $8,712 for the three months ended September 30, 2021.  Income from operations was 14.5% of Intermodal operating revenues for the three months ended September 30, 2022 compared to 11.1% for the same period in 2021.  The increase in income from operations as a percentage of operating revenues was primarily due to increased drayage revenue per shipment, partially offset by the change in mix of freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers and higher Leased Capacity Provider and third party carrier costs.

Other Operations - Three Months Ended September 30, 2022 compared to Three Months Ended September 30, 2021

Other operations included a $1,249 operating loss during the three months ended September 30, 2022 compared to an $872 operating loss during the three months ended September 30, 2021. The change in the operating loss was primarily due to an increase in self-insurance reserves for vehicle liability claims, partially offset by a decrease in the reserves for group health insurance claims and the recovery of bad debt related to other receivables. The increase in the self-insurance reserves for vehicle liability claims was due to the unfavorable loss development factor of historical claims.


39




Results from Operations

The following table sets forth our consolidated financial data for the nine months ended September 30, 2022 and 2021 (unaudited and in thousands):

Nine Months Ended
September 30,
2022
September 30,
2021
ChangePercent Change
Operating revenues:
Expedited Freight$1,181,083 $997,478 $183,605 18.4 %
Intermodal311,272 205,820 105,452 51.2 
Eliminations and other operations(152)(800)648 (81.0)
Operating revenues1,492,203 1,202,498 289,705 24.1 
Operating expenses:
Purchased transportation693,648 605,299 88,349 14.6 
Salaries, wages, and employee benefits263,194 243,948 19,246 7.9 
Operating leases71,097 60,073 11,024 18.4 
Depreciation and amortization34,994 28,067 6,927 24.7 
Insurance and claims37,257 30,616 6,641 21.7 
Fuel expense20,951 12,218 8,733 71.5 
Other operating expenses166,501 114,953 51,548 44.8 
Total operating expenses1,287,642 1,095,174 192,468 17.6 
Income (loss) from continuing operations:
Expedited Freight167,091 93,854��73,237 78.0 
Intermodal43,005 21,607 21,398 99.0 
Other Operations(5,535)(8,137)2,602 (32.0)
Income from continuing operations204,561 107,324 97,237 90.6 
Other expense:
Interest expense(3,521)(3,461)(60)1.7 
Total other expense(3,521)(3,461)(60)1.7 
Income from continuing operations before income taxes201,040 103,863 97,177 93.6 
Income tax expense50,791 25,969 24,822 95.6 
Net income from continuing operations150,249 77,894 72,355 92.9 
Loss from discontinued operation, net of tax— (12,500)12,500 (100.0)
Net income and comprehensive income$150,249 $65,394 $84,855 129.8 %


40

Operating Revenues

Operating revenues increased $289,705, or 24.1% to $1,492,203 for the nine months ended September 30, 2022 compared to $1,202,498 for the nine months ended September 30, 2021. The increase was primarily due to an increase in our Expedited Freight segment of $183,605, driven by increased Network, Truckload and Final Mile revenue, and in our Intermodal segment of $105,452 driven by increased drayage and accessorial revenues.


Operating Expenses
Operating expenses increased $192,468, or 17.6%, to $1,287,642 for the nine months ended September 30, 2022 compared to $1,095,174 for the nine months ended September 30, 2021. The increase was primarily due to an increase in purchased transportation expense of $88,349, salaries, wages and employee benefits of $19,246 and other operating expenses of $51,548 in both our Expedited Freight and Intermodal segments. Purchased transportation expense includes Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. Purchased transportation expense increased due to higher Lease Capacity Provider and third party carrier costs, and the change in the mix of freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers. Salaries, wages and employee benefits increased primarily due to the additional employees hired in response to the increase in volumes in 2022, higher salaries and wages, and an increase in the reserve for incentive compensation. Other operating expenses increased due to maintenance costs, travel expenses, recruiting costs, and terminal and office expenses, partially offset by lower professional fees. Other operating expenses also increased due to additional expenses incurred in support of the increased accessorial revenues as noted above for the Intermodal segment.
Income from Continuing Operations and Segment Operations

Income from continuing operations increased $97,237, or 90.6%, to $204,561 for the nine months ended September 30, 2022 compared to $107,324 for the nine months ended September 30, 2021. The increase was primarily driven by an increase in income from continuing operations in our Expedited Freight segment and Intermodal segment of $73,237 and $21,398, respectively. The results of our two reportable segments are discussed below in more detail.

Interest Expense

Interest expense was $3,521 for the nine months ended September 30, 2022 compared to $3,461 for the nine months ended September 30, 2021. The increase in interest expense was attributabledue to additionala higher borrowings outstanding under our credit facility during the nine months ended September 30, 2022 partially offset by a lower weighted-average interest rate during the nine months ended September 30, 2022. The weighted-average interest rate on the outstanding borrowings under our revolving credit facility.facility was 2.27% and 2.51% during the nine months ended September 30, 2022 and 2021, respectively.


Income Taxes on a Continuing Basis


The combined federal and stateeffective tax rate on a continuing basis for the nine months ended September 30, 2022 was 25.3% compared to a rate of 25.0% for the nine months ended September 30, 2021. The higher effective tax rate for the third quarter of 2017nine months ended September 30, 2022 was 31.8%primarily due to lower excess tax benefits realized on share-based awards in 2022 compared to a rate of 51.3% for the same period in 2016. The effective2021.

Loss from Discontinued Operation, net of tax rate

There was no loss from discontinued operation, net of tax for the third quarternine months ended September 30, 2022 compared to a loss from discontinued operation, net of 2017tax of $12,500 for the nine months ended September 30, 2021. Loss from discontinued operation includes a change in estimated tax benefit from a technology creditour Pool business and, as discussed above, the result of the impairment of goodwill in the second quarter of 2016 that is non-deductible for tax purposes.Pool business was sold on February 12, 2021.


Net Income


As a result of the foregoing factors, net income increased by $6.3 million,$84,855, or 52.9%129.8%, to $18.2 million for the third quarter of 2017 from $11.9 million for the same period in 2016.


Expedited LTL - Three Months Ended September 30, 2017 compared to Three Months Ended September 30, 2016

The following table sets forth our historical financial data of the Expedited LTL segment for the three months ended September 30, 2017 and 2016 (in millions):
Expedited LTL Segment Information
(In millions)
(Unaudited)
            
 Three months ended
 September 30, Percent of September 30, Percent of   Percent
 2017 Revenue 2016 Revenue Change Change
Operating revenue$155.7
 100.0% $144.3
 100.0% $11.4
 7.9 %
            
Operating expenses:           
Purchased transportation64.0
 41.1
 56.3
 39.0
 7.7
 13.7
Salaries, wages and employee benefits35.2
 22.6
 33.8
 23.4
 1.4
 4.1
Operating leases9.4
 6.0
 9.0
 6.2
 0.4
 4.4
Depreciation and amortization5.4
 3.5
 5.5
 3.8
 (0.1) (1.8)
Insurance and claims3.3
 2.1
 3.9
 2.7
 (0.6) (15.4)
Fuel expense0.9
 0.6
 0.8
 0.6
 0.1
 12.5
Other operating expenses14.3
 9.2
 14.0
 9.7
 0.3
 2.1
Total operating expenses132.5
 85.1
 123.3
 85.4
 9.2
 7.5
Income from operations$23.2
 14.9% $21.0
 14.6% $2.2
 10.5 %

Expedited LTL Operating Statistics
      
 Three months ended
 September 30, September 30, Percent
 2017 2016 Change
      
Operating ratio85.1% 85.4% (0.4)%
      
Business days63.0
 64.0
 (1.6)
Business weeks12.6
 12.8
 (1.6)
      
Expedited LTL:     
Tonnage     
    Total pounds ¹636,009
 588,929
 8.0
    Average weekly pounds ¹50,477
 46,010
 9.7
      
Linehaul shipments     
    Total linehaul986,632
 909,787
 8.4
    Average weekly78,304
 71,077
 10.2
      
Forward Air Complete shipments242,902
 195,594
 24.2
As a percentage of linehaul shipments24.6% 21.5% 14.4
      
Average linehaul shipment size645
 647
 (0.3)
      
Revenue per pound 2
     
    Linehaul yield$16.89
 $17.71
 (3.7)
    Fuel surcharge1.11
 1.06
 0.2
    Forward Air Complete3.94
 3.49
 2.1
Total Expedited LTL yield$21.94
 $22.26
 (1.4)%
      
¹ - In thousands     
2 - In dollars per hundred pound; percentage change is expressed as a percent of total yield.


Revenues
Expedited LTL had operating revenue increase $11.4 million, or 7.9%, to $155.7 million from $144.3 million, accounting for 55.6% of consolidated operating revenue for the three months ended September 30, 2017 compared to 57.8% for the same period in 2016. The increase in revenue is mostly the result of increases to our Forward Air Complete ("Complete"), pick-up and delivery services and linehaul revenues. Linehaul revenue, which is the largest portion of Expedited LTL revenue, increased $3.1 million, or 3.0%, on higher tonnage partly offset by the decrease in average base revenue per pound noted in the preceding table. The increase in tonnage is due to a growing percentage of total volume from class rated shipments, which have higher density attributes and a slightly lower length of haul than our traditional shipments. While increasing tonnage, class rated tonnage has caused a decrease in average base revenue per pound.
The $11.4 million revenue increase is primarily the result of a $4.5 million, or 21.8%, increase in Complete revenue.  The increase in Complete revenue was attributable to an increase in shipping volumes in our Expedited LTL network and a 14.4% increase in the attachment rate of Complete to linehaul shipments. Additionally, compared to the same period in 2016, net fuel surcharge revenue increased $0.9 million largely due to the increase in fuel prices and tonnage volumes. Other terminal based revenues, which includes dedicated local pickup and delivery services, warehousing and terminal handling, increased $2.9 million, or 22.0%, to $16.1 million in the third quarter of 2017 from $13.2 million in the same period of 2016. The increase in other terminal revenue was mainly attributable to increases in certain dedicated local pickup and delivery revenues.
Purchased Transportation
Expedited LTL’s purchased transportation increased by $7.7 million, or 13.7%, to $64.0 million for the three months ended September 30, 2017 from $56.3 million for the three months ended September 30, 2016. As a percentage of segment operating revenue, Expedited LTL purchased transportation was 41.1% during the three months ended September 30, 2017 compared to 39.0% for the same period in 2016. The increase is mostly due to a 6.3% increase in Expedited LTL cost per mile. The increase in cost per mile is due to increased utilization of third party carriers, which are more costly than our network of owner operators. The increase is also due to increased Complete attachment on higher linehaul volumes. Complete purchased transportation is a much higher percentage of Complete revenue than our linehaul services.
Salaries, Wages, and Benefits
Salaries, wages and employee benefits of Expedited LTL increased $1.4 million, or 4.1%, to $35.2 million in the third quarter of 2017 from $33.8 million for the same period in 2016.  Salaries, wages and employee benefits were 22.6% of Expedited LTL’s operating revenue in the third quarter of 2017 compared to 23.4% for the same period of 2016.  The improvement in salaries, wages and employee benefits as a percentage of revenue was primarily attributable to a 0.7% decrease in health insurance costs and a 0.1% decrease in workers' compensation costs as a percentage of revenue.
Operating Leases
Operating leases increased $0.4 million, or 4.4%, to $9.4 million for the three months ended September 30, 2017 from $9.0 million for the same period in 2016.  Operating leases were 6.0% of Expedited LTL operating revenue for the three months ended September 30, 2017 compared to 6.2% for the same period of 2016. The increase in cost is due to a $0.3 million increase in truck, trailer and equipment rentals and leases and $0.1 million of additional facility lease expenses. Facility leases increased due to the expansion of certain facilities. Vehicle leases increased due to the replacement of older, owned power equipment with leased power equipment.
Depreciation and Amortization
Depreciation and amortization decreased $0.1 million, or 1.8%, to $5.4 million in the third quarter of 2017 from $5.5 million in the same period of 2016.  Depreciation and amortization expense as a percentage of Expedited LTL operating revenue was 3.5% in the third quarter of 2017 compared to 3.8% in the same period of 2016.  The decrease as a percentage of revenue was due to the increase in leased equipment mentioned above instead of purchased equipment.
Insurance and Claims
Expedited LTL insurance and claims expense decreased $0.6 million, or 15.4%, to $3.3 million for the three months ended September 30, 2017 from $3.9 million for the same period of 2016.  Insurance and claims was 2.1% of operating revenue for the three months ended September 30, 2017 compared to 2.7% in the same period of 2016. The decrease was attributable to a $0.5 million decrease in vehicle liability reserves and a $0.1 million decrease in reserves for cargo claims due to improved claims activity.



Fuel Expense
Expedited LTL fuel expense increased $0.1 million, or 12.5%, to $0.9 million for the third quarter of 2017 from $0.8 million in the same period of 2016.  Fuel expenses were 0.6% of Expedited LTL operating revenue in the third quarter of 2017 and 2016.  Expedited LTL fuel expenses increased due to an increase in year-over-year fuel prices.
Other Operating Expenses
Other operating expenses increased $0.3 million, or 2.1%, to $14.3 million during the three months ended September 30, 2017 from $14.0 million in the same period of 2016.  Other operating expenses were 9.2% of Expedited LTL operating revenue in the third quarter of 2017 compared to 9.7% in the same period of 2016. The decrease as percentage of revenue was primarily the result of decreased legal and professional fees and network efficiencies, such as lower tolls. The prior period also included a corporate event that did not occur in 2017. These improvements were partly offset by an increase in receivables allowance.
Income from Operations
Income from operations increased by $2.2 million, or 10.5%, to $23.2 million for the third quarter of 2017 compared with $21.0 million for the same period in 2016.  Income from operations as a percentage of Expedited LTL operating revenue was 14.9% for the three months ended September 30, 2017 compared with 14.6% in the same period of 2016. Improvement in income from operations was due to increases in revenue due to higher tonnage and Complete attachment and lower vehicle liability reserves. These improvements were partly offset by increased utilization of third party transportation providers.




Truckload Premium Services - Three Months Ended September 30, 2017 compared to Three Months Ended September 30, 2016

The following table sets forth our historical financial data of the Truckload Premium Services segment for the three months ended September 30, 2017 and 2016 (in millions):
Truckload Premium Services Segment Information
(In millions)
(Unaudited)
            
 Three months ended
 September 30, Percent of September 30, Percent of   Percent
 2017 Revenue 2016 Revenue Change Change
Operating revenue$45.9
 100.0% $42.2
 100.0% $3.7
 8.8 %
            
Operating expenses:
          
Purchased transportation33.9
 73.9
 29.7
 70.4
 4.2
 14.1
Salaries, wages and employee benefits5.0
 10.9
 4.9
 11.6
 0.1
 2.0
Operating leases0.3
 0.6
 0.1
 0.2
 0.2
 200.0
Depreciation and amortization1.6
 3.5
 1.5
 3.6
 0.1
 6.7
Insurance and claims2.0
 4.4
 1.1
 2.6
 0.9
 81.8
Fuel expense0.8
 1.7
 0.7
 1.7
 0.1
 14.3
Other operating expenses2.2
 4.8
 2.2
 5.2
 
 
Total operating expenses45.8
 99.8
 40.2
 95.3
 5.6
 13.9
Income from operations$0.1
 0.2% $2.0
 4.7% $(1.9) (95.0)%

Truckload Premium Services Operating Statistics
  
 Three months ended
 September 30, September 30, Percent
 2017 2016 Change
      
    Company driver 1
1,990
 1,761
 13.0 %
    Owner operator 1
11,454
 13,125
 (12.7)
    Third party 1
11,263
 8,339
 35.1
Total Miles24,707
 23,225
 6.4
      
Revenue per mile$1.79
 $1.78
 0.6
      
Cost per mile$1.44
 $1.37
 5.1 %
      
¹ - In thousands     


Revenues
TLS revenue increased $3.7 million, or 8.8%, to $45.9 million in the third quarter of 2017 from $42.2 million in the third quarter of 2016.  TLS revenue increased due to a 6.4% increase in overall miles on new business wins. TLS also experienced a 0.6% increase in average revenue per mile on an increase in pharmaceutical revenue which historically has a higher revenue per mile than traditional truckload business.


Purchased Transportation

Purchased transportation costs for our TLS revenue increased $4.2 million, or 14.1%, to $33.9 million for the three months ended September 30, 2017 from $29.7 million for the same period in 2016. For the three months ended September 30, 2017, TLS purchased transportation costs represented 73.9% of TLS revenue compared to 70.4% for the same period in 2016.  The increase in TLS purchased transportation was attributable to a 5.8% increase in non-Company miles driven and a 6.0% increase in cost per mile during the three months ended September 30, 2017 compared to the same period in 2016. The increase in TLS non-Company miles driven was attributable to the business wins discussed above. The increase in cost per mile was due to TLS utilizing third party carriers, which are more costly than owner operators, to cover the additional miles. This increased utilization of third party carriers also led to the increase in purchased transportation as a percentage of revenue.
Salaries, Wages, and Benefits

Salaries, wages and employee benefits of TLS increased by $0.1 million, or 2.0%, to $5.0 million in the third quarter of 2017 from $4.9 million in the same period of 2016.  Salaries, wages and employee benefits were 10.9% of TLS’s operating revenue in the third quarter of 2017 compared to 11.6% for the same period of 2016.  The decrease in salaries, wages and employee benefits as a percentage of revenue was mostly attributable to the increase in revenue outpacing the increase in pay to office staff. The decrease as a percentage of revenue was also attributable to improved efficiencies in our Company driver fleet. These improvements were partly offset by an increase in employee incentives.
Operating Leases
Operating leases increased $0.2 million to $0.3 million for the third quarter of 2017 from $0.1 million for the same period in 2016.  Operating leases were 0.6% of LTL operating revenue for the third quarter of 2017 compared to 0.2% for the same period in 2016. The $0.2 million increase in cost is due to additional trailer rentals for the new business wins mentioned above.
Depreciation and Amortization

Depreciation and amortization increased $0.1 million, or 6.7%, to $1.6 million in the third quarter of 2017 from $1.5 million for the same period of 2016.  Depreciation and amortization expense as a percentage of TLS operating revenue was 3.5% in the third quarter of 2017 compared to 3.6% in the same period of 2016.  The decrease as a percentage of revenue was due to the use of rental trailers to handle new business wins instead of company trailers.
Insurance and Claims

TLS insurance and claims expense increased $0.9 million, or 81.8%, to $2.0 million for the three months ended September 30, 2017 from $1.1 million for the same period of 2016.  Insurance and claims were 4.4% of operating revenue for the three months ended September 30, 2017 compared to 2.6% in the same period of 2016. The increase was due to developments on a large vehicle claim reserve and increased vehicle insurance premiums associated with our insurance plan renewals partly offset by a benefit from a prior period insurance premium audit.
Fuel Expense

TLS fuel expense increased $0.1 million, or 14.3%, to $0.8 million for the third quarter of 2017 from $0.7 million for the same period of 2016.  Fuel expense as a percentage of TLS operating revenue was 1.7% in the third quarter of 2017 and 2016. The increase was mostly attributable to an increase in year-over-year fuel prices and the increase in Company driver miles.
Other Operating Expenses

Other operating expenses were $2.2 million for the three months ended September 30, 2017 and 2016.  Other operating expenses were 4.8% of TLS operating revenue in the third quarter of 2017 compared to 5.2% in the same period of 2016.  The decline in other operating expenses as a percentage of revenue was due to reduced legal fees and decreased office costs.
Results from Operations
Income from operations decreased by $1.9 million to $0.1 million during the third quarter of 2017 compared with $2.0 million for the same period in 2016. The deterioration in income from operations was due to a large increase to vehicle claims reserves and increased utilization of third party carriers which led to the increase in cost per mile outpacing the increase in revenue per mile.


Pool Distribution - Three Months Ended September 30, 2017 compared to Three Months Ended September 30, 2016

The following table sets forth our historical financial data of the Pool Distribution segment for the three months ended September 30, 2017 and 2016 (in millions):

Pool Distribution Segment Information
(In millions)
(Unaudited)
            
 Three months ended
 September 30, Percent of September 30, Percent of   Percent
 2017 Revenue 2016 Revenue Change Change
Operating revenue$39.2
 100.0% $36.4
 100.0% $2.8
 7.7%
            
Operating expenses:           
Purchased transportation10.4
 26.5
 10.1
 27.7
 0.3
 3.0
Salaries, wages and employee benefits15.3
 39.0
 14.4
 39.6
 0.9
 6.3
Operating leases3.3
 8.4
 3.3
 9.1
 
 
Depreciation and amortization1.7
 4.4
 1.4
 3.8
 0.3
 21.4
Insurance and claims1.1
 2.8
 1.0
 2.7
 0.1
 10.0
Fuel expense1.3
 3.3
 1.2
 3.3
 0.1
 8.3
Other operating expenses5.4
 13.8
 4.9
 13.5
 0.5
 10.2
Total operating expenses38.5
 98.2
 36.3
 99.7
 2.2
 6.1
Income from operations$0.7
 1.8% $0.1
 0.3% $0.6
 600.0%

Revenues

Pool Distribution (Pool) operating revenue increased $2.8 million, or 7.7%, to $39.2 million for the three months ended September 30, 2017 from $36.4 million for the same period in 2016.  The increase was attributable to higher shipping volumes from previously existing customers and current year rate increases slightly offset by lost revenues from the impact of weather on southeast and southwest terminals.
Purchased Transportation

Pool purchased transportation increased $0.3 million, or 3.0%, to $10.4 million for the three months ended September 30, 2017 compared to $10.1 million for the same period of 2016.  Pool purchased transportation as a percentage of revenue was 26.5% for the three months ended September 30, 2017 compared to 27.7% for the same period of 2016.  The improvement in Pool purchased transportation as a percentage of revenue was attributable to an increased utilization of owner operators over more costly third party carriers and revenue increases associated with rate increases.
Salaries, Wages, and Benefits

Pool salaries, wages and employee benefits increased $0.9 million, or 6.3%, to $15.3 million for the three months ended September 30, 2017 compared to $14.4 million for the same period of 2016.  As a percentage of Pool operating revenue, salaries, wages and benefits increased to 39.0% for the three months ended September 30, 2017 compared to 39.6% for the same period in 2016.   The decrease in salaries, wages and benefits as a percentage of revenue was the result of improvements in dock efficiencies and decreased driver pay partly offset by increases in employee incentives, administrative salaries and workers' compensation costs. These decreases benefited from the revenue volumes discussed above.
Operating Leases

Operating leases were $3.3 million for the three months ended September 30, 2017 and 2016.  Operating leases were 8.4% of Pool operating revenue for the three months ended September 30, 2017 compared with 9.1% in the same period of 2016.  Operating


leases decreased as a percentage of revenue due to decreases in facility rent, as prior year included transition and relocation costs for certain terminals that did not occur in the third quarter of 2017.
Depreciation and Amortization

Pool depreciation and amortization increased $0.3 million, or 21.4%, to $1.7 million for the three months ended September 30, 2017 from $1.4 million for the same period in 2016. Depreciation and amortization expense as a percentage of Pool operating revenue was 4.4% in the third quarter of 2017 compared to 3.8% in the same period of 2016. The increase in Pool depreciation and amortization in total dollars was due to the allocation of trailer depreciation, which reflect Pool's increased utilization of our trailer fleet.
Insurance and Claims

Pool insurance and claims expense increased $0.1 million, or 10.0%, to $1.1 million for the three months ended September 30, 2017 from $1.0 million for the same period of 2016.  Insurance and claims were 2.8% of operating revenue for the three months ended September 30, 2017 compared to 2.7% in the same period of 2016. The increase as a percentage of revenue was due to increased vehicle insurance premiums.
Fuel Expense

Pool fuel expense increased $0.1 million, or 8.3%, to $1.3 million for the third quarter of 2017 from $1.2 million in the same period of 2016.  Fuel expenses were 3.3% of Pool operating revenue in the third quarter of 2017 and 2016.  Pool fuel expenses increased in total dollars due to an increase in year-over-year fuel prices and higher revenue volumes. These increases were partially offset by increased utilization of owner operators.
Other Operating Expenses

Pool other operating expenses increased $0.5 million, or 10.2%, to $5.4 million for the three months ended September 30, 2017 from $4.9 million in the same period of 2016.  Pool other operating expenses for the third quarter of 2017 were 13.8% compared to 13.5% for the same period of 2016.  The increase in percentage of revenue was due to increased activity at agent stations partly offset by decreased dock and office costs.
Results from Operations

Income from operations increased $0.6 million to $0.7 million for the third quarter of 2017 from $0.1 million for the same period in 2016.  Income from operations as a percentage of Pool operating revenue was 1.8% for the three months ended September 30, 2017 compared to 0.3% for the same period of 2016.  The improvement in Pool operating income was primarily the result of increased revenue volumes, current year rate increases and dock, driver and purchased transportation efficiencies slightly mitigated by lost revenues from the impact of weather.



Intermodal - Three Months Ended September 30, 2017 compared to Three Months Ended September 30, 2016

The following table sets forth our historical financial data of the Intermodal segment for the three months ended September 30, 2017 and 2016 (in millions):

Intermodal Segment Information
(In millions)
(Unaudited)
            
 Three months ended
 September 30, Percent of September 30, Percent of   Percent
 2017 Revenue 2016 Revenue Change Change
Operating revenue$42.3
 100.0% $27.6
 100.0% $14.7
 53.3%
            
Operating expenses:
          
Purchased transportation17.5
 41.4
 9.7
 35.1
 7.8
 80.4
Salaries, wages and employee benefits9.0
 21.3
 6.6
 23.9
 2.4
 36.4
Operating leases3.8
 9.0
 3.3
 12.0
 0.5
 15.2
Depreciation and amortization1.7
 4.0
 1.0
 3.6
 0.7
 70.0
Insurance and claims1.2
 2.8
 0.8
 2.9
 0.4
 50.0
Fuel expense1.1
 2.6
 0.7
 2.5
 0.4
 57.1
Other operating expenses4.5
 10.6
 2.5
 9.1
 2.0
 80.0
Total operating expenses38.8
 91.7
 24.6
 89.1
 14.2
 57.7
Income from operations$3.5
 8.3% $3.0
 10.9% $0.5
 16.7%

Revenues

Intermodal operating revenue increased $14.7 million, or 53.3%, to $42.3 million for the three months ended September 30, 2017 from $27.6 million for the same period in 2016.  The increases in operating revenue were primarily attributable to the acquisitions of Atlantic and Triumph, the impact of increased fuel surcharges and increased storage revenues.

Purchased Transportation

Intermodal purchased transportation increased $7.8 million, or 80.4%, to $17.5 million for the three months ended September 30, 2017 from $9.7 million for the same period in 2016.  Intermodal purchased transportation as a percentage of revenue was 41.4% for the three months ended September 30, 2017 compared to 35.1% for the three months ended September 30, 2016.  The increase in Intermodal purchased transportation as a percentage of revenue was attributable to higher utilization of owner operators as opposed to Company-employed drivers, as Atlantic utilized more owner operators than Company drivers.

Salaries, Wages, and Benefits

Intermodal salaries, wages and employee benefits increased $2.4 million, or 36.4%, to $9.0 million for the three months ended September 30, 2017 compared to $6.6 million for the three months ended September 30, 2016.  As a percentage of Intermodal operating revenue, salaries, wages and benefits decreased to 21.3% for the three months ended September 30, 2017 compared to 23.9% for the same period in 2016. The improvement in salaries, wages and employee benefits as a percentage of revenue was attributable to lower workers' compensation and health insurance costs and dock efficiencies.

Operating Leases

Operating leases increased $0.5 million, or 15.2%, to $3.8 million for the three months ended September 30, 2017 compared to $3.3 million for the same period of 2016.  Operating leases were 9.0% of Intermodal operating revenue for the three months ended September 30, 2017 compared with 12.0% in the same period of 2016.  Operating leases decreased as a percentage of revenue due to consistent trailer rental charges while other revenue that does not require trailer rentals increased. The decrease as a percentage of revenue is also attributable utilization of owned equipment acquired from Atlantic.




Depreciation and Amortization

Depreciation and amortization increased $0.7 million, or 70.0%, to $1.7 million for the three months ended September 30, 2017 compared to $1.0 million for the same period in 2016. Depreciation and amortization expense as a percentage of Intermodal operating revenue was 4.0% in the third quarter of 2017 compared to 3.6% in the same period of 2016. The higher depreciation and amortization was due to the acquisitions of equipment and intangible assets from Atlantic and Triumph.

Insurance and Claims

Intermodal insurance and claims increased $0.4 million, or 50.0%, to $1.2 million for the three months ended September 30, 2017 from $0.8 million for the same period in 2016. Intermodal insurance and claims were 2.8% of operating revenue for the three months ended September 30, 2017 compared with 2.9% for the same period in 2016. The increase in Intermodal insurance and claims was attributable to higher insurance premiums due to acquisitions.

Fuel Expense

Intermodal fuel expense increased $0.4 million, or 57.1%, to $1.1 million for the third quarter of 2017 from $0.7 million in the same period of 2016.  Fuel expenses were 2.6% of Intermodal operating revenue in the third quarter of 2017 compared with 2.5% for the same period of 2016.  Intermodal fuel expenses increased on higher year-over-year fuel prices and revenue volumes. These increases were partially offset by higher utilization of owner operators as opposed to Company-employed drivers.
Other Operating Expenses
Intermodal other operating expenses increased $2.0 million, or 80.0%, to $4.5 million for the three months ended September 30, 2017 compared to $2.5 million for the same period of 2016.  Intermodal other operating expenses for the third quarter of 2017 were 10.6% compared to 9.1% for the same period of 2016.  The increase in Intermodal other operating expenses was due mostly to a $1.3 million increase in container related rental and storage charges associated with revenue increases discussed previously. The increase was also due to higher terminal expenses and other variable costs, such as maintenance and tolls, corresponding with the increases in revenue and professional fees related to the acquisition of Atlantic.
Income from Operations
Intermodal’s income from operations increased by $0.5 million, or 16.7%, to $3.5 million for the third quarter of 2017 compared with $3.0 million for the same period in 2016.  Income from operations as a percentage of Intermodal operating revenue was 8.3% for the three months ended September 30, 2017 compared to 10.9% in the same period of 2016.  The increase in operating income was primarily attributable to the Atlantic and Triumph acquisitions. The decrease in income from operations as a percentage of revenue was attributable to increased depreciation and amortization associated with Intermodal's acquisitions, insurance premiums and acquisition related professional fees.


Other Operations

Other operating activity improved from a $1.4 million operating loss during the three months ended September 30, 2016 to a $0.6 million operating loss during the three months ended September 30, 2017. The $0.6 million of other expenses for the three months ended September 30, 2017 is due to increased claims activity during 2017 resulting in increases to our loss development factors for workers' compensation and vehicle claims.

The $1.4 million in operating loss included in other operations and corporate activities for the three months ended September 30, 2016 was primarily for a $0.6 million increase to reserves for remaining net payments on duplicate facilities vacated following the Towne acquisition, as several facilities had yet to be sub-leased. The remaining $0.8 million was due to increased claims activity during 2016 resulting in increases to our loss development factors for workers' compensation and vehicle claims. 




Results from Operations
The following table sets forth our consolidated historical financial data$150,249 for the nine months ended September 30, 2017 and 2016 (in millions):2022 compared to $65,394 for the nine months ended September 30, 2021.

41

Table of Contents

 Nine months ended September 30
 2017 2016 Change Percent Change
Operating revenue:       
Expedited LTL$448.6
 $423.4
 $25.2
 6.0 %
Expedited Truckload132.9
 120.3
 12.6
 10.5
Pool Distribution113.8
 101.2
 12.6
 12.5
Intermodal105.9
 76.4
 29.5
 38.6
Eliminations and other operations(6.5) (3.5) (3.0) 85.7
Operating revenue794.7
 717.8
 76.9
 10.7
Operating expenses:       
   Purchased transportation342.0
 300.8
 41.2
 13.7
   Salaries, wages, and employee benefits191.3
 175.9
 15.4
 8.8
   Operating leases47.2
 44.7
 2.5
 5.6
   Depreciation and amortization30.6
 28.4
 2.2
 7.7
   Insurance and claims21.4
 19.2
 2.2
 11.5
   Fuel expense11.4
 9.4
 2.0
 21.3
   Other operating expenses70.9
 65.2
 5.7
 8.7
   Impairment of goodwill, intangibles and other assets
 42.4
 (42.4) 100.0
      Total operating expenses714.8
 686.0
 28.8
 4.2
Income (loss) from operations:       
Expedited LTL64.6
 63.0
 1.6
 2.5
Expedited Truckload3.7
 (36.7) 40.4
  NM
Pool Distribution3.7
 (0.2) 3.9
  NM
Intermodal9.1
 8.2
 0.9
 11.0
Other operations(1.2) (2.5) 1.3
 (52.0)
Income from operations79.9
 31.8
 48.1
 151.3
Other expense:       
   Interest expense(0.8) (1.2) 0.4
 (33.3)
   Other, net
 (0.2) 0.2
 (100.0)
      Total other expense(0.8) (1.4) 0.6
 (42.9)
Income before income taxes79.1
 30.4
 48.7
 160.2
Income taxes27.2
 15.4
 11.8
 76.6
Net income$51.9
 $15.0
 $36.9
 246.0 %



Expedited LTLFreight - Nine Months Ended September 30, 20172022 compared to Nine Months Ended September 30, 20162021


The following table sets forth our historicalthe financial data of theour Expedited LTLFreight segment for the nine months ended September 30, 20172022 and 2016 (in millions)2021 (unaudited and in thousands):

Nine Months Ended
 September 30,
2022
Percent of RevenueSeptember 30,
2021
Percent of RevenueChangePercent Change
Operating revenues:
Network1
$726,054 61.5 %$579,373 58.1 %$146,681 25.3 %
Truckload171,659 14.5 162,999 16.3 8,660 5.3 
Final Mile215,608 18.3 203,494 20.4 12,114 6.0 
Other67,762 5.7 51,612 5.2 16,150 31.3 
Total operating revenues1,181,083 100.0 997,478 100.0 183,605 18.4 
Operating expenses:
Purchased transportation613,392 51.9 538,608 54.0 74,784 13.9 
Salaries, wages and employee benefits209,259 17.7 195,145 19.6 14,114 7.2 
Operating leases47,483 4.0 43,773 4.4 3,710 8.5 
Depreciation and amortization23,438 2.0 20,361 2.0 3,077 15.1 
Insurance and claims26,258 2.2 24,070 2.4 2,188 9.1 
Fuel expense8,752 0.7 6,365 0.6 2,387 37.5 
Other operating expenses85,410 7.2 75,302 7.5 10,108 13.4 
Total operating expenses1,013,992 85.9 903,624 90.6 110,368 12.2 
Income from operations$167,091 14.1 %$93,854 9.4 %$73,237 78.0 %
1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

42

Table of Contents

Expedited LTL Segment Information
(In millions)
(Unaudited)
            
 Nine months ended
 September 30, Percent of September 30, Percent of   Percent
 2017 Revenue 2016 Revenue Change Change
Operating revenue$448.6
 100.0% $423.4
 100.0% $25.2
 6.0%
            
Operating expenses:           
Purchased transportation180.5
 40.2
 165.5
 39.1
 15.0
 9.1
Salaries, wages and employee benefits107.0
 23.9
 102.6
 24.2
 4.4
 4.3
Operating leases27.6
 6.2
 25.5
 6.0
 2.1
 8.2
Depreciation and amortization16.5
 3.7
 16.3
 3.8
 0.2
 1.2
Insurance and claims10.3
 2.3
 10.1
 2.4
 0.2
 2.0
Fuel expense2.8
 0.6
 2.4
 0.6
 0.4
 16.7
Other operating expenses39.3
 8.7
 38.0
 9.0
 1.3
 3.4
Total operating expenses384.0
 85.6
 360.4
 85.1
 23.6
 6.5
Income from operations$64.6
 14.4% $63.0
 14.9% $1.6
 2.5%
Expedited Freight Operating Statistics
Nine Months Ended
September 30,
2022
September 30,
2021
Percent Change
Business days192 191 0.5 %
Tonnage1,2
    Total pounds2,145,744 2,067,346 3.8 
    Pounds per day11,176 10,824 3.3 
Shipments1,2
    Total shipments2,769 2,967 (6.7)
    Shipments per day14.4 15.5 (7.1)
Weight per shipment775 697 11.2 
Revenue per hundredweight3
$34.09 $28.35 20.2 
Revenue per hundredweight, ex fuel3
$25.95 $23.68 9.6 
Revenue per shipment3
$264.19 $197.52 33.8 
Revenue per shipment, ex fuel3
$201.10 $165.02 21.9 
1 In thousands
2 Excludes accessorial, Truckload and Final Mile products
3 Includes intercompany revenue between the Network and Truckload revenue streams


43

Table of Contents

Expedited LTL Operating Statistics
      
 Nine months ended
 September 30, September 30, Percent
 2017 2016 Change
      
Operating ratio85.6% 85.1% 0.6 %
      
Business days191.0
 192.0
 (0.5)
Business weeks38.2
 38.4
 (0.5)
      
Expedited LTL:     
Tonnage     
    Total pounds ¹1,828,227
 1,758,689
 4.0
    Average weekly pounds ¹47,859
 45,799
 4.5
      
Linehaul shipments     
    Total linehaul2,893,057
 2,751,019
 5.2
    Average weekly75,734
 71,641
 5.7
      
Forward Air Complete shipments696,873
 579,973
 20.2
As a percentage of linehaul shipments24.1% 21.1% 14.2
      
Average linehaul shipment size632
 639
 (1.1)
      
Revenue per pound 2
     
    Linehaul yield$17.13
 $17.72
 (2.7)
    Fuel surcharge1.17
 0.93
 1.1
    Forward Air Complete3.84
 3.29
 2.5
Total Expedited LTL yield$22.14
 $21.94
 0.9 %
      
¹ - In thousands     
2 - In dollars per hundred pound; percentage change is expressed as a percent of total yield.


Operating Revenues
Expedited LTLFreight operating revenues increased $183,605, or 18.4%, to $1,181,083 for the nine months ended September 30, 2022 from $997,478 for the nine months ended September 30, 2021. The increase was attributable to higher Network, Truckload and Final Mile revenue. Network revenue increased $25.2 million,due to a 3.8% increase in tonnage and a 9.6% increase in revenue per hundredweight ex fuel as compared to the same period in the prior year. The increase in tonnage reflects an increase in weight per shipment of 11.2% on 6.7% fewer number of shipments. The increase in the weight per shipment was the result of more dense freight in our network primarily driven by our freight rationalization actions to capture higher quality freight. The increase in the revenue per hundredweight ex fuel was driven by the execution of our revenue growth strategies, pricing initiatives, including our general rate increase, and continued strong demand for our services. Network fuel surcharge revenue increased $78,265, or 6.0%81.2% as a result of the rise in the average price of fuel and an increase in tonnage. Truckload and Final Mile revenue increased $8,660 and $12,114, respectively, primarily due to continued strong demand for our services. Other revenue, which includes warehousing and terminal handling, increased $16,150 due to the pricing initiatives, partially offset by the lower number of shipments.

Purchased Transportation
Expedited Freight purchased transportation increased $74,784, or 13.9%, to $448.6 million$613,392 for the nine months ended September 30, 2022 from $423.4 million, accounting$538,608 for 56.4%the nine months ended September 30, 2021. Purchased transportation was 51.9% of consolidatedExpedited Freight operating revenue for the nine months ended September 30, 20172022 compared to 59.0%54.0% for the same period in 2016.2021. Expedited Freight purchased transportation includes Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. The increase in revenue is mostly the result of increases to Complete activity and fuel surcharge revenues. Linehaul revenue, which is the largest portion of Expedited LTL, increased $1.7 million, or 0.5%,purchased transportation expense was primarily due to higher Leased Capacity Provider and third party carrier costs, and the increase in tonnage partly offset by the decrease in linehaul yield notedchange in the preceding table. The increasemix of freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers for Network and Truckload services. For the nine months ended September 30, 2022, we purchased 65.7%, 30.9% and 3.4% of our freight capacity from Leased Capacity Providers, third party carriers and Company-employed drivers, respectively. This compares to 66.7%, 29.7% and 3.6% in tonnage is due to a growing percentage of total volume from shipments with higher density attributes and a slightly lower length of haul than our traditional shipments, driving the decrease in average base revenue per pound.

The $25.2 million revenue increase is primarily the result of a $12.3 million, or 21.2%, increase in Complete revenue.  The increase in Complete revenue was attributable to an increase in shipping volumes in our Expedited LTL network and a 14.2% increase in the attachment rate of Complete to linehaul shipments. Additionally, compared to the same period in 2016, net fuel surcharge revenue2021.
Salaries, Wages, and Employee Benefits
Expedited Freight salaries, wages and employee benefits increased $4.9 million largely due to the increase in fuel prices and volume increases. Other terminal based revenues, which includes dedicated local pickup and delivery services, warehousing and terminal handling, increased $6.3 million,$14,114, or 16.7%7.2%, to $43.8 million in the first nine months of 2017 from $37.5 million in the same period of 2016. The increase in other terminal revenue was mainly attributable to increases in dedicated local pickup and delivery.

Purchased Transportation
LTL purchased transportation increased by $15.0 million, or 9.1%, to $180.5 million$209,259 for the nine months ended September 30, 20172022 from $165.5 million$195,145 for the nine months ended September 30, 2016. As2021.  Salaries, wages and employee benefits were 17.7% of Expedited Freight operating revenues for the nine months ended September 30, 2022 compared to 19.6% for the same period in 2021.  The increase in salaries, wages and employee benefits expense was primarily due to additional employees hired in response to the increased volumes in 2022, higher salaries and wages, and an increase in the reserve for incentive compensation as compared to the same period in 2021.
Operating Leases
Expedited Freight operating leases increased $3,710, or 8.5%, to $47,483 for the nine months ended September 30, 2022 from $43,773 for the nine months ended September 30, 2021. Operating leases were 4.0% of Expedited Freight operating revenues for the nine months ended September 30, 2022 compared to 4.4% for the same period in 2021. The increase in operating leases expense was primarily due to higher facility expense, partially offset by fewer equipment leases for the nine months ended September 30, 2022 as compared to the same period in 2021.
Depreciation and Amortization
Expedited Freight depreciation and amortization increased $3,077, or 15.1%, to $23,438 for the nine months ended September 30, 2022 from $20,361 for the nine months ended September 30, 2021.  Depreciation and amortization was 2.0% of Expedited Freight operating revenues for both the nine months ended September 30, 2022 and 2021. The increase in depreciation and amortization expense was primarily due to an increase in equipment depreciation for the nine months ended September 30, 2022 as compared to the same period in 2021.

44

Table of Contents

Insurance and Claims
Expedited Freight insurance and claims increased $2,188, or 9.1%, to $26,258 for the nine months ended September 30, 2022 from $24,070 for the nine months ended September 30, 2021.  Insurance and claims were 2.2% of Expedited Freight operating revenues for the nine months ended September 30, 2022 compared to 2.4% for the same period in 2021. The increase in insurance and claims expense was primarily due to an increase in insurance premiums and vehicle repairs, partially offset by a percentagedecrease in cargo claims and vehicle liability claims for the nine months ended September 30, 2022 as compared to the same period in 2021. See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations section below.
Fuel Expense
Expedited Freight fuel expense increased $2,387, or 37.5%, to $8,752 for the nine months ended September 30, 2022 from $6,365 for the nine months ended September 30, 2021.  Fuel expense was 0.7% of segmentExpedited Freight operating revenue, LTL purchased transportation was 40.2%revenues for the nine months ended September 30, 2022 compared to 0.6% for the same period in 2021. Fuel expense increased primarily due to the rise in the average price of fuel during the nine months ended September 30, 2017 compared to 39.1% for the same period in 2016. The increase is mostly due to a 4.4% increase in 2022.
Other Operating Expenses
Expedited LTL cost per mile. The higher cost per mile is due toFreight other operating expenses increased utilization of third party transportation providers, which are more costly than owner operators. The increase is also due to increased Complete attachment on higher linehaul volumes. Complete purchased transportation has a higher percentage of revenue than linehaul.
Salaries, Wages, and Benefits
Salaries, wages and employee benefits of LTL increased by $4.4 million,$10,108, or 4.3%13.4%, to $107.0 million$85,410 for the nine months ended September 30, 20172022 from $102.6 million in the same period of 2016. Salaries, wages and employee benefits were 23.9% of LTL’s operating revenue$75,302 for the nine months ended September 30, 2017 compared to 24.2% for the same period2021. Other operating expenses were 7.2% of 2016.   The improvement in salaries, wages and employee benefits as a percentage of revenue was primarily attributable to a 0.2% decrease in health insurance costs and a 0.1% decrease in workers' compensation costs as a percentage of revenue.
Operating Leases
Operating leases increased $2.1 million, or 8.2%, to $27.6 millionExpedited Freight operating revenues for the nine months ended September 30, 2017 from $25.5 million2022 compared to 7.5% for the same period in 2016.  Operating leases were 6.2% of LTL2021. Other operating revenue for the nine months ended September 30, 2017 compared to 6.0% for the same period in 2016. The increase in cost is due to $1.1 million of additionalexpenses include equipment maintenance, facility lease expenses, and a $1.0 million increase in truck, trailer and equipment rentals and leases. Facility leases increased due to the expansion of certain facilities. Vehicle leases increased due to the replacement of older owned power equipment with leased power equipment.
Depreciation and Amortization
Depreciation and amortization increased $0.2 million, or 1.2%, to $16.5 million for the nine months ended September 30, 2017 from $16.3 million in the same period of 2016.  Depreciation and amortization expense as a percentage of LTL operating revenue was 3.7% in the nine months ended September 30, 2017 compared to 3.8% in the same period of 2016.  The decrease as a percentage of revenue was due to the increase in equipment leasing mentioned above instead of purchased equipment.
Insurance and Claims
LTL insurance and claims expense increased $0.2 million, or 2.0%, to $10.3 million for the nine months ended September 30, 2017 from $10.1 million for the nine months ended September 30, 2016.  Insurance and claims was 2.3% of operating revenue for the nine months ended September 30, 2017 compared to 2.4% for the same period of 2016. The increase in dollars was partly attributable to a $0.5 million increase in insurance premiums associated with our insurance plan renewals and a $0.5 million increase in vehicle claim reserves primarily due to current period development of a reserve for a prior period accident. These increases were mostly offset by decreases in vehicle damage and cargo claims and claim related legal and professional fees.


Fuel Expense

LTL fuel expense increased $0.4 million, or 16.7%, to $2.8 million for the nine months ended September 30, 2017 from $2.4 million in the same period of 2016.  Fuel expenses were 0.6% of LTL operating revenue for the nine months ended September 30, 2017fees, and 2016.  LTL fuel expenses increased due to higher year-over-year fuel prices.
Other Operating Expenses
Other operating expenses increased $1.3 million, or 3.4%, to $39.3 million for the nine months ended September 30, 2017 from $38.0 million in the same period of 2016.  Other operating expenses were 8.7% of LTL operating revenue in the nine months ended September 30, 2017 compared to 9.0% in the same period of 2016.other over-the-road costs. The decrease as percentage of revenue was primarily the result a decrease in legal fees mostly related to indemnification funds received related to the Towne acquisition. The prior period also included a corporate event that did not occur in 2017. These improvements were partly offset by an increase in receivables allowance.
Income from Operations
Income from operations increased by $1.6 million, or 2.5%, to $64.6 million for the nine months ended September 30, 2017 compared with $63.0 million for the same period in 2016.  Income from operations as a percentage of LTL operating revenue was 14.4% for the nine months ended September 30, 2017 compared with 14.9% in the same period of 2016. Deterioration in income from operations was caused by an increased utilization of third party transportation providers partly offset by higher tonnage driving increased Complete, fuel surcharge and linehaul revenues.


Truckload Premium Services - Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016

The following table sets forth our historical financial data of the Truckload Premium Services segment for the nine months ended September 30, 2017 and 2016 (in millions):
Truckload Premium Services Segment Information
(In millions)
(Unaudited)
            
 Nine months ended
 September 30, Percent of September 30, Percent of   Percent
 2017 Revenue 2016 Revenue Change Change
Operating revenue$132.9
 100.0% $120.3
 100.0 % $12.6
 10.5 %
            
Operating expenses:           
Purchased transportation95.9
 72.2
 83.7
 69.6
 12.2
 14.6
Salaries, wages and employee benefits15.2
 11.4
 14.4
 12.0
 0.8
 5.6
Operating leases0.5
 0.4
 0.3
 0.2
 0.2
 66.7
Depreciation and amortization4.7
 3.5
 4.9
 4.1
 (0.2) (4.1)
Insurance and claims4.3
 3.2
 2.9
 2.4
 1.4
 48.3
Fuel expense2.3
 1.7
 1.9
 1.6
 0.4
 21.1
Other operating expenses6.3
 4.8
 6.5
 5.4
 (0.2) (3.1)
Impairment of goodwill, intangibles and other assets

 
 42.4
 35.2
 (42.4) 100.0
Total operating expenses129.2
 97.2
 157.0
 130.5
 (27.8) (17.7)
Income (loss) from operations$3.7
 2.8% $(36.7) (30.5)% $40.4
 NM

Truckload Premium Services Operating Statistics
  
 Nine months ended
 September 30, September 30, Percent
 2017 2016 Change
      
    Company driver 1
5,707
 5,074
 12.5 %
    Owner operator 1
35,718
 37,740
 (5.4)
    Third party 1
30,460
 22,904
 33.0
Total Miles71,885
 65,718
 9.4
      
Revenue per mile$1.79
 $1.78
 0.6
      
Cost per mile$1.41
 $1.36
 3.7 %
      
¹ - In thousands     

Revenues
TLS revenue increased $12.6 million, or 10.5%, to $132.9 million for the nine months ended September 30, 2017 from $120.3 million in the same period of 2016.  The increase in TLS revenue was attributable to new business wins which resulted in an 9.4% increase in miles driven to support revenue.
Purchased Transportation

Purchased transportation costs for our TLS revenue increased $12.2 million, or 14.6%, to $95.9 million for the nine months ended September 30, 2017 from $83.7 million for the nine months ended September 30, 2016. For the nine months ended September 30,


2017, TLS purchased transportation costs represented 72.2% of TLS revenue compared to 69.6% for the same period in 2016.  The increase in TLS purchased transportation was attributable to a 9.1% increase in non-Company miles driven and a 4.0% increase in non-Company cost per mile during the nine months ended September 30, 2017 compared to the same period in 2016. The increase in TLS miles driven was attributable to new business wins discussed above. The increase in cost per mile was due to TLS utilizing third party carriers to cover the additional miles, which are more costly than our network of owner operators. This increased utilization of third party transportation providers also led to the increase in purchased transportation as a percentage of revenue.
Salaries, Wages, and Benefits

Salaries, wages and employee benefits of TLS increased by $0.8 million, or 5.6%, to $15.2 million for the nine months ended September 30, 2017 from $14.4 million in the same period of 2016.  Salaries, wages and employee benefits were 11.4% of TLS’s operating revenue in the nine months ended September 30, 2017 compared to 12.0% for the same period of 2016.  The decrease in salaries, wages and employee benefits as a percentage of revenue was mostly attributable to the increase in revenue outpacing the increase in pay to Company drivers and office staff.
Operating Leases
Operating leases increased $0.2 million, or 66.7%, to $0.5 million for the nine months ended September 30, 2017 from $0.3 million for the same period in 2016.  Operating leases were 0.4% of TLS operating revenue for the nine months ended September 30, 2017 compared to 0.2% for the same period in 2016. The $0.2 million increase in cost is due to additional trailer rentals for the new business wins mentioned above.
Depreciation and Amortization

Depreciation and amortization decreased $0.2 million, or 4.1%, to $4.7 million for the nine months ended September 30, 2017 from $4.9 million in the same period of 2016.  Depreciation and amortization expense as a percentage of TLS operating revenue was 3.5% in the nine months ended September 30, 2017 compared to 4.1% in the same period of 2016.  The decrease was due to the impairment of TQI intangible assets in the second quarter of 2016 leading to lower on-going amortization expense. This decrease was partially offset by increased trailer depreciation on trailers purchased since the third quarter of 2016.
Insurance and Claims

TLS insurance and claims expense increased $1.4 million, or 48.3%, to $4.3 million for the nine months ended September 30, 2017 from $2.9 million for the nine months ended September 30, 2016.  Insurance and claims were 3.2% of operating revenue for the nine months ended September 30, 2017 compared to 2.4% in the same period of 2016. The increase was due to higher reserves for vehicle liability, which included a large increase for developments on a single claim. The increase was also attributable to higher insurance premiums associated with our insurance plan renewals and higher cargo claims partly offset by a benefit from a prior period insurance premium audit.
Fuel Expense

TLS fuel expense increased $0.4 million, or 21.1%, to $2.3 million for the nine months ended September 30, 2017 from $1.9 million for the same period of 2016.  Fuel expense as a percentage of TLS operating revenue was 1.7% for the nine months ended September 30, 2017 compared to 1.6% in the same period of 2016. The increase as a percentage of revenue was mostly attributable to higher year-over-year fuel prices and the increase in Company driver miles.
Other Operating Expenses

Other operating expenses decreased $0.2 million, or 3.1%, to $6.3 million for the nine months ended September 30, 2017 from $6.5 million in the same period of 2016.  Other operating expenses were 4.8% of TLS operating revenue in the nine months ended September 30, 2017 compared to 5.4% in the same period of 2016.  The decline in other operating expenses was primarily due to reduced legal fees.
Impairment of goodwill, intangibles and other assets
In the second quarter of 2016, we determined there were indicators of potential impairment of goodwill and other long lived assets assigned to the TQI acquisition. As a result, we performed fair value calculations as of June 30, 2016. Based on these calculations we recorded $42.4 million in total impairment charges related to TQI’s goodwill and other long lived assets. During the three months ended September 30, 2017, there were no additional indicators of impairment.



Results from Operations
Results from operations increased by $40.4 million to $3.7 million in income from operations for the nine months ended September 30, 2017 compared with a $36.7 million loss from operations for the same period in 2016.  Excluding the impairment charges, the deterioration in results from operations was due to a largean increase in vehicle claims reservesmaintenance costs, terminal and increased utilization of third party transportation providers which led to the increase in cost per mile outpacing the increase in revenue per mile.



Pool Distribution - Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016

The following table sets forth our historical financial data of the Pool Distribution segment for the nine months ended September 30, 2017office expenses, recruiting costs, and 2016 (in millions):

Pool Distribution Segment Information
(In millions)
(Unaudited)
            
 Nine months ended
 September 30, Percent of September 30, Percent of   Percent
 2017 Revenue 2016 Revenue Change Change
Operating revenue$113.8
 100.0% $101.2
 100.0 % $12.6
 12.5%
            
Operating expenses:           
Purchased transportation29.9
 26.2
 27.6
 27.3
 2.3
 8.3
Salaries, wages and employee benefits43.8
 38.5
 39.0
 38.5
 4.8
 12.3
Operating leases9.6
 8.4
 9.2
 9.1
 0.4
 4.3
Depreciation and amortization5.0
 4.4
 4.4
 4.3
 0.6
 13.6
Insurance and claims3.2
 2.8
 3.2
 3.2
 
 
Fuel expense3.7
 3.3
 3.3
 3.3
 0.4
 12.1
Other operating expenses14.9
 13.1
 14.7
 14.5
 0.2
 1.4
Total operating expenses110.1
 96.7
 101.4
 100.2
 8.7
 8.6
Income (loss) from operations$3.7
 3.3% $(0.2) (0.2)% $3.9
 NM

Revenues

Pool operating revenue increased $12.6 million, or 12.5%, to $113.8 million for the nine months ended September 30, 2017 from $101.2 million for the same period in 2016.  The increase was attributable to increased volume from previously existing customers and current year rate increases.
Purchased Transportation

Pool purchased transportation increased $2.3 million, or 8.3%, to $29.9 million for the nine months ended September 30, 2017 compared to $27.6 million for the same period of 2016.  Pool purchased transportation as a percentage of revenue was 26.2% for the nine months ended September 30, 2017 compared to 27.3% for the same period of 2016.  The improvement in Pool purchased transportation as a percentage of revenue was attributable to an increased utilization of owner operators over more costly third party carriers and revenue increases associated with rate increases.
Salaries, Wages, and Benefits

Pool salaries, wages and employee benefits increased $4.8 million, or 12.3%, to $43.8 million for the nine months ended September 30, 2017 compared to $39.0 million for the same period of 2016.  As a percentage of Pool operating revenue, salaries, wages and benefits was 38.5% for the nine months ended September 30, 2017 and 2016.  As a percentage of revenue, increases in dock pay and employee incentive were offset by decreases in Company driver pay, administrative salaries, wages and benefits and workers' compensation costs. Dock pay deteriorated as a percentage of revenue as increasing revenue volumes required the use of more costly contract labor.
Operating Leases

Operating leases increased $0.4 million, or 4.3%, to $9.6 million for the nine months ended September 30, 2017 from $9.2 million for the same period in 2016.  Operating leases were 8.4% of Pool operating revenue for the nine months ended September 30, 2017 compared with 9.1% in the same period of 2016.  Operating leases increased in total dollars due to additional truck and trailer leases and rentals used to provide capacity for additional business wins throughout the network. The decrease as a percentage of


revenue is attributable to decreases in facility rent, as 2016 included transition and relocation costs of certain terminals that did not occur in 2017.
Depreciation and Amortization

Pool depreciation and amortization increased $0.6 million, or 13.6%, to $5.0 million for the nine months ended September 30, 2017 from $4.4 million for the same period in 2016. Depreciation and amortization expense as a percentage of Pool operating revenue was 4.4% for the nine months ended September 30, 2017 compared to 4.3% for the same period of 2016. The increase in Pool depreciation and amortization in total dollars was due to the allocation of trailer depreciation, which reflect Pool's increased utilization of our trailer fleet. This increase was partly offset by a decrease in tractor depreciation due to the increased use of rentals and leases mentioned above.
Insurance and Claims

Pool insurance and claims expense was $3.2 million for the nine months ended September 30, 2017 and 2016.  Insurance and claims were 2.8% of operating revenue for the nine months ended September 30, 2017 compared to 3.2% in the same period of 2016. The decrease as a percentage of revenue was due to a decrease in cargo claims and claims related professional fees.
Fuel Expense

Pool fuel expense increased $0.4 million, or 12.1%, to $3.7 million for the nine months ended September 30, 2017 from $3.3 million in the same period of 2016.  Fuel expenses were 3.3% of Pool operating revenue during the nine months ended September 30, 2017 and 2016.  Pool fuel expenses increased in total dollars due to higher year-over-year fuel prices and higher revenue volumes. These increases were partially offset by increased utilization of owner operators.
Other Operating Expenses

Pool other operating expenses increased $0.2 million, or 1.4%, to $14.9 million for the nine months ended September 30, 2017 compared to $14.7 million for the same period of 2016.  Pool other operatingtravel expenses for the nine months ended September 30, 2017 were 13.1% of operating revenue2022 as compared to 14.5% for the same period of 2016.  The decrease as a percentage of revenue is due to improved margins at agent stations, reduced legal fees and decreases in dock and office costs.2021.
ResultsIncome from Operations
ResultsExpedited Freight income from operations increased by $3.9 million$73,237, or 78.0%, to $3.7 million in income from operations$167,091 for the nine months ended September 30, 20172022 compared with a $0.2 million loss from operations for the same period in 2016.  Income from operations as a percentage of Pool operating revenue was 3.3%to $93,854 for the nine months ended September 30, 20172021.  Income from operations was 14.1% of Expedited Freight operating revenues in the nine months ended September 30, 2022 compared to a 0.2% loss from operations in9.4% for the same period in 2021. The increase in income from operations as a percentage of 2016.   The improvement in Pool operating resultsrevenues was primarily due to increased tonnage and revenue per hundredweight ex fuel combined with higher fuel surcharge revenue, partially offset by the resultchange in mix of freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers, and higher revenue volumes, current year rate increases, the reduction of cargo claims, agent station margin improvementsLeased Capacity Provider and purchased transportation efficiencies.third party carrier costs.

45


Table of Contents

Intermodal - Nine Months EndedSeptember 30, 20172022 compared to Nine Months Ended September 30, 20162021


The following table sets forth our historicalthe financial data of theour Intermodal segment for the nine months ended September 30, 20172022 and 2016 (in millions)2021 (unaudited and in thousands):


Nine Months Ended
 September 30,
2022
Percent of RevenueSeptember 30,
2021
Percent of RevenueChangePercent Change
Operating revenues$311,272 100.0 %$205,820 100.0 %$105,452 51.2 %
Operating expenses:
Purchased transportation80,441 25.8 67,354 32.7 13,087 19.4 
Salaries, wages and employee benefits54,711 17.6 47,889 23.3 6,822 14.2 
Operating leases23,613 7.6 16,193 7.9 7,420 45.8 
Depreciation and amortization11,455 3.7 7,664 3.7 3,791 49.5 
Insurance and claims6,639 2.1 7,465 3.6 (826)(11.1)
Fuel expense12,198 3.9 5,853 2.8 6,345 108.4 
Other operating expenses79,210 25.4 31,795 15.4 47,415 149.1 
Total operating expenses268,267 86.2 184,213 89.5 84,054 45.6 
Income from operations$43,005 13.8 %$21,607 10.5 %$21,398 99.0 %

Intermodal Operating Statistics
Nine Months Ended
September 30,
2022
September 30,
2021
Percent Change
Drayage shipments272,534 278,488 (2.1)%
Drayage revenue per shipment1
$1,003 $632 58.7 
1 Excludes revenue derived from container freight station warehouse and handling, and linehaul and LTL services.

46

Table of Contents

Intermodal Segment Information
(In millions)
(Unaudited)
            
 Nine months ended
 September 30, Percent of September 30, Percent of   Percent
 2017 Revenue 2016 Revenue Change Change
Operating revenue$105.9
 100.0% $76.4
 100.0% $29.5
 38.6%
            
Operating expenses:           
Purchased transportation41.2
 38.9
 26.5
 34.7
 14.7
 55.5
Salaries, wages and employee benefits23.8
 22.5
 18.6
 24.3
 5.2
 28.0
Operating leases10.0
 9.4
 9.2
 12.0
 0.8
 8.7
Depreciation and amortization4.3
 4.1
 2.8
 3.7
 1.5
 53.6
Insurance and claims3.3
 3.1
 2.2
 2.9
 1.1
 50.0
Fuel expense2.7
 2.5
 1.8
 2.4
 0.9
 50.0
Other operating expenses11.5
 10.9
 7.1
 9.3
 4.4
 62.0
Total operating expenses96.8
 91.4
 68.2
 89.3
 28.6
 41.9
Income from operations$9.1
 8.6% $8.2
 10.7% $0.9
 11.0%

Operating Revenues


Intermodal operating revenuerevenues increased $29.5 million,$105,452, or 38.6%51.2%, to $105.9 million$311,272 for the nine months ended September 30, 20172022 from $76.4 million for the same period in 2016.   The increases in operating revenue were primarily attributable to the acquisition of Atlantic, Ace and Triumph, the impact of increased fuel surcharges and increased storage revenues.

Purchased Transportation

Intermodal purchased transportation increased $14.7 million, or 55.5%, to $41.2 million$205,820 for the nine months ended September 30, 2017 from $26.5 million for2021. The increase in operating revenue was primarily attributable to a 58.7% increase in drayage revenue per shipment as compared to the same period in 2016.  2021. The increase in drayage revenue per shipment was driven by execution of our pricing initiatives, the acquisitions of BarOle in November 2021 and Edgmon in May 2022, higher accessorial revenue in support of our customers and continued strong demand for our services. In addition, fuel surcharge revenue increased $19,978, or 101.5% as a result of the rise in the average price of fuel.

Purchased Transportation

Intermodal purchased transportation as a percentage of revenue was 38.9%increased $13,087, or 19.4%, to $80,441 for the nine months ended September 30, 2017 compared to 34.7%2022 from $67,354 for the nine months ended September 30, 2016.2021.  Purchased transportation was 25.8% of Intermodal operating revenues for the nine months ended September 30, 2022 compared to 32.7% for the same period in 2021.  Intermodal purchased transportation includes Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. The increase in Intermodal purchased transportation as a percentage of revenuecosts was attributableprimarily due to higher utilizationLeased Capacity Provider and third party carrier costs, and the change in the mix of owner operators as opposed tofreight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers, as Atlantic utilized more owner operators than Company drivers.


Salaries, Wages, and Employee Benefits


Intermodal salaries, wages and employee benefits increased $5.2 million,$6,822, or 28.0%14.2%, to $23.8 million$54,711 for the nine months ended September 30, 20172022 compared to $18.6 million$47,889 for the nine months ended September 30, 2016.  As a percentage2021.  Salaries, wages and employee benefits were 17.6% of Intermodal operating revenue, salaries, wages and benefits increased to 22.5%revenues for the nine months ended September 30, 20172022 compared to 24.3%23.3% for the same period in 2016.2021.  The improvementincrease in salaries, wages and employee benefits as a percentage of revenueexpense was attributableprimarily due to leveraging theadditional employees hired in 2022 and an increase in revenue on office and administrative salaries. The improvement is also duethe reserve for incentive compensation as compared to lower workers' compensation and health insurance costs and dock and driver efficiencies.the same period in 2021.


Operating Leases


OperatingIntermodal operating leases increased $0.8 million,$7,420, or 8.7%45.8%, to $10.0 million$23,613 for the nine months ended September 30, 20172022 from $9.2 million for the same period in 2016.  Operating leases were 9.4% of Intermodal operating revenue$16,193 for the nine months ended September 30, 2017 compared with 12.0% in the same period of 2016.2021.  Operating leases decreased as a percentagewere 7.6% of revenue due to consistent


trailer rental charges while other revenue that does not require trailer rentals increased. The decrease as a percentage of revenue is also attributable to utilization of owned equipment acquired from Atlantic and the increase in revenue out-pacing the increase in facility rents.

Depreciation and Amortization

Depreciation and amortization increased $1.5 million, or 53.6%, to $4.3 millionIntermodal operating revenues for the nine months ended September 30, 2017 from $2.8 million2022 compared to 7.9% for the same period in 2016. Depreciation2021. The increase in operating leases expense was due to higher facility expense and amortization expense as a percentage of Intermodal operating revenue was 4.1%additional equipment leases for the nine months ended September 30, 2017 from 3.7% for2022 as compared to the same period in 2016. The higher2021.

Depreciation and Amortization

Intermodal depreciation and amortization was due to equipment and intangible assets acquired with Atlantic, Triumph and Ace.

Insurance and Claims

Intermodal insurance and claims expense increased $1.1 million,$3,791, or 50.0%49.5%, to $3.3 million$11,455 for the nine months ended September 30, 20172022 from $2.2 million$7,664 for the nine months ended September 30, 2016.2021.  Depreciation and amortization was 3.7% of Intermodal insurance and claims were 3.1% of operating revenuerevenues for the nine months ended September 30, 20172022 compared with 2.9%to 3.7% for the same period in 2016. 2021. The increase in depreciation and amortization expense was primarily due to the equipment and intangible assets acquired in connection with the acquisitions completed in the fourth quarter of 2021 and the second quarter of 2022.

Insurance and Claims

Intermodal insurance and claims was attributable to increased vehicle liability reserves and higher insurance premiums.

Fuel Expense

Intermodal fuel expense increased $0.9 million,decreased $826, or 50.0%11.1%, to $2.7 million$6,639 for the nine months ended September 30, 20172022 from $1.8 million in the same period of 2016.  Fuel expenses were 2.5% of Intermodal operating revenue$7,465 for the nine months ended September 30, 2017 compared to 2.4% in the same period2021.  Insurance and claims were 2.1% of 2016.  Intermodal fuel expenses increased due to higher year-over-year fuel prices and revenue volumes. These increases were partially offset by increased utilization of owner operators.

Other Operating Expenses

Intermodal other operating expenses increased $4.4 million, or 62.0%, to $11.5 millionrevenues for the nine months ended September 30, 20172022 compared to $7.1 million3.6% for the same period in 2021. The decrease in insurance and claims expense was primarily due to the decrease in insurance premiums and vehicle liability claims, partially offset by an increase in vehicle repairs during the nine months ended September 30, 2022 as compared to the same period in 2021. See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations section below.


47

Table of 2016.  Contents

Fuel Expense

Intermodal other operating expensesfuel expense increased $6,345, or 108.4%, to $12,198 for the nine months ended September 30, 2017 were 10.9%2022 from $5,853 for the nine months ended September 30, 2021. Fuel expense was 3.9% of Intermodal operating revenuerevenues for the nine months ended September 30, 2022 compared to 9.3%2.8% for the same period in 2021. Intermodal fuel expense increased primarily due to the rise in the average price of 2016.fuel for the nine months ended September 30, 2022 as compared to the same period in 2021.

Other Operating Expenses

Intermodal other operating expenses increased $47,415, or 149.1%, to $79,210 for the nine months ended September 30, 2022 compared to $31,795 for the nine months ended September 30, 2021. Other operating expenses were 25.4% of Intermodal operating revenues for the nine months ended September 30, 2022 compared to 15.4% for the same period in 2021. The increase in Intermodal other operating expenses was due mostlyprimarily due to a $2.3 million increaseadditional expenses incurred in container related rentalsupport of the increased accessorial revenues, maintenance costs, bad debt expense, terminal and storage charges associated with revenue increases discussed previously. The remaining increase was due to increased terminaloffice expenses and other variable costs, such as maintenance and tolls, corresponding with the increases in revenue, and legal and professional fees related to the acquisition of Atlantic.

Income from Operations

Intermodal’s income from operations increased by $0.9 million, or 11.0%, to $9.1 million for the nine months ended September 30, 20172022 as compared with $8.2 million forto the same period in 2016.  2021.

Income from Operations

Intermodal income from operations as a percentage of Intermodal operating revenue was 8.6%increased by $21,398, or 99.0%, to $43,005 for the nine months ended September 30, 20172022 compared to 10.7% in$21,607 for the nine months ended September 30, 2021.  Income from operations was 13.8% of Intermodal operating revenues for the nine months ended September 30, 2022 compared to 10.5% for the same period of 2016.in 2021. The increase in operating income in total dollars was primarily attributable to the Atlantic, Ace and Triumph acquisitions. The decrease in income from operations as a percentage of revenueoperating revenues was attributableprimarily due to increased depreciationdrayage revenue per shipment, partially offset by the change in mix of freight capacity purchased from Leased Capacity Providers, third party carriers and amortization associated with Intermodal's acquisitions,Company-employed drivers and higher insurance premiumsLease Capacity Provider and vehicle liability reserves and acquisition related legal and professional fees.third party carrier costs.



Other Operations - Nine Months Ended September 30, 2022 compared to Nine Months Ended September 30, 2021


Other operating activity improved from a $2.5 millionincluded an $5,535 operating loss during the nine months ended September 30, 20162022 compared to a $1.2 million$8,137 operating loss during the nine months ended September 30, 2017.2021. The nine months ended September 30, 2017, includes $0.9 million of executive severance costs and $0.9 millionchange in the operating loss was primarily due to an increase in self-insurance reserves for vehicle liability claims, reserve for an incentive program established for certain employees in 2021, and workers' compensation claims. These costs were partlylegal reserves, partially offset by $0.6 milliona decrease in the reserves for group health insurance claims and professional fees. The increase in the self-insurance reserves for vehicle liability claims was due to the unfavorable loss development factor of indemnification funds receivedhistorical claims. Professional fees related to cybersecurity and shareholder engagement activities in the Towne acquisition. These costs and benefitsamount of $6,955 were kept at the corporate level and not passed through to our operating segments.

The $2.5 million in operating loss included in other operations and corporate activities forincurred during the nine months ended September 30, 2016 was primarily for increases to loss development factors resulting from our bi-annual actuary analysis of our vehicle and workers' compensation claims. Other operating activity for2021. Similar professional fees were not incurred during the nine months ended September 30, 2016 also included a $0.5 million additional reserve for remaining net payments on duplicate facilities vacated following the Towne acquisition, as several facilities had yet to be sub-leased.2022.



Critical Accounting Policies


Our unaudited condensed consolidatedThe discussion and analysis of our financial statementscondition and results of operations are based on our Condensed Consolidated Financial Statements, which have been prepared in accordanceconformity with United StatesU.S. generally accepted accounting principles (“GAAP”GAAP). The preparation of these financial statements in accordanceconformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts reported inof assets and liabilities, and disclosures of contingent assets and liabilities at the unaudited condensed consolidateddate of the financial statements and accompanying notes.  Ourexpenses during the reporting period. On an ongoing basis, management evaluates estimates, including those related to allowance for doubtful accounts and assumptions are basedrevenue adjustments, deferred income taxes and uncertain tax positions, goodwill, other intangible and long-lived assets, and self-insurance loss reserves. Management bases these estimates on historical experience and changes inon various other assumptions that are believed to be reasonable under the business environment.  However, actualcircumstances. Actual results may differ from those estimates under different conditions, sometimes materially.  Criticalassumptions or conditions. A description of critical accounting policies and related judgments and estimates are defined as those that are both most important toaffect the portrayalpreparation of our financial condition and results and require management’s most subjective judgments.  A summary of significant accounting policies is disclosed in Note 1 to the Condensed Consolidated Financial Statements includedis set forth in our 2016the Annual Report on Form 10-K. Our critical accounting policies are further described under the caption “Discussion of Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2016 Annual Report on Form 10-K.

Valuation of Goodwill and Other Long Term Assets
We test our goodwill for impairment annually or more frequently if events or circumstances indicate impairment may exist. Examples of such events or circumstances could include a significant change in business climate or a loss of significant customers. We complete our annual analysis of our reporting units as of the last day of our second quarter, June 30th. We first consider our reporting unit and related components in accordance with U.S. GAAP. Goodwill is allocated to reporting units that are expected to benefit from the business combinations generating the goodwill. We have five reporting units - Expedited LTL, TLX Forward Air, Intermodal, Pool Distribution and Total Quality, Inc. ("TQI"). The TLX Forward Air and the TQI reporting units are assigned to the Truckload Premium Services reportable segment. Currently, there is no goodwill assigned to the TLX Forward Air reporting unit. In evaluating reporting units, we first assess qualitative factors to determine whether it is more likely than not that the fair value of any of its reporting units is less than its carrying amount, including goodwill. When performing the qualitative assessment, we consider the impact of factors including, but not limited to, macroeconomic and industry conditions, overall financial performance of each reporting unit, litigation and new legislation. If based on the qualitative assessments, we believe it is more likely than not that the fair value of any reporting unit is less than the reporting unit's carrying amount, or periodically as deemed appropriate by management, we will prepare an estimation of the respective reporting unit's fair value utilizing a quantitative approach. If this estimation of fair value indicates that impairment potentially exists, we will then measure the amount of the impairment, if any. Goodwill impairment exists when the calculated implied fair value of goodwill is less than its carrying value.
We determine the fair value of our reporting units based on a combination of a market approach, which considers comparable companies, and the income approach, using a discounted cash flow model. Under the market approach, valuation multiples are derived based on a selection of comparable companies and applied to projected operating data for each reporting unit to arrive at an indication of fair value. Under the income approach, the discounted cash flow model determines fair value based on the present value of management prepared projected cash flows over a specific projection period and a residual value related to future cash flows beyond the projection period. Both values are discounted using a rate which reflects our best estimate of the weighted average cost of capital of a market participant, and is adjusted for appropriate risk factors. We believe the most sensitive estimate used in our income approach is the management prepared projected cash flows. Consequently, we perform sensitivity tests to ensure reductions of the present value of the projected cash flows by at least 10% would not adversely impact the results of the goodwill impairment tests. Historically, we have equally weighted the income and market approaches as we believed the quality and quantity of the collected information were approximately equal. The inputs used in the fair value calculations for goodwill are classified within level 3 of the fair value hierarchy as defined in the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.


In 2017, based on our qualitative analysis of the LTL, Intermodal and Pool reporting units we determined it is more likely than not that the fair value of these reporting units exceeded their respective carrying amounts, including goodwill. However, we performed a fair value estimation10-K for the TQI reporting unit due to the reporting unit's 2016 goodwill impairment and continuing operating losses. Our 2017 calculations for TQI indicated that, asyear-ended December 31, 2021.


48

Table of June 30, 2017, the fair value of the reporting unit exceeded its carrying value by approximately 15.0%.Contents


For our 2017 TQI analysis the significant assumptions used in the income approach were 10 years of projected net cash flows, a discount rate of 15.5% and a long-term growth rate of 4.0%. As shown with the 2016 TQI goodwill impairment, the estimates used to calculate the fair value of each reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of the reporting unit's fair value and goodwill impairment for the reporting unit.

Impact of Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board ("FASB") issued guidance that changes the accounting for certain aspects of share-based payments to employees. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital ("APIC") pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. We adopted this guidance in January 2017 and the elimination of APIC pools resulted in approximately $0.1 million of income tax benefit during the nine months ended September 30, 2017. This guidance has been applied prospectively and no prior periods have been adjusted.

In February 2016, the FASB, issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The guidance will be effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. We are evaluating the impact of the future adoption of this standard on our consolidated financial statements.

In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance is effective for the interim and annual periods beginning on or after December 15, 2017.

As permitted by the guidance, we will implement the use of full retrospective presentation. While evaluating principal versus agent relationships under the new standard, we determined that we will transition certain revenue streams from an agent to principal relationship. This will cause these revenue streams and their associated costs to be recognized on a gross basis that have historically been netted. This would increase revenue and expenses by approximately $46.0 million for the nine months ended September 30, 2017 and $33.0 million for the same period of 2016 and would have no impact of operating income.

In addition, based on a review of our customer shipping arrangements, we currently believe the implementation of this standard will change our revenue recognition policy from recognizing revenue upon shipment completion to recognizing revenue over time based on the progress toward completion of shipments in transit at each period end.  While the timing of revenue recognition will be accelerated, due to the short duration of our transit times and relatively low dollar value of individual shipments, the anticipated timing impact on our consolidated financial position, revenue and results from operations is not expected to change significantly. 


Liquidity and Capital Resources
 
We have historically financed our working capital needs, including capital expenditures, with available cash, cash flows from operations and borrowings under our bank linescredit facility. We believe that borrowings under our credit facility, together with available cash and internally generated funds, will be sufficient to support our working capital, capital expenditures and debt service requirements for the foreseeable future. To further support liquidity and cash reserves, in December 2021, we entered into a third amendment to our credit facility, which increased the amount available for borrowing to $450,000, consisting of credit. a $300,000 revolving line of credit and a term loan of $150,000. The amendment establishes annual mandatory repayment of the principal amount of the term loan of: 1.0% per annum in 2022 and 2023; 2.5% per annum in 2024 and 2025; 5.0% per annum in 2026; with the remaining unpaid principal being due on July 20, 2026. As of September 30, 2022, we were in compliance with our financial covenants contained in the credit facility and expect to maintain such compliance. In the event that we encounter difficulties, our historical relationships with our lenders has been strong and we anticipate their continued long-term support of our business. Refer to Note 7, Indebtedness, to our Condensed Consolidated Financial Statements for additional information regarding our credit facility.

Cash Flows

Continuing Operations

Net cash provided by operating activities totaled approximately $77.7 millionof continuing operations was $196,814 for the nine months ended September 30, 20172022 compared to approximately $94.6 million$82,752 for the nine months ended September 30, 2016.2021. The $16.9 million decreaseincrease in net cash provided by operating activities is mainly attributableof continuing operations was primarily due to the increase in accounts receivable. Accountsnet income from continuing operations after consideration of non-cash items and a decrease in other receivables. Other receivables increased on higher revenue across all segments and revenues associatedchanged due to the completion of the services rendered under the Transition Services Agreement with the Atlantic acquisition.buyer of the Pool business in October 2021.




Net cash used in investing activities of continuing operations was approximately $34.7 million$64,411 for the nine months ended September 30, 20172022 compared with approximately $39.4 million duringto $43,729 for the nine months ended September 30, 2016.2021. Capital expenditures for the first nine months of 2022 were $25,401, which primarily related to the purchase of technology and operating equipment, and the investment in the expansion of our national hub in Columbus, Ohio. Capital expenditures for the first nine months of 2021 were $23,015, which primarily related to the investment in the expansion of our national hub in Columbus, Ohio. Investing activities duringof continuing operations for the first nine months of 2022 included the acquisition of Edgmon Trucking, LLC for a preliminary purchase price of $40,433 while investing activities for the first nine months of 2021 included the acquisition of Proficient Transport for $15,510 and J&P Hall Express Delivery for $7,543.

Net cash used in financing activities of continuing operations was $122,873 for the nine months ended September 30, 2017 consisted primarily of $22.5 million used2022 compared to acquire Atlantic and net capital expenditures of $12.1 million primarily$27,347 for new trailers and information technology.  Investing activities during the nine months ended September 30, 2016 consisted primarily of $11.8 million used to acquire Ace and Triumph, which are included2021. The change in the Intermodal segment,net cash used in financing activities of continuing operations was primarily due to the proceeds received from credit facility in 2021 and net capital expendituresthe payments made on the credit facility in 2022. During the first nine months of $26.9 million primarily for new trailers, forklifts, computer hardware and internally developed software. The2021, proceeds from disposalthe credit facility were $45,000 as compared to during the first nine months of property and equipment during2022 payments on the credit facility were $48,625.

Discontinued Operation

Net cash used in operating activities of discontinued operation was $— for the nine months ended September 30, 2017 and 2016 were2022 compared to $6,902 for the nine months ended September 30, 2021. The change in net cash used in operating activities of discontinued operation was primarily related to a decrease in net income of discontinued operation after consideration of non-cash items. The sale of Pool was completed on February 12, 2021.

Net cash provided by investing activities of discontinued operation was $— for the nine months ended September 30, 2022 compared to $8,020 for the nine months ended September 30, 2021. The change in the net cash provided by investing activities of discontinued operation was due to the proceeds received from salesthe sale of older trailers and vehicles.the Pool business during the first nine months of 2021. The sale of Pool was completed on February 12, 2021.

Net cash used in financing activities totaled approximately $39.1 millionof discontinued operation was $— for the nine months ended September 30, 20172022 compared withto $1,118 for the nine months ended September 30, 2021. The change in the net cash used in financing activities of $77.2 million for the nine months ended September 30, 2016.  The $38.1 million change in cash from financing activitiesdiscontinued operation was attributabledue to $55.0 million in borrowings from our revolving credit facility partly offset by a $1.4 million decrease in cash from employee stock transactions, a $12.0 million increase in share repurchases and a $2.6 million increase in our quarterly cash dividend.

On September 29, 2017, the Company, entered into a five-year senior unsecured revolving credit facility (the “Facility”) with a maximum aggregate principal amount of $150.0 million, with a sublimit of $30.0 million for letters of credit and a sublimit of $30.0 million for swing line loans. The Facility may be increased by up to $100.0 million to a maximum aggregate principal amount of $250.0 million pursuantdecreased contributions to the termsparent. The sale of the credit agreement, subject to the lenders’ agreement to increase their commitments or the additionPool was completed on February 12, 2021.


Share Repurchase Program

49

Table of new lenders extending such commitments. Such increases to the Facility may be in the form of additional revolving credit loans, term loans or a combination thereof, and are contingent upon there being no events of default under the Facility and satisfaction of other conditions precedent and are subject to the other limitations set forth in the credit agreement.Contents


The Facility is scheduled to mature in September 2022 and may be used to refinance existing indebtedness of the Company and for working capital, capital expenditures and other general corporate purposes. The Facility refinances the Company’s existing obligations for its unsecured credit facility under the credit agreement dated as of February 4, 2015, as amended, which has been terminated as of the date of the new Facility.

Unless the Company elects otherwise under the credit agreement, interest on borrowings under the Facility is based on the highest of (a) the federal funds rate (not less than 0%) plus 0.5%, (b) the administrative agent's prime rate and (c) the LIBOR Rate plus 1.0%, in each case plus a margin that can range from 0.3% to 0.8% with respect to the Facility depending on the Company’s ratio of consolidated funded indebtedness to earnings before interest, taxes, depreciation and amortization, as set forth in the credit agreement. The Facility contains financial covenants and other covenants that, among other things, restrict the ability of the Company and its subsidiaries, without the approval of the required lenders, to engage in certain mergers, consolidations, asset sales, dividends and stock repurchases, investments, and other transactions or to incur liens or indebtedness in excess of agreed thresholds, as set forth in the credit agreement. As of September 30, 2017, we had $40.5 million in borrowings outstanding under the revolving credit facility, $8.7 million utilized for outstanding letters of credit and $100.8 million of available borrowing capacity under the revolving credit facility.  The interest rate on the outstanding borrowing under the revolving credit facility was 2.6% at September 30, 2017.

Our new facility is replacing our previously existing unsecured credit facility, which had a maximum aggregate principal amount of $275.0 million, including a revolving credit facility of $150.0 million and a term loan facility of $125.0 million. The previous revolving credit facility was scheduled to expire in February 2020.

On July 21, 2016, our Board of Directors approved a stock repurchase authorization for up to three million shares of the Company’s common stock. During the three months ended September 30, 2017, we repurchased 579,769 for $30.0 million, or $51.72 per share. During the nine months ended September 30, 2017,2022 and 2021, we repurchased 826,633466 and 535 shares of our common stock, respectively, for $42.0 million, or $50.79 per share. Duringapproximately $47,774 and $48,989, respectively, through open market transactions. All shares received were retired upon receipt, and the three months ended September 30, 2016, we repurchased 222,388 for $10.0 million, or $44.95 per share. Duringexcess of the nine months ended September 30, 2016, we repurchased 676,773 shares for $30.0 million, or an average of $44.31 per share. The repurchases made forpurchase price over the three and nine months ended September 30, 2016 were made under a previous share repurchase plan approved by our Board of Directors on February 7, 2014. This plan was canceled and replaced on July 21, 2016. As of September 30, 2017, there were 1,939,851 shares remaining to be purchased under the 2016 Plan.

During the fourth quarter of 2016 and each quarter of 2017, our Board of Directors declared a cash dividend of $0.15par value per share was recorded to “Retained Earnings” in our Condensed Consolidated Balance Sheets.

50

Table of common stock. During the first, second and third quarter of 2016, our Board of Directors declared a cash dividend of $0.12 per share of common stock. We expect to continue to pay regular quarterly cash dividends, though each subsequent quarterly dividend is subject to review and approval by the Board of Directors.Contents



We believe that our available cash, investments, expected cash generated from future operations and borrowings under the available credit facility will be sufficient to satisfy our anticipated cash needs for at least the next twelve months.


Forward-Looking Statements


This report contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance. In this Form 10-Q, forward-looking statements include, but are not limited to, any projections of earnings, revenues, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements regarding future insurance and claims; any statements concerning proposed or intended new services or developments; any statements regarding intended expansion through acquisition or greenfield startups; any statements regarding future economic conditions or performance; and any statements of belief and any statements of assumptions underlying any of the foregoing. Some forward-looking statements may be identified by use of such terms as “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or “expects.”In this Form 10-Q, forward-looking statements include, but are not limited to, any statements regarding (i) the impact of the COVID-19 pandemic on our business or our liquidity; (ii) results of operations and financial condition; (iii) any projections of earnings, revenues, dividends, or other financial items or methods of interpretation or measurement; (iv) plans, strategies, and objectives of management for future operations; (v) growing our less-than-truckload, final mile geographic footprint and Intermodal geographic footprint through greenfield start-ups as well as acquisitions; (vi) future and pending insurance, claims and litigation and any associated estimates or reserves; (vii) yield management; (viii) intentions to promote a healthier natural environment; (ix) proposed or intended new services, or developments, and related integration costs; (x) expected expansion and potential performance based on our business strategy, including acquisitions; (xi) future macroeconomic conditions, including but not limited to, labor shortages and other inflationary conditions and our ability to successfully address such conditions; (xii) the sufficiency of our credit facility; (xiii) our ESG and sustainability initiatives and operations; (xiv) plans to incorporate data requirements identified by widely accepted sustainability frameworks and set measurable targets and goals for our priority areas; and (xv) certain tax and accounting matters, including the impact on our financial statements; and any belief and any assumptions underlying any of the foregoing.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the impact of the COVID-19 pandemic on our inability to maintain our historical growth rate becausebusiness, results of a decreased volume of freight moving through our network or decreased average revenue per pound of freight moving through our network, increasing competitionoperations and pricing pressure, surplus inventories, loss of a major customer,financial condition, the creditworthiness of our customers and their ability to pay for services rendered, more limited liquidity than expected which limits our ability to secure terminal facilities in desirable locations at reasonable rates,make key investments, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, loss of a major customer, increasing competition and pricing pressure, our ability to secure terminal facilities in desirable locations at reasonable rates, our inability to successfully integrate acquisitions, claims for property damage, personal injuries or workers’ compensation, employment matters including rising health care costs, enforcement of and changes in governmental regulations, environmental and tax matters, insurance matters, the handling of hazardous materials, and the availability and compensation of qualified independent owner operators and freight handlers needed to serverisks described in our transportation needs and our inability to successfully integrate acquisitions.Annual Report on Form 10-K for the year ended December 31, 2021. As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
51

Table of Contents

Item 3.Quantitative and Qualitative Disclosures About Market Risk.


Our exposureFor quantitative and qualitative disclosures about market risks, see “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021. As of the third quarter of 2022, there were no material changes in our exposures to market risk related to our outstanding debt is not significant and has not changed materially since December 31, 2016.risk.


Item 4.Controls and Procedures.


Disclosure Controls and Procedures


We maintain controls and procedures designed to ensure that we are able to collect the information required to be disclosed in the reports we file with the Securities and Exchange Commission (“SEC”), and to process, summarize and disclose this information within the time periods specified in the rules of the SEC. Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this report conducted by management, with the participation of the Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer believe that these controls and procedures are effective to ensure that we are able to collect, process and disclose the information we are required to disclose in the reports we file with the SEC within the required time periods.


Changes in Internal Control

During the three months ended September 30, 2022, we implemented a new enterprise resource planning (“ERP”) system that replaced legacy systems in which our financial transactions were processed and recorded. The SEC's general guidance permits the exclusionnew ERP system is a significant component of an assessment of the effectiveness of a registrant'sour disclosure controls and procedures as they relate to itsprocedures. As a result of this implementation, we modified certain existing internal controls over financial reporting and will continue to evaluate the operating effectiveness of related controls in subsequent periods. Except for an acquired business during the first year following such acquisition, if among other circumstances and factors there is not adequate time between the acquisition date and the date of assessment. As previously disclosed, the Company completed its acquisition of Atlantic on May 7, 2017. Atlantic represents approximately 3.5% percentimplementation of the Company's total assets as of September 30, 2017. Management's assessment and conclusion on the effectiveness of the Company's disclosure controls and procedures as of September 30, 2017 excluded an assessment of the internal control over financial reporting of Atlantic.



Changes in Internal Control

Therenew ERP system, there were no changes in our internal control over financial reporting identified in connection with the evaluation described above that occurred during the three and nine months ended September 30, 20172022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Part II.Other Information
Item 1.Legal Proceedings.


From time to time, we are a party to ordinary, routine litigation incidental to and arising in the normal course of our business, most of which involve claims for personal injury and property damage related to the transportation and handling of freight, or workers’ compensation. We doaccrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Based on the knowledge of the facts, we believe the resolution of claims and pending litigation, taking into account existing reserves, will not believe that any of these pending actions, individually or in the aggregate, will have a material adverse effect on our business, financial condition or results of operations.

Item 1A.Risk Factors.

A summary Moreover, the results of factors which could affect resultscomplex legal proceedings are difficult to predict, and cause results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf, are further described under the caption “Risk Factors”view of these matters may change in the Business portion of our 2016 Annual Report on Form 10-K. There have been no changes infuture as the nature of these factors since December 31, 2016.litigation and related events unfold.



52


Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.


Issuer Purchases of Equity Securities


On July 21, 2016,The table below sets forth information with respect to purchases of our Boardcommon stock made by or on behalf of Directors approved a stock repurchase authorization for up tous during the three million shares of the Company’s common stock.months ended September 30, 2022.

PeriodTotal Number of Shares PurchasedAverage Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs1
July 1, 2022 through
July 31, 2022
— $— — 2,656,555 
August 1, 2022 through
August 31, 2022
210,976 105.62 210,976 2,445,579 
September 1, 2022 through
September 30, 2022
79,083 97.51 79,083 2,366,496 
Total290,059 $103.41 290,059 2,366,496 
1On February 5, 2019, our Board approved the 2019 Repurchase Plan authorizing up to 5.0 million shares of our common stock. The 2019 Share Repurchase Plan expires when the shares authorized for repurchase are exhausted or the 2019 Repurchase Plan is canceled.

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced 2016 Program Maximum Number of Shares that May Yet Be Purchased Under the Program
July 1-31, 2017 37,073
 $54
 37,073
 2,482,547
August 1-31, 2017 373,974
 51
 373,974
 2,108,573
September 1-30, 2017 168,722
 52
 168,722
 1,939,851
Total 579,769
 $52
 579,769
 1,939,851



Item 3.Defaults Upon Senior Securities.


Not applicable.



Item 4.Mine Safety Disclosures.


Not applicable.



Item 5.
Item 5. Other Information.


Not applicable.None.






53


Table of Contents




Item 6.Exhibits.

In accordance with SEC Release No. 33-8212, Exhibits 32.1 and 32.2 are to be treated as “accompanying” this report rather than “filed” as part of the report.
No.Item 6.Exhibits.
Exhibit
3.1No.Exhibit
3.1
3.2
4.131.1
10.1
10.2
10.3
31.1
31.2
32.1
32.2
101.INSThe instance document does not appear in the interactive data file because its XBRL Instance Document tags are embedded within the inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema 
101.CALXBRL Taxonomy Extension Calculation Linkbase 
101.DEFXBRL Taxonomy Extension Definition Linkbase 
101.LABXBRL Taxonomy Extension Label Linkbase 
101.PREXBRL Taxonomy Extension Presentation Linkbase 
104Cover Page Interactive File (formatted in Inline XBRL and contained in Exhibit 101).




54


Table of Contents


Signatures


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Forward Air Corporation
November 9, 2022By: /s/ Thomas Schmitt
Thomas Schmitt
President and Chief Executive Officer
(Principal Executive Officer and Duly Authorized Officer)

Forward Air Corporation
November 9, 2022By: /s/ Rebecca J. Garbrick
Rebecca J. Garbrick
Chief Financial Officer and Treasurer
(Principal Financial Officer and Duly Authorized Officer)
Forward Air Corporation
Date: October 26, 2017By: /s/ Michael J. Morris
Michael J. Morris
Chief Financial Officer, Senior Vice President and Treasurer
(Principal Financial Officer)





EXHIBIT INDEX

No.Exhibit
3.1
3.2
4.1
10.1
10.2
10.3
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document 
101.SCHXBRL Taxonomy Extension Schema 
101.CALXBRL Taxonomy Extension Calculation Linkbase 
101.DEFXBRL Taxonomy Extension Definition Linkbase 
101.LABXBRL Taxonomy Extension Label Linkbase 
101.PREXBRL Taxonomy Extension Presentation Linkbase 





53
55