DASEKE, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q) – Marketscreener.com | CarTailz

overview


Daseke is a 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 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 thousands 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 committed capacity and continuity of 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 U.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 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. We have seen strong freight rates
for much of 2022, which have been supported by our strategic alignment with
niche end-markets in the industrial 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 observed ongoing
delays in receiving new equipment as the supply chain disruptions persisted
throughout the first half of 2022. We began to see improvements during the third
quarter, and we are expecting to see additional improvement in receiving new
equipment during the fourth quarter of 2022.

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 value of shares 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 common stock, general market and economic conditions and
applicable legal requirements. The program may be suspended, modified or
discontinued by the Board at any time without prior notice.
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operating results


The following table sets forth revenue, operating expenses and income from
operations (in dollars and as a 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 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   %



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The following table sets forth revenue, operating expenses 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, 2022 and
2021, as well as certain operating statistics for the same periods. In addition,
the absolute and 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,
                                        2022                       2021                 Increase (Decrease)
(Dollars in millions,
except Rate per mile and
Revenue per tractor)           Amount           %         Amount           %         Absolute        Relative
REVENUE(1):
Company freight               $  127.8        47.3   %   $  123.9        50.8   %   $      3.9          3.1   %
Owner operator freight            48.7        18.0           42.6        17.5              6.1         14.3
Brokerage                         46.8        17.3           51.5        21.1             (4.7 )       (9.1 )
Logistics                         12.8         4.7            8.6         3.5              4.2         48.8
Fuel surcharge                    34.3        12.7           17.4         7.1             16.9         97.1
Total revenue                 $  270.4       100.0   %   $  244.0       100.0   %   $     26.4         10.8   %

OPERATING EXPENSES(1):
Salaries, wages and
employee benefits             $   65.1        24.1   %   $   61.3        25.1   %   $      3.8          6.2   %
Fuel                              28.9        10.7           18.4         7.5             10.5         57.1
Operations and maintenance        32.1        11.9           29.3        12.0              2.8          9.6
Purchased freight                 78.4        29.0           75.1        30.8              3.3          4.4
Depreciation and
amortization                      12.7         4.7           13.3         5.5             (0.6 )       (4.5 )
Restructuring charges             (0.3 )      (0.1 )          0.1           -             (0.4 )     (400.0 )
Other operating expenses          18.5         6.8           16.9         6.9              1.6          9.5
Total operating expenses      $  235.4        87.1   %   $  214.4        87.9   %   $     21.0          9.8   %

INCOME FROM OPERATIONS        $   35.0        12.9   %   $   29.6        12.1   %   $      5.4         18.2   %

OPERATING STATISTICS:
Company miles                     38.2                       36.6                          1.6          4.4   %
Owner operator miles              10.0                       12.2                         (2.2 )      (18.0 )
Total miles (in millions)         48.2                       48.8                         (0.6 )       (1.2 ) %

Rate per mile                 $   3.66                   $   3.41                   $     0.25          7.3   %
Revenue per tractor           $ 74,000                   $ 70,300                   $    3,700          5.3   %

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 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) Includes inter-segment income and expenses, if any, that are eliminated in the Company’s consolidated results.

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The following table sets forth revenue, operating expenses 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, 2022 and
2021, as well as certain operating statistics for the same periods. In addition,
the absolute and 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.

                               FLATBED SOLUTIONS

                                       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(1):
Company freight               $   42.8        22.0   %   $   45.1        24.5   %   $     (2.3 )      (5.1 ) %
Owner operator freight            81.5        41.9           89.2        48.5             (7.7 )      (8.6 )
Brokerage                         38.5        19.8           30.4        16.5              8.1        26.6
Logistics                          0.9         0.5            1.1         0.6             (0.2 )     (18.2 )
Fuel surcharge                    31.0        15.8           18.2         9.9             12.8        70.3
Total revenue                 $  194.7       100.0   %   $  184.0       

100.0% $10.7 5.8%


OPERATING EXPENSES(1):
Salaries, wages and
employee benefits             $   28.1        14.4   %   $   28.6        15.5   %   $     (0.5 )      (1.7 ) %
Fuel                              11.0         5.6            8.4         4.6              2.6        31.0
Operations and maintenance        12.1         6.2           11.2         6.1              0.9         8.0
Purchased freight                104.4        53.6           95.7        52.0              8.7         9.1
Depreciation and
amortization                       9.9         5.1            8.8         4.8              1.1        12.5
Other operating expenses          11.9         6.1           10.2         5.5              1.7        16.7

business expenses $177.4 91.1% $162.9 88.5% $14.5 8.9%

INCOME FROM OPERATING $17.3 8.9% $21.1 11.5% $(3.8) (18.0 )%


OPERATING STATISTICS:
Company miles                     16.2                       17.8                         (1.6 )      (9.0 ) %
Owner operator miles              31.6                       34.5                         (2.9 )      (8.4 )
Total miles (in millions)         47.8                       52.3                         (4.5 )      (8.6 ) %

Rate per mile                 $   2.60                   $   2.57                   $     0.03         1.2   %
Revenue per tractor           $ 51,500                   $ 56,000                   $   (4,500 )      (8.0 ) %

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 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) Includes inter-segment income and expenses, if any, that are eliminated in the Company’s consolidated results.

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Revenue. Total revenue increased 9.0% for the three months ended September 30,
2022 as compared to the same period in 2021. The increase in total revenue was
primarily attributed to increased fuel surcharges due to increased fuel costs.
In addition, rate per mile increased 5.8%, whereas there was a 5.0% decrease in
total miles driven. The increase in rate per mile was primarily due to the
diversity of end markets, driven by strength within the Specialized Solutions
segment.

The Company's Specialized Solutions segment's revenue increased 10.8% for the
three months ended September 30, 2022 as compared to the same period in 2021,
primarily due to higher fuel surcharge and strength in the freight environment,
primarily in the high security cargo, agriculture and aerospace end-markets,
which has offset lower wind energy volumes. Company freight increased 3.1% for
the three months ended September 30, 2022 as compared to the same period in 2021
due to a 4.4% increase in miles driven, partially offset by a 1.2% decrease in
company rate per mile. Owner operator freight increased 14.3% due to a 39.5%
increase in owner operator rate per mile, partially offset by an 18.0% decrease
in miles driven which was correlated to a 12.3% decrease in average owner
operator tractors. Brokerage revenue decreased 9.1% for the three months ended
September 30, 2022 as compared to the same period in 2021. 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 higher rates
during the three months ended September 30, 2022 as compared to the same period
in 2021. Fuel surcharge revenue increased 97.1% for the three months ended
September 30, 2022 as compared to the same period in 2021 due to increased fuel
costs that triggered higher fuel surcharges to our customers.

Despite softening in the overall flatbed freight market, the Company's Flatbed
Solutions segment's revenue increased 5.8% for the three months ended September
30, 2022 as compared to the same period in 2021, primarily due to higher fuel
surcharge and higher rates driven by strength in the construction and
manufacturing end markets, which has offset the decreases in the steel end
markets. Company freight revenue decreased 5.1% due to a 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, 2022 as compared to the same
period in 2021. In this segment, total brokerage loads were up 15% and the
brokerage revenue per load was up 10% due to higher rates during the three
months ended September 30, 2022 as compared to the same period in 2021. Fuel
surcharge revenue increased 70.3% due to increased fuel 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 increased 8.3% for the three
months ended September 30, 2022 as compared to the same period in 2021. The
increase 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, 2022 as compared to the same period in 2021.

The Company's Specialized Solutions segment's salaries, wages and employee
benefits expense increased 6.2% for the three months ended September 30, 2022
compared to the same period in 2021, primarily as a result of increased health
insurance claims and higher 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 three
months ended September 30, 2022 as compared to the same period in 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
6.8% for the three months ended September 30, 2022 as compared to the same
period in 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.
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Total fuel expense increased 49.3% for the three months ended September 30, 2022
as compared to the same period in 2021. This increase was primarily due to a
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 9.0% decrease in Company miles
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 $5.152 for the three months ended September 30,
2022, compared to $3.357 for the same period in 2021.

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 increased 6.4% for the three months ended
September 30, 2022 as compared to the same period in 2021 primarily due to a
$3.4 million increase in repairs, tires, and preventive maintenance and upkeep
of tractors 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 repairs and tires for 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 repairs and
tires for tractors and trailers. Operations and maintenance expense, as a
percentage of consolidated revenue (excluding brokerage revenue), was generally
consistent for the three months ended September 30, 2022 as compared to the same
period in 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 higher
payments during periods of increasing fuel prices.

Total purchased freight expense increased 7.6% during the three months ended
September 30, 2022 as compared to the same period in 2021. Purchased freight
expense from owner operators decreased $15.3 million, or 14.3%, during the three
months ended September 30, 2022 as compared to the same period in 2021 as a
result of 10.9% decrease in owner operator miles driven. Purchased freight
expense from third-party capacity providers increased $28.1 million, or 46.4%,
during the three months ended September 30, 2022 as compared to the same period
in 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 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 4.4% during the three months ended September 30, 2022 as compared to
the same period in 2021. Purchased freight expense from owner operators
increased $0.8 million, or 2.5%, during the three months ended September 30,
2022 as compared to the same period in 2021, as a result of a 39.5% increase in
owner operators' rate, partially offset by a 18.0% decrease in owner operator
miles driven. Purchased freight expense from third-party capacity providers
increased $2.5 million, or 5.8%, during the three months ended September 30,
2022 as compared to the same period in 2021, 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 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 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
9.1% for the three months ended September 30, 2022 as compared to the same
period in 2021. Purchased freight expense from owner operators decreased $16.0
million, or 21.3%, for the three months ended September 30, 2022 as compared to
the same period in 2021, as a result of a 8.4% decrease in owner operator miles
driven and a 0.2% decrease in owner operators' rate. Purchased freight expense
from third-party capacity providers increased $24.7 million, or 120.5%, during
the three months ended September 30, 2022 as compared to the same period in
2021, primarily as a result of increased utilization of third-party capacity
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.
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Depreciation and amortization expense increased 7.2% for the three months ended
September 30, 2022 as compared to the same period in 2021. The Company's
Specialized Solutions segment's depreciation and amortization expense 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 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. Factors affecting the Company's insurance and claims expense 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; 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
increased 43.9% during the three months ended September 30, 2022 as compared to
the same period in 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.

Other (Income) Expense. Interest expense consists of cash interest, amortization
and write-off of related issuance costs and fees. Interest expense increased
26.0% for the three months ended September 30, 2022 as compared to the same
period in 2021 primarily due to higher interest rates on the Replacement Term
Loans and Equipment Term Loans. The Company's common stock purchase warrants
expired in 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.

Income Tax. Income tax expense was $9.9 million for the three months ended
September 30, 2022 compared to income tax expense of $8.7 million for the same
period in 2021. The effective tax rate was 44.0% for the three months ended
September 30, 2022, compared to 29.4% for the same period in 2021. The
difference between the Company's effective tax rate and the federal statutory
rate primarily results from the impact of the permanent disallowance of goodwill
impairment in the second quarter of 2022 and disallowances of executive
compensation pursuant to IRC Section 162(m).
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The following table sets forth revenue, operating expenses and income from
operations (in dollars and as a 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 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.

                                         Nine 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               $   492.4        36.1   %   $   475.3        40.9   %   $    17.1          3.6   %
Owner operator freight            397.7        29.1           365.3        31.4            32.4          8.9
Brokerage                         255.4        18.7           197.1        17.0            58.3         29.6
Logistics                          39.2         2.9            28.9         2.5            10.3         35.6
Fuel surcharge                    180.4        13.2            95.9         8.2            84.5         88.1
Total revenue                 $ 1,365.1       100.0   %   $ 1,162.5       100.0   %   $   202.6         17.4   %

OPERATING EXPENSES:
Salaries, wages and
employee benefits             $   299.3        21.9   %   $   280.7        24.1   %   $    18.6          6.6   %
Fuel                              120.4         8.8            79.1         6.8            41.3         52.2
Operations and maintenance        117.6         8.6           108.1         9.3             9.5          8.8
Communications                      2.6         0.2             3.1         0.3            (0.5 )      (16.1 )
Purchased freight                 548.9        40.2           444.2        38.2           104.7         23.6
Administrative                     51.6         3.8            46.2         4.0             5.4         11.7
Sales and marketing                 1.2         0.1             1.5         0.1            (0.3 )      (20.0 )
Taxes and licenses                 11.6         0.8            11.2         1.0             0.4          3.6
Insurance and claims               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                       68.2         5.0            66.7         5.7             1.5          2.2
Gain on disposition of
revenue property and
equipment                         (14.0 )      (1.0 )         (13.1 )      (1.1 )          (0.9 )        6.9
Impairment                          7.8         0.6               -           -             7.8        100.0
Restructuring charges               2.0         0.1             0.2           -             1.8        900.0
Total operating expenses      $ 1,281.9        93.9   %   $ 1,068.5        91.9   %   $   213.4         20.0   %

INCOME FROM OPERATIONS        $    83.2         6.1   %   $    94.0         8.1   %   $   (10.8 )      (11.5 ) %

Other expense:
Interest income               $    (1.5 )      (0.1 ) %   $    (0.2 )         -   %   $    (1.3 )      650.0   %
Interest expense                   23.8         1.7            26.1         2.2            (2.3 )       (8.8 )
Change in fair value of
warrant liability                  (4.7 )      (0.3 )           1.2         0.1            (5.9 )     (491.7 )
Other                               1.3         0.1            (0.6 )      (0.1 )           1.9       (316.7 )
Total other expense           $    18.9         1.4   %   $    26.5         2.3   %   $    (7.6 )      (28.7 ) %

Income before income taxes         64.3         4.7   %        67.5         5.8   %        (3.2 )       (4.7 ) %
Income tax expense                 21.0         1.5            18.6         1.6             2.4         12.9
Net income                    $    43.3         3.2   %   $    48.9         4.2   %   $    (5.6 )      (11.5 ) %

OPERATING STATISTICS:
Company miles                     159.7                       170.9                       (11.2 )       (6.6 ) %
Owner operator miles              130.3                       139.2                        (8.9 )       (6.4 )
Total miles (in millions)         290.0                       310.1                       (20.1 )       (6.5 ) %

Rate per mile                 $    3.07                   $    2.71                   $    0.36         13.3   %
Revenue per tractor           $ 189,900                   $ 173,400                   $  16,500          9.5   %

 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 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                    4,687                       4,847                        (160 )       (3.3 ) %



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The following table sets forth revenue, operating expenses 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, 2022 and
2021, as well as certain operating statistics for the same periods. In addition,
the absolute and 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,
                                        2022                        2021                 Increase (Decrease)
(Dollars in millions,
except Rate per mile and
Revenue per tractor)           Amount            %         Amount            %         Absolute       Relative
REVENUE(1):
Company freight               $   371.7        48.5   %   $   345.0        52.8   %   $     26.7         7.7   %
Owner operator freight            139.1        18.1           117.9        18.0             21.2        18.0
Brokerage                         128.2        16.7           119.6        18.3              8.6         7.2
Logistics                          36.2         4.7            25.0         3.8             11.2        44.8
Fuel surcharge                     92.4        12.0            46.2         7.1             46.2       100.0
Total revenue                 $   767.6       100.0   %   $   653.7       100.0   %   $    113.9        17.4   %

OPERATING EXPENSES(1):
Salaries, wages and
employee benefits             $   190.9        24.9   %   $   176.5        27.0   %   $     14.4         8.2   %
Fuel                               87.1        11.3            54.1         8.3             33.0        61.0
Operations and maintenance         85.3        11.1            76.2        11.7              9.1        11.9
Purchased freight                 224.2        29.2           190.7        29.2             33.5        17.6
Depreciation and
amortization                       37.9         4.9            39.4         6.0             (1.5 )      (3.8 )
Impairment                          7.8         1.0               -           -              7.8       100.0
Restructuring charges               0.2           -             0.2           -                -           -
Other operating expenses           58.9         7.7            47.5         7.3             11.4        24.0
Total operating expenses      $   692.3        90.2   %   $   584.6        89.4   %   $    107.7        18.4   %

INCOME FROM OPERATIONS        $    75.3         9.8   %   $    69.1        10.6   %   $      6.2         9.0   %

OPERATING STATISTICS:
Company miles                     112.0                       112.8                         (0.8 )      (0.7 ) %
Owner operator miles               31.6                        36.3                         (4.7 )     (12.9 )
Total miles (in millions)         143.6                       149.1                         (5.5 )      (3.7 ) %

Rate per mile                 $    3.56                   $    3.10                   $     0.46        14.8   %
Revenue per tractor           $ 219,000                   $ 194,200         

$24,800 12.8%


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 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                        2,332                       2,384                          (52 )      (2.2 ) %


(1)

Includes inter-segment revenues and expenses, if any, that are eliminated in the entity’s consolidated results.

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The following table sets forth revenue, operating expenses 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, 2022 and 2021,
as well as certain operating statistics for the same periods. In addition, the
absolute and 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.

                               FLATBED SOLUTIONS

                                         Nine Months Ended September 30,
                                        2022                        2021                  Increase (Decrease)
(Dollars in millions,
except Rate per mile and
Revenue per tractor)           Amount            %         Amount            %         Absolute        Relative
REVENUE(1):
Company freight               $   127.2        21.0   %   $   137.5        26.5   %   $    (10.3 )       (7.5 ) %
Owner operator freight            259.9        42.9           249.1        48.1             10.8          4.3
Brokerage                         127.2        21.0            77.8        15.0             49.4         63.5
Logistics                           2.9         0.5             3.6         0.7             (0.7 )      (19.4 )
Fuel surcharge                     88.6        14.6            50.3         9.7             38.3         76.1
Total revenue                 $   605.8       100.0   %   $   518.3       100.0   %   $     87.5         16.9   %

OPERATING EXPENSES(1):
Salaries, wages and
employee benefits             $    82.7        13.7   %   $    86.4        16.7   %   $     (3.7 )       (4.3 ) %
Fuel                               33.3         5.5            25.1         4.8              8.2         32.7
Operations and maintenance         33.5         5.5            32.0         6.2              1.5          4.7
Purchased freight                 333.4        55.0           263.3        50.8             70.1         26.6
Depreciation and
amortization                       28.3         4.7            26.5         5.1              1.8          6.8
Other operating expenses           36.7         6.1            30.0         5.8              6.7         22.3
Total operating expenses      $   547.9        90.4   %   $   463.3        89.4   %   $     84.6         18.3   %

INCOME FROM OPERATIONS        $    57.9         9.6   %   $    55.0        10.6   %   $      2.9          5.3   %

OPERATING STATISTICS:
Company miles                      47.7                        58.1                        (10.4 )      (17.9 ) %
Owner operator miles               98.7                       102.9                         (4.2 )       (4.1 )
Total miles (in millions)         146.4                       161.0                        (14.6 )       (9.1 ) %

Rate per mile                 $    2.64                   $    2.40                   $     0.24         10.0   %
Revenue per tractor           $ 164,400                   $ 156,900         

$7,500 4.8%


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 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                        2,355                       2,464                         (109 )       (4.4 ) %


(1)

Includes inter-segment revenues and expenses, if any, that are eliminated in the entity’s consolidated results.

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Revenue. Total revenue increased 17.4% for the nine months ended September 30,
2022 as compared to the same period in 2021. The increase in total revenue was
primarily attributed to increases in fuel surcharge, growth in our brokerage
service offering, and higher rates. In addition, rate per mile increased 13.3%;
however, total miles driven decreased 6.5%.

The Company's Specialized Solutions segment's revenue increased 17.4% for the
nine months ended September 30, 2022 as compared to the same period in 2021,
primarily due to higher fuel surcharge and strength in the freight environment,
primarily in the high security cargo, construction and manufacturing
end-markets. Company freight increased 7.7% for the nine months ended September
30, 2022 as compared to the same period in 2021 due to an 8.5% increase in
company rate per mile, partially offset by a 0.7% decrease in miles driven
partially due to 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 increased 7.2% for the nine months ended September 30, 2022 as
compared to the same period in 2021. 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 higher rates
during the nine months ended September 30, 2022 as compared to the same period
in 2021. Fuel surcharge revenue increased 100.0% for the nine months ended
September 30, 2022 as compared to the same period in 2021 due to increased fuel
costs that triggered higher fuel surcharges to our customers.

The Company's Flatbed Solutions segment's revenue increased 16.9% for the nine
months ended September 30, 2022 as compared to the same period in 2021,
primarily due to increases in brokerage revenue, fuel surcharge, and owner
operator freight revenue. 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. 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 utilized our brokerage service offering to capture excess volumes. This
resulted in a 63.5% increase in brokerage revenue for the nine months ended
September 30, 2022 as compared to the same period in 2021. In this segment,
total brokerage loads were up 28% and the brokerage revenue per load was up 27%
due to higher rates during the nine months ended September 30, 2022 as compared
to the same period in 2021. Fuel surcharge revenue increased 76.1% due to
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 4.1% decrease in miles driven. Company
freight revenue decreased 7.5% due to supply chain delays in receiving and
seating new revenue equipment and softening in the overall flatbed freight
market which led to 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 increased 6.6% for the nine months
ended September 30, 2022 as compared to the same period in 2021. The increase in
salaries, wages and employee benefits expense was primarily due to higher driver
pay in the Specialized Solutions segment, increased health insurance claims, and
increased employee headcount related to the expansion of corporate functions in
legal, accounting and 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
4.8% for the nine months ended September 30, 2022 as compared to the same period
in 2021.

The Company's Specialized Solutions segment's salaries, wages and employee
benefits expense increased 8.2% for the nine months ended September 30, 2022
compared to the same period in 2021, primarily as a result of higher driver and
non-driver pay and increased health insurance claims. The increased driver pay
was due to an 8% increase in driver rate, slightly offset by a 0.7% decrease in
Company miles. Salaries, wages and employee benefits expense, as a percentage of
Specialized Solutions revenue (excluding brokerage and owner operator revenue),
decreased 4.2% for the nine months ended September 30, 2022 as compared to the
same period in 2021.

The Company's Flatbed Solutions segment's salaries, wages and employee benefits
expense decreased 4.3% for the nine months ended September 30, 2022 compared to
the same period in 2021, primarily as a result of the decreased employee
headcount and lower driver pay due to a 17.9% decrease in Company miles,
partially offset by a 17% increase in driver rate. Salaries, wages and employee
benefits expense, as a percentage of Flatbed Solutions revenue (excluding
brokerage and owner operator revenue), decreased 7.3% for the nine months ended
September 30, 2022 as compared to the same period in 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.
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Total fuel expense increased 52.2% for the nine months ended September 30, 2022
as compared to the same period in 2021. This increase was primarily due to a
57.0% increase in fuel price, partially offset by a 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 $4.961 for the nine months ended
September 30, 2022, compared to $3.161 for the same period in 2021.

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 increased 8.8% for the nine months ended
September 30, 2022 as compared to the same period in 2021 primarily due to a
$5.8 million increase in maintenance and upkeep costs, a $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 compared to the
same period in 2021 primarily as a result of a $4.5 million increase in
maintenance and upkeep costs, a $0.8 million increase in pilot car and permit
fees, and a $1.0 million increase in lease 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 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), was generally consistent for the nine months
ended September 30, 2022 as compared to the same period in 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 higher
payments during periods of increasing fuel prices.

Total purchased freight expense increased 23.6% during the nine months ended
September 30, 2022 as compared to the same period in 2021. Purchased freight
expense from owner operators increased $8.3 million, or 2.8%, during the nine
months ended September 30, 2022 as compared to the same period in 2021 as a
result of a 16.3% increase in owner operators' rate, partially offset by a 6.4%
decrease in owner operator miles driven. Purchased freight expense from
third-party capacity providers increased $96.4 million, or 66.9%, during the
nine months ended September 30, 2022 as compared to the same period in 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 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, 2022, increased 2.0% as compared to the same period in 2021.

The Company's Specialized Solutions segment's purchased freight expense
increased 17.6% during the nine months ended September 30, 2022 as compared to
the same period in 2021. Purchased freight expense from owner operators
increased $9.7 million, or 10.8%, during the nine months ended September 30,
2022 as compared to the same period in 2021, as a result of a 35.5% increase in
owner operators' rate, partially offset by a 12.9% decrease in owner operator
miles driven. Purchased freight expense from third-party capacity providers
increased $23.8 million, or 23.6%, during the nine months ended September 30,
2022 as compared to the same period in 2021, 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 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, 2022, was generally consistent as compared to the same
period in 2021.

The Company's Flatbed Solutions segment's purchased freight expense increased
26.6% for the nine months ended September 30, 2022 as compared to the same
period in 2021. Purchased freight expense from owner operators decreased $1.5
million, or 0.7%, for the nine months ended September 30, 2022 as compared to
the same period in 2021, as a result of a 4.1% decrease in owner operator miles
driven despite an 8.8% increase in owner operators' rate. Purchased freight
expense from third-party capacity providers increased $71.6 million, or 135.6%,
during the nine months ended September 30, 2022 as compared to the same period
in 2021, primarily as a result of increased utilization of third-party capacity
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, 2022, increased 4.2% 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.
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Depreciation and amortization expense was generally consistent for the nine
months ended September 30, 2022 as compared to the same period in 2021. The
Company's Specialized Solutions segment's depreciation and amortization expense
decreased 3.8% for the nine months ended September 30, 2022 as compared to the
same period in 2021 as a result of a 0.5% decrease in average tractor count in
the segment's fleet. The Company's Flatbed Solutions segment's depreciation and
amortization expense increased 6.8% for the nine months ended September 30, 2022
as compared to the same period in 2021 as a result of recent revenue equipment
additions.

Impairment. Impairment expense was $7.8 million for the nine months ended
September 30, 2022 related to goodwill, trade name intangibles, and customer
relationships intangibles of an operating segment within the Company's
Specialized Solutions segment that had been integrated into another operating
segment as part of the Plan. There was no impairment expense for the nine months
ended September 30, 2021. The 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 $0.2 million
related to customer relationships intangibles for the nine months ended
September 30, 2022. 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 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. Factors affecting the Company's insurance and claims expense are
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; 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
increased 50.2% during the nine months ended September 30, 2022 as compared to
the same period in 2021. Claims increased $12.8 million primarily due to $10.5
million in development of claims in excess of the Company's self-insured
retention. The Company also recorded an $11.8 million increase in incurred but
not recorded claims. These increases were partially offset by a $4.2 million
decrease in certain insurance premiums.

Other (Income) Expense. Interest expense consists of cash interest, amortization
and write-off of related issuance costs and fees. Interest expense decreased
8.8% for the nine months ended September 30, 2022 as compared to the same period
in 2021. This decrease was primarily attributable to lower interest rates
achieved through the successful refinancing of our Term Loan Facility (as
defined below) in March 2021, and decreases in the balance outstanding on the
Term Loan Facility. Change in fair value of warrant liability was a gain of $4.7
million for the nine months ended September 30, 2022 compared to a loss of $1.2
million for the same period in 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. The Company's common stock purchase
warrants expired in February 2022 and are no longer exercisable.

Income Tax. Income tax expense was $21.0 million for the nine months ended
September 30, 2022 compared to income tax expense of $18.6 million for the same
period in 2021. The effective tax rate was 32.7% for the nine months ended
September 30, 2022, compared to 27.6% for the same period in 2021. The
difference between the Company's effective tax rate and the federal statutory
rate primarily results from the mix of earnings with state jurisdictions,
combined with the impact of nontaxable income, primarily related to the change
in fair value of the warrant liability, and nondeductible expenses, primarily
related to executive compensation and goodwill impairment.

Liquidity, capital resources and capital requirements

The company had the following sources of liquidity at its disposal 09/30/2022 and December 31, 2021 (in millions).


                                    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 were cash provided by operations, the issuance of common stock and borrowings under its credit facilities. The Company also receives cash from equipment sales.

The Company’s business requires significant 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. 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
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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.

investments


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 tangible and fixed asset additions for the past nine months 09/30/2022 and 2021 are shown below (in millions):


                                                            Nine Months 

Completed 09/30,

                                                             2022           

2021

Net cash capital expenditures (receipts)                $          5.4      

$(13.7) Property, plant and equipment acquired with debt or finance lease obligations

                                                 93.7                     55.0
Total net property and equipment additions              $         99.1         $           41.3



Total net additions to property, plant and equipment increased due to an increase in purchases of financed equipment and a decrease in revenue from the sale of equipment during the nine months to date 09/30/2022.

The company is currently estimating its net investments for 2022 $145 million to $155 million.


Operating leases

The Company entered into operating leases for revenue equipment with terms of
one year to seven years and real property with terms of less than one year to
twenty years having right-of-use asset values at lease inception of $10.5
million and $17.3 million, respectively, for the nine months ended September 30,
2022.

Material Debt

Overview

away 09/30/2022the company had the following significant debts:

the Term Loan Facility and the ABL Facility;
•
equipment and real estate term loans; and
•
finance lease liabilities.

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The amounts outstanding under such agreements were as follows (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 and finance lease liabilities, less the current portion and unamortized deferred finance charges

                                                    $         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.

See Note 7 of the Notes to the Consolidated Financial Statements contained herein for information about the Company’s principal liabilities.

ABL and term loan facilities and equipment financing agreements


As of September 30, 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).

As of September 30, 2022, the Company had $220.7 million of equipment and real
estate loans and $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.

As of September 30, 2022, the Company had no borrowings outstanding on the ABL
Facility, $22.5 million in outstanding letters of credit, and $123.4 million
available under the ABL Facility, based on 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 insurances liabilities.

cash flows


The Company's summary statements of cash flows information for the nine months
ended September 30, 2022 and 2021 is set forth in the table below (in millions):

                                                             Nine Months Ended September 30,
                                                             2022                     2021
Net cash provided by operating activities               $         106.7         $           115.7

Net Cash (Used In) Provided By Investing Activities $(24.5)

     $            13.7
Net cash used in financing activities                   $         (42.5 )   

$(161.9)




Operating Activities. Cash provided by operating activities was $106.7 million
during the nine months ended September 30, 2022 and consisted of $43.3 million
of net income plus $70.3 million of non-cash items, consisting primarily of
depreciation, amortization, deferred taxes, gain on disposition of property and
equipment, stock-based compensation, and 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,
2022 reflect an increase of $34.1 million in accounts receivable, an increase of
$3.1 million in drivers' advances and other receivables, and an increase of $3.7
million in other current assets, partially offset by an increase of $30.5
million in accrued expenses and other liabilities and an increase of $3.5
million in accounts payable.

The $9.0 million decrease in cash provided by operating activities during the
nine months ended September 30, 2022, as compared with the nine months ended
September 30, 2021, was the result of increases in net cash provided by working
capital of $7.2 million, decreases in non-cash items of $10.6 million, and a
$5.6 million reduction to net income.

Investing Activities. Cash used in investing activities was $24.5 million for
the nine months ended September 30, 2022 as compared to cash provided by
investing activities of $13.7 million for the nine months ended September 30,
2021. This change is primarily due to a $19.1 million cash payment for the SJ
Transportation acquisition, a decrease of $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, 2022.
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Total net cash investments (income) for the past nine months
09/30/2022 and 2021 are shown below (in millions):


                                                            Nine Months 

Completed 09/30,

                                                             2022           

2021

Revenue equipment (tractors, trailers and trailer
accessories)                                            $         25.8         $           29.8
Buildings and building improvements                                2.6                      1.2
Other                                                              5.0                      3.2
Total cash capital expenditures                                   33.4                     34.2
Less: Proceeds from sales of property and equipment               28.0                     47.9
Net cash capital expenditures (receipts)                $          5.4      

$(13.7)




Financing Activities. Cash used in financing activities decreased from $161.9
million for the nine months ended September 30, 2021 to $42.5 million for the
nine months ended September 30, 2022. 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 as the result of the 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 proceeds
from warrant exercises compared to none in the same period in 2021. In addition,
during the nine months ended September 30, 2021, we repurchased $20.4 million in
common stock compared to none in the same period in 2022.

Critical Accounting Estimates


The preparation of the Company's consolidated 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
affected 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
particular 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 for the year ended December 31, 2021, for a
discussion of our critical accounting estimates; there have been no material
changes to the Company's critical accounting estimates as disclosed therein.

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