SAIA INC

Previous wording

The Securities and Exchange Commission (the SEC) encourages companies to disclose forward-looking information so that investors can better understand the future prospects of a company and make informed investment decisions. This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations,” contains these types of statements, which are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “plan,” “predict,” “believe,” “should” and similar words or expressions are intended to identify forward-looking statements. Investors should not place undue reliance on forward-looking statements, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, except as otherwise required by applicable law. All forward-looking statements reflect the present expectation of future events of our management as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors, risks, uncertainties and assumptions that could cause actual results to differ materially from those described in any forward-looking statements. These factors, risks, uncertainties and assumptions include, but are not limited to, the following:

Current wording

The Securities and Exchange Commission (the SEC) encourages companies to disclose forward-looking information so that investors can better understand the future prospects of a company and make informed investment decisions. This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations,” contains these types of statements, which are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “plan,” “predict,” “believe,” “should,” “potential” and similar words or expressions are intended to identify forward-looking statements. Investors should not place undue reliance on forward-looking statements, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, except as otherwise required by applicable law. All forward-looking statements reflect the present expectation of future events of our management as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors, risks, uncertainties and assumptions that could cause actual results to differ materially from those described in any forward-looking statements. These factors, risks, uncertainties and assumptions include, but are not limited to, the following:

Previous wording

The Company’s business is highly correlated to non-service sectors of the general economy. The Company’s strategy is to improve profitability by increasing yield while also increasing volumes. Components of this strategy include building density in existing geography and pursuing geographic and terminal expansion in an effort to promote profitable growth and improve our customer value proposition over time. The Company’s business is labor intensive, capital intensive and service sensitive. The Company looks for opportunities to improve safety, cost effectiveness and asset utilization (primarily tractors and trailers). Pricing initiatives have had a positive impact on yield and profitability. The Company continues to execute targeted sales and marketing programs along with initiatives to align costs with volumes and improve customer satisfaction. Technology continues to be an important investment as we work towards improving customer experience, operational efficiencies and Company image.

Current wording

The Company’s business is highly correlated to non-service sectors of the general economy. The Company’s strategy is to improve profitability by increasing yield, while also increasing volumes. Components of this strategy include building density in existing geographies and pursuing geographic and terminal expansion in an effort to promote profitable growth and improve our customer value proposition over time. The Company’s business is labor intensive, capital intensive and service sensitive. The Company looks for opportunities to improve safety, cost effectiveness and asset utilization (primarily tractors and trailers). Pricing initiatives have had a positive impact on yield and profitability. The Company continues to execute targeted sales and marketing programs along with initiatives to align costs with volumes and improve customer satisfaction. Technology continues to be an important investment as we work towards improving customer experience, operational efficiencies and Company image.

Previous wording

The Company’s operating revenue increased by 14.3 percent in the first quarter of 2024 compared to the same period in 2023. The increase resulted primarily from increases in shipments and tonnage partially as a result of the redistribution of freight due to industry consolidation. In the first quarter of 2024, LTL shipments were up 15.7 percent and LTL tonnage was up 6.2 percent compared to the prior year quarter. Additionally, increases in revenue were driven by improved revenue per hundredweight due to pricing and changes in business mix.

Current wording

The Company’s operating revenue increased by 18.5 percent in the second quarter of 2024 compared to the same period in 2023. The increase resulted primarily from increases in shipments and tonnage partially as a result of the redistribution of freight due to a competitor bankruptcy. In the second quarter of 2024, LTL shipments were up 18.1 percent and LTL tonnage was up 9.7 percent compared to the prior year quarter. Additionally, increases in revenue were driven by improved revenue per hundredweight due to pricing and changes in business mix.

Previous wording

Consolidated operating income was $117.9 million for the first quarter of 2024 compared to $99.1 million for the first quarter of 2023. Diluted earnings per share were $3.38 in the first quarter of 2024 compared to diluted earnings per share of $2.85 in the prior year quarter. The operating ratio (operating expenses divided by operating revenue) was 84.4 percent in the first quarter of 2024 compared to 85.0 percent in the first quarter of 2023. The Company generated $106.5 million in net cash provided by operating activities in the first three months of 2024 compared with $119.3 million in the same period last year.

Current wording

Consolidated operating income was $137.6 million for the second quarter of 2024 compared to $120.3 million for the second quarter of 2023. Diluted earnings per share were $3.83 in the second quarter of 2024 compared to diluted earnings per share of $3.42 in the prior year quarter. The operating ratio (operating expenses divided by operating revenue) was 83.3 percent in the second quarter of 2024 compared to 82.7 percent in the second quarter of 2023. The Company generated $237.2 million in net cash provided by operating activities in the first six months of 2024 compared with $291.4 million in the same period last year. The Company opened six new terminals and relocated an additional two terminals during the second quarter of 2024.

Previous wording

The effective tax rate was 23.7 percent and 23.2 percent for the quarters ended March 31, 2024 and 2023, respectively.

Current wording

For the quarters ended June 30, 2024 and 2023

Previous wording

Quarter ended March 31, 2024 compared to quarter ended March 31, 2023

Current wording

Quarter and six months ended June 30, 2024 compared to quarter and six months ended June 30, 2023

Previous wording

Consolidated revenue for the quarter ended March 31, 2024 increased 14.3 percent to $754.8 million primarily as a result of increases in shipments and tonnage partially as a result of the redistribution of freight due to industry consolidation. For the first quarter of 2024, Saia’s LTL tonnage was up 6.2 percent to 1.4 million tons, and LTL shipments increased 15.7 percent to 2.1 million shipments. LTL revenue per hundredweight, excluding fuel surcharge, increased 10.5 percent to $22.26 per hundredweight for the first quarter of 2024 as a result of changes in business mix and pricing actions. For the first quarter of 2024, approximately 75 percent of the Company’s operating revenue was subject to specific customer price negotiations that occur throughout the year. The remaining 25 percent of operating revenue was subject to a general rate increase. For customers subject to a general rate increase, Saia implemented 6.5 and 7.5 percent general rate increases on January 30, 2023 and December 4, 2023, respectively. Competitive factors, customer turnover and mix changes impact the extent to which customer rate increases are retained over time.

Current wording

Consolidated revenue for the quarter ended June 30, 2024 increased 18.5 percent to $823.2 million primarily as a result of increases in shipments and tonnage partially as a result of the redistribution of freight due to a competitor bankruptcy. For the second quarter of 2024, Saia’s LTL tonnage was up 9.7 percent to 1.6 million tons, and LTL shipments increased 18.1 percent to 2.3 million shipments. LTL revenue per hundredweight, excluding fuel surcharge, increased 8.7 percent to $21.69 per hundredweight for the second quarter of 2024 as a result of changes in business mix and pricing actions. For the second quarter of 2024, approximately 75 percent of the Company’s operating revenue was subject to specific customer price negotiations that occur throughout the year. The remaining 25 percent of operating revenue was subject to a general rate increase. For customers subject to a general rate increase, Saia implemented 7.5 and 6.5 percent general rate increases on December 4, 2023 and January 30, 2023, respectively. Competitive factors, customer turnover and mix changes impact the extent to which customer rate increases are retained over time.

Previous wording

Operating revenue includes revenue recognized from the Company’s fuel surcharge program, which is designed to reduce exposure to fluctuations in diesel fuel prices by adjusting total freight charges to account for changes in the price of diesel fuel. The Company’s fuel surcharge is generally based on the average national price for diesel fuel (as published by the United States Energy Information Administration) and is typically reset weekly. Fuel surcharges are widely accepted in the industry and are a significant component of revenue and pricing. Fuel surcharges are an integral part of customer contract negotiations, but represent only one portion of overall customer price negotiations, as customers may negotiate increases in base rates instead of increases in fuel surcharges or vice versa. Fuel surcharge revenue as a percentage of operating revenue decreased to 15.7 percent for the quarter ended March 31, 2024 compared to 17.8 percent for the quarter ended March 31, 2023, as a result of decreases in the average cost of diesel fuel for the quarter compared to the prior year.

Current wording

Operating revenue includes revenue recognized from the Company’s fuel surcharge program, which is designed to reduce exposure to fluctuations in diesel fuel prices by adjusting total freight charges to account for changes in the price of diesel fuel. The Company’s fuel surcharge is generally based on the average national price for diesel fuel (as published by the United States Energy Information Administration) and is typically reset weekly. Fuel surcharges are widely accepted in the industry and are a significant component of revenue and pricing. Fuel surcharges are an integral part of customer contract negotiations, but represent only one portion of overall customer price negotiations, as customers may negotiate increases in base rates instead of increases in fuel surcharges or vice versa. Fuel surcharge revenue as a percentage of operating revenue decreased to 15.4 percent for the quarter ended June 30, 2024 compared to 15.9 percent for the quarter ended June 30, 2023, as a result of decreases in the average cost of diesel fuel and changes in customer mix.

Previous wording

Consolidated operating income was $117.9 million in the first quarter of 2024 compared to $99.1 million in the prior year quarter. Overall, the increase in consolidated operating income was the result of increased volumes during the first quarter of 2024. The first quarter of 2024 operating ratio (operating expenses divided by operating revenue) was 84.4 percent compared to 85.0 percent for the same period in 2023.

Current wording

Consolidated operating income was $137.6 million in the second quarter of 2024 compared to $120.3 million in the prior year quarter. Overall, the increase in consolidated operating income was the result of increased volumes partially offset by increased operating expenses during the second quarter of 2024, primarily driven by the expanded footprint of opening eight new terminals and nine relocations during the past twelve months. The second quarter of 2024 operating ratio (operating expenses divided by operating revenue) was 83.3 percent compared to 82.7 percent for the same period in 2023.

Previous wording

Salaries, wages and employees’ benefits increased $42.8 million in the first quarter of 2024 compared to the first quarter of 2023. This change was primarily driven by increases during the quarter in employee hours and headcount in response to overall increased volumes, expanded footprint and by a Company-wide wage increase in July 2023 of approximately 4.1 percent. Purchased transportation increased $5.8 million in the first quarter of 2024 compared to the first quarter of 2023 primarily due to increased volumes. Fuel, operating expenses and supplies increased by $14.7 million compared to the first quarter of 2023 largely due to increased administrative costs and facility costs due to increased volumes and expanded footprint. Claims and insurance expense in the first quarter of 2024 was $3.4 million higher than the first quarter of 2023 primarily due to increased activity and premiums. Depreciation and amortization expense increased $6.0 million in the first quarter of 2024 compared to the same period in 2023 primarily due to ongoing investments in revenue equipment, real estate and technology.

Current wording

Salaries, wages and benefits increased $103.1 million during the first six months of 2024 compared to the same period last year. This change was primarily driven by increased volumes and expanded footprint, and by a Company-wide wage increase in July 2023 of approximately 4.1 percent. In addition, other employee related costs increased, including increased training hours and unfavorable development of workers’ compensation claims. Purchased transportation increased $17.1 million for the first six months of 2024 compared to the same period in the prior year primarily due to increases in both non-asset truckload volume and LTL purchased transportation miles. Fuel, operating expenses and supplies increased $42.1 million during the first six months of 2024 compared to the same period last year largely due to increased facility costs, administrative costs and fuel costs due to increased volumes and expanded footprint. During the first six months of 2024, claims and insurance expense was $5.3 million higher than the same period last year primarily due to increased claim activity and development of open claims. Depreciation and amortization expense increased $13.8 million during the first six months of 2024 compared to the same period in 2023 primarily due to ongoing investments in revenue equipment and network expansion.

Previous wording

Interest income for the first quarter of 2024 was higher than the same period in 2023 due to increased interest rates on deposit balances during the period.

Current wording

Interest income for the quarter and six months ended June 30, 2024 was lower than the same period in 2023 due to decreased deposit balances during the period.

Previous wording

Our business remains highly correlated to non-service sectors of the general economy and competitive pricing pressures, as well as the success of Company-specific improvement initiatives. Our outlook is dependent on a number of external factors, including strength of the economy, inflation, labor availability, diesel fuel prices and supply chain constraints. The potential impact of these factors on our operations, financial performance and financial condition, as well as the impact on our ability to successfully execute our business strategies and initiatives, remains uncertain and difficult to predict. We are continuing initiatives to improve and enhance customer service in an effort to support our ongoing pricing and business mix optimization, while seeking to control costs and improve productivity. Planned revenue initiatives include building density in our current geography, targeted marketing initiatives to grow revenue in more profitable areas, further expanding our geographic and terminal network, as well as pricing and yield management. On January 30, 2023 and December 4, 2023 Saia implemented 6.5 and 7.5 percent general rate increases, respectively, for customers comprising approximately 25 percent of Saia’s operating revenue. The extent of success of these revenue initiatives is impacted by what proves to be the underlying economic trends, competitor initiatives and other factors discussed under “Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A. “Risk Factors.”

Current wording

Our business remains highly correlated to non-service sectors of the general economy and competitive pricing pressures, as well as the success of Company-specific improvement initiatives. Our outlook is dependent on a number of external factors, including strength of the economy, inflation, labor availability, diesel fuel prices and supply chain constraints. The potential impact of these factors on our operations, financial performance and financial condition, as well as the impact on our ability to successfully execute our business strategies and initiatives, remains uncertain and difficult to predict. We are continuing initiatives to improve and enhance customer service in an effort to support our ongoing pricing and business mix optimization, while seeking to control costs and improve productivity. Planned revenue initiatives include building density in our current geography, targeted marketing initiatives to grow revenue in more profitable areas, further expanding our geographic and terminal network, as well as pricing and yield management. On December 4, 2023 and January 30, 2023 Saia implemented 7.5 and 6.5 percent general rate increases, respectively, for customers comprising approximately 25 percent of Saia’s operating revenue. The extent of success of these revenue initiatives is impacted by what proves to be the underlying economic trends, competitor initiatives and other factors discussed under “Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A. “Risk Factors.”

Previous wording

If we build market share, including through our geographic and terminal expansion, we expect there to be numerous operating leverage cost benefits. Conversely, should the economy soften, we plan to match resources and capacity to shifting volume levels to lessen unfavorable operating leverage. The success of cost improvement initiatives is impacted by a number of factors, including the cost and availability of drivers, dock workers and personnel, and purchased transportation, diesel fuel and insurance costs and inflation.

Current wording

With our objective of building market share, including through our geographic and terminal expansion, we expect there to be numerous operating leverage cost benefits. Conversely, should the economy soften, we plan to match resources and capacity to shifting volume levels to lessen unfavorable operating leverage. The success of cost improvement initiatives is impacted by a number of factors, including the cost and availability of drivers, dock workers and personnel, and purchased transportation, diesel fuel and insurance costs and inflation.

Previous wording

Working capital at March 31, 2024 was $78.5 million, a decrease from $243.0 million at March 31, 2023.

Current wording

Working capital at June 30, 2024 was $118.2 million, a decrease from $311.6 million at June 30, 2023.

Previous wording

Current assets at March 31, 2024 decreased by $97.3 million as compared to March 31, 2023, driven by a decrease in cash and cash equivalents of $154.1 million to fund the Yellow Corporation real estate acquisitions, partially offset by an increase in accounts receivable of $50.9 million. Current liabilities increased by $67.2 million at March 31, 2024 compared to March 31, 2023 largely due to an increase in accounts payable and other current liabilities.

Current wording

Current assets at June 30, 2024 decreased by $132.8 million as compared to June 30, 2023, driven by a decrease in cash and cash equivalents of $223.8 million to fund the Yellow Corporation real estate acquisitions, partially offset by an increase in accounts receivable of $76.3 million. Current liabilities increased by $60.5 million at June 30, 2024 compared to June 30, 2023 largely due to an increase in accounts payable and other current liabilities.

Previous wording

Cash flows provided by operating activities were $106.5 million for the three months ended March 31, 2024 versus $119.3 million for the three months ended March 31, 2023. The decrease is primarily due to an increase in accounts receivable, partially offset by changes in other assets and liabilities and additional net income. For the three months ended March 31, 2024, net cash used in investing activities was $451.8 million compared to $128.1 million in the same period last year, a $323.7 million increase. This increase resulted from the acquisition of terminals from Yellow Corporation in January 2024 in addition to increased revenue equipment purchases to support higher volumes. For the three months ended March 31, 2024, net cash provided by financing activities was $61.4 million compared to $12.2 million net cash used in financing activities during the same period last year, as a result of borrowings to help fund capital expenditures during the first three months of 2024.

Current wording

Cash flows provided by operating activities were $237.2 million for the six months ended June 30, 2024 versus $291.4 million for the six months ended June 30, 2023. The decrease is primarily due to an increase in accounts receivable and changes in other assets and liabilities, partially offset by additional net income. For the six months ended June 30, 2024, net cash used in investing activities was $676.3 million compared to $226.5 million in the same period last year, a $449.8 million increase. This increase resulted from the acquisition of terminals from Yellow Corporation in January 2024 in addition to increased revenue equipment purchases to support higher volumes. For the six months ended June 30, 2024, net cash provided by financing activities was $154.0 million compared to $17.3 million net cash used in financing activities during the same period last year, as a result of borrowings to help fund capital expenditures during the first six months of 2024.

Previous wording

The Company has historically generated cash flows from operations to fund a large portion of its capital expenditure requirements. The timing of capital expenditures can largely be managed around the seasonal working capital requirements of the Company. The Company believes it has adequate sources of capital to meet short-term liquidity needs through its cash on hand, operating cash flows and availability under its credit agreements, discussed below. Future operating cash flows are primarily dependent upon the Company’s profitability and its ability to manage its working capital requirements, primarily accounts receivable, accounts payable and wage and benefit accruals.

Current wording

The Company has historically generated cash flows from operations to fund a large portion of its capital expenditure requirements. The timing of capital expenditures can largely be managed around the seasonal working capital requirements of the Company. The Company believes it has adequate sources of capital to meet short-term liquidity needs through its cash on hand, operating cash flows and availability under its credit arrangements, discussed below. Future operating cash flows are primarily dependent upon the Company’s profitability and its ability to manage its working capital requirements, primarily accounts receivable, accounts payable and wage and benefit accruals.

Previous wording

The Company currently anticipates that net capital expenditures in 2024 will be in excess of $1 billion, subject to ongoing evaluation of market conditions. Anticipated capital expenditures for the year include normal replacement cycles of revenue equipment, investments in technology, and revenue equipment and real estate investments to support our growth initiatives. Net capital expenditures were $456.8 million in the first three months of 2024 and include $235.7 million for the acquisition of Yellow Corporation terminals. Additionally, $7.9 million was used to fund the acquisition of the rights of leased properties from Yellow Corporation. Approximately $330.4 million of the 2024 remaining capital budget was committed as of March 31, 2024.

Current wording

The Company currently anticipates that net capital expenditures in 2024 will be in excess of $1 billion, subject to ongoing evaluation of market conditions. Anticipated capital expenditures for the remainder of the year include normal replacement cycles of revenue equipment, investments in technology and revenue equipment and real estate investments to support our growth initiatives, including the plan to open 12 to 15 additional terminals in the third and fourth quarters. Net capital expenditures were $681.3 million in the first six months of 2024 and include $235.7 million for the acquisition of 17 Yellow Corporation freight terminals. Additionally, $7.9 million was used to fund the acquisition of Yellow Corporation's interest in leases for 11 freight terminals and the payment of cure costs. Approximately $152.8 million of the 2024 remaining capital budget was committed as of June 30, 2024.

Previous wording

The Company is a party to a credit agreement with its banking group (the Revolving Credit Facility), which provides up to a $300 million revolving line of credit through February 2028. The Revolving Credit Facility contains an accordion feature that allows the Company to increase the size of the facility by up to $150 million, subject to certain conditions and availability of lender commitments. Borrowings under the Revolving Credit Facility bear interest at the Company’s election at a variable rate equal to (a) one, three or six month term SOFR (the forward-looking secured overnight financing rate) plus 0.10%, or (b) an alternate base rate, in each case plus an applicable margin. The applicable margin is between 1.00% and 1.75% per annum for term SOFR loans and between 0.00% and 0.75% per annum for alternate base rate loans, in each case based on the Company’s consolidated net lease adjusted leverage ratio. The Company also accrues fees based on the daily unused portion of the credit facility, which is between 0.0125% and 0.025% based on the Company’s consolidated net lease adjusted leverage ratio. Under the Revolving Credit Facility, the Company is subject to a maximum consolidated net lease adjusted leverage ratio of less than 3.50 to 1.00 with the potential to be temporarily increased in the event the Company makes an acquisition that meets certain criteria. The Revolving Credit Facility contains certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default. Under the Revolving Credit Facility, if an event of default occurs, the banks will be entitled to take various actions, including the acceleration of amounts due. The Company was in compliance with its debt covenants at March 31, 2024.

Current wording

The Company is a party to an unsecured credit agreement with its banking group (the Revolving Credit Facility), which provides up to a $300 million revolving line of credit through February 2028. The Revolving Credit Facility contains an accordion feature that allows the Company to increase the size of the facility by up to $150 million, subject to certain conditions and availability of lender commitments. Borrowings under the Revolving Credit Facility bear interest at the Company’s election at a variable rate equal to (a) one, three or six month term SOFR (the forward-looking secured overnight financing rate) plus 0.10%, or (b) an alternate base rate, in each case plus an applicable margin. The applicable margin is between 1.00% and 1.75% per annum for term SOFR loans and between 0.00% and 0.75% per annum for alternate base rate loans, in each case based on the Company’s leverage ratio, as defined in the agreement. The Company also accrues fees based on the daily unused portion of the Revolving Credit Facility, which is between 0.0125% and 0.025% based on the Company’s consolidated net lease adjusted leverage ratio. Under the Revolving Credit Facility, the Company is subject to a maximum consolidated net lease adjusted leverage ratio of less than 3.50 to 1.00 with the potential to be temporarily increased in the event the Company makes an acquisition that meets certain criteria. The Revolving Credit Facility contains certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default. Under the Revolving Credit Facility, if an event of default occurs, the banks will be entitled to take various actions, including the acceleration of amounts due. The Company was in compliance with its debt covenants at June 30, 2024.

Previous wording

At March 31, 2024 the Company had outstanding borrowings of $72.0 million and outstanding letters of credit $32.4 million under this Revolving Credit Facility. As of December 31, 2023, the Company had no outstanding borrowings and outstanding letters of credit of $32.1 million under this Revolving Credit Facility. At March 31, 2024, the Company had $195.6 million in availability under the Revolving Credit Facility.

Current wording

At June 30, 2024 the Company had outstanding borrowings of $67.0 million and outstanding letters of credit $32.2 million under this Revolving Credit Facility. As of December 31, 2023, the Company had no outstanding borrowings and outstanding letters of credit of $32.1 million under this Revolving Credit Facility. At June 30, 2024, the Company had $200.8 million in availability under the Revolving Credit Facility.

Previous wording

Pursuant to the Shelf Agreement, the Company agreed to sell up to $100 million aggregate principal amount of senior notes (the Initial Notes) to the Note Purchasers. The Initial Notes will bear interest at 6.09% per annum and will mature five years after the date on which the Initial Notes are issued, unless repaid earlier by the Company. The funding date for the Initial Notes may occur at any time on or prior to August 2, 2024. The Initial Notes will be senior unsecured obligations and rank pari passu with borrowings under the Revolving Credit Facility or other senior promissory notes issued pursuant to the Shelf Agreement.

Current wording

Pursuant to the Shelf Agreement, on May 1, 2024, the Company issued senior promissory notes (the Initial Notes) in an aggregate principal amount of $100 million to the Note Purchasers. The Initial Notes bear interest at 6.09% per annum and mature five years after the date on which the Initial Notes were issued, on May 1, 2029, unless repaid earlier by the Company. The Initial Notes are senior unsecured obligations and rank pari passu with borrowings under the Revolving Credit Facility or other senior promissory notes issued pursuant to the Shelf Agreement.

Previous wording

The Shelf Agreement requires that the Company maintain a consolidated net lease adjusted leverage ratio of less than 3.50 to 1.00, with limited exceptions. The Shelf Agreement also contains certain customary representations and warranties, affirmative and negative covenants and provisions related to events of default. Upon the occurrence and continuance of an event of default, the holders of notes issued under the Shelf Agreement may require immediate payment of all amounts owing under such notes.

Current wording

The Shelf Agreement requires that the Company maintain a consolidated net lease adjusted leverage ratio of less than 3.50 to 1.00, with limited exceptions. The Shelf Agreement also contains certain customary representations and warranties, affirmative and negative covenants and provisions related to events of default. Upon the occurrence and continuance of an event of default, the holders of notes issued under the Shelf Agreement may require immediate payment of all amounts owing under such notes. The Company was in compliance with its debt covenants at June 30, 2024.

Previous wording

At March 31, 2024 and December 31, 2023, respectively, the Company had no outstanding borrowings under its Shelf Agreement.

Current wording

At June 30, 2024 and December 31, 2023, the Company had outstanding borrowings under this Shelf Agreement of $100.0 million and $0, respectively.

Previous wording

The Company is obligated under finance leases with seven-year original terms covering revenue equipment. Total liabilities recognized under finance leases were $12.1 million and $16.5 million as of March 31, 2024 and December 31, 2023, respectively. Amortization of assets held under the finance leases is included in depreciation and amortization expense. The weighted average interest rates for the finance leases at March 31, 2024 and December 31, 2023 were each 4.0 percent.

Current wording

The Company is obligated under finance leases with seven-year original terms covering certain revenue equipment. Total liabilities recognized under the finance leases were $9.7 million and $16.5 million as of June 30, 2024 and December 31, 2023, respectively. Amortization of assets held under the finance leases is included in depreciation and amortization expense. The weighted average interest rates for the finance leases at June 30, 2024 and December 31, 2023 were 4.1 percent and 4.0 percent, respectively.

Previous wording

Contractual obligations for the Company are comprised of lease agreements, purchase obligations and long-term debt obligations related to any outstanding balance under the credit agreements. Contractual obligations for operating leases at March 31, 2024 totaled $149.0 million, including operating leases with original maturities of less than one year, which are not recorded in our consolidated balance sheet in accordance with U.S. generally accepted accounting principles. Contractual obligations in the form of finance leases were $12.5 million at March 31, 2024, which includes both principal and interest amounts. For the remainder of 2024, $5.7 million of interest payments are anticipated based on borrowings and commitments outstanding at March 31, 2024. See Note 5 to the accompanying unaudited condensed consolidated financial statements in this Current Report on Form 10-Q. Purchase obligations at March 31, 2024 were $330.7 million, including commitments of $330.4 million for capital expenditures. As of March 31, 2024, the Revolving Credit Facility had $72.0 million outstanding principal balance and the Shelf Agreement had no outstanding principal balance.

Current wording

Contractual obligations for the Company are comprised of lease agreements, purchase obligations and long-term debt obligations. Contractual obligations for operating leases at June 30, 2024 totaled $147.6 million, including operating leases with original maturities of less than one year, which are not recorded in our consolidated balance sheet in accordance with U.S. generally accepted accounting principles. Contractual obligations in the form of finance leases were $10.0 million at June 30, 2024, which includes both principal and interest amounts. For the remainder of 2024, $7.0 million of interest payments are anticipated based on borrowings and commitments outstanding at June 30, 2024. See Note 5 to the accompanying unaudited condensed consolidated financial statements in this Current Report on Form 10-Q. Purchase obligations at June 30, 2024 were $153.0 million, including commitments of $152.8 million for capital expenditures. As of June 30, 2024, the Revolving Credit Facility had $67.0 million outstanding principal balance and the Shelf Agreement had $100.0 million outstanding principal balance.

Previous wording

Other commercial commitments of the Company typically include letters of credit and surety bonds required for collateral towards insurance agreements. As of March 31, 2024 the Company had total outstanding letters of credit of $32.4 million and $59.6 million in surety bonds.

Current wording

Other commercial commitments of the Company typically include letters of credit and surety bonds required for collateral towards insurance agreements. As of June 30, 2024 the Company had total outstanding letters of credit of $32.2 million and $59.6 million in surety bonds.

Previous wording

The Company has accrued approximately $5.0 million for uncertain tax positions and $0.5 million for interest and penalties related to the uncertain tax positions as of March 31, 2024. At March 31, 2024, the Company has accrued $83.3 million for claims and insurance liabilities.

Current wording

The Company has accrued approximately $4.4 million for uncertain tax positions and $0.5 million for interest and penalties related to the uncertain tax positions as of June 30, 2024. At June 30, 2024, the Company has accrued $86.9 million for claims and insurance liabilities.