UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 20212022
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to _________
Commission File Number: 001-37509
DASEKE, INC.
(Exact name of registrant as specified in its charter)
Delaware |
| 47-3913221 |
15455 Dallas Parkway, Suite 550 | 75001 | |
(Address of | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (972) 248-0412
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.0001 per share | DSKE | The 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 No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ Large accelerated filer | Accelerated filer | |||
☐ Non-accelerated filer |
| |||
☐ Emerging growth company |
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Common shares of the registrant outstanding at October 22, 2021November 3, 2022 were 62,489,27362,807,816.
DASEKE, INC.
FORM 10-Q
For the Quarterly Period Ended September 30, 20212022
INDEX
| Page No. | |
1 | ||
1 | ||
1 | ||
Consolidated Statements of Operations and Comprehensive Income | 2 | |
3 | ||
5 | ||
7 | ||
| ||
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
| |
| ||
| ||
| ||
| ||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
| |
35 | ||
37 | ||
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|
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this Report) of Daseke, Inc. (Daseke or the Company) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except as otherwise indicated by the context, references in this Report to “we,” “us” and “our” are to the consolidated business of the Company. All statements in this Report, including those made by the management of the Company, other than statements of historical fact, are forward-looking statements. These forward-looking statements are based on management’s estimates, projections and assumptions as of the date hereof. Forward-looking statements may be identified by the use of words such as “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan,” “should,” “could,” “would,” “forecast,” “seek,” “target,” “predict,” and “potential,” the negative of these terms, or other comparable terminology. Forward-looking statements may include statements about the Company’s goals; the Company’s business strategy and plans; the Company’s financial strategy, liquidity and capital required for its business strategy and plans; the Company’s competition and government regulations; general economic conditions; and the Company’s future operating results.
These forward-looking statements are based on information available as of the date of this Report, (or, in the case of forward-looking statements incorporated herein by reference, as of the date of the applicable filed document), and current expectations, forecasts and assumptions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that the Company anticipates. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Accordingly, readersReaders are cautioned not to place undue reliance on the forward-looking statements.
Forward-looking statements are subject to risks and uncertainties (many of which are beyond the Company’s control) that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, general economic and business risks, such as downturns in customers’ business cycles, and disruptions in capital and credit markets; impact to the Company’s businessmarkets, and operations resulting from the COVID-19 pandemic;inflationary cost pressures; the Company’s ability to adequately address downward pricing and other competitive pressures; the Company’s insurance or claims expense; driver shortages and increases in driver compensation or owner operator contracted rates; the Company’s ability to execute and realize all of the expected benefits of its integration, business improvement and comprehensive restructuring plans; loss of key personnel; the Company’s ability to realize all of the intended benefits from recent or future acquisitions; the Company’s ability to complete recent or future divestitures successfully; seasonality and the impact of weather and other catastrophic events; fluctuations in the price or availability of diesel fuel; increased prices for, or decreases in the availability of, new revenue equipment and decreases in the value of used revenue equipment; impact to the Company’s business and operations resulting from the COVID-19 pandemic; seasonality and the impact of weather and other catastrophic events; the Company’s ability to secure the services of third-party capacity providers on competitive terms; loss of key personnel; a failure of the Company’s information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data or other security breach, or cybersecurity incidents; the Company’s ability to execute and realize all of the expected benefits of its integration, business improvement and comprehensive restructuring plans; the Company’s ability to realize all of the intended benefits from acquisitions and investments; the Company’s ability to complete divestitures successfully; the Company’s ability to generate sufficient cash to service all of the Company’s indebtedness and the Company’s ability to finance its capital requirements; restrictions in its existing and future debt agreements; increases in interest rates; changes in existing laws or regulations, including environmental and worker health safety laws and regulations and those relating to tax rates or taxes in general; the impact of governmental regulations and other governmental actions related to the Company and its operations; insurance and claims expenses; and litigation and governmental proceedings. For additional information regarding known material factors that could cause the Company’s actual results to differ from its projected results, please see the Company’s filings with the Securities and Exchange Commission (the SEC), particularly the section titled “Part I. Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K/A,10-K, filed with the SEC on May 6, 2021.February 23, 2022. Additional risks or uncertainties that are not currently known to us, that we currently deem to be immaterial, or that could apply to any company could also materially adversely affect our business, financial condition, or future results.
All forward-looking statements, expressed or implied, attributed to the Company or persons acting on its behalf are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on its behalf may issue.
PartPART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in millions, except per share data)
|
| September 30, |
|
| December 31, |
|
| September 30, |
|
| December 31, |
| ||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
ASSETS |
|
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| ||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 143.6 |
| $ | 176.2 |
|
| $ | 188.3 |
|
| $ | 147.5 |
| |
Accounts receivable, net of allowance of $2.1 at September 30, 2021 and $3.0 at December 31, 2020 |
| 189.1 |
| 154.4 |
| |||||||||||
Accounts receivable, net of allowance of $2.5 and $2.1 at September 30, 2022 and December 31, 2021, respectively |
|
| 208.4 |
|
|
| 172.3 |
| ||||||||
Drivers’ advances and other receivables |
| 8.1 |
| 8.0 |
|
|
| 8.3 |
|
|
| 7.7 |
| |||
Other current assets |
|
| 27.0 |
|
| 26.5 |
|
|
| 28.2 |
|
|
| 22.6 |
| |
Total current assets |
| 367.8 |
| 365.1 |
|
|
| 433.2 |
|
|
| 350.1 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Property and equipment, net |
| 394.2 |
| 402.7 |
|
|
| 456.2 |
|
|
| 397.7 |
| |||
Intangible assets, net |
| 88.6 |
| 93.8 |
|
|
| 83.8 |
|
|
| 86.9 |
| |||
Goodwill |
| 140.1 |
| 140.1 |
|
|
| 137.2 |
|
|
| 140.1 |
| |||
Right-of-use assets |
| 114.5 |
| 121.1 |
|
|
| 108.7 |
|
|
| 108.3 |
| |||
Other non-current assets |
|
| 4.5 |
|
| 4.1 |
|
|
| 3.7 |
|
|
| 4.3 |
| |
Total assets |
| $ | 1,109.7 |
| $ | 1,126.9 |
|
| $ | 1,222.8 |
|
| $ | 1,087.4 |
| |
|
|
|
|
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|
|
|
|
|
|
|
| ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
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|
|
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| ||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounts payable |
| $ | 16.1 |
| $ | 16.5 |
|
| $ | 18.1 |
|
| $ | 14.7 |
| |
Accrued expenses and other liabilities |
| 52.2 |
| 35.7 |
|
|
| 54.5 |
|
|
| 43.9 |
| |||
Accrued payroll, benefits and related taxes |
| 38.1 |
| 29.9 |
|
|
| 37.1 |
|
|
| 32.9 |
| |||
Accrued insurance and claims |
| 21.3 |
| 23.7 |
|
|
| 46.0 |
|
|
| 26.8 |
| |||
Current portion of long-term debt |
| 55.7 |
| 54.0 |
|
|
| 68.8 |
|
|
| 55.5 |
| |||
Warrant liability |
| 7.5 |
| — |
|
|
| — |
|
|
| 4.7 |
| |||
Operating lease liabilities |
|
| 33.6 |
|
| 30.9 |
| |||||||||
Current operating lease liabilities |
|
| 33.9 |
|
|
| 33.7 |
| ||||||||
Total current liabilities |
| 224.5 |
| 190.7 |
|
|
| 258.4 |
|
|
| 212.2 |
| |||
|
|
|
|
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|
|
|
|
|
|
|
| ||||
Line of credit |
|
| — |
|
|
| — |
| ||||||||
Long-term debt, net of current portion |
| 536.2 |
| 618.6 |
|
|
| 562.6 |
|
|
| 531.4 |
| |||
Deferred tax liabilities |
| 87.5 |
| 70.0 |
|
|
| 86.9 |
|
|
| 85.1 |
| |||
Non-current operating lease liabilities |
| 87.7 |
| 96.0 |
|
|
| 81.2 |
|
|
| 81.1 |
| |||
Warrant liability |
| — |
| 6.3 |
| |||||||||||
Other non-current liabilities |
|
| 5.3 |
|
| 6.5 |
|
|
| 2.1 |
|
|
| 1.6 |
| |
Total liabilities |
|
| 941.2 |
|
| 988.1 |
|
|
| 991.2 |
|
|
| 911.4 |
| |
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| ||||
Commitments and contingencies (Note 9) |
|
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Commitments and contingencies (Note 10) |
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| ||||||||||
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| ||||
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Series A convertible preferred stock, $0.0001 par value; 10,000,000 shares authorized; 650,000 shares issued with liquidation preference of $65.0 at September 30, 2021 and December 31, 2020 |
| 65.0 |
| 65.0 |
| |||||||||||
Common stock, par value $0.0001 per share; 250,000,000 shares authorized, 62,485,747 and 65,023,174 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively |
| 0 |
| 0 |
| |||||||||||
Series A convertible preferred stock, $0.0001 par value; 10,000,000 shares authorized; 650,000 shares issued with liquidation preference of $65.0 at September 30, 2022 and December 31, 2021 |
|
| 65.0 |
|
|
| 65.0 |
| ||||||||
Common stock, par value $0.0001 per share; 250,000,000 shares authorized, 63,551,566 and 62,489,278 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively |
|
| — |
|
|
| — |
| ||||||||
Additional paid-in-capital |
| 386.2 |
| 401.6 |
|
|
| 404.3 |
|
|
| 387.8 |
| |||
Accumulated deficit |
| (282.6 | ) |
| (327.8 | ) |
|
| (237.2 | ) |
|
| (276.8 | ) | ||
Accumulated other comprehensive loss |
|
| (0.1 | ) |
|
| — |
|
|
| (0.5 | ) |
|
| — |
|
Total stockholders’ equity |
|
| 168.5 |
|
| 138.8 |
|
|
| 231.6 |
|
|
| 176.0 |
| |
Total liabilities and stockholders’ equity |
| $ | 1,109.7 |
| $ | 1,126.9 |
|
| $ | 1,222.8 |
|
| $ | 1,087.4 |
|
The accompanying notes are an integral part of the consolidated financial statements.
1
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Dollars in millions, except per share data)
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||||||||||||
|
| September 30, |
|
| September 30, |
|
| September 30, |
|
| September 30, |
| ||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||
Revenues: |
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Company freight |
| $ | 166.6 |
| $ | 174.8 |
| $ | 475.3 |
| $ | 522.7 |
|
| $ | 168.6 |
|
| $ | 166.6 |
|
| $ | 492.4 |
|
| $ | 475.3 |
| |||
Owner operator freight |
| 131.1 |
| 103.3 |
| 365.3 |
| 307.1 |
|
|
| 130.0 |
|
|
| 131.1 |
|
|
| 397.7 |
|
|
| 365.3 |
| |||||||
Brokerage |
| 81.9 |
| 65.2 |
| 197.1 |
| 184.8 |
|
|
| 85.3 |
|
|
| 81.9 |
|
|
| 255.4 |
|
|
| 197.1 |
| |||||||
Logistics |
| 9.7 |
| 9.9 |
| 28.9 |
| 28.8 |
|
|
| 13.8 |
|
|
| 9.7 |
|
|
| 39.2 |
|
|
| 28.9 |
| |||||||
Fuel surcharge |
|
| 35.3 |
|
| 22.6 |
|
| 95.9 |
|
| 75.1 |
|
|
| 65.1 |
|
|
| 35.3 |
|
|
| 180.4 |
|
|
| 95.9 |
| |||
Total revenue |
| 424.6 |
| 375.8 |
| 1,162.5 |
| 1,118.5 |
|
|
| 462.8 |
|
|
| 424.6 |
|
|
| 1,365.1 |
|
|
| 1,162.5 |
| |||||||
|
|
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| ||||||||
Operating expenses: |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||||
Salaries, wages and employee benefits |
| 96.6 |
| 95.8 |
| 280.7 |
| 305.6 |
|
|
| 104.6 |
|
|
| 96.6 |
|
|
| 299.3 |
|
|
| 280.7 |
| |||||||
Fuel |
| 26.8 |
| 20.2 |
| 79.1 |
| 67.1 |
|
|
| 40.0 |
|
|
| 26.8 |
|
|
| 120.4 |
|
|
| 79.1 |
| |||||||
Operations and maintenance |
| 40.5 |
| 45.5 |
| 108.1 |
| 136.4 |
|
|
| 43.1 |
|
|
| 40.5 |
|
|
| 117.6 |
|
|
| 108.1 |
| |||||||
Communications |
| 0.9 |
| 0.9 |
| 3.1 |
| 2.8 |
|
|
| 0.7 |
|
|
| 0.9 |
|
|
| 2.6 |
|
|
| 3.1 |
| |||||||
Purchased freight |
| 167.5 |
| 127.9 |
| 444.2 |
| 374.3 |
|
|
| 180.3 |
|
|
| 167.5 |
|
|
| 548.9 |
|
|
| 444.2 |
| |||||||
Administrative expenses |
| 17.0 |
| 12.6 |
| 46.2 |
| 50.0 |
| |||||||||||||||||||||||
Administrative |
|
| 17.6 |
|
|
| 17.0 |
|
|
| 51.6 |
|
|
| 46.2 |
| ||||||||||||||||
Sales and marketing |
| 0.5 |
| 0.3 |
| 1.5 |
| 1.3 |
|
|
| 0.2 |
|
|
| 0.5 |
|
|
| 1.2 |
|
|
| 1.5 |
| |||||||
Taxes and licenses |
| 3.5 |
| 3.9 |
| 11.2 |
| 12.4 |
|
|
| 3.9 |
|
|
| 3.5 |
|
|
| 11.6 |
|
|
| 11.2 |
| |||||||
Insurance and claims |
| 13.9 |
| 16.3 |
| 40.6 |
| 46.9 |
|
|
| 20.0 |
|
|
| 13.9 |
|
|
| 61.0 |
|
|
| 40.6 |
| |||||||
Acquisition-related transaction expenses |
|
| 0.4 |
|
|
| — |
|
|
| 3.7 |
|
|
| — |
| ||||||||||||||||
Depreciation and amortization |
| 22.3 |
| 22.3 |
| 66.7 |
| 71.4 |
|
|
| 23.9 |
|
|
| 22.3 |
|
|
| 68.2 |
|
|
| 66.7 |
| |||||||
Gain on disposition of property and equipment |
| (5.4 | ) |
| (3.1 | ) |
| (13.1 | ) |
| (3.9 | ) |
|
| (4.9 | ) |
|
| (5.4 | ) |
|
| (14.0 | ) |
|
| (13.1 | ) | ||||
Impairment |
| 0 |
| 0 |
| 0 |
| 13.4 |
|
|
| — |
|
|
| — |
|
|
| 7.8 |
|
|
| — |
| |||||||
Restructuring charges |
|
| 0.1 |
|
| 5.1 |
|
| 0.2 |
|
| 8.6 |
|
|
| 0.8 |
|
|
| 0.1 |
|
|
| 2.0 |
|
|
| 0.2 |
| |||
Total operating expenses |
|
| 384.2 |
|
| 347.7 |
|
| 1,068.5 |
|
| 1,086.3 |
|
|
| 430.6 |
|
|
| 384.2 |
|
|
| 1,281.9 |
|
|
| 1,068.5 |
| |||
Income from operations |
| 40.4 |
| 28.1 |
| 94.0 |
| 32.2 |
|
|
| 32.2 |
|
|
| 40.4 |
|
|
| 83.2 |
|
|
| 94.0 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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| ||||||||
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||||
Interest income |
| (0.1 | ) |
| (0.1 | ) |
| (0.2 | ) |
| (0.5 | ) |
|
| (0.7 | ) |
|
| (0.1 | ) |
|
| (1.5 | ) |
|
| (0.2 | ) | ||||
Interest expense |
| 7.3 |
| 11.1 |
| 26.1 |
| 34.1 |
|
|
| 9.2 |
|
|
| 7.3 |
|
|
| 23.8 |
|
|
| 26.1 |
| |||||||
Change in fair value of warrant liability |
| 3.4 |
| 3.0 |
| 1.2 |
| 0.9 |
|
|
| — |
|
|
| 3.4 |
|
|
| (4.7 | ) |
|
| 1.2 |
| |||||||
Other |
|
| 0.2 |
|
| (0.6 | ) |
|
| (0.6 | ) |
|
| (0.5 | ) |
|
| 1.2 |
|
|
| 0.2 |
|
|
| 1.3 |
|
|
| (0.6 | ) | |
Total other expense |
|
| 10.8 |
|
| 13.4 |
|
| 26.5 |
|
| 34.0 |
|
|
| 9.7 |
|
|
| 10.8 |
|
|
| 18.9 |
|
|
| 26.5 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Income (loss) before income taxes |
| 29.6 |
| 14.7 |
| 67.5 |
| (1.8 | ) | |||||||||||||||||||||||
Income before income taxes |
|
| 22.5 |
|
|
| 29.6 |
|
|
| 64.3 |
|
|
| 67.5 |
| ||||||||||||||||
Income tax expense |
|
| 8.7 |
|
| 2.0 |
|
| 18.6 |
|
| 0.2 |
|
|
| 9.9 |
|
|
| 8.7 |
|
|
| 21.0 |
|
|
| 18.6 |
| |||
Net income (loss) |
| 20.9 |
| 12.7 |
| 48.9 |
| (2.0 | ) | |||||||||||||||||||||||
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Foreign currency translation adjustments, net of tax of $0.0, $0.1, $0.0 and $(0.1), respectively |
|
| (0.5 | ) |
|
| 0.2 |
|
| (0.1 | ) |
|
| (0.1 | ) | |||||||||||||||||
Comprehensive income (loss) |
| $ | 20.4 |
| $ | 12.9 |
| $ | 48.8 |
| $ | (2.1 | ) | |||||||||||||||||||
Net income |
|
| 12.6 |
|
|
| 20.9 |
|
|
| 43.3 |
|
|
| 48.9 |
| ||||||||||||||||
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Foreign currency translation adjustments |
|
| (0.4 | ) |
|
| (0.5 | ) |
|
| (0.5 | ) |
|
| (0.1 | ) | ||||||||||||||||
Comprehensive income |
| $ | 12.2 |
|
| $ | 20.4 |
|
| $ | 42.8 |
|
| $ | 48.8 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) |
| $ | 20.9 |
| $ | 12.7 |
| $ | 48.9 |
| $ | (2.0 | ) | |||||||||||||||||||
Net income |
| $ | 12.6 |
|
| $ | 20.9 |
|
| $ | 43.3 |
|
| $ | 48.9 |
| ||||||||||||||||
Less dividends to Series A convertible preferred stockholders |
|
| (1.2 | ) |
|
| (1.2 | ) |
|
| (3.7 | ) |
|
| (3.7 | ) |
|
| (1.3 | ) |
|
| (1.2 | ) |
|
| (3.7 | ) |
|
| (3.7 | ) |
Net income (loss) attributable to common stockholders |
| $ | 19.7 |
| $ | 11.5 |
| $ | 45.2 |
| $ | (5.7 | ) | |||||||||||||||||||
Income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Net income attributable to common stockholders |
| $ | 11.3 |
|
| $ | 19.7 |
|
| $ | 39.6 |
|
| $ | 45.2 |
| ||||||||||||||||
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Basic |
| $ | 0.31 |
| $ | 0.17 |
| $ | 0.70 |
| $ | (0.09 | ) |
| $ | 0.18 |
|
| $ | 0.31 |
|
| $ | 0.62 |
|
| $ | 0.70 |
| |||
Diluted |
| $ | 0.30 |
| $ | 0.17 |
| $ | 0.68 |
| $ | (0.09 | ) |
| $ | 0.17 |
|
| $ | 0.30 |
|
| $ | 0.60 |
|
| $ | 0.68 |
| |||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic |
|
| 62,583,115 |
|
| 64,823,973 |
|
| 64,159,551 |
|
| 64,692,039 |
|
|
| 63,535,897 |
|
|
| 62,583,115 |
|
|
| 63,301,446 |
|
|
| 64,159,551 |
| |||
Diluted |
|
| 70,000,603 |
|
| 71,700,156 |
|
| 71,207,581 |
|
| 64,692,039 |
|
|
| 66,270,641 |
|
|
| 70,000,603 |
|
|
| 66,266,666 |
|
|
| 71,207,581 |
| |||
Dividends declared per Series A convertible preferred share |
| $ | 1.91 |
| $ | 1.91 |
| $ | 5.72 |
| $ | 5.72 |
|
| $ | 1.91 |
|
| $ | 1.91 |
|
| $ | 5.72 |
|
| $ | 5.72 |
|
The accompanying notes are an integral part of the consolidated financial statements.
2
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Three and Nine Months Ended September 30, 20212022
(Unaudited)
(Dollars in millions)
|
| Series A Convertible |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |||||||||||
|
| Preferred Stock |
|
| Common Stock |
|
|
|
|
|
|
|
| Other |
|
|
|
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Par |
|
| Additional |
|
| Accumulated |
|
| Comprehensive |
|
|
|
| ||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Value |
|
| Paid-In Capital |
|
| Deficit |
|
| Income (Loss) |
|
| Total |
| ||||||||
Balance at January 1, 2021 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 65,023,174 |
|
| $ | — |
|
| $ | 401.6 |
|
| $ | (327.8 | ) |
| $ | — |
|
| $ | 138.8 |
|
Exercise of options |
|
| — |
|
|
| — |
|
|
| 149,545 |
|
|
| — |
|
|
| 0.6 |
|
|
| — |
|
|
| — |
|
|
| 0.6 |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 5,737 |
|
|
| — |
|
|
| (0.8 | ) |
|
| — |
|
|
| — |
|
|
| (0.8 | ) |
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.2 | ) |
|
| — |
|
|
| (1.2 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1.4 |
|
|
| — |
|
|
| — |
|
|
| 1.4 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (7.3 | ) |
|
| — |
|
|
| (7.3 | ) |
Balance at March 31, 2021 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 65,178,456 |
|
| $ | — |
|
| $ | 402.8 |
|
| $ | (336.3 | ) |
| $ | 0.2 |
|
| $ | 131.7 |
|
Exercise of options |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 143,601 |
|
|
| — |
|
|
| (0.3 | ) |
|
| — |
|
|
| — |
|
|
| (0.3 | ) |
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.3 | ) |
|
| — |
|
|
| (1.3 | ) |
Common stock repurchased and retired |
|
| — |
|
|
| — |
|
|
| (1,517,623 | ) |
|
| — |
|
|
| (10.5 | ) |
|
| — |
|
|
| — |
|
|
| (10.5 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2.9 |
|
|
| — |
|
|
| — |
|
|
| 2.9 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 35.3 |
|
|
| — |
|
|
| 35.3 |
|
Balance at June 30, 2021 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 63,804,434 |
|
| $ | — |
|
| $ | 394.9 |
|
| $ | (302.3 | ) |
| $ | 0.4 |
|
| $ | 158.0 |
|
Exercise of options |
|
| — |
|
|
| — |
|
|
| 8,000 |
|
|
| — |
|
|
| (0.1 | ) |
|
| — |
|
|
| — |
|
|
| (0.1 | ) |
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 155,690 |
|
|
| — |
|
|
| (0.9 | ) |
|
| — |
|
|
| — |
|
|
| (0.9 | ) |
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.2 | ) |
|
| — |
|
|
| (1.2 | ) |
Common stock repurchased and retired |
|
| — |
|
|
| — |
|
|
| (1,482,377 | ) |
|
| — |
|
|
| (9.8 | ) |
|
| — |
|
|
| — |
|
|
| (9.8 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2.1 |
|
|
| — |
|
|
| — |
|
|
| 2.1 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.5 | ) |
|
| (0.5 | ) |
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 20.9 |
|
|
| — |
|
|
| 20.9 |
|
Balance at September 30, 2021 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 62,485,747 |
|
| $ | — |
|
| $ | 386.2 |
|
| $ | (282.6 | ) |
| $ | (0.1 | ) |
| $ | 168.5 |
|
|
| Series A Convertible |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |||||||||||
|
| Preferred Stock |
|
| Common Stock |
|
|
|
|
|
|
|
| Other |
|
|
|
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Par |
|
| Additional |
|
| Accumulated |
|
| Comprehensive |
|
|
|
| ||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Value |
|
| Paid-In Capital |
|
| Deficit |
|
| Loss |
|
| Total |
| ||||||||
Balance at January 1, 2022 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 62,489,278 |
|
| $ | — |
|
| $ | 387.8 |
|
| $ | (276.8 | ) |
| $ | — |
|
| $ | 176.0 |
|
Exercise of options |
|
| — |
|
|
| — |
|
|
| 91,425 |
|
|
| — |
|
|
| 0.8 |
|
|
| — |
|
|
| — |
|
|
| 0.8 |
|
Exercise of warrants |
|
| — |
|
|
| — |
|
|
| 817,648 |
|
|
| — |
|
|
| 9.4 |
|
|
| — |
|
|
| — |
|
|
| 9.4 |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 43,450 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.2 | ) |
|
| — |
|
|
| (1.2 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2.2 |
|
|
| — |
|
|
| — |
|
|
| 2.2 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13.0 |
|
|
| — |
|
|
| 13.0 |
|
Balance at March 31, 2022 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 63,441,801 |
|
| $ | — |
|
| $ | 400.2 |
|
| $ | (265.0 | ) |
| $ | — |
|
| $ | 200.2 |
|
Exercise of options |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 62,217 |
|
|
| — |
|
|
| (0.2 | ) |
|
| — |
|
|
| — |
|
|
| (0.2 | ) |
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.2 | ) |
|
| — |
|
|
| (1.2 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2.3 |
|
|
| — |
|
|
| — |
|
|
| 2.3 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.1 | ) |
|
| (0.1 | ) |
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 17.7 |
|
|
| — |
|
|
| 17.7 |
|
Balance at June 30, 2022 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 63,504,018 |
|
| $ | — |
|
| $ | 402.3 |
|
| $ | (248.5 | ) |
| $ | (0.1 | ) |
| $ | 218.7 |
|
Exercise of options |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 47,548 |
|
|
| — |
|
|
| (0.1 | ) |
|
| — |
|
|
| — |
|
|
| (0.1 | ) |
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.3 | ) |
|
| — |
|
|
| (1.3 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2.1 |
|
|
| — |
|
|
| — |
|
|
| 2.1 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.4 | ) |
|
| (0.4 | ) |
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 12.6 |
|
|
| — |
|
|
| 12.6 |
|
Balance at September 30, 2022 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 63,551,566 |
|
| $ | — |
|
| $ | 404.3 |
|
| $ | (237.2 | ) |
| $ | (0.5 | ) |
| $ | 231.6 |
|
The accompanying notes are an integral part of the consolidated financial statements.
3
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Three and Nine Months Ended September 30, 20202021
(Unaudited)
(Dollars in millions)
|
| Series A Convertible |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |||||||||||
|
| Preferred Stock |
|
| Common Stock |
|
|
|
|
|
|
|
| Other |
|
|
|
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Par |
|
| Additional |
|
| Accumulated |
|
| Comprehensive |
|
|
|
| ||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Value |
|
| Paid-In Capital |
|
| Deficit |
|
| Income (Loss) |
|
| Total |
| ||||||||
Balance at January 1, 2020 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 64,589,075 |
|
| $ | — |
|
| $ | 396.9 |
|
| $ | (327.0 | ) |
| $ | (0.4 | ) |
| $ | 134.5 |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 8,950 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.2 | ) |
|
| — |
|
|
| (1.2 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.9 |
|
|
| — |
|
|
| — |
|
|
| 0.9 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.5 | ) |
|
| (0.5 | ) |
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (16.3 | ) |
|
| — |
|
|
| (16.3 | ) |
Balance at March 31, 2020 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 64,598,025 |
|
| $ | — |
|
| $ | 397.8 |
|
| $ | (344.5 | ) |
| $ | (0.9 | ) |
| $ | 117.4 |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 129,400 |
|
|
| — |
|
|
| (0.1 | ) |
|
| — |
|
|
| — |
|
|
| (0.1 | ) |
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.3 | ) |
|
| — |
|
|
| (1.3 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1.1 |
|
|
| — |
|
|
| — |
|
|
| 1.1 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1.6 |
|
|
| — |
|
|
| 1.6 |
|
Balance at June 30, 2020 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 64,727,425 |
|
| $ | — |
|
| $ | 398.8 |
|
| $ | (344.2 | ) |
| $ | (0.7 | ) |
| $ | 118.9 |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 291,334 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Exercise of warrant |
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.2 | ) |
|
| — |
|
|
| (1.2 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1.0 |
|
|
| — |
|
|
| — |
|
|
| 1.0 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 12.7 |
|
|
| — |
|
|
| 12.7 |
|
Balance at September 30, 2020 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 65,018,760 |
|
| $ | — |
|
| $ | 399.8 |
|
| $ | (332.7 | ) |
| $ | (0.5 | ) |
| $ | 131.6 |
|
|
| Series A Convertible |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |||||||||||
|
| Preferred Stock |
|
| Common Stock |
|
|
|
|
|
|
|
| Other |
|
|
|
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Par |
|
| Additional |
|
| Accumulated |
|
| Comprehensive |
|
|
|
| ||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Value |
|
| Paid-In Capital |
|
| Deficit |
|
| Income (Loss) |
|
| Total |
| ||||||||
Balance at January 1, 2021 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 65,023,174 |
|
| $ | — |
|
| $ | 401.6 |
|
| $ | (327.8 | ) |
| $ | — |
|
| $ | 138.8 |
|
Exercise of options |
|
| — |
|
|
| — |
|
|
| 149,545 |
|
|
| — |
|
|
| 0.6 |
|
|
| — |
|
|
| — |
|
|
| 0.6 |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 5,737 |
|
|
| — |
|
|
| (0.8 | ) |
|
| — |
|
|
| — |
|
|
| (0.8 | ) |
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.2 | ) |
|
| — |
|
|
| (1.2 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1.4 |
|
|
| — |
|
|
| — |
|
|
| 1.4 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (7.3 | ) |
|
| — |
|
|
| (7.3 | ) |
Balance at March 31, 2021 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 65,178,456 |
|
| $ | — |
|
| $ | 402.8 |
|
| $ | (336.3 | ) |
| $ | 0.2 |
|
| $ | 131.7 |
|
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 143,601 |
|
|
| — |
|
|
| (0.3 | ) |
|
| — |
|
|
| — |
|
|
| (0.3 | ) |
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.3 | ) |
|
| — |
|
|
| (1.3 | ) |
Common stock repurchased and retired |
|
| — |
|
|
| — |
|
|
| (1,517,623 | ) |
|
| — |
|
|
| (10.5 | ) |
|
| — |
|
|
| — |
|
|
| (10.5 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2.9 |
|
|
| — |
|
|
| — |
|
|
| 2.9 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 35.3 |
|
|
| — |
|
|
| 35.3 |
|
Balance at June 30, 2021 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 63,804,434 |
|
| $ | — |
|
| $ | 394.9 |
|
| $ | (302.3 | ) |
| $ | 0.4 |
|
| $ | 158.0 |
|
Exercise of options |
|
| — |
|
|
| — |
|
|
| 8,000 |
|
|
| — |
|
|
| (0.1 | ) |
|
| — |
|
|
| — |
|
|
| (0.1 | ) |
Vesting of restricted stock units |
|
| — |
|
|
| — |
|
|
| 155,690 |
|
|
| — |
|
|
| (0.9 | ) |
|
| — |
|
|
| — |
|
|
| (0.9 | ) |
Series A convertible preferred stock dividend |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1.2 | ) |
|
| — |
|
|
| (1.2 | ) |
Common stock repurchased and retired |
|
| — |
|
|
| — |
|
|
| (1,482,377 | ) |
|
| — |
|
|
| (9.8 | ) |
|
| — |
|
|
| — |
|
|
| (9.8 | ) |
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2.1 |
|
|
| — |
|
|
| — |
|
|
| 2.1 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.5 | ) |
|
| (0.5 | ) |
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 20.9 |
|
|
| — |
|
|
| 20.9 |
|
Balance at September 30, 2021 |
|
| 650,000 |
|
| $ | 65.0 |
|
|
| 62,485,747 |
|
| $ | — |
|
| $ | 386.2 |
|
| $ | (282.6 | ) |
| $ | (0.1 | ) |
| $ | 168.5 |
|
The accompanying notes are an integral part of the consolidated financial statements.
4
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in millions)
|
| Nine Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) |
| $ | 48.9 |
| $ | (2.0 | ) | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities |
|
|
|
|
|
| ||||||||||
Net income |
| $ | 43.3 |
|
| $ | 48.9 |
| ||||||||
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
| ||||||||||
Depreciation |
| 61.5 |
| 65.9 |
|
|
| 63.0 |
|
|
| 61.5 |
| |||
Amortization of intangible assets |
| 5.2 |
| 5.5 |
|
|
| 5.2 |
|
|
| 5.2 |
| |||
Amortization of deferred financing fees |
| 1.4 |
| 3.2 |
|
|
| 0.9 |
|
|
| 1.4 |
| |||
Non-cash operating lease expense |
| 1.0 |
| 0.2 |
|
|
| — |
|
|
| 1.0 |
| |||
Change in fair value of warrant liability |
| 1.2 |
| 0.9 |
|
|
| (4.7 | ) |
|
| 1.2 |
| |||
Write-off of deferred financing fees |
| 1.2 |
| 0 |
|
|
| — |
|
|
| 1.2 |
| |||
Stock-based compensation expense |
| 5.3 |
| 4.9 |
|
|
| 8.8 |
|
|
| 5.3 |
| |||
Deferred taxes |
| 17.5 |
| 0.2 |
|
|
| 2.6 |
|
|
| 17.5 |
| |||
Bad debt (recovery) expense |
| (0.3 | ) |
| 1.2 |
| ||||||||||
Bad debt expense |
|
| 0.7 |
|
|
| (0.3 | ) | ||||||||
Gain on disposition of property and equipment |
| (13.1 | ) |
| (3.9 | ) |
|
| (14.0 | ) |
|
| (13.1 | ) | ||
Impairment |
| 0 |
| 13.4 |
|
|
| 7.8 |
|
|
| — |
| |||
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounts receivable |
| (34.5 | ) |
| 23.8 |
|
|
| (34.1 | ) |
|
| (34.5 | ) | ||
Drivers’ advances and other receivables |
| 0.4 |
| (0.7 | ) |
|
| (3.1 | ) |
|
| 0.4 |
| |||
Other current assets |
| (0.7 | ) |
| (8.9 | ) |
|
| (3.7 | ) |
|
| (0.7 | ) | ||
Accounts payable |
| (0.4 | ) |
| (5.1 | ) |
|
| 3.5 |
|
|
| (0.4 | ) | ||
Accrued expenses and other liabilities |
|
| 21.1 |
|
| 23.8 |
|
|
| 30.5 |
|
|
| 21.1 |
| |
Net cash provided by operating activities |
|
| 115.7 |
|
| 122.4 |
|
|
| 106.7 |
|
|
| 115.7 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Purchases of property and equipment |
| (34.2 | ) |
| (18.0 | ) |
|
| (33.4 | ) |
|
| (34.2 | ) | ||
Proceeds from sale of property and equipment |
|
| 47.9 |
|
| 52.0 |
|
|
| 28.0 |
|
|
| 47.9 |
| |
Net cash provided by investing activities |
|
| 13.7 |
|
| 34.0 |
| |||||||||
Cash paid for acquisitions, net of cash received |
|
| (19.1 | ) |
|
| — |
| ||||||||
Net cash (used in) provided by investing activities |
|
| (24.5 | ) |
|
| 13.7 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Advances on line of credit |
| 1,202.1 |
| 1,111.2 |
|
|
| 1,356.9 |
|
|
| 1,202.1 |
| |||
Repayments on line of credit |
| (1,202.1 | ) |
| (1,112.9 | ) |
|
| (1,356.9 | ) |
|
| (1,202.1 | ) | ||
Principal payments on long-term debt |
| (232.3 | ) |
| (57.3 | ) |
|
| (49.0 | ) |
|
| (232.3 | ) | ||
Proceeds from long-term debt |
| 97.5 |
| 0 |
|
|
| — |
|
|
| 97.5 |
| |||
Payments of deferred financing fees |
| (3.4 | ) |
| 0 |
|
|
| — |
|
|
| (3.4 | ) | ||
Repurchases of common stock |
| (20.4 | ) |
| 0 |
| ||||||||||
Exercise of options, net |
| 0.4 |
| 0 |
| |||||||||||
Repurchase of common stock |
|
| — |
|
|
| (20.4 | ) | ||||||||
Exercise of stock options, net |
|
| 0.8 |
|
|
| 0.4 |
| ||||||||
Exercise of warrants |
|
| 9.4 |
|
|
| — |
| ||||||||
Series A convertible preferred stock dividends |
|
| (3.7 | ) |
|
| (3.7 | ) |
|
| (3.7 | ) |
|
| (3.7 | ) |
Net cash used in financing activities |
| (161.9 | ) |
| (62.7 | ) |
|
| (42.5 | ) |
|
| (161.9 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of exchange rates on cash and cash equivalents |
|
| (0.1 | ) |
|
| 0.4 |
|
|
| 1.1 |
|
|
| (0.1 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net increase (decrease) in cash and cash equivalents |
| (32.6 | ) |
| 94.1 |
|
|
| 40.8 |
|
|
| (32.6 | ) | ||
Cash and cash equivalents – beginning of period |
|
| 176.2 |
|
| 95.7 |
|
|
| 147.5 |
|
|
| 176.2 |
| |
Cash and cash equivalents – end of period |
| $ | 143.6 |
| $ | 189.8 |
|
| $ | 188.3 |
|
| $ | 143.6 |
|
The accompanying notes are an integral part of the consolidated financial statements.
5
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)
(Unaudited)
(Dollars in millions)
|
| Nine Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash paid for interest |
| $ | 22.4 |
| $ | 30.8 |
|
| $ | 23.1 |
|
| $ | 22.4 |
| |
Cash paid for income taxes |
| $ | 4.7 |
| $ | 3.0 |
|
| $ | 19.8 |
|
| $ | 4.7 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Noncash investing and financing activities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Property and equipment acquired with debt or finance lease obligations |
| $ | 55.0 |
| $ | 45.4 |
|
| $ | 93.7 |
|
| $ | 55.0 |
| |
Property and equipment sold for notes receivable |
| $ | 0.5 |
| $ | 0.3 |
|
| $ | — |
|
| $ | 0.5 |
| |
Right-of-use assets acquired |
| $ | 21.4 |
| $ | 53.5 |
|
| $ | 27.8 |
|
| $ | 21.4 |
|
The accompanying notes are an integral part of the consolidated financial statements.
6
NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Daseke Inc.’s (the Company or Daseke) wholly-owned subsidiary Daseke Companies, Inc., was incorporated in December 2008 and began operations on January 1, 2009. Daseke is thea premier North American transportation solutions specialist dedicated to servicing challenging industrial end-markets through experienced people and a fleet of more than 4,500 tractors and 11,000 flatbed and specialized trailers, and has operations throughout the United States, Canada and Mexico. The Company also provides logistical planning and warehousing services to customers. The Company is subject to regulation by the Department of Transportation, the Department of Defense, the Department of Energy, and various state regulatory authorities in the United States. The Company is also subject to regulation by the Ministries of Transportation and Communications and various provincial regulatory authorities in Canada.
Basis of Presentation
These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP 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. Operating results for the three and nine months ended September 30, 20212022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021.2022.
The consolidated balance sheet as of December 31, 20202021 has been derived from the audited consolidated financial statements at that date. On May 6, 2021, the Company filed an Amended Annual Report on Form 10-K/A (Amended 10-K) in order to restate the financial statements to reflect warrants as a liability and changes in fair value recorded as non-cash income or expense. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the year ended December 31, 20202021 as set forth in the Company’s Amended 10-K.Annual Report on Form 10-K, filed with the SEC on February 23, 2022.
Fair Value Measurements
The Company follows the accounting guidance for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The three levels of the fair value framework are as follows:
Level 1 – Quoted market prices in active markets for identical assets or liabilities.
Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3 – Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.
A financial asset or liability’s classification within the framework is determined based on the lowest level of input that is significant to the fair value measurement.
The Company may be required, on a non-recurring basis, to adjust the carrying value of the Company’s property and equipment, intangible assets, goodwill and goodwill.contingent consideration. When necessary, these valuations are determined by the Company using Level 3 inputs. These assets are subject to fair value adjustments in certain circumstances, such as when there is evidence that impairment may exist.
The Company’s warrant liabilities are included within the Level 1 and Level 3 fair value hierarchy. The fair valueThere was no warrant liability as of the Public Warrants is determined using the closing price of the warrants on the NASDAQ market. The fair value of the Private Placement Warrants is determined using the Black-Scholes option pricing formula. The primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility. The expected volatility was estimated considering observable Daseke public warrant pricing, Daseke’s own historical volatility and the volatility of guideline public companies.September 30, 2022.
The following table sets forth by level within the fair value hierarchy the Company’s assets and liabilitieswarrant liability that were accounted for at fair value as of December 31, 2021 (in millions):
|
| Fair value as of September 30, 2021 |
| |||||||||||||
Liabilities: |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Warrant liability |
| $ | 4.3 |
|
| $ | — |
|
| $ | 3.2 |
|
| $ | 7.5 |
|
Total fair value |
| $ | 4.3 |
|
| $ | — |
|
| $ | 3.2 |
|
| $ | 7.5 |
|
7
|
| Fair value as of December 31, 2020 |
|
| Fair value as of December 31, 2021 |
| ||||||||||||||||||||||||||
Liabilities: |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||||||
Warrant liability |
| $ | 3.6 |
| $ | — |
| $ | 2.7 |
| $ | 6.3 |
|
| $ | 2.7 |
|
| $ | — |
|
| $ | 2.0 |
|
| $ | 4.7 |
| |||
Total fair value |
| $ | 3.6 |
| $ | — |
| $ | 2.7 |
| $ | 6.3 |
|
| $ | 2.7 |
|
| $ | — |
|
| $ | 2.0 |
|
| $ | 4.7 |
|
The table below is a summary of the changes in the fair value of the warrant liability within the Level 3 fair value hierarchy for the nine months ended September 30, 20212022 (in millions):
|
| Nine Months Ended |
| |
|
| September 30, 2022 |
| |
Balance at beginning of period |
| $ | 2.0 |
|
Change in fair value |
|
| (2.0 | ) |
Balance at end of period |
| $ | — |
|
7
|
| Nine Months Ended |
| |
|
| September 30, 2021 |
| |
Balance at beginning of period |
| $ | 2.7 |
|
Change in fair value |
|
| 0.5 |
|
Balance at end of period |
| $ | 3.2 |
|
Common Stock Purchase Warrants
The Company’s common stock purchase warrants expired in accordance with their terms on February 27, 2022 and are no longer exercisable. During 2022, prior to their expiration, there were 1,635,296 warrants exercised for 817,648 shares of the Company’s common stock in exchange for $9.4 million in proceeds to the Company.
Recently Issued Accounting Pronouncements
In August 2020, the FASBFinancial Accounting Standards Board (the FASB) issued ASU 2020-06 – Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The guidance simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. The amendments are effective for the Company for fiscal years beginning after December 15, 2021. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. Theadopted this guidance must be adopted as of the beginning of the fiscal year of adoption. ASU 2020-06 isJanuary 1, 2022. The adoption did not expected to have a material impact on the Company’s consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04 – Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S.US GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendmentsprovisions of this update are effective for all entities as of March 20, 2020 through December 31, 2022 and apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. In addition, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848) – Scope, to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. ASU 2020-04 is not expected to have a material impact on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12 – Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The amendments in ASU2019-12will become effective for the Company onadopted this guidance as of January 1, 2022. EarlyThe adoption is permitted, including adoption in any interim period. ASU 2019-12 isof this standard did not expected to have a material impact on the Company’sCompany's consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Accounting for Credit Losses (Topic 326). ASU 2016-13 requires the use of an “expected loss” model on certain types of financial instruments. The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. In addition, in March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures to improve the decision usefulness of information provided to investors concerning certain loan refinancings, restructurings and writeoffs. The new standard will become effective for the Company beginning with the first quarter of 2023 and is not expected to have a material impact on the Company’s consolidated financial statements.
8
Lease Income
The Company leases tractors and trailers to certain of its owner \ operators and accounts for these transactions as operating leases. These leases typically have terms of 30 to 72 months and are collateralized by a security interest in the related revenue equipment. The Company recognizes income for these leases as payments are received over the lease term, which are reported in purchased freight on the consolidated statements of operations and comprehensive income (loss).income. The Company's equipment leases may include options for the lessee to purchase the equipment at the end of the lease term or terminate the lease prior to the end of the lease term. When an asset reaches the end of its useful economic life, the Company disposes of the asset.
8Lease income from lease payments related to these operating leases for the
Table of Contentsthree and nine months ended September 30, 2022
was $8.4 million and $24.2 million, respectively. Lease income from lease payments related to these operating leases for the three and nine months ended September 30, 2021 was $7.6 million and $20.7 million, respectively. Lease income from lease payments related to these operating leases
NOTE 2 – ACQUISITIONS
On March 3, 2022, the Company acquired 100% of the outstanding stock of SJ Transportation Co., Inc. (SJ Transportation) for consideration net of cash acquired of $19.1 million, which was funded with cash on hand. The acquisition was a stock purchase under US GAAP. A Section 338(h)(10) election was filed for the entity acquired which will deem the acquisition as an asset purchase for tax purposes; therefore approximately $7.9 million of the values assigned to goodwill and intangibles are expected to be deductible for tax purposes. Approximately $0.5 million of transaction expenses were incurred in the acquisition, which are not deductible for tax purposes.
The following is a summary of the preliminary allocation of the purchase price paid to the fair values of the net assets, net of cash acquired (in millions):
|
| SJ Transportation |
| |
Accounts receivable |
| $ | 3.4 |
|
Other current assets |
|
| 1.8 |
|
Property and equipment |
|
| 10.0 |
|
Goodwill and intangibles |
|
| 7.9 |
|
Accounts payable and other liabilities |
|
| (4.0 | ) |
Total |
| $ | 19.1 |
|
For the three months ended September 30, 2022, revenue and net income of the acquired company, post-acquisition date, was $7.0 million and $0.7 million, respectively, and for the nine months ended September 30, 2020 was2022, $6.115.7 million and $18.51.3 million, respectively.
Supplemental Pro Forma Information (Unaudited)
The following supplemental pro forma financial information reflects the SJ Transportation acquisition as if it occurred on January 1, 2021 (in millions). This pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the pro forma events taken place on January 1, 2021. Further, the pro forma financial information does not purport to project the future operating results of the consolidated company.
| Three Months Ended |
| Nine Months Ended |
| ||||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(in millions, except per share amounts) |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Pro forma revenue |
| $ | 462.8 |
|
| $ | 430.3 |
|
| $ | 1,369.0 |
|
| $ | 1,180.2 |
|
Pro forma net income |
| $ | 12.6 |
|
| $ | 21.1 |
|
| $ | 43.5 |
|
| $ | 50.3 |
|
Pro forma earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.18 |
|
| $ | 0.31 |
|
| $ | 0.63 |
|
| $ | 0.72 |
|
Diluted |
| $ | 0.17 |
|
| $ | 0.30 |
|
| $ | 0.60 |
|
| $ | 0.70 |
|
9
NOTE 23 – OTHER CURRENT ASSETS
The components of other current assets are as follows as of September 30, 20212022 and December 31, 20202021 (in millions):
|
| September 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Insurance |
| $ | 7.9 |
|
| $ | 12.0 |
|
Licensing, permits and tolls |
|
| 4.7 |
|
|
| 4.9 |
|
Parts supplies |
|
| 3.5 |
|
|
| 3.1 |
|
Highway and fuel taxes |
|
| 5.7 |
|
|
| 1.1 |
|
Other prepaids |
|
| 1.9 |
|
|
| 3.2 |
|
Other assets |
|
| 1.7 |
|
|
| 0.6 |
|
Income tax receivable |
|
| 1.6 |
|
|
| 1.6 |
|
|
| $ | 27.0 |
|
| $ | 26.5 |
|
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Prepaid insurance |
| $ | 9.0 |
|
| $ | 7.5 |
|
Prepaid licensing, permits and tolls |
|
| 6.5 |
|
|
| 4.8 |
|
Parts supplies |
|
| 4.9 |
|
|
| 3.5 |
|
Other prepaids |
|
| 2.4 |
|
|
| 2.6 |
|
Income tax receivable |
|
| 1.9 |
|
|
| 1.9 |
|
Prepaid software |
|
| 1.7 |
|
|
| 1.1 |
|
Prepaid highway and fuel taxes |
|
| 1.3 |
|
|
| 1.1 |
|
Prepaid taxes |
|
| 0.5 |
|
|
| 0.1 |
|
Total |
| $ | 28.2 |
|
| $ | 22.6 |
|
NOTE 34 – INTEGRATION AND RESTRUCTURING
On July 30, 2019,During the first quarter of 2022, the Company internally announced a phased integration and restructuring plan to integrate(Transformation Plan or the Plan), with the first phase integrating 3five operating segments withinto 3three other operating segments, (Project Synchronize or the Plan), which reducedwill reduce the number of overall operating segments from 16eleven to 13. Onsix. The second phase of the Plan will integrate those six operating segments into four or five operating segments. As of September 4, 2019, the Company announced a comprehensive restructuring plan (Project Pivot)30, 2022, we had nine operating segments. The Transformation Plan is intended to reduce itsthe Company’s cost base, right size its organization and management team and increase and accelerate its previously announced operational improvement goals. In addition, the Company anticipates additional revenue opportunities driven by synergies from optimizing a consolidated operation, including empty mile reduction, pricing improvements, and additional seated truck contribution. The integration and restructuring costs consist of asset impairments, employee-related costs and other transition and termination costs related to restructuring activities. Employee-related costs include severance, tax preparation, and relocation costs, which are accounted for in accordance with ASC 420 Exit or Disposal Cost Obligations. Other transition and termination costs include fixed asset-related charges, contract and lease termination costs, professional fees, and other miscellaneous expenditures associated with the integration or restructuring activities, which are expensed as incurred. Costs are reported in restructuring charges in the consolidated statements of operations and comprehensive income (loss).income. The obligation related to employee separation costs is included in other current liabilities in the consolidated balance sheets.
During the first quarter of 2020, the Company made the decision to close certain of the Aveda terminals and wind down those operations, which was completed during the fourth quarter of 2020. As a result of the planned divestiture of Aveda, impairment charges of $13.4 million were recorded for the three months ended March 31, 2020 consisting of property and equipment of $4.0 million, right-of-use assets of $3.2 million and tradename intangible assets of $6.2 million.
On March 10, 2020, the Company announced a plan to integrate 3 operating segments with 3 other operating segments (Phase II of the Plan). Phase II of the Plan was initially expected to be significantly completed by June 30, 2020, however, due to uncertainties and changes in focus caused by the COVID-19 pandemic, the Company delayed and reevaluated Phase II of the Plan and reduced the planned number of integrations from 3 to 2 operating segments. As of September 30, 2021, 1 of these integrations had been completed, and the Company expects to complete the remaining integration in 2022.
The Company recorded $0.10.8 million and $5.12.0 million of integration and restructuring expenses in connection with Phase II of the Plan and Project Pivot in the three months ended September 30, 2021 and 2020, respectively. The Company recorded $0.2 million and $8.6 million of integration and restructuring expenses in connection with Phase II of the Plan and Project Pivot in the nine months ended September 30, 2021 and 2020, respectively.2022, respectively. As of September 30, 2021,2022, we have incurred a cumulative total of $9.92.0 million in integration and restructuring costs since inception of the Plan.
9The Company completed the previously announced internal restructuring (Project Pivot) and integration (Project Synchronize) plans as of December 31, 2021 and does not expect any future material restructuring costs associated with those prior plans. As of December 31, 2021, the Company had incurred a cumulative total of $9.9 million in integration and restructuring costs related to Project Pivot and Project Synchronize.
10
The following table summarizes the integration and restructuring costs as of September 30, 20212022 (in millions):
|
| Severance |
|
| Operating |
|
|
|
|
|
|
| ||||
|
| and |
|
| Lease |
|
|
|
|
|
|
| ||||
|
| Other Payroll |
|
| Termination |
|
| Other |
|
| Total |
| ||||
Balance at December 31, 2020 |
| $ | 0.1 |
|
| $ | — |
|
| $ | — |
|
| $ | 0.1 |
|
Specialized Solution |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs accrued |
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Amounts paid or charged |
|
| — |
|
|
| — |
|
|
| (0.2 | ) |
|
| (0.2 | ) |
Specialized Solution balance at September 30, 2021 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Flatbed Solution |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs accrued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Amounts paid or charged |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Flatbed Solution balance at September 30, 2021 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Corporate |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs accrued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Amounts paid or charged |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Adjustments |
|
| (0.1 | ) |
|
| — |
|
|
|
|
|
| (0.1 | ) | |
Corporate balance at September 30, 2021 |
|
| (0.1 | ) |
|
| — |
|
|
| — |
|
|
| (0.1 | ) |
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs accrued |
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Amounts paid or charged |
|
| — |
|
|
| — |
|
|
| (0.2 | ) |
|
| (0.2 | ) |
Adjustments |
|
| (0.1 | ) |
|
| — |
|
|
| — |
|
|
| (0.1 | ) |
Consolidated balance at September 30, 2021 |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
|
| Severance |
|
| Operating |
|
|
|
|
|
|
| ||||
|
| and |
|
| Lease |
|
|
|
|
|
|
| ||||
|
| Other Payroll |
|
| Termination |
|
| Other |
|
| Total |
| ||||
Balance at December 31, 2021 |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Specialized Solution |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs accrued |
|
| — |
|
|
| — |
|
|
| 0.2 |
|
|
| 0.2 |
|
Amounts paid or charged |
|
| — |
|
|
| — |
|
|
| (0.2 | ) |
|
| (0.2 | ) |
Specialized Solution balance at September 30, 2022 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Flatbed Solution |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs accrued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Amounts paid or charged |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Flatbed Solution balance at September 30, 2022 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Corporate |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs accrued |
|
| — |
|
|
| — |
|
|
| 1.8 |
|
|
| 1.8 |
|
Amounts paid or charged |
|
| — |
|
|
| — |
|
|
| (1.8 | ) |
|
| (1.8 | ) |
Corporate balance at September 30, 2022 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Costs accrued |
|
| — |
|
|
| — |
|
|
| 2.0 |
|
|
| 2.0 |
|
Amounts paid or charged |
|
| — |
|
|
| — |
|
|
| (2.0 | ) |
|
| (2.0 | ) |
Consolidated balance at September 30, 2022 |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Impairments
During the second quarter of 2022, the Company made a decision to no longer use the trade name of an operating segment within the Specialized Solutions segment that had been integrated into another operating segment as part of the Plan. In addition, there were no remaining customer relationships associated with this integrated operating segment. As such, the Company determined there were indicators of impairment regarding this operating segment’s trade name intangibles, customer relationships intangibles, and goodwill. The Company determined there was no fair value associated with this integrated operating segment’s intangibles. As such, the Company recorded an impairment charge of $7.8 million in the Specialized Solutions segment during the second quarter of 2022, consisting of $1.9 million of trade name intangibles, $0.2 million of customer relationships, and $5.7 million of goodwill. The impairment charge is included in impairment in the consolidated statements of operations and comprehensive income.
NOTE 45 – PROPERTY AND EQUIPMENT
The components of property and equipment are as follows (in millions):
|
| September 30, |
|
| December 31, |
|
| September 30, |
|
| December 31, |
| ||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
Revenue equipment |
| $ | 513.4 |
| $ | 546.7 |
|
| $ | 580.6 |
|
| $ | 520.5 |
| |
Assets leased and available for lease to owner operators |
| 119.4 |
| 87.1 |
| |||||||||||
Revenue equipment leased and available for lease to owner operators |
|
| 151.6 |
|
|
| 123.4 |
| ||||||||
Buildings and improvements |
| 56.9 |
| 57.0 |
|
|
| 58.8 |
|
|
| 58.0 |
| |||
Furniture and fixtures, office and computer equipment and vehicles |
|
| 34.0 |
|
| 31.9 |
| |||||||||
|
| 723.7 |
| 722.7 |
| |||||||||||
Furniture and fixtures, office and computer equipment, vehicles and capitalized software development |
|
| 37.6 |
|
|
| 33.3 |
| ||||||||
Property and equipment, gross |
|
| 828.6 |
|
|
| 735.2 |
| ||||||||
Accumulated depreciation |
|
| (329.5 | ) |
|
| (320.0 | ) |
|
| (372.4 | ) |
|
| (337.5 | ) |
Property and equipment, net |
| $ | 394.2 |
| $ | 402.7 |
|
| $ | 456.2 |
|
| $ | 397.7 |
|
Depreciation expense on property and equipment was $22.1 million and $20.6 million for both the three months ended September 30, 2022 and 2021, and 2020.respectively. Depreciation expense on property and equipment was $61.563.0 million and $66.061.5 million for the nine months ended September 30, 20212022 and 2020,2021, respectively.
11
NOTE 56 – ACCRUED EXPENSES AND OTHER LIABILITIES
The components of accrued expenses and other liabilities are as follows as of September 30, 20212022 and December 31, 20202021 (in millions):
|
| September 30, |
|
| December 31, |
|
| September 30, |
|
| December 31, |
| ||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
Brokerage and escorts |
| $ | 20.5 |
| $ | 11.9 |
|
| $ | 17.9 |
|
| $ | 15.6 |
| |
Unvouchered payables |
|
| 10.9 |
|
|
| 8.7 |
| ||||||||
Owner operator deposits |
| 11.2 |
| 7.8 |
|
|
| 10.4 |
|
|
| 11.3 |
| |||
Unvouchered payables |
| 7.6 |
| 6.1 |
| |||||||||||
Other accrued expenses |
| 4.9 |
| 6.8 |
|
|
| 7.3 |
|
|
| 3.7 |
| |||
Fuel and fuel taxes |
| 4.9 |
| 1.1 |
|
|
| 5.2 |
|
|
| 1.2 |
| |||
Accrued property taxes and sales taxes payable |
| 1.9 |
| 1.5 |
|
|
| 2.0 |
|
|
| 2.3 |
| |||
Interest |
|
| 1.2 |
|
| 0.5 |
|
|
| 0.8 |
|
|
| 1.1 |
| |
|
| $ | 52.2 |
| $ | 35.7 |
|
| $ | 54.5 |
|
| $ | 43.9 |
|
10
NOTE 67 – LONG-TERM DEBT
Long-term debt consists of the following as of September 30, 20212022 and December 31, 20202021 (in millions):
|
| September 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Term loan facility |
| $ | 398.0 |
|
| $ | 483.5 |
|
Equipment term loans |
|
| 171.1 |
|
|
| 164.9 |
|
Finance leases |
|
| 30.6 |
|
|
| 31.3 |
|
|
|
| 599.7 |
|
|
| 679.7 |
|
Less current portion |
|
| (55.7 | ) |
|
| (54.0 | ) |
Less unamortized debt issuance costs |
|
| (7.8 | ) |
|
| (7.1 | ) |
Total long-term debt |
| $ | 536.2 |
|
| $ | 618.6 |
|
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Term Loan Facility |
| $ | 394.0 |
|
| $ | 397.0 |
|
ABL Facility |
|
| — |
|
|
| — |
|
Equipment and real estate term loans |
|
| 220.7 |
|
|
| 169.0 |
|
Finance lease liabilities |
|
| 23.4 |
|
|
| 28.5 |
|
Total debt and finance lease liabilities |
|
| 638.1 |
|
|
| 594.5 |
|
Less current portion |
|
| (68.8 | ) |
|
| (55.5 | ) |
Less unamortized deferred financing fees |
|
| (6.7 | ) |
|
| (7.6 | ) |
Long-term debt and finance lease liabilities, less current portion and unamortized deferred financing fees |
| $ | 562.6 |
|
| $ | 531.4 |
|
Term Loan Facility
On March 9, 2021, the Company and Daseke Companies, Inc., a wholly-owned subsidiary of the Company (the Term Loan Borrower), entered into a Refinancing Amendment (Amendment No. 3 to Term Loan Agreement) (the Term Loan Amendment) with JPMorgan Chase Bank, N.A., as successor administrative agent and collateral agent and a replacement lender, Credit Suisse AG, Cayman Islands Branch, as predecessor administrative agent and collateral agent, the other loan partieslenders party thereto and the other financial institutions party thereto. Pursuant to the Term Loan Amendment, the Company prepaid, refinanced and replaced all of its issuedthe then-issued and outstanding term loans, under its Term Loan Facility (as defined below)which had an aggregate principal amount of $484 million, with cash on hand and new replacement terms loans in an aggregate principal amount of approximately $483.5 million utilizing proceeds from (i) replacement term loans in aggregate principal amount of $400.0400 million (the Replacement Term Loans) and (ii) approximately $83.5 million from its cash balance.
. The terms of the Replacement Term Loans are governed by a $400.0 million term loan facility (the Term Loan Facility) evidenced by a Term Loan Agreement dated as of February 27, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the Term Loan Agreement), among the Company, the Term Loan Borrower, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (the Term Loan Agent), and the other lenders from time to time party thereto withhave a scheduled maturity date of March 9, 2028. The Replacement Term Loans are, at the Company’s election from time to time, comprised of alternate base rate loans (an ABR Borrowing) or adjusted LIBOR loans (a Eurodollar Rate Borrowing), with the applicable margins of interest being an alternate base rate (subject to a 20281.75% floor) plus 3.00% per annum and LIBOR (subject to a 0.75% floor) plus 4.00% per annum. During the three months ended. At September 30, 2022 and December 31, 2021, and 2020, the weighted average interest rate on the Replacement Term Loan FacilityLoans was 4.17.06% and 6.04.75%, respectively. During the nine months ended September 30, 2021 and 2020, the weighted average interest rate on the Term Loan Facility was 5.0% and 6.2%, respectively.
The Term Loan Facility is secured by substantially all assets of the Company, excluding those assets collateralizing certain equipment and real estate debt and other customary exceptions.
The Term Loan Facility permits voluntary prepayments of borrowings. In certain circumstances (subject to exceptions, exclusions and, in the case of excess cash flow, step-downs described below), the Company may also be required to make an offer to prepay the Replacement Term Loans if it receives proceeds as a result of certain asset sales, debt issuances, casualty or similar events of loss, or if it has excess cash flow (defined as an annual amount calculated using a customary formula based on consolidated Adjusted EBITDA, including, among other things, deductions for (i) the amount of certain voluntary prepayments of the Replacement Term Loans and (ii) the amount of certain capital expenditures, acquisitions, investments and restricted payments). The percentage of excess cash flow that must be applied as a mandatory prepayment is 50%, 25% or 0% for excess cash flow periods for the year ending December 31, 2018 and beyond, depending upon the first lien leverage ratio.
The Term Loan Facility contains (i) certain customary affirmative covenants that, among other things, require compliance with applicable laws, periodic financial reporting and notices of material events, payment of taxes and other obligations, maintenance of property and insurance, and provision of additional guarantees and collateral, and (ii) certain customary negative covenants that, among other things, restrict the incurrence of additional indebtedness, liens on property, sale and leaseback transactions, investments, mergers, consolidations, liquidations and dissolutions, asset sales, acquisitions, the payment of distributions, dividends, redemptions and repurchases of equity interests, transactions with affiliates, prepayments and redemptions of certain other indebtedness, burdensome agreements, holding company limitations, changes in fiscal year and modifications of organizational documents. As of September 30, 2021,2022, the Company was in compliance with all covenants contained in the agreement governing the Replacement Term Loan Facility.Loans.
ABL Facility
The Company has a senior secured asset-based revolving line of credit (the ABL Facility) under a credit agreement (as amended, restated, supplemented or otherwise modified from time to time, the ABL Credit Agreement) with PNC Bank, National Association, as administrative agent and the lenders party thereto (the ABL Agent).thereto.
11
On April 29, 2021, the Company, Daseke Companies, Inc., a wholly-owned subsidiary of the Company, and the Company’s other domestic subsidiaries party thereto (together with Daseke Companies, Inc., the ABL Borrowers) entered into the Fifth Amendment to the Fifth Amended and Restated Revolving Credit and Security Agreement (the ABL Amendment) with the financial institutions party thereto as lenders and the ABL Agent, which amends certain terms of the ABL Credit Agreement.
Principally, the ABL Amendment extended the scheduled maturity date of the ABL Facility from February 27, 2025 to April 29, 2026. The ABL Amendment also, among other things, (a) increased the Maximum Revolving Advance Amount (as defined therein) from $100 million to $150 million, (b) provides that the Maximum Revolving Advance Amount may be increased further from $150 million to $200 million (the ABL Amendment did not result in such an increase), (c) removed the ABL Borrowers’ total leverage financial covenant, which had been tested on a quarterly basis and (d) provided additional covenant flexibility in the form of increased debt, lien, investment, disposition and restricted payment baskets.
The ABL Facility also provides for the issuance of letters of credit subject to certain restrictions and a sublimit of $40 million. As of September 30, 2021,2022, the Company had 0no borrowings, $23.322.5 million in letters of credit outstanding, and could incur approximately $117.7123.4 million of additional indebtedness under the ABL Facility, based on current qualified collateral.
At As of September 30, 2021,2022, the interest rate on the ABL Facility was 3.756.75%. Margins on the ABL Facility are adjusted, if necessary, to the applicable rates set forth in the following table corresponding to the average RLOC Utilization for the trailing 12 month period on the last day of the most recently completed fiscal quarter. RLOC Utilization at a particular date shall mean an amount equal to (a)(i) outstanding amount of Revolving Advances plus (ii) the outstanding amount of the Swing Loans plus (iii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, divided by (b) Maximum Revolving Advance Amount.
RLOC Utilization |
| Base Rate Margins |
|
| LIBOR Rate Margins |
| ||
Less than 33.3% |
|
| 0.50 | % |
|
| 1.50 | % |
Greater than or equal to 33.3%, but less than 66.6% |
|
| 0.75 | % |
|
| 1.75 | % |
Greater than or equal to 66.6% |
|
| 1.00 | % |
|
| 2.00 | % |
The ABL Facility is secured by all of the Company’s U.S.-based accounts receivable, parts supplies, cash and cash equivalents excluding proceeds of Term Loan Facility, securities and deposit accounts and other general assets not included in the Term Loan Facility collateral.
The ABL Facility contains a financial covenant such that during any period after a default or event of default or after excess availability falling below 17.5% of the maximum credit amount, continuing until such time as no default or event of default has existed and excess availability has exceeded such amounts for a period of 60 consecutive days, a financial covenant requiring the Company to maintain a minimum consolidated fixed charge coverage ratio of 1.00x, tested on a quarterly basis. The Company’s fixed charge coverage ratio is defined as the ratio of (1) consolidated Adjusted EBITDA minus unfinanced capital expenditures, cash taxes and cash dividends or distributions, to (2) the sum of all funded debt payments for the four-quarter period then ending (with customary add-backs permitted to consolidated Adjusted EBITDA).
The ABL Facility contains affirmative and negative covenants similar to those in the Term Loan Facility, together with such additional terms as are customary for a senior secured asset-based revolving credit facility.
As of September 30, 2021,2022, the Company was in compliance with all covenants contained in the ABL Facility.Credit Agreement.
Equipment and Real Estate Term Loans and Mortgages
As of September 30, 2021,2022, the Company had term loans collateralized by equipment in the aggregate amount of $168.8218.4 million with 16 lenders (Equipment Term Loans). The Equipment Term Loans bear interest at rates ranging from 2.6% to 5.96.6%, require monthly payments of principal and interest and mature at various dates through July 2027. The2029. As of September 30, 2022, the weighted average interest rate for the three months ended September 30, 2021 and 2020 was 3.84.4% and .3.9
%, respectively. The weighted average interest rate for the nine months ended September 30, 2021 and 2020 was 12
As of September 30, 2021,2022, the Company has a bank mortgage loan with a balance of $2.3 million incurred to finance the construction of the headquarters and terminalcertain facilities in Redmond, Oregon. The mortgage loan is collateralized by such property and buildings. The mortgage is payable in monthly installments of approximately $15,000, including interest at 3.7%, and a balloon payment of approximately $2.1 million at maturity date. The bank mortgage loan matures November 1, 2023.
12
NOTE 78 – INCOME TAXES
The effective tax rates for the three months ended September 30, 20212022 and 20202021 were 29.444.0% and 13.629.4%, respectively. The effective tax rates for the nine months ended September 30, 20212022 and 20202021 were 27.632.7% and 11.127.6%, respectively. The difference between the Company’sCompany's effective tax rate anddiffers from the federal statutory rate primarily resultsdue to state income taxes, nontaxable income stemming from the mixchange in fair value of earnings with state jurisdictions, combined with the unfavorable impact ofwarrant liability, and certain nondeductible expenses including the effect of the per diem pay structure for driversrelated to executive compensation and nondeductible executive compensation.goodwill impairment. State tax rates vary among states and typically range from 1% to 6%, although some state rates are higher and a small number of states do not impose an income tax. The effective tax rate for the three and nine months ended September 30, 20212022 differs from the effective tax rate for the same period in 20202021 primarily due to the impactpermanent disallowance of goodwill impairment in 2020the second quarter of nontaxable income2022 and permanent differences in relationlarger disallowances related to forecasted pretax book income. The effective tax rate forexecutive compensation under Section 162(m) of the nine months ended September 30, 2021 differs from the effective tax rate for the same period in 2020 primarily due to the impactInternal Revenue Code of permanent differences in relation to forecasted earnings before income taxes each period.1986, as amended (IRC).
There were no changes in uncertain tax positions during the three and nine months ended September 30, 2021.2022.
NOTE 89 – STOCK-BASED COMPENSATION
Under the 2017 Omnibus Incentive Plan (as amended from time to time, the Incentive Plan), the Company may grant awards of stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and performance awards. On June 18, 2021, at the Company's 2021 annual meeting of stockholders, the Company’s stockholders approved an amendment and restatement (the Restatement) of the Incentive Plan. The Restatement increased the number of shares that may be granted as awards thereunder by 4.0 million and extended the scheduled expiration date of the Incentive Plan from February 27, 2027 to June 18, 2031.
As of September 30, 2021,2022, the Company hashad approximately 2.51.0 million shares of common stock available for issuance under the Incentive Plan. Equity awards to non-directors underPlan, assuming the Incentive Plan generally vest annually on a pro-rata basis over a three to five-year period on the anniversarymaximum potential number of each grant date. The Company also grants equity awards to our directors under the Incentive Plan. The awards granted to directors vest ratably over periods of one to five years annually on the anniversary of each grant date.shares that may be issued from outstanding awards.
Aggregate stock-based compensation charges, net of forfeitures, were $2.12.4 million and $2.32.1 million for the three months ended September 30, 20212022 and 2020,2021, respectively, and $5.38.8 million and $4.95.3 million for the nine months ended September 30, 2022 and 2021, and 2020, respectively. These expenses are included as a component of salaries, wages and employee benefits on the accompanying consolidated statements of operations and comprehensive income (loss).
Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the employees’ requisite service period. Forfeitures are recorded as a cumulative adjustment to stock-based compensation expense in the period forfeitures occur. As of September 30, 2021,2022, there was $2.70.8 million, $2.73.7 million, and $7.66.3 million of unrecognized stock-based compensation expense related to stock options, restricted stock units (RSUs) and performance stock units (PSUs) (both equity and liability awards), respectively. This expense will be recognized over the weighted average periods of 1.40.6 years for stock options, 1.81.4 years for restricted stock unitsRSUs and 1.91.0 years for PSUs.
Stock OptionsDuring the nine months ended September 30, 2022, there were
208,386
The following table summarizes stock option grants:
Grantee Type |
| # of |
|
| Issued and |
|
| Vesting |
| Weighted |
|
| Weighted Average |
| ||||
Director Group |
|
| 150,000 |
|
|
| 75,000 |
|
| 5 years |
| $ | 9.98 |
|
| $ | 4.36 |
|
Employee Group |
|
| 4,682,630 |
|
|
| 2,541,622 |
|
| 3-5 years |
| $ | 5.60 |
|
| $ | 3.08 |
|
Total |
|
|
|
|
| 2,616,622 |
|
|
|
|
|
|
|
|
|
The Company’s calculations of the fair value of stock options grantedRSUs awarded to participants that are classified as equity classificationequity. In addition, during the nine months ended September 30, 20212022, there were made using235,393 PSUs awarded to participants that are classified as liabilities. During the Black-Scholes option-pricing model. The fair value of the Company’snine months ended September 30, 2022, there were no stock option grants was estimated utilizing the following assumptions:options granted.
Restricted Stock Units
The following table summarizes RSU grants under the Incentive Plan:
|
| |
|
| |
|
| |
|
|
Grantee Type |
| # of |
|
| Issued and Outstanding |
|
| Vesting |
| Weighted Average Grant Date Fair Value (Per Unit) |
| |||
Director Group |
|
| 835,543 |
|
|
| 76,336 |
|
| < 1 year -1 year |
| $ | 10.96 |
|
Employee Group |
|
| 2,393,066 |
|
|
| 544,270 |
|
| 1 year -5 years |
| $ | 9.54 |
|
Total |
|
|
|
|
| 620,606 |
|
|
|
|
|
|
A summary of RSU awards activity under the Incentive Plan as of September 30, 2022, and the changes during the nine months ended September 30, 2022 are as follows:
|
| Units |
|
| Weighted |
| ||
Non-vested as of January 1, 2022 |
|
| 673,830 |
|
| $ | 8.56 |
|
Granted |
|
| 208,386 |
|
|
| 12.05 |
|
Vested |
|
| (200,982 | ) |
|
| 8.17 |
|
Forfeited |
|
| (60,628 | ) |
|
| 10.07 |
|
Non-vested as of September 30, 2022 |
|
| 620,606 |
|
| $ | 9.72 |
|
13
A summary of option activity as of September 30, 2021 and changes during the nine months ended September 30, 2021 are as follows:
|
| Shares |
|
| Weighted |
|
| Weighted |
|
| Aggregate |
| ||||
Outstanding as of January 1, 2021 |
|
| 3,114,931 |
|
| $ | 6.19 |
|
|
| 7.9 |
|
| $ | 5.9 |
|
Granted |
|
| 20,000 |
|
|
| 2.39 |
|
|
|
|
|
|
| ||
Exercised |
|
| (157,545 | ) |
|
| 3.00 |
|
|
|
|
|
|
| ||
Forfeited or expired |
|
| (360,764 | ) |
|
| 7.11 |
|
|
|
|
|
|
| ||
Outstanding as of September 30, 2021 |
|
| 2,616,622 |
|
| $ | 6.23 |
|
|
| 7.1 |
|
| $ | 9.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Exercisable as of September 30, 2021 |
|
| 1,507,483 |
|
| $ | 7.85 |
|
|
| 6.5 |
|
| $ | 3.2 |
|
Vested and expected to vest as of September 30, 2021 |
|
| 2,616,622 |
|
| $ | 6.23 |
|
|
| 7.1 |
|
| $ | 9.4 |
|
The stock options’ maximum contract term is ten years. The total weighted average grant date fair value of optionsRSUs granted during the nine months ended September 30, 2022 and 2021 and 2020 was $0.012.05 and $7.04, respectively. The total fair value of RSUs vested during the nine months ended September 30, 2022 and 2021 was $1.6 million and $1.53.8 million, respectively.
RestrictedPerformance Stock Units
RSUs are nontransferable until vested. The Plan Committee (as defined inAs of September 30, 2022, the Incentive Plan) may, in its sole discretion, grant dividend or dividend equivalents with respect to non-vested units. Prior to vesting, the granteesCompany had 2,579,897 PSUs outstanding, of RSUs are not entitled to vote the shares. RSUs typically vest in equal annual increments over the vesting period.which 1,356,500 were classified as equity and 1,223,397 were classified as liabilities.
The following table summarizes RSUs granted under the Incentive Plan:
Grantee Type |
| # of |
|
| Issued and Outstanding |
|
| Vesting |
| Weighted Average Grant Date Fair Value (Per Unit) |
| |||
Director Group |
|
| 933,237 |
|
|
| 39,241 |
|
| 1-2 years |
| $ | 2.96 |
|
Employee Group |
|
| 1,832,106 |
|
|
| 389,708 |
|
| 3-5 years |
| $ | 10.07 |
|
Total |
|
|
|
|
| 428,949 |
|
|
|
|
|
|
A summary of RSUsequity-classified performance stock unit awards activity under the Incentive Plan as of September 30, 20212022, and the changes during the nine months ended September 30, 20212022 are as follows:
|
| Units |
| Weighted |
|
| Units |
|
| Weighted |
| |||||
Non-vested as of January 1, 2021 |
|
| 594,801 |
|
| $ | 5.72 |
| ||||||||
Non-vested equity-classified as of January 1, 2022 |
|
| 1,745,000 |
|
| $ | 4.93 |
| ||||||||
Granted |
|
| 302,692 |
|
|
| 7.04 |
|
|
| — |
|
|
| — |
|
Vested |
|
| (433,117 | ) |
|
| 3.98 |
|
|
| — |
|
|
| — |
|
Forfeited |
|
| (35,427 | ) |
|
| 10.14 |
|
|
| (388,500 | ) |
|
| 0.59 |
|
Non-vested as of September 30, 2021 |
|
| 428,949 |
|
| $ | 8.05 |
| ||||||||
Non-vested equity-classified as of September 30, 2022 |
|
| 1,356,500 |
|
| $ | 6.17 |
|
Performance Stock UnitsAs of September 30, 2022, there
were 548,397 PSUs become eligible forclassified as liabilities in which the vesting in sharesoccurs upon the achievement of specific performance-based conditions related to the Company’s financial performance and market-based conditionsover a three-year period, modified based on the Company’s Relative Total Shareholder Return (TSR) and subject to final vesting based on the participant’s continued employment through the end of the requisite service periods. The grant date fair value of PSUs was determined using a Monte Carlo probability model and compensation cost is recognized ratably overultimate amount to vest may be downwardly adjusted by the requisite service period.
As of September 30, 2021, the Company had 1,890,178 total PSUs outstanding. There are 1,495,000 PSUs in which the vesting occurs upon the achievement of specific market-based conditions based on the performance of per share priceCompensation Committee of the Company’s common stock and subject to final vesting based onBoard of Directors if the participant’s continued employment through the end of the requisite service periods.
In addition, there are 395,178 PSUs in which the vesting occurs upon the achievement of specific performance-based conditions related to the Company's financial performance over a three year period, modified based on the Company's Relative Total Shareholder Return and
14
subject to final vesting based on the participant’s continued employment through the end of the requisite service periods. TSR is negative. The amount of awards that will ultimately vest for these 395,178 PSUs can range from 0% to 200% based on the Company’s Relative Total Shareholder ReturnTSR calculated over a three yearthree-year period beginning January 1 of the year each grant was made. The Company currently expects that these PSUs will vest between 96% and 129%. The fair value of these PSUs will be remeasured at 133%.
each period-end until the earlier of the date they are reclassified to equity or the vesting date. The following inputs and assumptions were used to calculate the fair value ranged from a remaining term of the PSUs for the shares granted during the nine months ended September 30, 2021:
1.25 to
|
| |
|
| |
|
| |
|
|
A summary
In addition, there are 675,000 PSUs classified as liabilities in which the vesting occurs upon the achievement of specific performance-based conditions related to the Company’s financial performance over a two-year period, subject to various subjective individual performance goals and subject to final vesting based on the participant’s continued employment through the end of the requisite service periods. The fair value of these PSUs will be remeasured at each period-end until the earlier of the date they are reclassified to equity or the vesting date. The Company currently expects that these PSUs will vest at 100%. The fair value is equal to the market value of the common stock unit awards activity asat each period-end.
As of September 30, 20212022, the total fair value of liability-classified awards was approximately $7.6 million, of which $2.0 million was recorded as a liability within accrued payroll, benefits and changes duringrelated taxes on the nine months endedconsolidated balance sheet and $1.6 million was recorded as a liability within other non-current liabilities on the consolidated balance sheet. As of September 30, 2021 are as follows:2022, the unrecognized stock-based compensation expense related to liability-classified PSUs was $
4.0
|
| Units |
|
| Weighted |
| ||
Non-vested as of January 1, 2021 |
|
| 1,716,100 |
|
| $ | 1.38 |
|
Granted |
|
| 395,178 |
|
|
| 7.84 |
|
Forfeited |
|
| (221,100 | ) |
|
| 6.30 |
|
Non-vested as of September 30, 2021 |
|
| 1,890,178 |
|
| $ | 5.44 |
|
million.
NOTE 910 – COMMITMENTS AND CONTINGENCIES
Letters of Credit
The Company had outstanding letters of credit as of September 30, 2022 and December 31, 2021 totaling approximately $24.9 million and $25.7 million, respectively, including those disclosed in Note 6.7. These letters of credit are related to liability and workersworkers’ compensation insurance claims.
Contingencies
The Company is involved in certain claims and pending litigation arising in the normal course of business. These proceedings primarily involve claims for personal injury or property damage incurred in the transportation of freight or for personnel matters. The Company maintains liability insurance to cover liabilities arising from these matters but is responsible to pay self-insurance and deductibles on such matters up to a certain threshold before the insurance is applied.
14
NOTE 1011 – COMMON STOCK REPURCHASE PROGRAM
On March 22, 2021,September 30, 2022, the Company’sCompany announced that the Board of Directors has authorized the repurchase of up to $3,000,00040.0 sharesmillion of the Company’s outstanding common stock. Shares are effectively retired at the time of purchase. As of July 31, 2021,September 30, 2022, the Company had not repurchased and retired all 3,000,000any shares at an aggregate cost of $20.4 million, and accordingly, no additional shares may be repurchased under this Stock Repurchase Program.the program.
NOTE 1112 – REPORTABLE SEGMENTS
The Company evaluates the performance of the reportable segments primarily based on their respective revenues and operating income. Accordingly, certain non-operating items are not reported in segment results. In addition, theThe Company has disclosed a corporate segment, which is not an operating segment and includes acquisition transaction expenses, corporate salaries, interest expense and other corporate administrative expenses and intersegment eliminations. In addition, the corporate segment, from time to time when advantageous to do so, purchases and resells certain revenue equipment. During the three months ended September 30, 2022, the corporate segment did not purchase and resell any revenue equipment. During the nine months ended September 30, 2022, the corporate segment purchased $6.7 million in revenue equipment, which it resold for $7.1 million. This resulted in gains of $0.4 million for the nine months ended September 30, 2022 and was recognized within Gain on disposition of property and equipment on the consolidated statements of operations and comprehensive income. During the three and nine months ended September 30, 2021, the corporate segment did not purchase or resell any revenue equipment.
The corporate segment also purchases revenue equipment to lease to the Company’s operating segments. Such leases are generally billed at estimated market rates, and the intersegment expenses included within operating income (loss) are eliminated in the Company’s consolidated results. Intersegment lease expenses for the Specialized Solutions segment totaled $1.1 million and $1.2 million for the three and nine months ended September 30, 2022, respectively. There were no intersegment lease expenses for the Flatbed Solutions segment for the three and nine months ended September 30, 2022. There were no intersegment lease expenses in any reportable segments for the three and nine months ended September 30, 2021.
The Company’s operating segments also provide transportation and related services for one another. Such services are generally billed at cost, and no profit is earned. Such intersegment revenues and expenses are eliminated in the Company’s consolidated results. Intersegment transportation and related services revenues and expenses for the Flatbed Solutions segment totaled $0.5 million and $2.3 million for the three and nine months ended September 30, 2022, respectively. Intersegment transportation and related services revenues and expenses for the Flatbed Solutions segment totaled $1.5 million $3.3 million, $1.4 million and $4.93.3 million for the three and nine months ended September 30, 2021, and 2020, respectively. Intersegment transportation and related services revenues and expenses for the Specialized Solutions segment totaled $1.9 million and $6.4 million for the three and nine months ended September 30, 2022, respectively. Intersegment transportation and related services revenues and expenses for the Specialized Solutions segment totaled $1.7 million $6.0 million, $2.4 million and $9.96.0 million for the three and nine months ended September 30, 2021, and 2020, respectively.
15
The following tables reflect certain financial data of the Company’s reportable segments for the three and nine months ended September 30, 20212022 and 20202021 (in millions):
|
| Flatbed |
| Specialized |
|
|
|
|
|
| Flatbed |
| Specialized |
| Corporate/ |
| Consolidated |
| ||||||||||||||
|
| Solutions |
| Solutions |
| Corporate/ |
| Consolidated |
|
| Solutions Segment |
|
| Solutions Segment |
|
| Eliminations |
|
| Total |
| |||||||||||
Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Total revenue |
| $ | 194.7 |
|
| $ | 270.4 |
|
| $ | (2.3 | ) |
| $ | 462.8 |
| ||||||||||||||||
Company freight |
|
| 42.8 |
|
|
| 127.8 |
|
|
| (2.0 | ) |
|
| 168.6 |
| ||||||||||||||||
Owner operator freight |
|
| 81.5 |
|
|
| 48.7 |
|
|
| (0.2 | ) |
|
| 130.0 |
| ||||||||||||||||
Brokerage |
|
| 38.5 |
|
|
| 46.8 |
|
|
| — |
|
|
| 85.3 |
| ||||||||||||||||
Logistics |
|
| 0.9 |
|
|
| 12.8 |
|
|
| 0.1 |
|
|
| 13.8 |
| ||||||||||||||||
Fuel surcharge |
|
| 31.0 |
|
|
| 34.3 |
|
|
| (0.2 | ) |
|
| 65.1 |
| ||||||||||||||||
Operating income (loss) |
|
| 17.3 |
|
|
| 35.0 |
|
|
| (20.1 | ) |
|
| 32.2 |
| ||||||||||||||||
Depreciation |
|
| 9.1 |
|
|
| 11.7 |
|
|
| 1.3 |
|
|
| 22.1 |
| ||||||||||||||||
Amortization of intangible assets |
|
| 0.8 |
|
|
| 1.0 |
|
|
| — |
|
|
| 1.8 |
| ||||||||||||||||
Restructuring |
|
| — |
|
|
| (0.3 | ) |
|
| 1.1 |
|
|
| 0.8 |
| ||||||||||||||||
Non-cash operating lease expense |
|
| 0.1 |
|
|
| (0.1 | ) |
|
| — |
|
|
| — |
| ||||||||||||||||
Interest expense |
|
| 1.0 |
|
|
| 1.4 |
|
|
| 6.8 |
|
|
| 9.2 |
| ||||||||||||||||
Capital expenditures |
|
| 23.8 |
|
|
| 22.9 |
|
|
| 13.9 |
|
|
| 60.6 |
| ||||||||||||||||
|
| Segment |
| Segment |
| Eliminations |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total revenue |
| $ | 184.0 |
| $ | 244.0 |
| $ | (3.4 | ) |
| $ | 424.6 |
|
| $ | 184.0 |
|
| $ | 244.0 |
|
| $ | (3.4 | ) |
| $ | 424.6 |
| ||
Company freight |
| 45.1 |
| 123.9 |
| (2.4 | ) |
| 166.6 |
|
|
| 45.1 |
|
|
| 123.9 |
|
|
| (2.4 | ) |
|
| 166.6 |
| ||||||
Owner operator freight |
| 89.2 |
| 42.6 |
| (0.7 | ) |
| 131.1 |
|
|
| 89.2 |
|
|
| 42.6 |
|
|
| (0.7 | ) |
|
| 131.1 |
| ||||||
Brokerage |
| 30.4 |
| 51.5 |
| 0 |
| 81.9 |
|
|
| 30.4 |
|
|
| 51.5 |
|
|
| — |
|
|
| 81.9 |
| |||||||
Logistics |
| 1.1 |
| 8.6 |
| 0 |
| 9.7 |
|
|
| 1.1 |
|
|
| 8.6 |
|
|
| — |
|
|
| 9.7 |
| |||||||
Fuel surcharge |
| 18.2 |
| 17.4 |
| (0.3 | ) |
| 35.3 |
|
|
| 18.2 |
|
|
| 17.4 |
|
|
| (0.3 | ) |
|
| 35.3 |
| ||||||
Operating income (loss) |
| 21.1 |
| 29.5 |
| (10.2 | ) |
| 40.4 |
|
|
| 21.1 |
|
|
| 29.5 |
|
|
| (10.2 | ) |
|
| 40.4 |
| ||||||
Depreciation |
| 7.9 |
| 12.3 |
| 0.4 |
| 20.6 |
|
|
| 7.9 |
|
|
| 12.3 |
|
|
| 0.4 |
|
|
| 20.6 |
| |||||||
Amortization of intangible assets |
| 0.8 |
| 1.0 |
| (0.1 | ) |
| 1.7 |
|
|
| 0.8 |
|
|
| 1.0 |
|
|
| (0.1 | ) |
|
| 1.7 |
| ||||||
Restructuring |
| 0 |
| 0.1 |
| 0 |
| 0.1 |
|
|
| — |
|
|
| 0.1 |
|
|
| — |
|
|
| 0.1 |
| |||||||
Non-cash operating lease expense |
| 1.1 |
| 0.7 |
| 0 |
| 1.8 |
|
|
| 1.1 |
|
|
| 0.7 |
|
|
| — |
|
|
| 1.8 |
| |||||||
Interest expense |
| 0.9 |
| 1.2 |
| 5.2 |
| 7.3 |
|
|
| 0.9 |
|
|
| 1.2 |
|
|
| 5.2 |
|
|
| 7.3 |
| |||||||
Income (loss) before income tax |
| 20.3 |
| 28.2 |
| (18.9 | ) |
| 29.6 |
| ||||||||||||||||||||||
Capital expenditures |
| 4.7 |
| 25.8 |
| 11.5 |
| 42.0 |
|
|
| 4.7 |
|
|
| 25.8 |
|
|
| 11.5 |
|
|
| 42.0 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Total revenue |
| $ | 144.5 |
| $ | 235.2 |
| $ | (3.9 | ) |
| $ | 375.8 |
| ||||||||||||||||||
Company freight |
| 47.1 |
| 129.7 |
| (2.0 | ) |
| 174.8 |
| ||||||||||||||||||||||
Owner operator freight |
| 67.2 |
| 37.7 |
| (1.6 | ) |
| 103.3 |
| ||||||||||||||||||||||
Brokerage |
| 17.6 |
| 47.8 |
| (0.2 | ) |
| 65.2 |
| ||||||||||||||||||||||
Logistics |
| 0.7 |
| 9.1 |
| 0.1 |
| 9.9 |
| |||||||||||||||||||||||
Fuel surcharge |
| 11.9 |
| 10.9 |
| (0.2 | ) |
| 22.6 |
| ||||||||||||||||||||||
Operating income (loss) |
| 9.3 |
| 31.1 |
| (12.3 | ) |
| 28.1 |
| ||||||||||||||||||||||
Depreciation |
| 8.4 |
| 11.8 |
| 0.2 |
| 20.4 |
| |||||||||||||||||||||||
Amortization of intangible assets |
| 0.9 |
| 1.0 |
| 0 |
| 1.9 |
| |||||||||||||||||||||||
Restructuring |
| 0.2 |
| 4.9 |
| 0 |
| 5.1 |
| |||||||||||||||||||||||
Non-cash operating lease expense |
| 2.2 |
| (4.7 | ) |
| 0 |
| (2.5 | ) | ||||||||||||||||||||||
Interest expense |
| 2.3 |
| 2.9 |
| 5.9 |
| 11.1 |
| |||||||||||||||||||||||
Income (loss) before income tax |
| 7.0 |
| 28.8 |
| (21.1 | ) |
| 14.7 |
| ||||||||||||||||||||||
Capital expenditures |
| 7.2 |
| 11.3 |
| 0 |
| 18.5 |
|
|
| Flatbed |
|
| Specialized |
|
| Corporate/ |
|
| Consolidated |
| ||||
|
| Solutions Segment |
|
| Solutions Segment |
|
| Eliminations |
|
| Total |
| ||||
Nine Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenue |
| $ | 605.8 |
|
| $ | 767.6 |
|
| $ | (8.3 | ) |
| $ | 1,365.1 |
|
Company freight |
|
| 127.2 |
|
|
| 371.7 |
|
|
| (6.5 | ) |
|
| 492.4 |
|
Owner operator freight |
|
| 259.9 |
|
|
| 139.1 |
|
|
| (1.3 | ) |
|
| 397.7 |
|
Brokerage |
|
| 127.2 |
|
|
| 128.2 |
|
|
| — |
|
|
| 255.4 |
|
Logistics |
|
| 2.9 |
|
|
| 36.2 |
|
|
| 0.1 |
|
|
| 39.2 |
|
Fuel surcharge |
|
| 88.6 |
|
|
| 92.4 |
|
|
| (0.6 | ) |
|
| 180.4 |
|
Operating income (loss) |
|
| 57.9 |
|
|
| 75.3 |
|
|
| (50.0 | ) |
|
| 83.2 |
|
Depreciation |
|
| 26.0 |
|
|
| 35.0 |
|
|
| 2.0 |
|
|
| 63.0 |
|
Amortization of intangible assets |
|
| 2.3 |
|
|
| 2.9 |
|
|
| — |
|
|
| 5.2 |
|
Restructuring |
|
| — |
|
|
| 0.2 |
|
|
| 1.8 |
|
|
| 2.0 |
|
Non-cash operating lease expense |
|
| 0.1 |
|
|
| (0.1 | ) |
|
| — |
|
|
| — |
|
Interest expense |
|
| 2.6 |
|
|
| 3.8 |
|
|
| 17.4 |
|
|
| 23.8 |
|
Capital expenditures |
|
| 44.2 |
|
|
| 50.8 |
|
|
| 32.1 |
|
|
| 127.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenue |
| $ | 518.3 |
|
| $ | 653.7 |
|
| $ | (9.5 | ) |
| $ | 1,162.5 |
|
Company freight |
|
| 137.5 |
|
|
| 345.0 |
|
|
| (7.2 | ) |
|
| 475.3 |
|
Owner operator freight |
|
| 249.1 |
|
|
| 117.9 |
|
|
| (1.7 | ) |
|
| 365.3 |
|
Brokerage |
|
| 77.8 |
|
|
| 119.6 |
|
|
| (0.3 | ) |
|
| 197.1 |
|
Logistics |
|
| 3.6 |
|
|
| 25.0 |
|
|
| 0.3 |
|
|
| 28.9 |
|
Fuel surcharge |
|
| 50.3 |
|
|
| 46.2 |
|
|
| (0.6 | ) |
|
| 95.9 |
|
Operating income (loss) |
|
| 55.0 |
|
|
| 69.1 |
|
|
| (30.1 | ) |
|
| 94.0 |
|
Depreciation |
|
| 24.2 |
|
|
| 36.5 |
|
|
| 0.8 |
|
|
| 61.5 |
|
Amortization of intangible assets |
|
| 2.3 |
|
|
| 2.9 |
|
|
| — |
|
|
| 5.2 |
|
Restructuring |
|
| — |
|
|
| 0.2 |
|
|
| — |
|
|
| 0.2 |
|
Non-cash operating lease expense |
|
| 0.9 |
|
|
| 0.1 |
|
|
| — |
|
|
| 1.0 |
|
Interest expense |
|
| 3.5 |
|
|
| 4.6 |
|
|
| 18.0 |
|
|
| 26.1 |
|
Capital expenditures |
|
| 21.4 |
|
|
| 49.9 |
|
|
| 17.9 |
|
|
| 89.2 |
|
16A measure of assets is not applicable, as segment assets are not regularly reviewed by the chief operating decision maker for evaluating performance or allocating resources.
|
| Flatbed |
|
| Specialized |
|
|
|
|
|
|
| ||||
|
| Solutions |
|
| Solutions |
|
| Corporate/ |
|
| Consolidated |
| ||||
|
| Segment |
|
| Segment |
|
| Eliminations |
|
| Total |
| ||||
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenue |
| $ | 518.3 |
|
| $ | 653.8 |
|
| $ | (9.6 | ) |
| $ | 1,162.5 |
|
Company freight |
|
| 137.5 |
|
|
| 345.1 |
|
|
| (7.3 | ) |
|
| 475.3 |
|
Owner operator freight |
|
| 249.1 |
|
|
| 117.9 |
|
|
| (1.7 | ) |
|
| 365.3 |
|
Brokerage |
|
| 77.8 |
|
|
| 119.6 |
|
|
| (0.3 | ) |
|
| 197.1 |
|
Logistics |
|
| 3.6 |
|
|
| 25.0 |
|
|
| 0.3 |
|
|
| 28.9 |
|
Fuel surcharge |
|
| 50.3 |
|
|
| 46.2 |
|
|
| (0.6 | ) |
|
| 95.9 |
|
Operating income (loss) |
|
| 55.0 |
|
|
| 69.1 |
|
|
| (30.1 | ) |
|
| 94.0 |
|
Depreciation |
|
| 24.2 |
|
|
| 36.5 |
|
|
| 0.8 |
|
|
| 61.5 |
|
Amortization of intangible assets |
|
| 2.3 |
|
|
| 2.9 |
|
|
| 0 |
|
|
| 5.2 |
|
Restructuring |
|
| 0 |
|
|
| 0.2 |
|
|
| 0 |
|
|
| 0.2 |
|
Non-cash operating lease expense |
|
| 0.9 |
|
|
| 0.1 |
|
|
| 0 |
|
|
| 1.0 |
|
Interest expense |
|
| 3.5 |
|
|
| 4.6 |
|
|
| 18.0 |
|
|
| 26.1 |
|
Income (loss) before income tax |
|
| 51.8 |
|
|
| 65.0 |
|
|
| (49.3 | ) |
|
| 67.5 |
|
Capital expenditures |
|
| 21.4 |
|
|
| 49.9 |
|
|
| 17.9 |
|
|
| 89.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenue |
| $ | 436.8 |
|
| $ | 697.2 |
|
| $ | (15.5 | ) |
| $ | 1,118.5 |
|
Company freight |
|
| 147.3 |
|
|
| 383.5 |
|
|
| (8.1 | ) |
|
| 522.7 |
|
Owner operator freight |
|
| 193.5 |
|
|
| 118.7 |
|
|
| (5.1 | ) |
|
| 307.1 |
|
Brokerage |
|
| 52.6 |
|
|
| 133.7 |
|
|
| (1.5 | ) |
|
| 184.8 |
|
Logistics |
|
| 2.2 |
|
|
| 26.4 |
|
|
| 0.2 |
|
|
| 28.8 |
|
Fuel surcharge |
|
| 41.2 |
|
|
| 34.9 |
|
|
| (1.0 | ) |
|
| 75.1 |
|
Operating income (loss) |
|
| 28.6 |
|
|
| 39.1 |
|
|
| (35.5 | ) |
|
| 32.2 |
|
Depreciation |
|
| 25.3 |
|
|
| 39.9 |
|
|
| 0.7 |
|
|
| 65.9 |
|
Amortization of intangible assets |
|
| 2.5 |
|
|
| 3.0 |
|
|
| 0 |
|
|
| 5.5 |
|
Impairment |
|
| 0 |
|
|
| 13.4 |
|
|
| 0 |
|
|
| 13.4 |
|
Restructuring |
|
| 0.3 |
|
|
| 8.3 |
|
|
| 0 |
|
|
| 8.6 |
|
Non-cash operating lease expense |
|
| 4.3 |
|
|
| (4.1 | ) |
|
| 0 |
|
|
| 0.2 |
|
Interest expense |
|
| 7.2 |
|
|
| 8.7 |
|
|
| 18.2 |
|
|
| 34.1 |
|
Income (loss) before income tax |
|
| 21.7 |
|
|
| 30.5 |
|
|
| (54.0 | ) |
|
| (1.8 | ) |
Capital expenditures |
|
| 24.2 |
|
|
| 39.2 |
|
|
| 0 |
|
|
| 63.4 |
|
1716
NOTE 1213 – EARNINGS (LOSS) PER SHARE
ASC Topic 260, “Earnings Per Share”, provides that unvestedUnvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall beare included in the computation of earnings per share pursuant to the two-class method. TheA portion of the Company’s outstanding non-vested restricted stock unitsRSUs are participating securities unless there is a net loss attributable to common stockholders. Accordingly, earnings per common share are computed using the two-class method.
Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the Company’s earnings.
For the three and nine months ended September 30, 2020,2022, shares of the Company’s 7.625% Series A Convertible Cumulative Preferred Stock (Series A Preferred Stock) and shares of the Company’s outstanding stock options and performance share units were not included in the computation of diluted lossearnings per share as their effects were anti-dilutive.
The following table sets forth the computation of basic and diluted earnings per share under the two-class method:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(in millions, except per share data) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) |
| $ | 20.9 |
|
| $ | 12.7 |
|
| $ | 48.9 |
|
| $ | (2.0 | ) |
Less Series A preferred dividends |
|
| (1.2 | ) |
|
| (1.2 | ) |
|
| (3.7 | ) |
|
| (3.7 | ) |
Net income (loss) attributable to common stockholders |
|
| 19.7 |
|
|
| 11.5 |
|
|
| 45.2 |
|
|
| (5.7 | ) |
Allocation of earnings to non-vested participating restricted stock units |
|
| (0.2 | ) |
|
| (0.2 | ) |
|
| (0.4 | ) |
|
| 0 |
|
Numerator for basic EPS - income (loss) available to common stockholders - two class method |
| $ | 19.5 |
|
| $ | 11.3 |
|
| $ | 44.8 |
|
| $ | (5.7 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Add back Series A preferred dividends |
| $ | 1.2 |
|
| $ | 0 |
|
| $ | 3.7 |
|
| $ | 0 |
|
Add back allocation earnings to participating securities |
|
| 0.2 |
|
|
| 0.2 |
|
|
| 0.4 |
|
|
| 0 |
|
Reallocation of earnings to participating securities considering potentially dilutive securities |
|
| (0.2 | ) |
|
| (0.2 | ) |
|
| (0.4 | ) |
|
| 0 |
|
Numerator for diluted EPS - income (loss) available to common shareholders - two class method |
| $ | 20.7 |
|
| $ | 11.3 |
|
| $ | 48.5 |
|
| $ | (5.7 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator for basic EPS - weighted-average shares |
|
| 62.6 |
|
|
| 64.8 |
|
|
| 64.2 |
|
|
| 64.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Stock options and performance share units |
|
| 1.7 |
|
|
| 1.2 |
|
|
| 1.3 |
|
|
| 0 |
|
Convertible preferred stock |
|
| 5.7 |
|
|
| 5.7 |
|
|
| 5.7 |
|
|
| 0 |
|
Denominator for diluted EPS - weighted-average shares |
|
| 70.0 |
|
|
| 71.7 |
|
|
| 71.2 |
|
|
| 64.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic earnings (loss) per share |
| $ | 0.31 |
|
| $ | 0.17 |
|
| $ | 0.70 |
|
| $ | (0.09 | ) |
Diluted earnings (loss) per share |
| $ | 0.30 |
|
| $ | 0.17 |
|
| $ | 0.68 |
|
| $ | (0.09 | ) |
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(in millions, except per share data) |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 12.6 |
|
| $ | 20.9 |
|
| $ | 43.3 |
|
| $ | 48.9 |
|
Less Series A Preferred Stock dividends |
|
| (1.3 | ) |
|
| (1.2 | ) |
|
| (3.7 | ) |
|
| (3.7 | ) |
Net income attributable to common stockholders |
|
| 11.3 |
|
|
| 19.7 |
|
|
| 39.6 |
|
|
| 45.2 |
|
Allocation of earnings to non-vested participating RSUs |
|
| — |
|
|
| (0.2 | ) |
|
| (0.1 | ) |
|
| (0.4 | ) |
Numerator for basic EPS - income available to common stockholders - two class method |
| $ | 11.3 |
|
| $ | 19.5 |
|
| $ | 39.5 |
|
| $ | 44.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Add back Series A Preferred Stock dividends |
| $ | — |
|
| $ | 1.2 |
|
| $ | — |
|
| $ | 3.7 |
|
Add back allocation earnings to participating securities |
|
| — |
|
|
| 0.2 |
|
|
| 0.1 |
|
|
| 0.4 |
|
Reallocation of earnings to participating securities considering potentially dilutive securities |
|
| — |
|
|
| (0.2 | ) |
|
| (0.1 | ) |
|
| (0.4 | ) |
Numerator for diluted EPS - income available to common shareholders - two class method |
| $ | 11.3 |
|
| $ | 20.7 |
|
| $ | 39.5 |
|
| $ | 48.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator for basic EPS - weighted-average shares |
|
| 63,535,897 |
|
|
| 62,583,115 |
|
|
| 63,301,446 |
|
|
| 64,159,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-participating outstanding share-based payment awards |
|
| 2,734,744 |
|
|
| 1,765,315 |
|
|
| 2,965,220 |
|
|
| 1,395,857 |
|
Series A Preferred Stock |
|
| — |
|
|
| 5,652,173 |
|
|
| — |
|
|
| 5,652,173 |
|
Denominator for diluted EPS - weighted-average shares |
|
| 66,270,641 |
|
|
| 70,000,603 |
|
|
| 66,266,666 |
|
|
| 71,207,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic earnings per share |
| $ | 0.18 |
|
| $ | 0.31 |
|
| $ | 0.62 |
|
| $ | 0.70 |
|
Diluted earnings per share |
| $ | 0.17 |
|
| $ | 0.30 |
|
| $ | 0.60 |
|
| $ | 0.68 |
|
1817
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Daseke is thea premier North American transportation solutions specialist dedicated to servicing challenging industrial end-markets through experienced people and a fleet of more than 4,500 tractors and 11,000 flatbed and specialized trailers, and has operations throughout the continental United States, Canada and Mexico. The Company also provides logistical planning and warehousing services to customers.
The Company believes it provides one of the most comprehensive transportation and logistics solutions offerings in the industry. The Company delivers its diverse offering of transportation and logistics solutions to its approximately 6,700thousands of customers across the United States, Canada and Mexico through two reportable segments: Flatbed Solutions and Specialized Solutions. The Flatbed Solutions segment focuses on delivering transportation and logistics solutions that principally require the use of flatbed and retractable-sided transportation equipment, and the Specialized Solutions segment focuses on delivering transportation and logistics solutions that require the use of specialized trailering transportation equipment.
Both of the Company’s reportable segments operate highly flexible business models comprised of company-owned tractors and trailers and asset-light operations (which consist of owner operator transportation, freight brokerage and logistics). The Company’s asset-based operations have the benefit of providing shippers with certainty of deliverycommitted capacity and continuity of operations.operations to meet shippers needs. Alternatively, the Company’s asset-light operations offer flexibility and scalability to meet customers’ dynamic needs and have lower capital expenditure requirements and fixed costs.
Recent Developments
Thus far in 2022, like others in our industry, we have experienced inflationary cost headwinds in driver pay, operations and maintenance, and insurance expenses. The levelsU.S. inflation rate is the highest experienced in four decades. Inflation can have an impact on the Company’s operating costs. A prolonged period of activityinflation could cause interest rates, fuel, wages and other costs to increase, which would adversely affect the Company’s results of operations unless freight rates correspondingly increase. We have seen strong freight rates for much of 2022, which have been supported by our strategic alignment with niche end-markets in the Company’s businessindustrial economy, as opposed to the commodity-oriented consumer retail markets. Although our flatbed segment rate per mile is higher in 2022 compared to 2021, we are beginning to experience softening in freight rates, which has negatively impacted our flatbed segment operating results in the midst of historic inflationary cost headwinds, which we expect to continue for the foreseeable future.
In addition to inflation, like others in our industry, we have historically been positively correlatedobserved ongoing delays in receiving new equipment as the supply chain disruptions persisted throughout the first half of 2022. We began to broad measuressee improvements during the third quarter, and we are expecting to see additional improvement in receiving new equipment during the fourth quarter of economic activity2022.
On September 30, 2022, the Company announced that its Board of Directors has approved a stock repurchase program, under which the Company is authorized to repurchase up to $40 million of its outstanding common stock. The Company intends to fund the repurchase program with cash on hand. The timing, number, and to measuresvalue of industrial production because manyshares repurchased under the program will be at management’s discretion and will depend on a number of factors, including the market price of the Company’s customers are in the manufacturingcommon stock, general market and industrial segments. In the first nine months of 2021, the Company saw improvement in industrial demand, which had previously been pressuredeconomic conditions and applicable legal requirements. The program may be suspended, modified or discontinued by the COVID-19 pandemic, and in the second and third quarters of 2021, the industrial end-market in various verticals (particularly in construction and steel and other metals) appeared to have returned to pre-pandemic levels. As a result, in the third quarter of 2021, the Flatbed Solutions segment experienced a significantly improved rate environment, with rates 32.5% higher than the third quarter of 2020. During the third quarter of 2021, the Specialized Solutions segment also benefitted from continued strong demand and freight rates, primarily serving construction, high security cargo and glass.Board at any time without prior notice.
As the coronavirus pandemic continues to evolve, we believe the extent of the impact to our business, operating results, cash flows, liquidity and financial condition will be primarily driven by the severity and duration of the coronavirus pandemic, including as a result of the emergence of new variants of the coronavirus; the development, acceptance and efficacy of treatments and vaccines; the pandemic’s impact on the U.S. and global economies; and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic. Those primary drivers are beyond our knowledge and control, and there are no comparable recent events that provide guidance as to the effect the COVID-19 global pandemic may have. As a result, the ultimate impact of the pandemic is highly uncertain and subject to change. See “Item 1A. Risk Factors—Risks Relating to the COVID-19 Pandemic” in our Annual Report on Form 10-K/A, filed with the SEC on May 6, 2021, for more information regarding risks relating to the COVID-19 pandemic.
1918
Results of Operations
The following table sets forth certainrevenue, operating statistics for the three months ended September 30, 2021expenses and 2020income from operations (in dollars and as well as itemsa percentage of total revenue), derived from the Company’s consolidated statements of operations, for the three months ended September 30, 2022 and 2021, as well as certain operating statistics for the same periods. In addition, the absolute and 2020.relative changes for each are presented. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner operator miles driven in the period. Miles are estimated based on information received as of the filing date and may change quarter to quarter when final information is received from each operating segment. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner operator tractors.
|
| Three Months Ended September 30, |
|
|
|
|
|
|
| ||||||||||||||||||
|
| 2022 |
| 2021 |
| Increase (Decrease) | |||||||||||||||||||||
(Dollars in millions, except Rate per mile and Revenue per tractor) |
| Amount |
|
| % |
| Amount |
|
| % |
| Absolute |
|
| Relative | ||||||||||||
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Company freight |
| $ | 168.6 |
|
|
| 36.4 |
| % |
| $ | 166.6 |
|
|
| 39.2 |
| % |
| $ | 2.0 |
|
|
| 1.2 |
| % |
Owner operator freight |
|
| 130.0 |
|
|
| 28.1 |
|
|
|
| 131.1 |
|
|
| 30.9 |
|
|
|
| (1.1 | ) |
|
| (0.8 | ) |
|
Brokerage |
|
| 85.3 |
|
|
| 18.4 |
|
|
|
| 81.9 |
|
|
| 19.3 |
|
|
|
| 3.4 |
|
|
| 4.2 |
|
|
Logistics |
|
| 13.8 |
|
|
| 3.0 |
|
|
|
| 9.7 |
|
|
| 2.3 |
|
|
|
| 4.1 |
|
|
| 42.3 |
|
|
Fuel surcharge |
|
| 65.1 |
|
|
| 14.1 |
|
|
|
| 35.3 |
|
|
| 8.4 |
|
|
|
| 29.8 |
|
|
| 84.4 |
|
|
Total revenue |
| $ | 462.8 |
|
|
| 100.0 |
| % |
| $ | 424.6 |
|
|
| 100.0 |
| % |
| $ | 38.2 |
|
|
| 9.0 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Salaries, wages and employee benefits |
| $ | 104.6 |
|
|
| 22.6 |
| % |
| $ | 96.6 |
|
|
| 22.8 |
| % |
| $ | 8.0 |
|
|
| 8.3 |
| % |
Fuel |
|
| 40.0 |
|
|
| 8.6 |
|
|
|
| 26.8 |
|
|
| 6.3 |
|
|
|
| 13.2 |
|
|
| 49.3 |
|
|
Operations and maintenance |
|
| 43.1 |
|
|
| 9.3 |
|
|
|
| 40.5 |
|
|
| 9.5 |
|
|
|
| 2.6 |
|
|
| 6.4 |
|
|
Communications |
|
| 0.7 |
|
|
| 0.2 |
|
|
|
| 0.9 |
|
|
| 0.2 |
|
|
|
| (0.2 | ) |
|
| (22.2 | ) |
|
Purchased freight |
|
| 180.3 |
|
|
| 39.0 |
|
|
|
| 167.5 |
|
|
| 39.4 |
|
|
|
| 12.8 |
|
|
| 7.6 |
|
|
Administrative |
|
| 17.6 |
|
|
| 3.8 |
|
|
|
| 17.0 |
|
|
| 4.0 |
|
|
|
| 0.6 |
|
|
| 3.5 |
|
|
Sales and marketing |
|
| 0.2 |
|
|
| — |
|
|
|
| 0.5 |
|
|
| 0.1 |
|
|
|
| (0.3 | ) |
|
| (60.0 | ) |
|
Taxes and licenses |
|
| 3.9 |
|
|
| 0.8 |
|
|
|
| 3.5 |
|
|
| 0.8 |
|
|
|
| 0.4 |
|
|
| 11.4 |
|
|
Insurance and claims |
|
| 20.0 |
|
|
| 4.3 |
|
|
|
| 13.9 |
|
|
| 3.3 |
|
|
|
| 6.1 |
|
|
| 43.9 |
|
|
Acquisition-related transaction expenses |
|
| 0.4 |
|
|
| 0.1 |
|
|
|
| — |
|
|
| — |
|
|
|
| 0.4 |
|
|
| 100.0 |
|
|
Depreciation and amortization |
|
| 23.9 |
|
|
| 5.2 |
|
|
|
| 22.3 |
|
|
| 5.3 |
|
|
|
| 1.6 |
|
|
| 7.2 |
|
|
Gain on disposition of revenue property and equipment |
|
| (4.9 | ) |
|
| (1.0 | ) |
|
|
| (5.4 | ) |
|
| (1.3 | ) |
|
|
| 0.5 |
|
|
| (9.3 | ) |
|
Restructuring charges |
|
| 0.8 |
|
|
| 0.2 |
|
|
|
| 0.1 |
|
|
| — |
|
|
|
| 0.7 |
|
|
| 700.0 |
|
|
Total operating expenses |
| $ | 430.6 |
|
|
| 93.0 |
| % |
| $ | 384.2 |
|
|
| 90.5 |
| % |
| $ | 46.4 |
|
|
| 12.1 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
INCOME FROM OPERATIONS |
| $ | 32.2 |
|
|
| 7.0 |
| % |
| $ | 40.4 |
|
|
| 9.5 |
| % |
| $ | (8.2 | ) |
|
| (20.3 | ) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest income |
| $ | (0.7 | ) |
|
| (0.2 | ) | % |
| $ | (0.1 | ) |
|
| — |
| % |
| $ | (0.6 | ) |
|
| 600.0 |
| % |
Interest expense |
|
| 9.2 |
|
|
| 2.0 |
|
|
|
| 7.3 |
|
|
| 1.7 |
|
|
|
| 1.9 |
|
|
| 26.0 |
|
|
Change in fair value of warrant liability |
|
| — |
|
|
| — |
|
|
|
| 3.4 |
|
|
| 0.8 |
|
|
|
| (3.4 | ) |
|
| (100.0 | ) |
|
Other |
|
| 1.2 |
|
|
| 0.3 |
|
|
|
| 0.2 |
|
|
| — |
|
|
|
| 1.0 |
|
|
| 500.0 |
|
|
Total other expense |
| $ | 9.7 |
|
|
| 2.1 |
| % |
| $ | 10.8 |
|
|
| 2.5 |
| % |
| $ | (1.1 | ) |
|
| (10.2 | ) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Income before income taxes |
| $ | 22.5 |
|
|
| 4.9 |
| % |
| $ | 29.6 |
|
|
| 7.0 |
| % |
| $ | (7.1 | ) |
|
| (24.0 | ) | % |
Income tax expense |
|
| 9.9 |
|
|
| 2.1 |
|
|
|
| 8.7 |
|
|
| 2.0 |
|
|
|
| 1.2 |
|
|
| 13.8 |
|
|
Net income |
| $ | 12.6 |
|
|
| 2.7 |
| % |
| $ | 20.9 |
|
|
| 4.9 |
| % |
| $ | (8.3 | ) |
|
| (39.7 | ) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Company miles |
|
| 54.4 |
|
|
|
|
|
|
| 54.4 |
|
|
|
|
|
|
| — |
|
|
| — |
| % | ||
Owner operator miles |
|
| 41.6 |
|
|
|
|
|
|
| 46.7 |
|
|
|
|
|
|
| (5.1 | ) |
|
| (10.9 | ) |
| ||
Total miles (in millions) |
|
| 96.0 |
|
|
|
|
|
|
| 101.1 |
|
|
|
|
|
|
| (5.1 | ) |
|
| (5.0 | ) | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Rate per mile |
| $ | 3.11 |
|
|
|
|
|
| $ | 2.94 |
|
|
|
|
|
| $ | 0.17 |
|
|
| 5.8 |
| % | ||
Revenue per tractor |
| $ | 62,200 |
|
|
|
|
|
| $ | 62,500 |
|
|
|
|
|
| $ | (300 | ) |
|
| (0.5 | ) | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Company owned tractors, at quarter-end |
|
| 2,799 |
|
|
|
|
|
|
| 2,641 |
|
|
|
|
|
|
| 158 |
|
|
| 6.0 |
| % | ||
Owner operator tractors, at quarter-end |
|
| 2,042 |
|
|
|
|
|
|
| 2,077 |
|
|
|
|
|
|
| (35 | ) |
|
| (1.7 | ) |
| ||
Number of trailers, at quarter-end |
|
| 11,028 |
|
|
|
|
|
|
| 11,266 |
|
|
|
|
|
|
| (238 | ) |
|
| (2.1 | ) | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Company owned tractors, average for the quarter |
|
| 2,748 |
|
|
|
|
|
|
| 2,672 |
|
|
|
|
|
|
| 76 |
|
|
| 2.8 |
| % | ||
Owner operator tractors, average for the quarter |
|
| 2,049 |
|
|
|
|
|
|
| 2,095 |
|
|
|
|
|
|
| (46 | ) |
|
| (2.2 | ) |
| ||
Total tractors, average for the quarter |
|
| 4,797 |
|
|
|
|
|
|
| 4,767 |
|
|
|
|
|
|
| 30 |
|
|
| 0.6 |
| % |
|
| Three Months Ended September 30, |
|
|
|
|
|
|
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| Increase (Decrease) |
| |||||||||||||||
(Dollars in millions, except Rate per mile and Revenue per tractor) |
| $ |
|
| % |
|
| $ |
|
| % |
|
| $ |
|
| % |
| ||||||
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Company freight |
| $ | 166.6 |
|
|
| 39.2 |
|
| $ | 174.8 |
|
|
| 46.5 |
|
| $ | (8.2 | ) |
|
| (4.7 | ) |
Owner operator freight |
|
| 131.1 |
|
|
| 30.9 |
|
|
| 103.3 |
|
|
| 27.5 |
|
|
| 27.8 |
|
|
| 26.9 |
|
Brokerage |
|
| 81.9 |
|
|
| 19.3 |
|
|
| 65.2 |
|
|
| 17.3 |
|
|
| 16.7 |
|
|
| 25.6 |
|
Logistics |
|
| 9.7 |
|
|
| 2.3 |
|
|
| 9.9 |
|
|
| 2.6 |
|
|
| (0.2 | ) |
|
| (2.0 | ) |
Fuel surcharge |
|
| 35.3 |
|
|
| 8.3 |
|
|
| 22.6 |
|
|
| 6.1 |
|
|
| 12.7 |
|
|
| 56.2 |
|
Total revenue |
|
| 424.6 |
|
|
| 100.0 |
|
|
| 375.8 |
|
|
| 100.0 |
|
|
| 48.8 |
|
|
| 13.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Salaries, wages and employee benefits |
|
| 96.6 |
|
|
| 22.8 |
|
|
| 95.8 |
|
|
| 25.5 |
|
|
| 0.8 |
|
|
| 0.8 |
|
Fuel |
|
| 26.8 |
|
|
| 6.3 |
|
|
| 20.2 |
|
|
| 5.4 |
|
|
| 6.6 |
|
|
| 32.7 |
|
Operations and maintenance |
|
| 40.5 |
|
|
| 9.5 |
|
|
| 45.5 |
|
|
| 12.1 |
|
|
| (5.0 | ) |
|
| (11.0 | ) |
Communications |
|
| 0.9 |
|
|
| 0.2 |
|
|
| 0.9 |
|
|
| 0.2 |
|
|
| — |
|
|
| — |
|
Purchased freight |
|
| 167.5 |
|
|
| 39.4 |
|
|
| 127.9 |
|
|
| 34.0 |
|
|
| 39.6 |
|
|
| 31.0 |
|
Administrative expenses |
|
| 17.0 |
|
|
| 4.0 |
|
|
| 12.6 |
|
|
| 3.4 |
|
|
| 4.4 |
|
|
| 34.9 |
|
Sales and marketing |
|
| 0.5 |
|
|
| 0.1 |
|
|
| 0.3 |
|
|
| 0.1 |
|
|
| 0.2 |
|
|
| 66.7 |
|
Taxes and licenses |
|
| 3.5 |
|
|
| 0.8 |
|
|
| 3.9 |
|
|
| 1.0 |
|
|
| (0.4 | ) |
|
| (10.3 | ) |
Insurance and claims |
|
| 13.9 |
|
|
| 3.3 |
|
|
| 16.3 |
|
|
| 4.3 |
|
|
| (2.4 | ) |
|
| (14.7 | ) |
Depreciation and amortization |
|
| 22.3 |
|
|
| 5.3 |
|
|
| 22.3 |
|
|
| 5.9 |
|
|
| — |
|
|
| — |
|
Gain on disposition of revenue property and equipment |
|
| (5.4 | ) |
|
| (1.2 | ) |
|
| (3.1 | ) |
|
| (0.8 | ) |
|
| (2.3 | ) |
|
| 74.2 |
|
Restructuring charges |
|
| 0.1 |
|
|
| — |
|
|
| 5.1 |
|
|
| 1.4 |
|
|
| (5.0 | ) |
|
| (98.0 | ) |
Total operating expenses |
|
| 384.2 |
|
|
| 90.5 |
|
|
| 347.7 |
|
|
| 92.5 |
|
|
| 36.5 |
|
|
| 10.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
INCOME FROM OPERATIONS |
|
| 40.4 |
|
|
| 9.5 |
|
|
| 28.1 |
|
|
| 7.5 |
|
|
| 12.3 |
|
|
| 43.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest income |
|
| (0.1 | ) |
|
| — |
|
|
| (0.1 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
Interest expense |
|
| 7.3 |
|
|
| 1.7 |
|
|
| 11.1 |
|
|
| 3.0 |
|
|
| (3.8 | ) |
|
| (34.2 | ) |
Change in fair value of warrant liability |
|
| 3.4 |
|
|
| 0.8 |
|
|
| 3.0 |
|
|
| 0.8 |
|
|
| 0.4 |
|
|
| 13.3 |
|
Other |
|
| 0.2 |
|
|
| — |
|
|
| (0.6 | ) |
|
| (0.2 | ) |
|
| 0.8 |
|
|
| (133.3 | ) |
Total other expense |
|
| 10.8 |
|
|
| 2.5 |
|
|
| 13.4 |
|
|
| 3.6 |
|
|
| (2.6 | ) |
|
| (19.4 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Income before income taxes |
|
| 29.6 |
|
|
| 7.0 |
|
|
| 14.7 |
|
|
| 3.9 |
|
|
| 14.9 |
|
|
| 101.4 |
|
Income tax expense |
|
| 8.7 |
|
|
| 2.0 |
|
|
| 2.0 |
|
|
| 0.5 |
|
|
| 6.7 |
|
|
| 335.0 |
|
Net income |
| $ | 20.9 |
|
|
| 4.9 |
|
| $ | 12.7 |
|
|
| 3.4 |
|
| $ | 8.2 |
|
|
| 64.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Company miles |
|
| 54.4 |
|
|
|
|
|
| 62.0 |
|
|
|
|
|
| (7.6 | ) |
|
| (12.3 | ) | ||
Owner operator miles |
|
| 46.7 |
|
|
|
|
|
| 47.8 |
|
|
|
|
|
| (1.1 | ) |
|
| (2.3 | ) | ||
Total miles (in millions) |
|
| 101.1 |
|
|
|
|
|
| 109.8 |
|
|
|
|
|
| (8.7 | ) |
|
| (7.9 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Rate per mile |
| $ | 2.94 |
|
|
|
|
| $ | 2.53 |
|
|
|
|
| $ | 0.41 |
|
|
| 16.2 |
| ||
Revenue per tractor |
| $ | 62,500 |
|
|
|
|
| $ | 54,100 |
|
|
|
|
| $ | 8,400 |
|
|
| 15.5 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Company-operated tractors, at period-end |
|
| 2,641 |
|
|
|
|
|
| 2,979 |
|
|
|
|
|
| (338 | ) |
|
| (11.3 | ) | ||
Owner-operated tractors, at period-end |
|
| 2,077 |
|
|
|
|
|
| 2,100 |
|
|
|
|
|
| (23 | ) |
|
| (1.1 | ) | ||
Number of trailers, at period-end |
|
| 11,266 |
|
|
|
|
|
| 11,607 |
|
|
|
|
|
| (341 | ) |
|
| (2.9 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Company-operated tractors, average for the period |
|
| 2,672 |
|
|
|
|
|
| 3,035 |
|
|
|
|
|
| (363 | ) |
|
| (12.0 | ) | ||
Owner-operated tractors, average for the period |
|
| 2,095 |
|
|
|
|
|
| 2,104 |
|
|
|
|
|
| (9 | ) |
|
| (0.4 | ) | ||
Total tractors, average for the period |
|
| 4,767 |
|
|
|
|
|
| 5,139 |
|
|
|
|
|
| (372 | ) |
|
| (7.2 | ) |
2019
The following table sets forth certainrevenue, operating statisticsexpenses and income from operations (in dollars and as a percentage of total revenue) of the Company’s Specialized Solutions segment for the three months ended September 30, 20212022 and 2020,2021, as well as revenue,certain operating expenses and income (loss) from operationsstatistics for the three months ended September 30, 2021same periods. In addition, the absolute and 2020. relative changes for each are presented. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner operator miles driven in the period. Miles are estimated based on information received as of the filing date and may change quarter to quarter when final information is received from each operating segment. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner operator tractors.
SPECIALIZED SOLUTIONS
|
| Three Months Ended September 30, |
|
|
|
|
|
|
|
| Three Months Ended September 30, |
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| Increase (Decrease) |
|
| 2022 |
| 2021 |
| Increase (Decrease) | ||||||||||||||||||||||||||||||||||||
(Dollars in millions, except Rate per mile and Revenue per tractor) |
| $ |
|
| % |
|
| $ |
|
| % |
| $ |
| % |
|
| Amount |
|
| % |
| Amount |
|
| % |
| Absolute |
|
| Relative | ||||||||||||||||||||
REVENUE(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company freight |
| $ | 123.9 |
| 50.8 |
| $ | 129.7 |
| 55.1 |
| $ | (5.8 | ) |
| (4.5 | ) |
| $ | 127.8 |
|
|
| 47.3 |
| % |
| $ | 123.9 |
|
|
| 50.8 |
| % |
| $ | 3.9 |
|
|
| 3.1 |
| % | |||||||
Owner operator freight |
| 42.6 |
| 17.5 |
| 37.7 |
| 16.0 |
| 4.9 |
| 13.0 |
|
|
| 48.7 |
|
|
| 18.0 |
|
|
|
| 42.6 |
|
|
| 17.5 |
|
|
|
| 6.1 |
|
|
| 14.3 |
|
| |||||||||||
Brokerage |
| 51.5 |
| 21.1 |
| 47.8 |
| 20.3 |
| 3.7 |
| 7.7 |
|
|
| 46.8 |
|
|
| 17.3 |
|
|
|
| 51.5 |
|
|
| 21.1 |
|
|
|
| (4.7 | ) |
|
| (9.1 | ) |
| |||||||||||
Logistics |
| 8.6 |
| 3.5 |
| 9.1 |
| 3.9 |
| (0.5 | ) |
| (5.5 | ) |
|
| 12.8 |
|
|
| 4.7 |
|
|
|
| 8.6 |
|
|
| 3.5 |
|
|
|
| 4.2 |
|
|
| 48.8 |
|
| ||||||||||
Fuel surcharge |
|
| 17.4 |
|
| 7.1 |
|
| 10.9 |
|
| 4.7 |
|
| 6.5 |
|
| 59.6 |
|
|
| 34.3 |
|
|
| 12.7 |
|
|
|
| 17.4 |
|
|
| 7.1 |
|
|
|
| 16.9 |
|
|
| 97.1 |
|
| |||||
Total revenue |
| 244.0 |
| 100.0 |
| 235.2 |
| 100.0 |
| 8.8 |
| 3.7 |
|
| $ | 270.4 |
|
|
| 100.0 |
| % |
| $ | 244.0 |
|
|
| 100.0 |
| % |
| $ | 26.4 |
|
|
| 10.8 |
| % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
OPERATING EXPENSES(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Salaries, wages and employee benefits |
| 61.3 |
| 25.1 |
| 60.3 |
| 25.6 |
| 1.0 |
| 1.6 |
|
| $ | 65.1 |
|
|
| 24.1 |
| % |
| $ | 61.3 |
|
|
| 25.1 |
| % |
| $ | 3.8 |
|
|
| 6.2 |
| % | |||||||||||
Fuel |
| 18.4 |
| 7.5 |
| 13.0 |
| 5.5 |
| 5.4 |
| 41.3 |
|
|
| 28.9 |
|
|
| 10.7 |
|
|
|
| 18.4 |
|
|
| 7.5 |
|
|
|
| 10.5 |
|
|
| 57.1 |
|
| |||||||||||
Operations and maintenance |
| 29.3 |
| 12.0 |
| 34.4 |
| 14.6 |
| (5.1 | ) |
| (14.9 | ) |
|
| 32.1 |
|
|
| 11.9 |
|
|
|
| 29.3 |
|
|
| 12.0 |
|
|
|
| 2.8 |
|
|
| 9.6 |
|
| ||||||||||
Purchased freight |
| 75.1 |
| 30.8 |
| 64.6 |
| 27.5 |
| 10.5 |
| 16.3 |
|
|
| 78.4 |
|
|
| 29.0 |
|
|
|
| 75.1 |
|
|
| 30.8 |
|
|
|
| 3.3 |
|
|
| 4.4 |
|
| |||||||||||
Depreciation and amortization |
| 13.3 |
| 5.4 |
| 12.8 |
| 5.4 |
| 0.5 |
| 3.6 |
|
|
| 12.7 |
|
|
| 4.7 |
|
|
|
| 13.3 |
|
|
| 5.5 |
|
|
|
| (0.6 | ) |
|
| (4.5 | ) |
| |||||||||||
Restructuring |
| 0.1 |
| — |
| 4.9 |
| 2.1 |
| (4.8 | ) |
| (98.1 | ) | |||||||||||||||||||||||||||||||||||||
Restructuring charges |
|
| (0.3 | ) |
|
| (0.1 | ) |
|
|
| 0.1 |
|
|
| — |
|
|
|
| (0.4 | ) |
|
| (400.0 | ) |
| ||||||||||||||||||||||||
Other operating expenses |
|
| 16.9 |
|
| 7.1 |
|
| 14.1 |
|
| 6.0 |
|
| 2.8 |
|
| 20.2 |
|
|
| 18.5 |
|
|
| 6.8 |
|
|
|
| 16.9 |
|
|
| 6.9 |
|
|
|
| 1.6 |
|
|
| 9.5 |
|
| |||||
Total operating expenses |
|
| 214.4 |
|
| 87.9 |
|
| 204.1 |
|
| 86.8 |
|
| 10.3 |
|
| 5.0 |
|
| $ | 235.4 |
|
|
| 87.1 |
| % |
| $ | 214.4 |
|
|
| 87.9 |
| % |
| $ | 21.0 |
|
|
| 9.8 |
| % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
INCOME FROM OPERATIONS |
| $ | 29.6 |
| 12.1 |
| $ | 31.1 |
| 13.2 |
| $ | (1.5 | ) |
| (4.8 | ) |
| $ | 35.0 |
|
|
| 12.9 |
| % |
| $ | 29.6 |
|
|
| 12.1 |
| % |
| $ | 5.4 |
|
|
| 18.2 |
| % | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company miles |
| 36.6 |
|
|
|
| 38.9 |
|
|
|
| (2.3 | ) |
| (5.9 | ) |
|
| 38.2 |
|
|
|
|
|
| 36.6 |
|
|
|
|
|
| 1.6 |
|
|
| 4.4 |
| % | ||||||||||||
Owner operator miles |
|
| 12.2 |
|
|
|
|
| 12.1 |
|
|
|
|
| 0.1 |
|
| 0.8 |
|
|
| 10.0 |
|
|
|
|
|
| 12.2 |
|
|
|
|
|
| (2.2 | ) |
|
| (18.0 | ) |
| |||||||||
Total miles (in millions) |
|
| 48.8 |
|
|
|
|
| 51.0 |
|
|
|
|
| (2.2 | ) |
|
| (4.3 | ) |
|
| 48.2 |
|
|
|
|
|
| 48.8 |
|
|
|
|
|
| (0.6 | ) |
|
| (1.2 | ) | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Rate per mile |
| $ | 3.41 |
|
|
|
| $ | 3.28 |
|
|
|
| $ | 0.13 |
| 4.0 |
|
| $ | 3.66 |
|
|
|
|
| $ | 3.41 |
|
|
|
|
| $ | 0.25 |
|
|
| 7.3 |
| % | ||||||||||
Revenue per tractor |
| $ | 70,300 |
|
|
|
| $ | 67,500 |
|
|
|
| $ | 2,800 |
| 4.1 |
|
| $ | 74,000 |
|
|
|
|
| $ | 70,300 |
|
|
|
|
| $ | 3,700 |
|
|
| 5.3 |
| % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company-operated tractors, at period-end |
| 1,835 |
|
|
|
| 1,960 |
|
|
|
| (125 | ) |
| (6.4 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, at period-end |
| 497 |
|
|
|
| 510 |
|
|
|
| (13 | ) |
| (2.5 | ) | |||||||||||||||||||||||||||||||||||
Number of trailers, at period-end |
| 7,059 |
|
|
|
| 7,278 |
|
|
|
| (219 | ) |
| (3.0 | ) | |||||||||||||||||||||||||||||||||||
Company owned tractors, at quarter-end |
|
| 1,982 |
|
|
|
|
|
| 1,835 |
|
|
|
|
|
| 147 |
|
|
| 8.0 |
| % | ||||||||||||||||||||||||||||
Owner operator tractors, at quarter-end |
|
| 441 |
|
|
|
|
|
| 497 |
|
|
|
|
|
| (56 | ) |
|
| (11.3 | ) |
| ||||||||||||||||||||||||||||
Number of trailers, at quarter-end |
|
| 7,181 |
|
|
|
|
|
| 7,059 |
|
|
|
|
|
| 122 |
|
|
| 1.7 |
| % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company-operated tractors, average for the period |
| 1,865 |
|
|
|
| 1,958 |
|
|
|
| (93 | ) |
| (4.7 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, average for the period |
|
| 504 |
|
|
|
|
| 523 |
|
|
|
|
| (19 | ) |
|
| (3.6 | ) | |||||||||||||||||||||||||||||||
Total tractors, average for the period |
|
| 2,369 |
|
|
|
|
| 2,481 |
|
|
|
|
| (112 | ) |
|
| (4.5 | ) | |||||||||||||||||||||||||||||||
Company owned tractors, average for the quarter |
|
| 1,942 |
|
|
|
|
|
| 1,865 |
|
|
|
|
|
| 77 |
|
|
| 4.1 |
| % | ||||||||||||||||||||||||||||
Owner operator tractors, average for the quarter |
|
| 442 |
|
|
|
|
|
| 504 |
|
|
|
|
|
| (62 | ) |
|
| (12.3 | ) |
| ||||||||||||||||||||||||||||
Total tractors, average for the quarter |
|
| 2,384 |
|
|
|
|
|
| 2,369 |
|
|
|
|
|
| 15 |
|
|
| 0.6 |
| % |
(1)
2120
The following table sets forth certainrevenue, operating statisticsexpenses and income from operations (in dollars and as a percentage of total revenue) of the Company’s Flatbed Solutions segment for the three months ended September 30, 20212022 and 2020,2021, as well as revenue,certain operating expensesstatistics for the same periods. In addition, the absolute and income (loss) from operationsrelative changes for three months ended September 30, 2021 and 2020. each are presented. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner operator miles driven in the period. Miles are estimated based on information received as of the filing date and may change quarter to quarter when final information is received from each operating segment. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner operator tractors.
FLATBED SOLUTIONS
|
| Three Months Ended September 30, |
|
|
|
|
|
|
|
| Three Months Ended September 30, |
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| Increase (Decrease) |
|
| 2022 |
| 2021 |
| Increase (Decrease) | ||||||||||||||||||||||||||||||||||||
(Dollars in millions, except Rate per mile and Revenue per tractor) |
| $ |
|
| % |
|
| $ |
|
| % |
|
| $ |
|
| % |
|
| Amount |
|
| % |
| Amount |
|
| % |
| Absolute |
|
| Relative | ||||||||||||||||||
REVENUE(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company freight |
| $ | 45.1 |
| 24.5 |
| $ | 47.1 |
| 32.6 |
| $ | (2.0 | ) |
| (4.2 | ) |
| $ | 42.8 |
|
|
| 22.0 |
| % |
| $ | 45.1 |
|
|
| 24.5 |
| % |
| $ | (2.3 | ) |
|
| (5.1 | ) | % | |||||||
Owner operator freight |
| 89.2 |
| 48.5 |
| 67.2 |
| 46.5 |
| 22.0 |
| 32.7 |
|
|
| 81.5 |
|
|
| 41.9 |
|
|
|
| 89.2 |
|
|
| 48.5 |
|
|
|
| (7.7 | ) |
|
| (8.6 | ) |
| |||||||||||
Brokerage |
| 30.4 |
| 16.5 |
| 17.6 |
| 12.2 |
| 12.8 |
| 72.7 |
|
|
| 38.5 |
|
|
| 19.8 |
|
|
|
| 30.4 |
|
|
| 16.5 |
|
|
|
| 8.1 |
|
|
| 26.6 |
|
| |||||||||||
Logistics |
| 1.1 |
| 0.6 |
| 0.7 |
| 0.5 |
| 0.4 |
| 57.1 |
|
|
| 0.9 |
|
|
| 0.5 |
|
|
|
| 1.1 |
|
|
| 0.6 |
|
|
|
| (0.2 | ) |
|
| (18.2 | ) |
| |||||||||||
Fuel surcharge |
|
| 18.2 |
|
| 9.9 |
|
| 11.9 |
|
| 8.2 |
|
| 6.3 |
|
| 52.9 |
|
|
| 31.0 |
|
|
| 15.8 |
|
|
|
| 18.2 |
|
|
| 9.9 |
|
|
|
| 12.8 |
|
|
| 70.3 |
|
| |||||
Total revenue |
| 184.0 |
| 100.0 |
| 144.5 |
| 100.0 |
| 39.5 |
| 27.3 |
|
| $ | 194.7 |
|
|
| 100.0 |
| % |
| $ | 184.0 |
|
|
| 100.0 |
| % |
| $ | 10.7 |
|
|
| 5.8 |
| % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
OPERATING EXPENSES(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Salaries, wages and employee benefits |
| 28.6 |
| 15.6 |
| 29.9 |
| 20.7 |
| (1.3 | ) |
| (4.2 | ) |
| $ | 28.1 |
|
|
| 14.4 |
| % |
| $ | 28.6 |
|
|
| 15.5 |
| % |
| $ | (0.5 | ) |
|
| (1.7 | ) | % | ||||||||||
Fuel |
| 8.4 |
| 4.6 |
| 7.2 |
| 5.0 |
| 1.2 |
| 16.6 |
|
|
| 11.0 |
|
|
| 5.6 |
|
|
|
| 8.4 |
|
|
| 4.6 |
|
|
|
| 2.6 |
|
|
| 31.0 |
|
| |||||||||||
Operations and maintenance |
| 11.2 |
| 6.1 |
| 11.0 |
| 7.6 |
| 0.2 |
| 2.0 |
|
|
| 12.1 |
|
|
| 6.2 |
|
|
|
| 11.2 |
|
|
| 6.1 |
|
|
|
| 0.9 |
|
|
| 8.0 |
|
| |||||||||||
Purchased freight |
| 95.7 |
| 52.0 |
| 67.3 |
| 46.6 |
| 28.4 |
| 42.2 |
|
|
| 104.4 |
|
|
| 53.6 |
|
|
|
| 95.7 |
|
|
| 52.0 |
|
|
|
| 8.7 |
|
|
| 9.1 |
|
| |||||||||||
Depreciation and amortization |
| 8.8 |
| 4.8 |
| 9.3 |
| 6.4 |
| (0.5 | ) |
| (5.5 | ) |
|
| 9.9 |
|
|
| 5.1 |
|
|
|
| 8.8 |
|
|
| 4.8 |
|
|
|
| 1.1 |
|
|
| 12.5 |
|
| ||||||||||
Restructuring |
| — |
| — |
| 0.2 |
| 0.1 |
| (0.2 | ) |
| (100.0 | ) | |||||||||||||||||||||||||||||||||||||
Other operating expenses |
|
| 10.1 |
|
| 5.4 |
|
| 10.3 |
|
| 7.1 |
|
| (0.2 | ) |
|
| (1.8 | ) |
|
| 11.9 |
|
|
| 6.1 |
|
|
|
| 10.2 |
|
|
| 5.5 |
|
|
|
| 1.7 |
|
|
| 16.7 |
|
| ||||
Total operating expenses |
|
| 162.9 |
|
| 88.5 |
|
| 135.2 |
|
| 93.6 |
|
| 27.7 |
|
| 20.5 |
|
| $ | 177.4 |
|
|
| 91.1 |
| % |
| $ | 162.9 |
|
|
| 88.5 |
| % |
| $ | 14.5 |
|
|
| 8.9 |
| % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
INCOME FROM OPERATIONS |
| $ | 21.1 |
| 11.5 |
| $ | 9.3 |
| 6.4 |
| $ | 11.8 |
| 127.4 |
|
| $ | 17.3 |
|
|
| 8.9 |
| % |
| $ | 21.1 |
|
|
| 11.5 |
| % |
| $ | (3.8 | ) |
|
| (18.0 | ) | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company miles |
| 17.8 |
|
|
|
| 23.1 |
|
|
|
| (5.3 | ) |
| (22.9 | ) |
|
| 16.2 |
|
|
|
|
|
| 17.8 |
|
|
|
|
|
| (1.6 | ) |
|
| (9.0 | ) | % | ||||||||||||
Owner operator miles |
|
| 34.5 |
|
|
|
|
| 35.7 |
|
|
|
|
| (1.2 | ) |
|
| (3.4 | ) |
|
| 31.6 |
|
|
|
|
|
| 34.5 |
|
|
|
|
|
| (2.9 | ) |
|
| (8.4 | ) |
| ||||||||
Total miles (in millions) |
|
| 52.3 |
|
|
|
|
| 58.8 |
|
|
|
|
| (6.5 | ) |
|
| (11.1 | ) |
|
| 47.8 |
|
|
|
|
|
| 52.3 |
|
|
|
|
|
| (4.5 | ) |
|
| (8.6 | ) | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Rate per mile |
| $ | 2.57 |
|
|
|
| $ | 1.94 |
|
|
|
| $ | 0.63 |
| 32.5 |
|
| $ | 2.60 |
|
|
|
|
| $ | 2.57 |
|
|
|
|
| $ | 0.03 |
|
|
| 1.2 |
| % | ||||||||||
Revenue per tractor |
| $ | 56,000 |
|
|
|
| $ | 43,000 |
|
|
|
| $ | 13,000 |
| 30.2 |
|
| $ | 51,500 |
|
|
|
|
| $ | 56,000 |
|
|
|
|
| $ | (4,500 | ) |
|
| (8.0 | ) | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company-operated tractors, at period-end |
| 806 |
|
|
|
| 1,019 |
|
|
|
| (213 | ) |
| (20.9 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, at period-end |
| 1,580 |
|
|
|
| 1,590 |
|
|
|
| (10 | ) |
| (0.6 | ) | |||||||||||||||||||||||||||||||||||
Number of trailers, at period-end |
| 4,207 |
|
|
|
| 4,329 |
|
|
|
| (122 | ) |
| (2.8 | ) | |||||||||||||||||||||||||||||||||||
Company owned tractors, at quarter-end |
|
| 817 |
|
|
|
|
|
| 806 |
|
|
|
|
|
| 11 |
|
|
| 1.4 |
| % | ||||||||||||||||||||||||||||
Owner operator tractors, at quarter-end |
|
| 1,601 |
|
|
|
|
|
| 1,580 |
|
|
|
|
|
| 21 |
|
|
| 1.3 |
|
| ||||||||||||||||||||||||||||
Number of trailers, at quarter-end |
|
| 3,847 |
|
|
|
|
|
| 4,207 |
|
|
|
|
|
| (360 | ) |
|
| (8.6 | ) | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company-operated tractors, average for the period |
| 807 |
|
|
|
| 1,077 |
|
|
|
| (270 | ) |
| (25.1 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, average for the period |
|
| 1,591 |
|
|
|
|
| 1,581 |
|
|
|
|
| 10 |
|
| 0.6 |
| ||||||||||||||||||||||||||||||||
Total tractors, average for the period |
|
| 2,398 |
|
|
|
|
| 2,658 |
|
|
|
|
| (260 | ) |
|
| (9.8 | ) | |||||||||||||||||||||||||||||||
Company owned tractors, average for the quarter |
|
| 806 |
|
|
|
|
|
| 807 |
|
|
|
|
|
| (1 | ) |
|
| (0.1 | ) | % | ||||||||||||||||||||||||||||
Owner operator tractors, average for the quarter |
|
| 1,607 |
|
|
|
|
|
| 1,591 |
|
|
|
|
|
| 16 |
|
|
| 1.0 |
|
| ||||||||||||||||||||||||||||
Total tractors, average for the quarter |
|
| 2,413 |
|
|
|
|
|
| 2,398 |
|
|
|
|
|
| 15 |
|
|
| 0.6 |
| % |
(1)
21
Revenue. Total revenue increased 13.0% to $424.6 million9.0% for the three months ended September 30, 2021 from $375.8 million for2022 as compared to the same period in 2020.2021. The increase in total revenue was primarily attributed to increased fuel surcharges due primarily to record freight rates in the Flatbed segment. Company freight revenue decreased $8.2 million, or 4.7%increased fuel costs. In addition, rate per mile increased 5.8%, to $166.6 million for the three months ended September 30, 2021 from $174.8 million for the same period in 2020. Thewhereas there was a 5.0% decrease in company freight revenue was a result of a 12.3% decrease in companytotal miles primarily due to the downsizing of company trucks partially offset by an 8.6% increase in rate per mile. Owner operator freight revenue increased $27.8 million, or 26.9%, due to a 29.9%driven. The increase in rate per mile partially offset by a 2.3% decrease in owner operator miles driven. The increase in total freight revenue was primarily due to a 16.2% increase in rate per mile. Brokerage revenue increased $16.7 million, or 25.6%, to $81.9 million for the three months ended September 30, 2021 from $65.2 million fordiversity of end markets, driven by strength within the same period in 2020 primarily due to increases in customer sales volumes and rate. Fuel surcharge revenue increased $12.7 million, or 56.2%, to $35.3 million for the three months ended September 30, 2021 from $22.6 million for the same period in 2020 due to increased fuel costs that led to higher fuel surcharges.Specialized Solutions segment.
22
The Company’s Specialized Solutions segment’s revenue increased 3.7% to $244.0 million10.8% for the three months ended September 30, 2021 from $235.2 million for2022 as compared to the same period in 2020. The increase was2021, primarily due to increases inhigher fuel surcharge owner operatorand strength in the freight environment, primarily in the high security cargo, agriculture and brokerage revenue.aerospace end-markets, which has offset lower wind energy volumes. Company freight revenue decreased $5.8 million, or 4.5%, to $123.9 millionincreased 3.1% for the three months ended September 30, 2021 from $129.7 million for the same period in 2020. The decrease in company freight revenue was a result of a 5.9% decrease in company miles due to the downsizing of company trucks2022 as compared to the same period in 2020,2021 due to a 4.4% increase in miles driven, partially offset by a 1.5% increase1.2% decrease in company rate per mile. TheOwner operator freight increased 14.3% due to a 39.5% increase in owner operator freight revenue was primarily a result of a 12.1% increase in rate per mile, and a 0.8% increasepartially offset by an 18.0% decrease in miles driven comparedwhich was correlated to the same perioda 12.3% decrease in 2020.average owner operator tractors. Brokerage revenue increased $3.7 million, or 7.7%, to $51.5 milliondecreased 9.1% for the three months ended September 30, 2021 from $47.8 million for2022 as compared to the same period in 20202021. In this segment, total brokerage loads were down 15%, primarily driven by a decrease in wind energy volumes and the brokerage revenue per load was up 7% due to increaseshigher rates during the three months ended September 30, 2022 as compared to the same period in customer sales volumes and rate.2021. Fuel surcharge revenue increased $6.5 million, or 59.6%, to $17.4 million97.1% for the three months ended September 30, 2021 from $10.9 million for2022 as compared to the same period in 20202021 due to increased fuel costs that led totriggered higher fuel surcharges.surcharges to our customers.
TheDespite softening in the overall flatbed freight market, the Company’s Flatbed Solutions segment’s revenue increased $39.5 million, or 27.3%, to $184.0 million5.8% for the three months ended September 30, 2021 from $144.5 million for2022 as compared to the same period in 2020, which was2021, primarily due to increaseshigher fuel surcharge and higher rates driven by strength in owner operator freightthe construction and brokerage revenue.manufacturing end markets, which has offset the decreases in the steel end markets. Company freight revenue decreased $2.0 million, or 4.2%,5.1% due to $45.1 milliona 6% decrease in miles per seated truck, in addition to a 2.5% worsening of unseated trucks due to supply chain delays in receiving and seating new revenue equipment which also contributed to the 9.0% decrease in miles, partially offset by a 4.3% increase in company rate per mile. Owner operator freight decreased 8.6% due to an 8.4% decrease in miles driven and a 0.2% decrease in owner operator rate per mile. The Company deployed company-owned assets into end-markets with higher rates and margins, and as such, some of the excess volumes, for which the Company was unable to utilize company-owned assets, were strategically captured through our brokerage service offering. This resulted in a 26.6% increase in brokerage revenue for the three months ended September 30, 2021 from $47.1 million for2022 as compared to the same period in 2020. The decrease in company freight2021. In this segment, total brokerage loads were up 15% and the brokerage revenue per load was a result of a 22.9% decrease in company milesup 10% due to the downsizing of company trucks, partially offset by 24.3% increase in rate per mile. Owner operator freight revenue increased $22.0 million, or 32.7%, to $89.2 million forhigher rates during the three months ended September 30, 2021 from $67.2 million for the same period in 2020. The increase in the owner operator freight revenue was the result of a 32.5% increase in rate per mile partially offset by a 11.1% decrease in total miles driven2022 as compared to the same period in 2020. Brokerage revenue increased $12.8 million, or 72.7%, to $30.4 million for the three months ended September 30, 2021 from $17.6 million for the same period in 2020 due to increases in customer sales volumes and rate.2021. Fuel surcharge revenue increased $6.3 million, or 52.9%, to $18.2 million for the three months ended September 30, 2021 from $11.9 million for the same period in 202070.3% due to increased fuel costs that led to higher fuel surcharges.costs.
Salaries, Wages and Employee Benefits. Salaries, wages and employee benefits expense, which consists of compensation for all employees, is primarily affected by the number of miles driven by company drivers, the rate per mile paid to company drivers, employee benefits including, but not limited to, health care and workers’ compensation, and to a lesser extent, the number of, and compensation and benefits paid to, non-driver employees. In general, the Specialized Solutions segment drivers receive a higher driver pay per total mile than Flatbed Solutions segment drivers due to the former requiring a higher level of training and expertise.
Salaries, wages and employee benefits expense were generally consistent with prior period at $96.6 millionincreased 8.3% for the three months ended September 30, 20212022 as compared to $95.8 million for the same period in 2020.
2021. The Company’s Specialized Solutions segmentincrease in salaries, wages and employee benefits expense was primarily due to higher driver pay, increased employee headcount related to the expansion of corporate functions in legal, accounting and risk management, and increased health insurance claims, partially offset by a decrease in accrued bonuses. Salaries, wages and employee benefits expense, as a percentage of consolidated revenue (excluding brokerage and owner operator revenue), decreased 3.4% for the three months ended September 30, 2021 was generally consistent with2022 as compared to the same period in 2020.2021.
The Company’s FlatbedSpecialized Solutions segment had a $1.3 million, or 4.2%, decrease insegment’s salaries, wages and employee benefits expense increased 6.2% for the three months ended September 30, 20212022 compared to the same period in 2020,2021, primarily as a result of the decreased employee headcount related to Project Synchronizeincreased health insurance claims and lowerhigher driver and non-driver pay, partially offset by a decrease in accrued bonuses. The increased driver pay was due to a 6.7% increase in driver rate and a 4.4% increase in Company miles. Salaries, wages and employee benefits expense, as a percentage of Specialized Solutions revenue (excluding brokerage and owner operator revenue), decreased 3.7% for the decrease in company milesthree months ended September 30, 2022 as compared to the same period in 2020.2021.
The Company’s Flatbed Solutions segment’s salaries, wages and employee benefits expense decreased 1.7% for the three months ended September 30, 2022 compared to the same period in 2021, primarily as a result of decreased health insurance claims, a decrease in accrued bonuses, reduced employee headcount, partially offset by higher driver pay. The increased driver pay was due to an 18.8% increase in driver rate, partially offset by a 9.0% decrease in Company miles. Salaries, wages and employee benefits expense, as a percentage of Flatbed Solutions revenue (excluding brokerage and owner operator revenue), decreased 4.9%6.8% for the three months ended September 30, 20212022 as compared to the same period in 2020.2021.
Fuel. Fuel expense consists primarily of diesel fuel expense for company-owned tractors and fuel taxes. The primary factors affecting fuel expense are the cost of diesel fuel, the miles per gallon realized with company equipment and the number of miles driven by company drivers.
22
Total fuel expense increased $6.6 million, or 32.7%, to $26.8 million49.3% for the three months ended September 30, 2021 from $20.2 million for2022 as compared to the same period in 2020.2021. This increase was primarily due to a 38.4%53.5% increase in fuel price. The Company’s Specialized Solutions segment’s fuel expense increased 57.1% for the three months ended September 30, 2022 as compared to the same period in 2021, primarily as a result of the increase in fuel price and a 4.4% increase in Company miles driven for the three months ended September 30, 2022 as compared to the same period in 2021. The Company’s Flatbed Solutions segment’s fuel expense increased 31.0% for the three months ended September 30, 2022 as compared to the same period in 2021, as a result of the increase in fuel price, partially offset by a 12.3%9.0% decrease in companyCompany miles driven.driven for the three months ended September 30, 2022 as compared to the same period in 2021. The U.S. national average diesel fuel price, as published by the U.S. Department of Energy, was $3.357$5.152 for the three months ended September 30, 2021,2022, compared to $2.426$3.357 for the same period in 2020.2021.
The Company’s Specialized Solutions segment’s fuel expense increased 41.3% to $18.4 million for the three months ended September 30, 2021 from $13.0 million for the same period in 2020, primarily as a result of the increase in fuel price mentioned above and partially offset by a 5.9% decrease in company miles driven for the three months ended September 30, 2021 as compared to the same period in 2020.
The Company’s Flatbed Solutions segment’s fuel expense increased 16.6% to $8.4 million for the three months ended September 30, 2021 from $7.2 million for the same period in 2020, primarily as a result of the increase in fuel price mentioned above and partially offset by a 22.9% decrease in company miles driven for the three months ended September 30, 2021 as compared to the same period in 2020.
23
Operations and Maintenance. Operations and maintenance expense consists primarily of ordinary vehicle repairs and maintenance, costs associated with preparing tractors and trailers for sale or trade-in, driver recruiting, training and safety costs, permitting and pilot car fees and other general operations expenses. Operations and maintenance expense is primarily affected by the age of company-owned tractors and trailers, the number of miles driven in a period and driver turnover.
Operations and maintenance expense decreased 11.0% to $40.5 millionincreased 6.4% for the three months ended September 30, 2021 from $45.5 million for2022 as compared to the same period in 20202021 primarily due to a decrease$3.4 million increase in repairs, tires, and preventive maintenance and upkeep of $1.2tractors and trailers. The Company’s Specialized Solutions segment’s operations and maintenance expense increased 9.6% for the three months ended September 30, 2022 as compared to the same period in 2021 primarily as a result of a $2.3 million increase in maintenance costs such as repairs and tires $3.3for tractors and trailers. The Company’s Flatbed Solutions segment’s operations and maintenance expense increased 8.0% for the three months ended September 30, 2022 as compared to the same period in 2021 primarily due to a $1.0 million increase in operation costs such as pilot carrepairs and permit fees,tires for tractors and $0.5 million in other operations expenses.trailers. Operations and maintenance expense, as a percentage of consolidated revenue (excluding brokerage revenue), decreased 2.8% to 11.8%was generally consistent for the three months ended September 30, 2021 as compared to 14.6% in the same period in 2020.
The Company’s Specialized Solutions segment’s operations and maintenance expense decreased $5.1 million, or 14.9%, for the three months ended September 30, 20212022 as compared to the same period in 2020 as a result of a decrease of $1.1 million in maintenance expense such as repairs and tires due to a reduction of tractors and trailers in the Company’s fleet, a decrease of $3.4 million in operation costs such as pilot car and permit fees and a decrease of $0.6 million in other operations expenses. Operations and maintenance expense, as a percentage of Specialized Solutions revenue (excluding brokerage revenue), decreased 3.2% to 15.2% for the three months ended September 30, 2021 as compared to 18.4% in the same period in 2020.2021.
The Company’s Flatbed Solutions segment’s operations and maintenance expense was generally consistent with prior period for the three months ended September 30, 2021 as compared to the same period in 2020.
Purchased Freight. Purchased freight expense consists of the payments to owner operators, including fuel surcharge reimbursements, and payments to third-party capacity providers that haul loads brokered to them. Purchased freight expense generally takes into account changes in diesel fuel prices, resulting in lowerhigher payments during periods of decliningincreasing fuel prices.
Total purchased freight expense increased $39.6 million, or 31.0%, to $167.5 million7.6% during the three months ended September 30, 2021 from $127.9 million during2022 as compared to the same period in 2020.2021. Purchased freight expense from owner operators increased 29.9% to $106.9decreased $15.3 million, or 14.3%, during the three months ended September 30, 2021 from $82.3 million during2022 as compared to the same period in 20202021 as a result of a 29.9% increase in rate, partially offset by a 2.3%10.9% decrease in owner operator miles driven. Purchased freight expense from third-party capacity providers increased 32.4% to $60.5$28.1 million, or 46.4%, during the three months ended September 30, 2021 from $45.7 million during2022 as compared to the same period in 2020,2021, as a result of increasedan increase in utilization of third-party capacity providers.providers due to supply chain delays in receiving and seating new revenue equipment. In addition, the cost of diesel fuel increased by 53.5% during the three months ended September 30, 2022 as compared to the same period in 2021. Purchased freight expense, as a percentage of consolidated revenue, for the three months ended September 30, 2022, was generally consistent as compared to the same period in 2021.
The Company’s Specialized Solutions segment’s purchased freight expense increased 16.3% to $75.1 million4.4% during the three months ended September 30, 2021 from $64.6 million during2022 as compared to the same period in 2020.2021. Purchased freight expense from owner operators increased 20.1% to $31.7$0.8 million, or 2.5%, during the three months ended September 30, 2021 from $26.4 million during2022 as compared to the same period in 20202021, as a result of a 12.1%39.5% increase in owner operators’ rate, andpartially offset by a 0.8% increase18.0% decrease in owner operator miles driven. Purchased freight expense from third-party capacity providers increased 13.6% to $43.4$2.5 million, or 5.8%, during the three months ended September 30, 2021 from $38.2 million during2022 as compared to the same period in 20202021, as a result of a change in the mix of freight, which resulted in a higher payout margin. As mentioned above, there was also an increase in utilizationthe cost of third-party capacity providers.diesel fuel during the three months ended September 30, 2022 as compared to the same period in 2021. Purchased freight expense, as a percentage of Specialized Solutions revenue, for the three months ended September 30, 2022, was generally consistent as compared to the same period in 2021.
The Company’s Flatbed Solutions segment’s purchased freight expense increased 42.2% to $95.7 million9.1% for the three months ended September 30, 2021 from $67.3 million for2022 as compared to the same period in 2020.2021. Purchased freight expense from owner operators increased 34.8% to $75.2decreased $16.0 million, or 21.3%, for the three months ended September 30, 2021 from $55.8 million for2022 as compared to the same period in 20202021, as a result of a 37.4% increase8.4% decrease in rate paid to owner operators.operator miles driven and a 0.2% decrease in owner operators’ rate. Purchased freight expense from third-party capacity providers increased 78.3% to $20.5$24.7 million, or 120.5%, during the three months ended September 30, 2021 from $11.5 million during2022 as compared to the same period in 2020,2021, primarily as a result of increased utilization of third-party capacity providers.providers due to supply chain delays in receiving and seating new revenue equipment. As mentioned above, there was also an increase in the cost of diesel fuel during the three months ended September 30, 2022 as compared to the same period in 2021. Purchased freight expense, as a percentage of Flatbed Solutions revenue, for the three months ended September 30, 2022, was generally consistent as compared to the same period in 2021.
Depreciation and Amortization. Depreciation and amortization expense consists primarily of depreciation for company-owned tractors and trailers and amortization of those financed with finance leases. The primary factors affecting these expense items include the size of the fleet and age of company-owned tractors and trailers and the cost of new equipment. Amortization of intangible assets is also included in this expense.
23
Depreciation and amortization expense was flat at $22.3 million duringincreased 7.2% for the three months ended September 30, 2021 and 2020.
2022 as compared to the same period in 2021. The Company’s Specialized Solutions segment’s depreciation and amortization expense increased $0.5 million, or 3.6%, for the three months ended September 30, 2021 as compared to the same period in 2020 as a result of recent revenue equipment additions partially offset by disposals of fully depreciated revenue equipment.
The Company’s Flatbed Solutions segment’s depreciation and amortization expense decreased $0.5 million, or 5.5%, for the three months ended September 30, 2021 as compared to the same period in 2020 as a result of a 25.1% decrease in average tractor count in the segment’s fleet.
24
Administrative Expenses. Administrative expenses consist of operating lease costs for real estate, professional fees and other expenses that are not directly associated with the Company’s fleet services. Administrative expense increased $4.4 million for the three months ended September 30, 2021 as compared to the same period in 2020 primarily due to gains on lease terminations that occurred during the 2020 period that did not reoccur in the 2021 period. Administrative expenses, as a percentage of revenue, increased 0.6% from the same period in 2020.
Taxes and Licenses. Operating taxes and licenses expense primarily represents the costs of taxes and licenses associated with the Company’s fleet of equipment and will vary according to the size of its equipment fleet. Taxes and license expense decreased $0.4 million for the three months ended September 30, 2021. Operating taxes and license expense, as a percentage of revenue, was generally consistent for the three months ended September 30, 2022 as compared to the same period in 2021. The Company’s Flatbed Solutions segment’s depreciation and amortization expense increased 12.5% for the three months ended September 30, 2022 as compared to the same period in 2021 and 2020.as a result of recent revenue equipment additions.
Insurance and Claims. Insurance and claims expense consists of insurance premiums and the accruals the Company makes for estimated payments and expenses for claims for bodily injury, property damage, cargo damage and other casualty events. The primary factorFactors affecting the Company’s insurance and claims expense is seasonality (the Company typically experiences higher accident frequency in winter months),are the frequency and severity of accidents, trends in the development factors used in its accruals and developments in large, prior-year claims. The frequency of accidents tends to correlate with the miles the Company travels.travels; however, insurance and claims expense could increase in periods where there are claims in excess of the Company’s self-insured retention. Insurance and claims expense decreased 14.7% to $13.9 millionincreased 43.9% during the three months ended September 30, 2021 from $16.3 million during the same period in 2020 due to decreases in miles and decreases insurance claims and premiums. Insurance and claims, as a percentage of revenue, decreased 1.0% for the three months ended September 30, 20212022 as compared to the same period in 2020.2021, primarily due to a $7.1 million increase in incurred but not recorded claims. These increases were partially offset by a $1.0 million decrease in certain insurance premiums.
Restructuring Costs. Restructuring costs of $0.1 million and $5.1 million were recognized in the three months ended September 30, 2021 and 2020, respectively. The restructuring costs in the three months ended September 30, 2020 were primarily related to Phase II of Project Synchronize and the closure of certain Aveda terminals.
Other (Income) Expense. Interest expense consists of cash interest, amortization and write-off of debtrelated issuance costs and fees and prepayment penalties.fees. Interest expense decreased 34.2% to $7.3 millionincreased 26.0% for the three months ended September 30, 2021 from $11.1 million for2022 as compared to the same period in 2020. The decrease was2021 primarily attributabledue to lowerhigher interest rates on the Replacement Term Loan FacilityLoans and decreasesEquipment Term Loans. The Company’s common stock purchase warrants expired in the balance outstanding on equipment term loans. February 2022 and are no longer exercisable. Change in fair value of warrant liability was a loss of $3.4 million for the three months ended September 30, 2021 compared to a loss of $3.0 million for the same period in 2020. The change in fair value is directly related to the fair value of the warrant liability as of each period end as calculated using Level 1 and Level 3 inputs. Other expense for the three months ended September 30, 2021 was $0.2 million compared to other income of $0.6 million for the same period in 2020.2021.
Income Tax. Income tax expense was $8.7$9.9 million for the three months ended September 30, 20212022 compared to income tax expense of $2.0$8.7 million for the same period in 2020.2021. The effective tax rate was 29.4%44.0% for the three months ended September 30, 2021,2022, compared to 13.6%29.4% for the same period in 2020.2021. The difference between the Company’s effective income tax rate varies fromand the federal statutory rate primarily due toresults from the mix of earnings with state jurisdictions, combined with the unfavorable impact of nondeductible expenses, including the effectpermanent disallowance of goodwill impairment in the per diem pay structure for driverssecond quarter of 2022 and nondeductibledisallowances of executive compensation.compensation pursuant to IRC Section 162(m).
2524
The following table sets forth certainrevenue, operating statistics for the nine months ended September 30, 2021expenses and 2020income from operations (in dollars and as well as itemsa percentage of total revenue), derived from the Company’s consolidated statements of operations, for the nine months ended September 30, 2022 and 2021, as well as certain operating statistics for the same periods. In addition, the absolute and 2020.relative changes for each are presented. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner operator miles driven in the period. Miles are estimated based on information received as of the filing date and may change quarter to quarter when final information is received from each operating segment. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner operator tractors.
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| Nine Months Ended September 30, |
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| Nine Months Ended September 30, |
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(Dollars in millions, except Rate per mile and Revenue per tractor) |
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REVENUE: |
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Company freight |
| $ | 475.3 |
| 40.9 |
| $ | 522.7 |
| 46.7 |
| $ | (47.4 | ) |
| (9.1 | ) |
| $ | 492.4 |
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| 36.1 |
| % |
| $ | 475.3 |
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| 40.9 |
| % |
| $ | 17.1 |
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| 3.6 |
| % | |||||||
Owner operator freight |
| 365.3 |
| 31.4 |
| 307.1 |
| 27.5 |
| 58.2 |
| 19.0 |
|
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| 397.7 |
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| 29.1 |
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| 365.3 |
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| 31.4 |
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| 32.4 |
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| 8.9 |
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Brokerage |
| 197.1 |
| 17.0 |
| 184.8 |
| 16.5 |
| 12.3 |
| 6.7 |
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| 255.4 |
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| 18.7 |
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| 197.1 |
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| 17.0 |
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| 58.3 |
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| 29.6 |
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Logistics |
| 28.9 |
| 2.5 |
| 28.8 |
| 2.6 |
| 0.1 |
| 0.3 |
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| 39.2 |
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| 2.9 |
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| 28.9 |
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| 2.5 |
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| 10.3 |
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| 35.6 |
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Fuel surcharge |
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| 95.9 |
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| 8.2 |
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| 75.1 |
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| 6.7 |
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| 20.8 |
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| 27.7 |
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| 180.4 |
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| 13.2 |
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| 95.9 |
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| 8.2 |
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| 84.5 |
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| 88.1 |
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Total revenue |
| 1,162.5 |
| 100.0 |
| 1,118.5 |
| 100.0 |
| 44.0 |
| 3.9 |
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| $ | 1,365.1 |
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| % |
| $ | 1,162.5 |
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| % |
| $ | 202.6 |
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OPERATING EXPENSES: |
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Salaries, wages and employee benefits |
| 280.7 |
| 24.1 |
| 305.6 |
| 27.3 |
| (24.9 | ) |
| (8.1 | ) |
| $ | 299.3 |
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| 21.9 |
| % |
| $ | 280.7 |
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| 24.1 |
| % |
| $ | 18.6 |
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| 6.6 |
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Fuel |
| 79.1 |
| 6.8 |
| 67.1 |
| 6.0 |
| 12.0 |
| 17.9 |
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| 120.4 |
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| 8.8 |
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| 79.1 |
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| 6.8 |
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| 41.3 |
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| 52.2 |
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Operations and maintenance |
| 108.1 |
| 9.3 |
| 136.4 |
| 12.2 |
| (28.3 | ) |
| (20.7 | ) |
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| 117.6 |
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| 8.6 |
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| 108.1 |
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| 9.3 |
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| 9.5 |
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| 8.8 |
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Communications |
| 3.1 |
| 0.3 |
| 2.8 |
| 0.3 |
| 0.3 |
| 10.7 |
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| 2.6 |
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| 0.2 |
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| 3.1 |
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| 0.3 |
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| (0.5 | ) |
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| (16.1 | ) |
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Purchased freight |
| 444.2 |
| 38.2 |
| 374.3 |
| 33.5 |
| 69.9 |
| 18.7 |
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| 548.9 |
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| 40.2 |
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| 444.2 |
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| 38.2 |
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| 104.7 |
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| 23.6 |
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Administrative expenses |
| 46.2 |
| 4.0 |
| 50.0 |
| 4.5 |
| (3.8 | ) |
| (7.6 | ) | |||||||||||||||||||||||||||||||||||||
Administrative |
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| 51.6 |
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| 3.8 |
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| 46.2 |
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| 4.0 |
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| 5.4 |
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| 11.7 |
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Sales and marketing |
| 1.5 |
| 0.1 |
| 1.3 |
| 0.1 |
| 0.2 |
| 15.4 |
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| 1.2 |
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| 0.1 |
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| 1.5 |
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| 0.1 |
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| (0.3 | ) |
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| (20.0 | ) |
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Taxes and licenses |
| 11.2 |
| 1.0 |
| 12.4 |
| 1.1 |
| (1.2 | ) |
| (9.7 | ) |
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| 11.6 |
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| 0.8 |
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| 11.2 |
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| 1.0 |
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| 0.4 |
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| 3.6 |
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Insurance and claims |
| 40.6 |
| 3.5 |
| 46.9 |
| 4.2 |
| (6.3 | ) |
| (13.4 | ) |
|
| 61.0 |
|
|
| 4.5 |
|
|
|
| 40.6 |
|
|
| 3.5 |
|
|
|
| 20.4 |
|
|
| 50.2 |
|
| ||||||||||
Acquisition-related transaction expenses |
|
| 3.7 |
|
|
| 0.3 |
|
|
|
| — |
|
|
| — |
|
|
|
| 3.7 |
|
|
| 100.0 |
|
| ||||||||||||||||||||||||
Depreciation and amortization |
| 66.7 |
| 5.7 |
| 71.4 |
| 6.4 |
| (4.7 | ) |
| (6.6 | ) |
|
| 68.2 |
|
|
| 5.0 |
|
|
|
| 66.7 |
|
|
| 5.7 |
|
|
|
| 1.5 |
|
|
| 2.2 |
|
| ||||||||||
Gain on disposition of revenue property and equipment |
| (13.1 | ) |
| (1.1 | ) |
| (3.9 | ) |
| (0.3 | ) |
| (9.2 | ) |
| 235.9 |
|
|
| (14.0 | ) |
|
| (1.0 | ) |
|
|
| (13.1 | ) |
|
| (1.1 | ) |
|
|
| (0.9 | ) |
|
| 6.9 |
|
| ||||||
Impairment |
| — |
| — |
| 13.4 |
| 1.2 |
| (13.4 | ) |
| (100.0 | ) |
|
| 7.8 |
|
|
| 0.6 |
|
|
|
| — |
|
|
| — |
|
|
|
| 7.8 |
|
|
| 100.0 |
|
| ||||||||||
Restructuring charges |
|
| 0.2 |
|
| — |
|
| 8.6 |
|
| 0.8 |
|
| (8.4 | ) |
|
| (97.7 | ) |
|
| 2.0 |
|
|
| 0.1 |
|
|
|
| 0.2 |
|
|
| — |
|
|
|
| 1.8 |
|
|
| 900.0 |
|
| ||||
Total operating expenses |
|
| 1,068.5 |
|
| 91.9 |
|
| 1,086.3 |
|
| 97.1 |
|
| (17.8 | ) |
|
| (1.6 | ) |
| $ | 1,281.9 |
|
|
| 93.9 |
| % |
| $ | 1,068.5 |
|
|
| 91.9 |
| % |
| $ | 213.4 |
|
|
| 20.0 |
| % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
INCOME FROM OPERATIONS |
| 94.0 |
| 8.1 |
| 32.2 |
| 2.9 |
| 61.8 |
| 191.9 |
|
| $ | 83.2 |
|
|
| 6.1 |
| % |
| $ | 94.0 |
|
|
| 8.1 |
| % |
| $ | (10.8 | ) |
|
| (11.5 | ) | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Interest income |
| (0.2 | ) |
| — |
| (0.5 | ) |
| — |
| 0.3 |
| (60.0 | ) |
| $ | (1.5 | ) |
|
| (0.1 | ) | % |
| $ | (0.2 | ) |
|
| — |
| % |
| $ | (1.3 | ) |
|
| 650.0 |
| % | |||||||||
Interest expense |
| 26.1 |
| 2.2 |
| 34.1 |
| 3.0 |
| (8.0 | ) |
| (23.5 | ) |
|
| 23.8 |
|
|
| 1.7 |
|
|
|
| 26.1 |
|
|
| 2.2 |
|
|
|
| (2.3 | ) |
|
| (8.8 | ) |
| ||||||||||
Change in fair value of warrant liability |
| 1.2 |
| 0.1 |
| 0.9 |
| — |
| 0.3 |
| 33.3 |
|
|
| (4.7 | ) |
|
| (0.3 | ) |
|
|
| 1.2 |
|
|
| 0.1 |
|
|
|
| (5.9 | ) |
|
| (491.7 | ) |
| |||||||||||
Other |
|
| (0.6 | ) |
|
| (0.1 | ) |
|
| (0.5 | ) |
|
| — |
|
| (0.1 | ) |
|
| 20.0 |
|
|
| 1.3 |
|
|
| 0.1 |
|
|
|
| (0.6 | ) |
|
| (0.1 | ) |
|
|
| 1.9 |
|
|
| (316.7 | ) |
| |
Total other expense |
|
| 26.5 |
|
| 2.3 |
|
| 34.0 |
|
| 3.0 |
|
| (7.5 | ) |
|
| (22.1 | ) |
| $ | 18.9 |
|
|
| 1.4 |
| % |
| $ | 26.5 |
|
|
| 2.3 |
| % |
| $ | (7.6 | ) |
|
| (28.7 | ) | % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Income (loss) before income taxes |
| 67.5 |
| 5.8 |
| (1.8 | ) |
| (0.3 | ) |
| 69.3 |
| (3,850.0 | ) | ||||||||||||||||||||||||||||||||||||
Income before income taxes |
|
| 64.3 |
|
|
| 4.7 |
| % |
|
| 67.5 |
|
|
| 5.8 |
| % |
|
| (3.2 | ) |
|
| (4.7 | ) | % | ||||||||||||||||||||||||
Income tax expense |
|
| 18.6 |
|
| 1.6 |
|
| 0.2 |
|
| — |
|
| 18.4 |
|
| 9,200.0 |
|
|
| 21.0 |
|
|
| 1.5 |
|
|
|
| 18.6 |
|
|
| 1.6 |
|
|
|
| 2.4 |
|
|
| 12.9 |
|
| |||||
Net income (loss) |
| $ | 48.9 |
|
| 4.2 |
| $ | (2.0 | ) |
|
| (0.2 | ) |
| $ | 50.9 |
|
| (2,545.0 | ) | ||||||||||||||||||||||||||||||
Net income |
| $ | 43.3 |
|
|
| 3.2 |
| % |
| $ | 48.9 |
|
|
| 4.2 |
| % |
| $ | (5.6 | ) |
|
| (11.5 | ) | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company miles |
| 170.9 |
|
|
|
| 192.8 |
|
|
|
| (21.9 | ) |
| (11.4 | ) |
|
| 159.7 |
|
|
|
|
|
| 170.9 |
|
|
|
|
|
| (11.2 | ) |
|
| (6.6 | ) | % | ||||||||||||
Owner operator miles |
|
| 139.2 |
|
|
|
|
| 145.3 |
|
|
|
|
| (6.1 | ) |
|
| (4.2 | ) |
|
| 130.3 |
|
|
|
|
|
| 139.2 |
|
|
|
|
|
| (8.9 | ) |
|
| (6.4 | ) |
| ||||||||
Total miles (in millions) |
|
| 310.1 |
|
|
|
|
| 338.1 |
|
|
|
|
| (28.0 | ) |
|
| (8.3 | ) |
|
| 290.0 |
|
|
|
|
|
| 310.1 |
|
|
|
|
|
| (20.1 | ) |
|
| (6.5 | ) | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Rate per mile |
| $ | 2.71 |
|
|
|
| $ | 2.45 |
|
|
|
| $ | 0.26 |
| 10.6 |
|
| $ | 3.07 |
|
|
|
|
| $ | 2.71 |
|
|
|
|
| $ | 0.36 |
|
|
| 13.3 |
| % | ||||||||||
Revenue per tractor |
| $ | 173,400 |
|
|
|
| $ | 147,500 |
|
|
|
| $ | 25,900 |
| 17.6 |
|
| $ | 189,900 |
|
|
|
|
| $ | 173,400 |
|
|
|
|
| $ | 16,500 |
|
|
| 9.5 |
| % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company-operated tractors, at period-end |
| 2,641 |
|
|
|
| 2,979 |
|
|
|
| (338 | ) |
| (11.3 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, at period-end |
| 2,077 |
|
|
|
| 2,100 |
|
|
|
| (23 | ) |
| (1.1 | ) | |||||||||||||||||||||||||||||||||||
Number of trailers, at period-end |
| 11,266 |
|
|
|
| 11,607 |
|
|
|
| (341 | ) |
| (2.9 | ) | |||||||||||||||||||||||||||||||||||
Company owned tractors, at quarter-end |
|
| 2,799 |
|
|
|
|
|
| 2,641 |
|
|
|
|
|
| 158 |
|
|
| 6.0 |
| % | ||||||||||||||||||||||||||||
Owner operator tractors, at quarter-end |
|
| 2,042 |
|
|
|
|
|
| 2,077 |
|
|
|
|
|
| (35 | ) |
|
| (1.7 | ) |
| ||||||||||||||||||||||||||||
Number of trailers, at quarter-end |
|
| 11,028 |
|
|
|
|
|
| 11,266 |
|
|
|
|
|
| (238 | ) |
|
| (2.1 | ) | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company-operated tractors, average for the period |
| 2,742 |
|
|
|
| 3,417 |
|
|
|
| (675 | ) |
| (19.7 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, average for the period |
|
| 2,105 |
|
|
|
|
| 2,210 |
|
|
|
|
| (105 | ) |
|
| (4.7 | ) | |||||||||||||||||||||||||||||||
Company owned tractors, average for the period |
|
| 2,638 |
|
|
|
|
|
| 2,742 |
|
|
|
|
|
| (104 | ) |
|
| (3.8 | ) | % | ||||||||||||||||||||||||||||
Owner operator tractors, average for the period |
|
| 2,049 |
|
|
|
|
|
| 2,105 |
|
|
|
|
|
| (56 | ) |
|
| (2.7 | ) |
| ||||||||||||||||||||||||||||
Total tractors, average for the period |
|
| 4,848 |
|
|
|
|
| 5,627 |
|
|
|
|
| (779 | ) |
|
| (13.8 | ) |
|
| 4,687 |
|
|
|
|
|
| 4,847 |
|
|
|
|
|
| (160 | ) |
|
| (3.3 | ) | % |
2625
The following table sets forth certainrevenue, operating statisticsexpenses and income from operations (in dollars and as a percentage of total revenue) of the Company’s Specialized Solutions segment for the nine months ended September 30, 20212022 and 2020,2021, as well as revenue,certain operating expenses and income (loss) from operationsstatistics for the nine months ended September 30, 2021same periods. In addition, the absolute and 2020. relative changes for each are presented. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner operator miles driven in the period. Miles are estimated based on information received as of the filing date and may change quarter to quarter when final information is received from each operating segment. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner operator tractors.
SPECIALIZED SOLUTIONS
|
| Nine Months Ended September 30, |
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||
�� |
| Nine Months Ended September 30, |
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| Increase (Decrease) |
|
| 2022 |
| 2021 |
| Increase (Decrease) | ||||||||||||||||||||||||||||||||||||
(Dollars in millions, except Rate per mile and Revenue per tractor) |
| $ |
| % |
| $ |
| % |
| $ |
| % |
|
| Amount |
|
| % |
| Amount |
|
| % |
| Absolute |
|
| Relative | |||||||||||||||||||||||
REVENUE(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company freight |
| $ | 345.1 |
| 52.8 |
| $ | 383.5 |
| 55.0 |
| $ | (38.4 | ) |
| (10.0 | ) |
| $ | 371.7 |
|
|
| 48.5 |
| % |
| $ | 345.0 |
|
|
| 52.8 |
| % |
| $ | 26.7 |
|
|
| 7.7 |
| % | |||||||
Owner operator freight |
| 117.9 |
| 18.0 |
| 118.7 |
| 17.0 |
| (0.8 | ) |
| (0.7 | ) |
|
| 139.1 |
|
|
| 18.1 |
|
|
|
| 117.9 |
|
|
| 18.0 |
|
|
|
| 21.2 |
|
|
| 18.0 |
|
| ||||||||||
Brokerage |
| 119.6 |
| 18.3 |
| 133.7 |
| 19.2 |
| (14.1 | ) |
| (10.5 | ) |
|
| 128.2 |
|
|
| 16.7 |
|
|
|
| 119.6 |
|
|
| 18.3 |
|
|
|
| 8.6 |
|
|
| 7.2 |
|
| ||||||||||
Logistics |
| 25.0 |
| 3.8 |
| 26.4 |
| 3.8 |
| (1.4 | ) |
| (5.3 | ) |
|
| 36.2 |
|
|
| 4.7 |
|
|
|
| 25.0 |
|
|
| 3.8 |
|
|
|
| 11.2 |
|
|
| 44.8 |
|
| ||||||||||
Fuel surcharge |
|
| 46.2 |
|
| 7.1 |
|
| 34.9 |
|
| 5.0 |
|
| 11.3 |
|
| 32.4 |
|
|
| 92.4 |
|
|
| 12.0 |
|
|
|
| 46.2 |
|
|
| 7.1 |
|
|
|
| 46.2 |
|
|
| 100.0 |
|
| |||||
Total revenue |
| 653.8 |
| 100.0 |
| 697.2 |
| 100.0 |
| (43.4 | ) |
| (6.2 | ) |
| $ | 767.6 |
|
|
| 100.0 |
| % |
| $ | 653.7 |
|
|
| 100.0 |
| % |
| $ | 113.9 |
|
|
| 17.4 |
| % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
OPERATING EXPENSES(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Salaries, wages and employee benefits |
| 176.5 |
| 27.0 |
| 198.2 |
| 28.4 |
| (21.7 | ) |
| (11.0 | ) |
| $ | 190.9 |
|
|
| 24.9 |
| % |
| $ | 176.5 |
|
|
| 27.0 |
| % |
| $ | 14.4 |
|
|
| 8.2 |
| % | ||||||||||
Fuel |
| 54.1 |
| 8.3 |
| 42.8 |
| 6.1 |
| 11.3 |
| 26.3 |
|
|
| 87.1 |
|
|
| 11.3 |
|
|
|
| 54.1 |
|
|
| 8.3 |
|
|
|
| 33.0 |
|
|
| 61.0 |
|
| |||||||||||
Operations and maintenance |
| 76.2 |
| 11.6 |
| 104.2 |
| 14.9 |
| (28.0 | ) |
| (26.9 | ) |
|
| 85.3 |
|
|
| 11.1 |
|
|
|
| 76.2 |
|
|
| 11.7 |
|
|
|
| 9.1 |
|
|
| 11.9 |
|
| ||||||||||
Purchased freight |
| 190.7 |
| 29.2 |
| 193.2 |
| 27.7 |
| (2.5 | ) |
| (1.3 | ) |
|
| 224.2 |
|
|
| 29.2 |
|
|
|
| 190.7 |
|
|
| 29.2 |
|
|
|
| 33.5 |
|
|
| 17.6 |
|
| ||||||||||
Depreciation and amortization |
| 39.4 |
| 6.0 |
| 42.9 |
| 6.2 |
| (3.5 | ) |
| (8.1 | ) |
|
| 37.9 |
|
|
| 4.9 |
|
|
|
| 39.4 |
|
|
| 6.0 |
|
|
|
| (1.5 | ) |
|
| (3.8 | ) |
| ||||||||||
Impairment |
| — |
| — |
| 13.4 |
| 1.9 |
| (13.4 | ) |
| (100.0 | ) |
|
| 7.8 |
|
|
| 1.0 |
|
|
|
| — |
|
|
| — |
|
|
|
| 7.8 |
|
|
| 100.0 |
|
| ||||||||||
Restructuring |
| 0.2 |
| — |
| 8.3 |
| 1.2 |
| (8.1 | ) |
| (97.0 | ) | |||||||||||||||||||||||||||||||||||||
Restructuring charges |
|
| 0.2 |
|
|
| — |
|
|
|
| 0.2 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
| ||||||||||||||||||||||||
Other operating expenses |
|
| 47.6 |
|
| 7.3 |
|
| 55.1 |
|
| 7.9 |
|
| (7.5 | ) |
|
| (13.7 | ) |
|
| 58.9 |
|
|
| 7.7 |
|
|
|
| 47.5 |
|
|
| 7.3 |
|
|
|
| 11.4 |
|
|
| 24.0 |
|
| ||||
Total operating expenses |
|
| 584.6 |
|
| 89.4 |
|
| 658.1 |
|
| 94.4 |
|
| (73.5 | ) |
|
| (11.2 | ) |
| $ | 692.3 |
|
|
| 90.2 |
| % |
| $ | 584.6 |
|
|
| 89.4 |
| % |
| $ | 107.7 |
|
|
| 18.4 |
| % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
INCOME FROM OPERATIONS |
| $ | 69.2 |
| 10.6 |
| $ | 39.1 |
| 5.6 |
| $ | 30.1 |
| 77.0 |
|
| $ | 75.3 |
|
|
| 9.8 |
| % |
| $ | 69.1 |
|
|
| 10.6 |
| % |
| $ | 6.2 |
|
|
| 9.0 |
| % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company miles |
| 112.8 |
|
|
|
| 117.4 |
|
|
|
| (4.6 | ) |
| (3.9 | ) |
|
| 112.0 |
|
|
|
|
|
| 112.8 |
|
|
|
|
|
| (0.8 | ) |
|
| (0.7 | ) | % | ||||||||||||
Owner operator miles |
|
| 36.3 |
|
|
|
|
| 38.2 |
|
|
|
|
| (1.9 | ) |
|
| (5.0 | ) |
|
| 31.6 |
|
|
|
|
|
| 36.3 |
|
|
|
|
|
| (4.7 | ) |
|
| (12.9 | ) |
| ||||||||
Total miles (in millions) |
|
| 149.1 |
|
|
|
|
| 155.6 |
|
|
|
|
| (6.5 | ) |
|
| (4.2 | ) |
|
| 143.6 |
|
|
|
|
|
| 149.1 |
|
|
|
|
|
| (5.5 | ) |
|
| (3.7 | ) | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Rate per mile |
| $ | 3.11 |
|
|
|
| $ | 3.23 |
|
|
|
| $ | (0.12 | ) |
| (3.7 | ) |
| $ | 3.56 |
|
|
|
|
| $ | 3.10 |
|
|
|
|
| $ | 0.46 |
|
|
| 14.8 |
| % | |||||||||
Revenue per tractor |
| $ | 194,200 |
|
|
|
| $ | 172,600 |
|
|
|
| $ | 21,600 |
| 12.5 |
|
| $ | 219,000 |
|
|
|
|
| $ | 194,200 |
|
|
|
|
| $ | 24,800 |
|
|
| 12.8 |
| % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company-operated tractors, at period-end |
| 1,835 |
|
|
|
| 1,960 |
|
|
|
| (125 | ) |
| (6.4 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, at period-end |
| 497 |
|
|
|
| 510 |
|
|
|
| (13 | ) |
| (2.5 | ) | |||||||||||||||||||||||||||||||||||
Number of trailers, at period-end |
| 7,059 |
|
|
|
| 7,278 |
|
|
|
| (219 | ) |
| (3.0 | ) | |||||||||||||||||||||||||||||||||||
Company owned tractors, at quarter-end |
|
| 1,982 |
|
|
|
|
|
| 1,835 |
|
|
|
|
|
| 147 |
|
|
| 8.0 |
| % | ||||||||||||||||||||||||||||
Owner operator tractors, at quarter-end |
|
| 441 |
|
|
|
|
|
| 497 |
|
|
|
|
|
| (56 | ) |
|
| (11.3 | ) |
| ||||||||||||||||||||||||||||
Number of trailers, at quarter-end |
|
| 7,181 |
|
|
|
|
|
| 7,059 |
|
|
|
|
|
| 122 |
|
|
| 1.7 |
| % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company-operated tractors, average for the period |
| 1,876 |
|
|
|
| 2,263 |
|
|
|
| (387 | ) |
| (17.1 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, average for the period |
|
| 507 |
|
|
|
|
| 646 |
|
|
|
|
| (139 | ) |
|
| (21.4 | ) | |||||||||||||||||||||||||||||||
Company owned tractors, average for the period |
|
| 1,867 |
|
|
|
|
|
| 1,876 |
|
|
|
|
|
| (9 | ) |
|
| (0.5 | ) | % | ||||||||||||||||||||||||||||
Owner operator tractors, average for the period |
|
| 465 |
|
|
|
|
|
| 508 |
|
|
|
|
|
| (43 | ) |
|
| (8.5 | ) |
| ||||||||||||||||||||||||||||
Total tractors, average for the period |
|
| 2,384 |
|
|
|
|
| 2,909 |
|
|
|
|
| (525 | ) |
|
| (18.1 | ) |
|
| 2,332 |
|
|
|
|
|
| 2,384 |
|
|
|
|
|
| (52 | ) |
|
| (2.2 | ) | % |
2726
The following table sets forth certainrevenue, operating statisticsexpenses and income from operations (in dollars and as a percentage of total revenue) of the Company’s Flatbed Solutions segment for the nine months ended September 30, 20212022 and 2020,2021, as well as revenue,certain operating expensesstatistics for the same periods. In addition, the absolute and income (loss) from operationsrelative changes for nine months ended September 30, 2021 and 2020. each are presented. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner operator miles driven in the period. Miles are estimated based on information received as of the filing date and may change quarter to quarter when final information is received from each operating segment. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner operator tractors.
FLATBED SOLUTIONS
|
| Nine Months Ended September 30, |
|
|
|
|
|
|
|
| Nine Months Ended September 30, |
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| Increase (Decrease) |
|
| 2022 |
| 2021 |
| Increase (Decrease) | ||||||||||||||||||||||||||||||||||||
(Dollars in millions, except Rate per mile and Revenue per tractor) |
| $ |
|
| % |
|
| $ |
|
| % |
|
| $ |
|
| % |
|
| Amount |
|
| % |
| Amount |
|
| % |
| Absolute |
|
| Relative | ||||||||||||||||||
REVENUE(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company freight |
| $ | 137.5 |
| 26.5 |
| $ | 147.3 |
| 33.7 |
| $ | (9.8 | ) |
| (6.7 | ) |
| $ | 127.2 |
|
|
| 21.0 |
| % |
| $ | 137.5 |
|
|
| 26.5 |
| % |
| $ | (10.3 | ) |
|
| (7.5 | ) | % | |||||||
Owner operator freight |
| 249.1 |
| 48.1 |
| 193.5 |
| 44.3 |
| 55.6 |
| 28.7 |
|
|
| 259.9 |
|
|
| 42.9 |
|
|
|
| 249.1 |
|
|
| 48.1 |
|
|
|
| 10.8 |
|
|
| 4.3 |
|
| |||||||||||
Brokerage |
| 77.8 |
| 15.0 |
| 52.6 |
| 12.0 |
| 25.2 |
| 47.9 |
|
|
| 127.2 |
|
|
| 21.0 |
|
|
|
| 77.8 |
|
|
| 15.0 |
|
|
|
| 49.4 |
|
|
| 63.5 |
|
| |||||||||||
Logistics |
| 3.6 |
| 0.7 |
| 2.2 |
| 0.5 |
| 1.4 |
| 63.6 |
|
|
| 2.9 |
|
|
| 0.5 |
|
|
|
| 3.6 |
|
|
| 0.7 |
|
|
|
| (0.7 | ) |
|
| (19.4 | ) |
| |||||||||||
Fuel surcharge |
|
| 50.3 |
|
| 9.7 |
|
| 41.2 |
|
| 9.5 |
|
| 9.1 |
|
| 22.1 |
|
|
| 88.6 |
|
|
| 14.6 |
|
|
|
| 50.3 |
|
|
| 9.7 |
|
|
|
| 38.3 |
|
|
| 76.1 |
|
| |||||
Total revenue |
| 518.3 |
| 100.0 |
| 436.8 |
| 100.0 |
| 81.5 |
| 18.7 |
|
| $ | 605.8 |
|
|
| 100.0 |
| % |
| $ | 518.3 |
|
|
| 100.0 |
| % |
| $ | 87.5 |
|
|
| 16.9 |
| % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
OPERATING EXPENSES(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Salaries, wages and employee benefits |
| 86.4 |
| 16.7 |
| 94.0 |
| 21.5 |
| (7.6 | ) |
| (8.1 | ) |
| $ | 82.7 |
|
|
| 13.7 |
| % |
| $ | 86.4 |
|
|
| 16.7 |
| % |
| $ | (3.7 | ) |
|
| (4.3 | ) | % | ||||||||||
Fuel |
| 25.1 |
| 4.8 |
| 24.4 |
| 5.6 |
| 0.7 |
| 2.8 |
|
|
| 33.3 |
|
|
| 5.5 |
|
|
|
| 25.1 |
|
|
| 4.8 |
|
|
|
| 8.2 |
|
|
| 32.7 |
|
| |||||||||||
Operations and maintenance |
| 32.0 |
| 6.2 |
| 32.0 |
| 7.3 |
| (0.0 | ) |
| (0.1 | ) |
|
| 33.5 |
|
|
| 5.5 |
|
|
|
| 32.0 |
|
|
| 6.2 |
|
|
|
| 1.5 |
|
|
| 4.7 |
|
| ||||||||||
Purchased freight |
| 263.3 |
| 50.8 |
| 197.0 |
| 45.1 |
| 66.3 |
| 33.7 |
|
|
| 333.4 |
|
|
| 55.0 |
|
|
|
| 263.3 |
|
|
| 50.8 |
|
|
|
| 70.1 |
|
|
| 26.6 |
|
| |||||||||||
Depreciation and amortization |
| 26.5 |
| 5.1 |
| 27.8 |
| 6.4 |
| (1.3 | ) |
| (4.8 | ) |
|
| 28.3 |
|
|
| 4.7 |
|
|
|
| 26.5 |
|
|
| 5.1 |
|
|
|
| 1.8 |
|
|
| 6.8 |
|
| ||||||||||
Restructuring |
| — |
| — |
| 0.3 |
| 0.1 |
| (0.3 | ) |
| (100.0 | ) | |||||||||||||||||||||||||||||||||||||
Other operating expenses |
|
| 30.2 |
|
| 5.8 |
|
| 32.7 |
|
| 7.5 |
|
| (2.5 | ) |
|
| (7.8 | ) |
|
| 36.7 |
|
|
| 6.1 |
|
|
|
| 30.0 |
|
|
| 5.8 |
|
|
|
| 6.7 |
|
|
| 22.3 |
|
| ||||
Total operating expenses |
|
| 463.3 |
|
| 89.4 |
|
| 408.2 |
|
| 93.5 |
|
| 55.1 |
|
| 13.5 |
|
| $ | 547.9 |
|
|
| 90.4 |
| % |
| $ | 463.3 |
|
|
| 89.4 |
| % |
| $ | 84.6 |
|
|
| 18.3 |
| % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
INCOME FROM OPERATIONS |
| $ | 55.0 |
| 10.6 |
| $ | 28.6 |
| 6.5 |
| $ | 26.4 |
| 92.1 |
|
| $ | 57.9 |
|
|
| 9.6 |
| % |
| $ | 55.0 |
|
|
| 10.6 |
| % |
| $ | 2.9 |
|
|
| 5.3 |
| % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company miles |
| 58.1 |
|
|
|
| 75.4 |
|
|
|
| (17.3 | ) |
| (22.9 | ) |
|
| 47.7 |
|
|
|
|
|
| 58.1 |
|
|
|
|
|
| (10.4 | ) |
|
| (17.9 | ) | % | ||||||||||||
Owner operator miles |
|
| 102.9 |
|
|
|
|
| 107.1 |
|
|
|
|
| (4.2 | ) |
|
| (3.9 | ) |
|
| 98.7 |
|
|
|
|
|
| 102.9 |
|
|
|
|
|
| (4.2 | ) |
|
| (4.1 | ) |
| ||||||||
Total miles (in millions) |
|
| 161.0 |
|
|
|
|
| 182.5 |
|
|
|
|
| (21.5 | ) |
|
| (11.8 | ) |
|
| 146.4 |
|
|
|
|
|
| 161.0 |
|
|
|
|
|
| (14.6 | ) |
|
| (9.1 | ) | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Rate per mile |
| $ | 2.40 |
|
|
|
| $ | 1.87 |
|
|
|
| $ | 0.53 |
| 28.3 |
|
| $ | 2.64 |
|
|
|
|
| $ | 2.40 |
|
|
|
|
| $ | 0.24 |
|
|
| 10.0 |
| % | ||||||||||
Revenue per tractor |
| $ | 156,900 |
|
|
|
| $ | 125,400 |
|
|
|
| $ | 31,500 |
| 25.1 |
|
| $ | 164,400 |
|
|
|
|
| $ | 156,900 |
|
|
|
|
| $ | 7,500 |
|
|
| 4.8 |
| % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Company-operated tractors, at period-end |
| 806 |
|
|
|
| 1,019 |
|
|
|
| (213 | ) |
| (20.9 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, at period-end |
| 1,580 |
|
|
|
| 1,590 |
|
|
|
| (10 | ) |
| (0.6 | ) | |||||||||||||||||||||||||||||||||||
Number of trailers, at period-end |
| 4,207 |
|
|
|
| 4,329 |
|
|
|
| (122 | ) |
| (2.8 | ) | |||||||||||||||||||||||||||||||||||
Company owned tractors, at quarter-end |
|
| 817 |
|
|
|
|
|
| 806 |
|
|
|
|
|
| 11 |
|
|
| 1.4 |
| % | ||||||||||||||||||||||||||||
Owner operator tractors, at quarter-end |
|
| 1,601 |
|
|
|
|
|
| 1,580 |
|
|
|
|
|
| 21 |
|
|
| 1.3 |
|
| ||||||||||||||||||||||||||||
Number of trailers, at quarter-end |
|
| 3,847 |
|
|
|
|
|
| 4,207 |
|
|
|
|
|
| (360 | ) |
|
| (8.6 | ) | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Company-operated tractors, average for the period |
| 866 |
|
|
|
| 1,154 |
|
|
|
| (288 | ) |
| (24.9 | ) | |||||||||||||||||||||||||||||||||||
Owner-operated tractors, average for the period |
|
| 1,598 |
|
|
|
|
| 1,564 |
|
|
|
|
| 34 |
|
| 2.2 |
| ||||||||||||||||||||||||||||||||
Company owned tractors, average for the period |
|
| 771 |
|
|
|
|
|
| 866 |
|
|
|
|
|
| (95 | ) |
|
| (11.0 | ) | % | ||||||||||||||||||||||||||||
Owner operator tractors, average for the period |
|
| 1,584 |
|
|
|
|
|
| 1,598 |
|
|
|
|
|
| (14 | ) |
|
| (0.9 | ) |
| ||||||||||||||||||||||||||||
Total tractors, average for the period |
|
| 2,464 |
|
|
|
|
| 2,718 |
|
|
|
|
| (254 | ) |
|
| (9.3 | ) |
|
| 2,355 |
|
|
|
|
|
| 2,464 |
|
|
|
|
|
| (109 | ) |
|
| (4.4 | ) | % |
2827
Revenue. Total revenue increased $44.0 million, or 3.9% to $1,162.5 million17.4% for the nine months ended September 30, 2021 from $1,118.5 million for2022 as compared to the same period in 2020. The exit of the Aveda operations, which was completed in the fourth quarter of 2020, resulted in a $51.8 million, or 4.5%, reduction in total revenue.2021. The increase in total revenue was primarily dueattributed to record freight ratesincreases in the Flatbed segment. Company freight revenue decreased $47.4 million, or 9.1%, to $475.3 million for the nine months ended September 30, 2021 from $522.7 million for the same periodfuel surcharge, growth in 2020. The decrease in company freight revenue was a result of a $31.6 million reduction due to the exit of the Aveda operations in conjunction with a 11.4% decrease in miles due to the downsizing of company trucks, partially offset by a 2.6% increase in rate per mile. The increase in owner operator freight revenue was a result of a 24.2% increase inour brokerage service offering, and higher rates. In addition, rate per mile partially offset by $8.4 million reduction due to the exit of the Aveda operations and a 4.2% decrease in owner operatorincreased 13.3%; however, total miles driven. Brokerage revenue increased $12.3 million, or 6.7%, to $197.1 million for the nine months ended September 30, 2021 from $184.8 million for the same period in 2020 due to increases in customer sales and rates in the Flatbed Solutions segment, partially offset by a $11.4 million reduction due to the exit of the Aveda operations. Fuel surcharge revenue increased $20.8 million, or 27.7%, to $95.9 million for the nine months ended September 30, 2021 from $75.1 million for the same period in 2020 due to increased fuel costs that led to higher fuel surcharges.driven decreased 6.5%.
The Company’s Specialized Solutions segment’s revenue decreased $43.4 million, or 6.2% to $653.8 millionincreased 17.4% for the nine months ended September 30, 2021 from $697.2 million for2022 as compared to the same period in 2020. The exit of the Aveda operations resulted in a $51.8 million, or 7.9%, reduction2021, primarily due to higher fuel surcharge and strength in the Specialized Solutions segment’s revenue.freight environment, primarily in the high security cargo, construction and manufacturing end-markets. Company freight revenue decreased $38.4 million, or 10.0%, to $345.1 millionincreased 7.7% for the nine months ended September 30, 2021 from $383.5 million for2022 as compared to the same period in 2020. The2021 due to an 8.5% increase in company rate per mile, partially offset by a 0.7% decrease in total freight revenue was primarily a result of a $40.0 million reductionmiles driven partially due to the exit of the Aveda operations.supply chain delays in receiving and seating new revenue equipment. Owner operator freight increased 18.0% due to a 35.5% increase in owner operator rate per mile, partially offset by a 12.9% decrease in miles driven primarily due to an 8.5% decrease in average owner operator tractors. Brokerage revenue decreased $14.1 million, or 10.5%, to $119.6 millionincreased 7.2% for the nine months ended September 30, 2021 from $133.7 million for2022 as compared to the same period in 2020 primarily2021. This segment experienced a drop in brokerage volumes tied to wind activity, which was mostly offset by the increase in loads tied to capturing excess freight volumes, for which the Company was unable to utilize company owned-assets. This resulted in total brokerage loads dropping 1% while brokerage revenue per load was up 8% due to a $11.4 million reduction duehigher rates during the nine months ended September 30, 2022 as compared to the exit of the Aveda operations combined with a decreasesame period in customer sales volumes.2021. Fuel surcharge revenue increased $11.3 million, or 32.4%, to $46.2 million100.0% for the nine months ended September 30, 2021 from $34.9 million for2022 as compared to the same period in 20202021 due to increased fuel costs that led totriggered higher fuel surcharges.surcharges to our customers.
The Company’s Flatbed Solutions segment’s revenue increased $81.5 million, or 18.7%, to $518.3 million16.9% for the nine months ended September 30, 2021 from $436.8 million for2022 as compared to the same period in 2020, which was2021, primarily due to increases in brokerage revenue, fuel surcharge, and owner operator freight revenuerevenue. The Company deployed company-owned assets into end-markets with higher rates and margins, and as such, some of the excess volumes, for which the Company was unable to utilize company-owned assets, were strategically captured through our brokerage revenue.service offering. In addition, during the nine months ended September 30, 2022, we experienced delays in receiving new equipment due to supply chain disruptions, and as such, the Company freightutilized our brokerage service offering to capture excess volumes. This resulted in a 63.5% increase in brokerage revenue decreased $9.8 million, or 6.7%, to $137.5 million for the nine months ended September 30, 2021 from $147.3 million for2022 as compared to the same period in 20202021. In this segment, total brokerage loads were up 28% and the brokerage revenue per load was up 27% due to a 22.9% decrease in miles due to the downsizing of company trucks, partially offset by a 21.1% increase in rate per mile. Owner operator freight revenue increased $55.6 million, or 28.7%, to $249.1 million forhigher rates during the nine months ended September 30, 2021 from $193.5 million for2022 as compared to the same period in 2020 predominantly2021. Fuel surcharge revenue increased 76.1% due to a 34.0%increased fuel costs that triggered higher fuel surcharges to our customers. Owner operator freight increased 4.3% due to an 8.8% increase in owner operator rate per mile, partially offset by a 3.9%4.1% decrease in miles driven. BrokerageCompany freight revenue increased $25.2 million, or 47.9%, to $77.8 million for the nine months ended September 30, 2021 from $52.6 million for the same period in 2020decreased 7.5% due to increasessupply chain delays in customer salesreceiving and seating new revenue equipment and softening in rate. Fuel surcharge revenue increased $9.1 million, or 22.1%, to $50.3 million for the nine months ended September 30, 2021 from $41.2 million for the same period in 2020 due to increased fuel costs thatoverall flatbed freight market which led to higher fuel surcharges.a 17.9% decrease in miles, partially offset by a 12.7% increase in rate per mile. The increase in rate per mile was driven by strength in the construction, steel, and manufacturing industries.
Salaries, Wages and Employee Benefits. Salaries, wages and employee benefits expense, which consists of compensation for all employees, is primarily affected by the number of miles driven by company drivers, the rate per mile paid to company drivers, employee benefits including, but not limited to, health care and workers’ compensation, and to a lesser extent, the number of, and compensation and benefits paid to, non-driver employees. In general, the Specialized Solutions segment drivers receive a higher driver pay per total mile than Flatbed Solutions segment drivers due to the former requiring a higher level of training and expertise.
Salaries, wages and employee benefits expense decreased 8.1% to $280.7 millionincreased 6.6% for the nine months ended September 30, 2021 from $305.6 million for2022 as compared to the same period in 2020.2021. The decreaseincrease in salaries, wages and employee benefits expense was primarily due to decreasedhigher driver pay in the Specialized Solutions segment, increased health insurance claims, and increased employee headcount related to Project Synchronizethe expansion of corporate functions in legal, accounting and lower driver pay due to the decrease in company miles compared to the same period in 2020.safety departments, partially offset by decreased accrued bonuses. Salaries, wages and employee benefits expense, as a percentage of consolidated revenue (excluding brokerage and owner operator revenue), decreased 3.6%4.8% for the nine months ended September 30, 20212022 as compared to the same period in 2020.2021.
The Company’s Specialized Solutions segment had a $21.7 million, or 11.0%, decrease insegment’s salaries, wages and employee benefits expense increased 8.2% for the nine months ended September 30, 20212022 compared to the same period in 2020,2021, primarily as a result of the decreased employee headcount related to Project Synchronizehigher driver and lowernon-driver pay and increased health insurance claims. The increased driver pay was due to thean 8% increase in driver rate, slightly offset by a 0.7% decrease in company miles compared to the same period in 2020.Company miles. Salaries, wages and employee benefits expense, as a percentage of Specialized Solutions revenue (excluding brokerage and owner operator revenue), decreased 2.2%4.2% for the nine months ended September 30, 20212022 as compared to the same period in 2020.2021.
The Company’s Flatbed Solutions segment had a $7.6 million, or 8.1%, decrease insegment’s salaries, wages and employee benefits expense decreased 4.3% for the nine months ended September 30, 20212022 compared to the same period in 2020,2021, primarily as a result of the decreased employee headcount related to Project Synchronize and lower driver pay due to thea 17.9% decrease in companyCompany miles, compared to the same periodpartially offset by a 17% increase in 2020.driver rate. Salaries, wages and employee benefits expense, as a percentage of Flatbed Solutions revenue (excluding brokerage and owner operator revenue), decreased 4.9%7.3% for the nine months ended September 30, 20212022 as compared to the same period in 2020.2021.
Fuel. Fuel expense consists primarily of diesel fuel expense for company-owned tractors and fuel taxes. The primary factors affecting fuel expense are the cost of diesel fuel, the miles per gallon realized with company equipment and the number of miles driven by company drivers.
2928
Total fuel expense increased $12.0 million, or 17.9%, to $79.1 million52.2% for the nine months ended September 30, 2021 from $67.1 million for2022 as compared to the same period in 2020.2021. This increase was primarily due to a 22.5%57.0% increase in fuel price, partially offset by a 11.4%6.6% decrease in Company miles driven. The Company’s Specialized Solutions segment’s fuel expense increased 61.0% for the nine months ended September 30, 2022 as compared to the same period in 2021, primarily as a result of the increase in fuel price. The Company’s Flatbed Solutions segment’s fuel expense increased 32.7% for the nine months ended September 30, 2022 as compared to the same period in 2021, as a result of the increase in fuel price, partially offset by a 17.9% decrease in Company miles driven for the nine months ended September 30, 2022 as compared to the same period in 2021. The U.S. national average diesel fuel price, as published by the U.S. Department of Energy, was $3.161$4.961 for the nine months ended September 30, 2021,2022, compared to $2.579$3.161 for the same period in 2020.2021.
The Company’s Specialized Solutions segment’s fuel expense increased 26.3% to $54.1 million for the nine months ended September 30, 2021 from $42.8 million for the same period in 2020, primarily as a result of the increase in fuel price mentioned above, partially offset by a 3.9% decrease in Company miles driven for the nine months ended September 30, 2021 as compared to the same period in 2020.
The Company’s Flatbed Solutions segment’s fuel expense increased 2.8% to $25.1 million for the nine months ended September 30, 2021 from $24.4 million for the same period in 2020, as a result of the increase in fuel price mentioned above, partially offset by a 22.9% decrease in Company miles driven for the nine months ended September 30, 2021 as compared to the same period in 2020.
Operations and Maintenance. Operations and maintenance expense consists primarily of ordinary vehicle repairs and maintenance, costs associated with preparing tractors and trailers for sale or trade-in, driver recruiting, training and safety costs, permitting and pilot car fees and other general operations expenses. Operations and maintenance expense is primarily affected by the age of company-owned tractors and trailers, the number of miles driven in a period and driver turnover.
Operations and maintenance expense decreased 20.7% to $108.1 millionincreased 8.8% for the nine months ended September 30, 2021 from $136.4 million for2022 as compared to the same period in 20202021 primarily due to a decrease of $4.9$5.8 million increase in maintenance and upkeep costs, sucha $1.1 million increase in lease costs and a $0.5 million increase in pilot car and permit fees. The Company’s Specialized Solutions segment’s operations and maintenance expense increased 11.9% for the nine months ended September 30, 2022 as repairscompared to the same period in 2021 primarily as a result of a $4.5 million increase in maintenance and tires, $18.3upkeep costs, a $0.8 million increase in operation costs such as pilot car and permit fees, and $5.1a $1.0 million increase in otherlease costs due to a shift from purchasing revenue equipment to leasing at some of our operating companies. The Company’s Flatbed Solutions segment’s operations expenses.and maintenance expense increased 4.7% for the nine months ended September 30, 2022 as compared to the same period in 2021 primarily due to a $1.3 million increase in maintenance and upkeep costs. Operations and maintenance expense, as a percentage of consolidated revenue (excluding brokerage revenue), decreased 3.4% to 11.2% for the nine months ended September 30, 2021 as compared to 14.6% in the same period in 2020.
The Company’s Specialized Solutions segment’s operations and maintenance expense decreased $28.0 million, or 26.9%, for the nine months ended September 30, 2021 as compared to the same period in 2020 as a result of a decrease of $4.8 million in maintenance expense such as repairs and tires due to a reduction of tractors and trailers in the Company’s fleet, a decrease of $18.4 million in operation costs such as pilot car and permit fees and a decrease of $4.7 million in other operations expenses. Operations and maintenance expense, as a percentage of Specialized Solutions revenue (excluding brokerage revenue), decreased 4.2% to 14.3% for the nine months ended September 30, 2021 as compared to 18.5% in the same period in 2020.
The Company’s Flatbed Solutions segment’s operations and maintenance expense was generally consistent for the nine months ended September 30, 20212022 as compared to the same period in 2020. Operations and maintenance expense, as a percentage of Flatbed Solutions revenue (excluding brokerage revenue), decreased 1.0% to 7.3% for the nine months ended September 30, 2021 as compared to 8.3% in the same period in 2020.2021.
Purchased Freight. Purchased freight expense consists of the payments to owner operators, including fuel surcharge reimbursements, and payments to third-party capacity providers that haul loads brokered to them. Purchased freight expense generally takes into account changes in diesel fuel prices, resulting in lowerhigher payments during periods of decliningincreasing fuel prices.
Total purchased freight expense increased $69.9 million, or 18.7%, to $444.2 million23.6% during the nine months ended September 30, 2021 from $374.3 million during2022 as compared to the same period in 2020.2021. Purchased freight expense from owner operators increased 20.9% to $300.1$8.3 million, or 2.8%, during the nine months ended September 30, 2021 from $248.3 million during2022 as compared to the same period in 20202021 as a result of a 20.9%16.3% increase in owner operators’ rate, partially offset by a 4.2%6.4% decrease in owner operator miles driven. Purchased freight expense from third-party capacity providers increased 14.3% to $144.0$96.4 million, or 66.9%, during the nine months ended September 30, 2021 from $126.0 million during2022 as compared to the same period in 2020,2021, as a result of an increase in utilization of third-party capacity providers due to supply chain delays in receiving and seating new revenue equipment. In addition, the Company's Flatbed Solutions segment.cost of diesel fuel increased by 57.0% during the nine months ended September 30, 2022 as compared to the same period in 2021. Purchased freight expense, as a percentage of consolidated revenue, for the nine months ended September 30, 2021,2022, increased 4.7% for the2.0% as compared to the same period in 2020.2021.
The Company’s Specialized Solutions segment’s purchased freight expense decreased 1.3% to $190.7 millionincreased 17.6% during the nine months ended September 30, 2021 from $193.2 million during2022 as compared to the same period in 2020.2021. Purchased freight expense from owner operators increased 4.9% to $89.7$9.7 million, or 10.8%, during the nine months ended September 30, 2021 from $85.5 million during2022 as compared to the same period in 2020,2021, as a result of a 4.5%35.5% increase in owner operators' rate, partially offset by a 5.0%12.9% decrease in owner operator miles driven. Purchased freight expense from third-party capacity providers decreased 6.2% to $101.0increased $23.8 million, or 23.6%, during the nine months ended September 30, 2021 from $107.7 million during2022 as compared to the same period in 2020,2021, as a result of a decreasechange in utilizationthe mix of third-party capacity providers.freight, which resulted in a higher payout margin. As mentioned above, there was also an increase in the cost of diesel fuel during the nine months ended September 30, 2022 as compared to the same period in 2021. Purchased freight expense, as a percentage of Specialized Solutions revenue, for the nine months ended September 30, 2021, increased 1.5%2022, was generally consistent as compared to the same period in 2020.2021.
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The Company’s Flatbed Solutions segment’s purchased freight expense increased 33.7% to $263.3 million26.6% for the nine months ended September 30, 2021 from $197.0 million for2022 as compared to the same period in 2020.2021. Purchased freight expense from owner operators increased 29.2% to $210.5decreased $1.5 million, or 0.7%, for the nine months ended September 30, 2021 from $162.9 million for2022 as compared to the same period in 2020,2021, as a result of a 34.0% increase in owner operators’ rate, partially offset by a 3.9%4.1% decrease in owner operator miles driven.driven despite an 8.8% increase in owner operators’ rate. Purchased freight expense from third-party capacity providers increased 54.8% to $52.8$71.6 million, or 135.6%, during the nine months ended September 30, 2021 from $34.1 million during2022 as compared to the same period in 2020,2021, primarily as a result of increased utilization of third-party capacity providers.providers due to supply chain delays in receiving and seating new revenue equipment. As mentioned above, there was also an increase in the cost of diesel fuel during the nine months ended September 30, 2022 as compared to the same period in 2021. Purchased freight expense, as a percentage of Flatbed Solutions revenue, for the nine months ended September 30, 2021,2022, increased 5.7%4.2% as compared to the same period in 2020.2021.
Depreciation and Amortization. Depreciation and amortization expense consists primarily of depreciation for company-owned tractors and trailers and amortization of those financed with finance leases. The primary factors affecting these expense items include the size of the fleet and age of company-owned tractors and trailers and the cost of new equipment. Amortization of intangible assets is also included in this expense.
29
Depreciation and amortization expense decreased $4.7 million, or 6.6%, to $66.7 million duringwas generally consistent for the nine months ended September 30, 2021 from $71.4 million during2022 as compared to the same period in 2020 as a result of a 19.7% decrease in average tractor count in the Company’s fleet.
2021. The Company’s Specialized Solutions segment’s depreciation and amortization expense decreased $3.5 million, or 8.1%,3.8% for the nine months ended September 30, 20212022 as compared to the same period in 20202021 as a result of a 17.1%0.5% decrease in average tractor count in the segment’s fleet.
The Company’s Flatbed Solutions segment’s depreciation and amortization expense decreased $1.3 million, or 4.8%,increased 6.8% for the nine months ended September 30, 20212022 as compared to the same period in 20202021 as a result of a 24.9% decrease in average tractor count in the segment’s fleet.recent revenue equipment additions.
Administrative Expenses.Impairment. Administrative expenses consist of operating lease costs for real estate, professional fees and other expenses that are not directly associated with the Company’s fleet services. AdministrativeImpairment expense decreased $3.8was $7.8 million for the nine months ended September 30, 2021 as compared2022 related to the same period in 2020 as a resultgoodwill, trade name intangibles, and customer relationships intangibles of cost reduction initiatives. Administrative expenses, as a percentage of revenue, decreased 0.5% from the same period in 2020.
Taxes and Licenses. Operating taxes and licenses expense primarily represents the costs of taxes and licenses associated withan operating segment within the Company’s fleetSpecialized Solutions segment that had been integrated into another operating segment as part of equipment and will vary according to the size of its equipment fleet. Taxes and licensePlan. There was no impairment expense decreased $1.2 million for the nine months ended September 30, 2021. Operating taxesThe Company’s Specialized Solutions segment’s impairment expense was $7.8 million consisting of $5.7 million related to goodwill, $1.9 million related to trade name intangibles, and license expense, as a percentage of revenue, was generally consistent$0.2 million related to customer relationships intangibles for the nine months ended September 30, 20212022. The Company’s Specialized Solutions segment had no impairment expense for nine months ended September 30, 2021. The Company’s Flatbed Solutions segment had no impairment expense for the nine months ended September 30, 2022 and 2020.2021.
Insurance and Claims. Insurance and claims expense consists of insurance premiums and the accruals the Company makes for estimated payments and expenses for claims for bodily injury, property damage, cargo damage and other casualty events. The primary factorFactors affecting the Company’s insurance and claims expense is seasonality (the Company typically experiences higher accident frequency in winter months), theare frequency and severity of accidents, trends in the development factors used in its accruals and developments in large, prior-year claims. The frequency of accidents tends to correlate with the miles the Company travels.travels; however, insurance and claims expense could increase in periods where there are claims in excess of the Company’s self-insured retention. Insurance and claims expense decreased 13.4% to $40.6 millionincreased 50.2% during the nine months ended September 30, 2021 from $46.9 million during the same period in 2020 due to decreases in miles and decreases in insurance claims and premiums. Insurance and claims, as a percentage of revenue, decreased 0.7% for the nine months ended September 30, 20212022 as compared to the same period in 2020.2021. Claims increased $12.8 million primarily
Impairment. No impairment expense was recognized during the nine months ended September 30, 2021. As a resultdue to $10.5 million in development of claims in excess of the then-planned divestiture of Aveda, impairment charges of $13.4Company’s self-insured retention. The Company also recorded an $11.8 million increase in incurred but not recorded claims. These increases were recorded for the same periodpartially offset by a $4.2 million decrease in 2020 consisting of property and equipment of $4.0 million, right-of-use assets of $3.2 million and tradename intangible assets of $6.2 million.
Restructuring Costs. Restructuring costs of $0.2 million were recognized in the nine months ended September 30, 2021, compared to $8.6 million in the same period of 2020. The restructuring costs in the nine months ended September 30, 2020 was primarily related to Phase I and II of Project Synchronize, and the closure of certain Aveda terminals.insurance premiums.
Other (Income) Expense. Interest expense consists of cash interest, amortization and write-off of related issuance costs and fees and prepayment penalties.fees. Interest expense decreased 23.5% to $26.1 million8.8% for the nine months ended September 30, 2021 from $34.1 million for2022 as compared to the same period in 2020.2021. This decrease was primarily attributable to lower interest rates onachieved through the successful refinancing of our Term Loan Facility (as defined below) in March 2021, and decreases in the balance outstanding on equipment term loans.the Term Loan Facility. Change in fair value of warrant liability was a lossgain of $1.2$4.7 million for the nine months ended September 30, 20212022 compared to a loss of $0.9$1.2 million for the same period in 2020.2021. The change in fair value is directly related to the fair value of the warrant liability as of each period end as calculated using Level 1 and Level 3 inputs. In addition, for the nine months ended September 30, 2021, there was $1.5 million includedThe Company’s common stock purchase warrants expired in interest expense related to the write-off of unamortized debt issuance costs associated with the extinguishment of certain lenders in the debt refinancing. Other income for the nine months ended September 30, 2021 was $0.6 million compared to other income of $0.5 million for the same period in 2020.February 2022 and are no longer exercisable.
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Income Tax. Income tax expense was $18.6$21.0 million for the nine months ended September 30, 20212022 compared to income tax expense of $0.2$18.6 million for the same period in 2020.2021. The effective tax rate was 27.6%32.7% for the nine months ended September 30, 2021,2022, compared to 11.1%27.6% for the same period in 2020.2021. The difference between the Company’s effective income tax rate varies fromand the federal statutory rate primarily due toresults from the mix of earnings with state jurisdictions, combined with the unfavorable impact of nontaxable income, primarily related to the change in fair value of the warrant liability, and nondeductible expenses, including the effect of the per diem pay structure for driversprimarily related to executive compensation and nondeductible executive compensation.goodwill impairment.
Liquidity, Capital Resources and Capital Requirements
The Company had the following sources of liquidity available at September 30, 20212022 and December 31, 2020.2021 (in millions).
(Dollars in millions) |
| September 30, 2021 |
|
| December 31, 2020 |
| ||
|
|
|
|
|
|
| ||
Cash |
| $ | 143.6 |
|
| $ | 176.2 |
|
Availability under line of credit |
|
| 117.7 |
|
|
| 83.2 |
|
Total |
| $ | 261.3 |
|
| $ | 259.4 |
|
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||
Cash |
| $ | 188.3 |
|
| $ | 147.5 |
|
Availability under line of credit |
|
| 123.4 |
|
|
| 107.8 |
|
Total |
| $ | 311.7 |
|
| $ | 255.3 |
|
The Company’s primary sources of liquidity have been cash provided by operations,operating activities, issuances of capital stock and borrowings under its credit facilities. Cash decreased by $32.6 million at September 30, 2021 as compared to December 31, 2020. This decrease primarily resultedThe Company also receives cash from $161.9 million in net cash used in financing activities, partially offset by $115.7 million in net cash provided by operating activities. See below for more information. Assales of September 30, 2021, the Company had no borrowings, $23.3 million in letters of credit outstanding, and could incur approximately $117.7 million of additional indebtedness under the ABL Facility, based on current qualified collateral.equipment.
The Company’s business requires substantial amounts of cash for operating expenses, including salaries and wages paid to employees, contract payments to independent contractors, insurance and claims payments, tax payments, and others. On March 22, 2021, the Company’s Board of Directors authorized the repurchase of up to three million shares of the Company’s common stock, of which 3,000,000 shares have been repurchased by the Company for approximately $20.4 million in cash through September 30, 2021. The Company also uses large amounts of cash and credit for capital expenditures.
The Company believes it can finance its expected cash needs, including debt repayment, in the short-term with cash flows from operations, and borrowings available under the ABL Facility. The Company expects that the ABL Facility will provide sufficient credit availability to support its ongoing operations, fund debt service requirements, capital expenditures, and working capital needs. Over the long-term, the Company will continue to have significant capital requirements, and expects to devote substantial financial resources to grow its operations and fund its acquisition activities. As a result of these funding requirements, the Company likely will need to sell additional equity or debt securities or seek additional financing through additional borrowings, lease financing or equity capital. The availability of financing or
30
equity capital will depend upon the Company’s financial condition and results of operations as well as prevailing market conditions. If such additional borrowings, lease financing or equity capital is not available at the time it needs to incur such expenditures, the Company may be required to extend the maturity of then outstanding indebtedness, rely on alternative financing arrangements or engage in asset sales.
Since its inception, the Company has acquired over twenty transportation companies. The primary reason for each acquisition was to add resources and services in geographic areas, customers and markets that the Company wants to serve. The Company will continue to evaluate potential acquisitions and any other sources of growth it considers in its best interest. Additionally, depending on the Company’s actual and anticipated sources and uses of liquidity, prevailing market conditions and other factors, the Company may from time to time seek to repay or repurchase outstanding debt or equity securities through cash purchases in the open market or privately negotiated transactions. The amounts involved in any such transactions may be material.
Capital Expenditures
The Company follows a dual strategy of both owning assets and employing asset-light activities, the latter of which reduces the capital expenditures required to operate the business. Asset-light activities are conducted utilizing tractors and trailers provided by owner operators and third-party carriers for significant portions of our flatbed and specialized services. Company-owned asset expenditures require substantial cash and financing (including finance and operating leases) to maintain a modern tractor fleet, refresh the trailer fleet, fund replacement and or growth in the revenue equipment fleet, and for the acquisition of real property and improvements to existing terminals and facilities.
Total capital expendituresproperty and equipment additions for the nine months ended September 30, 20212022 and 20202021 are shown below:below (in millions):
|
| Nine Months Ended September 30, |
| |||||
(Dollars in millions) |
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Net cash capital receipts |
| $ | (13.7 | ) |
| $ | (34.0 | ) |
Financed capital expenditures |
|
| 55.0 |
|
|
| 45.4 |
|
Property and equipment purchases and sales |
| $ | 41.3 |
|
| $ | 11.4 |
|
|
| Nine Months Ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net cash capital expenditures (receipts) |
| $ | 5.4 |
|
| $ | (13.7 | ) |
Property and equipment acquired with debt or finance lease obligations |
|
| 93.7 |
|
|
| 55.0 |
|
Total net property and equipment additions |
| $ | 99.1 |
|
| $ | 41.3 |
|
PropertyTotal net property and equipment additions increased due to an increase in financed equipment purchases and sales increased primarily due to a decrease in net cash capital receipts which resulted from fewer sales of equipment compared tosale proceeds during the prior period.nine months ended September 30, 2022.
Additionally, theThe Company currently estimates its 2022 net capital expenditures to be $145 million to $155 million.
Operating leases
The Company entered into operating leases for revenue equipment with terms of 2one year to 5seven years and real property with terms of 3less than one year to 7twenty years having right-of-use asset values at lease inception of $17.1$10.5 million and $4.0$17.3 million, respectively, for the nine months ended September 30, 2021.2022.
32
Material Debt
Overview
As of September 30, 2021,2022, the Company had the following material debt:
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The amounts outstanding under such agreements excluding financing fees, were as follows as of September 30, 2021 (in millions):
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Term Loan Facility |
| $ | 394.0 |
|
| $ | 397.0 |
|
ABL Facility |
|
| — |
|
|
| — |
|
Equipment and real estate term loans |
|
| 220.7 |
|
|
| 169.0 |
|
Finance lease liabilities |
|
| 23.4 |
|
|
| 28.5 |
|
Total debt and finance lease liabilities |
|
| 638.1 |
|
|
| 594.5 |
|
Less current portion |
|
| (68.8 | ) |
|
| (55.5 | ) |
Less unamortized deferred financing fees |
|
| (6.7 | ) |
|
| (7.6 | ) |
Long-term debt and finance lease liabilities, less current portion and unamortized deferred financing fees |
| $ | 562.6 |
|
| $ | 531.4 |
|
The Company regularly evaluates its capital structure and liquidity position. From time to time and as opportunities arise, the Company may access the debt capital markets and modify its debt arrangements to optimize its capital structure and liquidity position.
Term Loan Facility | $ | 398.0 |
|
Equipment term loans |
| 168.8 |
|
Finance lease obligations |
| 30.6 |
|
Mortgages |
| 2.3 |
|
Total long-term debt and finance leases |
| 599.7 |
|
Less: current portion |
| (55.7 | ) |
Long-term debt and finance leases obligations, less current portion | $ | 544.0 |
|
See Note 7 of the Notes to Consolidated Financial Statements included herein for information regarding the Company’s material debt.
ABL and Term Loan Facilities and Equipment Financing Agreements
As of September 30, 2021,2022, the Company has (i) a $400.0 million senior secured term loan credit facility (the Term Loan Credit Facility), and (ii) an asset-based senior secured revolving credit facility with an aggregate maximum credit amount equal to $150.0 million (that may be increased to $200.0 million, subject to availability under a borrowing base). See Note 6 of Notes to Consolidated Financial Statements for more information regarding the Term Loan Facility and the ABL Facility, including the March 9, 2021 Term Loan refinancing and the April 29, 2021 ABL Amendment.
TheAs of September 30, 2022, the Company had $168.8$220.7 million of termequipment and real estate loans and $30.6$23.4 million of finance leases collateralized primarily by revenue equipment, with the majority of the equipment loans and finance leases having terms of 48 to 60 months. Certain
As of the term loans contain conditions, covenants, representations and warranties, events of default, and indemnification provisions applicable toSeptember 30, 2022, the Company and certain of its subsidiaries that are customary for equipment financings, including, but not limited to, limitationshad no borrowings outstanding on the incurrenceABL Facility, $22.5 million in outstanding letters of additional debtcredit, and the prepayment of existing indebtedness, certain payments (including dividends and other distributions to persons not party to its ABL Facility) and transfers of assets.
The Company believes it can finance its expected cash needs, including debt repayment, in the short-term with cash flows from operations and borrowings$123.4 million available under the ABL Facility. The Company expects that the ABL Facility, will provide sufficient credit availability to support its ongoing operations, fund debt service requirements, capital expenditures, and working capital needs. Over the long-term, the Company will continue to have significant capital requirements, and expects to devote substantial financial resources to grow its operations and fund its acquisition activities. As a result of these funding requirements, the Company may need to sell additional equity or debt securities or seek additional financing through additional borrowings, lease financing or equity capital, though it is not likely that the Company will issue any common stock in the near term. The availability of financing or equity capital will depend upon the Company’s financial condition and results of operations as well as prevailing market conditions. If such additional borrowings, lease financing or equity capital is not available at the time it needs to incur such expenditures, the Company may be required to extend the maturity of then outstanding indebtedness, relybased on alternative financing arrangements or engage in asset sales.
Letters of credit –current qualified collateral. Under the terms of the ABL Facility, lenders may issue up to $40 million of standby letters of credit on our behalf. Outstanding letters of credit reduce the availability on the $150 million ABL Facility. Standby letters of credit are generally issued for the benefit of regulatory authorities, insurance companies and state departments of insurance for the purpose of satisfying certain collateral requirements, primarily related to automobile, workers’ compensation, and general liability insurances.insurances liabilities.
Off-Balance Sheet Arrangements
Information about the Company’s standby letters of credit is included in Note 6 of the Notes to Consolidated Financial Statements included herein. See also Liquidity and Capital Resources above.
33
Cash Flows
The Company’s summary statements of cash flows information for the nine months ended September 30, 20212022 and 20202021 is set forth in the table below:below (in millions):
|
| Nine Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
(Dollars in millions) |
| 2021 |
|
| 2020 |
| ||||||||||
|
|
|
|
|
|
|
| 2022 |
|
| 2021 |
| ||||
Net cash provided by operating activities |
| $ | 115.7 |
| $ | 122.4 |
|
| $ | 106.7 |
|
| $ | 115.7 |
| |
Net cash provided by investing activities |
| $ | 13.7 |
| $ | 34.0 |
| |||||||||
Net cash (used in) provided by investing activities |
| $ | (24.5 | ) |
| $ | 13.7 |
| ||||||||
Net cash used in financing activities |
| $ | (161.9 | ) |
| $ | (62.7 | ) |
| $ | (42.5 | ) |
| $ | (161.9 | ) |
Operating Activities. Cash provided by operating activities was $115.7$106.7 million during the nine months ended September 30, 20212022 and consisted of $48.9$43.3 million of net income plus $80.9$70.3 million of non-cash items, consisting primarily of depreciation, amortization, deferred taxes, gain on disposition of property and equipment, non-cash operating lease expense, change in fair value of warrant liability and stock-based compensation, plus $14.1and impairment, partially offset by $6.9 million of net cash used in working capital and other activities. Cash used in working capital and other activities during the nine months ended September 30, 20212022 reflect an increase of $34.5$34.1 million in accounts receivable, a $0.7an increase of $3.1 million in drivers’ advances and other receivables, and an increase of $3.7 million in other current assets, and a decrease of $0.4 million in accounts payable, which was partially offset by a $21.1an increase of $30.5 million increase in accrued expenses and other liabilities and a $0.4an increase of $3.5 million decrease in drivers’ advances and other receivables.accounts payable.
The $6.7$9.0 million decrease in cash provided by operating activities during the nine months ended September 30, 2021,2022, as compared with the nine months ended September 30, 2020,2021, was the result of a $50.9 million improvement in net income, reduced by decreasesincreases in net cash provided by working capital of $47.0$7.2 million, and decreases in non-cash items of $10.6 million.million, and a $5.6 million reduction to net income.
Investing Activities. Cash flows fromused in investing activities decreased from $34.0was $24.5 million provided by investing activities for the three months ended September 30, 2020 to $13.7 million provided by investing activities for the nine months ended September 30, 2021 reflecting an increase2022 as compared to cash provided by investing activities of $16.2$13.7 million infor the nine months ended September 30, 2021. This change is primarily due to a $19.1 million cash equipment purchases andpayment for the SJ Transportation acquisition, a decrease of $4.1$19.9 million in cash receipts from sales of revenue equipment, and a decrease of $0.8 million in cash equipment purchases for the nine months ended September 30, 2021.2022.
32
Total net cash capital expenditures (receipts) for the nine months ended September 30, 20212022 and 20202021 are shown below:below (in millions):
|
| Nine Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
(Dollars in millions) |
| 2021 |
|
| 2020 |
| ||||||||||
|
|
|
|
|
|
|
| 2022 |
|
| 2021 |
| ||||
Revenue equipment (tractors, trailers and trailer accessories) |
| 29.8 |
| $ | 16.4 |
|
| $ | 25.8 |
|
| $ | 29.8 |
| ||
Buildings and building improvements |
| 1.2 |
| 0.9 |
|
|
| 2.6 |
|
|
| 1.2 |
| |||
Other |
|
| 3.2 |
|
| 0.7 |
|
|
| 5.0 |
|
|
| 3.2 |
| |
Total cash capital expenditures |
| 34.2 |
| 18.0 |
|
|
| 33.4 |
|
|
| 34.2 |
| |||
Less: Proceeds from sales of property and equipment |
|
| 47.9 |
|
| 52.0 |
|
|
| 28.0 |
|
|
| 47.9 |
| |
Net cash capital expenditures (receipts) |
| $ | (13.7 | ) |
| $ | (34.0 | ) |
| $ | 5.4 |
|
| $ | (13.7 | ) |
Financing Activities. Cash flows from financing activities changed from $62.7 million used in financing activities decreased from $161.9 million for the nine months ended September 30, 20202021 to $161.9$42.5 million used in financing activities for the nine months ended September 30, 2021. This change was2022. During the nine months ended September 30, 2022, we had approximately $89.2 million less net debt-related payments compared to same period in 2021, primarily aas the result of net debt payments of $79.2 million and $20.4the Company refinancing the Term Loan Facility during the nine months ended September 30, 2021. Also, during the nine months ended September 30, 2022, we received $9.4 million in repurchases of common stock.
Inflation
Inflation can have an impact onproceeds from warrant exercises compared to none in the Company’s operating costs. A prolongedsame period of inflation could cause interest rates, fuel, wages and other costs to increase, which would adversely affect the Company’s results of operations unless freight rates correspondingly increase. The Company attempts to limit the effects of inflation through increases in freight rates, certain cost control efforts and limiting the effects of fuel prices through fuel surcharges and measures intended to reduce the consumption of fuel. Over the past three fiscal years, the effect of inflation has been immaterial.
Seasonality2021
. In the transportation industry, results of operations generally show a seasonal pattern. The Company’s productivity decreasesaddition, during the winter season because inclement weather impedes operations, end-users reduce their activity and certain shippers reduce their shipments during winter. Atnine months ended September 30, 2021, we repurchased $20.4 million in common stock compared to none in the same time, operating expenses increase and fuel efficiency decreases because of engine idling and harsh weather creating higher accident frequency, increased claims and higher equipment repair expenditures. The Company also may suffer from weather-related or other events such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes and explosions. These events mayperiod in 2022
34
disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, destroy the Company’s assets, increase insurance costs or adversely affect the business or financial condition of its customers, any of which could adversely affect the Company’s results of operations or make such results more volatile..
Critical Accounting PoliciesEstimates
The preparation of the Company’s significant accounting policiesconsolidated financial statements in accordance with US GAAP requires it to make estimates and assumptions that impact the amounts reported in its consolidated financial statements and accompanying notes. Therefore, the reported amounts of assets, liabilities, revenue, expenses, and associated disclosures of contingent assets and liabilities are described in Note 1 of Notes to Consolidated Financial Statementsaffected by these estimates and assumptions. The Company evaluates these estimates and assumptions on an ongoing basis, utilizing historical experience, consultation with experts and other methods considered reasonable in the Company’sparticular circumstances. Nevertheless, actual results may differ significantly from these estimates and assumptions, and it is possible that materially different amounts will be reported using differing estimates or assumptions.
The Company considers critical accounting estimates to be those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company's financial condition or results of operations. See “Critical Accounting Estimates” included in Part II, Item 7 of our Annual Report on Form 10-K/A filed on May 6, 2021. The Company considers certain10-K for the year ended December 31, 2021, for a discussion of theseour critical accounting policies to be “critical”estimates; there have been no material changes to the portrayal of the Company’s financial position and results of operations, as they require the application of significant judgment by management. As a result, they are subject to an inherent degree of uncertainty. The Company identifies and discusses these “critical” accounting policies in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the Company’s Annual Report on Form 10-K/A filed on May 6, 2021. Management bases its estimates and judgments on historical experience and on various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, management evaluates its estimates and judgments, including those considered “critical.” Management has discussed the development, selection and evaluation ofcritical accounting estimates including those deemed “critical,” and the associated disclosures in this Quarterly Report on Form 10-Q with the Audit Committee of the Company’s board of directors.as disclosed therein.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company’s market risk since December 31, 2020.2021. For further information on the Company’s market risk, refer to “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K/A10-K filed on May 6, 2021.February 23, 2022.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report, on Form 10-Q, the Company’s management conducted an evaluation, under the supervision and with the participation of the principal executive and principal financial officers, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities and Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, the principal executive and principal financial officers concluded our disclosure controls and procedures were not effective as of September 30, 2021 due to material weaknesses in internal control over financial reporting that were disclosed in our Amendment No. 2 to our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020.2022.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the three months ended September 30, 20212022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
33
PART II.II – OTHER INFORMATION
Item 1. Legal Proceedings
The Company and its subsidiaries are involved in litigation and claims primarily arising in the normal course of business, which include claims for personal injury or property damage incurred in the transportation of freight. Based on its knowledge of the facts and, in certain cases, advice of outside counsel, the Company believes the resolution of claims and pending litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flows, and the Company and its subsidiaries are not currently a party to, nor is their property currently subject to, any material legal proceedings other than ordinary routine litigation incidental to the business, and we are not aware of any such proceedings contemplated by governmental authorities.
Item 1A. Risk Factors
There have been no material changes in the risks facing the Company as described in Amendment No. 2 to the Company’s Annual Report on Form 10-K/A10-K for the year ended December 31, 2020.2021.
35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information about our repurchases of Common Stockcommon stock during the three months ended September 30, 2021:2022:
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |
|
| Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1) |
| ||||
07/01/2022 to 07/31/2022 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | — |
|
08/01/2022 to 08/31/2022 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | — |
|
09/01/2022 to 09/30/2022 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | 40,000,000 |
|
Total |
|
| — |
|
| $ | — |
|
|
| — |
|
|
|
|
ISSUER PURCHASES OF EQUITY SECURITIES
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |
|
| Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs(1) |
| ||||
07/01/2021 to 07/31/2021 |
|
| 1,482,377 |
|
| $ | 6.63 |
|
|
| 1,482,377 |
|
|
| — |
|
08/01/2021 to 08/31/2021 |
|
| — |
|
|
|
|
|
| — |
|
|
| — |
| |
09/01/2021 to 09/30/2021 |
|
| — |
|
|
|
|
|
| — |
|
|
| — |
| |
Total |
|
| 1,482,377 |
|
| $ | 6.63 |
|
|
| 1,482,377 |
|
|
|
|
36
34
Item 6. Exhibits
EXHIBIT INDEX
35
* | Filed herewith. |
** | Furnished herewith. |
+
| Management contract or compensatory plan or arrangement. |
3736
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.
Date: | DASEKE, INC. | |
By: | /s/ | |
Name: |
| |
Title: | Chief Financial Officer | |
(On behalf of the Registrant and as the Registrant’s Principal Financial Officer) |
3837