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 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 of working capital and liquidity
(including our mix of debt, finance leases, and operating leases as means of
financing revenue equipment), future stock repurchases, if any, expected capital
expenditures, allocations, and requirements, future customer relationships,
expected debt reduction, including future interest expense, future driver market
conditions, future use of independent contractors, expected cash flows, expected
operating income, future investments in and growth of our segments and services,
expected adjusted operating ratio, future trucking capacity, future rates and
prices, future utilization, future depreciation and amortization, future
salaries, wages, and related expenses, including driver compensation and the
impact of our cost saving measures, 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, and upgrades, the market value of used equipment,
including equipment subject to operating or finance leases relative to our
payment obligations under such operating leases (including residual value
guarantees and the proceeds from the sale thereof), the anticipated impact of
our investment in TEL, the future impact of our restructuring activities,
strategic plan, and other strategic initiatives, anticipated levels of and
fluctuations relating to insurance, claims, and litigation expenses, including
the erosion of available limits in our aggregate insurance policies, our
disposition of the assets of TFS, including any future indemnification
obligations related to the TFS Portfolio, future Department of Transportation
("DOT") safety ratings for our motor carriers and the potential impact of a
change in such ratings, and the anticipated impact of the COVID-19 outbreak or
other similar outbreaks, 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 sections
entitled "Item 1A. Risk Factors," set forth in this Form 10-Q and our Form 10-K
for the year ended December 31, 2020, as amended. Readers should review and
consider the factors discussed in "Item 1A. Risk Factors," set forth in this
Form 10-Q and our Form 10-K for the year ended December 31, 2020, as amended,
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



For the second quarter of 2021, we were pleased to report earnings per share of
$0.91, which is the highest earnings for any quarter in the Company's history.
In the second quarter, we saw freight market demand firing on all cylinders as a
result of growing economic activity, low inventories, and supply chain
disruptions, accompanied by constrained supply due to an intensifying national
driver shortage. These conditions have continued into the third quarter. The
full impact of these factors on our operating statistics year-over-year is
complicated by changes in business mix due to downsizing our refrigerated fleet
and solo tractor count in the Expedited business. We expect year-over-year
comparability to be clearer in the second half of 2021.



Although we are pleased with these results, we recognize the opportunity for
further improvement, particularly in our Dedicated segment. In the short run,
this means continuing to improve rates and contractual terms with customers who
are not yielding the level of consistent profit we expect from this segment of
the business, and in the long run, this means holding ourselves accountable for
improved margins and returns across all aspects of our business.



                                                                         Page 22
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As of June 30, 2020, our Factoring 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 TFS, a division of Covenant
Transport Solutions LLC, an indirect wholly owned subsidiary of the Company,
which included substantially all of the assets and operations of our Factoring
segment. Beginning with the period ended June 30, 2020, we have reflected the
former Factoring segment as discontinued operations in the condensed
consolidated statements of operations for all periods presented. Prior periods
have been adjusted to conform to the current presentation.



Additional items of note for the second quarter of 2021 include the following:

? Total revenue of $256.3 million, an increase of 33.7% compared with the second

quarter of 2020, and freight revenue (which excludes revenue from fuel

surcharges) of $231.9 million, an increase of 29.2% compared with the second

quarter of 2020, despite our reduced tractor fleet;

? Operating income of $18.3 million, compared with operating loss of $29.0

million in the second quarter of 2020;

? Net income of $15.4 million, or $0.91 per diluted share, compared with

net loss of $22.3 million, or $1.31 per diluted share, in the second quarter

of 2020. Net income from continuing operations of $15.4 million, or $0.91

per diluted share, compared to $23.2 million net loss from continuing

operations or $1.36 per diluted share, in the second quarter of 2020. Net

income from discontinued operations of $0.0 million, or $0.00 per diluted

share, compared to net income from discontinued operations of $0.8 million, or

$0.05 per diluted share, in the second quarter of 2020.

  ? 34% of consolidated total revenue was in our more volatile Expedited
    reportable segment, as compared to 42% in the second quarter of 2020;

? Our Managed Freight reportable segment's total revenue increased to $71.6

million in the 2021 quarter from $34.4 million in the 2020 quarter and the

segment had an operating income of $7.3 million in the 2021 quarter compared

to operating loss of $3.7 million in the 2020 quarter;

? Our equity investment in TEL has fully recovered from the soft equipment

market and provided $3.4 million of pre-tax earnings in the second quarter

of 2021 compared to $0.5 million in the second quarter of 2020;

? Since December 31, 2020, total indebtedness, net of cash, decreased by $13.9

million to $88.1 million, primarily related to the indemnification call under

the TFS Settlement, and with available borrowing capacity of $70.5 million

under our Credit Facility at June 30, 2021, we do not expect to be required to

test our fixed charge covenant in the foreseeable future; and

? Stockholders' equity and tangible book value at June 30, 2021, were $313.5


    million and $248.8 million, respectively.




Outlook



For the balance of 2021, our short-term focus will be to continue to improve the
profitability of our Dedicated segment and continue working to solidify longer
term agreements with certain of our key Expedited and Brokerage customers. Thus
far, we have seen some success in these efforts. The freight environment and our
new business pipeline are both currently robust, which we believe will support
our commercial plan. Potential headwinds include inefficiencies from
re-engineering or replacing certain contracts, driver availability and cost,
accident experience, the cost and volatility of claims, general inflation, and
supply and demand factors for our customers and our industry. At present, we
expect to continue to make steady, incremental progress on our Dedicated
segment's margins over the remainder of 2021.



Over time, we expect our Managed Freight segment's margin to gravitate toward
the mid-single digits and Dedicated to gravitate toward the mid to high single
digits and ultimately double digits. Directionally the margin changes may offset
each other to some extent as the freight and driver markets return to more
balanced levels.



For the longer term, we expect to continue the execution of our strategic plan,
which consists of steadily and intentionally growing the percentage of our
business generated by Dedicated, Managed Freight, and Warehousing segments,
reducing unnecessary overhead, and improving our safety, service, and
productivity. This will be a gradual process of diversifying our customer base
with less seasonal and cyclical exposure, implementing more consistent
contracts, and investing in systems, technology, and people to support the
growth of these previously under-invested areas. With diligence and
accountability, we expect to make consistent progress and be a stronger, more
profitable, and more predictable business with the opportunity for significant
and sustained value creation.



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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 June 30,                              Six Months Ended June 30,

GAAP Operating Ratio: 2021 OR % 2020 OR %


        2021          OR %          2020          OR %
Total revenue             $ 256,324                   $ 191,689                   $ 477,213                   $ 402,502
Total operating
expenses                    237,992       92.8%         220,639      115.1%

448,370 94.0% 432,906 107.6% Operating income (loss) $ 18,332

$ (28,950 )                 $  28,843                   $ (30,404 )

Adjusted Operating
Ratio:                      2021        Adj. OR %       2020        Adj. OR %       2021        Adj. OR %       2020        Adj. OR %
Total revenue             $ 256,324                   $ 191,689                   $ 477,213                   $ 402,502
Fuel surcharge revenue      (24,376 )                   (12,125 )                   (44,577 )                   (33,357 )
Freight revenue (total
revenue, excluding fuel
surcharge)                  231,948                     179,564                     432,636                     369,145

Total operating
expenses                    237,992                     220,639                     448,370                     432,906
Adjusted for:
Fuel surcharge revenue      (24,376 )                   (12,125 )                   (44,577 )                   (33,357 )
Amortization of
intangibles                  (1,152 )                    (2,062 )                    (2,304 )                    (2,793 )
Bad debt expense
associated with
customer bankruptcy and
high credit risk
customers                         -                      (2,617 )                         -                      (2,617 )
Insurance policy
erosion                           -                           -                           -                           -
Strategic restructuring
adjusting items:
Gain on disposal of
terminals, net                    -                       5,712                           -                       5,712
Impairment of real
estate and related
tangible assets                   -                      (9,790 )                         -                      (9,790 )
Impairment of revenue
equipment and related
charges                           -                     (17,604 )                         -                     (17,604 )
Restructuring related
severance and other               -                      (1,791 )                         -                      (1,791 )
Abandonment of
information technology
infrastructure                    -                      (1,048 )                         -                      (1,048 )
Contract exit costs and
other restructuring               -                        (695 )                         -                        (695 )
Adjusted operating
expenses                    212,464       91.6%         178,619       99.5%         401,489       92.8%         368,923       99.9%
Adjusted operating
income (loss)             $  19,484                   $     945                   $  31,147                   $     222




                                                                         Page 24

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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.



Until the second quarter of 2020, we had four reportable segments, Highway
Services, Dedicated, Managed Freight, and Factoring Services. As discussed
above, our Factoring reportable segment was classified as discontinued
operations as of June 30, 2020. As of September 30, 2020, the segment formerly
known as Highway Services is now reflected as Expedited, given the change in
business mix surrounding the exit of the majority of the solo-refrigerated
business in the second quarter of 2020. In addition, given management changes
and growth, we have reported Warehousing as a separate reportable segment from
Managed Freight. We believe the updated reportable segments reflect our service
offerings, strategic direction, and how management, including our chief
operating decision maker, monitors our performance.



Our four reportable segments include:

? Expedited: The Expedited 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 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. Many of our

Dedicated contract customers are automotive companies or shippers of produce,

where the nature of the product we ship requires high service standards.






  ? Managed Freight: The Managed Freight 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 segment provides day-to-day warehouse management


    services to customers who have chosen to outsource this function.




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 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. The main factors
that could affect our Dedicated revenue are the rates and utilization under the
contracts with our Dedicated customers. 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.



                                                                         Page 25
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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
arranging transportation services, directly and through agents, who are paid a
commission for the freight they provide, for customers on both an ad-hoc and a
contractual basis. We provide these services directly and through relationships
with thousands of third-party carriers and integration with our Expedited
reportable segment. We also utilize technology and process management to provide
detailed visibility into a customer's movement of freight - inbound and outbound
- throughout the customer's network and can provide focused customer support
through multiyear contracts. 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 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
24 for the uses and limitations associated with adjusted operating ratio.



Revenue Equipment



At June 30, 2021, we operated 2,407 tractors and 5,314 trailers. Of such
tractors, 1,570 were owned, 670 were financed under operating leases, and 167
were provided by independent contractors, who provide and drive their own
tractors. Of such trailers, 4,607 were owned, 621 were financed under finance
type leases, and 86 were held under short-term operating leases. We finance a
small portion of our trailer fleet and larger portion of our tractor fleet with
operating leases, which generally run for a period of three to five years for
tractors and five to seven years for trailers. At June 30, 2021, our fleet had
an average tractor age of 1.9 years and an average trailer age of 4.7 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 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 six months ended June 30, 2021 TO three and six months ended June 30, 2020





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           Six Months Ended
                                June 30,                    June 30,
                           2021          2020          2021          2020
Revenue:
Freight revenue          $ 231,948     $ 179,564     $ 432,636     $ 369,145
Fuel surcharge revenue      24,376        12,125        44,577        33,357
Total revenue            $ 256,324     $ 191,689     $ 477,213     $ 402,502




The increase in total revenue resulted from a $37.2 million, $9.3 million, $3.8
million, and $2.0 million increase in Managed Freight, Dedicated,
Warehousing, and Expedited freight revenue, respectively, for the three months
ended June 30, 2021 and a $57.9 million, $7.2 million, and $4.0 million increase
in Managed Freight, Warehousing, and Dedicated freight revenue, respectively,
partially offset by a $5.7 million decrease in Expedited freight revenue for the
six months ended June 30, 2021.



See results of 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           Six Months Ended
                                               June 30,                    June 30,
                                           2021          2020         2021          2020
Salaries, wages, and related expenses   $   88,477     $ 74,688     $ 171,062     $ 157,152
% of total revenue                            34.5 %       39.0 %        35.8 %        39.0 %
% of freight revenue                          38.1 %       41.6 %        39.5 %        42.6 %




Salaries, wages, and related expenses for the three months ended June 30,
2021, increased on a dollars basis primarily as the result of substantial cents
per mile driver pay increases made effective in early January 2021, increases in
workers' compensation insurance, and management incentive compensation
attributable to favorable second quarter results. The decreases on a percentage
basis are due to increased revenue over which to spread those costs.



For the six months ended June 30, 2021, the increase on a dollars basis in
salaries, wages, and benefits was primarily the result of substantial cents per
mile driver pay increases made effective in early January 2021, as well as
management incentive compensation attributable to favorable results in the 2021
period, and increases in workers' compensation insurance. The decreases on a
percentage basis are due to increased revenue over which to spread those costs.



For the remainder of 2021 we believe salaries, wages, and related expenses will
increase in comparison to the first half of 2021 and 2020 as a result of driver
pay changes put in place in the tight freight market, partially offset by fewer
drivers as a result of our change in business model and our smaller fleet.
Additionally, we expect salaries, wages, and related expenses to continue to
increase period over period as the result of reinstatement of the 401(k) match,
wage inflation, and, in certain periods, increased incentive compensation due to
improved performance. 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          Six Months Ended
                              June 30,                   June 30,
                          2021          2020         2021         2020
Fuel expense           $   26,372     $ 15,938     $ 49,194     $ 41,202
% of total revenue           10.3 %        8.3 %       10.3 %       10.2 %
% of freight revenue         11.4 %        8.9 %       11.4 %       11.2 %




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 $0.10 per gallon higher for the
quarter ended June 30, 2021 compared with the same quarter in 2020.



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, our percentage of deadhead miles,
for which we do not receive material fuel surcharge revenues, and the net impact
of fuel hedging gains and losses.



Net fuel expense is shown below:





                                            Three Months Ended             Six Months Ended
                                                 June 30,                      June 30,
                                           2021            2020           2021           2020
Total fuel surcharge                    $    24,376     $   12,125     $   44,577     $   33,357
Less: Fuel surcharge revenue
reimbursed to owner operators and
other third parties                           2,135          1,319          3,786          4,100
Company fuel surcharge revenue          $    22,241     $   10,806     $   40,791     $   29,257
Total fuel expense                      $    26,372     $   15,938     $   49,194     $   41,202
Less: Company fuel surcharge revenue         22,241         10,806         40,791         29,257
Net fuel expense                        $     4,131     $    5,132     $    8,403     $   11,945
% of freight revenue                            1.8 %          2.9 %          1.9 %          3.2 %




Net fuel expense for the three months ended June 30, 2021, decreased primarily
due to higher fuel surcharge recovery, partially offset by slightly higher fuel
prices. There were no diesel fuel hedge gains or losses for the quarter,
compared to $0.3 million of losses for the same 2020 quarter. Also, as a result
of the change in our business mix our fleet was more fuel efficient due to less
idling and less temperature-controlled freight thus reducing refrigerated
trailer fuel expense. As of June 30, 2021, we had no remaining fuel hedging
contracts.



For the six months ended June 30, 2021, net fuel expense decreased primarily due
to higher fuel surcharge recovery, partially offset by slightly higher fuel
prices. Additionally, there were $0.4 million of diesel fuel hedge gains for the
year-to-date period, compared to $0.3 million of losses for the same
2020 period. Also, as a result of the change in our business mix our fleet was
more fuel efficient due to less idling and less temperature-controlled freight
thus reducing refrigerated trailer fuel expense.



We expect to continue managing our idle time and tractor speeds, investing in
more fuel-efficient tractors to improve our miles per gallon, locking in fuel
hedges when deemed appropriate, and partnering with customers to adjust fuel
surcharge programs that are inadequate to recover a fair portion of fuel costs.
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 by refrigerated operations (which
uses diesel fuel for refrigeration but usually does not recover fuel surcharges
on refrigeration fuel), percentage of revenue generated from independent
contractors, and the success of fuel efficiency initiatives.



                                                                         Page 28
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Operations and maintenance





                               Three Months Ended          Six Months Ended
                                    June 30,                   June 30,
                                2021          2020         2021         2020
Operations and maintenance   $   14,294     $ 12,218     $ 29,013     $ 25,044
% of total revenue                  5.6 %        6.4 %        6.1 %        6.2 %
% of freight revenue                6.2 %        6.8 %        6.7 %        6.8 %




The increases in operations and maintenance on a dollar basis for the three
months and six months ended June 30, 2021 were primarily related to an
additional $2.3 million and $3.4 million in costs related to the recruitment and
onboarding of drivers, respectively, when compared to the prior year periods,
despite having a smaller fleet in 2021. This increase is attributable to the
extremely tight driver market and our focused effort to seat more of our
tractors. This was partially offset by a reduction in tolls, cargo damage, and
other costs associated with temperature-controlled freight that was exited in
the second quarter of 2020 as a result of our business restructuring.



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, and the reliability of new and untested revenue
equipment models.


Revenue equipment rentals and purchased transportation





                                            Three Months Ended             Six Months Ended
                                                 June 30,                      June 30,
                                           2021            2020           2021           2020
Revenue equipment rentals and
purchased transportation                $    75,455     $   47,011     $  132,691     $   93,073
% of total revenue                             29.4 %         24.5 %         27.8 %         23.1 %
% of freight revenue                           32.5 %         26.2 %         30.7 %         25.2 %




The increases in revenue equipment rentals and purchased transportation for the
three and six months ended June 30, 2021,were primarily the result of a more
competitive market for sourcing third-party capacity and growth in the Managed
Freight reportable segment, partially offset by a reduction in the percentage of
the total miles run by independent contractors from 11.1% for the three months
ended June 30, 2020 to 8.5% for the same 2021 period and from 11.6% for the six
months ended June 30, 2020 to 8.7% for the same 2021 period.



When compared year-over-year, we expect revenue equipment rentals to decrease
going forward as a result of the reduction of our tractor fleet. However, we
expect purchased transportation to increase as we seek to grow the Managed
Freight reportable segment. 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 continues to tighten 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          Six Months Ended
                                      June 30,                   June 30,
                                  2021          2020         2021         2020
Operating taxes and licenses   $    2,960      $ 3,123     $   5,545     $ 6,576
% of total revenue                    1.2 %        1.6 %         1.2 %       1.6 %
% of freight revenue                  1.3 %        1.7 %         1.3 %       1.8 %




The decreases in operating taxes and licenses as a percentage of revenue for the
three and six months ended June 30, 2021 are primarily due to increased revenue
over which to spread those costs.



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Insurance and claims



                         Three Months Ended          Six Months Ended
                              June 30,                   June 30,
                         2021           2020         2021         2020
Insurance and claims   $   9,577      $ 11,562     $ 17,415     $ 27,174
% of total revenue           3.7 %         6.0 %        3.6 %        6.8 %
% of freight revenue         4.1 %         6.4 %        4.0 %        7.4 %




Insurance and claims per mile cost decreased to 12.8 cents per mile for the
three months ended June 30, 2021 compared to 15.4 cents per mile for the same
2020 quarter and 11.8 cents per mile for the six months ended June 30, 2021
compared to 17.4 cents per mile for the same 2020 period. This change is
primarily a result of the occurrence and development of large claims in the 2020
periods partially offset by the 2020 refund of $7.3 million of previously
expensed premiums from our commutation of the April 10, 2015 through March 31,
2018 policy for our primary auto liability insurance. Additionally, incident
rates during the 2021 periods have decreased as compared to the same 2020
periods.



The auto liability policy contains a feature whereby we are able to
retroactively obtain a partial refund of the premium in exchange for taking on
the liability for incidents that occurred during the period and releasing the
insurers. This is referred to as "commuting" the policy or "policy commutation."
In the second quarter of 2020, as well as in several past periods we have
commuted the policy, which has lowered our insurance and claims expense. We
intend to evaluate our ability to execute the policy release premium refund or
commutation option for the auto liability policy for the three years ended March
31, 2021, which could reduce insurance and claims expense by up to $14.0
million, less any future amounts paid on claims by the insurer. A decision with
respect to commutation of the policy has not yet been made. Management cannot
predict whether or not future claims or the development of existing claims will
justify a commutation of the policy period, and accordingly, no related amounts
were recorded at June 30, 2021.



Our auto liability (personal injury and property damage), cargo, and general
liability insurance programs include significant self-insured retention amounts.
We are also self-insured for physical damage to our equipment. Because of these
significant self-insured exposures, insurance and claims expense may fluctuate
significantly from period-to-period. Any increase in frequency or severity of
claims, or any increases to then-existing reserves, could adversely affect our
financial condition and results of operations. We periodically evaluate
strategies to efficiently reduce our insurance and claims expense. Our current
policy for the $7.0 million in excess of $3.0 million layer runs from January
28, 2021 to April 1, 2024. Due to the erosion of the $9.0 million in excess of
$1.0 million layer of our prior policy, any adverse developments in claims filed
between April 1, 2018 and March 31, 2021, could result in additional expense
accruals. 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.



In addition, in future periods, insurance and claims costs may be more volatile
depending on our future accident experience, which could have a material adverse
effect on our business, financial condition, and results of operations.



                                                                         Page 30
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Communications and utilities



                                 Three Months Ended          Six Months Ended
                                      June 30,                   June 30,
                                  2021          2020         2021         2020
Communications and utilities   $    1,130      $ 1,782     $   2,377     $ 3,351
% of total revenue                    0.4 %        0.9 %         0.5 %       0.8 %
% of freight revenue                  0.5 %        1.0 %         0.5 %       0.9 %



For the periods presented, the changes in communications and utilities as a percentage of revenue for the three and six months ended June 30, 2021 is primarily due to increased revenue over which to spread those costs.





General supplies and expenses



                                  Three Months Ended          Six Months Ended
                                       June 30,                   June 30,
                                  2021           2020         2021         2020
General supplies and expenses   $   7,752      $ 11,536     $ 15,934     $ 19,894
% of total revenue                    3.0 %         6.0 %        3.3 %        4.9 %
% of freight revenue                  3.3 %         6.4 %        3.7 %        5.4 %




The decreases in general supplies and expenses for the three and six months
ended  June 30, 2021 primarily relate to
additional reserves put in place during the second quarter of 2020 for
potentially uncollectible accounts receivable and 2020 strategic planning and
process improvement investments that were part of our organizational
restructuring. Additionally, travel expenses were decreased for the six months
ended June 30, 2021 compared to the same 2020 period due to the travel
limitations brought on by the COVID-19 pandemic.

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Depreciation and amortization





                                  Three Months Ended          Six Months Ended
                                       June 30,                   June 30,
                                   2021          2020         2021         2020
Depreciation and amortization   $   13,863     $ 19,663     $ 27,951     $ 37,846
% of total revenue                     5.4 %       10.3 %        5.9 %        9.4 %
% of freight revenue                   6.0 %       11.0 %        6.5 %       10.3 %



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





Depreciation expense decreased $4.9 million and $9.5 million to $12.7
million and $25.6 million for the three and six months ended June 30, 2021,
respectively, compared to $17.6 million and $35.1 million in the
same 2020 periods. The decreases in depreciation expense are due to the mix
change in the overall business that reduced total tractor count and increased
utilization, along with reductions in terminals and other capital
assets. Amortization of intangible assets was $1.2 million and $2.3 million for
the three and six months ended June 30, 2021, respectively, and $2.1
million and $2.8 million for the same 2020 periods. The decrease is a result of
the 2020 termination of the non-compete agreement with a former Landair
executive partially offset by the revised remaining useful life of the Landair
trade name to 15 months as of June 30, 2020, as a result of management changes,
a change in the branding of the organization, and the expected use of the
Landair trade name.



For the remainder of 2021, we expect our average operational fleet size to remain relatively flat at approximately 2,500 tractors.

Gain on disposition of property and equipment, net





                                            Three Months Ended                Six Months Ended
                                                 June 30,                         June 30,
                                           2021             2020            2021            2020
Gain on disposition of property and
equipment, net                          $    (1,888 )    $   (3,451 )    $   (2,812 )    $   (4,975 )
% of total revenue                             (0.7 %)         (1.8 %)         (0.6 %)         (1.2 %)
% of freight revenue                           (0.8 %)         (1.9 %)         (0.6 %)         (1.3 %)



The decreases in gain on disposition of property and equipment, net are primarily the result of the $5.7 million gain on a terminal in the second quarter of 2020, as part of the Company's restructuring plan, partially offset by the timing of the trade cycle of our equipment.

Impairment of long-lived property and equipment





                                           Three Months Ended               Six Months Ended
                                                June 30,                        June 30,
                                         2021              2020           2021             2020
Impairment of long-lived property
and equipment                         $         -       $   26,569     $         -      $   26,569
% of total revenue                            0.0 %           13.9 %           0.0 %           6.6 %
% of freight revenue                          0.0 %           14.8 %           0.0 %           7.2 %




During the second quarter of 2020, we recognized impairment of $16.8 million on
revenue equipment, $7.3 million on a terminal, related leasehold improvements,
and equipment, $2.2 million on an office facility held under an operating lease,
and $0.2 million on a training and orientation facility.



                                                                         Page 32
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Interest expense, net



                          Three Months Ended          Six Months Ended
                               June 30,                   June 30,
                          2021           2020         2021         2020
Interest expense, net   $    708       $  2,084     $   1,450     $ 3,983
% of total revenue           0.3 %          1.1 %         0.3 %       1.0 %
% of freight revenue         0.3 %          1.2 %         0.3 %       1.1 %




The decreases in interest expense, net for the three and six months ended June
30, 2021 are primarily the result of the reduction of our total indebtedness
since the same 2020 periods, partially offset by interest expense on the $35.6
million Draw Note related to the indemnification call by Triumph.



This line item will fluctuate based on our decision with respect to purchasing
revenue equipment with balance sheet debt versus operating leases as well as our
ability to continue to generate profitable results and reduce our leverage.



Income from equity method investment





                                             Three Months Ended               Six Months Ended
                                                  June 30,                        June 30,
                                           2021              2020           2021            2020
Income (loss) from equity method
investment                              $     3,382       $      530     $     6,342     $     (205 )




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 increase in TEL's contributions to our results for
the three and six months ended June 30, 2021 is the result of constricted used
equipment capacity in the transportation market. We expect the impact on our
earnings for the remaining quarters of 2021 to be consistent with the first half
of 2021.



Income tax expense (benefit)



                                 Three Months Ended           Six Months Ended
                                      June 30,                    June 30,
                                 2021           2020          2021         2020
Income tax expense (benefit)   $   5,570      $ (7,336 )    $  9,716     $ (8,340 )
% of total revenue                   2.2 %        (3.8 %)        2.0 %       (2.1 %)
% of freight revenue                 2.4 %        (4.1 %)        2.2 %       (2.3 %)




The changes in income tax expense (benefit) were primarily related to the $51.5
million and $68.3 million increases in pre-tax income in the three and six
months ended June 30, 2021, respectively, compared to the same 2020 periods,
resulting from the increases in operating income, earnings on investment in TEL,
and income from discontinued operations.



The effective tax rate is different from the expected combined tax rate due
primarily to permanent differences related to our per diem pay structure for
drivers. Due to the partial nondeductible effect of the per diem payments, our
tax rate will fluctuate in future periods as income fluctuates. We are currently
estimating our 2021 effective income tax rate to be approximately 27.4%.



                                                                         Page 33
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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 six months ended June 30, 2021 TO three and six months ended June 30, 2020





The following table summarizes financial and operating data by reportable
segment:



(in thousands)               Three Months Ended           Six Months Ended
                                  June 30,                    June 30,
                             2021          2020          2021          2020
Revenues:
Expedited                  $  87,369     $  79,778     $ 165,849     $ 165,938
Dedicated                     81,868        65,940       157,314       147,728
Managed Freight               71,635        34,362       123,032        65,099
Warehousing                   15,452        11,609        31,018        23,737
Total revenues             $ 256,324     $ 191,689     $ 477,213     $ 402,502

Operating Income (Loss):
Expedited                  $  10,225     $ (12,844 )   $  16,436     $ (14,396 )
Dedicated                       (191 )     (13,177 )      (1,990 )     (14,718 )
Managed Freight                7,316        (3,611 )      12,261        (2,946 )
Warehousing                      982           682         2,136         1,656
Total operating income     $  18,332     $ (28,950 )   $  28,843     $ (30,404 )




The increase in Expedited revenue for the three months ended June 30, 2021
relates to an increase in average freight revenue per tractor per week
of 43.3% and a $5.6 million increase in fuel surcharge revenue compared to
the 2020 quarter, partially offset by a 342 (or 28.3%) average
tractor decrease related to the exit of the solo-refrigerated business in the
second quarter of 2020. The increase in average freight revenue per tractor per
week for the quarter ended June 30, 2021 is the result of a 31.0% increase in
average miles per unit and a 16.5 cents per mile (or 9.4%) increase in average
rate per total mile compared to the 2020 quarter. Expedited team-driven tractors
averaged 866 tractors in the second quarter of 2021, a decrease of
approximately 0.8% from the average of 873 tractors in the second quarter of
2020.



For the six months ended June 30, 2021, the change in Expedited revenue relates
to a 383 (or 30.4%) average tractor decrease related to the exit of the
solo-refrigerated business in the second quarter of 2020 partially offset by
an increase in average freight revenue per tractor per week of 39.0% compared to
the same 2020 period. The increase in average freight revenue per tractor per
week for the six months ended June 30, 2021 is the result of a 31.9% increase in
average miles per unit and an 8.0 cents per mile (or 4.4%) increase in average
rate per total mile compared to the same 2020 period. Expedited team-driven
tractors averaged 871 tractors for the six months ended June 30, 2021, an
increase of approximately 1.2% from the average of 860 tractors for the
same 2020 period.



The increase in Dedicated revenue relates to an increase in average freight
revenue per tractor per week compared to the 2020 quarter as the result of
a 7.4% increase in average miles per unit as well as a 18.0 cents per
mile (or 9.4% increase) in average rate per total mile compared to the 2020
quarter, as well as a $6.6 million increase in fuel surcharge revenue. These
increases were partially offset by a 27 (or 1.7%) average tractor decrease as a
result of not renewing underperforming contracts.



For the six months ended June 30, 2021, the increase in Dedicated revenue
relates to an increase in average freight revenue per tractor per week compared
to the same 2020 period as the result of a 17.0 cents per mile (or 9.2%)
increase in average rate per total mile, partially offset by a 3.5% decrease in
average miles per unit as compared to the same 2020 period. Additionally, fuel
surcharge revenue increased $5.6 million compared to the 2020 period. These
increases were partially offset by a 35 (or 2.1%) average tractor decrease as a
result of not renewing underperforming contracts.



Managed Freight total revenue increased as a result of a robust freight market
and executing various spot rate opportunities in the quarter and year-to-date
periods, as well as handling overflow freight from both Expedited and Dedicated
truckload operations.



Warehousing total revenue for the quarter and year-to-date periods increased as
a result of new customer business that began operations during the third quarter
of 2020.



In addition to the changes in revenue described above for the three and six
months ended June 30, 2021, the change in operating income for the three months
ended June 30, 2021, resulted from a $26.3 million, $3.5 million, and $2.9
million increase in Managed Freight, Warehousing, and Dedicated operating
expenses, respectively, partially offset by a $15.5 million decrease in
Expedited operating expenses. For the six months ended June 30, 2021, the change
in operating income resulted from a $42.7 million and $6.8 million increase in
Managed Freight and Warehousing operating expenses, respectively, partially
offset by a $30.9 million and $3.1 million decrease in Expedited and Dedicated
operating expenses, respectively.



The decrease in Expedited operating expenses for the three and six months ended
June 30, 2021, and the decrease in Dedicated operating expenses for the six
months ended June 30, 2021, is primarily the result of the restructuring costs
incurred in the second quarter of 2020 related to downsizing our solo-driver
refrigerated, one-way irregular routes, and other less profitable operations.
Operating expenses for Expedited were further reduced by a decrease in insurance
and claims expense and a 28.3% and 30.4% average operating fleet reduction,
respectively, partially offset by higher variable costs associated with driver
pay increases and greater concentration of team driven units. The increase in
Dedicated operating expenses for the three months ended June 30, 2021 primarily
related to driver pay increases partially offset by the aforementioned 2020
restructuring costs.



The increase in Managed Freight operating expenses is the result of increased
revenue driving an increase in variable expenses, primarily purchased
transportation. The increase for Warehousing was primarily driven by the new
customer business that began operations during the third quarter of 2020.



                                                                         Page 34
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LIQUIDITY AND CAPITAL RESOURCES





Our business requires significant capital investments over the short-term and
the long-term. Recently, 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 through purchases and
finance leases to increase as a percentage of our fleet as we decrease our use
of operating leases. Further, we expect to increase our capital allocation
toward Dedicated and Managed Freight 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 $21.5 million and $14.4 million at June 30, 2021 and December 31, 2020,
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 fleet age of 1.9 years at June 30, 2021, 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 June 30, 2021 and December 31, 2020 we had $93.0 million and $110.4 million in long-term debt and lease obligations, respectively, consisting of the following:

? $10.0 million and $15.0 million outstanding borrowings under the Credit

Facility, respectively;

? $4.6 million and no outstanding borrowings under the Draw Note, respectively;



   ? $9.0 million and $17.8 million in revenue equipment installment notes,
     respectively;

   ? $22.1 million and $22.7 million in real estate notes, respectively;

   ? No deferred loan costs (which reduce long-term debt) as of June 30,
     2021 and $0.1 million as of December 31, 2020;

? $15.0 million and $16.4 million of the principal portion of financing lease


     obligations, respectively; and

   ? $32.4 million and $38.5 million of the operating lease obligations,
     respectively.




The decrease in our revenue equipment installment notes and financing lease
obligations was primarily due to a strategic decision to reduce our debt and
lease obligations through the second quarter of 2021. The decrease in operating
lease obligations was primarily due to the amortization of the operating lease
liability.



As of June 30, 2021, we had $10.0 million of borrowings outstanding, undrawn
letters of credit outstanding of approximately $29.5 million, and available
borrowing capacity of $70.5 million under the Credit Facility. Additionally, we
had $40.4 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. Refer to Note 7,
"Debt" of the accompanying condensed consolidated financial statements for
further information about material debt agreements.



Our net capital expenditures for the six months ended June 30, 2021 totaled
$19.9 million of proceeds, as compared to $4.5 million of proceeds for the prior
year period. In the first half of 2021, we took delivery of approximately 88 new
tractors and 75 new trailers, while disposing of approximately 249 used tractors
and 482 used trailers. Our current fleet plan for fiscal 2021 includes the
delivery of an additional 196 new company replacement tractors and no additional
new trailer deliveries. For the remainder of 2021, we expect our average
operational fleet size to remain relatively flat with the first quarter of
2021 at approximately 2,500 tractors. Net gains on disposal of equipment and
real estate in the first half of 2021 were $2.8 compared to $5.0 million in the
same prior year period.



We believe we have sufficient liquidity to satisfy our cash needs, however we
continue to evaluate and act, as necessary, to maintain sufficient liquidity to
ensure our ability to operate during these unprecedented times. The extent to
which COVID-19 and its variants could impact our operations, financial
condition, liquidity, results of operations, and cash flows is highly
uncertain and will depend on future developments. We will continue to evaluate
the nature and extent of the potential short-term and long-term impacts to our
business.



                                                                         Page 35

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Cash Flows



Net cash flows provided by operating activities increased to $34.1 million for
the six months ended June 30, 2021, compared to $24.1 million for the same 2020
period, primarily due to a $51.1 million increase in net income, as well as,
funding receivables of our discontinued Factoring reportable segment in the
prior year period, partially offset by changes in the timing and amount of
payments on insurance claims.



Net cash flows provided by investing activities were $19.8 million for the six
months ended June 30, 2021, compared to $4.1 million in the same 2020 period.
The change in net cash flows provided by investing activities was primarily the
result of the timing of our trade cycle whereby we took delivery of
approximately 88 new company tractors and disposed of approximately 249 used
tractors in the 2021 period compared to delivery and disposal of
approximately 305 and 781 tractors, respectively in the same 2020 period.



Net cash flows used by financing activities were approximately $57.3
million for the six months ended June 30, 2021, compared to $4.6 million in the
same 2020 period. The change in net cash flows used by financing activities was
primarily a function of net proceeds in the 2020 period and net repayments in
the 2021 period relating to notes payable, the Draw Note, and under our Credit
Facility.



On February 10, 2020, our Board approved the repurchase of up to $20.0 million
of the Company's Class A common stock. The program was suspended on March 26,
2020 with approximately $2.5 million remaining authorized.



On January 25, 2021, our Board approved the repurchase of up to $40.0 million of
the Company's outstanding Class A common stock. There were 0.5 million and 1.4
million shares repurchased in the open market for $8.4 million and $17.5 million
during the six months ended June 30, 2021 and 2020, respectively. The Company
has the ability to repurchase up to $31.6 million of the Company's outstanding
Class A common stock under the current stock repurchase program as circumstances
warrant based on market conditions, cash flow requirements, securities law
limitations, and other factors.



Going forward, the disposition of our Factoring reportable segment is expected
to continue to improve our cash flows used by financing activities. However, on
an ongoing basis, our cash flows may fluctuate depending on capital
expenditures, future stock repurchases, 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 six months ended June 30, 2021, compared to those
disclosed in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," included in our 2020 Form 10-K, as
amended, other than those discussed above.

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