MARTEN TRANSPORT, LTD. The following discussion and analysis of our financial condition and results of operations should be read together with the selected consolidated financial data and our consolidated condensed financial statements and the related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those included in our Form 10-K, Part I, Item 1A for the year endedDecember 31, 2020 . We do not assume, and specifically disclaim, any obligation to update any forward-looking statement contained in this report. Overview We have strategically transitioned from a refrigerated long-haul carrier to a multifaceted business offering a network of refrigerated and dry truck-based transportation capabilities across our five distinct business platforms - Truckload, Dedicated, Intermodal, Brokerage and MRTN deMexico . The primary source of our operating revenue is provided by our Truckload segment through a combination of regional short-haul and medium-to-long-haul full-load transportation services. We transport food and other consumer packaged goods that require a temperature-controlled or insulated environment, along with dry freight, acrossthe United States and into and out ofMexico andCanada . Our agreements with customers are typically for one year. Our Dedicated segment provides customized transportation solutions tailored to meet each individual customer's requirements, utilizing temperature-controlled trailers, dry vans and other specialized equipment withinthe United States . Our agreements with customers range from three to five years and are subject to annual rate reviews. Generally, we are paid by the mile for our Truckload and Dedicated services. We also derive Truckload and Dedicated revenue from fuel surcharges, loading and unloading activities, equipment detention and other accessorial services. The main factors that affect our Truckload and Dedicated revenue are the rate per mile we receive from our customers, the percentage of miles for which we are compensated, the number of miles we generate with our equipment and changes in fuel prices. We monitor our revenue production primarily through average Truckload and Dedicated revenue, net of fuel surcharges, per tractor per week. We also analyze our average Truckload and Dedicated revenue, net of fuel surcharges, per total mile, non-revenue miles percentage, the miles per tractor we generate, our fuel surcharge revenue, our accessorial revenue and our other sources of operating revenue. Our Intermodal segment transports our customers' freight withinthe United States utilizing our temperature-controlled trailers and, beginning inSeptember 2019 , our refrigerated containers, each on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers. The main factors that affect our Intermodal revenue are the rate per mile and other charges we receive from our customers. Our Brokerage segment develops contractual relationships with and arranges for third-party carriers to transport freight for our customers in temperature-controlled trailers and dry vans withinthe United States and into and out ofMexico throughMarten Transport Logistics, LLC , which was established in 2007 and operates pursuant to brokerage authority granted by the DOT. We retain the billing, collection and customer management responsibilities. The main factors that affect our Brokerage revenue are the rate per mile and other charges that we receive from our customers.
Operating results of our MRTN de
In addition to the factors discussed above, our operating revenue is also affected by, among other things,the United States economy, inventory levels, the level of truck and rail capacity in the transportation market, a contracting driver market, severe weather conditions and specific customer demand. 10 -------------------------------------------------------------------------------- Our operating revenue increased$4.4 million , or 2.0%, in the first three months of 2021 from the first three months of 2020. Our operating revenue, net of fuel surcharges, increased$4.8 million , or 2.5%, compared with the first three months of 2020. Truckload segment revenue, net of fuel surcharges, increased 0.1% from the first three months of 2020 due to an increase in our average revenue per tractor, substantially offset by a reduction in our average number of tractors. Dedicated segment revenue, net of fuel surcharges, increased 4.3% from the first three months of 2020 primarily due to fleet growth driven by an increase in the number of Dedicated contracts we have with our customers. Intermodal segment revenue, net of fuel surcharges, decreased 5.6% primarily due to decreased load volume. Brokerage segment revenue increased 12.5% primarily due to an increase in revenue per load in the first three months of 2021. Fuel surcharge revenue decreased slightly to$24.9 million in the first three months of 2021 from$25.2 million in the first three months of 2020. Our profitability is impacted by the variable costs of transporting freight for our customers, fixed costs, and expenses containing both fixed and variable components. The variable costs include fuel expense, driver-related expenses, such as wages, benefits, training, and recruitment, and independent contractor costs, which are recorded under purchased transportation. Expenses that have both fixed and variable components include maintenance and tire expense and our cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency and other factors. Our main fixed costs relate to the acquisition and subsequent depreciation of long-term assets, such as revenue equipment and operating terminals. We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment, along with any increases in fleet size. Although certain factors affecting our expenses are beyond our control, we monitor them closely and attempt to anticipate changes in these factors in managing our business. For example, fuel prices have significantly fluctuated over the past several years. We manage our exposure to changes in fuel prices primarily through fuel surcharge programs with our customers, as well as through volume fuel purchasing arrangements with national fuel centers and bulk purchases of fuel at our terminals. To help further reduce fuel expense, we have installed and tightly manage the use of auxiliary power units in our tractors to provide climate control and electrical power for our drivers without idling the tractor engine, and also have improved the fuel usage in the temperature-control units on our trailers. For our Intermodal and Brokerage segments, our profitability is impacted by the percentage of revenue which is payable to the providers of the transportation services we arrange. This expense is included within purchased transportation in our consolidated condensed statements of operations. Our operating income improved 33.1% from$18.0 million in the first three months of 2020 to$24.0 million in the first three months of 2021, a period in which we overcame the impact of the severe winter weather inFebruary 2021 . Our operating expenses as a percentage of operating revenue, or "operating ratio," improved to 89.2% in the first three months of 2021 from 91.8% in the first three months of 2020. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 87.9% in the first three months of 2021 from 90.7% in the first three months of 2020. Our net income improved 31.3% to$18.0 million , or$0.22 per diluted share, in the first three months of 2021 from$13.7 million , or$0.17 per diluted share, in the first three months of 2020. Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers. AtMarch 31, 2021 , we had$88.6 million of cash and cash equivalents,$635.0 million in stockholders' equity and no long-term debt outstanding. In the first three months of 2021, net cash flows provided by operating activities of$43.6 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of$16.3 million , to pay cash dividends of$3.3 million , and to upgrade regional operating facilities in the amount of$591,000 , resulting in a$22.5 million increase in cash and cash equivalents. We estimate that capital expenditures, net of proceeds from dispositions, will be approximately$135 million for the remainder of 2021. We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future. We continue to invest considerable time and capital resources to actively implement and promote long-term environmentally sustainable solutions that drive reductions in our fuel and electricity consumption and decrease our carbon footprint. These initiatives include (i) reducing idle time for our tractors by installing and tightly managing the use of auxiliary power units, which are powered by solar panels and provide climate control and electrical power for our drivers without idling the tractor engine, (ii) improving the energy efficiency of our newer, more aerodynamic and well-maintained tractor and trailer fleets by optimizing the equipment's specifications, weight and tractor speed, equipping our tractors with automatic transmissions, converting the refrigeration units in our refrigerated trailers to the new, more-efficient CARB refrigeration units along with increasing the insulation in the trailer walls and installing trailer skirts, and using ultra-fuel efficient and wide-based tires, and (iii) upgrading all of our facilities to indoor and outdoor LED lighting along with converting all of our facilities to solar power. Additionally, we are an active participant in theUnited States EPA SmartWay Transport Partnership , in which freight shippers, carriers, logistics companies and other voluntary stakeholders partner with theEPA to measure, benchmark and improve logistics operations to reduce their environmental footprint. 11 -------------------------------------------------------------------------------- This Management's Discussion and Analysis of Financial Condition and Results of Operations includes discussions of operating revenue, net of fuel surcharge revenue; Truckload, Dedicated and Intermodal revenue, net of fuel surcharge revenue; operating expenses as a percentage of operating revenue, each net of fuel surcharge revenue; and net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads). We provide these additional disclosures because management believes these measures provide a more consistent basis for comparing results of operations from period to period. These financial measures in this report have not been determined in accordance withU.S. generally accepted accounting principles (GAAP). Pursuant to Item 10(e) of Regulation S-K, we have included the amounts necessary to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures of operating revenue, operating expenses divided by operating revenue, and fuel and fuel taxes. Stock Split OnAugust 13, 2020 , we effected a three-for-two stock split of our common stock,$.01 par value, in the form of a 50% stock dividend. Our consolidated condensed financial statements, related notes, and other financial data contained in this report have been adjusted to give retroactive effect to the stock split for all periods presented. COVID-19 Update The demand that our customers have from their customers within the COVID-19 pandemic for the food, beverages and other consumer goods that we transport and distribute varies significantly for each customer across their individual products, by region and in total - with the level of demand by freight lane also subject to significant fluctuations. Our continual redeployment of our drivers to match the changing freight demand by lane while minimizing empty miles has been and will continue to be imperative to the utilization of our revenue equipment and our operating revenue through this environment. Our execution of our unique multifaceted business model across our diverse customer base, including our ability to quickly make data-driven decisions and adjustments utilizing our in-house operating technology, has and will continue to be one of our key strengths as we proactively navigate through this fast-changing landscape in providing our essential service. Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we believe we are well-positioned for the sustainability of our business from a balance sheet perspective.
We fully embrace our responsibility to keep our valued employees safe, healthy and informed and have implemented measures including the following:
- Throughout our headquarters and regional operating facilities, we are applying
the social distancing guidelines by having a number of our office employees
work from their homes and by staggering shift and break times for our
maintenance personnel.
- We have increased the frequency and extent of disinfecting and cleaning of
each of our facilities and thoroughly disinfect all tractors prior to
assignment to our drivers.
- We provide hand sanitizer and masks to all of our employees. When hand
sanitizer was not available in
prepared and distributed over 6,000 bottles.
- We provide clear communication to our employees promoting essential healthy
hygiene habits and assist in responsibly responding to potential symptoms
including self-quarantining and testing.
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Results of Operations
The following table sets forth for the periods indicated certain operating statistics regarding our revenue and operations:
Three Months
Ended March 31,
2021 2020
Truckload Segment:
Revenue (in thousands) $ 94,915 $ 95,132
Average revenue, net of fuel surcharges, per tractor
per week(1) $ 4,057 $ 3,814
Average tractors(1) 1,609 1,691
Average miles per trip 534 559
Total miles (in thousands) 38,283 41,039
Dedicated Segment:
Revenue (in thousands) $ 78,237 $ 75,037
Average revenue, net of fuel surcharges, per tractor
per week(1) $ 3,214 $ 3,304
Average tractors(1) 1,619 1,494
Average miles per trip 307 306
Total miles (in thousands) 31,999 31,536
Intermodal Segment:
Revenue (in thousands) $ 22,004 $ 23,680
Loads 7,982 9,737
Average tractors 134 100
Brokerage Segment:
Revenue (in thousands) $ 27,890 $ 24,797
Loads 14,575 16,108
(1) Includes tractors driven by both company-employed drivers and independent
contractors. Independent contractors provided 133 and 106 tractors as of
March 31, 2021 and 2020, respectively.
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Comparison of Three Months Ended
The following table sets forth for the periods indicated our operating revenue,
operating income and operating ratio by segment, along with the change for each
component:
Dollar Percentage
Change Change
Three Months Three Months Three Months
Ended Ended Ended
March 31, March 31, March 31,
(Dollars in thousands) 2021 2020 2021 vs. 2020 2021 vs. 2020
Operating revenue:
Truckload revenue, net of fuel surcharge
revenue $ 83,919 $ 83,857 $ 62 0.1 %
Truckload fuel surcharge revenue 10,996 11,275 (279 ) (2.5 )
Total Truckload revenue 94,915 95,132 (217 ) (0.2 )
Dedicated revenue, net of fuel surcharge
revenue 66,902 64,159 2,743 4.3
Dedicated fuel surcharge revenue 11,335 10,878 457 4.2
Total Dedicated revenue 78,237 75,037 3,200 4.3
Intermodal revenue, net of fuel
surcharge revenue 19,446 20,594 (1,148 ) (5.6 )
Intermodal fuel surcharge revenue 2,558 3,086 (528 ) (17.1 )
Total Intermodal revenue 22,004 23,680 (1,676 ) (7.1 )
Brokerage revenue 27,890 24,797 3,093 12.5
Total operating revenue $ 223,046 $ 218,646 $ 4,400 2.0 %
Operating income:
Truckload $ 11,415 $ 6,785 $ 4,630 68.2 %
Dedicated 8,936 8,533 403 4.7
Intermodal 1,461 1,306 155 11.9
Brokerage 2,186 1,408 778 55.3
Total operating income $ 23,998 $ 18,032 $ 5,966 33.1 %
Operating ratio(1):
Truckload 88.0 % 92.9 %
Dedicated 88.6 88.6
Intermodal 93.4 94.5
Brokerage 92.2 94.3
Consolidated operating ratio 89.2 % 91.8 %
(1) Represents operating expenses as a percentage of operating revenue.
Our operating revenue increased $4.4 million , or 2.0%, to $223.0 million in the
2021 period from $218.6 million in the 2020 period. Our operating revenue, net
of fuel surcharges, increased $4.8 million , or 2.5%, to $198.2 million in the
2021 period from $193.4 million in the 2020 period. This increase was due to a
$3.1 million increase in Brokerage revenue, a $2.7 million increase in Dedicated
revenue, net of fuel surcharges, and a $62,000 increase in Truckload revenue,
net of fuel surcharges, partially offset by a $1.1 million decrease in
Intermodal revenue, net of fuel surcharges. Fuel surcharge revenue decreased
slightly to $24.9 million in the 2021 period from $25.2 million in the 2020
period.
14-------------------------------------------------------------------------------- Truckload segment revenue decreased$217,000 , or 0.2%, to$94.9 million in the 2021 period from$95.1 million in the 2020 period. Truckload segment revenue, net of fuel surcharges, increased$62,000 , or 0.1%, and was$83.9 million in each of the 2021 and 2020 periods. During the 2021 period, an increase in our average revenue per tractor was substantially offset by a reduction in our average number of tractors. The improvement in the operating ratio in the 2021 period was primarily due to an increase in our average revenue per tractor due to increased rates with our customers. Dedicated segment revenue increased$3.2 million , or 4.3%, to$78.2 million in the 2021 period from$75.0 million in the 2020 period. Dedicated segment revenue, net of fuel surcharges, increased 4.3% primarily due to fleet growth driven by an increase in the number of Dedicated contracts we have with our customers. The operating ratio was consistent in both the 2021 and 2020 periods. Intermodal segment revenue decreased$1.7 million , or 7.1%, to$22.0 million in the 2021 period from$23.7 million in the 2020 period. Intermodal segment revenue, net of fuel surcharges, decreased 5.6% from the 2020 period primarily due to a decrease in load volume. The improvement in the operating ratio in the 2021 period was primarily due to a decrease in the amounts payable to railroads as a percentage of our revenue. Brokerage segment revenue increased$3.1 million , or 12.5%, to$27.9 million in the 2021 period from$24.8 million in the 2020 period primarily due to an increase in revenue per load. The improvement in the operating ratio in the 2021 period was primarily due to a decrease in the amounts payable to carriers for transportation services which we arranged as a percentage of our Brokerage revenue and increased rates with our customers. The following table sets forth for the periods indicated the dollar and percentage increase or decrease of the items in our unaudited consolidated condensed statements of operations, and those items as a percentage of operating revenue: Dollar Percentage Percentage of Change Change Operating Revenue Three Months Three Months Three Months Ended Ended Ended March 31, March 31, March 31, (Dollars in thousands) 2021 vs. 2020 2021 vs. 2020 2021 2020 Operating revenue$ 4,400 2.0 % 100.0 % 100.0 % Operating expenses (income): Salaries, wages and benefits 237 0.3 32.7 33.3 Purchased transportation 320 0.8 18.3 18.5 Fuel and fuel taxes 640 2.3 13.0 12.9 Supplies and maintenance (1,213 ) (9.9 ) 4.9 5.6 Depreciation 260 1.0 11.5 11.6 Operating taxes and licenses 73 2.8 1.2 1.2 Insurance and claims (838 ) (6.8 ) 5.1 5.6 Communications and utilities 98 4.9 0.9 0.9 Gain on disposition of revenue equipment (429 ) (27.6 ) (0.9 ) (0.7 ) Other (714 ) (11.7 ) 2.4 2.8 Total operating expenses (1,566 ) (0.8 ) 89.2 91.8 Operating income 5,966 33.1 10.8 8.2 Other 87 89.7 - - Income before income taxes 5,879 32.4 10.8 8.3 Income taxes expense 1,591 36.1 2.7 2.0 Net income$ 4,288 31.3 % 8.1 % 6.3 % Salaries, wages and benefits consist of compensation for our employees, including both driver and non-driver employees, employees' health insurance, 401(k) plan contributions and other fringe benefits. These expenses vary depending upon the size of our Truckload, Dedicated and Intermodal tractor fleets, the ratio of company drivers to independent contractors, our efficiency, our experience with employees' health insurance claims, changes in health care premiums and other factors. Salaries, wages and benefits expense increased$237,000 , or 0.3%, in the 2021 period from the 2020 period. Bonus compensation expense for our non-driver employees increased by$1.1 million in the 2021 period. This increase, along with other smaller increases in the components of salaries, wages and benefits, were partially offset by a$1.4 million decrease in employees' health insurance expense as a result of lower self-insured medical claims. 15
-------------------------------------------------------------------------------- Purchased transportation consists of amounts payable to railroads and carriers for transportation services we arrange in connection with Brokerage and Intermodal operations and to independent contractor providers of revenue equipment. This category will vary depending upon the amount and rates, including fuel surcharges, we pay to third-party railroad and motor carriers, the ratio of company drivers versus independent contractors and the amount of fuel surcharges passed through to independent contractors. Purchased transportation expense increased$320,000 in total, or 0.8%, in the 2021 period from the 2020 period. Amounts payable to railroads and drayage carriers for transportation services within our Intermodal segment decreased$3.2 million to$12.6 million in the 2021 period from$15.8 million in the 2020 period, primarily due to a decrease in the volume of loads moved on the rail. Amounts payable to carriers for transportation services we arranged in our Brokerage segment increased$2.5 million to$23.6 million in the 2021 period from$21.1 million in the 2020 period, primarily due to an increase in the cost per load within the tight freight market. The portion of purchased transportation expense related to independent contractors within our Truckload and Dedicated segments, including fuel surcharges, increased$1.1 million in the 2021 period as the number of independent contractors rose. We expect our purchased transportation expense to increase as we grow our Intermodal and Brokerage segments. Fuel and fuel taxes increased by$640,000 , or 2.3%, in the 2021 period from the 2020 period. Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) increased$332,000 , or 5.3%, to$6.6 million in the 2021 period from$6.3 million in the 2020 period. Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads decreased to$2.6 million from$3.2 million in the 2020 period.The United States Department of Energy , orDOE , national average cost of fuel increased slightly to$2.91 per gallon from$2.88 per gallon in the 2020 period. Net fuel expense increased to 3.9% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, from 3.7% in the 2020 period. We have worked diligently to control fuel usage and costs by improving our volume purchasing arrangements and optimizing our drivers' fuel purchases with national fuel centers, focusing on shorter lengths of haul, installing and tightly managing the use of auxiliary power units in our tractors to minimize engine idling and improving fuel usage in the temperature-control units on our trailers. Auxiliary power units, which we have installed in our company-owned tractors, provide climate control and electrical power for our drivers without idling the tractor engine. Supplies and maintenance consist of repairs, maintenance, tires, parts, oil and engine fluids, along with load-specific expenses including loading/unloading, tolls, pallets and trailer hostling. Our supplies and maintenance expense decreased$1.2 million , or 9.9%, from the 2020 period primarily due to lower parts, tires and outside repair costs. Insurance and claims consist of the costs of insurance premiums and accruals we make for claims within our self-insured retention amounts, primarily for personal injury, property damage, physical damage to our equipment, cargo claims and workers' compensation claims. These expenses will vary primarily based upon the frequency and severity of our accident experience, our self-insured retention levels and the market for insurance. The$838,000 , or 6.8%, decrease in insurance and claims in the 2021 period was primarily due to a decrease in the cost of our self-insured auto liability claims, partially offset by increased insurance premiums. Our significant self-insured retention exposes us to the possibility of significant fluctuations in claims expense between periods which could materially impact our financial results depending on the frequency, severity and timing of claims. Gain on disposition of revenue equipment was$2.0 million in the 2021 period, up from$1.6 million in the 2020 period primarily due to an increase in the number of tractors and trailers sold. Future gains or losses on dispositions of revenue equipment will be impacted by the market for used revenue equipment, which is beyond our control.
The
Our operating income improved 33.1% to$24.0 million in the 2021 period from$18.0 million in the 2020 period as a result of the foregoing factors and by overcoming the impact of the severe winter weather inFebruary 2021 . Our operating expenses as a percentage of operating revenue, or "operating ratio," improved to 89.2% in the 2021 period from 91.8% in the 2020 period. The operating ratio for our Truckload segment was 88.0% in the 2021 period and 92.9% in the 2020 period, for our Dedicated segment was 88.6% in each of the 2021 and 2020 periods, for our Intermodal segment was 93.4% in the 2021 period and 94.5% in the 2020 period, and for our Brokerage segment was 92.2% in the 2021 period and 94.3% in the 2020 period. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 87.9% in the 2021 period from 90.7% in the 2020 period. 16 --------------------------------------------------------------------------------
Our effective income tax rate increased to 25.0% in the 2021 period from 24.3% in the 2020 period.
As a result of the factors described above, net income improved 31.3% to$18.0 million , or$0.22 per diluted share, in the 2021 period from$13.7 million , or$0.17 per diluted share, in the 2020 period.
Liquidity and Capital Resources
Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers. Our primary sources of liquidity are funds provided by operations and our revolving credit facility. A portion of our tractor fleet is provided by independent contractors who own and operate their own equipment. We have no capital expenditure requirements relating to those drivers who own their tractors or obtain financing through third parties.
The table below reflects our net cash flows provided by operating activities, net cash flows used for investing activities and net cash flows used for financing activities for the periods indicated.
Three Months
Ended March 31,
(In thousands) 2021 2020
Net cash flows provided by operating activities
InAugust 2019 , our Board of Directors approved and we announced an increase from current availability in our existing share repurchase program providing for the repurchase of up to$34 million , or approximately 1.8 million shares, of our common stock, which was increased by our Board of Directors to 2.7 million shares inAugust 2020 to reflect the three-for-two stock split effected in the form of a stock dividend onAugust 13, 2020 . The share repurchase program allows purchases on the open market or through private transactions in accordance with Rule 10b-18 of the Exchange Act. The timing and extent to which we repurchase shares depends on market conditions and other corporate considerations. The repurchase program does not have an expiration date. We repurchased and retired 53,064 shares of common stock for$597,000 in the first quarter of 2020. We did not repurchase any shares in the rest of 2020 or in the first quarter of 2021. As ofMarch 31, 2021 , future repurchases of up to$33.4 million , or approximately 2.6 million shares, were available in the share repurchase program. In the first three months of 2021, net cash flows provided by operating activities of$43.6 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of$16.3 million , to pay cash dividends of$3.3 million , and to upgrade regional operating facilities in the amount of$591,000 , resulting in a$22.5 million increase in cash and cash equivalents. In the first three months of 2020, net cash flows provided by operating activities of$43.5 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of$34.6 million , to pay cash dividends of$2.2 million , and to upgrade regional operating facilities in the amount of$983,000 , resulting in a$4.7 million increase in cash and cash equivalents. Beginning in 2018, our net cash flows have been increased by the new tax laws established by the Tax Cuts and Jobs Act of 2017, which reduces the federal corporate statutory income tax rate and establishes bonus depreciation that allows for full expensing of qualified assets. We estimate that capital expenditures, net of proceeds from dispositions, will be approximately$135 million for the remainder of 2021. A quarterly cash dividend of$0.04 per share of common stock was declared in the first quarter of 2021 which totaled$3.3 million . A quarterly cash dividend of$0.027 per share of common stock was declared in the first quarter of 2020 which totaled$2.2 million . We currently expect to continue to pay quarterly cash dividends in the future. The payment of cash dividends in the future, and the amount of any such dividends, will depend upon our financial condition, results of operations, cash requirements, and certain corporate law requirements, as well as other factors deemed relevant by our Board of Directors. We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future. 17 -------------------------------------------------------------------------------- We maintain a credit agreement that provides for an unsecured committed credit facility with an aggregate principal amount of$30.0 million which matures inAugust 2023 . AtMarch 31, 2021 , there was no outstanding principal balance on the facility. As of that date, we had outstanding standby letters of credit to guarantee settlement of self-insurance claims of$17.0 million and remaining borrowing availability of$13.0 million . This facility bears interest at a variable rate based on the London Interbank Offered Rate or the lender's Prime Rate, in each case plus/minus applicable margins. Our credit facility prohibits us from paying, in any fiscal year, stock redemptions and dividends in excess of 25% of our net income from the prior fiscal year. A waiver allowing stock redemptions and dividends in excess of the 25% limitation in a total amount of up to$60 million in 2020 was obtained from the lender inNovember 2020 . This facility also contains restrictive covenants which, among other matters, require us to maintain compliance with cash flow leverage and fixed charge coverage ratios. We were in compliance with all covenants atMarch 31, 2021 andDecember 31, 2020 . The following is a summary of our contractual obligations as ofMarch 31, 2021 . Payments Due by Period 2022 2024 Remainder of And And (In thousands) 2021 2023 2025 Thereafter Total Purchase obligations for revenue equipment$ 89,283 $ - $ - $ -$ 89,283 Operating lease obligations 376 334 116 - 826 Total$ 89,659 $ 334 $ 116 $ -$ 90,109
The obligation to issue shares of our common stock under our nonqualified
deferred compensation plan at
Off-balance Sheet Arrangements
Other than standby letters of credit maintained in connection with our self-insurance programs in the amount of$17.0 million along with purchase obligations and operating leases summarized above in our summary of contractual obligations, we did not have any other material off-balance sheet arrangements atMarch 31, 2021 . Inflation and Fuel Costs Most of our operating expenses are inflation-sensitive, with inflation generally producing increased costs of operations. During the last two years, the most significant effects of inflation have been on revenue equipment prices, accident claims, health insurance and employee compensation. We attempt to limit the effects of inflation through increases in freight rates and cost control efforts. In addition to inflation, fluctuations in fuel prices can affect our profitability. We require substantial amounts of fuel to operate our tractors and power the temperature-control units on our trailers. Substantially all of our contracts with customers contain fuel surcharge provisions. Although we historically have been able to pass through a significant portion of long-term increases in fuel prices and related taxes to customers in the form of fuel surcharges and higher rates, such increases usually are not fully recovered. These fuel surcharge provisions are not effective in mitigating the fuel price increases related to non-revenue miles or fuel used while the tractor is idling. Seasonality Our tractor productivity generally decreases during the winter season because inclement weather impedes operations and some shippers reduce their shipments. At the same time, operating expenses generally increase, with harsh weather creating higher accident frequency, increased claims, lower fuel efficiency and more equipment repairs. Critical Accounting Policies Our critical accounting policies are described in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . We have reviewed and determined that those critical accounting policies remain our critical accounting policies as of and for the three months endedMarch 31, 2021 , and that there have been no material changes to our critical accounting policies during this period. 18
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