# Hub Group, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Hub Group, Inc.](/companies/hubg.md) (CIK 940942)
- Form: 10-Q
- Filed: 2024-11-01
- Accepted by EDGAR: Nov 1, 2024, 16:10 ET
- Period: 2024-09-30
- Accession: 0000950170-24-120064
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/940942/000095017024120064/hubg-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/940942/000095017024120064/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $986.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $2.97bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | $32.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | $108.8m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $3.6m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $11.2m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $7.1m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $23.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $23.6m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $79.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.39 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $1.30 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.39 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $1.31 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 60,949 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 61,241 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $193.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $43.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2024-01-01 to 2024-09-30 | $22.7m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2024-01-01 to 2024-09-30 | $68.3m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-09-30 | $186.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $805.4m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $2.83bn | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $617.9m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-09-30 | $187.2m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-09-30 | $99.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-09-30 | $1.63bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 28,288 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 our actual performance 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 our business is included in filings it makes with the SEC from time to time, including those discussed under the “Risk Factors” section in the 2023 10-K and subsequent filings. We assume 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.

*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 the first nine months of 2024, approximately 73% 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, 2024, our trucking transportation operation consisted of approximately 2,100 tractors, 3,000 employee drivers and 4,300 trailers. We also contract for services with approximately 400 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs. 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.

*Logistics*. Our Logistics segment offers a wide range of non-asset-based 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. Logistics includes our brokerage business which consists of a full range of trucking transportation services, including dry van, expedited, less-than-truckload (“LTL”), refrigerated and flatbed, all of which is provided by third-party carriers with whom we contract. We 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 final mile delivery offering provides residential final mile delivery and installation of appliances and big and bulky goods. Final mile operates through a network of independent service providers in company, customer and third-party facilities throughout the continental United States. Our business operates or has access to approximately 7 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.

On December 20, 2023, we acquired 100% of the equity interest of Forward Air Final Mile (“FAFM”). Total consideration for the transaction was $257.2 million. $260.9 million was paid in cash in December 2023 while $3.7 million was received from the seller in the second quarter of 2024 as part of the post-closing true-up of net working capital.

We are focused on several margin 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 71% of revenue for the nine months ended September 30, 2024, while one customer accounted for more than 10% of our revenue in both segments for both the nine months ended September 30, 2024 and 2023. We use various performance indicators to manage our business. We closely monitor operating cash flow, profit levels for our top customers, daily sales outstanding by customer account and vendor cost changes. On-time performance, customer service, cost per load and vendor service levels are also monitored closely.

The following table includes the one customer that represented 10% or more of our revenue by segment for the nine months ending September 30, 2024 and 2023, respectively:

| Customer A | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| ITS | 19% | 14% |
| Logistics | 16% | 11% |
| Total operating revenue | 18% | 13% |

Uncertainties and risks to our outlook include inflation, increased healthcare costs, a slowdown in consumer spending (driven by, among other factors, 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, elevated levels of 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. Exiting of truckload capacity, retail inventory levels declining leading to restocking demand, a return of typical shipping peak season demands and a stronger used tractor market could have a materially positive impact on our revenue, profitability and cash flows.

### RESULTS OF OPERATIONS

#### Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

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

| Operating Revenue | Three Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Intermodal and Transportation Solutions | $559,968 | $595,308 |
| Logistics | 460,847 | 460,309 |
| Inter-segment eliminations | (33,923) | (30,782) |
| Total operating revenue | $986,892 | $1,024,835 |

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

| Operating Income | Three Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Intermodal and Transportation Solutions | $13,516 | $13,484 |
| Logistics | 18,583 | 29,071 |
| Total operating income | $32,099 | $42,555 |

Total consolidated operating revenue decreased 4% to $987 million in 2024 from $1,025 million in 2023.

Intermodal and Transportation Solutions (“ITS”) revenue decreased 6% to $560 million primarily due to a 17% decline in intermodal revenue per load mainly due to lower prices, fuel prices, accessorial revenue and mix, partially offset by a 12% increase in intermodal volume and a 2% increase in dedicated revenues due to growth with existing and new customers.

ITS operating income remained consistent at approximately $14 million in both 2024 and in 2023 and was 2% of revenue in both years. ITS experienced lower drayage costs, rail expenses and equipment costs, which were partially offset by lower revenue per load in intermodal. In third quarter of 2024, we decreased the portion of drayage handled on our own fleet to 71% as compared to 78% in the prior year. ITS operating income included approximately $1 million of transaction-related costs associated with the EASO investment agreement.

Logistics revenue remained consistent at approximately $461 million in both 2024 and 2023. Logistics experienced higher revenue due to the final mile acquisition, partially offset by lower revenue per load in our brokerage service line. Brokerage volume remained flat compared to the prior year. Operating income was 4% of revenue in 2024 as compared to 6% of revenue in 2023.

Logistics operating income was $19 million as compared to $29 million last year, as brokerage yields were lower than the prior year and we incurred approximately $8 million of incremental costs related to our network alignment initiative within consolidation and fulfillment.

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

|  | Three Months Ended September 30, 2024 |  | 2023 |  |
| --- | ---: | ---: | ---: | ---: |
| Operating revenue | $986,892 | 100.0% | $1,024,835 | 100.0% |
| Operating expenses: |  |  |  |  |
| Purchased transportation and warehousing | 739,995 | 75.0% | 772,650 | 75.4% |
| Salaries and benefits | 142,948 | 14.5% | 138,503 | 13.5% |
| Depreciation and amortization | 32,386 | 3.3% | 36,065 | 3.5% |
| Insurance and claims | 10,217 | 1.0% | 11,681 | 1.1% |
| General and administrative | 29,674 | 3.0% | 24,146 | 2.4% |
| Gain on sale of assets, net | (427) | -0.1% | (765) | -0.1% |
| Total operating expenses | 954,793 | 96.7% | 982,280 | 95.8% |
| Operating income | $32,099 | 3.3% | $42,555 | 4.2% |
| Other income (expense): |  |  |  |  |
| Interest expense | (3,582) | -0.3% | (3,537) | -0.4% |
| Interest income | 2,249 | 0.2% | 2,838 | 0.3% |
| Other, net | (23) | 0.0% | (188) | 0.0% |
| Total other expense, net | (1,356) | -0.1% | (887) | -0.1% |
| Income before provision for income taxes | 30,743 | 3.2% | 41,668 | 4.1% |
| Provision for income taxes | 7,140 | 0.7% | 11,209 | 1.1% |
| Net income | $23,603 | 2.5% | $30,459 | 3.0% |

### Purchased Transportation and Warehousing

Purchased transportation and warehousing costs decreased 4% to $740 million in 2024 from $773 million in 2023.

Purchased transportation and warehousing costs declined as compared to prior year due to reductions in external third-party carrier costs and lower accessorial costs, partially offset by network alignment costs.

### Salaries and Benefits

Salaries and benefits increased to $143 million in 2024 from $139 million in 2023. As a percentage of revenue, salaries and benefits increased to 14.5% in 2024 from 13.5% in 2023.

While an increase of $9 million was primarily due to the final mile acquisition on December 20, 2023, this increase was partially offset by decreases in driver costs of $5 million resulting from lower driver headcount.

Headcount, which includes drivers, warehouse personnel and office employees, was 5,900, which includes 572 employees of final mile, as of September 30, 2024 and 5,600 as of September 30, 2023, respectively. The increase in headcount of office and warehouse employees was primarily due to the final mile acquisition, partially offset by a decrease in the number of drivers.

### Depreciation and Amortization

Depreciation and amortization expense decreased to $32 million in 2024 from $36 million in 2023. This decrease was primarily related to decreased container depreciation expense resulting from changes made in the third quarter of 2024 to the estimated useful lives of our containers. This decrease was partially offset by an increase in the amortization of intangibles related to the final mile acquisition. This expense, as a percentage of revenue, decreased to 3.3% in 2024 from 3.5% in 2023. 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 $10 million in 2024 from $12 million in 2023. This decrease was primarily due to a decrease in auto liability expense related to claim costs. These expenses, as a percentage of revenue, decreased to 1.0% in 2024 from 1.1% in 2023.

### General and Administrative

General and administrative expenses increased to $30 million in 2024 from $24 million in 2023. These expenses, as a percentage of revenue, increased to 3.0% in 2024 from 2.4% in 2023.

This increase in general and administrative expenses was primarily due to the final mile acquisition on December 20, 2023, as well as IT software expense and transaction-related costs associated with the EASO investment agreement.

### Gain on Sale of Assets, Net

Net gains on the sale of equipment decreased to $0.4 million in 2024 from $0.8 million in 2023. This decrease resulted from both less units sold and a lower average gain per unit sold in 2024 as compared to 2023.

### Other Income (Expense)

Other expense, net remained consistent at $1 million in both 2024 and 2023.

### Provision for Income Taxes

The provision for income taxes decreased to $7 million in 2024 from $11 million in 2023 due primarily to a decrease in pre-tax income. We provided for income taxes using an effective rate of 23.2% in 2024 and an effective rate of 26.9% in 2023. The third quarter 2024 effective tax rate of 23.2% was lower than the 2023 effective tax rate as our state apportionment was lower is 2024 and there was a valuation allowance recorded for a state tax credit in 2023.

### Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

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

| Operating Revenue | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Intermodal and Transportation Solutions | $1,673,034 | $1,919,189 |
| Logistics | 1,400,159 | 1,382,999 |
| Inter-segment eliminations | (100,313) | (84,626) |
| Total operating revenue | $2,972,880 | $3,217,562 |

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

| Operating Income | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Intermodal and Transportation Solutions | $40,186 | $94,639 |
| Logistics | 68,580 | 88,190 |
| Total operating income | $108,766 | $182,829 |

16

Total consolidated operating revenue decreased 8% to $2,973 million in 2024 from $3,218 million in 2023.

Intermodal and Transportation Solutions (“ITS”) revenue decreased 13% to $1,673 million primarily due a 17% decrease in intermodal revenue per load mainly due to lower prices, fuel prices, accessorial revenue and mix, partially offset by a 3% increase in intermodal volume and a 2% increase in dedicated revenues due to growth with existing and new customers.

ITS operating income decreased to $40 million, 2% of revenue, as compared to $95 million, 5% of revenue in the prior year due to lower intermodal revenue per load, partially offset by lower rail costs, lower fuel costs, lower drayage costs and lower equipment costs.

Logistics revenue increased 1% to $1,400 million primarily driven by an increase in final mile driven by the 4th quarter final mile acquisition, partially offset by lower revenue per load in our brokerage service line, lower revenue in managed transportation and consolidation and fulfillment. Brokerage volumes decreased 1% compared to the prior year.

Logistics operating income was 5% of revenue in 2024 as compared to 6% of revenue in 2023. Operating income was $69 million as compared to $88 million last year primarily driven by lower yields in brokerage and we incurred approximately $8 million of incremental costs related to our network alignment initiative within consolidation and fulfillment.

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

|  | Nine Months Ended September 30, 2024 |  | 2023 |  |
| --- | ---: | ---: | ---: | ---: |
| Operating revenue | $2,972,880 | 100.0% | $3,217,562 | 100.0% |
| Operating expenses: |  |  |  |  |
| Purchased transportation and warehousing | 2,207,403 | 74.3% | 2,403,190 | 74.7% |
| Salaries and benefits | 429,300 | 14.4% | 417,757 | 13.0% |
| Depreciation and amortization | 108,489 | 3.6% | 106,899 | 3.3% |
| Insurance and claims | 35,474 | 1.2% | 36,041 | 1.1% |
| General and administrative | 84,785 | 2.9% | 76,445 | 2.4% |
| Gain on sale of assets, net | (1,337) | -0.1% | (5,599) | -0.2% |
| Total operating expenses | 2,864,114 | 96.3% | 3,034,733 | 94.3% |
| Operating income | $108,766 | 3.7% | $182,829 | 5.7% |
| Other income (expense): |  |  |  |  |
| Interest expense | (11,170) | -0.4% | (9,623) | -0.3% |
| Interest income | 5,450 | 0.2% | 6,302 | 0.2% |
| Other, net | (259) | 0.0% | (81) | 0.0% |
| Total other expense, net | (5,979) | -0.2% | (3,402) | -0.1% |
| Income before provision for income taxes | 102,787 | 3.5% | 179,427 | 5.6% |
| Provision for income taxes | 23,116 | 0.8% | 40,684 | 1.3% |
| Net income | $79,671 | 2.7% | $138,743 | 4.3% |

### Purchased Transportation and Warehousing

Purchased transportation and warehousing costs decreased 8% to $2,207 million in 2024 from $2,403 million in 2023.

Purchased transportation and warehousing costs declined as compared to prior year due to reductions in external third-party carrier costs and lower accessorial costs, partially offset by network alignment costs.

### Salaries and Benefits

Salaries and benefits increased to $429 million in 2024 from $418 million in 2023. As a percentage of revenue, salaries and benefits increased to 14.4% in 2024 from 13.0% in 2023.

The increase was due primarily to the final mile acquisition, as well as an increase in incentive compensation expense of $5 million, partially offset by decreases in driver related expenses of $16 million related to lower driver headcount, lower office compensation expense of $7 million and lower restricted stock expense of $2 million.

### Depreciation and Amortization

Depreciation and amortization expense increased to $108 million in 2024 from $107 million in 2023. This increase was related primarily to the amortization of intangibles related to the final mile acquisition, as well as increased technology and warehouse equipment depreciation expense. These increases were partially offset by decreased container depreciation expense resulting from changes made in the third quarter of 2024 to the estimated useful lives of our containers. This expense, as a percentage of revenue, increased to 3.6% in 2024 from 3.3% in 2023. 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 $35 million in 2024 from $36 million in 2023. This decrease was primarily due to less claim expenses related to both auto liability and workers compensation claims in 2024. These expenses, as a percentage of revenue, increased to 1.2% in 2024 from 1.1% in 2023.

### General and Administrative

General and administrative expenses increased to $85 million in 2024 from $76 million in 2023. These expenses, as a percentage of revenue, increased to 2.9% in 2024 from 2.4% in 2023.

This expense increase was primarily due to the final mile acquisition on December 20, 2023, as well as transaction-related costs associated with the EASO investment agreement, increases in legal expense and IT software expense. These increases were partially offset by less impairment of right-of-use assets of $2 million and a decrease in bad debt expense.

### Gain on Sale of Assets, Net

Net gains on the sale of equipment decreased to $1 million in 2024 from $6 million in 2023. This decrease resulted from both less units sold and a lower average gain per unit sold in 2024 as compared to 2023.

### Other Income (Expense)

Other expense, net increased to $6 million in 2024 from $3 million in 2023 due primarily to an increase in interest expense due to higher interest rates on our debt as well as a decrease of $1 million of interest income due to lower average cash balances.

### Provision for Income Taxes

The provision for income taxes decreased to $23 million in 2024 from $41 million in 2023 due primarily to a decrease in pre-tax income. We provided for income taxes using an effective rate of 22.5% in 2024 as compared to an effective rate of 22.7% in 2023. The lower effective tax rate in 2024 resulted primarily from lower state apportionment in 2024.

### 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, 2024, we had $186 million of cash and cash equivalents and $21 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. Our investment agreement with EASO in October 2024 is consistent with this approach. See Note 8 of the condensed consolidated financial statements for details to this transaction. 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, 2024 was $194 million, which resulted primarily from net income of $80 million plus non-cash charges of $147 million, partially offset by the changes in operating assets and liabilities of $33 million.

Cash provided by operating activities totaled $194 million in 2024 compared to $323 million in 2023. The $129 million decrease in cash flow was primarily due to a decrease in net income of $59 million, a decrease in the change in assets and liabilities of $49 million and a decrease in non-cash charges of $21 million.

Net cash used in investing activities for the nine months ended September 30, 2024 was $30 million which included capital expenditures of $43 million, partially offset by proceeds from the sale of equipment of $10 million and $4 million related to the final mile acquisition. Capital expenditures of $43 million related primarily to tractors of $16 million, technology investments of $15 million, warehouse equipment of $7 million and the remainder for other transportation equipment.

Capital expenditures decreased by approximately $62 million in 2024 as compared to 2023. The 2024 decrease was due primarily to decreases in tractor purchases of $33 million, container purchases of $32 million as well as warehouse equipment and leasehold improvements of $2 million each. These decreases were partially offset by increased technology spend of $4 million.

In 2024, we estimate capital expenditures will range from $45 million to $65 million. Expected purchases include replacement tractors, technology projects and warehouse equipment. 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, 2024 was $165 million which includes cash used for repayments of long-term debt of $81 million, the purchase of treasury stock of $68 million, dividends paid of $23 million, cash used for stock tendered for payments of withholding taxes of $9 million and finance lease payments of $2 million, partially offset by proceeds from the issuance of debt of $18 million. Debt incurred in 2024 was used to fund the purchase of transportation equipment.

The $42 million increase in cash used in financing activities for 2024 versus 2023 was primarily due to an increase in dividends paid of $23 million, an increase in cash paid for stock related to employee withholding taxes of $1 million and a decrease in proceeds from the issuance of debt of $67 million, partially offset by a decrease in the purchase of treasury stock of $49 million.

As a result of anticipated unfavorable timing differences, primarily related to depreciation and compensation, we expect our cash paid for income taxes in 2024 to exceed our income tax expense.

See Note 6 of the condensed consolidated financial statements for details related to interest rates and commitment fees.

We have standby letters of credit that expire in 2025. Our letters of credit were $1 million as of both September 30, 2024 and December 31, 2023.

As of September 30, 2024, and December 31, 2023, we had no borrowings under the Credit Agreement. Our unused and available borrowings were $349 million as of both September 30, 2024 and December 31, 2023. We were in compliance with our debt covenants as of September 30, 2024 and December 31, 2023.

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.

We do not have any off-balance sheet transactions, arrangements, obligations (including contingent obligations) or liabilities.

### CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Refer to our 2023 10-K for a complete discussion regarding our critical accounting policies and estimates. As of September 30, 2024, there were no material changes to our critical accounting policies and estimates.

## Controls and procedures

As filed, 1,177 characters.

*(a) Disclosure Controls and Procedures.* As of September 30, 2024, 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, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.

*(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, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On December 20, 2023, we completed the acquisition of Forward Air Final Mile. We are currently integrating processes, employees, technologies and operations. Management will continue to evaluate our internal controls over financial reporting as we complete our integration.

## Risk factors

As filed, 387 characters.

Investing in shares of our stock involves certain risks, including those identified and described in Part I, Item 1A of our 2023 10-K under the heading “Risk Factors.” When any one or more of these risks materialize from time to time, our business and stock price can be materially and adversely affected. There have been no material changes to our risk factors since the 2023 Form 10-K.

Filed Nov 1, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-120064. Last ingested by Listed: Oct 27, 2026, 16:30 ET. No prices; not investment advice.