# Hub Group, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Hub Group, Inc.](/companies/hubg.md) (CIK 940942)
- Form: 10-Q
- Filed: 2023-11-03
- Accepted by EDGAR: Nov 3, 2023, 14:12 ET
- Period: 2023-09-30
- Accession: 0000950170-23-058706
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/940942/000095017023058706/hubg-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/940942/000095017023058706/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $1.02bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $3.22bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $42.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $182.8m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $3.5m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $9.6m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $11.2m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $40.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $30.5m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $138.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.97 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $4.31 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.98 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $4.35 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 31,493 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 32,208 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $322.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $105.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $117.4m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $400.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $1.08bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $2.92bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $656.3m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2023-09-30 | $243.8m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $102.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-30 | $1.63bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 26,818 characters.

### Forward-Looking Statements

Statements in this section and other parts of this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements, provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that might cause the actual performance of the Company to differ materially from those expressed or implied by this discussion and, therefore, should be viewed with caution. Further information on the risks that may affect the Company’s business is included in filings it makes with the SEC from time to time, including those discussed under the “Risk Factors” section in the 2022 10-K and subsequent filings. The Company assumes no obligation to update any such forward-looking statements.

### EXECUTIVE SUMMARY

We are a leading supply chain solutions provider in North America that offers comprehensive transportation and logistics management services focused on reliability, visibility and value for our customers. Our service offerings include a full range of freight transportation and logistics services, some of which are provided by assets we own and operate, and some of which are provided by third parties with whom we contract. Our services include intermodal, truckload, less-than-truckload, flatbed, temperature-controlled, dedicated and regional trucking. Other services include full outsource logistics solutions, transportation management services, freight consolidation, warehousing and fulfillment, final mile delivery, parcel and international services.

We service a large and diversified customer base in a broad range of industries, including retail, consumer products and durable goods. We believe our strategy to offer multi-modal supply chain management solutions serves to strengthen and deepen our relationships with our customers and allows us to provide a more cost effective and higher service solution.

Beginning in first quarter 2023, we have two reportable segments - Intermodal and Transportation Solutions, and Logistics, which are based primarily on the services each segment provides. Results for the three and nine months ended September 30, 2022, have been recast to conform with the current period presentation.

*Intermodal and Transportation Solutions.* Our Intermodal and Transportation Solutions segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In 2023, approximately 77% of our drayage services was provided by our own fleet. We arrange for the movement of our customers’ freight in one of our approximately 50,000 containers. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of September 30, 2023, our trucking transportation operation consisted of approximately 2,300 tractors, 3,100 employee drivers and 4,400 trailers. We also contract for services with approximately 480 independent owner-operators.

*Logistics*. Our Logistics segment offers a wide range of services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, warehousing, fulfillment, cross-docking, consolidation services and final mile delivery. These services include a full range of trucking transportation services, including dry van, expedited, less-than-truckload, refrigerated and flatbed, all of which is provided by third party carriers with whom we contract. We also leverage proprietary technology along with collaborative relationships with third party service providers to deliver cost savings and performance-enhancing supply chain services to our clients. Our transportation management offering also serves as a source of volume for our ITS segment. Many of the customers for these solutions are consumer goods companies who sell into the retail channel. Our business operates or has access to approximately 10 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations. These services offer our customers shipment visibility, transportation cost savings, high service and compliance with retailers’ increasingly stringent supply chain requirements.

In August 2022, we acquired TAGG Logistics, LLC which enhanced our presence in the consolidation and fulfillment space and added a complementary e-commerce offering to serve our customers' multimodal transportation and logistics needs. The acquisition added scale to our logistics segment.

We are working on several yield enhancement projects including network optimization, matching of inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, increasing our driver and asset utilization, reducing repositioning costs, providing holistic solutions and improving low profit freight. Hub’s top 50 customers represent approximately 63% of revenue for the nine months ended September 30, 2023, while one customer accounted for more than 10% of our revenue for the nine months ended September 30, 2023. We use various performance indicators to manage our business. We closely monitor profit levels for our top customers. We also evaluate on-time performance, customer service, cost per load and outstanding accounts receivable by customer. Vendor cost changes and vendor service levels are also monitored closely.

Uncertainties and risks to our outlook include the following: inflation, increased healthcare costs, a slowdown in consumer spending (driven by, among other factors, rising inflation, increases in interest rates, an economic recession and geopolitical concerns), a shift by consumers to spending on services at the expense of goods, an increase of retailers’ inventory levels, the ability of customers to pay our accounts receivable, a significant increase in transportation supply in the marketplace, aggressive pricing actions by our competitors and any inability to pass cost increases, such as transportation and warehouse costs, through to our customers, all of which could have a materially negative impact on our revenue, profitability and cash flow in 2023.

### RESULTS OF OPERATIONS

#### Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

The following table summarizes our operating revenue by segment (in thousands):

| Operating Revenue | Three Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Intermodal and Transportation Solutions | $595,308 | $856,001 |
| Logistics | 460,309 | 525,178 |
| Inter-segment eliminations | (30,782) | (25,772) |
| Total operating revenue | $1,024,835 | $1,355,407 |

The following table summarizes our operating income by segment (in thousands):

| Operating Income | Three Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Intermodal and Transportation Solutions | $13,484 | $86,772 |
| Logistics | 29,071 | 30,966 |
| Total operating income | $42,555 | $117,738 |

Total consolidated operating revenue decreased 24% to $1,025 million in 2023 from $1,355 million in 2022.

Intermodal and Transportation Solutions (“ITS”) revenue decreased 30% to $595 million primarily due to a 16% decrease in intermodal volume due to low transportation demand and an oversupply of truckload carrier capacity, a 20% decrease in intermodal revenue per load (primarily due to lower price, fuel prices and mix) and a 6% decline in dedicated revenues due to lost customers partially offset by growth with existing and new customers.

ITS operating income decreased to $13 million, 2% of revenue, as compared to $87 million, 10% of revenue in the prior year, due to lower customer rates, volume and accessorials. These headwinds were partially offset by lower drayage costs, rail expenses and equipment costs. In third quarter 2023, we increased the portion of drayage handled on our own fleet to 78% as compared to 62% in the prior year.

Logistics revenue decreased 12% to $460 million primarily driven by lower revenue per load in our brokerage service line, partially offset by performance of our managed transportation, consolidation and final mile service lines, as well as contribution from our fulfillment business. Brokerage volumes increased 5% compared to the prior year. Operating income was 6% of revenue in both 2023 and 2022. Operating income was $29 million as compared to $31 million last year, as lower revenue was partially offset by lower purchased transportation costs and our yield management initiatives.

The following is a summary of operating results and certain items in the consolidated statements of income as a percentage of revenue (in thousands):

|  | Three Months Ended September 30, 2023 |  | 2022 |  |
| --- | ---: | ---: | ---: | ---: |
| Operating revenue | $1,024,835 | 100.0% | $1,355,407 | 100.0% |
| Operating expenses: |  |  |  |  |
| Purchased transportation and warehousing | 772,650 | 75.4% | 1,023,052 | 75.5% |
| Salaries and benefits | 138,503 | 13.5% | 137,666 | 10.1% |
| Depreciation and amortization | 36,065 | 3.5% | 33,542 | 2.5% |
| Insurance and claims | 11,681 | 1.1% | 17,615 | 1.3% |
| General and administrative | 24,146 | 2.4% | 34,382 | 2.5% |
| Gain on sale of assets, net | (765) | -0.1% | (8,588) | -0.6% |
| Total operating expenses | 982,280 | 95.8% | 1,237,669 | 91.3% |
| Operating income | $42,555 | 4.2% | $117,738 | 8.7% |

### CONSOLIDATED OPERATING EXPENSES

### Purchased Transportation and Warehousing

Purchased transportation and warehousing costs decreased 24% to $773 million in 2023 from $1,023 million in 2022.

Purchased transportation and warehousing costs declined as compared to prior year due to lower volumes, reductions in third party carrier costs and decreased use of third-party carriers for drayage in ITS.

### Salaries and Benefits

Salaries and benefits increased to $139 million in 2023 from $138 million in 2022. As a percentage of revenue, salaries and benefits increased to 13.5% in 2023 from 10.1% in 2022.

This increase was primarily due to $19 million of incremental expense related to growth of our driver and warehouse employees which includes a $2 million increase in medical claims, as well as increased expenses resulting from TAGG, which incurred three months of expenses in 2023 as compared to just over one month of expenses in 2022. These increases were partially offset by an $18 million reduction in office employee compensation due to lower headcount and lower incentive compensation expense.

Headcount, which includes drivers, warehouse personnel and office employees, was 5,610 and 5,783 as of September 30, 2023 and 2022, respectively. The decrease in headcount of office and warehouse employees was partially offset by increases in the number of drivers as we have expanded the portion of drayage handled by our own fleet.

### Depreciation and Amortization

Depreciation and amortization expense increased to $36 million in 2023 from $34 million in 2022. This increase was primarily due to increased container, tractor and warehouse equipment depreciation expense as well as the amortization of intangibles related to the acquisition of TAGG. This expense, as a percentage of revenue, increased to 3.5% in 2023 from 2.5% in 2022. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.

### Insurance and Claims

Insurance and claims expense decreased to $12 million in 2023 from $18 million in 2022. This decrease was primarily due to less claim expenses related to both auto liability and workers compensation claims in 2023. These expenses, as a percentage of revenue, decreased to 1.1% in 2023 from 1.3% in 2022.

### General and Administrative

General and administrative expenses decreased to $24 million in 2023 from $34 million in 2022. These expenses, as a percentage of revenue, decreased to 2.4% in 2023 from 2.5% in 2022.

This expense decrease was primarily due to higher 2022 expenses resulting from an impairment charge of a right-of-use asset, higher use tax expense and higher legal expense. These decreases were partially offset by higher rent expense and increased expenses resulting from TAGG, which incurred three months of expenses in 2023 as compared to just over one month of expenses in 2022.

### Gain on Sale of Assets, Net

Net gains on the sale of equipment decreased to $1 million in 2023 from $9 million in 2022. This decrease resulted from both less units sold and a lower average gain per unit sold in 2023 as compared to 2022.

### Other Income (Expense)

Interest expense increased to $4 million in 2023 from $2 million in 2022 due primarily to higher interest rates on our debt and higher debt balances. This expense increase was partially offset by increased interest income of $3 million in 2023 due to higher interest rates on our cash balance and higher cash balances. These changes resulted in Other Expense decreasing to $1 million in 2023 from $3 million in 2022.

### Provision for Income Taxes

The provision for income taxes decreased to $11 million in 2023 from $28 million in 2022 due a decrease in pre-tax income. We provided for income taxes using an effective rate of 26.9% in 2023 and an effective rate of 24.2% in 2022. The third quarter 2023 effective tax rate of 26.9% was adversely affected by a reduction in the expected use of state income tax credits and larger permanent differences in 2023.

### Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

The following table summarizes our operating revenue by segment (in thousands):

| Operating Revenue | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Intermodal and Transportation Solutions | $1,919,189 | $2,507,722 |
| Logistics | 1,382,999 | 1,614,775 |
| Inter-segment eliminations | (84,626) | (67,510) |
| Total operating revenue | $3,217,562 | $4,054,987 |

The following table summarizes our operating income by segment (in thousands):

| Operating Income | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Intermodal and Transportation Solutions | $94,639 | $273,069 |
| Logistics | 88,190 | 97,365 |
| Total operating income | $182,829 | $370,434 |

Total consolidated operating revenue decreased 21% to $3,218 million in 2023 from $4,055 million in 2022.

Intermodal and Transportation Solutions (“ITS”) revenue decreased 23% to $1,919 million primarily due to a 15% decrease in intermodal volume due to low transportation demand and an oversupply of truckload carrier capacity, a 12% decrease in intermodal revenue per load (primarily due to lower price, fuel prices and mix) and a 3% decline in dedicated revenues due to lost customers partially offset by growth with existing and new customers.

ITS operating income decreased to $95 million, 5% of revenue, as compared to $273 million, 11% of revenue in the prior year due to lower volume, lower customer rates, higher equipment costs and lower surcharges and accessorial income. These headwinds were partially offset by lower drayage costs as we increased the portion of drayage handled on our own fleet to 77% in the first nine months of 2023 as compared to 61% in the prior year, as well as an improvement in profitability at our Dedicated service line.

Logistics revenue decreased 14% to $1,383 million primarily driven by lower revenue per load in our brokerage service line and lower managed transportation service line revenue, partially offset by an increase in fulfillment revenue. Brokerage volumes increased 1% compared to the prior year. Operating income was 6% of revenue in both 2023 and 2022. Operating income was $88 million as compared to $97 million last year, as lower revenue was partially offset by lower purchased transportation costs and our yield management initiatives.

The following is a summary of operating results and certain items in the consolidated statements of income as a percentage of revenue (in thousands):

|  | Nine Months Ended September 30, 2023 |  | 2022 |  |
| --- | ---: | ---: | ---: | ---: |
| Operating revenue | $3,217,562 | 100.0% | $4,054,987 | 100.0% |
| Operating expenses: |  |  |  |  |
| Purchased transportation and warehousing | 2,403,190 | 74.7% | 3,081,299 | 76.0% |
| Salaries and benefits | 417,757 | 13.0% | 395,904 | 9.8% |
| Depreciation and amortization | 106,899 | 3.3% | 97,075 | 2.4% |
| Insurance and claims | 36,041 | 1.1% | 37,553 | 0.9% |
| General and administrative | 76,445 | 2.4% | 93,819 | 2.3% |
| Gain on sale of assets, net | (5,599) | -0.2% | (21,097) | -0.5% |
| Total operating expenses | 3,034,733 | 94.3% | 3,684,553 | 90.9% |
| Operating income | $182,829 | 5.7% | $370,434 | 9.1% |

### CONSOLIDATED OPERATING EXPENSES

### Purchased Transportation and Warehousing

Purchased transportation and warehousing costs decreased 22% to $2,403 million in 2023 from $3,081 million in 2022.

Purchased transportation and warehousing costs declined as compared to prior year due to lower volumes, reductions in third party carrier costs and decreased use of third-party carriers for drayage in ITS.

### Salaries and Benefits

Salaries and benefits increased to $418 million in 2023 from $396 million in 2022. As a percentage of revenue, salaries and benefits increased to 13.0% in 2023 from 9.8% in 2022.

This increase was primarily due to $78 million of incremental expense related to growth of our driver and warehouse employees which includes a $4 million increase in medical claims, as well as increased expenses resulting from TAGG, which incurred nine months of expenses in 2023 as compared to just over four months of expenses in 2022. These increases were partially offset by a $56 million reduction in office employee compensation due to lower headcount and lower incentive compensation expense.

### Depreciation and Amortization

Depreciation and amortization expense increased to $107 million in 2023 from $97 million in 2022. This increase was primarily due to increased container, tractor and warehouse equipment depreciation expense as well as the amortization of intangibles related to the acquisition of TAGG. This expense, as a percentage of revenue, increased to 3.3% in 2023 from 2.4% in 2022. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.

### Insurance and Claims

Insurance and claims expense decreased to $36 million in 2023 from $38 million in 2022. This decrease was primarily due to less claim expenses related to both auto liability and workers compensation claims in 2023. These expenses, as a percentage of revenue, increased to 1.1% in 2023 from 0.9% in 2022.

### General and Administrative

General and administrative expenses decreased to $76 million in 2023 from $94 million in 2022. These expenses, as a percentage of revenue, increased to 2.4% in 2023 from 2.3% in 2022.

This expense decrease was primarily due to decreases in legal and acquisition-related expenses, use tax expense, professional services expense including IT software expense, less impairment of a right-of-use asset, bad debt expense and outside sales commissions, partially offset by higher rent expense, increased expenses resulting from TAGG, which incurred nine months of expenses in 2023 as compared to just over one month of expenses in 2022 and higher temporary labor expense.

### Gain on Sale of Assets, Net

Net gains on the sale of equipment decreased to $6 million in 2023 from $21 million in 2022. This decrease resulted from both less units sold and a lower average gain per unit sold in 2023 as compared to 2022.

### Other Income (Expense)

Interest expense increased to $10 million in 2023 from $5 million in 2022 due primarily to higher interest rates on our debt and higher average debt balances. This expense increase was partially offset by increased interest income of $6 million in 2023 due to higher interest rates on our cash balance and higher cash balances. These changes resulted in Other Expense decreasing to $3 million in 2023 from $6 million in 2022.

### Provision for Income Taxes

The provision for income taxes decreased to $41 million in 2023 from $87 million in 2022 due a decrease in pre-tax income. We provided for income taxes using an effective rate of 22.7% in 2023 and an effective rate of 23.9% in 2022. The lower effective tax rate in 2023 resulted primarily from a change in state apportionment methodology.

### LIQUIDITY AND CAPITAL RESOURCES

Our financing and liquidity strategy is to fund operating cash payments and future dividends through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment. As of September 30, 2023, we had $401 million of cash and cash equivalents and $20 million of restricted investments. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes. In prior years, we have funded our business acquisitions from cash on hand. Payments for our other investing activities, such as the construction of our office buildings and our capitalized technology investments, have been funded by cash on hand or cash flows from operations. Cash used in financing activities including the purchase of treasury stock has been funded by cash from operations or cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed. Based on past performance and current expectations, we believe cash on hand and cash received from the provision of services, along with other financing sources, will provide us the necessary capital to fund transactions and achieve our planned growth for the next twelve months and the foreseeable future.

Cash provided by operating activities for the nine months ended September 30, 2023 was $323 million, which resulted primarily from net income of $139 million plus non-cash charges of $168 million and changes in operating assets and liabilities of $16 million.

Cash provided by operating activities totaled $323 million in 2023 compared to $350 million in 2022. The $28 million decrease in cash flow was primarily due to a decrease in net income of $139 million, partially offset by an increase in non-cash charges of $59 million and an increase in the change in assets and liabilities of $52 million.

Net cash used in investing activities for the nine months ended September 30, 2023 was $85 million which included capital expenditures of $106 million, partially offset by proceeds from the sale of equipment of $20 million. Capital expenditures of $106 million related primarily to tractors of $50 million, containers of $34 million, technology investments of $11 million, warehouse equipment of $9 million and leasehold improvements of $2 million.

Capital expenditures decreased by approximately $52 million in 2023 as compared to 2022. The 2023 decrease was due to decreased container purchases of $39 million, less spend on our corporate headquarters of $17 million and technology investments of $8 million. These decreases were partially offset by more purchases of warehouse equipment of $9 million, tractors of $2 million and the remainder related to leasehold improvements in 2023.

In 2023, we estimate capital expenditures will range from $140 million to $150 million. This range is lower than the estimate we disclosed in our 2022 10-K of $170 million to $190 million, as we have reduced our planned purchase of containers in 2023. We expect transportation equipment purchases to range from $116 million to $124 million and technology and other investments will range from $24 million to $26 million. We plan to fund these expenditures with a combination of cash and debt.

Net cash used in financing activities for the nine months ended September 30, 2023 was $123 million which includes cash used for the purchase of treasury stock of $117 million, repayments of long-term debt of $81 million, cash used for stock tendered for payments of withholding taxes of $8 million and finance lease payments of $2 million, partially offset by proceeds from the issuance of debt of $85 million. Debt incurred in 2023 was used to fund the purchase of transportation equipment.

The $51 million increase in cash used in financing activities for 2023 versus 2022 was primarily due to a decrease in proceeds from the issuance of debt of $42 million, an increase in the purchase of treasury stock of $7 million and an increase in cash paid for stock related to employee withholding taxes of $2 million.

As a result of anticipated favorable timing differences, primarily related to depreciation and compensation, we expect our cash paid for income taxes in 2023 to be less than our income tax expense.

See Note 5 of the consolidated financial statements for details related to interest rates and commitment fees.

We have standby letters of credit that expire in 2023 and 2024. As of September 30, 2023 and December 31, 2022, our letters of credit were $1 million and $43 million, respectively.

As of September 30, 2023, and December 31, 2022, we had no borrowings under the Credit Agreement and our unused and available borrowings were $349 million and $307 million, respectively. We were in compliance with our debt covenants as of September 30, 2023 and December 31, 2022.

We are continually evaluating the possible effects of current economic conditions and reasonable and supportable economic forecasts in operational cash flows, including the risks of declines in the overall freight market and our customers’ liquidity and ability to pay. We are monitoring working capital on a daily basis and are in frequent communications with our customers.

## Controls and procedures

As filed, 902 characters.

*(a) Disclosure Controls and Procedures.* As of September 30, 2023, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2023.

*(b) Changes in Internal Control over Financial Reporting.* There have been no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) during the fiscal quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 407 characters.

Investing in shares of our stock involves certain risks, including those identified and described in Part I, Item 1A of our 2022 10-K under the heading “Risk Factors.” When any one or more of these risks materialize from time to time, the Company’s business and stock price can be materially and adversely affected. There have been no material changes to the Company’s risk factors since the 2022 Form 10-K.

Filed Nov 3, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-058706. Last ingested by Listed: Oct 27, 2026, 16:30 ET. No prices; not investment advice.