U.S. XPRESS ENTERPRISES, INC. The unaudited condensed consolidated financial statements include the accounts ofU.S. Xpress Enterprises, Inc. , aNevada corporation, and its consolidated subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer toU.S. Xpress Enterprises, Inc. and its consolidated subsidiaries. All significant intercompany transactions and accounts 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, outlook, growth prospects or objectives of management for future operations; our operational and financial targets; general economic trends, performance or conditions and trends in the industry and markets; the competitive environment in which we operate; any statements concerning proposed new services, technologies or developments; and any statement of belief and any statements of assumptions underlying any of the foregoing. In this Form 10-Q, statements relating to the impact of new accounting standards, future tax rates, expenses, and deductions, expected freight demand, capacity, and volumes, potential results of a default under our 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), expected capital expenditures, expected fleet age and mix of owned versus leased equipment, expected impact of technology, our strategic initiatives, our ability to profitably scale and achieve operational efficiencies in Variant, as well as our Brokerage segment, future performance of our Dedicated division, including pricing and margins, future customer relationships, future fluctuations in purchased transportation expense and fuel surcharge reimbursement, future driver market conditions and driver turnover and retention rates, any projections of earnings, revenues, cash flows, dividends, capital expenditures, operating ratio, or other financial items, expected cash flows, expected operating improvements, any statements regarding future economic conditions or performance, any statement of plans, strategies, programs and objectives of management for future operations, including the anticipated impact of such plans, strategies, programs and objectives, future rates and prices, future utilization, future depreciation and amortization, future salaries, wages, and related expenses, including driver compensation, future insurance and claims expense, future fluctuations in fuel costs and fuel surcharge revenue, including the future effectiveness of our fuel surcharge program, strategies for managing fuel costs, future fleet size and management, including allocation of trucks among Variant, Dedicated and legacy Over-the-Road, any statements concerning proposed acquisition plans, new services or developments, the anticipated impact of legal proceedings on our financial position and results of operations, and the anticipated effect of the COVID-19 pandemic, among others, are forward-looking statements. Such statements may be identified by their use of terms or phrases such as "believe," "may," "could," "should," "expects," "estimates," "projects," "anticipates," "plans," "intends," "outlook," "strategy," "target," "optimistic," "focus," "continue," "will" 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 our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Readers should review and consider the factors discussed in "Item 1A. Risk Factors," set forth in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , along with various disclosures in our press releases, stockholder reports, and other filings with theSEC . 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. Page 20 Table of Contents Overview We are one of the largest asset-based truckload carriers inthe United States by revenue, generating over$1.7 billion in total operating revenue in 2020. We provide services primarily throughoutthe United States , with a focus in the densely populated and economically diverse eastern half ofthe United States . We offer customers a broad portfolio of services using our own truckload fleet and third-party carriers through our non-asset-based truck brokerage network. As ofJune 30, 2021 , our fleet consisted of approximately 6,100 tractors and approximately 12,600 trailers, including approximately 1,400 tractors provided by independent contractors. Our terminal network is established and capable of handling significantly larger volumes without meaningful additional investment. Executive Summary For much of our history, we focused primarily on scaling our fleet and expanding our service offerings to support sustainable, multi-faceted relationships with customers. More recently, we have focused on our core service offerings and refined our network to focus on shorter, more profitable lanes with more density, which we believe are more attractive to drivers. We believe we have the strategy, management team, revenue base, modern fleet, and capital structure that position us very well to execute upon our initiatives, drive further operational gains, and deliver long term value for our stockholders. We are currently focused on three main priorities. The first is optimizing our Truckload network and resulting average revenue per tractor per week through repositioning equipment and allocating capacity to our Dedicated service offering and Variant, our digital fleet, from certain underperforming portions of our Over-the-Road ("OTR") service offering. The second is improving the experience of our professional truck drivers, including their safety and security. And, the third is advancing our technology initiatives centered on digitization of our loads and business, automated load acceptance and prioritization, and our goal of achieving a frictionless order. During 2020 and the first half of 2021, we continued to see tangible, financial benefits of our strategic initiatives focused on utilizing technology to improve our processes, accelerate the velocity of our business, reduce the number of our preventable accidents, improve our customers' and drivers' satisfaction, and lower our costs.
We intend to continue to further develop these digital initiatives that we believe are re-engineering our Company to be a market leader in growth and profitability over the next decade. We believe the result of these initiatives will provide for a more scalable model with significantly lower costs.
Total revenue for the second quarter of 2021 increased by$52.5 million to$475.0 million as compared to the second quarter of 2020. The increase was primarily the result of a 109.6% increase in Brokerage revenue to$96.5 million , combined with a increase in fuel surcharge revenue of$9.0 million partially offset by a decrease of$6.9 million in our Truckload revenue. Excluding the impact of fuel surcharge revenue, second quarter revenue increased$43.6 million to$437.5 million , an increase of 11.1% as compared to the prior year quarter. Operating income for the second quarter of 2021 was$8.9 million compared to$16.3 million in the second quarter of 2020. We delivered a 98.1% operating ratio for the quarter compared to 96.1% in the second quarter of 2020. Our profitability decreased largely as a result of 10.9% fewer available tractors combined with increases in technology and personnel expenses and higher net fuel costs partially offset by an increase in our Brokerage gross margin to 12.0% compared to 8.1% in the prior year quarter on higher Brokerage revenue. We are continuing to focus on our driver centric initiatives, such as increased miles and modern equipment, to both retain the professional drivers who have chosen to partner with us and attract new professional drivers to our team. During the second quarter of 2020 we launched our digital fleet, Variant, which is largely recruited, planned, dispatched and managed using artificial intelligence and digital platforms. Variant is a completely new paradigm for operating trucks in an OTR environment that is provided to the driver through a proprietary app-based driver experience. We developed the concept as a hypothesis in 2018 based in part on the business models of the digital freight brokerages. As digital brokers began to enter the market utilizing cutting edge technology and a new operating model, we believed there was an opportunity to take this approach and apply it to our asset based business in order to drive improved profitability and Page 21 Table of Contents
growth. During 2019, we began building our technology leadership and teams to construct the necessary databases, applications, and processes to launch a pilot fleet with a small number of trucks in the fourth quarter of 2019. The test proved successful and we expanded the pilot fleet to approximately 100 trucks in the first quarter of 2020. Given the positive results of the first quarter pilot we moved to a full production model, scaling the business to approximately 700 trucks at the end of 2020. During the first quarter of 2021, we completed phase one of our plan and converted a total of 951 OTR solo trucks, with the lowest returns, to our Variant platform. Phase two of our plan will be to convert an additional 550 trucks over the balance of 2021. During the second quarter of 2021, we grew Variant by an additional 209 trucks while eliminating approximately 300 trucks in our underperforming legacy OTR fleet. We remain on track to meet or exceed our goal of reaching 1,500 Variant trucks, which would represent an annualized revenue run rate of$300.0 million and approximately 25% of Truckload revenues, by the end of 2021. While the conversion will not be linear, we expect our margins to expand further over time. We believe that we can further scale this platform while maintaining these positive results and continuing to further enhance the capabilities of this new technology. We will continue to focus on implementing and executing our initiatives that we expect will continue to drive sustainable improved performance over time. While we believe our margins will expand as we continue to convert more of our trucks to our Variant platform, we also see tremendous growth opportunity given the highly fragmented nature of theU.S. trucking market. Our Variant business model directly addresses our drivers' frustrations as our model delivers higher utilization and pay which has directly contributed to a significant drop in turnover. We expect the growth in Variant, which continues to exceed our expectations, to begin to offset our reduction of underperforming legacy OTR tractors later in the year, with a return to fleet count growth as we exit 2021. During 2020, we purchased a small business with a technology platform and an experienced and talented team. Their approach to the brokerage business is to utilize a digital framework for handling transactions which we expect to be scalable. Importantly, we believe this platform will enable our team to continue scaling the business and drive a high level of growth in the years to come. Our team processed 75% of our Brokerage transactions digitally in the second quarter of 2021. Our digital platform is enabling our Brokerage segment to profitably scale while offering freight selectivity for Variant. As we drive more volume over our digital platform, we believe our Brokerage segment will become much more scalable and allow us to profitably drive growth as we look to the years ahead.
In our Dedicated division, our team continues to successfully address pricing in certain Dedicated accounts as a result of driver and capacity cost inflation.
We are pleased with our progress to date; however, we have more work to do in the second half of the year. We are optimistic that our Dedicated division is on track to deliver sequential margin improvement in the second half of the year. We expect freight demand to remain strong throughout 2021 given the broader economic recovery and tailwinds that it is experiencing as a result of the Federal Government's stimulus package, which had a notable impact on our operations in the first half of this year. On the supply side, the market for experienced drivers remains challenging, which is keeping a lid on supply. Additionally, chip shortages and supply chain constraints are impacting new tractor builds, which is also supportive of a favorable supply-demand balance over the near term. These conditions are expected to continue to support spot market rates in excess of contract rates and a strengthening contract renewal environment through the remainder 2021. As a result, we expect contract rates up for renewal in 2021 in our OTR division to increase on average by 10-15% with the driver shortage likely extending the cycle as we believe there could be up to 200,000 fewer drivers in the market compared to 2019. From a cost perspective, inflationary pressure and higher fixed costs will continue to pressure margins until Variant growth exceeds legacy OTR decline. We believe the overall fleet reached its low point towards the end of second quarter of 2021 and expect total fleet size to begin growing in the third quarter, with Variant becoming an increasing percentage of the fleet. Investment in TuSimple OnApril 15, 2021 , TuSimple completed its initial public offering at a price of$40.00 per share. Our$5.0 million investment consisted of 353,604 shares of TuSimple and atJune 30, 2021 , the fair value of our investment was$25.2 million and we recorded an unrealized gain on investment of$20.2 million in other (income) expense within the unaudited consolidated statements of comprehensive income (loss). Page 22 Table of Contents Reportable Segments Our business is organized into two reportable segments, Truckload and Brokerage. Our Truckload segment offers truckload services, including OTR trucking and dedicated contract services. Our OTR service offering transports a full trailer of freight for a single customer from origin to destination, typically without intermediate stops or handling pursuant to short-term contracts and spot moves that include irregular route moves without volume and capacity commitments. Tractors are operated with a solo driver or, when handling more time-sensitive, higher-margin freight, a team of two drivers. Our dedicated contract service offering provides similar freight transportation services, but with contractually assigned equipment, drivers and on-site personnel to address customers' needs for committed capacity and service levels pursuant to multi-year contracts with guaranteed volumes and pricing. Our Brokerage segment is principally engaged in non-asset-based freight brokerage services, where loads are contracted to third-party carriers.
Truckload Segment
In our Truckload segment, we generate revenue by transporting freight for our customers in our OTR and dedicated contract service offerings. Our OTR service offering provides solo and expedited team services through one way movements of freight over routes throughoutthe United States . Our Variant fleet is included within our OTR service offering. Our dedicated contract service offering devotes the use of equipment to specific customers and provides services through long term contracts. Our Truckload segment provides services that are geographically diversified but have similar economic and other relevant characteristics, as they all provide truckload carrier services of general commodities and durable goods to similar classes of customers. We are typically paid a predetermined rate per load or per mile for our Truckload services. We enhance our revenue by charging for tractor and trailer detention, loading and unloading activities and other specialized services. Consistent with industry practice, our typical customer contracts (other than those contracts in which we have agreed to dedicate certain tractor and trailer capacity for use by specific customers) do not guarantee load levels or tractor availability. This gives us and our customers a certain degree of flexibility to negotiate rates up or down in response to changes in freight demand and trucking capacity. In our dedicated contract service offering, which comprised approximately 41.5% of our Truckload operating revenue, and approximately 42.0% of our Truckload revenue, before fuel surcharge, for 2020, we provide service under contracts with fixed terms, volumes and rates. Dedicated contracts are often used by our customers with high service and high priority freight, sometimes to replace private fleets previously operated by them. Generally, in our Truckload segment, we receive fuel surcharges on the miles for which we are compensated by customers. Fuel surcharge revenue mitigates the effect of price increases over a negotiated base rate per gallon of fuel; however, these revenues may not fully protect us from all fuel price increases. Our fuel surcharges to customers may not fully recover all fuel increases due to engine idle time, out of route miles and non-revenue generating miles that are not generally billable to the customer, as well as to the extent the surcharge paid by the customer is insufficient. The main factors that affect fuel surcharge revenue are the price of diesel fuel and the number of revenue miles we generate. Although our surcharge programs vary by customer, we generally attempt to negotiate an additional penny per mile charge for everyfive cent increase in theU.S. Department of Energy's (the "DOE") national average diesel fuel index over an agreed baseline price. Our fuel surcharges are billed on a lagging basis, meaning we typically bill customers in the current week based on a 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. Based on the current status of our empty miles percentage and the fuel efficiency of our tractors, we believe that our fuel surcharge recovery is effective. The main factors that affect our operating revenue in our Truckload segment are the average revenue per mile or load we receive from our customers, the percentage of miles for which we are compensated and the number of shipments and miles we generate. Our primary measures of revenue generation for our Truckload segment are average revenue per loaded mile and average revenue per tractor per period, in each case excluding fuel surcharge revenue.
In our Truckload segment, our most significant operating expenses vary with miles traveled and include (i) fuel, (ii) driver related expenses, such as wages, benefits, training and recruitment and (iii) costs associated with independent
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contractors (which are primarily included in the "Purchased transportation" line
item). 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, fleet age, efficiency and other factors. Our main fixed costs
include vehicle rent and depreciation of long term assets, such as revenue
equipment and service center facilities, the compensation of non-driver
personnel and other general and administrative expenses.
Our Truckload segment requires substantial capital expenditures for purchase of
new revenue equipment. We use a combination of operating leases and secured
financing to acquire tractors and trailers, which we refer to as revenue
equipment. When we finance revenue equipment acquisitions with operating leases,
we record an operating lease right of use asset and an operating lease liability
on our condensed consolidated balance sheet, and the lease payments in respect
of such equipment are reflected in our condensed consolidated statement of
comprehensive income (loss) in the line item "Vehicle rents." When we finance
revenue equipment acquisitions with secured financing, the asset and liability
are recorded on our condensed consolidated balance sheet, and we record expense
under "Depreciation and amortization" and "Interest expense." Typically, the
aggregate monthly payments are similar under operating lease financing and
secured financing. We use a mix of finance leases and operating leases with
individual decisions being based on competitive bids, tax projections and
contractual restrictions. Because of the inverse relationship between vehicle
rents and depreciation and amortization, we review both line items together.
Approximately 21.5% of our total tractor fleet was operated by independent
contractors at June 30, 2021 . Independent contractors provide a tractor and a
driver and are responsible for all of the costs of operating their equipment and
drivers, including interest and depreciation, vehicle rents, driver
compensation, fuel and other expenses, in exchange for a fixed payment per mile
or percentage of revenue per invoice plus a fuel surcharge pass through.
Payments to independent contractors are recorded in the "Purchased
transportation" line item. When independent contractors increase as a percentage
of our total tractor fleet, our "Purchased transportation" line item typically
will increase, with offsetting reductions in employee driver wages and related
expenses, net of fuel (assuming all other factors remain equal). The reverse is
true when the percentage of our total fleet operated by company drivers
increases.
Brokerage Segment
In our Brokerage segment, we retain the customer relationship, including billing and collection, and we outsource the transportation of the loads to third-party carriers. For this segment, we rely on brokerage employees to procure third-party carriers, as well as information systems to match loads and carriers. Our Brokerage segment revenue is mainly affected by the rates we obtain from customers, the freight volumes we ship through our third-party carriers and our ability to secure third-party carriers to transport customer freight. We generally do not have contracted long-term rates for the cost of third-party carriers, and we cannot assure that our results of operations will not be adversely impacted in the future if our ability to obtain third-party carriers changes or the rates of such providers increase. The most significant expense of our Brokerage segment, which is primarily variable, is the cost of purchased transportation that we pay to third-party carriers, and is included in the "Purchased transportation" line item. This expense generally varies depending upon truckload capacity, availability of third-party carriers, rates charged to customers and current freight demand and customer shipping needs. Other operating expenses are generally fixed and primarily include the compensation and benefits of non-driver personnel (which are recorded in the "Salaries, wages and benefits" line item) and depreciation and amortization expense. The key performance indicator in our Brokerage segment is gross margin percentage (which is calculated as Brokerage revenue less purchased transportation expense expressed as a percentage of total operating revenue). Gross margin percentage can be impacted by the rates charged to customers and the costs of securing third-party carriers.
Our Brokerage segment does not require significant capital expenditures and is not asset intensive like our Truckload segment.
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Results of Operations
Revenue
We generate revenue from two primary sources: transporting freight for our customers (including related fuel surcharge revenue) and arranging for the transportation of customer freight by third-party carriers. We have two reportable segments: our Truckload segment and our Brokerage segment. Truckload revenue, before fuel surcharge and truckload fuel surcharge are primarily generated through trucking services provided by our two Truckload service offerings (OTR and dedicated contract). Brokerage revenue is primarily generated through brokering freight to third-party carriers. Our total operating revenue is affected by certain factors that relate to, among other things, the general level of economic activity inthe United States , customer inventory levels, specific customer demand, the level of capacity in the truckload and brokerage industry, the success of our marketing and sales efforts and the availability of drivers, independent contractors and third-party carriers. A summary of our revenue generated for the three and six months endedJune 30, 2021 and 2020 is as follows: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (dollars in thousands) (dollars in thousands) Revenue, before fuel surcharge$ 437,533 $ 393,964 $ 855,174 $ 786,784 Fuel surcharge 37,488 28,513 70,607 68,261 Total operating revenue$ 475,021 $ 422,477 $ 925,781 $ 855,045 For the quarter endedJune 30, 2021 , the primary factors driving the increases in total operating revenue and revenue, before fuel surcharge, were increased volumes and pricing in our Brokerage segment, increased miscellaneous revenues, and increased fuel surcharge revenues offset by 10.9% lower available tractors. For the six months endedJune 30, 2021 , the primary factors driving the increases in total operating revenue and revenue, before fuel surcharge, were increased volumes and pricing in our Brokerage segment, increased miscellaneous revenues, and increased fuel surcharge revenues offset by 8.8% lower available tractors. As a result of our customer mix we did not experience a decline in overall freight volumes during the COVID-19 pandemic as the majority of our customers did not shutdown. However, our spot rates did suffer a decline early in the second quarter of 2020 due to capacity from other verticals becoming available as their customer base saw a reduction in volumes. During the third quarter of 2020, we saw spot market rates exceed contract rates for the first time in seven quarters, and we expect our contract rates up for renewal in our OTR division in 2021 to increase on average 10-15%.
A summary of our revenue generated by segment for the three and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)Truckload revenue, before fuel surcharge$ 341,045 $ 347,935 $ 676,846 $ 690,279 Fuel surcharge 37,488 28,513 70,607 68,261 Total Truckload operating revenue 378,533 376,448
747,453 758,540 Brokerage operating revenue 96,488 46,029 178,328 96,505 Total operating revenue$ 475,021 $ 422,477 $ 925,781 $ 855,045 Page 25 Table of Contents The following is a summary of our key Truckload segment performance indicators, before fuel surcharge for the three and six months endedJune 30, 2021 and 2020. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Over the road
Average revenue per tractor per week$ 3,837 $ 3,558 $ 3,778 $ 3,511 Average revenue per mile$ 2.278 $ 1.855 $ 2.223 $ 1.863 Average revenue miles per tractor per week 1,684 1,918 1,699 1,884 Average tractors 3,318 3,825 3,369 3,830 Dedicated Average revenue per tractor per week$ 4,336 $ 4,122 $ 4,243 $ 4,095 Average revenue per mile$ 2.448 $ 2.351 $ 2.420 $ 2.363 Average revenue miles per tractor per week 1,772 1,753 1,753 1,733 Average tractors 2,531 2,739 2,603 2,721 Consolidated Average revenue per tractor per week$ 4,053 $ 3,793 $ 3,981 $ 3,753 Average revenue per mile$ 2.354 $ 2.051 $ 2.311 $ 2.061 Average revenue miles per tractor per week 1,722 1,849
1,723 1,821 Average tractors 5,849 6,564 5,972 6,551 For the quarter endedJune 30, 2021 , the primary factors driving the decreases in Truckload revenue, were a 10.9% decrease in average available tractors combined with a 6.9% decrease in average revenue miles per tractor per week partially offset by 14.8% increase in average revenue per mile and an increase of$8.6 million in miscellaneous revenue. The increase in fuel surcharge revenue primarily relates to increased fuel prices offset by a decrease in revenue miles compared to the same quarter in 2020. TheDOE national weekly average fuel price per gallon averaged approximately$0.76 per gallon higher for the second quarter of 2021 compared to the same quarter of 2020. For the six months endedJune 30, 2021 , the primary factors driving the decreases in Truckload revenue, were a 8.8% decrease in average available tractors combined with a 5.4% decrease in average revenue miles per tractor per week partially offset by a 12.1% increase in average revenue per mile and an increase of$9.7 million in miscellaneous revenue. The increase in fuel surcharge revenue primarily relates to increased fuel prices offset by a decrease in revenue miles compared to the same period in 2020. TheDOE national weekly average fuel price per gallon averaged approximately$0.37 per gallon higher for the six months endedJune 30, 2021 compared to the same period of 2020. The key performance indicator of our Brokerage segment is gross margin percentage (Brokerage revenue less purchased transportation expense expressed as a percentage of total operating revenue). Gross margin percentage can be impacted by the rates charged to customers and the costs of securing third-party carriers. The following table lists the gross margin percentage for our Brokerage segment for the three and six months endedJune 30, 2021 and
2020.
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Gross margin percentage 12.0 % 8.1 % 12.9 % 5.8 %
For the quarter ended June 30, 2021 , the primary factors driving the increase in
Brokerage revenue were a 92.1% increase in average revenue per load combined
with a 9.1% increase in load count. The increase in gross margin was due to the
increase in revenue per load of 92.1% exceeding the 83.8% increase in cost per
load as compared to the same quarter in 2020. During the second quarter of 2021,
our Brokerage revenue grew 109.6% compared to the prior year quarter as a result
of a better rate environment, higher fuel costs and the conversion of our
portfolio from 77.3% contract and 22.7% spot in the second quarter of 2020 to
52.6% and 47.4%, respectively in the second quarter of 2021.
For the six months ended June 30, 2021 , the primary factors driving the increase
in Brokerage revenue were a 79.6% increase in average revenue per load combined
with a 2.9% increase in load count. The increase in gross margin
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was due to the increase in revenue per load of 79.6% exceeding the 65.9%
increase in cost per load as compared to the same quarter in 2020. During the
six months ended June 30, 2021 , our Brokerage revenue grew 84.8% compared to the
prior year period primarily as a result of a increased revenue per load, higher
fuel costs and the conversion of our portfolio from 77.5% contract and 22.5%
spot in the first six months of 2020 to 54.4% and 45.6%, respectively in the
first six months of 2021.
Operating Expenses
For comparison purposes in the discussion below, we use total operating revenue and revenue, before fuel surcharge when discussing changes as a percentage of revenue. As it relates to the comparison of expenses to revenue, before fuel surcharge, we believe that removing fuel surcharge revenue, which is sometimes a volatile source of revenue affords a more consistent basis for comparing the results of operations from period-to-period.
Individual expense line items as a percentage of total operating revenue also are affected by fluctuations in the percentage of our revenue generated by independent contractor and brokerage loads.
Salaries, Wages and Benefits
Salaries, wages and benefits consist primarily of compensation for all employees. Salaries, wages and benefits are primarily affected by the total number of miles driven by company drivers, the rate per mile we pay our company drivers, employee benefits such as health care and workers' compensation, and to a lesser extent by the number of, and compensation and benefits paid to, non-driver employees.
The following is a summary of our salaries, wages and benefits for the three and
six months ended
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)
Salaries, wages and benefits $ 144,500 $ 139,970 $ 286,503 $ 275,348
% of total operating revenue 30.4 % 33.1 % 30.9 % 32.2 %% of revenue, before fuel surcharge 33.0 % 35.5 %
33.5 % 35.0 %
For the quarter ended June 30, 2021 , the increase in salaries, wages and
benefits in absolute dollar terms was due primarily to $6.0 million in higher
office wages due in part to a 14.2% increase in average headcount as we continue
to invest in our digital initiatives. We believe our office wages as a
percentage of revenue will decrease as we scale our organization. Our driver
wages remained constant despite a 11.3% decrease in company driver miles due
primarily to the higher driver pay per mile. During the second quarter of 2021,
our workers' compensation expense decreased 32.6% primarily due to 33.3% fewer
claims as compared to the same quarter in 2020.
For the six months ended June 30, 2021 , the increase in salaries, wages and
benefits in absolute dollar terms was due primarily to $11.0 million in higher
office wages due in part to a 11.2% increase in average headcount as we continue
to invest in our digital initiatives. We believe our office wages as a
percentage of revenue will decrease as we scale our organization. Our driver
wages increased $2.0 million despite an 8.5% decrease in company driver miles
due primarily to the higher driver pay per mile. During the six months ended
June 30, 2021 , our workers' compensation expense decreased 15.7% primarily due
to 25.9% fewer claims as compared to the same period in 2020.
In the near term, we believe salaries, wages and benefits will increase as a
result of a tight driver market, wage inflation and higher healthcare costs. As
a percentage of revenue, we expect salaries, wages and benefits will fluctuate
based on our ability to generate offsetting increases in average revenue per
total mile and the percentage of revenue generated by independent contractors
and brokerage operations, for which payments are reflected in the "Purchased
transportation" line item.
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Fuel and Fuel Taxes
Fuel and fuel taxes consist primarily of diesel fuel expense and fuel taxes for our company-owned and leased tractors. The primary factors affecting our fuel and fuel taxes expense are the cost of diesel fuel, the miles per gallon we realize with our equipment and the number of miles driven by company drivers. We believe that the most effective protection against net fuel cost increases in the near term is to maintain an effective fuel surcharge program and to operate a fuel-efficient fleet by incorporating fuel efficiency measures, such as auxiliary heating units, installation of aerodynamic devices on tractors and trailers and low-rolling resistance tires on our tractors, engine idle limitations and computer-optimized fuel-efficient routing of our fleet.
The following is a summary of our fuel and fuel taxes for the three and six
months ended
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)
Fuel and fuel taxes $ 43,783 $ 29,850 $ 84,187 $ 70,057
% of total operating revenue 9.2 % 7.1 % 9.1 % 8.2 %% of revenue, before fuel surcharge 10.0 % 7.6 %
9.8 % 8.9 %
To measure the effectiveness of our fuel surcharge program, we calculate "net
fuel expense" by subtracting fuel surcharge revenue (other than the fuel
surcharge revenue we reimburse to independent contractors, which is included in
purchased transportation) from our fuel expense. Our net fuel expense as
a percentage of revenue, before fuel surcharge, is affected by the cost of
diesel fuel net of surcharge collection, the percentage of miles driven by
company tractors and our percentage of non-revenue generating miles, for which
we do not receive fuel surcharge revenues. Net fuel expense as a percentage of
revenue, before fuel surcharge, is shown below:
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)
Total fuel surcharge revenue $ 37,488 $ 28,513 $ 70,607 $ 68,261
Less: fuel surcharge revenue
reimbursed to independent
contractors 8,422 7,311 16,082 18,522Company fuel surcharge revenue 29,066 21,202
54,525 49,739 Total fuel and fuel taxes$ 43,783 $ 29,850 $ 84,187 $ 70,057 Less: company fuel surcharge revenue 29,066 21,202 54,525 49,739 Net fuel expense$ 14,717 $ 8,648 $ 29,662 $ 20,318 % of total operating revenue 3.1 % 2.0 % 3.2 % 2.4 % % of revenue, before fuel surcharge 3.4 % 2.2 % 3.5 % 2.6 %
For the quarter endedJune 30, 2021 , the increase in net fuel expenses was primarily the result of a 63.4% increase in the average company fuel price per gallon partially offset by a$7.9 million increase in company fuel surcharge revenue, a 11.3% decrease in company miles and a 1.8% increase in average miles per gallon compared to the same quarter in 2020. For the six months endedJune 30, 2021 , the increase in net fuel expenses was primarily the result of a 32.2% increase in the average company fuel price per gallon partially offset by a$4.8 million increase in company fuel surcharge revenue, an 8.5% decrease in company miles and a 1.8% increase in average miles per gallon compared to the same period in 2020. In the near term, our net fuel expense is expected to fluctuate as a percentage of total operating revenue and revenue, before fuel surcharge, based on factors such as diesel fuel prices, the percentage recovered from fuel surcharge programs, the percentage of uncompensated miles, the percentage of revenue generated by independent contractors, and Page 28 Table of Contents
the 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).
Vehicle Rents and Depreciation and Amortization
Vehicle rents consist primarily of payments for tractors and trailers financed with operating leases. The primary factors affecting this expense item include the size and age of our tractor and trailer fleets, the cost of new equipment and the relative percentage of owned versus leased equipment. Depreciation and amortization consists primarily of depreciation for owned tractors and trailers. The primary factors affecting these expense items include the size and age of our tractor and trailer fleets, the cost of new equipment and the relative percentage of owned equipment and equipment acquired through debt or finance leases versus equipment leased through operating leases. We use a mix of finance leases and operating leases to finance our revenue equipment with individual decisions being based on competitive bids and tax projections. Gains or losses realized on the sale of owned revenue equipment are included in depreciation and amortization for reporting purposes. Vehicle rents and depreciation and amortization are closely related because both line items fluctuate depending on the relative percentage of owned equipment and equipment acquired through finance leases versus equipment leased through operating leases. Vehicle rents increase with greater amounts of equipment acquired through operating leases, while depreciation and amortization increases with greater amounts of owned equipment and equipment acquired through finance leases. Because of the inverse relationship between vehicle rents and depreciation and amortization, we review both line items together.
The following is a summary of our vehicle rents and depreciation and
amortization for the three and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)
Vehicle rents $ 21,547 $ 21,335 $ 43,010 $ 43,212
Depreciation and amortization, net
of (gains) losses on sale of
property 23,205 26,283 45,587 52,086
Vehicle rents and depreciation and
amortization of property and
equipment $ 44,752 $ 47,618 $ 88,597 $ 95,298
% of total operating revenue 9.4 % 11.3 % 9.6 % 11.1 %
% of revenue, before fuel
surcharge 10.2 % 12.1 % 10.4 % 12.1 %
For the quarter ended June 30, 2021 , the increase in vehicle rents was primarily
due to increased trailers financed under operating leases partially offset by
decreased short term rents compared to the same quarter in 2020. The decrease in
depreciation and amortization, net of (gains) losses on sale of property, is
primarily due to a decrease in the number of owned tractors compared to the same
quarter in 2020.
For the six months ended June 30, 2021 , the increase in vehicle rents was
primarily due to increased trailers financed under operating leases partially
offset by decreased short term rents compared to the same quarter in 2020. The
decrease in depreciation and amortization, net of (gains) losses on sale of
property, is primarily due to a decrease in the number of owned tractors
combined with a decrease in loss on sale of equipment compared to the same
period in 2020.
For calendar year 2021, excluding any change in our percentage allocation of
owned versus leased equipment due to available financing terms, we expect to
spend approximately $130.0 to $150.0 million in net capital expenditures which
will keep the average age of our equipment relatively constant. This amount
could expand to fund additional profitable growth opportunities. The balance of
our equipment procurement will be funded through operating leases.
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Purchased Transportation
Purchased transportation consists of the payments we make to independent contractors, including fuel surcharge reimbursements paid to independent contractors, in our Truckload segment, and payments to third-party carriers in our Brokerage segment.
The following is a summary of our purchased transportation for the three and six
months ended
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)
Purchased transportation $ 157,489 $ 117,366 $ 299,150 $ 247,120
% of total operating revenue 33.2 % 27.8 % 32.3 % 28.9 %% of revenue, before fuel surcharge 36.0 % 29.8 %
35.0 % 31.4 %
Because we reimburse independent contractors for fuel surcharges we receive, we
subtract fuel surcharge revenue reimbursed to them from our purchased
transportation. The result, referred to as purchased transportation, net of fuel
surcharge reimbursements, is evaluated as a percentage of total operating
revenue and as a percentage of revenue, before fuel surcharge, as shown below:
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)
Purchased transportation $ 157,489 $ 117,366 $ 299,150 $ 247,120
Less: fuel surcharge revenue
reimbursed to independent
contractors 8,422 7,311 16,082 18,522
Purchased transportation, net
of fuel surcharge
reimbursement $ 149,067 $ 110,055 $ 283,068 $ 228,598
% of total operating revenue 31.4 % 26.0 % 30.6 % 26.7 %
% of revenue, before fuel
surcharge 34.1 % 27.9 % 33.1 % 29.1 %
For the quarter ended June 30, 2021 , the increase in purchased transportation,
net of fuel surcharge reimbursement reflected a 83.8% increase in cost per
Brokerage load, a 9.1% increase in Brokerage load count partially offset by a
32.4% decrease in independent contractor miles as compared to the same quarter
in 2020.
For the six months ended June 30, 2021 , the increase in purchased
transportation, net of fuel surcharge reimbursement reflected a 65.9% increase
in cost per Brokerage load, a 2.9% increase in Brokerage load count partially
offset by a 29.1% decrease in independent contractor miles as compared to the
same period in 2020. This expense category will fluctuate with the number
and percentage of loads hauled by independent contractors and third-party
carriers, as well as the amount of fuel surcharge revenue passed through to
independent contractors.
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 carriers and
independent contractors, which could increase this expense category on an
absolute basis and as a percentage of total operating revenue and revenue,
before fuel surcharge, absent an offsetting increase in revenue. We continue to
actively attempt to expand our Brokerage segment and recruit independent
contractors.
Operating Expenses and Supplies
Operating expenses and supplies consist primarily of ordinary vehicle repairs
and maintenance costs, driver on-the-road expenses, tolls and driver recruiting
and training costs. Operating expenses and supplies are primarily affected by
the age of our company-owned and leased fleet of tractors and trailers, the
number of miles driven in a period and driver turnover.
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The following is a summary of our operating expenses and supplies expense for
the three and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)Operating expenses and supplies$ 34,443 $ 31,592 $ 66,958 $ 67,322 % of total operating revenue 7.3 % 7.5 % 7.2 % 7.9 % % of revenue, before fuel surcharge 7.9 % 8.0 %
7.8 % 8.6 %
For the quarter ended June 30, 2021 , the primary factors driving the increase in
operating expenses and supplies in absolute dollar terms were increased driver
hiring costs partially offset by decreased tractor maintenance and lease program
expenses as compared to the same quarter in 2020.
For the six months ended June 30, 2021 , the primary factors driving the decrease
in operating expenses and supplies was decreased tractor and trailer maintenance
expenses and lease program expenses as compared to the same period in 2020.Insurance Premiums and Claims
Insurance premiums and claims consists primarily of retained amounts for liability (personal injury and property damage), physical damage and cargo damage, as well as insurance premiums. The primary factors affecting our insurance premiums and claims are the frequency and severity of accidents, trends in the development factors used in our actuarial accruals and developments in large, prior year claims. The number of accidents tends to increase with the miles we travel. With our significant retained amounts, insurance claims expense may fluctuate significantly and impact the cost of insurance premiums and claims from period-to-period, and any increase in frequency or severity of claims or adverse loss development of prior period claims would adversely affect our financial condition and results of operations.
The following is a summary of our insurance premiums and claims expense for the
three and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)
Insurance premiums and claims $ 18,933 $ 21,283 $ 40,710 $ 47,306
% of total operating revenue 4.0 % 5.0 % 4.4 % 5.5 %% of revenue, before fuel surcharge 4.3 % 5.4 %
4.8 % 6.0 %
For the quarter ended June 30, 2021 , the primary factors driving the decrease in
insurance premiums and claims were decreased physical damage, cargo and auto
liability claims primarily as a result of reduced frequency partially offset by
increased auto liability premiums as compared to the same quarter in 2020.
For the six months ended June 30, 2021 , the primary factors driving the decrease
in insurance premiums and claims were decreased physical damage and auto
liability claims primarily as a result of reduced frequency partially offset by
increased auto liability premiums as compared to the same period in 2020. We
renewed our liability insurance policies effective September 1, 2020 and as a
result of the challenging insurance market our premiums increased approximately
30% while our coverage limits decreased to $75.0 million from $300.0 million per
occurrence.
We continue to believe we have an opportunity to reduce our claims expense over
time as a result the successful launch of Variant, our digital fleet, which is
currently experiencing fewer preventable accidents per million miles than our
OTR legacy fleet combined with the suspension of our OTR student program. During
the first six months of 2021 we experienced approximately 40% fewer preventable
accidents than we did in the comparable prior year period which we
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believe contributed greatly to our lower insurance and claims expense despite
higher premiums. Although a decrease in frequency in claims reduced our expense
during the year, to the extent we have an increase in severity these savings
could be partially or fully offset.
General and Other Operating Expenses
General and other operating expenses consist primarily of legal and professional services fees, general and administrative expenses and other costs.
The following is a summary of our general and other operating expenses for the
periods indicated:
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(dollars in thousands) (dollars in thousands)General and other operating expenses$ 16,004 $ 12,545 $ 30,904 $ 27,880 % of total operating revenue 3.4 % 3.0 % 3.3 % 3.3 % % of revenue, before fuel surcharge 3.7 % 3.2 %
3.6 % 3.5 %
For the quarter ended June 30, 2021 , the primary factors driving the increase in
general and other operating expenses were increased other professional and
administrative expenses along with increased travel and entertainment expense as
compared to the same quarter in 2020.
For the six months ended June 30, 2021 , the primary factors driving the increase
in general and other operating expenses were increased other professional and
administrative expenses compared to the same period in 2020.
Liquidity and Capital Resources
Overview
Our business requires substantial amounts of cash to cover operating expenses as well as to fund capital expenditures, working capital changes, principal and interest payments on our obligations, lease payments, letters of credit to support insurance requirements and tax payments when we generate taxable income. Recently, we have financed our capital requirements with borrowings under our Credit Facility, cash flows from operating activities, direct equipment financing, finance leases, operating leases and proceeds from equipment sales. We believe we can fund our expected cash needs, including debt repayment, in the short-term with projected cash flows from operating activities, borrowings under our Credit Facility and direct debt and lease financing we believe to be available for at least the next 12 months. Over the long-term, we expect that we will continue to have significant capital requirements, which may require us to seek additional borrowings, lease financing or equity capital. We have obtained a significant portion of our revenue equipment under operating leases, which are not reflected as net capital expenditures. The availability of financing and equity capital will depend upon our financial condition and results of operations as well as prevailing market conditions.
At
Sources of Liquidity
Credit Facility
On
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$250.0 million revolving credit facility, with an uncommitted accordion feature
that, so long as no event of default exists, allows the Company to request an
increase in the revolving credit facility of up to $75.0 million .
The Credit Facility is a five-year facility scheduled to terminate on January
28, 2025 . Borrowings under the Credit Facility are classified as either "base
rate loans" or "eurodollar rate loans". Base rate loans accrue interest at a
base rate equal to the highest of (A) the Federal Funds Rate plus 0.50%, (B) the
Agent's prime rate, and (C) LIBOR plus 1.00% plus an applicable margin that was
set at 0.50% through June 30, 2020 and adjusted quarterly thereafter between
0.25% and 0.75% based on the ratio of the daily average availability under the
Credit Facility to the daily average of the lesser of the borrowing base or the
revolving credit facility. Eurodollar rate loans accrue interest at LIBOR plus
an applicable margin that was set at 1.50% through June 30, 2020 and adjusted
quarterly thereafter between 1.25% and 1.75% based on the ratio of the daily
average availability under the Credit Facility to the daily average of the
lesser of the borrowing base or the revolving credit facility. The Credit
Facility includes, within its $250.0 million revolving credit facility, a letter
of credit sub-facility in an aggregate amount of $75.0 million and a swingline
sub-facility in an aggregate amount of $25.0 million . An unused line fee of
0.25% is applied to the average daily amount by which the lenders' aggregate
revolving commitments exceed the outstanding principal amount of revolver loans
and aggregate undrawn amount of all outstanding letters of credit issued under
the Credit Facility. The Credit Facility is secured by a pledge of
substantially all of the Company's assets, excluding, among other things, any
real estate or revenue equipment financed outside the Credit Facility.
Borrowings under the Credit Facility are subject to a borrowing base limited to
the lesser of (A) $250.0 million ; or (B) the sum of (i) 87.5% of eligible billed
accounts receivable, plus (ii) 85.0% of eligible unbilled accounts receivable
(less than 30 days), plus (iii) 85.0% of the net orderly liquidation value
percentage applied to the net book value of eligible revenue equipment, plus
(iv) the lesser of (a) 80.0% the fair market value of eligible real estate or
(b) $25.0 million . The Credit Facility contains a single springing financial
covenant, which requires a consolidated fixed charge coverage ratio of at least
1.0 to 1.0. The financial covenant is tested only in the event excess
availability under the Credit Facility is less than the greater of (A) 10.0% of
the lesser of the borrowing base or revolving credit facility or (B) $20.0
million . Based on excess availability as of June 30, 2021 , there was no fixed
charge coverage ratio requirement.
The Credit Facility includes usual and customary events of default for a
facility of this nature and provides that, upon the occurrence and continuation
of an event of default, payment of all amounts payable under the Credit Facility
may be accelerated, and the lenders' commitments may be terminated. The Credit
Facility contains certain restrictions and covenants relating to, among other
things, dividends, liens, acquisitions and dispositions, affiliate transactions,
and other indebtedness.
At June 30, 2021 , the Credit Facility had issued collateralized letters of
credit in the face amount of $28.1 million , with $15.0 million in borrowings
outstanding and $175.6 million available to borrow. We do not anticipate
material liquidity constraints or any issues with our ongoing ability to remain
in compliance with our Credit Facility.
Cash Flows
Our summary statements of cash flows for the six months ended
Six Months Ended
June 30,
2021 2020
(dollars in thousands)
Net cash provided by operating activities
Operating Activities
The decrease in cash flows from operating activities was due primarily to a$25.4 million increase in our operating assets, including a$24.1 million increase in accounts receivable combined with a$7.8 million decrease in our operating liabilities, partially offset by a$1.8 million increase in net income adjusted for noncash items. Our accounts receivable Page 33 Table of Contents increased primarily as a result of the$52.5 million increase in revenue for the quarter endedJune 30, 2021 as compared to the same period in 2020. Our operating liabilities decreased$7.8 million during the six months endedJune 30, 2021 as compared to the same period in 2020, due in part to decreased claims and insurance accruals related to timing of payments. Our increase in net income adjusted for noncash items was due in part to increases in our Brokerage gross margin, increased revenue per mile of 12.1%, decreased insurance premiums and claims along with decreased interest and other expense offset by decreases in our average revenue miles per tractor per week, lower available tractors and higher driver hiring costs. Investing Activities For the six months endedJune 30, 2021 , net cash flows used in investing activities decreased primarily as a result of decreased net capital expenditures of$48.0 million compared to the same period in 2020. We expect our net capital expenditures for calendar year 2021 will approximate$130.0 million to$150.0 million to execute our equipment replacement strategy and will be financed with cash from operations, borrowings on the Credit Facility and secured debt financing. If our growth strategy gains momentum beyond our current expectations, we may need to increase our capital expenditures to fund additional profitable growth opportunities.
Financing Activities
The increase in net cash flows used in financing activities is primarily due to debt repayments in excess of debt borrowings of$17.8 million as compared to the same period in 2020. Working Capital As ofJune 30, 2021 , we had a working capital deficit of$44.3 million , representing a$25.6 million increase in our working capital fromJune 30, 2020 . When we analyze our working capital, we typically exclude balloon payments in the current maturities of long-term debt and current portion of operating lease liabilities as these payments are typically either funded with the proceeds from equipment sales or addressed by extending the maturity of such payments. We believe this facilitates a more meaningful analysis of our changes in working capital from period-to-period. Excluding balloon payments included in current maturities of long-term debt and current portion of operating lease liabilities as ofJune 30, 2021 , we had a working capital deficit of$23.1 million , compared with a working capital deficit of$42.7 million atJune 30, 2020 . The increase in working capital was primarily the result of increased accounts receivable and other current assets partially offset by increased accounts payable and accrued wages and benefits . Working capital deficits are common to many trucking companies that operate by financing revenue equipment purchases through borrowing, or lease arrangements. When we finance revenue equipment through borrowing or lease arrangements, the principal amortization or, in the case of operating leases, the present value of the lease payments scheduled for the next twelve months, is categorized as a current liability, although the revenue equipment and operating lease right of use assets are classified as long-term assets. Consequently, each acquisition of revenue equipment financed with borrowing, or lease arrangements decreases working capital. We believe a working capital deficit has little impact on our liquidity. Based on our expected financial condition, net capital expenditures, results of operations, related net cash flows, borrowings under our Credit Facility, direct debt and lease financing, 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.
Off-Balance Sheet Arrangements
The Company had letters of credit of$28.1 million outstanding as ofJune 30, 2021 . The letters of credit are maintained primarily to support the Company's insurance program. The Company had cancelable commitments outstanding atJune 30, 2021 to acquire revenue equipment and other equipment for approximately$131.2 million and$5.1 million outstanding for terminal renovations and software during the remainder of 2021. These purchase commitments are expected to be financed by operating leases, long-term debt and proceeds from sales of existing equipment. Page 34 Table of Contents Seasonality In the trucking industry, revenue has historically decreased as customers reduce shipments following the winter holiday season and as inclement weather impedes operations. At the same time, operating expenses have generally increased, with fuel efficiency declining because of engine idling and weather, causing more physical damage equipment repairs and insurance claims and costs. For the reasons stated, first quarter results historically have been lower than results in each of the other three quarters of the year. However, cyclical changes in the trucking industry, including imbalances in supply and demand, can override the seasonality faced in the industry. Over the past several years, we have seen increases in demand at varying times, including surges betweenThanksgiving
and the year-end holiday season. Contractual Obligations
During the six months ended
Critical Accounting Policies
We have reviewed our critical accounting policies and considered whether any new critical accounting estimates or other significant changes to our accounting policies require any additional disclosures. There have been no significant changes to our accounting policies since the disclosures made in our Annual Report on Form 10-K for the year endedDecember 31, 2020 .
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