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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, 2024

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: 001-42192

 logonew.jpg 

COVENANT LOGISTICS GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

88-0320154

(State or other jurisdiction of incorporation

(I.R.S. Employer Identification No.)

or organization)

 
  

400 Birmingham Hwy.

 

Chattanooga, TN

37419

(Address of principal executive offices)

(Zip Code)

 

423-821-1212

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each classTrading Symbol(s)Name of each exchange on which registered
$0.01 Par Value Class A common stockCVLGThe New York Stock Exchange

 

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, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☐

  

Accelerated filer ☒

Non-accelerated filer   ☐

Smaller reporting company ☐

 

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 ☒


Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (October 30, 2024).

 

Class A Common Stock, $.01 par value: 10,829,667 shares

Class B Common Stock, $.01 par value: 2,350,000 shares

 

Page 1
Table of Contents

 

 

TABLE OF CONTENTS

 

PART I

FINANCIAL INFORMATION
   

Page

Number

Item 1.

Financial Statements

  
     
 

Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 (unaudited)

 3
     
 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 (unaudited)

 4
     
 

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2024 and 2023 (unaudited)

 5
     
 

Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2024 and 2023 (unaudited)

 6
     
 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (unaudited)

 7
     
 

Notes to Condensed Consolidated Financial Statements (unaudited)

 8
     

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

 23
     

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 37
     

Item 4.

Controls and Procedures

 38
 

PART II

OTHER INFORMATION
   

Page

Number
     

Item 1.

Legal Proceedings

 39
     

Item 1A.

Risk Factors

 40
     

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 41
     

Item 3.

Defaults Upon Senior Securities

 41
     

Item 4.

Mine Safety Disclosures

 41
     

Item 5.

Other Information

 41
     

Item 6.

Exhibits

 42

 

Page 2
Table of Contents

  

 

PART I

FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS

 

COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

  

September 30, 2024

  

December 31, 2023

 
  

(unaudited)

    

ASSETS

        

Current assets:

        

Cash and cash equivalents

 $35,197  $2,294 

Accounts receivable, net of allowance of $2,357 in 2024 and $2,449 in 2023

  135,080   142,504 

Drivers' advances and other receivables, net of allowance of $586 in 2024 and $591 in 2023

  4,430   4,367 

Inventory and supplies

  6,109   4,848 

Prepaid expenses

  21,054   17,880 

Assets held for sale

  4,914   6,782 

Income taxes receivable

  7,533   6,739 

Other short-term assets

  430   531 

Total current assets

  214,747   185,945 
         

Property and equipment, at cost

  735,810   692,532 

Less: accumulated depreciation and amortization

  (198,619)  (177,877)

Net property and equipment

  537,191   514,655 
         

Goodwill

  78,941   75,747 

Other intangibles, net

  92,498   99,615 

Other assets, net

  86,009   78,067 

Noncurrent assets of discontinued operations

  259   409 

Total assets

 $1,009,645  $954,438 

LIABILITIES AND STOCKHOLDERS' EQUITY

        

Current liabilities:

        

Accounts payable

 $31,644  $33,155 

Accrued expenses

  55,722   59,067 

Current maturities of long-term debt

  73,101   47,651 

Current portion of finance lease obligations

  985   781 

Current portion of operating lease obligations

  10,980   11,950 

Current portion of insurance and claims accrual

  22,214   17,687 

Total current liabilities

  194,646   170,291 
         

Long-term debt

  192,461   196,894 

Long-term portion of finance lease obligations

  5,353   5,296 

Long-term portion of operating lease obligations

  33,608   30,892 

Insurance and claims accrual

  19,461   15,746 

Deferred income taxes

  119,016   116,095 

Other long-term liabilities

  12,513   14,169 

Long-term liabilities of discontinued operations

  1,035   1,635 

Total liabilities

  578,093   551,018 

Stockholders' equity:

        

Class A common stock, $.01 par value; 40,000,000 shares authorized; 16,125,786 shares issued and 10,829,667 outstanding as of September 30, 2024; and 16,125,786 shares issued and 10,721,517 outstanding as of December 31, 2023

  161   161 

Class B common stock, $.01 par value; 5,000,000 shares authorized; 2,350,000 shares issued and outstanding

  24   24 

Additional paid-in-capital

  158,481   155,846 

Treasury stock at cost; 5,296,119 and 5,404,269 shares as of September 30, 2024 and December 31, 2023, respectively

  (131,472)  (132,346)

Accumulated other comprehensive income

  579   816 

Retained earnings

  403,779   378,919 

Total stockholders' equity

  431,552   403,420 

Total liabilities and stockholders' equity

 $1,009,645  $954,438 

 

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

 

Page 3
Table of Contents

 

 

COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE three and nine months ended September 30, 2024 and 2023

(In thousands, except per share data)

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

(unaudited)

    

(unaudited)

  
   

2024

    

2023

    

2024

    

2023

  

Revenues

                                

Freight revenue

   $ 258,599     $ 253,377     $ 762,796     $ 730,503  

Fuel surcharge revenue

     29,286       35,344       91,349       99,085  

Total revenue

   $ 287,885     $ 288,721     $ 854,145     $ 829,588  
                                 

Operating expenses:

                                

Salaries, wages, and related expenses

   $ 110,815     $ 102,314     $ 317,523     $ 302,753  

Fuel expense

     28,545       35,173       88,590       100,692  

Operations and maintenance

     17,690       16,984       46,838       50,328  

Revenue equipment rentals and purchased transportation

     64,434       72,046       193,940       203,045  

Operating taxes and licenses

     3,227       3,381       8,871       10,161  

Insurance and claims

     12,241       13,074       44,779       36,810  

Communications and utilities

     1,330       1,254       4,005       3,753  

General supplies and expenses

     11,937       11,774       47,244       38,169  

Depreciation and amortization

     21,222       18,182       64,460       51,701  

Loss (gain) on disposition of property and equipment, net

     209       (602 )     1,748       (12,380 )

Total operating expenses

     271,650       273,580       817,998       785,032  

Operating income

     16,235       15,141       36,147       44,556  

Interest expense, net

     3,204       2,637       10,341       5,530  

Income from equity method investment

     (3,993 )     (5,335 )     (11,763 )     (16,659 )

Income before income taxes

     17,024       17,839       37,569       55,685  

Income tax expense

     4,141       4,483       8,817       13,701  

Income from continuing operations, net of tax

     12,883       13,356       28,752       41,984  

Income from discontinued operations, net of tax

     150       150       450       450  

Net income

   $ 13,033     $ 13,506     $ 29,202     $ 42,434  
                                 

Basic income per share: (1)

                                

Income from continuing operations

   $ 0.98     $ 1.03     $ 2.19     $ 3.21  

Income from discontinued operations

     0.01       0.01       0.03       0.03  

Net income per share

   $ 0.99     $ 1.04     $ 2.22     $ 3.24  

Diluted income per share: (1)

                                

Income from continuing operations

   $ 0.93     $ 0.98     $ 2.08     $ 3.06  

Income from discontinued operations

     0.01       0.01       0.03       0.03  

Net income per share

   $ 0.94     $ 0.99     $ 2.11     $ 3.09  

Basic weighted average shares outstanding

     13,177       12,947       13,137       13,082  

Diluted weighted average shares outstanding

     13,901       13,679       13,827       13,739  

 

(1) Total may not sum due to rounding.

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

 

Page 4
Table of Contents

 

 

COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE three and nine months ended September 30, 2024 and 2023

(Unaudited and in thousands)

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 
                 

Net income

 $13,033  $13,506  $29,202  $42,434 
                 

Other comprehensive income:

                
                 

Unrealized (loss) gain on effective portion of cash flow hedges, net of tax of $152 and ($20) in 2024 and ($177) and ($221) in 2023, respectively

  (435)  505   57   632 

Reclassification of cash flow hedge gains into statement of operations, net of tax of $34 and $103 in 2024 and $35 and $95 in 2023, respectively

  (96)  (100)  (294)  (271)

Total other comprehensive (loss) income

  (531)  405   (237)  361 
                 

Comprehensive income

 $12,502  $13,911  $28,965  $42,795 

 

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

 

Page 5
Table of Contents

 

 

COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE three and nine months ended September 30, 2024 and 2023

(Unaudited and in thousands)

 

  

For the Three and Nine Months Ended September 30, 2024

 
                  

Accumulated

         
          

Additional

      

Other

      

Total

 
  

Common Stock

  

Paid-In

  

Treasury

  

Comprehensive

  

Retained

  

Stockholders'

 
  

Class A

  

Class B

  

Capital

  

Stock

  

Income

  

Earnings

  

Equity

 

Balances at December 31, 2023

 $161  $24  $155,846  $(132,346) $816  $378,919  $403,420 

Net income

  -   -   -   -   -   3,974   3,974 

Cash dividend ($0.11 per common share)

  -   -   -   -   -   (1,443)  (1,443)

Share repurchase

  -   -   -   -   -   -   - 

Other comprehensive income

  -   -   -   -   260   -   260 

Stock-based employee compensation expense

  -   -   947   -   -   -   947 

Exercise of stock options

  -   -   150   278   -   -   428 

Issuance of restricted shares, net

  -   -   (248)  (91)  -   -   (339)

Balances at March 31, 2024

 $161  $24  $156,695  $(132,159) $1,076  $381,450  $407,247 

Net income

  -   -   -   -   -   12,194   12,194 

Cash dividend ($0.11 per common share)

  -   -   -   -   -   (1,448)  (1,448)

Other comprehensive income

  -   -   -   -   34   -   34 

Stock-based employee compensation expense

  -   -   765   -   -   -   765 

Exercise of stock options

  -   -   195   386   -   -   581 

Issuance of restricted shares, net

  -   -   (207)  207   -   -   - 

Balances at June 30, 2024

 $161  $24  $157,448  $(131,566) $1,110  $392,196  $419,373 

Net income

  -   -   -   -   -   13,033   13,033 

Cash dividend ($0.11 per common share)

  -   -   -   -   -   (1,450)  (1,450)

Other comprehensive income

  -   -   -   -   (531)  -   (531)

Stock-based employee compensation expense

  -   -   988   -   -   -   988 

Exercise of stock options

  -   -   45   94   -   -   139 

Balances at September 30, 2024

 $161  $24  $158,481  $(131,472) $579  $403,779  $431,552 

 

  

For the Three and Nine Months Ended September 30, 2023

 
                  

Accumulated

         
          

Additional

      

Other

      

Total

 
  

Common Stock

  

Paid-In

  

Treasury

  

Comprehensive

  

Retained

  

Stockholders'

 
  

Class A

  

Class B

  

Capital

  

Stock

  

Income

  

Earnings

  

Equity

 

Balances at December 31, 2022

 $161  $24  $152,886  $(106,500) $1,086  $329,471  $377,128 

Net income

  -   -   -   -   -   16,635   16,635 

Cash dividend ($0.11 per common share)

  -   -   -   -   -   (1,466)  (1,466)

Other comprehensive loss

  -   -   -   -   (403)  -   (403)

Share repurchase

  -   -   -   (20,805)  -   -   (20,805)

Stock-based employee compensation expense

  -   -   1,558   -   -   -   1,558 

Issuance of restricted shares, net

  -   -   (1,523)  38   -   -   (1,485)

Balances at March 31, 2023

 $161  $24  $152,921  $(127,267) $683  $344,640  $371,162 

Net income

  -   -   -   -   -   12,293   12,293 

Cash dividend ($0.11 per common share)

  -   -   -   -   -   (1,442)  (1,442)

Other comprehensive income

  -   -   -   -   359   -   359 

Share repurchase

  -   -   -   (4,683)  -   -   (4,683)

Stock-based employee compensation expense reversal

  -   -   1,774   -   -   -   1,774 

Exercise of stock options

  -   -   42   194   -   -   236 

Issuance of restricted shares, net

  -   -   (389)  354   -   -   (35)

Balances at June 30, 2023

 $161  $24  $154,348  $(131,402) $1,042  $355,491  $379,664 

Net income

  -   -   -   -   -   13,506   13,506 

Cash dividend ($0.11 per common share)

  -   -   -   -   -   (1,436)  (1,436)

Other comprehensive loss

  -   -   -   -   405   -   405 

Stock-based employee compensation expense

  -   -   1,884   -   -   -   1,884 

Balances at September 30, 2023

 $161  $24  $156,232  $(131,402) $1,447  $367,561  $394,023 

 

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

 

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COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE nine months ended September 30, 2024 and 2023

(Unaudited and in thousands)

 

   

Nine Months Ended September 30,

  
   

2024

    

2023

  

Cash flows from operating activities:

                

Net income

   $ 29,202     $ 42,434  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Provision for losses on accounts receivable

     (46 )     10  

Reversal of gain on sales to equity method investee

     (28 )     (1 )

Depreciation and amortization

     64,460       51,701  

Deferred income tax expense

     5,426       4,128  

Income tax expense arising from restricted share vesting and stock options exercised

     (658 )     (816 )

Stock-based compensation expense

     2,700       5,216  

Income from equity method investment

     (11,763 )     (16,659 )

Return on investment from equity method investee

     3,675       9,800  

Loss (gain) on disposition of property and equipment

     1,748       (12,580 )

Changes in operating assets and liabilities:

                

Receivables and advances

     7,704       (24,563 )

Prepaid expenses and other assets

     (4,080 )     (2,511 )

Inventory and supplies

     (1,261 )     (332 )

Insurance and claims accrual

     8,242       (1,645 )

Accounts payable and accrued expenses

     (4,360 )     (1,209 )

Net cash flows provided by operating activities

     100,961       52,973  
                 

Cash flows used by investing activities:

                

Acquisition, net of cash acquired

     (4,556 )     (107,922 )

Other investments

     (488 )     (1,580 )

Purchase of property and equipment

     (131,494 )     (112,047 )

Proceeds from disposition of property and equipment

     32,332       76,954  

Net cash flows used by investing activities

     (104,206 )     (144,595 )
                 

Cash flows from financing activities:

                

Change in checks outstanding in excess of bank balances

     -       771  

Cash dividend

     (4,341 )     (4,344 )

Proceeds from issuance of notes payable

     104,785       98,451  

Repayments of notes payable

     (45,949 )     (23,142 )

Repayments of finance lease obligations

     (553 )     (5,432 )

Proceeds under revolving credit facility

     57,247       123,463  

Repayments under revolving credit facility and draw note

     (68,826 )     (123,463 )

Payment of contingent consideration liability

     (7,023 )     (9,187 )

Proceeds from exercise of stock options

     1,147       236  

Payment of minimum tax withholdings on stock compensation

     (339 )     (1,520 )

Common stock repurchased

     -       (25,488 )

Net cash flows provided by financing activities

     36,148       30,345  
                 

Net change in cash and cash equivalents

     32,903       (61,277 )
                 

Cash and cash equivalents at beginning of period

     2,294       68,665  

Cash and cash equivalents at end of period

   $ 35,197     $ 7,388  

 

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

 

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COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 1.

Significant Accounting Policies

 

Basis of Presentation

 

The condensed consolidated financial statements include the accounts of Covenant Logistics Group, Inc., a Nevada holding company, and its wholly owned subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer to Covenant Logistics Group, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Act of 1933. In preparing financial statements, it is necessary for management to make assumptions and estimates affecting the amounts reported in the condensed consolidated financial statements and related notes. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. In the opinion of management, the accompanying financial statements include all adjustments that are necessary for a fair presentation of the results for the interim periods presented, such adjustments being of a normal recurring nature.

 

Certain information and footnote disclosures have been condensed or omitted pursuant to such rules and regulations. The December 31, 2023, condensed consolidated balance sheet was derived from our audited balance sheet as of that date. Our operating results are subject to seasonal trends when measured on a quarterly basis; therefore, operating results for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2023. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year.

 

Property and Equipment

 

Property and equipment is stated at cost less accumulated depreciation. Depreciation for book purposes is determined using the straight-line method over the estimated useful lives of the assets. Depreciation of revenue equipment is our largest item of depreciation. We generally depreciate new tractors over five years to salvage values ranging from approximately 0% to 35% of their cost, depending on the utilization profile of the equipment. We generally depreciate new trailers over seven years for refrigerated trailers and ten years for dry van trailers to salvage values of approximately 28% and 25% of their cost, respectively. We annually, or whenever events or changes in circumstances indicate that a review is warranted, review the reasonableness of our estimates regarding useful lives and salvage values of our revenue equipment and other long-lived assets, based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice. We performed a review of our estimates for certain subsets of revenue equipment during the quarter ended June 30, 2024 and, due to a weak used revenue equipment market, we increased the rate of depreciation on these units in the period. This change resulted in an additional $1.2 million and $3.8 million of depreciation expense during the three and nine months ended September 30, 2024, respectively. Changes in the useful life or salvage value estimates, or fluctuations in market values that are not reflected in our estimates, could have a material effect on our results of operations. During the three months ended March 31, 2023, we sold a Tennessee terminal resulting in a $7.6 million gain which is included in gain on disposition of property and equipment, net in the condensed consolidated statements of operations.

 

Recent Accounting Pronouncements

 

Accounting Standards not yet adopted

 

In  November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after  December 15, 2023, and interim periods within fiscal years beginning after  December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending  December 31, 2024.

 

In  December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after  December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.

 

 

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Note 2.

Income Per Share

 

Basic income per share excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted income per share reflects the 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 our earnings. There were approximately 75,000 and 71,000 shares issuable upon conversion of unvested restricted shares for the three and nine months ended September 30, 2024, respectively, and 254,000 and 247,000 shares issuable upon conversion of unvested restricted shares for the three and nine months ended September 30, 2023, respectively. There were no unvested shares excluded from the calculation of diluted earnings per share as anti-dilutive for either of the three and nine months ended September 30, 2024 and 2023. There were approximately 649,000 and 619,000 shares issuable upon conversion of unvested employee stock options for the three and nine months ended September 30, 2024, respectively, and 478,000 and 411,000 shares issuable upon conversion of unvested employee stock options for the three and nine months ended September 30, 2023, respectively. There were no unvested employee stock options excluded from the calculation of diluted earnings per share as anti-dilutive for the three and nine months ended September 30, 2024, respectively, and no and 32,000 unvested employee stock options excluded from the calculation of diluted earnings per share as anti-dilutive for the three and nine months ended September 30, 2023, respectively. Income per share is the same for both Class A and Class B shares.

 

The following table sets forth, for the periods indicated, the calculation of net income per share included in the condensed consolidated statements of operations:

 

(in thousands except per share data)

 

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Numerators:

                

Income from continuing operations

 $12,883  $13,356  $28,752  $41,984 

Income from discontinued operations

  150   150   450   450 

Net income

 $13,033  $13,506  $29,202  $42,434 

Denominator:

                

Denominator for basic income per share – weighted-average shares

  13,177   12,947   13,137   13,082 

Effect of dilutive securities:

                

Equivalent shares issuable upon conversion of unvested restricted shares

  75   254   71   247 

Equivalent shares issuable upon conversion of unvested employee stock options

  649   478   619   411 

Denominator for diluted income per share adjusted weighted-average shares and assumed conversions

  13,901   13,679   13,827   13,740 
                 

Basic income per share(1):

                

Income from continuing operations

 $0.98  $1.03  $2.19  $3.21 

Income from discontinued operations

  0.01   0.01   0.03   0.03 

Net income per share

 $0.99  $1.04  $2.22  $3.24 

Diluted income per share: (1)

                

Income from continuing operations

 $0.93  $0.98  $2.08  $3.06 

Income from discontinued operations

  0.01   0.01   0.03   0.03 

Net income per share

 $0.94  $0.99  $2.11  $3.09 
(1)Total may not sum due to rounding.

 

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Note 3.

Fair Value of Financial Instruments

 

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability.

 

The fair value of our interest rate swap agreements is determined using the market-standard methodology of netting the discounted future fixed-cash payments and the discounted expected variable-cash receipts. The variable-cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These analyses reflect the contractual terms of the swap, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatilities. The fair value calculation also includes an amount for risk of non-performance of our counterparties using "significant unobservable inputs" such as estimates of current credit spreads to evaluate the likelihood of default, which we have determined to be insignificant to the overall fair value of our interest rate swap agreements.

 

The fair value of the contingent consideration arrangement is based on inputs that are not observable in the market and is estimated using a probability-weighted method. The significant unobservable inputs used in the fair value of the contingent consideration liability include the financial projections over the earn-out period, the volatility of the underlying financial metrics, and estimated discount rates.

 

The fair value of the life insurance policies was determined by the underwriting insurance company’s valuation models and represents the guaranteed value we would receive upon surrender of these policies as of the reporting date.

 

A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

 

●

Level 1. Observable inputs such as quoted prices in active markets;

●

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

●

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

Financial Instruments Measured at Fair Value on a Recurring Basis

 

(in thousands)

            
  

September 30, 2024

  

December 31, 2023

  

Input Level

 

Interest rate swaps

  782   1,101   2 

Contingent consideration

  (20,836)  (21,802)  3 

Cash surrender value life insurance policies

  3,262   2,424   2 

 

The carrying amount of cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, and current debt approximates their fair value because of the short-term maturity of these instruments. 

 

Interest rates that are currently available to us for issuance of long-term debt with similar terms and remaining maturities are used to estimate the fair value of our long-term debt, which primarily consists of revenue equipment installment notes. The fair value of our revenue equipment installment notes approximated the carrying value as of  September 30, 2024, as the weighted average interest rate on these notes approximates the market rate for similar debt. Borrowings under our revolving Credit Facility (as defined herein) approximate fair value due to the variable interest rate on that facility.

 

Contingent consideration arrangements require us to pay up to $20.0 million of additional consideration to AAT Carriers, Inc.'s ("AAT's") former shareholders based on AAT's results during the first two post-acquisition years, of which the final installment was made during 2024, up to $30.0 million of additional consideration to Lew Thompson & Son Trucking, Inc.'s ("LTST's") former shareholders based on LTST's results during the first three calendar years following closing, and up to $12.0 million of additional consideration to Sims Transport Services, LLC's ("Sims") former shareholders based on Sims' results during the first four calendar years following closing. Refer to Note 13, "Acquisition of Lew Thompson & Son Trucking, Inc.", for additional information regarding the LTST acquisition and Note 12, "Acquisition of Sims Transport Services, LLC", for additional information regarding the Sims acquisition.

 

The fair value of the contingent consideration is adjusted at each reporting period based on changes to the expected cash flows and related assumptions. There were no contingent consideration payments made during the three months ended September 30, 2024 or 2023, and $10.0 million and $10.0 million paid during the nine months ended September 30, 2024 and 2023, respectively, based on AAT's results for the first and second post-acquisition years. Of the $10.0 million paid for the contingent consideration liability during 2024, $7.0 million was classified as financing cash flows and $3.0 million was classified as operating cash flows within the condensed consolidated statements of cash flows. Of the $10.0 million paid for the contingent consideration liability during 2023, $9.2 million was classified as financing cash flows and $0.8 million was classified as operating cash flows within the condensed consolidated statements of cash flows. The fair value of the contingent consideration increased $0.2 million and increased $9.0 million during the three and nine months ended September 30, 2024, respectively, and increased by $2.3 million and $14.3 million during the three and nine months ended September 30, 2023, respectively. Of the 2024 increases, increases of $0.7 million and $9.5 million related to a change in the fair value for the LTST contingent consideration arrangement for the three and nine months ended September 30, 2024 partially offset by decreases of $0.5 million and $0.5 million related to a change in the fair value for the Sims contingent consideration arrangement. Of the 2023 increases, $1.8 million was related to the initial recognition of the Sims contingent consideration arrangement and $0.5 million was due to a change in the fair value for the AAT contingent consideration arrangement for the three month period and $10.0 million was related to the initial recognition of the LTST contingent consideration arrangement, $2.5 million was due to a change in the fair value for the AAT contingent consideration arrangement, and $1.8 million was related to the initial recognition of the Sims contingent consideration arrangement for the nine-month period. The adjustment to the fair value of the contingent consideration liability was recorded as a component of general supplies and expenses within the condensed consolidated statements of operations. The contingent consideration liability is included in accounts payable and other long-term liabilities in our condensed consolidated balance sheets. 

 

The following table provides a summary (in thousands) of the activity for the contingent consideration liability for 2024:

 

  December 31, 2023  Additions  Adjustments to fair market value  Payments  September 30, 2024 
Contingent consideration  $(21,802)  $-   $(9,034)  $10,000   $(20,836)

 

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Note 4.

Discontinued Operations

 

As of June 30, 2020, our former Factoring reportable segment was classified as discontinued operations as it: (i) was a component of the entity, (ii) met the criteria as held for sale, and (iii) had a material effect on the Company's operations and financial results. On July 8, 2020, we closed on the disposition of substantially all of the operations and assets of Transport Financial Services ("TFS"), which included substantially all of the assets and operations of our Factoring reportable segment. The sale consisted primarily of $103.3 million of net accounts receivable, which included $108.7 million of gross accounts receivable, less advances and rebates of $5.4 million. 

 

We have reflected the former Factoring reportable segment as discontinued operations in the condensed consolidated statements of operations for all periods presented.

 

The following table summarizes the results of our discontinued operations for the three and nine months ended September 30, 2024 and 2023:

 

(in thousands)

 

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Reversal of contingent loss liability

 $(200) $(200) $(600) $(600)

Income before income taxes

  200   200   600   600 

Income tax expense

  50   50   150   150 

Income from discontinued operations, net of tax

 $150  $150  $450  $450 

 

Reversal of contingent loss liability for the three and nine months ended September 30, 2024 and 2023 relates to the reduced exposure of future indemnification by the Company to the purchaser of TFS, Triumph Bancorp, Inc. ("Triumph"), as a result of the collection of covered receivables identified in the amended purchase agreement.

 

The following table summarizes the major classes of assets and liabilities included as discontinued operations as of  September 30, 2024 and December 31, 2023:

 

(in thousands)

 

September 30, 2024

  

December 31, 2023

 

Noncurrent deferred tax asset

 $259  $409 

Noncurrent assets from discontinued operations

  259   409 

Total assets from discontinued operations

 $259  $409 
         

Liabilities:

        

Long-term contingent loss liability

 $1,035  $1,635 

Long-term liabilities of discontinued operations

  1,035   1,635 

Total liabilities from discontinued operations

 $1,035  $1,635 

 

There were no operating cash outflows for the three and nine months ended September 30, 2024 and 2023.

 

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Note 5.

Segment Information

 

We have four reportable segments:

 

●

Expedited: The Expedited reportable segment primarily provides truckload services to customers with high service freight and delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows. Expedited services generally require two-person driver teams on equipment either owned or leased by the Company.

 

●

Dedicated: The Dedicated reportable segment provides customers with committed truckload capacity over contracted periods with the goal of three to five years in length. Equipment is either owned or leased by the Company.

 

●

Managed Freight: The Managed Freight reportable segment includes our brokerage and transport management services (“TMS”). Brokerage services provide logistics capacity by outsourcing the carriage of customers’ freight to third parties. TMS provides comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.

 

●

Warehousing: The Warehousing reportable segment provides day-to-day warehouse management services to customers who have chosen to outsource this function. We also provide shuttle and switching services related to shuttling containers and trailers in or around freight yards and to/from warehouses.

 

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in our Form 10-K for the year ended December 31, 2023. Substantially all intersegment sales prices are market based. We evaluate performance based on operating income of the respective business units.

 

The following table summarizes our total revenue by our four reportable segments, as used by our chief operating decision maker in making decisions regarding allocation of resources etc., for the three and nine months ended September 30, 2024 and 2023:

 

(in thousands)

                    

Three Months Ended September 30, 2024

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $104,314  $94,715  $63,385  $25,471  $287,885 

Intersegment revenue

  1,152   -   -   -   1,152 

Operating income

  6,467   5,429   2,451   1,888   16,235 

 

Nine Months Ended September 30, 2024

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $317,795  $272,662  $186,668  $77,020  $854,145 

Intersegment revenue

  2,680   -   -   -   2,680 

Operating income

  16,019   6,182   8,050   5,896   36,147 

 

Three Months Ended September 30, 2023

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $113,419  $80,242  $69,713  $25,347  $288,721 

Intersegment revenue

  1,556   -   -   -   1,556 

Operating income

  7,522   2,976   3,742   901   15,141 

 

Nine Months Ended September 30, 2023

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $318,388  $241,680  $193,868  $75,652  $829,588 

Intersegment revenue

  9,933   -   -   -   9,933 

Operating income

  22,613   13,366   6,905   1,672   44,556 

 

(in thousands)

 

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Total external revenues for reportable segments

 $287,885  $288,721  $854,145  $829,588 

Intersegment revenues for reportable segments

  1,152   1,556   2,680   9,933 

Elimination of intersegment revenues

  (1,152)  (1,556)  (2,680)  (9,933)

Total consolidated revenues

 $287,885  $288,721  $854,145  $829,588 

 

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Note 6.

Income Taxes

 

Income tax expense in both 2024 and 2023 varies from the amount computed by applying the federal corporate income tax rates of 21% to income before income taxes, primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences the most significant of which is the effect of the per diem pay structure for drivers. Drivers who meet the requirements to receive per diem receive non-taxable per-diem pay in lieu of a portion of their taxable wages. This per diem program increases our drivers' net pay per mile, after taxes, while decreasing gross pay, before taxes. As a result, salaries, wages, and related expenses are slightly lower and our effective income tax rate is higher than the statutory rate. Generally, as pre-tax income increases, the impact of the driver per diem program on our effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pre-tax income, while in periods where earnings are at or near breakeven the impact of the per diem program on our effective tax rate is significant. Due to the partially nondeductible effect of per diem pay, our tax rate will fluctuate in future periods based on fluctuations in earnings.

 

Our liability recorded for uncertain tax positions as of  September 30, 2024 is unchanged since  December 31, 2023.

 

The net deferred tax liability of $118.8 million primarily relates to differences in cumulative book versus tax depreciation of property and equipment, partially off-set by net operating loss carryovers and insurance claims that have been reserved but not paid. The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis, we assess the need for adjustment of the valuation allowance. The Company has determined that a valuation allowance was not necessary at September 30, 2024 for its deferred tax assets since it is more likely than not they will be realized from the future reversals of temporary differences. If these estimates and related assumptions change in the future, we may be required to modify our valuation allowance against the carrying value of the deferred tax assets.

 

On March 11, 2021, President Biden signed the American Rescue Plan ("ARPA") into law. The law includes several provisions meant to stimulate the U.S. economy. Of relevance to the Company, ARPA extended the reach of IRC Section 162(m) to include compensation paid to the eight highest-paid individuals other than the chief executive officer and the chief financial officers (rather than the three highest), however, this change is not effective until 2027. There is no material impact to the financial statements at this time.

 

President Biden signed the Inflation Reduction Act (the "IRA") into law on  August 16, 2022. We do not anticipate the IRA will have a significant impact on income tax expense or on other taxes. One of the most impactful provisions of the IRA includes the establishment of a Corporate Alternative Minimum Tax ("CAMT"). However, this tax only applies to corporations with three-year average earnings in excess of $1.0 billion. We will continue to monitor the CAMT each year to determine if we will become an applicable corporation. Additionally, the IRA enacted an excise tax on stock buybacks, which imposes a 1% tax on stock buybacks, subject to netting provisions regarding stock awarded to employees as part of their compensation. We do not believe this will have a material impact on our active buyback program, but will continue to monitor IRS guidance and regulations on how the buyback tax will be imposed and administered.

 

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Note 7.

Debt

 

Current and long-term debt and lease obligations consisted of the following as of  September 30, 2024 and December 31, 2023:

 

(in thousands)

 

September 30, 2024

  

December 31, 2023

 
  

Current

  

Long-Term

  

Current

  

Long-Term

 

Borrowings under Credit Facility

 $-  $-  $-  $11,579 

Borrowings under the Draw Note

  -   -   -   - 

Revenue equipment installment notes; weighted average interest rate of 5.3% at September 30, 2024, and 5.2% at December 31, 2023, due in monthly installments with final maturities at various dates ranging from February 2028 to March 2029, secured by related revenue equipment

  71,765   175,662   46,357   167,509 

Real estate notes; interest rate of 6.6% at September 30, 2024 and 7.1% at December 31, 2023 due in monthly installments with a fixed maturity at August 2035, secured by related real estate

  1,336   16,799   1,294   17,806 

Total debt

  73,101   192,461   47,651   196,894 

Principal portion of finance lease obligations, secured by related revenue equipment

  985   5,353   781   5,296 

Principal portion of operating lease obligations, secured by related real estate and revenue equipment

  10,980   33,608   11,950   30,892 

Total debt and lease obligations

 $85,066  $231,422  $60,382  $233,082 

 

We and substantially all of our subsidiaries are parties to the Third Amended and Restated Credit Agreement (the "Credit Facility") with Bank of America, N.A., as agent (the "Agent") and JPMorgan Chase Bank, N.A. (together with the Agent, the "Lenders"). The Credit Facility is a $110.0 million revolving credit facility, with an uncommitted accordion feature that, so long as no event of default exists, allows us to request an increase in the revolving credit facility of up to $75.0 million subject to Lender acceptance of the additional funding commitment. The Credit Facility includes a letter of credit sub facility in an aggregate amount of $105.0 million and a swing line sub facility in an aggregate amount equal to the greater of $10.0 million or 10% of the Lenders' aggregate commitments under the Credit Facility from time-to-time. The Credit Facility matures in May 2027.

 

Borrowings under the Credit Facility are classified as either "base rate loans" or "SOFR loans." Base rate loans accrue interest at a base rate equal to the greater of the Agent’s prime rate, the federal funds rate plus 0.5%, or SOFR for a one month period as of such day, plus an applicable margin ranging from 0.25% to 0.75%; while SOFR loans accrued interest at SOFR, plus an applicable margin ranging from 1.25% to 1.75%. The applicable rates are adjusted quarterly based on average pricing availability. The unused line fee is the product of 0.25% times the average daily amount by which the Lenders' aggregate revolving commitments under the Credit Facility exceed the outstanding principal amount of revolver loans and the aggregate undrawn amount of all outstanding letters of credit issued under the Credit Facility. The obligations under the Credit Facility are guaranteed by us and secured by a pledge of substantially all of our assets, with the notable exclusion of any real estate, revenue equipment pledged under other financing agreements, including revenue equipment installment notes and finance leases, and revenue equipment that we do not designate as being included in the borrowing base.

 

Borrowings under the Credit Facility are subject to a borrowing base limited to the lesser of (A) $110.0 million, minus the sum of the stated amount of all outstanding letters of credit; or (B) the sum of (i) 87.5% of eligible accounts receivable, plus (ii) the least of (a) 85% of the appraised net orderly liquidation value of eligible revenue equipment, (b) 100% of the net book value of eligible revenue equipment, (c) 60.0% of the Lenders' aggregate revolving commitments under the Credit Facility, or (d) $65.0 million. 

 

We had no borrowings outstanding under the Credit Facility as of September 30, 2024, undrawn letters of credit outstanding of approximately $19.7 million, and available borrowing capacity of $90.3 million. As of September 30, 2024, there were no base rate and no SOFR loans. Based on availability as of September 30, 2024 and 2023, there was no fixed charge coverage requirement.

 

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The Credit Facility includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the Credit Facility may be accelerated, and the Lenders' commitments may be terminated. If an event of default occurs under the Credit Facility and the Lenders cause, or have the ability to cause, all of the outstanding debt obligations under the Credit Facility to become due and payable, this could result in a default under other debt instruments that contain acceleration or cross-default provisions. The Credit Facility contains certain restrictions and covenants relating to, among other things, debt, dividends, liens, acquisitions and dispositions outside of the ordinary course of business, and affiliate transactions. Failure to comply with the covenants and restrictions set forth in the Credit Facility could result in an event of default. 

 

Pricing for the revenue equipment installment notes is quoted by the respective financial affiliates of our primary revenue equipment suppliers and other lenders at the funding of each group of equipment acquired and include fixed annual rates for new equipment under retail installment contracts. The notes included in the funding are due in monthly installments with final maturities at various dates ranging from  February 2028 to March 2029. The notes contain certain requirements regarding payment, insuring of collateral, and other matters, but do not have any financial or other material covenants or events of default except certain notes totaling $32.2 million are cross-defaulted with the Credit Facility. Additional borrowings from the financial affiliates of our primary revenue equipment suppliers and other lenders are expected to be available to fund new tractors expected to be delivered in 2024, while any other property and equipment purchases, including trailers, are expected to be funded with a combination of available cash, notes, operating leases, finance leases, and/or from the Credit Facility.

 

In August 2015, we financed a portion of the purchase of our corporate headquarters, a maintenance facility, and certain surrounding property in Chattanooga, Tennessee by entering into a $28.0 million variable rate note with a third-party lender. The note contains certain restrictions and covenants that are usual and customary for a note of this nature. Failure to comply with the covenants and restrictions set forth in the note could result in an event of default. Concurrently with entering into the note, we entered into an interest rate swap to effectively fix the related interest rate to 4.2%. We expect to be in compliance with our debt covenants for the next 12 months. 

 

In connection with the settlement of a dispute related to the sale of TFS (the "TFS Settlement"), in September 2020, TBK Bank, SSB, as lender and agent for Triumph (“TBK Bank”), provided the Company with a $45 million line of credit (the “Draw Note”), the proceeds of which are to be used solely to satisfy our indemnification obligations under the TFS Settlement. We may borrow pursuant to the Draw Note until September 23, 2025.

 

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Note 8.

Lease Obligations

 

The finance leases in effect at  September 30, 2024 terminate from  May 2025 through  November 2033 and contain guarantees of the residual value of the related equipment by us.

 

 A summary of our lease obligations at September 30, 2024 and 2023 are as follows:

 

(dollars in thousands)

 

Three Months Ended

  

Three Months Ended

  

Nine Months Ended

  

Nine Months Ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Finance lease cost:

                

Amortization of right-of-use assets

 $122  $54  $368  $567 

Interest on lease liabilities

  215   181   636   305 

Operating lease cost

  3,648   4,656   10,607   13,901 

Variable lease cost

  50   87   199   972 

Short-term lease cost

  802   1,497   2,776   5,630 

Total lease cost

 $4,837  $6,475  $14,586  $21,375 
                 

Other information

                

Cash paid for amounts included in the measurement of lease liabilities:

                

Operating cash flows from finance leases

  215   181   636   305 

Operating cash flows from operating leases

  2,851   3,436   8,286   10,614 

Financing cash flows from finance leases

  188   1,923   553   5,432 

Right-of-use assets obtained in exchange for new finance lease liabilities

  -   2,799   815   5,938 

Right-of-use assets obtained in exchange for new operating lease liabilities

  4,783   -   13,753   3,992 

Weighted-average remaining lease term—finance leases (in years)

  3.5             

Weighted-average remaining lease term—operating leases (in years)

  4.6             

Weighted-average discount rate—finance leases

  13.5%            

Weighted-average discount rate—operating leases

  8.6%            

 

As of  September 30, 2024, and December 31, 2023, right-of-use assets of $42.9 million and $41.2 million for operating leases and $6.6 million and $6.4 million for finance leases, respectively, are included in net property and equipment in our condensed consolidated balance sheets. Operating lease right-of-use asset amortization is included in revenue equipment rentals and purchased transportation and general supplies and expenses, depending on the underlying asset, in the condensed consolidated statement of operations. Amortization of finance leased assets is included in depreciation and amortization expense in the condensed consolidated statement of operations.

 

Our future minimum lease payments as of September 30, 2024, are summarized as follows by lease category:

 

(in thousands)

 

Operating

  

Finance

 
2024 (1) $3,739  $443 

2025

  13,083   1,770 

2026

  11,560   1,768 

2027

  10,386   1,768 

2028

  5,944   1,487 

Thereafter

  8,186   1,703 

Total minimum lease payments

 $52,898  $8,939 

Less: amount representing interest

  (8,310)  (2,601)

Present value of minimum lease payments

 $44,588  $6,338 

Less: current portion

  (10,980)  (985)

Lease obligations, long-term

 $33,608  $5,353 

 

(1) Excludes the nine months ended September 30, 2024.

 

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Note 9.

Stock-Based Compensation

 

Our Third Amended and Restated 2006 Omnibus Incentive Plan, as amended (the "Incentive Plan") governs the issuance of equity awards and other incentive compensation to management and members of the Board of Directors (the "Board"). On May 17, 2023, the stockholders, upon recommendation of the Board, approved the Third Amendment (the “Third Amendment”) to our Third Amended and Restated 2006 Omnibus Incentive Plan (the "Incentive Plan"). The Third Amendment (i) increased the number of shares of Class A common stock available for issuance under the Incentive Plan by an additional 575,000 shares, (ii) re-set the term of the plan to expire on May 1, 2033, and (iii) made other miscellaneous, administrative and conforming changes as necessary. The Incentive Plan includes (i) a fungible share reserve feature, under which shares subject to stock options and stock appreciation rights will be counted as one share for every share granted and shares subject to all other awards will be counted as 1.80 shares for every share granted, (ii) a double-trigger vesting requirement upon a change in control, and (iii) a maximum award granted or payable to any one participant under the Incentive Plan for a calendar year of 500,000 shares of Class A common stock or $4,000,000, in the event the award is paid in cash.

 

The Incentive Plan permits annual awards of shares of our Class A common stock to executives, other key employees, consultants, non-employee directors, and eligible participants under various types of options, restricted stock, or other equity instruments. As of  September 30, 2024, there were 1,063,228 shares remaining of the 4,775,000 shares available for award under the Incentive Plan. No awards may be made under the Incentive Plan after May 1, 2033. To the extent available, we have issued treasury stock to satisfy all share-based incentive plans.

 

Included in salaries, wages, and related expenses within the condensed consolidated statements of operations is stock-based compensation expense of $0.8 million and $1.7 million for the three months ended September 30, 2024 and 2023, respectively, and expense of $2.1 million and $4.7 million for the nine months ended September 30, 2024 and 2023, respectively. Included in general supplies and expenses within the condensed consolidated statements of operations is stock-based compensation expense for non-employee directors of $0.2 million and $0.2 million for each of the three months ended September 30, 2024 and 2023, respectively, and $0.6 million and $0.5 million for the nine months ended September 30, 2024 and 2023, respectively. Of the stock compensation expense recorded for the three months ended  September 30, 2024 and September 30, 2023, $0.8 million and $0.7 million relates to restricted shares, respectively. There were no unvested employee stock options or related stock compensation expense for the three months ended  September 30, 2024 and $1.0 million of stock compensation expense related to unvested employee stock options for the three months ended  September 30, 2023. Of the stock compensation expense recorded for the nine months ended September 30, 2024 and 2023, $1.5 million and $1.8 million relates to restricted shares, respectively, and $0.6 million and $2.9 million relates to unvested employee stock options, respectively.

 

The Incentive Plan allows participants to pay the federal and state minimum statutory tax withholding requirements related to awards that vest or allows participants to deliver to us shares of Class A common stock having a fair market value equal to the minimum amount of such required withholding taxes. To satisfy withholding requirements for shares that vested through September 30, 2024, certain participants elected to forfeit receipt of an aggregate of 6,879 shares of Class A common stock at a weighted average per share price of $49.27 based on the closing price of our Class A common stock on the dates the shares vested in 2024, in lieu of the federal and state minimum statutory tax withholding requirements. We remitted $0.3 million to the proper taxing authorities in satisfaction of the employees' minimum statutory withholding requirements.
 

Note 10.

Commitments and Contingencies

 

From time-to-time, we are a party to ordinary, routine litigation arising in the ordinary course of business, most of which involves claims for personal injury and/or property damage incurred in connection with the transportation of freight.

 

We had $19.7 million and $21.8 million of outstanding and undrawn letters of credit as of September 30, 2024 and December 31, 2023. The letters of credit are maintained primarily to support our insurance programs. Additionally, we had $45.0 million of availability on a line of credit from Triumph solely to fund any indemnification owed to Triumph in relation to the sale of TFS. As of  September 30, 2024 the remaining contingent liability was $1.0 million.
 

Note 11.

Equity Method Investment

 

We own a 49.0% interest in Transport Enterprise Leasing, LLC ("TEL"), a tractor and trailer equipment leasing company and used equipment reseller. There is no loss limitation on our 49.0% interest in TEL. We have not guaranteed any of TEL's debt and have no obligation to provide funding, services, or assets. There are no current put rights to purchase or sell with any owners. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. There are no third-party liquidity arrangements, guarantees, and/or other commitments that may affect the fair value or risk of our interest in TEL.

 

During the quarter ended March 31, 2024, we sold revenue equipment to TEL in exchange for the assumption of the related notes payable of $26.2 million and $0.5 million of cash. During the nine months ended September 30, 2024, we entered into revenue equipment operating leases with TEL, which resulted in an operating lease obligation to TEL of $10.7 million as of  September 30, 2024. No other transactions with TEL were material for the nine months ended September 30, 2024 and 2023.

 

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We have accounted for our investment in TEL using the equity method of accounting, and thus our financial results include our proportionate share of TEL's 2024 net income through September 30, 2024, or $11.8 million.

 

Our accounts receivable from TEL, accounts payable to TEL, and investment in TEL as of  September 30, 2024 and December 31, 2023 are as follows (in thousands):

 

Description:

Balance Sheet Line Item:

 

September 30, 2024

  

December 31, 2023

 

Accounts receivable from TEL

Driver advances and other receivables

 $24  $37 

Accounts payable to TEL

Accrued expenses

 $41  $460 

Investment in TEL

Other assets

 $74,444  $66,327 

Operating lease obligations

Current and long-term portion of operating lease obligations

 $10,662  $4,100 

 

Our accounts receivable from TEL related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL’s behalf.

 

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Note 12.

Acquisition of Sims Transport Services, LLC

 

On August 18, 2023, we acquired 100% of the equity interests of Sims, a specialized brokerage company, headquartered in Maysville, GA. The acquisition date fair value of the consideration transferred was $9.8 million. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Stock Purchase Agreement includes an earnout component of up to an aggregate of $12.0 million based on Sims' adjusted earnings before interest, taxes, depreciation, and amortization reported for the first through fourth calendar years following closing. The total purchase price, including any earnout achieved, is expected to range from $9.8 million to $20.0 million depending on the results achieved by Sims.

 

Sims' results have been included in the consolidated financial statements since the date of acquisition and are reported within our Managed Freight reportable segment.

 

The acquisition date fair value of the consideration transferred consisted of the following:

 

  

August 18, 2023

 

(in thousands)

    

Cash paid pursuant to Stock Purchase Agreement

 $8,573 

Cash acquired included in historical book value of Sims' assets and liabilities

  (526

)

Contingent consideration

  1,786 

Net purchase price

 $9,833 

 

The contingent consideration arrangement requires us to pay up to $12.0 million of additional consideration to Sim's former equity-holders based on Sims' results during the first four calendar years following closing. We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. Refer to Note 3, "Fair Value of Financial Instruments" for information regarding changes in the contingent consideration arrangement.

 

All goodwill related to the acquisition is deductible for tax purposes and there are no deferred income taxes arising from the acquisition.

 

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.

 

  

August 18, 2023

 

Accounts receivable

 $735 
Other intangibles, net  6,090 

Total identifiable assets acquired

  6,825 
     

Accounts payable

  (457

)

Accrued expenses

  (4

)

Total liabilities assumed

  (461

)

Net identifiable assets acquired

  6,364 

Goodwill

  3,469 

Net assets acquired

 $9,833 

 

During the nine months ended September 30, 2024 we recognized measurement period adjustments of $1.6 million, primarily related to the deductibility of goodwill and other intangibles, which decreased goodwill from $5.1 million as of December 31, 2023 to $3.5 million as of September 30, 2024. The goodwill recognized is attributable primarily to expected cost synergies as a result of overhead support. Refer to Note 14, "Goodwill and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired. 

 

The amounts of revenue and earnings of Sims included in the Company’s consolidated results of operations from the acquisition date of August 18, 2023, to the periods ended September 30, 2024 and 2023 are as follows:

 

(in thousands)

 

Three months ended

  

Nine months ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Total revenue

 $2,694  $1,026  $7,421  $1,026 

Net income

 $361  $219  $982  $219 

 

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Note 13.

Acquisition of Lew Thompson & Son Trucking, Inc.

 

On April 26, 2023, we acquired 100% of the outstanding stock of LTST and related entities, headquartered in Huntsville, AR. LTST is a dedicated contract carrier specializing in poultry feed and live haul transportation in Northwest Arkansas and surrounding areas and was acquired to expand the Dedicated reportable segment into this niche market. The acquisition date fair value of the consideration transferred was $114.5 million. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Stock Purchase Agreement includes an earnout component of up to an aggregate of $30.0 million based on LTST's adjusted earnings before interest, taxes, depreciation, and amortization reported for the first, second, and third calendar years following closing. The total purchase, including any earnout achieved, is expected to range from $114.5 million to $134.5 million depending on the results achieved by LTST.

 

LTST's results have been included in the condensed consolidated financial statements since the date of acquisition and are reported within our Dedicated reportable segment.

 

The acquisition date fair value of the consideration transferred consisted of the following:

  

April 26, 2023

 

(in thousands)

    

Cash paid pursuant to Stock Purchase Agreement

 $105,282 

Cash acquired included in historical book value of LTST's assets and liabilities

  (839)

Contingent consideration

  10,016 

Net purchase price

 $114,459 

 

The contingent consideration arrangement requires us to pay up to $30.0 million of additional consideration to LTST's former shareholders based on LTST's results during the first three calendar years following closing. We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.

 

Because of our 338(h)10 election, all goodwill related to the acquisition is deductible for tax purposes and there are no deferred income taxes arising from the acquisition.

 

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:

  

April 26, 2023

 

Accounts receivable

 $4,848 

Driver advances and other receivables

  98 

Inventory and supplies

  1,015 

Prepaid expenses

  561 

Net property and equipment

  42,277 

Other assets, net

  120 

Other intangibles, net

  52,870 

Total identifiable assets acquired

  101,789 
     

Accounts payable

  (565)

Accrued expenses

  (1,465)

Current portion of operating lease obligations

  (396)

Current portion of insurance and claims accrual

  (56)

Long-term portion of operating lease obligations

  (2,103)

Total liabilities assumed

  (4,585)

Net identifiable assets acquired

  97,204 

Goodwill

  17,255 

Net assets acquired

 $114,459 

 

During the nine months ended September 30, 2024 we recognized measurement period adjustments of $4.8 million, primarily related to the Section 338(h)10 election which increased goodwill from $12.4 million as of December 31, 2023 to $17.3 million as of September 30, 2024. The goodwill recognized is attributable primarily to expected cost synergies in the areas of fuel and purchases of revenue equipment. Refer to Note 14, "Goodwill and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired.

 

The amounts of revenue and earnings of LTST included in the Company’s consolidated results of operations from the acquisition date of April 26, 2023, to the periods ended September 30, 2024 and 2023 are as follows:

 

(in thousands)

 

Three months ended

  

Nine months ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Total revenue

 $35,730  $15,020  $88,857  $25,829 

Net income

 $3,058  $1,542  $8,211  $3,420 


The following unaudited pro forma consolidated results of operations assume that the acquisition of LTST occurred as of January 1, 2023:

 

(in thousands)

        
  

Three months ended

  

Nine months ended

 
  

September 30, 2023

  

September 30, 2023

 

Total revenue

 $303,741  $878,626 

Net income

 $14,687  $49,772 

Basic net income per share

 $1.13  $3.80 

Diluted net income per share

 $1.07  $3.62 

 

The pro forma financial information for all periods presented above has been calculated after adjusting the results of LTST to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets as though the acquisition occurred as of the beginning of the Company’s fiscal year 2023. The Company's historical consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the Company’s 2023 fiscal year.
 

Note 14.

Goodwill and Other Assets

 

The Landair Holdings, Inc. ("Landair") trade name has a residual value of $0.5 million.

 

Amortization expense of $7.1 million and $5.1 million for the nine months ended September 30, 2024 and 2023, respectively, was included in depreciation and amortization in the condensed consolidated statements of operations.

 

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A summary of other intangible assets as of  September 30, 2024 and  December 31, 2023 is as follows:

 

(in thousands)

 

September 30, 2024

 
  

Gross intangible assets

  

Accumulated amortization

  

Net intangible assets

  

Remaining life (months)

 

Trade name:

                

Dedicated

 $4,502  $(2,426) $2,076     

Managed Freight

  1,089   (906)  183     

Warehousing

  999   (885)  114     

Total trade name

  6,590   (4,217)  2,373   101 

Non-compete agreement:

                

Dedicated

  4,670   (1,654)  3,016     

Managed Freight

  380   (103)  277     

Total non-compete agreement

  5,050   (1,757)  3,293   31 

Customer relationships:

                

Dedicated

  60,172   (11,171)  49,001     

Managed Freight

  7,312   (1,751)  5,561     

Warehousing

  12,436   (6,477)  5,959     

Total customer relationships:

  79,920   (19,399)  60,521   152 

Credentialing:

                

Expedited

  32,000   (5,689)  26,311     

Total credentialing

  32,000   (5,689)  26,311   148 

Total other intangible assets

 $123,560  $(31,062) $92,498   144 

 

(in thousands)

 

December 31, 2023

 
  

Gross intangible assets

  

Accumulated amortization

  

Net intangible assets

  

Remaining life (months)

 

Trade name:

                

Dedicated

 $4,502  $(2,269) $2,233     

Managed Freight

  1,089   (891)  198     

Warehousing

  999   (885)  114     

Total trade name

  6,590   (4,045)  2,545   110 

Non-compete agreement:

                

Dedicated

  4,670   (778)  3,892     

Managed Freight

  380   (32)  348     

Total non-compete agreement

  5,050   (810)  4,240   40 

Customer relationships:

                

Dedicated

  60,172   (8,258)  51,914     

Managed Freight

  7,312   (1,043)  6,269     

Warehousing

  12,436   (5,700)  6,736     

Total customer relationships:

  79,920   (15,001)  64,919   159 

Credentialing:

                

Expedited

  32,000   (4,089)  27,911   157 

Total credentialing

  32,000   (4,089)  27,911     

Total other intangible assets

 $123,560  $(23,945) $99,615   151 

 

The expected amortization of these assets for the next five successive years is as follows:

 

  

(in thousands)

 

2024 (1)

  2,372 

2025

  9,488 

2026

  9,488 

2027

  8,678 

2028

  8,220 

Thereafter

  53,752 

 

(1) Excludes the nine months ended September 30, 2024.

 

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The carrying amount of goodwill increased to $78.9 million at  September 30, 2024 from $75.7 million at December 31, 2023. A summary of the changes in carrying amount of goodwill is as follows:

 

(in thousands)

 

September 30, 2024

 
  

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

 

Balance at December 31, 2023

 $15,699  $27,767  $10,531  $21,750 

Post-acquisition goodwill adjustments

  -   4,808   (1,614)  - 

Goodwill

 $15,699  $32,575  $8,917  $21,750 

 
 

Note 15.

Equity

 

On May 18, 2022, our Board approved a stock repurchase authorization of up to $75.0 million of our Class A common stock, with any remaining amount available under prior authorizations being excluded and no longer available. Under such authorization, we repurchased 2.0 million shares of our Class A common stock for $54.7 million during 2022. On January 30, 2023, the Board approved an amendment to the Company's stock repurchase program authorizing the purchase of up to an aggregate $55.0 million of our Class A common stock. The amendment added an incremental approximately $37.5 million to the approximately $17.5 million that was then-remaining under the program. Between  May 2022 and April 2023, we repurchased a total of 2.7 million shares of our Class A common stock. The program expired on January 31, 2024.

 

On February 15, 2023, our Board declared a cash dividend of $0.11 per share, which was paid on March 31, 2023, to stockholders of record on March 3, 2023. On May 17, 2023, our Board declared a cash dividend of $0.11 per share which was paid on June 30, 2023, to stockholders of record on June 2, 2023. On February 13, 2024, our Board declared a cash dividend of $0.11 per share which was paid on March 29, 2024, to stockholders of record on March 1, 2024. On May 15, 2024, our Board declared a cash dividend of $0.11 per share which was paid on June 28, 2024, to stockholders of record on June 7, 2024. On August 14, 2024, our Board declared a cash dividend of $0.11 per share which was paid on September 27, 2024, to stockholders of record on September 6, 2024.

 

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ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The condensed consolidated financial statements include the accounts of Covenant Logistics Group, Inc., a Nevada holding company, and its wholly owned subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer to Covenant Logistics Group, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

This report contains certain statements that may be considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation: any projections of earnings, revenues, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; and any statements of belief and any statements of assumptions underlying any of the foregoing. In this Form 10-Q, statements relating to future impact of accounting standards, future third-party transportation provider expenses, future tax rates, expenses, and deductions, expected freight demand, capacity, and volumes and trucking industry conditions, potential results of a default and testing of our fixed charge covenant under the Credit Facility or other debt agreements, expected sources, as well as adequacy, of working capital and liquidity (including our mix of debt, finance leases, and operating leases as means of financing revenue equipment), future inflation, future stock repurchases (including any taxes imposed on such repurchases) and dividends, if any, expected capital expenditures, allocations, and requirements, future customer relationships, including the length of contracted periods with our Dedicated segment, future interest expense, future driver market conditions, including driver satisfaction, future use of independent contractors, expected cash flows, future investments in and growth of our reportable segments and services, future margins of our reportable segments, future rates and prices, future depreciation and amortization, future salaries, wages, and related expenses, including driver compensation, expected net fuel costs, strategies for managing fuel costs, the effectiveness and impact of, and cash flows relating to, our fuel surcharge programs, future fluctuations in operations and maintenance expenses, expected effects and mix of our solo and team operations, future fleet size, management, utilization, upgrades, and age, availability and usage of tractors and trailers, the market value of used equipment, the anticipated impact of our investment in TEL, the future impact of our business model, service standards, strategic plan and other strategic initiatives, changes to and deviations from our business model, strategic plan, and other strategic initiatives, anticipated levels of and fluctuations relating to insurance and claims expenses, including the erosion of available limits in our aggregate insurance policies, any future indemnification obligations related to the TFS Settlement, contingent consideration related to our purchase of AAT, LTST and Sims, and the future impact of our acquisition of LTST and Sims, among others, are forward-looking statements. Forward-looking statements may be identified by the use of terms or phrases such as "believe," "may," "could," "would," "will," "expects," "estimates," "projects," "anticipates," "plans," " outlook," "focus," "seek," "potential," "continue," "goal," "target," "objective," "intends," derivations thereof, and similar terms and phrases. Such statements are based on currently available operating, financial, and competitive information. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled "Item 1A. Risk Factors," set forth in our Form 10-K for the year ended December 31, 2023. Readers should review and consider the factors discussed in "Item 1A. Risk Factors," set forth in our Form 10-K for the year ended December 31, 2023, along with various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.

 

All such forward-looking statements speak only as of the date of this Form 10-Q. You are cautioned not to place undue reliance on such forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in the events, conditions, or circumstances on which any such statement is based.

 

Executive Overview

 

We are pleased to report third quarter earnings of $0.94 per diluted share. Our third quarter’s results include year over year freight revenue growth of 2.1%, operating income growth of 7.2%, and a $36.6 million sequential reduction of our net indebtedness, composed of total debt and finance lease obligations, net of cash, while improving the average age of our fleet by one month. Our core business continues to perform well despite the prolonged general freight market down cycle, as a result of capitalizing on new value-added commercial opportunities where available, allocating equipment investments toward more profitable operations, and controlling costs.

 

Our asset-based segments, consisting of Expedited and Dedicated, contributed approximately 69% of total revenue and 66% of total freight revenue in the quarter. Our combined truckload operations experienced improved year over year margins primarily related to operating 8.0% more average tractors combined with improved freight revenue per total mile, partially offset by a reduction in utilization and higher costs compared to the prior year quarter. 

 

Our asset-light segments, consisting of Managed Freight and Warehousing, contributed approximately 31% of total revenue and 34% of total freight revenue in the quarter. Year over year freight revenue and operating income each declined 6.5%, due to the combination of softer volumes of available profitable freight and a large cargo related claim incurred during the third quarter in our Managed Freight reportable segment, which was partially offset by improved cost efficiencies and rate increases in our Warehousing reportable segment.

 

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Additional items of note for the third quarter of 2024 include the following:

 
 

●

Total revenue of $287.9 million, a decrease of 0.3% compared with the third quarter of 2023, and freight revenue (which excludes revenue from fuel surcharges) of $258.6 million, an increase of 2.1% compared with the third quarter of 2023;
     
 

●

Operating income of $16.2 million, compared with $15.1 million in the third quarter of 2023;
     
 

●

Net income of $13.0 million, or $0.94 per diluted share, compared with $13.5 million, or $0.99 per diluted share, in the third quarter of 2023. Net income from continuing operations of $12.9 million, or $0.93 per diluted share, compared to $13.4 million or $0.98 per diluted share, in the third quarter of 2023. Net income from discontinued operations of $0.2 million, or $0.01 per diluted share, compared to $0.2 million, or $0.01 per diluted share, in the third quarter of 2023;
     
 

●

Our equity investment in TEL provided $4.0 million of pre-tax earnings in the third quarter of 2024 compared to $5.3 million in the third quarter of 2023;
     
  ● We distributed a total of $1.5 million to stockholders through dividends;
     
  ● Since December 31, 2023, total indebtedness, comprised of total debt and finance leases, net of cash, decreased by $11.6 million to $236.7 million, primarily due to cash flows from operations exceeding our net capital investment in revenue equipment of $72.9 million and the final post-acquisition earnout payment of $10.0 million related to AAT’s operational performance. With available borrowing capacity of $90.3 million under our Credit Facility at September 30, 2024 we do not expect to be required to test our fixed charge covenant in the foreseeable future;
     
 

●

Leverage ratio (ending total indebtedness, comprised of debt and finance leases, net of cash, divided by the sum of operating income, depreciation and amortization, gain on disposition of property and equipment, net, and impairment of long lived property and equipment) as of September 30, 2024 was 1.76;
     
  ● Stockholders' equity at September 30, 2024, was $431.6 million;
     
 

●

Tangible book value at September 30, 2024, was $260.1 million; and
     
  ● During the third quarter of 2024, we voluntarily transferred the listing of our Class A common stock to the New York Stock Exchange from the NASDAQ Global Select Market.

 

Outlook

 

Although we are pleased with our results for the period, our belief is that the overall general freight market will take time to meaningfully improve. The combination of lingering excess carrier capacity and the lack of an immediate catalyst to improve volumes, feeds our thesis that improvements will be slow and steady. While we are seeing some green shoots in the form of new dedicated business awards and a small number of customer rate increases, these wins have somewhat been offset with softer than anticipated volumes, particularly in our Expedited reportable segment. Additionally, we remind investors that our less volatile operating model, consisting of a large percentage of multi-year contractual agreements, will likely take time to execute and recognize the benefits of operational leverage than our historical model if and when freight demand and pricing improve materially. Regardless of the operating environment, our focus and commitment remains unchanged as we execute our strategic plan through tactical step by step execution that will continue to allow us to capitalize on opportunities that drive us deeper into the supply chain, add value for our customers, and create efficiencies across our enterprise, which we believe will allow us to become a stronger, more profitable, and more predictable business.

 

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Non-GAAP Reconciliation

 

In addition to operating ratio, we use "adjusted operating ratio" as a key measure of profitability. Adjusted operating ratio is not a substitute for operating ratio measured in accordance with GAAP. There are limitations to using non-GAAP financial measures. Adjusted operating ratio means operating expenses, net of fuel surcharge revenue, excluding amortization of intangibles, and significant unusual items, divided by total revenue, less fuel surcharge revenue. We believe the use of adjusted operating ratio allows us to more effectively compare periods, while excluding the potentially volatile effect of changes in fuel prices, amortization of intangibles, and significant unusual items. Our Board and management focus on our adjusted operating ratio as an indicator of our performance from period to period. We believe our presentation of adjusted operating ratio is useful because it provides investors and securities analysts the same information that we use internally to assess our core operating performance. Although we believe that adjusted operating ratio improves comparability in analyzing our period-to-period performance, it could limit comparability to other companies in our industry, if those companies define adjusted operating ratio differently. Because of these limitations, adjusted operating ratio should not be considered a measure of income generated by our business or discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.

 

Operating Ratio

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  

GAAP Operating Ratio:

  

2024

    

OR %

    

2023

    

OR %

    

2024

    

OR %

    

2023

    

OR %

  

Total revenue

   $ 287,885             $ 288,721             $ 854,145             $ 829,588          

Total operating expenses

     271,650       94.4 %     273,580       94.8 %     817,998       95.8 %     785,032       94.6 %

Operating income

   $ 16,235             $ 15,141             $ 36,147             $ 44,556          
                                                                 

Adjusted Operating Ratio:

  

2024

    

Adj. OR %

    

2023

    

Adj. OR %

    

2024

    

Adj. OR %

    

2023

    

Adj. OR %

  

Total revenue

   $ 287,885             $ 288,721             $ 854,145             $ 829,588          

Fuel surcharge revenue

     (29,286 )             (35,344 )             (91,349 )             (99,085 )        

Freight revenue (total revenue, excluding fuel surcharge)

     258,599               253,377               762,796               730,503          
                                                                 

Total operating expenses

     271,650               273,580               817,998               785,032          

Adjusted for:

                                                                

Fuel surcharge revenue

     (29,286 )             (35,344 )             (91,349 )             (99,085 )        

Amortization of intangibles

     (2,372 )             (2,220 )             (7,116 )             (5,142 )        

Gain on disposal of terminals, net

     -               -               -               7,627          

Contingent consideration liability adjustment

     (720 )             (493 )             (9,534 )             (2,485 )        

Transaction and executive retirement

     -               -               -               (2,158 )        

Adjusted operating expenses

     239,272       92.5 %     235,523       93.0 %     709,999       93.1 %     683,789       93.6 %

Adjusted operating income

   $ 19,327             $ 17,854             $ 52,797             $ 46,714          

 

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Revenue and Expenses

 

We focus on targeted markets throughout the United States where we believe our service standards can provide a competitive advantage. We are a major carrier for transportation companies such as parcel freight forwarders, less-than-truckload carriers, and third-party logistics providers that require a high level of service to support their businesses, as well as for traditional truckload customers such as manufacturers, retailers, and food and beverage shippers. 

 

We have four reportable segments, which include:

 

 

●

 Expedited: The Expedited reportable segment primarily provides truckload services to customers with high service freight and delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows. Expedited services generally require two-person driver teams on equipment either owned or leased by the Company.

 

 

●

Dedicated: The Dedicated reportable segment provides customers with committed truckload capacity over contracted periods with the goal of three to five years in length. Equipment is either owned or leased by the Company.

 

 

●

Managed Freight: The Managed Freight reportable segment includes our brokerage and transport management services (“TMS”). Brokerage services provide logistics capacity by outsourcing the carriage of customers’ freight to third parties. TMS provides comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.

 

 

●

Warehousing: The Warehousing reportable segment provides day-to-day warehouse management services to customers who have chosen to outsource this function. We also provide shuttle and switching services related to shuttling containers and trailers in or around freight yards and to/from warehouses.

 

In our Expedited and Dedicated reportable segments, we primarily generate revenue by transporting freight for our customers. Generally, we are paid a predetermined rate per mile for our truckload services. We enhance our truckload revenue by charging for tractor and trailer detention, loading and unloading activities, and other specialized services, as well as through the collection of fuel surcharges to mitigate the impact of increases in the cost of fuel. The main factors that could affect our Expedited and Dedicated revenue are the revenue per mile we receive from our customers, the percentage of miles for which we are compensated, and the number of shipments and miles we generate. These factors relate, among other things, to the general level of economic activity in the United States, inventory levels, specific customer demand, the level of capacity in the trucking industry, and driver availability.

 

The main expenses that impact the profitability of our Expedited and Dedicated reportable segments are the variable costs of transporting freight for our customers. These costs include fuel expenses, driver-related expenses, such as wages, benefits, training, and recruitment, and purchased transportation expenses, which primarily include compensating independent contractors. Expenses that have both fixed and variable components include maintenance and tire expense and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, self-insured retention versus insurance premiums, fleet age, efficiency, and other factors. Historically, our main fixed costs include rentals and depreciation of long-term assets, such as revenue equipment and terminal facilities, and the compensation of non-driver personnel.

 

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Within our Expedited and Dedicated reportable segments, we operate tractors driven by a single driver and also tractors assigned to two-person driver teams. Our single driver tractors generally operate in shorter lengths of haul, generate fewer miles per tractor, and experience more non-revenue miles, but the lower productive miles are expected to be offset by generally higher revenue per loaded mile and the reduced employee expense of compensating only one driver. In contrast, our two-person driver tractors generally operate in longer lengths of haul, generate greater miles per tractor, and experience fewer non-revenue miles, but we typically receive lower revenue per loaded mile and incur higher employee expenses of compensating both drivers. We expect operating statistics and expenses to shift with the mix of single and team operations.

 

Within our Managed Freight reportable segment, we derive revenue from Brokerage and TMS services, particularly, for arranging transportation services for customers, directly and through relationships with thousands of third-party carriers and integration with our Expedited reportable segment. Additionally, utilizing technology and process management we provide detailed visibility into a customer’s movement of freight – inbound and outbound – throughout the customer’s network and focused customer support through multiyear contracts. We provide Brokerage services directly and through agents, who are paid a commission for the freight they provide. The main factors that impact profitability in terms of expenses are the variable costs of outsourcing the transportation freight for our customers and managing fixed costs, including purchased transportation, facility warehousing costs, salaries, and selling, general, and administrative expenses.

 

Within our Warehousing reportable segment, we empower customers to outsource warehousing management, including moving containers and trailers in or around freight yards. The main factors that impact profitability in terms of expenses are fixed costs, including salaries, facility warehousing costs, and selling, general, and administrative expenses. 

 

In May 2011, we acquired a 49.0% interest in TEL. TEL is a tractor and trailer equipment leasing company and used equipment reseller. We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income since May 2011.

 

Our main measures of profitability are operating ratio and adjusted operating ratio. We define adjusted operating ratio as operating expenses, net of fuel surcharge revenue, excluding amortization of intangibles, and significant unusual items, divided by total revenue, less fuel surcharge revenue. See page 25 for the uses and limitations associated with adjusted operating ratio.

 

Revenue Equipment

 

At September 30, 2024, we operated 2,306 tractors and 6,484 trailers. Of such tractors, 2,169 were owned, 22 were financed under finance or operating leases, and 115 tractors were provided by independent contractors, who own and drive their own tractors. Of such trailers, 5,842 were owned and 642 were held under finance or operating leases. At September 30, 2024, our fleet had an average tractor age of 1.6 years and an average trailer age of 5.6 years.

 

Independent contractors provide a tractor and a driver and are responsible for all operating expenses in exchange for a fixed payment per mile. We do not have the capital outlay of purchasing or leasing the tractor. The payments to independent contractors and the financing of equipment under operating leases are recorded in revenue equipment rentals and purchased transportation. Expenses associated with company owned equipment, such as interest and depreciation, and expenses associated with employee drivers, including driver compensation, fuel, and other expenses, are not incurred with respect to independent contractors. Obtaining equipment from independent contractors and under operating leases effectively shifts financing expenses from interest to "above the line" operating expenses, and as such, we evaluate our efficiency using net income margin, as well as operating ratio.

 

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RESULTS OF CONSOLIDATED OPERATIONS

 

COMPARISON OF three and nine months ended September 30, 2024 TO three and nine months ended September 30, 2023

 

The following tables set forth the percentage relationship of certain items to total revenue and freight revenue (total revenue less fuel surcharge revenue) for the periods indicated, where applicable (dollars in thousands):

 

Revenue

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Revenue:

                                

Freight revenue

   $ 258,599     $ 253,377     $ 762,796     $ 730,503  

Fuel surcharge revenue

     29,286       35,344       91,349       99,085  

Total revenue

   $ 287,885     $ 288,721     $ 854,145     $ 829,588  

 

The decrease in total revenue for the three months ended September 30, 2024 primarily resulted from a $6.3 million and $4.3 million decrease in Managed Freight and Expedited freight revenue, respectively, and a $6.1 million decrease in fuel surcharge revenue partially offset by a $15.7 million and $0.1 million increase in Dedicated and Warehousing freight revenue, respectively. The increase in total revenue for the nine months ended September 30, 2024 primarily resulted from a $34.6 million, $3.6 million, and $1.4 million increase in Dedicated, Expedited, and Warehousing freight revenue, respectively, and a $7.7 million decrease in fuel surcharge revenue partially offset by a $7.2 million decrease in Managed Freight revenue.

 

See results of reportable segment operations section for discussion of fluctuations.

 

For comparison purposes in the discussion below, we use total revenue and freight revenue (total revenue less fuel surcharge revenue) when discussing changes as a percentage of revenue. 

 

For each expense item discussed below, we have provided a table setting forth the relevant expense first as a percentage of total revenue, and then as a percentage of freight revenue.

 

Salaries, wages, and related expenses

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Salaries, wages, and related expenses

   $ 110,815     $ 102,314     $ 317,523     $ 302,753  

% of total revenue

     38.5 %     35.4 %     37.2 %     36.5 %

% of freight revenue

     42.9 %     40.4 %     41.6 %     41.4 %

 

Salaries, wages, and related expenses for the three and nine months ended September 30, 2024, increased primarily as a result of averaging more drivers and tractors due to growth in our Dedicated reportable segment, resulting in higher driver salaries, wages, and benefits, as well as an increase in workers' compensation expense due to a large current period claim.

 

We believe salaries, wages, and related expenses will continue to increase as the result of wage inflation, higher healthcare costs, and, in certain periods, increased incentive compensation due to better performance. Driver pay may also fluctuate based on the number of miles driven. While driver pay remains stable at the present time, we have historically put driver pay increases in place as necessary to address driver market pressure and will continue to do so in the future as necessary. If freight market rates increase, we would expect to, as we have historically, pass a portion of those rate increases on to our professional drivers. Salaries, wages, and related expenses will fluctuate to some extent based on the percentage of revenue generated by independent contractors and our Managed Freight reportable segment, for which payments are reflected in the purchased transportation line item.

 

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Fuel expense

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Fuel expense

   $ 28,545     $ 35,173     $ 88,590     $ 100,692  

% of total revenue

     9.9 %     12.2 %     10.4 %     12.1 %

% of freight revenue

     11.0 %     13.9 %     11.6 %     13.8 %

 

The decreases in total fuel expense are primarily related to lower fuel prices in the 2024 periods partially offset by a 3.4% and 6.5% increase in total miles compared to the same 2023 periods, respectively.

 

We receive a fuel surcharge on our loaded miles from most shippers; however, this does not cover the entire cost of fuel for several reasons, including the following: surcharges cover only loaded miles we operate; surcharges do not cover miles driven out-of-route by our drivers; and surcharges typically do not cover refrigeration unit fuel usage or fuel burned by tractors while idling. Moreover, most of our business relating to shipments obtained from freight brokers does not carry a fuel surcharge. Finally, fuel surcharges vary in the percentage of reimbursement offered, and not all surcharges fully compensate for fuel price increases even on loaded miles.

 

The rate of fuel price changes also can have an impact on results. Most fuel surcharges are based on the average fuel price as published by the Department of Energy ("DOE") for the week prior to the shipment, meaning we typically bill customers in the current week based on the previous week's applicable index. Therefore, in times of increasing fuel prices, we do not recover as much as we are currently paying for fuel. In periods of declining prices, the opposite is true. Fuel prices as measured by the DOE were $0.62 per gallon, or 14.5%, lower for the quarter ended September 30, 2024 compared with the same quarter in 2023.

 

To measure the effectiveness of our fuel surcharge program, we subtract fuel surcharge revenue (other than the fuel surcharge revenue we reimburse to independent contractors and other third parties which is included in purchased transportation) from our fuel expense. The result is referred to as net fuel expense. Our net fuel expense as a percentage of freight revenue is affected by the cost of diesel fuel net of fuel surcharge revenue, the percentage of miles driven by company tractors, our fuel economy, and our percentage of deadhead miles, for which we do not receive material fuel surcharge revenues.

 

Net fuel expense is shown below:

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Total fuel surcharge

   $ 29,286     $ 35,344     $ 91,349     $ 99,085  

Less: Fuel surcharge revenue reimbursed to independent contractors and other third parties

     2,225       2,672       7,426       7,105  

Company fuel surcharge revenue

   $ 27,061     $ 32,672     $ 83,923     $ 91,980  

Total fuel expense

   $ 28,545     $ 35,173     $ 88,590     $ 100,692  

Less: Company fuel surcharge revenue

     27,061       32,672       83,923       91,980  

Net fuel expense

   $ 1,484     $ 2,501     $ 4,667     $ 8,712  

% of freight revenue

     0.6 %     1.0 %     0.6 %     1.2 %

 

For the periods presented, net fuel expense decreased as a percentage of freight revenue primarily due to lower fuel prices and higher fuel surcharge recovery.

 

We expect to continue managing our idle time and tractor speeds, investing in more fuel-efficient tractors and auxiliary power units to improve our miles per gallon, locking in fuel hedges when deemed appropriate, partnering with customers to adjust fuel surcharge programs that are inadequate to recover a fair portion of fuel costs, and testing the latest technologies that reduce fuel consumption. Going forward, our net fuel expense is expected to fluctuate as a percentage of revenue based on factors such as diesel fuel prices, percentage recovered from fuel surcharge programs, percentage of uncompensated miles, percentage of revenue generated by team-driven tractors (which tend to generate higher miles and lower revenue per mile, thus proportionately more fuel cost as a percentage of revenue), percentage of revenue generated from independent contractors, and the success of fuel efficiency initiatives.

 

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Operations and maintenance

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Operations and maintenance

   $ 17,690     $ 16,984     $ 46,838     $ 50,328  

% of total revenue

     6.1 %     5.9 %     5.5 %     6.1 %

% of freight revenue

     6.8 %     6.7 %     6.1 %     6.9 %

 

The increase in operations and maintenance for the three months ended September 30, 2024 was insignificant both as a percentage of total revenue and freight revenue. The decrease in operations and maintenance for the nine months ended September 30, 2024 was primarily related to a decrease in the average age of our fleet and the improvement in both availability and cost of tires and maintenance related parts compared to the prior year period.

 

Going forward, we believe this category will fluctuate based on several factors, including the condition of the driver market and our ability to hire and retain drivers, our continued ability to maintain a relatively young fleet, accident severity and frequency, weather, the reliability of new and untested revenue equipment models, and the global disruption of the supply chain. Additionally, operations and maintenance costs may increase if we experience wage and parts inflation.

 

Revenue equipment rentals and purchased transportation

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Revenue equipment rentals and purchased transportation

   $ 64,434     $ 72,046     $ 193,940     $ 203,045  

% of total revenue

     22.4 %     25.0 %     22.7 %     24.5 %

% of freight revenue

     24.9 %     28.4 %     25.4 %     27.8 %

 

The decreases in revenue equipment rentals and purchased transportation for the three and nine months ended September 30, 2024 were primarily the result of a decrease in purchased transportation costs due to the decline in the spot market primarily affecting the Managed Freight reportable segment. The decrease for the nine months ended September 30, 2024 was partially offset as total miles run by independent contractors increased from 7.4% for the nine months ended September 30, 2023 to 8.2% for the same 2024 period.

 

We expect purchased transportation to fluctuate as volumes in our Managed Freight reportable segment may be volatile. In addition, if fuel prices increase, it would result in a further increase in what we pay third party carriers and independent contractors. However, this expense category will fluctuate with the number and percentage of loads hauled by independent contractors, loads handled by Managed Freight, and tractors, trailers, and other assets financed with operating leases. In addition, factors such as the cost to obtain third party transportation services and the amount of fuel surcharge revenue passed through to the third party carriers and independent contractors will affect this expense category. If industry-wide trucking capacity tightens in relation to freight demand, we may need to increase the amounts we pay to third-party transportation providers and independent contractors, which could increase this expense category on an absolute basis and as a percentage of freight revenue absent an offsetting increase in revenue. If we were to recruit more independent contractors, we would expect this line item to increase as a percentage of revenue.

 

Operating taxes and licenses 

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Operating taxes and licenses

   $ 3,227     $ 3,381     $ 8,871     $ 10,161  

% of total revenue

     1.1 %     1.2 %     1.0 %     1.2 %

% of freight revenue

     1.2 %     1.3 %     1.2 %     1.4 %

 

For the periods presented, the change in operating taxes and licenses was insignificant both as a percentage of total revenue and freight revenue.

 

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Insurance and claims

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Insurance and claims

   $ 12,241     $ 13,074     $ 44,779     $ 36,810  

% of total revenue

     4.3 %     4.5 %     5.2 %     4.4 %

% of freight revenue

     4.7 %     5.2 %     5.9 %     5.0 %

 

Insurance and claims per mile cost decreased to 17.4 cents per mile for the three months ended September 30, 2024, and increased to 21.3 cents per mile for the nine months ended September 30, 2024, respectively, compared to 19.2 cents per mile and 18.7 cents per mile, respectively, for the same 2023 periods. The decrease on a cents per mile basis for the three months ended September 30, 2024 is primarily the result of increased miles compared to the same 2023 period. The increase for the nine months ended September 30, 2024 is primarily the result of current period claims expense and the development of prior period claims compared to the same 2023 period.

 

Our insurance program includes multi-year policies with specific insurance limits that may be eroded over the course of the policy term. If that occurs, we will be operating with less liability coverage insurance at various levels of our insurance tower. For the policy period that ran from April 1, 2018 to March 31, 2021, the aggregate limits available in the coverage layer $9.0 million in excess of $1.0 million were fully eroded. We replaced our $9.0 million in excess of $1.0 million layer with a new $7.0 million in excess of $3.0 million policy that we continue to maintain. Due to the erosion of the $9.0 million in excess of $1.0 million layer, any adverse developments in claims filed between April 1, 2018 and March 31, 2021, could result in additional expense accruals. We have maintained our retention and limits set in place during the prior renewal cycle. Due to these developments, we may experience additional expense accruals, increased insurance and claims expenses, and greater volatility in our insurance and claims expenses, which could have a material adverse effect on our business, financial condition, and results of operations. 

 

We expect insurance and claims expense to continue to be volatile over the long-term. Recently the trucking industry has experienced a decline in the number of carriers and underwriters that write insurance policies or that are willing to provide insurance for trucking companies, however, for 2024, we expect insurance premiums expense to be similar to that of 2023.

 

Communications and utilities

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Communications and utilities

   $ 1,330     $ 1,254     $ 4,005     $ 3,753  

% of total revenue

     0.5 %     0.4 %     0.5 %     0.5 %

% of freight revenue

     0.5 %     0.5 %     0.5 %     0.5 %

 

For the periods presented, the change in communications and utilities were insignificant both as a percentage of total revenue and freight revenue.

 

General supplies and expenses

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

General supplies and expenses

   $ 11,937     $ 11,774     $ 47,244     $ 38,169  

% of total revenue

     4.1 %     4.1 %     5.5 %     4.6 %

% of freight revenue

     4.6 %     4.6 %     6.2 %     5.2 %

 

The change in general supplies and expenses for the three months ended September 30, 2024 was insignificant both as a percentage of total revenue and freight revenue. The increase in general supplies and expenses for the nine months ended September 30, 2024 was primarily the result of the increase in the contingent consideration liability since the 2023 period partially offset by acquisition costs recognized during the 2023 period with no similar costs during the same 2024 period.

 

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Depreciation and amortization

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Depreciation and amortization

   $ 21,222     $ 18,182     $ 64,460     $ 51,701  

% of total revenue

     7.4 %     6.3 %     7.5 %     6.2 %

% of freight revenue

     8.2 %     7.2 %     8.5 %     7.1 %

 

Depreciation and amortization consists primarily of depreciation of tractors, trailers, and other capital assets, as well as amortization of intangible assets.

 

Depreciation expense increased $2.8 million and $10.7 million to $18.8 million and $57.3 million for the three and nine months ended September 30, 2024, respectively, compared to $16.0 million and $46.6 million in the same 2023 periods, as a result of increased costs on new equipment and an increase in our average total tractor count. Amortization of intangible assets was $2.4 million and $7.1 million for three and nine months ended September 30, 2024, respectively, compared to $2.2 million and $5.1 million for the same 2023 periods. The increase for the three months ended September 30, 2024 is due to the amortization of the intangible assets related to the Sims acquisitions and the increase for the nine months ended September 30, 2024 is due to the amortization of intangible assets related to the LTST and Sims acquisitions.

 

We expect depreciation and amortization to increase going forward as the cost of new equipment increases and we see the full year effect of our 2023 equipment replacement plan. Additionally, changes in the used tractor market have caused us to adjust residual values and increase depreciation, and further adjustments may be necessary in the future. These changes may also cause us to hold assets longer than planned, or experience increased losses on sale. Successfully executing our plan to grow the Dedicated reportable segment could also increase depreciation and amortization going forward.

 

Loss (gain) on disposition of property and equipment, net

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Loss (gain) on disposition of property and equipment, net

   $ 209     $ (602 )   $ 1,748     $ (12,380 )

% of total revenue

     0.1 %     (0.2 %)     0.2 %     (1.5 %)

% of freight revenue

     0.1 %     (0.2 %)     0.2 %     (1.7 %)

 

The loss on disposition of property and equipment, net for the three and nine months ended September 30, 2024, compared to a gain on disposition of property and equipment, net for the prior periods, was primarily the result of reductions in the gain on disposition of equipment due to the soft used equipment market. Additionally, the nine months ended 2023 includes the $7.6 million gain on sale of a Tennessee terminal in the first quarter of 2023, with no such sales in the same 2024 period.

 

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Interest expense, net

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Interest expense, net

   $ 3,204     $ 2,637     $ 10,341     $ 5,530  

% of total revenue

     1.1 %     0.9 %     1.2 %     0.7 %

% of freight revenue

     1.2 %     1.0 %     1.4 %     0.8 %

 

The change in interest expense for the three months ended September 30, 2024 was insignificant both as a percentage of total revenue and freight revenue. For nine months ended September 30, 2024, the increase in interest expense was primarily the result of an increase in revenue equipment installment notes as a result of additional equipment added during 2023 and 2024 as a result of our revenue equipment replacement plan, as well as increased interest rates since the 2023 periods.

 

This line item will fluctuate based on our decision with respect to purchasing revenue equipment with balance sheet debt versus operating leases, our revenue equipment replacement plan, and changing interest rates.

 

Income from equity method investment

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Income from equity method investment

   $ 3,993     $ 5,335     $ 11,763     $ 16,659  

 

We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income or loss. The decreases in TEL's contribution to our results for the three and nine months ended September 30, 2024 were primarily the result of a deterioration in the equipment market, suppressing gains on sale of used equipment, and increased interest expense associated with higher interest rates on equipment related debt compared to the 2023 periods. Due to TEL's business model, gains and losses on sale of equipment is a normal part of the business and can cause earnings to fluctuate from period to period and therefore our income from investment to similarly fluctuate. We expect TEL's net income for the remainder of 2024 to decline compared that of the third quarter of 2024, resulting in a lower full year 2024 net income from TEL compared to full year 2023.

 

Income tax expense

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Income tax expense

   $ 4,141     $ 4,483     $ 8,817     $ 13,701  

% of total revenue

     1.4 %     1.6 %     1.0 %     1.7 %

% of freight revenue

     1.6 %     1.8 %     1.2 %     1.9 %

 

The decreases in income tax expense for the three and nine months ended September 30, 2024 were the result of a $0.8 million and $18.1 million decrease in pre-tax income, respectively, compared to the same 2023 periods. The decreases in pre-tax income resulted from the aforementioned changes in operating income and earnings on investment in TEL.

 

The effective tax rate is different from the expected combined tax rate due primarily to state tax expense and permanent differences. The rate impact of items such as executive compensation disallowance and the deductibility of per diem payments will fluctuate in future periods as income fluctuates.

 

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RESULTS OF SEGMENT OPERATIONS

 

We have four reportable segments, Expedited, Dedicated, Managed Freight, and Warehousing, each as described above.

 

COMPARISON OF three and nine months ended September 30, 2024 TO three and nine months ended September 30, 2023

 

The following table summarizes revenue and operating income data by reportable segment:

 

(in thousands)

  

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Revenues:

                                

Expedited

   $ 104,314     $ 113,419     $ 317,795     $ 318,388  

Dedicated

     94,715       80,242       272,662       241,680  

Managed Freight

     63,385       69,713       186,668       193,868  

Warehousing

     25,471       25,347       77,020       75,652  

Total revenues

   $ 287,885     $ 288,721     $ 854,145     $ 829,588  
                                 

Operating Income:

                                

Expedited

   $ 6,467     $ 7,522     $ 16,019     $ 22,613  

Dedicated

     5,429       2,976       6,182       13,366  

Managed Freight

     2,451       3,742       8,050       6,905  

Warehousing

     1,888       901       5,896       1,672  

Total operating income

   $ 16,235     $ 15,141     $ 36,147     $ 44,556  

 

The decrease in Expedited revenue for the three months ended September 30, 2024 relates to a decrease in average freight revenue per tractor per week of 4.8%, and a $4.8 million decrease in fuel surcharge revenue compared to the 2023 quarter. The decrease in average freight revenue per tractor per week for the quarter ended September 30, 2024 is the result of a 3.7% decrease in average miles per unit and a 3.0 cents per mile (or 1.2%) decrease in average rate per total mile as compared to the 2023 quarter. Expedited team-driven tractors averaged 823 and 831 tractors in the third quarter of 2024 and 2023, respectively.

 

For the nine months ended September 30, 2024, the decrease in Expedited revenue relates to a decrease in average freight revenue per tractor per week of 2.8%, and a $4.2 million decrease in fuel surcharge revenue partially offset by a 34 (or 3.9%) average tractor increase compared to the same 2023 period. The decrease in average freight revenue per tractor per week for the nine months ended September 30, 2024 is the result of a 6.0 cents per mile (or 2.8%) decrease in average rate per total mile partially offset by a 0.3% increase in average miles per unit compared to the same 2023 period. Expedited team-driven tractors averaged 837 and 801 for the nine months ended September 30, 2024 and 2023, respectively.

 

The increase in Dedicated revenue for the three months ended September 30, 2024 relates to a 167, or 13.5% average tractor increase and an increase in average freight revenue per tractor per week of 8.7% compared to the 2023 quarter. The increase in average freight revenue per tractor per week was the result of a 18.4 cents per mile (or 6.8%) increase in average rate per total mile and a 1.8% increase in average miles per unit compared to the 2023 quarter.

 

For the nine months ended September 30, 2024, the increase in Dedicated revenue relates to a 110 (or 8.9%) average tractor increase and an increase in average freight revenue per tractor per week of 7.1% compared to the same 2023 period. The increase in average freight revenue per tractor per week for the nine months ended September 30, 2024 is the result of a 16.9 cents per mile (or 6.3%) increase in average rate per total mile and a 1.1% increase in average miles per unit compared to the same 2023 period.

 

For the three and nine months ended September 30, 2024, Managed Freight total revenue decreased primarily as a result of a degraded spot market, partially offset by the third quarter 2023 Sims acquisition.

 

For the three and nine months ended September 30, 2024, Warehousing total revenue increased as a result of customer rate increases since the same 2023 periods.

 

The increase in operating income for the three months ended September 30, 2024, was the result of an $8.1 million, $5.0 million, and $0.9 million decrease in Expedited, Managed Freight, and Warehousing operating expenses, respectively, partially offset by a $12.0 million increase in Dedicated operating expenses and the decrease in total revenue described above. The decrease in operating income for the nine months ended September 30, 2024, was the result of a $38.2 million and $6.0 million increase in Dedicated and Expedited operating expenses, respectively, partially offset by an $8.4 million and $2.9 million decrease in Managed Freight and Warehousing operating expenses, as well as the aforementioned changes in total revenue.

 

The decrease in Expedited operating income for the three and nine months ended September 30, 2024 was primarily the result of the aforementioned decreases in revenue and changes to the Expedited operating expenses. The decrease in Expedited operating expenses for the three months ended September 30, 2024 was primarily the result of a decrease in fuel expense and a decrease in operations and maintenance expenses as a compared to the same 2023 period, partially offset by a large workers' compensation claim during the 2024 period. The increase in Expedited operating expenses for the nine months ended September 30, 2024, primarily related to increases in insurance and claims expense, depreciation expense as a result of increased equipment cost, and losses on the sale of equipment since the 2023 period, partially offset by reductions in fuel expense and operations and maintenance expense. The increase in Dedicated operating income for the three months ended September 30, 2024 was primarily the result of the aforementioned increase in revenue, partially offset by an increase in Dedicated operating expenses. The decrease in Dedicated operating income for the nine months ended September 30, 2024 was primarily the result of an increase in Dedicated operating expenses partially offset by the aforementioned increase in revenue. The increase in Dedicated operating expenses for the three and nine months ended September 30, 2024, was primarily the result of increased salaries, wages, and benefits for our professional drivers of $6.6 million and $13.9 million, respectively, as the result of growth, the increase in the contingent consideration liability of $0.7 million and $9.5 million, respectively, increased depreciation expense as a result of growth and increased equipment costs, and losses on the sale of equipment since the 2023 period. Additionally, during the nine months ended September 30, 2023, we sold a Tennessee terminal resulting in a $7.6 million gain which is included in gain on disposition of property and equipment, net in the condensed consolidated statements of operations with no similar gain in the same 2024 period.

 

The decrease in operating income for Managed Freight for the three months ended September 30, 2024was primarily the result of the aforementioned decreases in revenue partially offset by a decrease in Managed Freight operating expenses. The decrease in Managed Freight operating expenses for the three months ended September 30, 2024 was primarily the result of the changes in revenue driving changes in variable expenses, primarily purchased transportation, partially offset by a large cargo related claim during the 2024 period. The increase in operating income for Managed Freight for the nine months ended September 30, 2024 was primarily the result of a decrease in Managed Freight operating expenses partially offset by the aforementioned decrease in revenue. The decrease in Managed Freight operating expenses for the nine months ended September 30, 2024 was primarily the result of the changes in revenue driving changes in variable expenses, primarily purchased transportation, as well as a small number of prior period claims recognized in the same 2023 period with no similar 2024 activity. Additionally, operating income improved for both periods as a result of the impact of the higher-margin Sims acquisition since the same 2023 periods. 

 

The increase in operating income for Warehousing for the three and nine months ended September 30, 2024 was primarily the result of the aforementioned increase in revenue and a decrease in Warehousing operating expenses. The decrease in Warehousing operating expenses for the three and nine months ended September 30, 2024, was a result of a reduction in outsourced labor since the 2023 periods. In our asset-light reportable segments, we are prioritizing long-term growth, focusing on talent acquisition and technology enhancements.

 

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LIQUIDITY AND CAPITAL RESOURCES

 

Our business requires significant capital investments over the short-term and the long-term. Historically, we have financed our capital requirements with borrowings under our Credit Facility, cash flows from operations, long-term operating leases, finance leases, secured installment notes with finance companies, and proceeds from the sale of our used revenue equipment. Going forward, we expect revenue equipment acquisitions to primarily be through purchases and finance leases. Further, we expect to increase our capital allocation toward our Dedicated, Managed Freight, and Warehousing reportable segments to become the go-to partner for our customers’ most critical transportation and logistics needs. We had working capital (total current assets less total current liabilities) of $20.1 million and $15.7 million at September 30, 2024 and December 31, 2023, respectively. Our working capital on any particular day can vary significantly due to the timing of collections and cash disbursements. Based on our expected financial condition, net capital expenditures, results of operations, related net cash flows, installment notes, and other sources of financing, we believe our working capital and sources of liquidity will be adequate to meet our current and projected needs, and we do not expect to experience material liquidity constraints in the foreseeable future.

 

With an average tractor fleet age of 1.6 years at September 30, 2024, we believe we have flexibility to manage our fleet, and we plan to regularly evaluate our tractor replacement cycle, new tractor purchase requirements, and purchase options. If we were to grow our independent contractor fleet, our capital requirements would be reduced.

 

As of September 30, 2024 and December 31, 2023 we had $316.5 million and $293.5 million in debt and lease obligations, respectively, consisting of the following:

 

 

●

 No and $11.6 million outstanding borrowings under the Credit Facility;
     
  ● No outstanding borrowings under the Draw Note;
     
  ● $247.4 million and $213.9 million in revenue equipment installment notes, respectively;
     
  ● $18.1 million and $19.1 million in real estate notes, respectively;
     
  ● $6.3 million and $6.1 million of the principal portion of financing lease obligations, respectively; and
     
  ● $44.6 million and $42.8 million of the operating lease obligations, respectively.

 

The increase in revenue equipment installment notes is primarily due to replacing our older equipment with new equipment as well as growth in our Dedicated reportable segment.

 

As of September 30, 2024, we had no borrowings outstanding, undrawn letters of credit outstanding of approximately $19.7 million, and available borrowing capacity of $90.3 million under the Credit Facility. Additionally, we had $45.0 million of remaining availability of a $45.0 million Draw Note from Triumph which is available solely to fund any indemnification owed to Triumph in relation to the TFS Settlement. Fluctuations in the outstanding balance and related availability under our Credit Facility are driven primarily by cash flows from operations and the timing and nature of property and equipment additions that are not funded through notes payable, as well as the nature and timing of collection of accounts receivable, payments of accrued expenses, and receipt of proceeds from disposals of property and equipment. 

 

Our net capital expenditures for the nine months ended September 30, 2024 totaled $77.5 million of expenditures, as compared to $143.0 million of expenditures for the prior year period. During the nine months ended September 30, 2024, we took delivery of approximately 691 new tractors and 757 new trailers, while disposing of approximately 791 used tractors and 319 used trailers. Our current fleet plan for the remainder of 2024 includes the delivery of an additional 104 new company replacement tractors and 93 additional new trailer deliveries. Net losses on disposal of equipment and real estate in the nine months ended September 30, 2024 were $1.7 million compared to $12.4 million net gains in the same prior year period primarily due to the $7.6 million gain on a Tennessee terminal during the 2023 period and the aforementioned disposal of revenue equipment as part of our trade cycle. For the balance of 2024, our baseline expectation for net capital expenditures is $15.0 million to $20.0 million. Our capital investment plan reflects our priorities of maintaining the average age of our fleet in a manner that allows us to optimize operational uptime and related operating costs, and offering a fleet of equipment that our professional drivers are proud to operate. We expect the benefits of improved utilization, fuel economy and maintenance costs to produce acceptable returns despite increased prices of new equipment and potentially lower values of used equipment.

 

We distributed a total of $4.3 million to stockholders in the first nine months of 2024 through dividends.

 

We believe we have sufficient liquidity to satisfy our cash needs, and we will continue to evaluate the nature and extent of potential short-term and long-term impacts to our business.

 

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Cash Flows

 

Despite a year over year reduction in net income of $13.2 million, net cash flows provided by operating activities increased to $101.0 million for the nine months ended September 30, 2024, compared to $52.9 million for the same 2023 period, primarily due to increases in non-cash expenses such as depreciation and amortization and reductions to non-cash gains on sale of property and equipment in the current period. Changes in operating assets and liabilities such as receivables and driver advances and insurance and claims accruals provided improved cash flow for the nine months ended September 30, 2024, compared to the 2023 period. 

 

Net cash flows used by investing activities were $104.2 million for the nine months ended September 30, 2024, compared to $144.6 million used in the same 2023 period. The decrease in net cash flows used by investing activities was primarily due to the April 2023 and the August 2023 acquisitions of LTST and Sims, respectively, for $107.9 million, net of cash acquired, partially offset by the $4.6 million payment related to the acquisition of LTST and our Section 338(h)(10) election during the 2024 period, and the timing of our trade cycle whereby we took delivery of approximately 691 new tractors and 757 new trailers, while disposing of approximately 791 used tractors and 319 used trailers during the 2024 period compared to delivery of 607 new tractors and 367 new trailers, while disposing of approximately 926 used tractors and 518 used trailers in the same 2023 period. Additionally, the 2023 period provided $12.5 million of proceeds related to the sale of a Tennessee terminal.

 

Net cash flows provided by financing activities were approximately $36.1 million for the nine months ended September 30, 2024, compared to $30.4 million provided in the same 2023 period. The increase in net cash flows provided by financing activities was primarily a function of no repurchases of shares of our Class A common stock during the 2024 period compared to $25.4 million during the same 2023 period, partially offset by net proceeds relating to our notes payable and our Credit Facility of $47.3 million in the 2024 period compared to $76.9 million in the 2023 period.

 

Net cash flows provided by operating activities and provided by financing activities in the 2024 period also included payment of $3.0 million and $7.0 million, respectively, of contingent consideration liabilities related to the acquisition of AAT. Net cash flows provided by operating activities and provided by financing activities in the 2023 period also included payment of $0.8 million and $9.2 million, respectively, of contingent consideration liabilities related to the acquisition of AAT.

 

On May 18, 2022 our Board approved a stock repurchase authorization of up to $75.0 million of our Class A common stock, with any remaining amount available under prior authorizations being excluded and no longer available. Under such authorization, we repurchased 2.0 million shares of our Class A common stock for $54.7 million during 2022. On January 30, 2023, the Board approved an amendment to the Company's stock repurchase program authorizing the purchase of up to an aggregate $55.0 million of our Class A common stock. The amendment added an incremental approximately $37.5 million to the approximately $17.5 million that was then-remaining under the program. Between May 2022 and April 2023, we repurchased a total of 2.7 million shares of our Class A common stock. The program expired on January 31, 2024.

 

Our cash flows may fluctuate depending on capital expenditures, future stock repurchases, dividends, strategic investments or divestitures, any indemnification calls related to the TFS Settlement, and the extent of future income tax obligations and refunds.

 

Page 36
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES 

 

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make decisions based upon estimates, assumptions, and factors we consider as relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of our estimates and assumptions. Accordingly, actual results could differ from those anticipated. There have been no material changes to our most critical accounting policies and estimates during the three and nine months ended September 30, 2024, compared to those disclosed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our Form 10-K for the year ended December 31, 2023.

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Our market risks have not changed materially from the market risks reported in our Form 10-K for the year ended December 31, 2023.

 

Page 37
Table of Contents

 

 

ITEM 4.     CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We have established disclosure controls and procedures to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and the Board.

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even effective internal control over financial reporting can only provide reasonable assurance of achieving its control objectives.

 

We have confidence in our internal controls and procedures. Nevertheless, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure procedures and controls or our internal controls will prevent all errors or intentional fraud. An internal control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. As a result of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all our control issues and instances of fraud, if any, have been detected.

 

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, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

Page 38
Table of Contents
 

PART II

OTHER INFORMATION

 

ITEM 1.

LEGAL PROCEEDINGS

 

Information about our legal proceedings is included in Note 10, "Commitments and Contingencies" of the accompanying condensed consolidated financial statements and is incorporated by reference herein.

 

 

Page 39
Table of Contents

 

ITEM 1A.

RISK FACTORS

 

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. Our Form 10-K for the year ended December 31, 2023, in the sections entitled "Item 1A. Risk Factors," describe some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects.

 

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Table of Contents

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the quarter ended September 30, 2024, we did not engage in unregistered sales of securities or any other transactions required to be reported under this Item 2 of Part II on Form 10-Q.

 

The payment of cash dividends is currently limited by our financing arrangements, including certain covenants under our Credit Facility. We distributed a total of $4.3 million to stockholders in the first nine months of 2024 through dividends.

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

 

Not applicable.

 

 

ITEM 5.

OTHER INFORMATION

 

During the third quarter of 2024, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

 

Page 41
Table of Contents
 
 

ITEM 6.       EXHIBITS

 

Exhibit

Number

 

Reference

 

Description

3.1

(1)

Third Amended and Restated Articles of Incorporation

3.2

(2)

Sixth Amended and Restated Bylaws

4.1

(1)

Third Amended and Restated Articles of Incorporation

4.2

(2)

Sixth Amended and Restated Bylaws

31.1

#

Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Principal Executive Officer

31.2

#

Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by James S. Grant, the Company's Principal Financial Officer

32.1

##

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Chief Executive Officer

32.2

##

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by James S. Grant, the Company's Principal Financial Officer

101.INS

   Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

  

Inline XBRL Taxonomy Extension Schema Document

101.CAL

  

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

  

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

  

Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE

  

Inline XBRL Taxonomy Extension Presentation Linkbase Document
104   Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

References:

    

(1)

 Incorporated by reference to Exhibit 3.1 to the Company's Report on Form 8-K (File No. 000-24960), filed July 2, 2020.

(2)

 Incorporated by reference to Exhibit 3.2 to the Company's Report on Form 8-K (File No. 000-24960), filed August 9, 2021.

#

Filed herewith.

##

Furnished herewith.

 

Page 42
Table of Contents

 

SIGNATURE

 

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

 

 

 

COVENANT LOGISTICS GROUP, INC.
   
   

Date: November 1, 2024

By:

/s/ James S. Grant
   

James S. Grant
   

Chief Financial Officer in his capacity as such and as a duly authorized officer on behalf of the issuer

 

 

Page 43

Exhibit 31.1

 

I, David R. Parker, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Covenant Logistics Group, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a.     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b.     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: November 1, 2024

/s/ David R. Parker
 

David R. Parker
 

Principal Executive Officer

 

 

Exhibit 31.2

 

I, James S. Grant, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Covenant Logistics Group, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a.     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b.     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: November 1, 2024

/s/ James S. Grant
 

James S. Grant

Principal Financial Officer

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

 

In connection with the Quarterly Report of Covenant Logistics Group, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David R. Parker, Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify, that to the best of my knowledge:

 

(1)     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: November 1, 2024

/s/ David R. Parker
 

David R. Parker
 

Chief Executive Officer

 

A signed original of this written statement required by Section 906 has been provided to Covenant Logistics Group, Inc. and will be retained by Covenant Logistics Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

 

In connection with the Quarterly Report of Covenant Logistics Group, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James S. Grant, Chief Financial Officer and Principal Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify, that to the best of my knowledge:

 

(1)     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: November 1, 2024

/s/ James S. Grant
  James S. Grant
 

Chief  Financial Officer

 

A signed original of this written statement required by Section 906 has been provided to Covenant Logistics Group, Inc. and will be retained by Covenant Logistics Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 
v3.24.3
Document And Entity Information - shares
 9 Months Ended
Sep. 30, 2024
Oct. 30, 2024
Document Information [Line Items]    
Entity Central Index Key 0000928658  
Entity Registrant Name COVENANT LOGISTICS GROUP, INC.  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2024  
Document Transition Report false  
Entity File Number 001-42192  
Entity Incorporation, State or Country Code NV  
Entity Tax Identification Number 88-0320154  
Entity Address, Address Line One 400 Birmingham Hwy.  
Entity Address, City or Town Chattanooga  
Entity Address, State or Province TN  
Entity Address, Postal Zip Code 37419  
City Area Code 423  
Local Phone Number 821-1212  
Title of 12(b) Security $0.01 Par Value Class A common stock  
Trading Symbol CVLG  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Common Class B [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   2,350,000
Common Class A [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   10,829,667
v3.24.3
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Current assets:    
Cash and cash equivalents $ 35,197 $ 2,294
Accounts receivable, net of allowance of $2,357 in 2024 and $2,449 in 2023 135,080 142,504
Drivers' advances and other receivables, net of allowance of $586 in 2024 and $591 in 2023 4,430 4,367
Inventory and supplies 6,109 4,848
Prepaid expenses 21,054 17,880
Assets held for sale 4,914 6,782
Income taxes receivable 7,533 6,739
Other short-term assets 430 531
Total current assets 214,747 185,945
Property and equipment, at cost 735,810 692,532
Less: accumulated depreciation and amortization (198,619) (177,877)
Net property and equipment 537,191 514,655
Goodwill 78,941 75,747
Other intangibles, net 92,498 99,615
Other assets, net 86,009 78,067
Noncurrent assets of discontinued operations 259 409
Total assets 1,009,645 954,438
Current liabilities:    
Accounts payable 31,644 33,155
Accrued expenses 55,722 59,067
Current maturities of long-term debt 73,101 47,651
Current portion of finance lease obligations 985 781
Operating lease obligations 10,980 11,950
Current portion of insurance and claims accrual 22,214 17,687
Total current liabilities 194,646 170,291
Long-term debt 192,461 196,894
Long-term portion of finance lease obligations 5,353 5,296
Long-term portion of operating lease obligations 33,608 30,892
Insurance and claims accrual 19,461 15,746
Deferred income taxes 119,016 116,095
Other long-term liabilities 12,513 14,169
Long-term liabilities of discontinued operations 1,035 1,635
Total liabilities 578,093 551,018
Stockholders' equity:    
Additional paid-in-capital 158,481 155,846
Treasury stock at cost; 5,296,119 and 5,404,269 shares as of September 30, 2024 and December 31, 2023, respectively (131,472) (132,346)
Accumulated other comprehensive income 579 816
Retained earnings 403,779 378,919
Total stockholders' equity 431,552 403,420
Total liabilities and stockholders' equity 1,009,645 954,438
Common Class A [Member]    
Stockholders' equity:    
Common stock 161 161
Common Class B [Member]    
Stockholders' equity:    
Common stock $ 24 $ 24
v3.24.3
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Accounts receivable allowance $ 2,357 $ 2,449
Driver's advances and other receivables, allowance $ 586 $ 591
Treasury stock, shares (in shares) 5,296,119 5,404,269
Common Class A [Member]    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 40,000,000 40,000,000
Common stock, shares issued (in shares) 16,125,786 16,125,786
Common stock, shares outstanding (in shares) 10,829,667 10,721,517
Common Class B [Member]    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 5,000,000 5,000,000
Common stock, shares issued (in shares) 2,350,000 2,350,000
Common stock, shares outstanding (in shares) 2,350,000 2,350,000
v3.24.3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Revenues        
Revenue $ 287,885 $ 288,721 $ 854,145 $ 829,588
Operating expenses:        
Salaries, wages, and related expenses 110,815 102,314 317,523 302,753
Fuel expense 28,545 35,173 88,590 100,692
Operations and maintenance 17,690 16,984 46,838 50,328
Revenue equipment rentals and purchased transportation 64,434 72,046 193,940 203,045
Operating taxes and licenses 3,227 3,381 8,871 10,161
Insurance and claims 12,241 13,074 44,779 36,810
Communications and utilities 1,330 1,254 4,005 3,753
General supplies and expenses 11,937 11,774 47,244 38,169
Depreciation and amortization 21,222 18,182 64,460 51,701
Loss (gain) on disposition of property and equipment, net 209 (602) 1,748 (12,380)
Total operating expenses 271,650 273,580 817,998 785,032
Operating income 16,235 15,141 36,147 44,556
Interest expense, net 3,204 2,637 10,341 5,530
Income from equity method investment (3,993) (5,335) (11,763) (16,659)
Income before income taxes 17,024 17,839 37,569 55,685
Income tax expense 4,141 4,483 8,817 13,701
Income from continuing operations, net of tax 12,883 13,356 28,752 41,984
Income from discontinued operations, net of tax 150 150 450 450
Net income $ 13,033 $ 13,506 $ 29,202 $ 42,434
Basic income per share: (1)        
Income from continuing operations (in dollars per share) $ 0.98 $ 1.03 $ 2.19 $ 3.21
Income from discontinued operations (in dollars per share) 0.01 0.01 0.03 0.03
Net income per share (in dollars per share) [1] 0.99 1.04 2.22 3.24
Diluted income per share: (1)        
Income from continuing operations (in dollars per share) 0.93 0.98 2.08 3.06
Income from discontinued operations (in dollars per share) 0.01 0.01 0.03 0.03
Net income per share (in dollars per share) [1] $ 0.94 $ 0.99 $ 2.11 $ 3.09
Basic weighted average shares outstanding (in shares) 13,177 12,947 13,137 13,082
Diluted weighted average shares outstanding (in shares) 13,901 13,679 13,827 13,739
Cargo and Freight [Member]        
Revenues        
Revenue $ 258,599 $ 253,377 $ 762,796 $ 730,503
Fuel Surcharge [Member]        
Revenues        
Revenue $ 29,286 $ 35,344 $ 91,349 $ 99,085
[1] Total may not sum due to rounding.
v3.24.3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Net income $ 13,033 $ 13,506 $ 29,202 $ 42,434
Other comprehensive income:        
Unrealized (loss) gain on effective portion of cash flow hedges, net of tax of $152 and ($20) in 2024 and ($177) and ($221) in 2023, respectively (435) 505 57 632
Reclassification of cash flow hedge gains into statement of operations, net of tax of $34 and $103 in 2024 and $35 and $95 in 2023, respectively (96) (100) (294) (271)
Total other comprehensive (loss) income (531) 405 (237) 361
Comprehensive income $ 12,502 $ 13,911 $ 28,965 $ 42,795
v3.24.3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Unrealized (loss) gain on effective portion of cash flow hedges, tax $ 152 $ (20) $ (177) $ (221)
Reclassification of cash flow hedge losses (gains) into statement of operations, tax $ 34 $ 103 $ 35 $ 95
v3.24.3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Common Class A [Member]
Common Stock [Member]
Common Class B [Member]
Additional Paid-in Capital [Member]
Treasury Stock, Common [Member]
AOCI Attributable to Parent [Member]
Retained Earnings [Member]
Total
Balances at Dec. 31, 2022 $ 161 $ 24 $ 152,886 $ (106,500) $ 1,086 $ 329,471 $ 377,128
Net income 0 0 0 0 0 16,635 16,635
Cash dividend 0 0 0 0 0 (1,466) (1,466)
Share repurchase 0 0 0 (20,805) 0 0 (20,805)
Other comprehensive income (loss) 0 0 0 0 (403) 0 (403)
Stock-based employee compensation expense 0 0 1,558 0 0   1,558
Issuance of restricted shares, net 0 0 (1,523) 38 0 0 (1,485)
Balances at Mar. 31, 2023 161 24 152,921 (127,267) 683 344,640 371,162
Balances at Dec. 31, 2022 161 24 152,886 (106,500) 1,086 329,471 377,128
Net income             42,434
Other comprehensive income (loss)             361
Balances at Sep. 30, 2023 161 24 156,232 (131,402) 1,447 367,561 394,023
Balances at Mar. 31, 2023 161 24 152,921 (127,267) 683 344,640 371,162
Net income 0 0 0 0 0 12,293 12,293
Cash dividend 0 0 0 0 0 (1,442) (1,442)
Share repurchase 0 0 0 (4,683) 0 0 (4,683)
Other comprehensive income (loss) 0 0 0 0 359 0 359
Stock-based employee compensation expense 0 0 1,774 0 0   1,774
Exercise of stock options 0 0 42 194 0 0 236
Issuance of restricted shares, net 0 0 (389) 354 0 0 (35)
Balances at Jun. 30, 2023 161 24 154,348 (131,402) 1,042 355,491 379,664
Net income 0 0 0 0 0 13,506 13,506
Cash dividend 0 0 0 0 0 (1,436) (1,436)
Other comprehensive income (loss) 0 0 0 0 405 0 405
Stock-based employee compensation expense 0 0 1,884 0 0   1,884
Balances at Sep. 30, 2023 161 24 156,232 (131,402) 1,447 367,561 394,023
Balances at Dec. 31, 2023 161 24 155,846 (132,346) 816 378,919 403,420
Net income 0 0 0 0 0 3,974 3,974
Cash dividend 0 0 0 0 0 (1,443) (1,443)
Share repurchase 0 0 0 0 0 0 0
Other comprehensive income (loss) 0 0 0 0 260 0 260
Stock-based employee compensation expense 0 0 947 0 0   947
Exercise of stock options 0 0 150 278 0 0 428
Issuance of restricted shares, net 0 0 (248) (91) 0 0 (339)
Balances at Mar. 31, 2024 161 24 156,695 (132,159) 1,076 381,450 407,247
Balances at Dec. 31, 2023 161 24 155,846 (132,346) 816 378,919 403,420
Net income             29,202
Other comprehensive income (loss)             (237)
Balances at Sep. 30, 2024 161 24 158,481 (131,472) 579 403,779 431,552
Balances at Mar. 31, 2024 161 24 156,695 (132,159) 1,076 381,450 407,247
Net income 0 0 0 0 0 12,194 12,194
Cash dividend 0 0 0 0 0 (1,448) (1,448)
Other comprehensive income (loss) 0 0 0 0 34 0 34
Stock-based employee compensation expense 0 0 765 0 0   765
Exercise of stock options 0 0 195 386 0 0 581
Issuance of restricted shares, net 0 0 (207) 207 0 0 0
Balances at Jun. 30, 2024 161 24 157,448 (131,566) 1,110 392,196 419,373
Net income 0 0 0 0 0 13,033 13,033
Cash dividend 0 0 0 0 0 (1,450) (1,450)
Other comprehensive income (loss) 0 0 0 0 (531) 0 (531)
Stock-based employee compensation expense 0 0 988 0 0 0 988
Exercise of stock options 0 0 45 94 0 0 139
Balances at Sep. 30, 2024 $ 161 $ 24 $ 158,481 $ (131,472) $ 579 $ 403,779 $ 431,552
v3.24.3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares
 3 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dividend, per share (in dollars per share) $ 0.11 $ 0.11 $ 0.11 $ 0.11 $ 0.11 $ 0.11
v3.24.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Cash flows from operating activities:              
Net income (loss) $ 13,033 $ 3,974 $ 13,506 $ 16,635 $ 29,202 $ 42,434  
Adjustments to reconcile net income to net cash provided by operating activities:              
Provision for losses on accounts receivable         (46) 10  
Reversal of gain on sales to equity method investee         (28) (1)  
Depreciation and amortization         64,460 51,701  
Deferred income tax expense         5,426 4,128  
Income tax expense arising from restricted share vesting and stock options exercised         (658) (816)  
Stock-based compensation expense         2,700 5,216  
Income from equity method investment (3,993)   (5,335)   (11,763) (16,659)  
Return on investment from equity method investee         3,675 9,800  
Loss (gain) on disposition of property and equipment         1,748 (12,580)  
Changes in operating assets and liabilities:              
Receivables and advances         7,704 (24,563)  
Prepaid expenses and other assets         (4,080) (2,511)  
Inventory and supplies         (1,261) (332)  
Insurance and claims accrual         8,242 (1,645)  
Accounts payable and accrued expenses         (4,360) (1,209)  
Net cash flows provided by operating activities         100,961 52,973  
Cash flows used by investing activities:              
Acquisition, net of cash acquired         (4,556) (107,922)  
Other investments         (488) (1,580)  
Purchase of property and equipment         (131,494) (112,047)  
Proceeds from disposition of property and equipment         32,332 76,954  
Net cash flows used by investing activities         (104,206) (144,595)  
Cash flows from financing activities:              
Change in checks outstanding in excess of bank balances         0 771  
Cash dividend         (4,341) (4,344)  
Proceeds from issuance of notes payable         104,785 98,451  
Repayments of notes payable         (45,949) (23,142)  
Repayments of finance lease obligations         (553) (5,432)  
Proceeds under revolving credit facility         57,247 123,463  
Repayments under revolving credit facility and draw note         (68,826) (123,463)  
Payment of contingent consideration liability         (7,023) (9,187)  
Proceeds from exercise of stock options         1,147 236  
Payment of minimum tax withholdings on stock compensation         (339) (1,520)  
Common stock repurchased         0 (25,488)  
Net cash flows provided by financing activities         36,148 30,345  
Net change in cash and cash equivalents         32,903 (61,277)  
Cash and cash equivalents at beginning of period   $ 2,294   $ 68,665 2,294 68,665 $ 68,665
Cash and cash equivalents at end of period $ 35,197   $ 7,388   $ 35,197 $ 7,388 $ 2,294
v3.24.3
Note 1 - Significant Accounting Policies
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Significant Accounting Policies [Text Block]

Note 1.

Significant Accounting Policies

 

Basis of Presentation

 

The condensed consolidated financial statements include the accounts of Covenant Logistics Group, Inc., a Nevada holding company, and its wholly owned subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer to Covenant Logistics Group, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Act of 1933. In preparing financial statements, it is necessary for management to make assumptions and estimates affecting the amounts reported in the condensed consolidated financial statements and related notes. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. In the opinion of management, the accompanying financial statements include all adjustments that are necessary for a fair presentation of the results for the interim periods presented, such adjustments being of a normal recurring nature.

 

Certain information and footnote disclosures have been condensed or omitted pursuant to such rules and regulations. The December 31, 2023, condensed consolidated balance sheet was derived from our audited balance sheet as of that date. Our operating results are subject to seasonal trends when measured on a quarterly basis; therefore, operating results for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2023. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year.

 

Property and Equipment

 

Property and equipment is stated at cost less accumulated depreciation. Depreciation for book purposes is determined using the straight-line method over the estimated useful lives of the assets. Depreciation of revenue equipment is our largest item of depreciation. We generally depreciate new tractors over five years to salvage values ranging from approximately 0% to 35% of their cost, depending on the utilization profile of the equipment. We generally depreciate new trailers over seven years for refrigerated trailers and ten years for dry van trailers to salvage values of approximately 28% and 25% of their cost, respectively. We annually, or whenever events or changes in circumstances indicate that a review is warranted, review the reasonableness of our estimates regarding useful lives and salvage values of our revenue equipment and other long-lived assets, based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice. We performed a review of our estimates for certain subsets of revenue equipment during the quarter ended June 30, 2024 and, due to a weak used revenue equipment market, we increased the rate of depreciation on these units in the period. This change resulted in an additional $1.2 million and $3.8 million of depreciation expense during the three and nine months ended September 30, 2024, respectively. Changes in the useful life or salvage value estimates, or fluctuations in market values that are not reflected in our estimates, could have a material effect on our results of operations. During the three months ended March 31, 2023, we sold a Tennessee terminal resulting in a $7.6 million gain which is included in gain on disposition of property and equipment, net in the condensed consolidated statements of operations.

 

Recent Accounting Pronouncements

 

Accounting Standards not yet adopted

 

In  November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after  December 15, 2023, and interim periods within fiscal years beginning after  December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending  December 31, 2024.

 

In  December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after  December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.

 

 
v3.24.3
Note 2 - Income Per Share
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Earnings Per Share [Text Block]

Note 2.

Income Per Share

 

Basic income per share excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted income per share reflects the 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 our earnings. There were approximately 75,000 and 71,000 shares issuable upon conversion of unvested restricted shares for the three and nine months ended September 30, 2024, respectively, and 254,000 and 247,000 shares issuable upon conversion of unvested restricted shares for the three and nine months ended September 30, 2023, respectively. There were no unvested shares excluded from the calculation of diluted earnings per share as anti-dilutive for either of the three and nine months ended September 30, 2024 and 2023. There were approximately 649,000 and 619,000 shares issuable upon conversion of unvested employee stock options for the three and nine months ended September 30, 2024, respectively, and 478,000 and 411,000 shares issuable upon conversion of unvested employee stock options for the three and nine months ended September 30, 2023, respectively. There were no unvested employee stock options excluded from the calculation of diluted earnings per share as anti-dilutive for the three and nine months ended September 30, 2024, respectively, and no and 32,000 unvested employee stock options excluded from the calculation of diluted earnings per share as anti-dilutive for the three and nine months ended September 30, 2023, respectively. Income per share is the same for both Class A and Class B shares.

 

The following table sets forth, for the periods indicated, the calculation of net income per share included in the condensed consolidated statements of operations:

 

(in thousands except per share data)

 

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Numerators:

                

Income from continuing operations

 $12,883  $13,356  $28,752  $41,984 

Income from discontinued operations

  150   150   450   450 

Net income

 $13,033  $13,506  $29,202  $42,434 

Denominator:

                

Denominator for basic income per share – weighted-average shares

  13,177   12,947   13,137   13,082 

Effect of dilutive securities:

                

Equivalent shares issuable upon conversion of unvested restricted shares

  75   254   71   247 

Equivalent shares issuable upon conversion of unvested employee stock options

  649   478   619   411 

Denominator for diluted income per share adjusted weighted-average shares and assumed conversions

  13,901   13,679   13,827   13,740 
                 

Basic income per share(1):

                

Income from continuing operations

 $0.98  $1.03  $2.19  $3.21 

Income from discontinued operations

  0.01   0.01   0.03   0.03 

Net income per share

 $0.99  $1.04  $2.22  $3.24 

Diluted income per share: (1)

                

Income from continuing operations

 $0.93  $0.98  $2.08  $3.06 

Income from discontinued operations

  0.01   0.01   0.03   0.03 

Net income per share

 $0.94  $0.99  $2.11  $3.09 
(1)Total may not sum due to rounding.

 
v3.24.3
Note 3 - Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

Note 3.

Fair Value of Financial Instruments

 

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability.

 

The fair value of our interest rate swap agreements is determined using the market-standard methodology of netting the discounted future fixed-cash payments and the discounted expected variable-cash receipts. The variable-cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These analyses reflect the contractual terms of the swap, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatilities. The fair value calculation also includes an amount for risk of non-performance of our counterparties using "significant unobservable inputs" such as estimates of current credit spreads to evaluate the likelihood of default, which we have determined to be insignificant to the overall fair value of our interest rate swap agreements.

 

The fair value of the contingent consideration arrangement is based on inputs that are not observable in the market and is estimated using a probability-weighted method. The significant unobservable inputs used in the fair value of the contingent consideration liability include the financial projections over the earn-out period, the volatility of the underlying financial metrics, and estimated discount rates.

 

The fair value of the life insurance policies was determined by the underwriting insurance company’s valuation models and represents the guaranteed value we would receive upon surrender of these policies as of the reporting date.

 

A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

 

●

Level 1. Observable inputs such as quoted prices in active markets;

●

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

●

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

Financial Instruments Measured at Fair Value on a Recurring Basis

 

(in thousands)

            
  

September 30, 2024

  

December 31, 2023

  

Input Level

 

Interest rate swaps

  782   1,101   2 

Contingent consideration

  (20,836)  (21,802)  3 

Cash surrender value life insurance policies

  3,262   2,424   2 

 

The carrying amount of cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, and current debt approximates their fair value because of the short-term maturity of these instruments. 

 

Interest rates that are currently available to us for issuance of long-term debt with similar terms and remaining maturities are used to estimate the fair value of our long-term debt, which primarily consists of revenue equipment installment notes. The fair value of our revenue equipment installment notes approximated the carrying value as of  September 30, 2024, as the weighted average interest rate on these notes approximates the market rate for similar debt. Borrowings under our revolving Credit Facility (as defined herein) approximate fair value due to the variable interest rate on that facility.

 

Contingent consideration arrangements require us to pay up to $20.0 million of additional consideration to AAT Carriers, Inc.'s ("AAT's") former shareholders based on AAT's results during the first two post-acquisition years, of which the final installment was made during 2024, up to $30.0 million of additional consideration to Lew Thompson & Son Trucking, Inc.'s ("LTST's") former shareholders based on LTST's results during the first three calendar years following closing, and up to $12.0 million of additional consideration to Sims Transport Services, LLC's ("Sims") former shareholders based on Sims' results during the first four calendar years following closing. Refer to Note 13, "Acquisition of Lew Thompson & Son Trucking, Inc.", for additional information regarding the LTST acquisition and Note 12, "Acquisition of Sims Transport Services, LLC", for additional information regarding the Sims acquisition.

 

The fair value of the contingent consideration is adjusted at each reporting period based on changes to the expected cash flows and related assumptions. There were no contingent consideration payments made during the three months ended September 30, 2024 or 2023, and $10.0 million and $10.0 million paid during the nine months ended September 30, 2024 and 2023, respectively, based on AAT's results for the first and second post-acquisition years. Of the $10.0 million paid for the contingent consideration liability during 2024, $7.0 million was classified as financing cash flows and $3.0 million was classified as operating cash flows within the condensed consolidated statements of cash flows. Of the $10.0 million paid for the contingent consideration liability during 2023, $9.2 million was classified as financing cash flows and $0.8 million was classified as operating cash flows within the condensed consolidated statements of cash flows. The fair value of the contingent consideration increased $0.2 million and increased $9.0 million during the three and nine months ended September 30, 2024, respectively, and increased by $2.3 million and $14.3 million during the three and nine months ended September 30, 2023, respectively. Of the 2024 increases, increases of $0.7 million and $9.5 million related to a change in the fair value for the LTST contingent consideration arrangement for the three and nine months ended September 30, 2024 partially offset by decreases of $0.5 million and $0.5 million related to a change in the fair value for the Sims contingent consideration arrangement. Of the 2023 increases, $1.8 million was related to the initial recognition of the Sims contingent consideration arrangement and $0.5 million was due to a change in the fair value for the AAT contingent consideration arrangement for the three month period and $10.0 million was related to the initial recognition of the LTST contingent consideration arrangement, $2.5 million was due to a change in the fair value for the AAT contingent consideration arrangement, and $1.8 million was related to the initial recognition of the Sims contingent consideration arrangement for the nine-month period. The adjustment to the fair value of the contingent consideration liability was recorded as a component of general supplies and expenses within the condensed consolidated statements of operations. The contingent consideration liability is included in accounts payable and other long-term liabilities in our condensed consolidated balance sheets. 

 

The following table provides a summary (in thousands) of the activity for the contingent consideration liability for 2024:

 

  December 31, 2023  Additions  Adjustments to fair market value  Payments  September 30, 2024 
Contingent consideration  $(21,802)  $-   $(9,034)  $10,000   $(20,836)

 
v3.24.3
Note 4 - Discontinued Operations
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 4.

Discontinued Operations

 

As of June 30, 2020, our former Factoring reportable segment was classified as discontinued operations as it: (i) was a component of the entity, (ii) met the criteria as held for sale, and (iii) had a material effect on the Company's operations and financial results. On July 8, 2020, we closed on the disposition of substantially all of the operations and assets of Transport Financial Services ("TFS"), which included substantially all of the assets and operations of our Factoring reportable segment. The sale consisted primarily of $103.3 million of net accounts receivable, which included $108.7 million of gross accounts receivable, less advances and rebates of $5.4 million. 

 

We have reflected the former Factoring reportable segment as discontinued operations in the condensed consolidated statements of operations for all periods presented.

 

The following table summarizes the results of our discontinued operations for the three and nine months ended September 30, 2024 and 2023:

 

(in thousands)

 

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Reversal of contingent loss liability

 $(200) $(200) $(600) $(600)

Income before income taxes

  200   200   600   600 

Income tax expense

  50   50   150   150 

Income from discontinued operations, net of tax

 $150  $150  $450  $450 

 

Reversal of contingent loss liability for the three and nine months ended September 30, 2024 and 2023 relates to the reduced exposure of future indemnification by the Company to the purchaser of TFS, Triumph Bancorp, Inc. ("Triumph"), as a result of the collection of covered receivables identified in the amended purchase agreement.

 

The following table summarizes the major classes of assets and liabilities included as discontinued operations as of  September 30, 2024 and December 31, 2023:

 

(in thousands)

 

September 30, 2024

  

December 31, 2023

 

Noncurrent deferred tax asset

 $259  $409 

Noncurrent assets from discontinued operations

  259   409 

Total assets from discontinued operations

 $259  $409 
         

Liabilities:

        

Long-term contingent loss liability

 $1,035  $1,635 

Long-term liabilities of discontinued operations

  1,035   1,635 

Total liabilities from discontinued operations

 $1,035  $1,635 

 

There were no operating cash outflows for the three and nine months ended September 30, 2024 and 2023.

 
v3.24.3
Note 5 - Segment Information
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

Note 5.

Segment Information

 

We have four reportable segments:

 

●

Expedited: The Expedited reportable segment primarily provides truckload services to customers with high service freight and delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows. Expedited services generally require two-person driver teams on equipment either owned or leased by the Company.

 

●

Dedicated: The Dedicated reportable segment provides customers with committed truckload capacity over contracted periods with the goal of three to five years in length. Equipment is either owned or leased by the Company.

 

●

Managed Freight: The Managed Freight reportable segment includes our brokerage and transport management services (“TMS”). Brokerage services provide logistics capacity by outsourcing the carriage of customers’ freight to third parties. TMS provides comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.

 

●

Warehousing: The Warehousing reportable segment provides day-to-day warehouse management services to customers who have chosen to outsource this function. We also provide shuttle and switching services related to shuttling containers and trailers in or around freight yards and to/from warehouses.

 

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in our Form 10-K for the year ended December 31, 2023. Substantially all intersegment sales prices are market based. We evaluate performance based on operating income of the respective business units.

 

The following table summarizes our total revenue by our four reportable segments, as used by our chief operating decision maker in making decisions regarding allocation of resources etc., for the three and nine months ended September 30, 2024 and 2023:

 

(in thousands)

                    

Three Months Ended September 30, 2024

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $104,314  $94,715  $63,385  $25,471  $287,885 

Intersegment revenue

  1,152   -   -   -   1,152 

Operating income

  6,467   5,429   2,451   1,888   16,235 

 

Nine Months Ended September 30, 2024

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $317,795  $272,662  $186,668  $77,020  $854,145 

Intersegment revenue

  2,680   -   -   -   2,680 

Operating income

  16,019   6,182   8,050   5,896   36,147 

 

Three Months Ended September 30, 2023

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $113,419  $80,242  $69,713  $25,347  $288,721 

Intersegment revenue

  1,556   -   -   -   1,556 

Operating income

  7,522   2,976   3,742   901   15,141 

 

Nine Months Ended September 30, 2023

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $318,388  $241,680  $193,868  $75,652  $829,588 

Intersegment revenue

  9,933   -   -   -   9,933 

Operating income

  22,613   13,366   6,905   1,672   44,556 

 

(in thousands)

 

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Total external revenues for reportable segments

 $287,885  $288,721  $854,145  $829,588 

Intersegment revenues for reportable segments

  1,152   1,556   2,680   9,933 

Elimination of intersegment revenues

  (1,152)  (1,556)  (2,680)  (9,933)

Total consolidated revenues

 $287,885  $288,721  $854,145  $829,588 

 
v3.24.3
Note 6 - Income Taxes
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 6.

Income Taxes

 

Income tax expense in both 2024 and 2023 varies from the amount computed by applying the federal corporate income tax rates of 21% to income before income taxes, primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences the most significant of which is the effect of the per diem pay structure for drivers. Drivers who meet the requirements to receive per diem receive non-taxable per-diem pay in lieu of a portion of their taxable wages. This per diem program increases our drivers' net pay per mile, after taxes, while decreasing gross pay, before taxes. As a result, salaries, wages, and related expenses are slightly lower and our effective income tax rate is higher than the statutory rate. Generally, as pre-tax income increases, the impact of the driver per diem program on our effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pre-tax income, while in periods where earnings are at or near breakeven the impact of the per diem program on our effective tax rate is significant. Due to the partially nondeductible effect of per diem pay, our tax rate will fluctuate in future periods based on fluctuations in earnings.

 

Our liability recorded for uncertain tax positions as of  September 30, 2024 is unchanged since  December 31, 2023.

 

The net deferred tax liability of $118.8 million primarily relates to differences in cumulative book versus tax depreciation of property and equipment, partially off-set by net operating loss carryovers and insurance claims that have been reserved but not paid. The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis, we assess the need for adjustment of the valuation allowance. The Company has determined that a valuation allowance was not necessary at September 30, 2024 for its deferred tax assets since it is more likely than not they will be realized from the future reversals of temporary differences. If these estimates and related assumptions change in the future, we may be required to modify our valuation allowance against the carrying value of the deferred tax assets.

 

On March 11, 2021, President Biden signed the American Rescue Plan ("ARPA") into law. The law includes several provisions meant to stimulate the U.S. economy. Of relevance to the Company, ARPA extended the reach of IRC Section 162(m) to include compensation paid to the eight highest-paid individuals other than the chief executive officer and the chief financial officers (rather than the three highest), however, this change is not effective until 2027. There is no material impact to the financial statements at this time.

 

President Biden signed the Inflation Reduction Act (the "IRA") into law on  August 16, 2022. We do not anticipate the IRA will have a significant impact on income tax expense or on other taxes. One of the most impactful provisions of the IRA includes the establishment of a Corporate Alternative Minimum Tax ("CAMT"). However, this tax only applies to corporations with three-year average earnings in excess of $1.0 billion. We will continue to monitor the CAMT each year to determine if we will become an applicable corporation. Additionally, the IRA enacted an excise tax on stock buybacks, which imposes a 1% tax on stock buybacks, subject to netting provisions regarding stock awarded to employees as part of their compensation. We do not believe this will have a material impact on our active buyback program, but will continue to monitor IRS guidance and regulations on how the buyback tax will be imposed and administered.

 
v3.24.3
Note 7 - Debt
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

Note 7.

Debt

 

Current and long-term debt and lease obligations consisted of the following as of  September 30, 2024 and December 31, 2023:

 

(in thousands)

 

September 30, 2024

  

December 31, 2023

 
  

Current

  

Long-Term

  

Current

  

Long-Term

 

Borrowings under Credit Facility

 $-  $-  $-  $11,579 

Borrowings under the Draw Note

  -   -   -   - 

Revenue equipment installment notes; weighted average interest rate of 5.3% at September 30, 2024, and 5.2% at December 31, 2023, due in monthly installments with final maturities at various dates ranging from February 2028 to March 2029, secured by related revenue equipment

  71,765   175,662   46,357   167,509 

Real estate notes; interest rate of 6.6% at September 30, 2024 and 7.1% at December 31, 2023 due in monthly installments with a fixed maturity at August 2035, secured by related real estate

  1,336   16,799   1,294   17,806 

Total debt

  73,101   192,461   47,651   196,894 

Principal portion of finance lease obligations, secured by related revenue equipment

  985   5,353   781   5,296 

Principal portion of operating lease obligations, secured by related real estate and revenue equipment

  10,980   33,608   11,950   30,892 

Total debt and lease obligations

 $85,066  $231,422  $60,382  $233,082 

 

We and substantially all of our subsidiaries are parties to the Third Amended and Restated Credit Agreement (the "Credit Facility") with Bank of America, N.A., as agent (the "Agent") and JPMorgan Chase Bank, N.A. (together with the Agent, the "Lenders"). The Credit Facility is a $110.0 million revolving credit facility, with an uncommitted accordion feature that, so long as no event of default exists, allows us to request an increase in the revolving credit facility of up to $75.0 million subject to Lender acceptance of the additional funding commitment. The Credit Facility includes a letter of credit sub facility in an aggregate amount of $105.0 million and a swing line sub facility in an aggregate amount equal to the greater of $10.0 million or 10% of the Lenders' aggregate commitments under the Credit Facility from time-to-time. The Credit Facility matures in May 2027.

 

Borrowings under the Credit Facility are classified as either "base rate loans" or "SOFR loans." Base rate loans accrue interest at a base rate equal to the greater of the Agent’s prime rate, the federal funds rate plus 0.5%, or SOFR for a one month period as of such day, plus an applicable margin ranging from 0.25% to 0.75%; while SOFR loans accrued interest at SOFR, plus an applicable margin ranging from 1.25% to 1.75%. The applicable rates are adjusted quarterly based on average pricing availability. The unused line fee is the product of 0.25% times the average daily amount by which the Lenders' aggregate revolving commitments under the Credit Facility exceed the outstanding principal amount of revolver loans and the aggregate undrawn amount of all outstanding letters of credit issued under the Credit Facility. The obligations under the Credit Facility are guaranteed by us and secured by a pledge of substantially all of our assets, with the notable exclusion of any real estate, revenue equipment pledged under other financing agreements, including revenue equipment installment notes and finance leases, and revenue equipment that we do not designate as being included in the borrowing base.

 

Borrowings under the Credit Facility are subject to a borrowing base limited to the lesser of (A) $110.0 million, minus the sum of the stated amount of all outstanding letters of credit; or (B) the sum of (i) 87.5% of eligible accounts receivable, plus (ii) the least of (a) 85% of the appraised net orderly liquidation value of eligible revenue equipment, (b) 100% of the net book value of eligible revenue equipment, (c) 60.0% of the Lenders' aggregate revolving commitments under the Credit Facility, or (d) $65.0 million. 

 

We had no borrowings outstanding under the Credit Facility as of September 30, 2024, undrawn letters of credit outstanding of approximately $19.7 million, and available borrowing capacity of $90.3 million. As of September 30, 2024, there were no base rate and no SOFR loans. Based on availability as of September 30, 2024 and 2023, there was no fixed charge coverage requirement.

 

The Credit Facility includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the Credit Facility may be accelerated, and the Lenders' commitments may be terminated. If an event of default occurs under the Credit Facility and the Lenders cause, or have the ability to cause, all of the outstanding debt obligations under the Credit Facility to become due and payable, this could result in a default under other debt instruments that contain acceleration or cross-default provisions. The Credit Facility contains certain restrictions and covenants relating to, among other things, debt, dividends, liens, acquisitions and dispositions outside of the ordinary course of business, and affiliate transactions. Failure to comply with the covenants and restrictions set forth in the Credit Facility could result in an event of default. 

 

Pricing for the revenue equipment installment notes is quoted by the respective financial affiliates of our primary revenue equipment suppliers and other lenders at the funding of each group of equipment acquired and include fixed annual rates for new equipment under retail installment contracts. The notes included in the funding are due in monthly installments with final maturities at various dates ranging from  February 2028 to March 2029. The notes contain certain requirements regarding payment, insuring of collateral, and other matters, but do not have any financial or other material covenants or events of default except certain notes totaling $32.2 million are cross-defaulted with the Credit Facility. Additional borrowings from the financial affiliates of our primary revenue equipment suppliers and other lenders are expected to be available to fund new tractors expected to be delivered in 2024, while any other property and equipment purchases, including trailers, are expected to be funded with a combination of available cash, notes, operating leases, finance leases, and/or from the Credit Facility.

 

In August 2015, we financed a portion of the purchase of our corporate headquarters, a maintenance facility, and certain surrounding property in Chattanooga, Tennessee by entering into a $28.0 million variable rate note with a third-party lender. The note contains certain restrictions and covenants that are usual and customary for a note of this nature. Failure to comply with the covenants and restrictions set forth in the note could result in an event of default. Concurrently with entering into the note, we entered into an interest rate swap to effectively fix the related interest rate to 4.2%. We expect to be in compliance with our debt covenants for the next 12 months. 

 

In connection with the settlement of a dispute related to the sale of TFS (the "TFS Settlement"), in September 2020, TBK Bank, SSB, as lender and agent for Triumph (“TBK Bank”), provided the Company with a $45 million line of credit (the “Draw Note”), the proceeds of which are to be used solely to satisfy our indemnification obligations under the TFS Settlement. We may borrow pursuant to the Draw Note until September 23, 2025.

 
v3.24.3
Note 8 - Lease Obligations
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

Note 8.

Lease Obligations

 

The finance leases in effect at  September 30, 2024 terminate from  May 2025 through  November 2033 and contain guarantees of the residual value of the related equipment by us.

 

 A summary of our lease obligations at September 30, 2024 and 2023 are as follows:

 

(dollars in thousands)

 

Three Months Ended

  

Three Months Ended

  

Nine Months Ended

  

Nine Months Ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Finance lease cost:

                

Amortization of right-of-use assets

 $122  $54  $368  $567 

Interest on lease liabilities

  215   181   636   305 

Operating lease cost

  3,648   4,656   10,607   13,901 

Variable lease cost

  50   87   199   972 

Short-term lease cost

  802   1,497   2,776   5,630 

Total lease cost

 $4,837  $6,475  $14,586  $21,375 
                 

Other information

                

Cash paid for amounts included in the measurement of lease liabilities:

                

Operating cash flows from finance leases

  215   181   636   305 

Operating cash flows from operating leases

  2,851   3,436   8,286   10,614 

Financing cash flows from finance leases

  188   1,923   553   5,432 

Right-of-use assets obtained in exchange for new finance lease liabilities

  -   2,799   815   5,938 

Right-of-use assets obtained in exchange for new operating lease liabilities

  4,783   -   13,753   3,992 

Weighted-average remaining lease term—finance leases (in years)

  3.5             

Weighted-average remaining lease term—operating leases (in years)

  4.6             

Weighted-average discount rate—finance leases

  13.5%            

Weighted-average discount rate—operating leases

  8.6%            

 

As of  September 30, 2024, and December 31, 2023, right-of-use assets of $42.9 million and $41.2 million for operating leases and $6.6 million and $6.4 million for finance leases, respectively, are included in net property and equipment in our condensed consolidated balance sheets. Operating lease right-of-use asset amortization is included in revenue equipment rentals and purchased transportation and general supplies and expenses, depending on the underlying asset, in the condensed consolidated statement of operations. Amortization of finance leased assets is included in depreciation and amortization expense in the condensed consolidated statement of operations.

 

Our future minimum lease payments as of September 30, 2024, are summarized as follows by lease category:

 

(in thousands)

 

Operating

  

Finance

 
2024 (1) $3,739  $443 

2025

  13,083   1,770 

2026

  11,560   1,768 

2027

  10,386   1,768 

2028

  5,944   1,487 

Thereafter

  8,186   1,703 

Total minimum lease payments

 $52,898  $8,939 

Less: amount representing interest

  (8,310)  (2,601)

Present value of minimum lease payments

 $44,588  $6,338 

Less: current portion

  (10,980)  (985)

Lease obligations, long-term

 $33,608  $5,353 

 

(1) Excludes the nine months ended September 30, 2024.

 
v3.24.3
Note 9 - Stock-based Compensation
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

Note 9.

Stock-Based Compensation

 

Our Third Amended and Restated 2006 Omnibus Incentive Plan, as amended (the "Incentive Plan") governs the issuance of equity awards and other incentive compensation to management and members of the Board of Directors (the "Board"). On May 17, 2023, the stockholders, upon recommendation of the Board, approved the Third Amendment (the “Third Amendment”) to our Third Amended and Restated 2006 Omnibus Incentive Plan (the "Incentive Plan"). The Third Amendment (i) increased the number of shares of Class A common stock available for issuance under the Incentive Plan by an additional 575,000 shares, (ii) re-set the term of the plan to expire on May 1, 2033, and (iii) made other miscellaneous, administrative and conforming changes as necessary. The Incentive Plan includes (i) a fungible share reserve feature, under which shares subject to stock options and stock appreciation rights will be counted as one share for every share granted and shares subject to all other awards will be counted as 1.80 shares for every share granted, (ii) a double-trigger vesting requirement upon a change in control, and (iii) a maximum award granted or payable to any one participant under the Incentive Plan for a calendar year of 500,000 shares of Class A common stock or $4,000,000, in the event the award is paid in cash.

 

The Incentive Plan permits annual awards of shares of our Class A common stock to executives, other key employees, consultants, non-employee directors, and eligible participants under various types of options, restricted stock, or other equity instruments. As of  September 30, 2024, there were 1,063,228 shares remaining of the 4,775,000 shares available for award under the Incentive Plan. No awards may be made under the Incentive Plan after May 1, 2033. To the extent available, we have issued treasury stock to satisfy all share-based incentive plans.

 

Included in salaries, wages, and related expenses within the condensed consolidated statements of operations is stock-based compensation expense of $0.8 million and $1.7 million for the three months ended September 30, 2024 and 2023, respectively, and expense of $2.1 million and $4.7 million for the nine months ended September 30, 2024 and 2023, respectively. Included in general supplies and expenses within the condensed consolidated statements of operations is stock-based compensation expense for non-employee directors of $0.2 million and $0.2 million for each of the three months ended September 30, 2024 and 2023, respectively, and $0.6 million and $0.5 million for the nine months ended September 30, 2024 and 2023, respectively. Of the stock compensation expense recorded for the three months ended  September 30, 2024 and September 30, 2023, $0.8 million and $0.7 million relates to restricted shares, respectively. There were no unvested employee stock options or related stock compensation expense for the three months ended  September 30, 2024 and $1.0 million of stock compensation expense related to unvested employee stock options for the three months ended  September 30, 2023. Of the stock compensation expense recorded for the nine months ended September 30, 2024 and 2023, $1.5 million and $1.8 million relates to restricted shares, respectively, and $0.6 million and $2.9 million relates to unvested employee stock options, respectively.

 

The Incentive Plan allows participants to pay the federal and state minimum statutory tax withholding requirements related to awards that vest or allows participants to deliver to us shares of Class A common stock having a fair market value equal to the minimum amount of such required withholding taxes. To satisfy withholding requirements for shares that vested through September 30, 2024, certain participants elected to forfeit receipt of an aggregate of 6,879 shares of Class A common stock at a weighted average per share price of $49.27 based on the closing price of our Class A common stock on the dates the shares vested in 2024, in lieu of the federal and state minimum statutory tax withholding requirements. We remitted $0.3 million to the proper taxing authorities in satisfaction of the employees' minimum statutory withholding requirements.
v3.24.3
Note 10 - Commitments and Contingencies
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

Note 10.

Commitments and Contingencies

 

From time-to-time, we are a party to ordinary, routine litigation arising in the ordinary course of business, most of which involves claims for personal injury and/or property damage incurred in connection with the transportation of freight.

 

We had $19.7 million and $21.8 million of outstanding and undrawn letters of credit as of September 30, 2024 and December 31, 2023. The letters of credit are maintained primarily to support our insurance programs. Additionally, we had $45.0 million of availability on a line of credit from Triumph solely to fund any indemnification owed to Triumph in relation to the sale of TFS. As of  September 30, 2024 the remaining contingent liability was $1.0 million.
v3.24.3
Note 11 - Equity Method Investment
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Equity Method Investment [Text Block]

Note 11.

Equity Method Investment

 

We own a 49.0% interest in Transport Enterprise Leasing, LLC ("TEL"), a tractor and trailer equipment leasing company and used equipment reseller. There is no loss limitation on our 49.0% interest in TEL. We have not guaranteed any of TEL's debt and have no obligation to provide funding, services, or assets. There are no current put rights to purchase or sell with any owners. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. There are no third-party liquidity arrangements, guarantees, and/or other commitments that may affect the fair value or risk of our interest in TEL.

 

During the quarter ended March 31, 2024, we sold revenue equipment to TEL in exchange for the assumption of the related notes payable of $26.2 million and $0.5 million of cash. During the nine months ended September 30, 2024, we entered into revenue equipment operating leases with TEL, which resulted in an operating lease obligation to TEL of $10.7 million as of  September 30, 2024. No other transactions with TEL were material for the nine months ended September 30, 2024 and 2023.

 

We have accounted for our investment in TEL using the equity method of accounting, and thus our financial results include our proportionate share of TEL's 2024 net income through September 30, 2024, or $11.8 million.

 

Our accounts receivable from TEL, accounts payable to TEL, and investment in TEL as of  September 30, 2024 and December 31, 2023 are as follows (in thousands):

 

Description:

Balance Sheet Line Item:

 

September 30, 2024

  

December 31, 2023

 

Accounts receivable from TEL

Driver advances and other receivables

 $24  $37 

Accounts payable to TEL

Accrued expenses

 $41  $460 

Investment in TEL

Other assets

 $74,444  $66,327 

Operating lease obligations

Current and long-term portion of operating lease obligations

 $10,662  $4,100 

 

Our accounts receivable from TEL related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL’s behalf.

 
v3.24.3
Note 12 - Acquisition of Sims Transport Services, LLC
 9 Months Ended
Sep. 30, 2024
Sims Transport Services, LLC [Member]  
Notes to Financial Statements  
Business Combination Disclosure [Text Block]

Note 12.

Acquisition of Sims Transport Services, LLC

 

On August 18, 2023, we acquired 100% of the equity interests of Sims, a specialized brokerage company, headquartered in Maysville, GA. The acquisition date fair value of the consideration transferred was $9.8 million. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Stock Purchase Agreement includes an earnout component of up to an aggregate of $12.0 million based on Sims' adjusted earnings before interest, taxes, depreciation, and amortization reported for the first through fourth calendar years following closing. The total purchase price, including any earnout achieved, is expected to range from $9.8 million to $20.0 million depending on the results achieved by Sims.

 

Sims' results have been included in the consolidated financial statements since the date of acquisition and are reported within our Managed Freight reportable segment.

 

The acquisition date fair value of the consideration transferred consisted of the following:

 

  

August 18, 2023

 

(in thousands)

    

Cash paid pursuant to Stock Purchase Agreement

 $8,573 

Cash acquired included in historical book value of Sims' assets and liabilities

  (526

)

Contingent consideration

  1,786 

Net purchase price

 $9,833 

 

The contingent consideration arrangement requires us to pay up to $12.0 million of additional consideration to Sim's former equity-holders based on Sims' results during the first four calendar years following closing. We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. Refer to Note 3, "Fair Value of Financial Instruments" for information regarding changes in the contingent consideration arrangement.

 

All goodwill related to the acquisition is deductible for tax purposes and there are no deferred income taxes arising from the acquisition.

 

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.

 

  

August 18, 2023

 

Accounts receivable

 $735 
Other intangibles, net  6,090 

Total identifiable assets acquired

  6,825 
     

Accounts payable

  (457

)

Accrued expenses

  (4

)

Total liabilities assumed

  (461

)

Net identifiable assets acquired

  6,364 

Goodwill

  3,469 

Net assets acquired

 $9,833 

 

During the nine months ended September 30, 2024 we recognized measurement period adjustments of $1.6 million, primarily related to the deductibility of goodwill and other intangibles, which decreased goodwill from $5.1 million as of December 31, 2023 to $3.5 million as of September 30, 2024. The goodwill recognized is attributable primarily to expected cost synergies as a result of overhead support. Refer to Note 14, "Goodwill and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired. 

 

The amounts of revenue and earnings of Sims included in the Company’s consolidated results of operations from the acquisition date of August 18, 2023, to the periods ended September 30, 2024 and 2023 are as follows:

 

(in thousands)

 

Three months ended

  

Nine months ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Total revenue

 $2,694  $1,026  $7,421  $1,026 

Net income

 $361  $219  $982  $219 

 
v3.24.3
Note 13 - Acquisition of Lew Thompson & Son Trucking, Inc.
 9 Months Ended
Sep. 30, 2024
Lew Thompson & Son Trucking, Inc. [Member]  
Notes to Financial Statements  
Business Combination Disclosure [Text Block]

Note 13.

Acquisition of Lew Thompson & Son Trucking, Inc.

 

On April 26, 2023, we acquired 100% of the outstanding stock of LTST and related entities, headquartered in Huntsville, AR. LTST is a dedicated contract carrier specializing in poultry feed and live haul transportation in Northwest Arkansas and surrounding areas and was acquired to expand the Dedicated reportable segment into this niche market. The acquisition date fair value of the consideration transferred was $114.5 million. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Stock Purchase Agreement includes an earnout component of up to an aggregate of $30.0 million based on LTST's adjusted earnings before interest, taxes, depreciation, and amortization reported for the first, second, and third calendar years following closing. The total purchase, including any earnout achieved, is expected to range from $114.5 million to $134.5 million depending on the results achieved by LTST.

 

LTST's results have been included in the condensed consolidated financial statements since the date of acquisition and are reported within our Dedicated reportable segment.

 

The acquisition date fair value of the consideration transferred consisted of the following:

  

April 26, 2023

 

(in thousands)

    

Cash paid pursuant to Stock Purchase Agreement

 $105,282 

Cash acquired included in historical book value of LTST's assets and liabilities

  (839)

Contingent consideration

  10,016 

Net purchase price

 $114,459 

 

The contingent consideration arrangement requires us to pay up to $30.0 million of additional consideration to LTST's former shareholders based on LTST's results during the first three calendar years following closing. We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.

 

Because of our 338(h)10 election, all goodwill related to the acquisition is deductible for tax purposes and there are no deferred income taxes arising from the acquisition.

 

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:

  

April 26, 2023

 

Accounts receivable

 $4,848 

Driver advances and other receivables

  98 

Inventory and supplies

  1,015 

Prepaid expenses

  561 

Net property and equipment

  42,277 

Other assets, net

  120 

Other intangibles, net

  52,870 

Total identifiable assets acquired

  101,789 
     

Accounts payable

  (565)

Accrued expenses

  (1,465)

Current portion of operating lease obligations

  (396)

Current portion of insurance and claims accrual

  (56)

Long-term portion of operating lease obligations

  (2,103)

Total liabilities assumed

  (4,585)

Net identifiable assets acquired

  97,204 

Goodwill

  17,255 

Net assets acquired

 $114,459 

 

During the nine months ended September 30, 2024 we recognized measurement period adjustments of $4.8 million, primarily related to the Section 338(h)10 election which increased goodwill from $12.4 million as of December 31, 2023 to $17.3 million as of September 30, 2024. The goodwill recognized is attributable primarily to expected cost synergies in the areas of fuel and purchases of revenue equipment. Refer to Note 14, "Goodwill and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired.

 

The amounts of revenue and earnings of LTST included in the Company’s consolidated results of operations from the acquisition date of April 26, 2023, to the periods ended September 30, 2024 and 2023 are as follows:

 

(in thousands)

 

Three months ended

  

Nine months ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Total revenue

 $35,730  $15,020  $88,857  $25,829 

Net income

 $3,058  $1,542  $8,211  $3,420 


The following unaudited pro forma consolidated results of operations assume that the acquisition of LTST occurred as of January 1, 2023:

 

(in thousands)

        
  

Three months ended

  

Nine months ended

 
  

September 30, 2023

  

September 30, 2023

 

Total revenue

 $303,741  $878,626 

Net income

 $14,687  $49,772 

Basic net income per share

 $1.13  $3.80 

Diluted net income per share

 $1.07  $3.62 

 

The pro forma financial information for all periods presented above has been calculated after adjusting the results of LTST to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets as though the acquisition occurred as of the beginning of the Company’s fiscal year 2023. The Company's historical consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the Company’s 2023 fiscal year.
v3.24.3
Note 14 - Goodwill and Other Assets
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]

Note 14.

Goodwill and Other Assets

 

The Landair Holdings, Inc. ("Landair") trade name has a residual value of $0.5 million.

 

Amortization expense of $7.1 million and $5.1 million for the nine months ended September 30, 2024 and 2023, respectively, was included in depreciation and amortization in the condensed consolidated statements of operations.

 

A summary of other intangible assets as of  September 30, 2024 and  December 31, 2023 is as follows:

 

(in thousands)

 

September 30, 2024

 
  

Gross intangible assets

  

Accumulated amortization

  

Net intangible assets

  

Remaining life (months)

 

Trade name:

                

Dedicated

 $4,502  $(2,426) $2,076     

Managed Freight

  1,089   (906)  183     

Warehousing

  999   (885)  114     

Total trade name

  6,590   (4,217)  2,373   101 

Non-compete agreement:

                

Dedicated

  4,670   (1,654)  3,016     

Managed Freight

  380   (103)  277     

Total non-compete agreement

  5,050   (1,757)  3,293   31 

Customer relationships:

                

Dedicated

  60,172   (11,171)  49,001     

Managed Freight

  7,312   (1,751)  5,561     

Warehousing

  12,436   (6,477)  5,959     

Total customer relationships:

  79,920   (19,399)  60,521   152 

Credentialing:

                

Expedited

  32,000   (5,689)  26,311     

Total credentialing

  32,000   (5,689)  26,311   148 

Total other intangible assets

 $123,560  $(31,062) $92,498   144 

 

(in thousands)

 

December 31, 2023

 
  

Gross intangible assets

  

Accumulated amortization

  

Net intangible assets

  

Remaining life (months)

 

Trade name:

                

Dedicated

 $4,502  $(2,269) $2,233     

Managed Freight

  1,089   (891)  198     

Warehousing

  999   (885)  114     

Total trade name

  6,590   (4,045)  2,545   110 

Non-compete agreement:

                

Dedicated

  4,670   (778)  3,892     

Managed Freight

  380   (32)  348     

Total non-compete agreement

  5,050   (810)  4,240   40 

Customer relationships:

                

Dedicated

  60,172   (8,258)  51,914     

Managed Freight

  7,312   (1,043)  6,269     

Warehousing

  12,436   (5,700)  6,736     

Total customer relationships:

  79,920   (15,001)  64,919   159 

Credentialing:

                

Expedited

  32,000   (4,089)  27,911   157 

Total credentialing

  32,000   (4,089)  27,911     

Total other intangible assets

 $123,560  $(23,945) $99,615   151 

 

The expected amortization of these assets for the next five successive years is as follows:

 

  

(in thousands)

 

2024 (1)

  2,372 

2025

  9,488 

2026

  9,488 

2027

  8,678 

2028

  8,220 

Thereafter

  53,752 

 

(1) Excludes the nine months ended September 30, 2024.

 

The carrying amount of goodwill increased to $78.9 million at  September 30, 2024 from $75.7 million at December 31, 2023. A summary of the changes in carrying amount of goodwill is as follows:

 

(in thousands)

 

September 30, 2024

 
  

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

 

Balance at December 31, 2023

 $15,699  $27,767  $10,531  $21,750 

Post-acquisition goodwill adjustments

  -   4,808   (1,614)  - 

Goodwill

 $15,699  $32,575  $8,917  $21,750 

 
v3.24.3
Note 15 - Equity
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Equity [Text Block]

Note 15.

Equity

 

On May 18, 2022, our Board approved a stock repurchase authorization of up to $75.0 million of our Class A common stock, with any remaining amount available under prior authorizations being excluded and no longer available. Under such authorization, we repurchased 2.0 million shares of our Class A common stock for $54.7 million during 2022. On January 30, 2023, the Board approved an amendment to the Company's stock repurchase program authorizing the purchase of up to an aggregate $55.0 million of our Class A common stock. The amendment added an incremental approximately $37.5 million to the approximately $17.5 million that was then-remaining under the program. Between  May 2022 and April 2023, we repurchased a total of 2.7 million shares of our Class A common stock. The program expired on January 31, 2024.

 

On February 15, 2023, our Board declared a cash dividend of $0.11 per share, which was paid on March 31, 2023, to stockholders of record on March 3, 2023. On May 17, 2023, our Board declared a cash dividend of $0.11 per share which was paid on June 30, 2023, to stockholders of record on June 2, 2023. On February 13, 2024, our Board declared a cash dividend of $0.11 per share which was paid on March 29, 2024, to stockholders of record on March 1, 2024. On May 15, 2024, our Board declared a cash dividend of $0.11 per share which was paid on June 28, 2024, to stockholders of record on June 7, 2024. On August 14, 2024, our Board declared a cash dividend of $0.11 per share which was paid on September 27, 2024, to stockholders of record on September 6, 2024.

 
v3.24.3
Insider Trading Arrangements
 9 Months Ended
Sep. 30, 2024
Insider Trading Arr Line Items  
Material Terms of Trading Arrangement [Text Block]

ITEM 5.

OTHER INFORMATION

 

During the third quarter of 2024, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

 
Rule 10b5-1 Arrangement Terminated [Flag] false
Non-Rule 10b5-1 Arrangement Terminated [Flag] false
Rule 10b5-1 Arrangement Adopted [Flag] false
Non-Rule 10b5-1 Arrangement Adopted [Flag] false
v3.24.3
Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

 

The condensed consolidated financial statements include the accounts of Covenant Logistics Group, Inc., a Nevada holding company, and its wholly owned subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer to Covenant Logistics Group, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Act of 1933. In preparing financial statements, it is necessary for management to make assumptions and estimates affecting the amounts reported in the condensed consolidated financial statements and related notes. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. In the opinion of management, the accompanying financial statements include all adjustments that are necessary for a fair presentation of the results for the interim periods presented, such adjustments being of a normal recurring nature.

 

Certain information and footnote disclosures have been condensed or omitted pursuant to such rules and regulations. The December 31, 2023, condensed consolidated balance sheet was derived from our audited balance sheet as of that date. Our operating results are subject to seasonal trends when measured on a quarterly basis; therefore, operating results for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2023. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year.

 
Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

 

Property and equipment is stated at cost less accumulated depreciation. Depreciation for book purposes is determined using the straight-line method over the estimated useful lives of the assets. Depreciation of revenue equipment is our largest item of depreciation. We generally depreciate new tractors over five years to salvage values ranging from approximately 0% to 35% of their cost, depending on the utilization profile of the equipment. We generally depreciate new trailers over seven years for refrigerated trailers and ten years for dry van trailers to salvage values of approximately 28% and 25% of their cost, respectively. We annually, or whenever events or changes in circumstances indicate that a review is warranted, review the reasonableness of our estimates regarding useful lives and salvage values of our revenue equipment and other long-lived assets, based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice. We performed a review of our estimates for certain subsets of revenue equipment during the quarter ended June 30, 2024 and, due to a weak used revenue equipment market, we increased the rate of depreciation on these units in the period. This change resulted in an additional $1.2 million and $3.8 million of depreciation expense during the three and nine months ended September 30, 2024, respectively. Changes in the useful life or salvage value estimates, or fluctuations in market values that are not reflected in our estimates, could have a material effect on our results of operations. During the three months ended March 31, 2023, we sold a Tennessee terminal resulting in a $7.6 million gain which is included in gain on disposition of property and equipment, net in the condensed consolidated statements of operations.

 
New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

 

Accounting Standards not yet adopted

 

In  November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after  December 15, 2023, and interim periods within fiscal years beginning after  December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending  December 31, 2024.

 

In  December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after  December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.

 
v3.24.3
Note 2 - Income Per Share (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

(in thousands except per share data)

 

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Numerators:

                

Income from continuing operations

 $12,883  $13,356  $28,752  $41,984 

Income from discontinued operations

  150   150   450   450 

Net income

 $13,033  $13,506  $29,202  $42,434 

Denominator:

                

Denominator for basic income per share – weighted-average shares

  13,177   12,947   13,137   13,082 

Effect of dilutive securities:

                

Equivalent shares issuable upon conversion of unvested restricted shares

  75   254   71   247 

Equivalent shares issuable upon conversion of unvested employee stock options

  649   478   619   411 

Denominator for diluted income per share adjusted weighted-average shares and assumed conversions

  13,901   13,679   13,827   13,740 
                 

Basic income per share(1):

                

Income from continuing operations

 $0.98  $1.03  $2.19  $3.21 

Income from discontinued operations

  0.01   0.01   0.03   0.03 

Net income per share

 $0.99  $1.04  $2.22  $3.24 

Diluted income per share: (1)

                

Income from continuing operations

 $0.93  $0.98  $2.08  $3.06 

Income from discontinued operations

  0.01   0.01   0.03   0.03 

Net income per share

 $0.94  $0.99  $2.11  $3.09 
v3.24.3
Note 3 - Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

(in thousands)

            
  

September 30, 2024

  

December 31, 2023

  

Input Level

 

Interest rate swaps

  782   1,101   2 

Contingent consideration

  (20,836)  (21,802)  3 

Cash surrender value life insurance policies

  3,262   2,424   2 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]
  December 31, 2023  Additions  Adjustments to fair market value  Payments  September 30, 2024 
Contingent consideration  $(21,802)  $-   $(9,034)  $10,000   $(20,836)
v3.24.3
Note 4 - Discontinued Operations (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Disposal Groups, Including Discontinued Operations [Table Text Block]

(in thousands)

 

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Reversal of contingent loss liability

 $(200) $(200) $(600) $(600)

Income before income taxes

  200   200   600   600 

Income tax expense

  50   50   150   150 

Income from discontinued operations, net of tax

 $150  $150  $450  $450 

(in thousands)

 

September 30, 2024

  

December 31, 2023

 

Noncurrent deferred tax asset

 $259  $409 

Noncurrent assets from discontinued operations

  259   409 

Total assets from discontinued operations

 $259  $409 
         

Liabilities:

        

Long-term contingent loss liability

 $1,035  $1,635 

Long-term liabilities of discontinued operations

  1,035   1,635 

Total liabilities from discontinued operations

 $1,035  $1,635 
v3.24.3
Note 5 - Segment Information (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Schedule of Segment Reporting Information, by Segment [Table Text Block]

(in thousands)

                    

Three Months Ended September 30, 2024

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $104,314  $94,715  $63,385  $25,471  $287,885 

Intersegment revenue

  1,152   -   -   -   1,152 

Operating income

  6,467   5,429   2,451   1,888   16,235 

Nine Months Ended September 30, 2024

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $317,795  $272,662  $186,668  $77,020  $854,145 

Intersegment revenue

  2,680   -   -   -   2,680 

Operating income

  16,019   6,182   8,050   5,896   36,147 

Three Months Ended September 30, 2023

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $113,419  $80,242  $69,713  $25,347  $288,721 

Intersegment revenue

  1,556   -   -   -   1,556 

Operating income

  7,522   2,976   3,742   901   15,141 

Nine Months Ended September 30, 2023

 

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

  

Consolidated

 

Total revenue from external customers

 $318,388  $241,680  $193,868  $75,652  $829,588 

Intersegment revenue

  9,933   -   -   -   9,933 

Operating income

  22,613   13,366   6,905   1,672   44,556 

(in thousands)

 

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Total external revenues for reportable segments

 $287,885  $288,721  $854,145  $829,588 

Intersegment revenues for reportable segments

  1,152   1,556   2,680   9,933 

Elimination of intersegment revenues

  (1,152)  (1,556)  (2,680)  (9,933)

Total consolidated revenues

 $287,885  $288,721  $854,145  $829,588 
v3.24.3
Note 7 - Debt (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Schedule of Debt [Table Text Block]

(in thousands)

 

September 30, 2024

  

December 31, 2023

 
  

Current

  

Long-Term

  

Current

  

Long-Term

 

Borrowings under Credit Facility

 $-  $-  $-  $11,579 

Borrowings under the Draw Note

  -   -   -   - 

Revenue equipment installment notes; weighted average interest rate of 5.3% at September 30, 2024, and 5.2% at December 31, 2023, due in monthly installments with final maturities at various dates ranging from February 2028 to March 2029, secured by related revenue equipment

  71,765   175,662   46,357   167,509 

Real estate notes; interest rate of 6.6% at September 30, 2024 and 7.1% at December 31, 2023 due in monthly installments with a fixed maturity at August 2035, secured by related real estate

  1,336   16,799   1,294   17,806 

Total debt

  73,101   192,461   47,651   196,894 

Principal portion of finance lease obligations, secured by related revenue equipment

  985   5,353   781   5,296 

Principal portion of operating lease obligations, secured by related real estate and revenue equipment

  10,980   33,608   11,950   30,892 

Total debt and lease obligations

 $85,066  $231,422  $60,382  $233,082 
v3.24.3
Note 8 - Lease Obligations (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Lease, Cost [Table Text Block]

(dollars in thousands)

 

Three Months Ended

  

Three Months Ended

  

Nine Months Ended

  

Nine Months Ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Finance lease cost:

                

Amortization of right-of-use assets

 $122  $54  $368  $567 

Interest on lease liabilities

  215   181   636   305 

Operating lease cost

  3,648   4,656   10,607   13,901 

Variable lease cost

  50   87   199   972 

Short-term lease cost

  802   1,497   2,776   5,630 

Total lease cost

 $4,837  $6,475  $14,586  $21,375 
                 

Other information

                

Cash paid for amounts included in the measurement of lease liabilities:

                

Operating cash flows from finance leases

  215   181   636   305 

Operating cash flows from operating leases

  2,851   3,436   8,286   10,614 

Financing cash flows from finance leases

  188   1,923   553   5,432 

Right-of-use assets obtained in exchange for new finance lease liabilities

  -   2,799   815   5,938 

Right-of-use assets obtained in exchange for new operating lease liabilities

  4,783   -   13,753   3,992 

Weighted-average remaining lease term—finance leases (in years)

  3.5             

Weighted-average remaining lease term—operating leases (in years)

  4.6             

Weighted-average discount rate—finance leases

  13.5%            

Weighted-average discount rate—operating leases

  8.6%            
Lessee, Lease Liability, Maturity [Table Text Block]

(in thousands)

 

Operating

  

Finance

 
2024 (1) $3,739  $443 

2025

  13,083   1,770 

2026

  11,560   1,768 

2027

  10,386   1,768 

2028

  5,944   1,487 

Thereafter

  8,186   1,703 

Total minimum lease payments

 $52,898  $8,939 

Less: amount representing interest

  (8,310)  (2,601)

Present value of minimum lease payments

 $44,588  $6,338 

Less: current portion

  (10,980)  (985)

Lease obligations, long-term

 $33,608  $5,353 
v3.24.3
Note 11 - Equity Method Investment (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Equity Method Investments [Table Text Block]

Description:

Balance Sheet Line Item:

 

September 30, 2024

  

December 31, 2023

 

Accounts receivable from TEL

Driver advances and other receivables

 $24  $37 

Accounts payable to TEL

Accrued expenses

 $41  $460 

Investment in TEL

Other assets

 $74,444  $66,327 

Operating lease obligations

Current and long-term portion of operating lease obligations

 $10,662  $4,100 
v3.24.3
Note 12 - Acquisition of Sims Transport Services, LLC (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Business Acquisition, Pro Forma Information [Table Text Block]

(in thousands)

 

Three months ended

  

Nine months ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Total revenue

 $35,730  $15,020  $88,857  $25,829 

Net income

 $3,058  $1,542  $8,211  $3,420 
Sims Transport Services, LLC [Member]  
Notes Tables  
Schedule of Business Acquisitions, by Acquisition [Table Text Block]
  

August 18, 2023

 

(in thousands)

    

Cash paid pursuant to Stock Purchase Agreement

 $8,573 

Cash acquired included in historical book value of Sims' assets and liabilities

  (526

)

Contingent consideration

  1,786 

Net purchase price

 $9,833 
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]
  

August 18, 2023

 

Accounts receivable

 $735 
Other intangibles, net  6,090 

Total identifiable assets acquired

  6,825 
     

Accounts payable

  (457

)

Accrued expenses

  (4

)

Total liabilities assumed

  (461

)

Net identifiable assets acquired

  6,364 

Goodwill

  3,469 

Net assets acquired

 $9,833 
Business Acquisition, Pro Forma Information [Table Text Block]

(in thousands)

 

Three months ended

  

Nine months ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Total revenue

 $2,694  $1,026  $7,421  $1,026 

Net income

 $361  $219  $982  $219 
v3.24.3
Note 13 - Acquisition of Lew Thompson & Son Trucking, Inc. (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Business Acquisition, Pro Forma Information [Table Text Block]

(in thousands)

 

Three months ended

  

Nine months ended

 
  

September 30, 2024

  

September 30, 2023

  

September 30, 2024

  

September 30, 2023

 

Total revenue

 $35,730  $15,020  $88,857  $25,829 

Net income

 $3,058  $1,542  $8,211  $3,420 
Lew Thompson & Son Trucking, Inc. [Member]  
Notes Tables  
Schedule of Business Acquisitions, by Acquisition [Table Text Block]
  

April 26, 2023

 

(in thousands)

    

Cash paid pursuant to Stock Purchase Agreement

 $105,282 

Cash acquired included in historical book value of LTST's assets and liabilities

  (839)

Contingent consideration

  10,016 

Net purchase price

 $114,459 
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]
  

April 26, 2023

 

Accounts receivable

 $4,848 

Driver advances and other receivables

  98 

Inventory and supplies

  1,015 

Prepaid expenses

  561 

Net property and equipment

  42,277 

Other assets, net

  120 

Other intangibles, net

  52,870 

Total identifiable assets acquired

  101,789 
     

Accounts payable

  (565)

Accrued expenses

  (1,465)

Current portion of operating lease obligations

  (396)

Current portion of insurance and claims accrual

  (56)

Long-term portion of operating lease obligations

  (2,103)

Total liabilities assumed

  (4,585)

Net identifiable assets acquired

  97,204 

Goodwill

  17,255 

Net assets acquired

 $114,459 
Business Acquisition, Pro Forma Information [Table Text Block]

(in thousands)

        
  

Three months ended

  

Nine months ended

 
  

September 30, 2023

  

September 30, 2023

 

Total revenue

 $303,741  $878,626 

Net income

 $14,687  $49,772 

Basic net income per share

 $1.13  $3.80 

Diluted net income per share

 $1.07  $3.62 
v3.24.3
Note 14 - Goodwill and Other Assets (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Schedule of Finite-Lived Intangible Assets [Table Text Block]

(in thousands)

 

September 30, 2024

 
  

Gross intangible assets

  

Accumulated amortization

  

Net intangible assets

  

Remaining life (months)

 

Trade name:

                

Dedicated

 $4,502  $(2,426) $2,076     

Managed Freight

  1,089   (906)  183     

Warehousing

  999   (885)  114     

Total trade name

  6,590   (4,217)  2,373   101 

Non-compete agreement:

                

Dedicated

  4,670   (1,654)  3,016     

Managed Freight

  380   (103)  277     

Total non-compete agreement

  5,050   (1,757)  3,293   31 

Customer relationships:

                

Dedicated

  60,172   (11,171)  49,001     

Managed Freight

  7,312   (1,751)  5,561     

Warehousing

  12,436   (6,477)  5,959     

Total customer relationships:

  79,920   (19,399)  60,521   152 

Credentialing:

                

Expedited

  32,000   (5,689)  26,311     

Total credentialing

  32,000   (5,689)  26,311   148 

Total other intangible assets

 $123,560  $(31,062) $92,498   144 

(in thousands)

 

December 31, 2023

 
  

Gross intangible assets

  

Accumulated amortization

  

Net intangible assets

  

Remaining life (months)

 

Trade name:

                

Dedicated

 $4,502  $(2,269) $2,233     

Managed Freight

  1,089   (891)  198     

Warehousing

  999   (885)  114     

Total trade name

  6,590   (4,045)  2,545   110 

Non-compete agreement:

                

Dedicated

  4,670   (778)  3,892     

Managed Freight

  380   (32)  348     

Total non-compete agreement

  5,050   (810)  4,240   40 

Customer relationships:

                

Dedicated

  60,172   (8,258)  51,914     

Managed Freight

  7,312   (1,043)  6,269     

Warehousing

  12,436   (5,700)  6,736     

Total customer relationships:

  79,920   (15,001)  64,919   159 

Credentialing:

                

Expedited

  32,000   (4,089)  27,911   157 

Total credentialing

  32,000   (4,089)  27,911     

Total other intangible assets

 $123,560  $(23,945) $99,615   151 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]
  

(in thousands)

 

2024 (1)

  2,372 

2025

  9,488 

2026

  9,488 

2027

  8,678 

2028

  8,220 

Thereafter

  53,752 
Schedule of Goodwill [Table Text Block]

(in thousands)

 

September 30, 2024

 
  

Expedited

  

Dedicated

  

Managed Freight

  

Warehousing

 

Balance at December 31, 2023

 $15,699  $27,767  $10,531  $21,750 

Post-acquisition goodwill adjustments

  -   4,808   (1,614)  - 

Goodwill

 $15,699  $32,575  $8,917  $21,750 
v3.24.3
Note 1 - Significant Accounting Policies (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Depreciation, Increase Decrease $ 1,200     $ 3,800  
Gain (Loss) on Disposition of Property Plant Equipment $ (209) $ 602   $ (1,748) $ 12,380
Tractors [Member]          
Property, Plant and Equipment, Useful Life (Year) 5 years     5 years  
Property, Plant and Equipment, Salvage Value, Percentage 0.00%     0.00%  
Tractors [Member] | Minimum [Member]          
Property, Plant and Equipment, Salvage Value, Percentage 35.00%     35.00%  
Refrigerated Trailers [Member]          
Property, Plant and Equipment, Useful Life (Year) 7 years     7 years  
Dry Van Trailers [Member]          
Property, Plant and Equipment, Useful Life (Year) 10 years     10 years  
Dry Van Trailers [Member] | Minimum [Member]          
Property, Plant and Equipment, Salvage Value, Percentage 28.00%     28.00%  
Dry Van Trailers [Member] | Maximum [Member]          
Property, Plant and Equipment, Salvage Value, Percentage 25.00%     25.00%  
Terminal Property [Member] | CALIFORNIA          
Gain (Loss) on Disposition of Property Plant Equipment     $ 7,600    
v3.24.3
Note 2 - Income Per Share (Details Textual) - shares
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Restricted Stock [Member]        
Incremental Common Shares Attributable to Dilutive Effect of Share-Based Payment Arrangements (in shares) 75,000 254,000 71,000 247,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)     0  
Share-Based Payment Arrangement, Option [Member]        
Incremental Common Shares Attributable to Dilutive Effect of Share-Based Payment Arrangements (in shares) 649,000 478,000 619,000 411,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 0 0   32,000
v3.24.3
Note 2 - Income Per Share - Calculation of Net Income Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Numerators:                
Income from continuing operations $ 12,883     $ 13,356     $ 28,752 $ 41,984
Income from discontinued operations 150     150     450 450
Net income (loss) $ 13,033 $ 12,194 $ 3,974 $ 13,506 $ 12,293 $ 16,635 $ 29,202 $ 42,434
Denominator:                
Denominator for basic income per share – weighted-average shares (in shares) 13,177,000     12,947,000     13,137,000 13,082,000
Effect of dilutive securities:                
Diluted weighted average shares outstanding (in shares) 13,901,000     13,679,000     13,827,000 13,739,000
Basic income per share: (1)                
Income from continuing operations (in dollars per share) $ 0.98     $ 1.03     $ 2.19 $ 3.21
Income from discontinued operations (in dollars per share) 0.01     0.01     0.03 0.03
Net income per share (in dollars per share) [1] 0.99     1.04     2.22 3.24
Diluted income per share: (1)                
Income from continuing operations (in dollars per share) 0.93     0.98     2.08 3.06
Income from discontinued operations (in dollars per share) 0.01     0.01     0.03 0.03
Net income per share (in dollars per share) [1] $ 0.94     $ 0.99     $ 2.11 $ 3.09
Restricted Stock [Member]                
Effect of dilutive securities:                
Equivalent shares issuable upon conversion of unvested restricted shares (in shares) 75,000     254,000     71,000 247,000
Share-Based Payment Arrangement, Option [Member]                
Effect of dilutive securities:                
Equivalent shares issuable upon conversion of unvested restricted shares (in shares) 649,000     478,000     619,000 411,000
[1] Total may not sum due to rounding.
v3.24.3
Note 3 - Fair Value of Financial Instruments (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended 12 Months Ended
Aug. 18, 2023
Apr. 26, 2023
Feb. 09, 2022
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Payment for Contingent Consideration Liability, Financing Activities           $ 7,023 $ 9,187  
AAT Carriers Inc [Member]                
Business Combination, Contingent Consideration, Earnout Period (Year)     2 years          
Payment for Contingent Consideration Liability       $ 0 $ 0 10,000 10,000  
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability           10,000   $ 10,000
Payment for Contingent Consideration Liability, Financing Activities           7,000   9,200
Payment for Contingent Consideration Liability, Operating Activities           3,000   $ 800
AAT Carriers Inc [Member] | Changes Measurement [Member]                
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability         500   2,500  
AAT Carriers Inc [Member] | Stock Purchase Agreement, Earnout Component [Member]                
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High     $ 20,000          
Lew Thompson & Son Trucking, Inc. [Member]                
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High   $ 30,000            
Business Combination, Contingent Consideration, Earnout Period (Year)   3 years            
Lew Thompson & Son Trucking, Inc. [Member] | Changes Measurement [Member]                
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability       700   9,500 10,000  
Lew Thompson & Son Trucking, Inc. [Member] | Stock Purchase Agreement, Earnout Component [Member]                
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High   $ 134,500            
Business Combination, Contingent Consideration Arrangements, Change in Range of Outcomes, Contingent Consideration, Liability, Value, High   $ 30,000            
Sims Transport Services, LLC [Member]                
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High $ 12,000              
Business Combination, Contingent Consideration, Earnout Period (Year) 4 years              
Sims Transport Services, LLC [Member] | Changes Measurement [Member]                
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability       (500) 1,800 (500) 1,800  
Sims Transport Services, LLC [Member] | Stock Purchase Agreement, Earnout Component [Member]                
Business Combination, Contingent Consideration Arrangements, Change in Range of Outcomes, Contingent Consideration, Liability, Value, High $ 12,000              
AAT, LTST, and Sims [Member] | Changes Measurement [Member]                
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability       $ 200 $ 2,300 $ 9,000 $ 14,300  
v3.24.3
Note 3 - Fair Value of Financial Instruments - Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Fair Value, Inputs, Level 2 [Member]    
Cash surrender value life insurance policies $ 3,262 $ 2,424
Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member]    
Interest rate swaps 782 1,101
Fair Value, Inputs, Level 3 [Member]    
Contingent consideration $ (20,836) $ (21,802)
v3.24.3
Note 3 - Fair Value of Financial Instruments - Activity for Contingent Consideration (Details) - Fair Value, Recurring [Member] - Fair Value, Inputs, Level 3 [Member]
$ in Thousands
 9 Months Ended
Sep. 30, 2024
USD ($)
Balance $ (21,802)
Additions 0
Adjustment to fair market value (9,034)
Contingent consideration 10,000
Balance $ (20,836)
v3.24.3
Note 4 - Discontinued Operations (Details Textual) - Transport Financial Services [Member] - Discontinued Operations, Disposed of by Sale [Member] - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Jul. 08, 2020
Disposal Group, Including Discontinued Operation, Accounts, Notes and Loans Receivable, Net     $ 103,300
Disposal Group Including Discontinued Operation Accounts Notes And Loans Receivable Gross     108,700
Disposal Group, Including Discontinued Operation, Allowance     $ 5,400
Cash Provided by (Used in) Operating Activities, Discontinued Operations $ 0 $ 0  
v3.24.3
Note 4 - Discontinued Operations - Results of Discontinued Operations (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Noncurrent assets from discontinued operations $ 259   $ 259   $ 409
Transport Financial Services [Member] | Discontinued Operations, Disposed of by Sale [Member]          
Reversal of contingent loss liability (200) $ (200) (600) $ (600)  
Income before income taxes 200 200 600 600  
Income tax expense 50 50 150 150  
Income from discontinued operations, net of tax 150 $ 150 450 $ 450  
Noncurrent deferred tax asset 259   259   409
Noncurrent assets from discontinued operations 259   259   409
Total assets from discontinued operations 259   259   409
Long-term contingent loss liability 1,035   1,035   1,635
Long-term liabilities of discontinued operations 1,035   1,035   1,635
Total liabilities from discontinued operations $ 1,035   $ 1,035   $ 1,635
v3.24.3
Note 5 - Segment Information (Details Textual)
 9 Months Ended
Sep. 30, 2024
Number of Asset-based Operating Fleets Aggregated in a Segment 4
v3.24.3
Note 5 - Segment Information - Segment Information (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Revenue $ 287,885 $ 288,721 $ 854,145 $ 829,588
Operating income 16,235 15,141 36,147 44,556
Operating Segments [Member]        
Revenue 287,885 288,721 854,145 829,588
Operating income 16,235 15,141 36,147 44,556
Intersegment Eliminations [Member]        
Revenue 1,152 1,556 2,680 9,933
Consolidation, Eliminations [Member]        
Revenue (1,152) (1,556) (2,680) (9,933)
Highway Services [Member] | Operating Segments [Member]        
Revenue 104,314   317,795  
Operating income 6,467   16,019  
Highway Services [Member] | Intersegment Eliminations [Member]        
Revenue 1,152   2,680  
Dedicated [Member] | Operating Segments [Member]        
Revenue 94,715 80,242 272,662 241,680
Operating income 5,429 2,976 6,182 13,366
Dedicated [Member] | Intersegment Eliminations [Member]        
Revenue 0 0 0 0
Managed Freight [Member] | Operating Segments [Member]        
Revenue 63,385 69,713 186,668 193,868
Operating income 2,451 3,742 8,050 6,905
Managed Freight [Member] | Intersegment Eliminations [Member]        
Revenue 0 0 0 0
Factoring [Member] | Operating Segments [Member]        
Revenue 25,471   77,020  
Operating income 1,888   5,896  
Factoring [Member] | Intersegment Eliminations [Member]        
Revenue $ 0   $ 0  
Expedited [Member] | Operating Segments [Member]        
Revenue   113,419   318,388
Operating income   7,522   22,613
Expedited [Member] | Intersegment Eliminations [Member]        
Revenue   1,556   9,933
Warehousing [Member] | Operating Segments [Member]        
Revenue   25,347   75,652
Operating income   901   1,672
Warehousing [Member] | Intersegment Eliminations [Member]        
Revenue   $ 0   $ 0
v3.24.3
Note 6 - Income Taxes (Details Textual) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent 21.00% 21.00%
Deferred Tax Liabilities, Net $ 118.8  
v3.24.3
Note 7 - Debt (Details Textual) - USD ($)
$ in Thousands
 9 Months Ended
Oct. 23, 2020
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2023
Sep. 30, 2020
Aug. 31, 2015
Letters of Credit Outstanding, Amount   $ 19,700     $ 21,800    
Interest Rate Swap [Member]              
Derivative, Fixed Interest Rate             4.20%
Variable Rate Note [Member]              
Debt Instrument, Face Amount             $ 28,000
Lenders [Member]              
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage 0.25%            
Percent of Eligible Accounts Receivable 87.50%            
Percent of Appraised Net Orderly Liquidation, Value of Eligible Revenue Equipment 85.00%            
Percent of Net Book Value of Eligible Revenue Equipment 100.00%            
Line of Credit Facility, Availability as Percentage of Revolver Commitment 60.00%            
Line of Credit Facility, Revolver Commitment, Amount $ 65,000            
Long-Term Line of Credit   0          
Letters of Credit Outstanding, Amount   19,700          
Line of Credit Facility, Remaining Borrowing Capacity   90,300          
Fixed Charge Coverage Requirement   0 $ 0        
Debt, Secured with a Cross Default Feature   32,200          
Lenders [Member] | Federal Funds Rate [Member] | Base Rate Loans [Member]              
Debt Instrument, Basis Spread on Variable Rate       0.50%      
Lenders [Member] | Applicable Margin [Member] | Base Rate Loans [Member] | Minimum [Member]              
Debt Instrument, Basis Spread on Variable Rate 0.25%            
Lenders [Member] | Applicable Margin [Member] | Base Rate Loans [Member] | Maximum [Member]              
Debt Instrument, Basis Spread on Variable Rate 0.75%            
Lenders [Member] | Applicable Margin [Member] | Secured Overnight Financing Rate (SOFR) Loans [Member] | Minimum [Member]              
Debt Instrument, Basis Spread on Variable Rate 1.25%            
Lenders [Member] | Applicable Margin [Member] | Secured Overnight Financing Rate (SOFR) Loans [Member] | Maximum [Member]              
Debt Instrument, Basis Spread on Variable Rate 1.75%            
Lenders [Member] | Revolving Credit Facility [Member]              
Line of Credit Facility, Maximum Borrowing Capacity $ 110,000            
Line of Credit Facility, Maximum Increase in Borrowing Capacity 75,000            
Lenders [Member] | Revolving Credit Facility [Member] | Base Rate Loans [Member]              
Long-Term Line of Credit   0          
Lenders [Member] | Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) Loans [Member]              
Long-Term Line of Credit   $ 0          
Lenders [Member] | Letter of Credit [Member]              
Line of Credit Facility, Maximum Borrowing Capacity 105,000            
Line of Credit Facility, Borrowing Capacity, Percentage of Aggregate Commitments $ 10,000            
Lenders [Member] | Swing Line Sub Facility [Member]              
Percent of Aggregate Commitments under Credit Facility 10.00%            
TBK Bank [Member] | Draw Note [Member]              
Line of Credit Facility, Maximum Borrowing Capacity           $ 45,000  
v3.24.3
Note 7 - Debt - Current and Long-term Debt (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Debt, current $ 73,101 $ 47,651
Debt, noncurrent 192,461 196,894
Principal portion of finance lease obligations, secured by related revenue equipment, current 985 781
Principal portion of finance lease obligations, secured by related revenue equipment, noncurrent 5,353 5,296
Principal portion of operating lease obligations, secured by related real estate and revenue equipment 10,980 11,950
Principal portion of operating lease obligations, secured by related real estate and revenue equipment 33,608 30,892
Total debt and lease obligations 85,066 60,382
Total debt and lease obligations 231,422 233,082
Finance Lease Secured by Related Revenue Equipment [Member]    
Principal portion of finance lease obligations, secured by related revenue equipment, current 985 781
Principal portion of finance lease obligations, secured by related revenue equipment, noncurrent 5,353 5,296
Operating Lease Secured By Related Equipment [Member]    
Principal portion of operating lease obligations, secured by related real estate and revenue equipment 10,980 11,950
Principal portion of operating lease obligations, secured by related real estate and revenue equipment 33,608 30,892
Draw Note [Member]    
Credit facility, current 0 0
Credit facility, noncurrent 0 0
Revenue Equipment Installment Notes [Member]    
Debt, current 71,765 46,357
Debt, noncurrent 175,662  
Real Estate Note [Member]    
Debt, current 1,336 1,294
Debt, noncurrent 16,799 17,806
Revolving Credit Facility [Member]    
Credit facility, current 0 0
Credit facility, noncurrent $ 0 $ 11,579
v3.24.3
Note 7 - Debt - Current and Long-term Debt (Details) (Parentheticals)
Sep. 30, 2024
Dec. 31, 2023
Revenue Equipment Installment Notes [Member]    
Interest rate 5.30% 5.20%
Real Estate Note [Member]    
Interest rate 6.60% 7.10%
v3.24.3
Note 8 - Lease Obligations (Details Textual) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Assets [Abstract]    
Property, Plant and Equipment, Net $ 537,191 $ 514,655
Finance Lease, Right-of-Use Asset, after Accumulated Amortization $ 6,600 $ 6,400
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Property, Plant and Equipment, Net Property, Plant and Equipment, Net
Leased Office Facility [Member]    
Operating Lease, Right-of-Use Asset $ 42,900 $ 41,200
v3.24.3
Note 8 - Lease Obligations - Lease Obligations (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Amortization of right-of-use assets $ 122 $ 54 $ 368 $ 567
Interest on lease liabilities 215 181 636 305
Operating lease cost 3,648 4,656 10,607 13,901
Variable lease cost 50 87 199 972
Short-term lease cost 802 1,497 2,776 5,630
Total lease cost 4,837 6,475 14,586 21,375
Operating cash flows from finance leases 215 181 636 305
Operating cash flows from operating leases 2,851 3,436 8,286 10,614
Financing cash flows from finance leases 188 1,923 553 5,432
Right-of-use assets obtained in exchange for new finance lease liabilities 0 2,799 815 5,938
Right-of-use assets obtained in exchange for new operating lease liabilities $ 4,783 $ 0 $ 13,753 $ 3,992
Weighted-average remaining lease term—finance leases (in years) (Year) 3 years 6 months   3 years 6 months  
Weighted-average remaining lease term—operating leases (in years) (Year) 4 years 7 months 6 days   4 years 7 months 6 days  
Weighted-average discount rate—finance leases 13.50%   13.50%  
Weighted-average discount rate—operating leases 8.60%   8.60%  
v3.24.3
Note 8 - Lease Obligations - Future Minimum Lease Payments (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
2024, Operating [1] $ 3,739  
2024, Finance [1] 443  
2025, Operating 13,083  
2025, Finance 1,770  
2026, Operating 11,560  
2026, Finance 1,768  
2027, Operating 10,386  
2027, Finance 1,768  
2028, Operating 5,944  
2028, Finance 1,487  
Thereafter, Operating 8,186  
Thereafter, Finance 1,703  
Total minimum lease payments, Operating 52,898  
Total minimum lease payments, Finance 8,939  
Less: amount representing interest, Operating (8,310)  
Less: amount representing interest, Finance (2,601)  
Present value of minimum lease payments, Operating 44,588  
Present value of minimum lease payments, Finance 6,338  
Less: current portion, Operating (10,980) $ (11,950)
Less: current portion, Finance (985) (781)
Lease obligations, long-term, Operating 33,608  
Lease obligations, long-term, Finance $ 5,353 $ 5,296
[1] Excludes the nine months ended September 30, 2024.
v3.24.3
Note 9 - Stock-based Compensation (Details Textual) - USD ($)
 3 Months Ended 9 Months Ended
May 17, 2023
Jul. 01, 2020
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized (in shares) 575,000          
Fungible Share Reserve Feature, Shares Subject for Each Share Granted (in shares)   1        
Fungible Share Reserve Feature, Shares Subject to All Other Awards (in shares)   1.8        
Maximum Number of Shares of Class A Common Stock Awarded to any Participant in the Incentive Plan in any Calendar Year (in shares)   500,000        
Maximum Cash Awarded to any Participant in the Incentive Plan in any Calendar Year   $ 4,000,000        
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares)     1,063,228   1,063,228  
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized (in shares)     4,775,000   4,775,000  
Payment, Tax Withholding, Share-Based Payment Arrangement         $ 339,000 $ 1,520,000
Common Class A [Member]            
Share-Based Payment Arrangement, Shares Withheld for Tax Withholding Obligation (in shares)         6,879  
Share-Based Compensation Arrangement by Share-Based Payment Award, Per Share Weighted Average Price of Shares Purchased (in dollars per share)     $ 49.27   $ 49.27  
Payment, Tax Withholding, Share-Based Payment Arrangement         $ 300,000  
Restricted Stock [Member]            
Share-Based Payment Arrangement, Expense     $ 800,000 $ 700,000 1,500,000 1,800,000
Share-Based Payment Arrangement, Option [Member]            
Share-Based Payment Arrangement, Expense     0 1,000,000 600,000 2,900,000
Salaries Wages And Related Expenses [Member]            
Share-Based Payment Arrangement, Expense     800,000 1,700,000 2,100,000 4,700,000
General and Administrative Expense [Member] | Director [Member]            
Share-Based Payment Arrangement, Expense     $ 200,000 $ 200,000 $ 600,000 $ 500,000
v3.24.3
Note 10 - Commitments and Contingencies (Details Textual) - USD ($)
$ in Millions
Sep. 30, 2024
Dec. 31, 2023
Letters of Credit Outstanding, Amount $ 19.7 $ 21.8
Line of Credit, Contingent Liability 1.0  
Draw Note [Member] | TBK Bank [Member]    
Line of Credit Facility, Remaining Borrowing Capacity $ 45.0  
v3.24.3
Note 11 - Equity Method Investment (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Proceeds from Sale of Property, Plant, and Equipment       $ 32,332 $ 76,954
Operating Lease, Liability $ 44,588     44,588  
Income (Loss) from Equity Method Investments 3,993   $ 5,335 11,763 $ 16,659
Transport Enterprise Leasing LLC [Member] | Equipment Operating Lease [Member]          
Operating Lease, Liability $ 10,700     $ 10,700  
Transport Enterprise Leasing LLC [Member] | Revenue Equipment [Member]          
Note Payable Assumed From Sale of Equipment   $ 26,200      
Proceeds from Sale of Property, Plant, and Equipment   $ 500      
Transport Enterprise Leasing LLC [Member]          
Equity Method Investment, Ownership Percentage 49.00%     49.00%  
Income (Loss) from Equity Method Investments       $ 11,800  
v3.24.3
Note 11 - Equity Method Investment - TEL's Summarized Financial Information (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Operating lease obligations $ 10,980 $ 11,950
Transport Enterprise Leasing LLC [Member]    
Operating lease obligations 10,662 4,100
Transport Enterprise Leasing LLC [Member] | Driver Advances and Other Receivable [Member]    
Accounts receivable from TEL 24 37
Transport Enterprise Leasing LLC [Member] | Accrued Expenses [Member]    
Accounts payable to TEL 41 460
Transport Enterprise Leasing LLC [Member] | Other Assets [Member]    
Investment in TEL $ 74,444 $ 66,327
v3.24.3
Note 12 - Acquisition of Sims Transport Services, LLC (Details Textual) - USD ($)
$ in Thousands
 9 Months Ended
Aug. 18, 2023
Sep. 30, 2024
Dec. 31, 2023
Goodwill   $ 78,941 $ 75,747
Sims Transport Services, LLC [Member]      
Business Acquisition, Percentage of Voting Interests Acquired 100.00%    
Business Combination, Consideration Transferred $ 9,833    
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High $ 12,000    
Business Combination, Contingent Consideration, Earnout Period (Year) 4 years    
Goodwill, Measurement Period Adjustment   1,600  
Goodwill $ 3,469 $ 3,500 $ 5,100
Sims Transport Services, LLC [Member] | Minimum [Member]      
Business Combination, Consideration Transferred 9,800    
Sims Transport Services, LLC [Member] | Maximum [Member]      
Business Combination, Consideration Transferred $ 20,000    
v3.24.3
Note 12 - Acquisition of Sims Transport Services, LLC - Allocation of Preliminary Purchase Price (Details) - USD ($)
$ in Thousands
 9 Months Ended
Aug. 18, 2023
Sep. 30, 2024
Sep. 30, 2023
Cash paid pursuant to Stock Purchase Agreement   $ 4,556 $ 107,922
Sims Transport Services, LLC [Member]      
Cash paid pursuant to Stock Purchase Agreement $ 8,573    
Cash acquired included in historical book value of Sims' assets and liabilities (526)    
Contingent consideration, Acquisition 1,786    
Net purchase price $ 9,833    
v3.24.3
Note 12 - Acquisition of Sims Transport Services, LLC - Summary of Preliminary Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Aug. 18, 2023
Goodwill $ 78,941 $ 75,747  
Sims Transport Services, LLC [Member]      
Accounts receivable     $ 735
Other intangibles, net     6,090
Total identifiable assets acquired     6,825
Accounts payable     (457)
Accrued expenses     (4)
Total liabilities assumed     (461)
Net identifiable assets acquired     6,364
Goodwill $ 3,500 $ 5,100 3,469
Net assets acquired     $ 9,833
v3.24.3
Note 12 - Acquisition of Sims Transport Services, LLC - Results of Operations From Acquisition Date (Details) - Sims Transport Services, LLC [Member] - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Total revenue $ 2,694 $ 1,026 $ 7,421 $ 1,026
Net income $ 361 $ 219 $ 982 $ 219
v3.24.3
Note 13 - Acquisition of Lew Thompson & Son Trucking, Inc. (Details Textual) - USD ($)
$ in Thousands
 9 Months Ended
Apr. 26, 2023
Sep. 30, 2024
Dec. 31, 2023
Goodwill   $ 78,941 $ 75,747
Lew Thompson & Son Trucking, Inc. [Member]      
Business Acquisition, Percentage of Voting Interests Acquired 100.00%    
Business Combination, Consideration Transferred $ 114,459    
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High $ 30,000    
Business Combination, Contingent Consideration, Earnout Period (Year) 3 years    
Goodwill, Measurement Period Adjustment   (4,800)  
Goodwill $ 17,255 $ 17,300 $ 12,400
Lew Thompson & Son Trucking, Inc. [Member] | Stock Purchase Agreement, Earnout Component [Member]      
Business Combination, Contingent Consideration Arrangements, Change in Range of Outcomes, Contingent Consideration, Liability, Value, High 30,000    
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low 114,500    
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High $ 134,500    
v3.24.3
Note 13 - Acquisition of Lew Thompson & Son Trucking, Inc - Allocation of Preliminary Purchase Price (Details) - USD ($)
$ in Thousands
 9 Months Ended
Apr. 26, 2023
Sep. 30, 2024
Sep. 30, 2023
Cash paid pursuant to Stock Purchase Agreement   $ 4,556 $ 107,922
Lew Thompson & Son Trucking, Inc. [Member]      
Cash paid pursuant to Stock Purchase Agreement $ 105,282    
Cash acquired included in historical book value of Sims' assets and liabilities (839)    
Contingent consideration, Acquisition 10,016    
Net purchase price $ 114,459    
v3.24.3
Note 13 - Acquisition of Lew Thompson & Son Trucking, Inc - Summary of Preliminary Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Apr. 26, 2023
Goodwill $ 78,941 $ 75,747  
Lew Thompson & Son Trucking, Inc. [Member]      
Accounts receivable     $ 4,848
Driver advances and other receivables     98
Inventory and supplies     1,015
Prepaid expenses     561
Net property and equipment     42,277
Other assets, net     120
Other intangibles, net     52,870
Total identifiable assets acquired     101,789
Accounts payable     (565)
Accrued expenses     (1,465)
Current portion of operating lease obligations     (396)
Current portion of insurance and claims accrual     (56)
Long-term portion of operating lease obligations     (2,103)
Total liabilities assumed     (4,585)
Net identifiable assets acquired     97,204
Goodwill $ 17,300 $ 12,400 17,255
Net assets acquired     $ 114,459
v3.24.3
Note 13 - Acquisition of Lew Thompson & Trucking, Inc - Results of Operations From Acquisition Date (Details) - Lew Thompson & Son Trucking, Inc. [Member] - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Total revenue $ 35,730 $ 15,020 $ 88,857 $ 25,829
Net income $ 3,058 $ 1,542 $ 8,211 $ 3,420
v3.24.3
Note 13 - Acquisition of Lew Thompson & Trucking, Inc - Pro Forma Consolidated Results of Operations (Details) - Lew Thompson & Son Trucking, Inc. [Member] - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2023
Total revenue $ 303,741 $ 878,626
Net income $ 14,687 $ 49,772
Basic net income per share (in dollars per share) $ 1.13 $ 3.8
Diluted net income per share (in dollars per share) $ 1.07 $ 3.62
v3.24.3
Note 14 - Goodwill and Other Assets (Details Textual) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2023
Amortization of Intangible Assets $ 7,100 $ 5,100  
Goodwill 78,941   $ 75,747
Trade Names [Member] | Landair Holdings Inc [Member]      
Acquired Finite-lived Intangible Asset, Residual Value $ 500    
v3.24.3
Note 14 - Goodwill and Other Assets - Intangible Assets (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Jun. 30, 2024
Dec. 31, 2023
Finite-Lived Intangible Assets, Gross $ 123,560   $ 123,560
Finite-Lived Intangible Assets, Accumulated Amortization (31,062)   (23,945)
Finite-Lived Intangible Assets, Net 92,498   $ 99,615
Finite-Lived Intangible Asset, Useful Life (Month)   144 months 151 months
Trade Names [Member]      
Finite-Lived Intangible Assets, Gross 6,590   $ 6,590
Finite-Lived Intangible Assets, Accumulated Amortization (4,217)   (4,045)
Finite-Lived Intangible Assets, Net 2,373   $ 2,545
Finite-Lived Intangible Asset, Useful Life (Month)   101 months 110 months
Trade Names [Member] | Dedicated [Member]      
Finite-Lived Intangible Assets, Gross 4,502   $ 4,502
Finite-Lived Intangible Assets, Accumulated Amortization (2,426)   (2,269)
Finite-Lived Intangible Assets, Net 2,076   2,233
Trade Names [Member] | Managed Freight [Member]      
Finite-Lived Intangible Assets, Gross 1,089   1,089
Finite-Lived Intangible Assets, Accumulated Amortization (906)   (891)
Finite-Lived Intangible Assets, Net 183   198
Trade Names [Member] | Warehousing [Member]      
Finite-Lived Intangible Assets, Gross 999   999
Finite-Lived Intangible Assets, Accumulated Amortization (885)   (885)
Finite-Lived Intangible Assets, Net 114   114
Noncompete Agreements [Member]      
Finite-Lived Intangible Assets, Gross 5,050   5,050
Finite-Lived Intangible Assets, Accumulated Amortization (1,757)   (810)
Finite-Lived Intangible Assets, Net 3,293   $ 4,240
Finite-Lived Intangible Asset, Useful Life (Month)   31 months 40 months
Noncompete Agreements [Member] | Dedicated [Member]      
Finite-Lived Intangible Assets, Gross 4,670   $ 4,670
Finite-Lived Intangible Assets, Accumulated Amortization (1,654)   (778)
Finite-Lived Intangible Assets, Net 3,016   3,892
Noncompete Agreements [Member] | Managed Freight [Member]      
Finite-Lived Intangible Assets, Gross 380   380
Finite-Lived Intangible Assets, Accumulated Amortization (103)   (32)
Finite-Lived Intangible Assets, Net 277   348
Customer Relationships [Member]      
Finite-Lived Intangible Assets, Gross 79,920   79,920
Finite-Lived Intangible Assets, Accumulated Amortization (19,399)   (15,001)
Finite-Lived Intangible Assets, Net 60,521   $ 64,919
Finite-Lived Intangible Asset, Useful Life (Month)   152 months 159 months
Customer Relationships [Member] | Dedicated [Member]      
Finite-Lived Intangible Assets, Gross 60,172   $ 60,172
Finite-Lived Intangible Assets, Accumulated Amortization (11,171)   (8,258)
Finite-Lived Intangible Assets, Net 49,001   51,914
Customer Relationships [Member] | Managed Freight [Member]      
Finite-Lived Intangible Assets, Gross 7,312   7,312
Finite-Lived Intangible Assets, Accumulated Amortization (1,751)   (1,043)
Finite-Lived Intangible Assets, Net 5,561   6,269
Customer Relationships [Member] | Warehousing [Member]      
Finite-Lived Intangible Assets, Gross 12,436   12,436
Finite-Lived Intangible Assets, Accumulated Amortization (6,477)   (5,700)
Finite-Lived Intangible Assets, Net 5,959   6,736
Credentialing [Member]      
Finite-Lived Intangible Assets, Gross 32,000   32,000
Finite-Lived Intangible Assets, Accumulated Amortization (5,689)   (4,089)
Finite-Lived Intangible Assets, Net 26,311   27,911
Finite-Lived Intangible Asset, Useful Life (Month)   148 months  
Credentialing [Member] | Expedited [Member]      
Finite-Lived Intangible Assets, Gross 32,000   32,000
Finite-Lived Intangible Assets, Accumulated Amortization (5,689)   (4,089)
Finite-Lived Intangible Assets, Net $ 26,311   $ 27,911
Finite-Lived Intangible Asset, Useful Life (Month)     157 months
v3.24.3
Note 14 - Goodwill and Other Assets - Expected Future Amortization (Details)
$ in Thousands
Sep. 30, 2024
USD ($)
2024 (1) $ 2,372 [1]
2025 9,488
2026 9,488
2027 8,678
2028 8,220
Thereafter $ 53,752
[1] Excludes the nine months ended September 30, 2024.
v3.24.3
Note 14 - Goodwill and Other Assets - Schedule of Goodwill (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2024
Balance, Goodwill   $ 75,747
Balance, Goodwill $ 78,941 78,941
Expedited [Member]    
Balance, Goodwill 15,699  
Post-acquisition goodwill adjustments 0  
Balance, Goodwill 15,699 15,699
Dedicated [Member]    
Balance, Goodwill 27,767  
Post-acquisition goodwill adjustments 4,808  
Balance, Goodwill 32,575 32,575
Managed Freight [Member]    
Balance, Goodwill 10,531  
Post-acquisition goodwill adjustments (1,614)  
Balance, Goodwill 8,917 8,917
Warehousing [Member]    
Balance, Goodwill 21,750  
Post-acquisition goodwill adjustments 0  
Balance, Goodwill $ 21,750 $ 21,750
v3.24.3
Note 15 - Equity (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands, shares in Millions
 3 Months Ended 12 Months Ended 17 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2023
Jan. 30, 2023
Jan. 29, 2023
May 18, 2022
Treasury Stock, Value, Acquired, Cost Method     $ (0)   $ 4,683 $ 20,805          
Common Stock, Dividends, Per Share, Declared (in dollars per share) $ 0.11 $ 0.11 $ 0.11 $ 0.11 $ 0.11 $ 0.11          
O 2023 Q1 Dividends [Member]                      
Common Stock, Dividends, Per Share, Declared (in dollars per share)           $ 0.11          
O 2023 Q2 Dividends [Member]                      
Common Stock, Dividends, Per Share, Declared (in dollars per share)         $ 0.11            
O 2024 Q1 Dividends [Member]                      
Common Stock, Dividends, Per Share, Declared (in dollars per share)     $ 0.11                
O 2024 Q2 Dividends [Member]                      
Common Stock, Dividends, Per Share, Declared (in dollars per share)   $ 0.11                  
O 2024 Q3 Dividends [Member]                      
Common Stock, Dividends, Per Share, Declared (in dollars per share) $ 0.11                    
Share Repurchase Program Authorized May 18, 2022 [Member]                      
Stock Repurchase Program, Authorized Amount                 $ 55,000   $ 75,000
Treasury Stock, Shares, Acquired (in shares)             2        
Treasury Stock, Value, Acquired, Cost Method             $ 54,700 $ 2,700      
Stock Repurchase Program, Additional Authorized Amount           $ 37,500          
Stock Repurchase Program, Remaining Authorized Repurchase Amount                   $ 17,500  
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