Hub Group Inc
For the period ended Sep 30, 2024. Filed Nov 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 1, 2024
HUBG$24.22-3.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000950170-24-089971
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0000950170-24-120064
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 85 previous paragraphs and 87 current paragraphs.
37 unchanged; 37 reworded; 13 added; 10 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Intermodal and Transportation Solutions (“ITS”) revenue decreased 6% to $560 million primarily due to a 17% decline in intermodal revenue per load mainly due to lower prices, fuel prices, accessorial revenue and mix, partially offset by a 12% increase in intermodal volume and a 2% increase in dedicated revenues due to growth with existing and new customers.
Current report
ITS operating income remained consistent at approximately $14 million in both 2024 and in 2023 and was 2% of revenue in both years. ITS experienced lower drayage costs, rail expenses and equipment costs, which were partially offset by lower revenue per load in intermodal. In third quarter of 2024, we decreased the portion of drayage handled on our own fleet to 71% as compared to 78% in the prior year. ITS operating income included approximately $1 million of transaction-related costs associated with the EASO investment agreement.
Current report
Logistics revenue remained consistent at approximately $461 million in both 2024 and 2023. Logistics experienced higher revenue due to the final mile acquisition, partially offset by lower revenue per load in our brokerage service line. Brokerage volume remained flat compared to the prior year. Operating income was 4% of revenue in 2024 as compared to 6% of revenue in 2023.
Current report
Logistics operating income was $19 million as compared to $29 million last year, as brokerage yields were lower than the prior year and we incurred approximately $8 million of incremental costs related to our network alignment initiative within consolidation and fulfillment.
Current report
Purchased transportation and warehousing costs decreased 4% to $740 million in 2024 from $773 million in 2023.
Current report
This increase in general and administrative expenses was primarily due to the final mile acquisition on December 20, 2023, as well as IT software expense and transaction-related costs associated with the EASO investment agreement.
Current report
Other expense, net remained consistent at $1 million in both 2024 and 2023.
Current report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Current report
Intermodal and Transportation Solutions (“ITS”) revenue decreased 13% to $1,673 million primarily due a 17% decrease in intermodal revenue per load mainly due to lower prices, fuel prices, accessorial revenue and mix, partially offset by a 3% increase in intermodal volume and a 2% increase in dedicated revenues due to growth with existing and new customers.
Current report
ITS operating income decreased to $40 million, 2% of revenue, as compared to $95 million, 5% of revenue in the prior year due to lower intermodal revenue per load, partially offset by lower rail costs, lower fuel costs, lower drayage costs and lower equipment costs.
Current report
Logistics revenue increased 1% to $1,400 million primarily driven by an increase in final mile driven by the 4 th quarter final mile acquisition, partially offset by lower revenue per load in our brokerage service line, lower revenue in managed transportation and consolidation and fulfillment. Brokerage volumes decreased 1% compared to the prior year.
Current report
Logistics operating income was 5% of revenue in 2024 as compared to 6% of revenue in 2023. Operating income was $69 million as compared to $88 million last year primarily driven by lower yields in brokerage and we incurred approximately $8 million of incremental costs related to our network alignment initiative within consolidation and fulfillment.
Current report
Purchased transportation and warehousing costs decreased 8% to $2,207 million in 2024 from $2,403 million in 2023.
Removed paragraphs (10)
Previous report
Intermodal and Transportation Solutions (“ITS”) revenue decreased 9% to $561 million primarily due to lower fuel revenue, lower accessorial revenue, price declines and mix, partially offset by an 8% increase in intermodal volume and a 4% increase in dedicated revenue resulting from growth of existing customers. ITS operating income decreased to $14 million, 2.4% of revenue, as compared to $32 million, 5.2% of revenue, in the prior year due to lower customer rates and lower accessorial revenue. These headwinds were partially offset by lower equipment costs, lower drayage costs and lower accessorial costs.
Previous report
Logistics revenue increased 1% to $459 million primarily due to the recent acquisition in final mile, partially offset by lower revenue in our brokerage service line and consolidation and fulfillment service lines. Brokerage revenue per load declined 13% due to lower pricing, fuel and customer mix and a 4% decline in volume. Logistics operating income decreased to $26 million, 5.6% of revenue, as compared to $30 million, 6.7% of revenue, due to lower brokerage margins, partially offset by our recent acquisition in final mile.
Previous report
CONSOLIDATED OPERATING EXPENSES. OTHER EXPENSES AND INCOME TAXES
Previous report
Purchased transportation and warehousing costs decreased 5% to $727 million in 2024 from $764 million in 2023. As a percentage of revenue, purchased transportation and warehousing costs increased to 73.7% in 2024 from 73.4% in 2023.
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Previous report
Intermodal and Transportation Solutions (“ITS”) revenue decreased 16% to $1,113 million primarily due to price declines, lower fuel revenue, lower accessorial revenue, a 1% decline in intermodal volume due to lower transportation demand and mix, partially offset by a 3% increase in dedicated revenue resulting from growth of existing customers. ITS operating income decreased to $27 million, 2.4% of revenue, as compared to $81 million, 6.1% of revenue, in the prior year, due to lower customer rates, lower accessorial revenue and lower volume. These headwinds were partially offset by lower drayage costs, lower equipment costs and lower accessorial costs.
Previous report
Logistics revenue increased 2% to $939 million primarily due to the recent acquisition in final mile, partially offset by lower revenue in our brokerage service line and consolidation and fulfillment service lines. Brokerage revenue per load declined 16% due to lower pricing, fuel and customer mix. Brokerage volume declined by 1%. Logistics operating income decreased to $50 million, 5.3% of revenue, as compared to $59 million, 6.4% of revenue, due to lower brokerage margins, partially offset by our recent acquisition in final mile.
Previous report
CONSOLIDATED OPERATING EXPENSES. OTHER EXPENSES AND INCOME TAXES
Previous report
Purchased transportation and warehousing costs decreased 10% to $1,467 million in 2024 from $1,631 million in 2023.
Previous report
This increase in general and administrative expenses was primarily due to the acquisition of FAFM, as well as increases in use tax expense and property tax expense of $1 million each, partially offset by less impairment of right-of-use assets of $2 million and a decrease in bad debt expense of $1 million.
Reworded paragraphs (37)
Previous wording
Statements in this section and other parts of this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements, provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that might cause the actual performance of the Company to differ materially from those expressed or implied by this discussion and, therefore, should be viewed with caution. Further information on the risks that may affect the Company’s business is included in filings it makes with the SEC from time to time, including those discussed under the “Risk Factors” section in the 2023 10-K and subsequent filings. The Company assumes no obligation to update any such forward-looking statements.
Current wording
Statements in this section and other parts of this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements, provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that might cause our actual performance to differ materially from those expressed or implied by this discussion and, therefore, should be viewed with caution. Further information on the risks that may affect our business is included in filings it makes with the SEC from time to time, including those discussed under the “Risk Factors” section in the 2023 10-K and subsequent filings. We assume no obligation to update any such forward-looking statements.
Previous wording
Intermodal and Transportation Solutions. Our Intermodal and Transportation Solutions segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In the first six months of 2024, approximately 75% of our drayage services was provided by our own fleet. We arrange for the movement of our customers’ freight in one of our approximately 50,000 containers. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of June 30, 2024, our trucking transportation operation consisted of approximately 2,200 tractors, 2,900 employee drivers and 4,300 trailers. We also contract for services with approximately 400 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations.
Current wording
Intermodal and Transportation Solutions. Our Intermodal and Transportation Solutions segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In the first nine months of 2024, approximately 73% of our drayage services was provided by our own fleet. We arrange for the movement of our customers’ freight in one of our approximately 50,000 containers. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of September 30, 2024, our trucking transportation operation consisted of approximately 2,100 tractors, 3,000 employee drivers and 4,300 trailers. We also contract for services with approximately 400 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations.
Previous wording
Logistics. Our Logistics segment offers a wide range of non-asset-based services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, warehousing, fulfillment, cross-docking, consolidation services and final mile delivery. Logistics includes our brokerage business which consists of a full range of trucking transportation services, including dry van, expedited, less-than-truckload (“LTL”), refrigerated and flatbed, all of which is provided by third-party carriers with whom we contract. We leverage proprietary technology along with collaborative relationships with third-party service providers to deliver cost savings and performance-enhancing supply chain services to our clients. Our transportation management offering also serves as a source of volume for our ITS segment. Many of the customers for these solutions are consumer goods companies who sell into the retail channel. Our final mile delivery offering provides residential final mile delivery and installation of appliances and big and bulky goods. Final mile operates through a network of independent service providers in company, customer and third-party facilities throughout the continental United States. Our business operates or has access to approximately 10 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations. These services offer our customers shipment visibility, transportation cost savings, high service and compliance with retailers’ increasingly stringent supply chain requirements.
Current wording
Logistics. Our Logistics segment offers a wide range of non-asset-based services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, warehousing, fulfillment, cross-docking, consolidation services and final mile delivery. Logistics includes our brokerage business which consists of a full range of trucking transportation services, including dry van, expedited, less-than-truckload (“LTL”), refrigerated and flatbed, all of which is provided by third-party carriers with whom we contract. We leverage proprietary technology along with collaborative relationships with third-party service providers to deliver cost savings and performance-enhancing supply chain services to our clients. Our transportation management offering also serves as a source of volume for our ITS segment. Many of the customers for these solutions are consumer goods companies who sell into the retail channel. Our final mile delivery offering provides residential final mile delivery and installation of appliances and big and bulky goods. Final mile operates through a network of independent service providers in company, customer and third-party facilities throughout the continental United States. Our business operates or has access to approximately 7 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations. These services offer our customers shipment visibility, transportation cost savings, high service and compliance with retailers’ increasingly stringent supply chain requirements.
Previous wording
We are focused on several margin enhancement projects including network optimization, matching of inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, increasing our driver and asset utilization, reducing repositioning costs, providing holistic solutions and improving low profit freight. Hub’s top 50 customers represent approximately 71% of revenue for the six months ended June 30, 2024, while one customer accounted for more than 10% of our revenue in both segments for both the six months ended June 30, 2024 and 2023. We use various performance indicators to manage our business. We closely monitor operating cash flow, profit levels for our top customers, daily sales outstanding by customer account and vendor cost changes. On-time performance, customer service, cost per load and vendor service levels are also monitored closely.
Current wording
We are focused on several margin enhancement projects including network optimization, matching of inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, increasing our driver and asset utilization, reducing repositioning costs, providing holistic solutions and improving low profit freight. Hub’s top 50 customers represent approximately 71% of revenue for the nine months ended September 30, 2024, while one customer accounted for more than 10% of our revenue in both segments for both the nine months ended September 30, 2024 and 2023. We use various performance indicators to manage our business. We closely monitor operating cash flow, profit levels for our top customers, daily sales outstanding by customer account and vendor cost changes. On-time performance, customer service, cost per load and vendor service levels are also monitored closely.
Previous wording
The following table includes the one customer that represented 10% or more of our revenue by segment for the six months ending June 30, 2024 and 2023, respectively:
Current wording
The following table includes the one customer that represented 10% or more of our revenue by segment for the nine months ending September 30, 2024 and 2023, respectively:
Previous wording
Uncertainties and risks to our outlook include inflation, increased healthcare costs, a slowdown in consumer spending (driven by, among other factors, inflation, increases in interest rates, an economic recession and geopolitical concerns), a shift by consumers to spending on services at the expense of goods, an increase of retailers’ inventory levels, the ability of customers to pay our accounts receivable, elevated levels of transportation supply in the marketplace, aggressive pricing actions by our competitors and any inability to pass cost increases, such as transportation and warehouse costs, through to our customers, all of which could have a materially negative impact on our revenue, profitability and cash flow in 2024. Exiting of truckload capacity, retail inventory levels declining leading to restocking demand, a return of typical shipping peak season demands and a stronger used tractor market could have a materially positive impact on our revenue, profitability and cash flows in 2024.
Current wording
Uncertainties and risks to our outlook include inflation, increased healthcare costs, a slowdown in consumer spending (driven by, among other factors, inflation, increases in interest rates, an economic recession and geopolitical concerns), a shift by consumers to spending on services at the expense of goods, an increase of retailers’ inventory levels, the ability of customers to pay our accounts receivable, elevated levels of transportation supply in the marketplace, aggressive pricing actions by our competitors and any inability to pass cost increases, such as transportation and warehouse costs, through to our customers, all of which could have a materially negative impact on our revenue, profitability and cash flow. Exiting of truckload capacity, retail inventory levels declining leading to restocking demand, a return of typical shipping peak season demands and a stronger used tractor market could have a materially positive impact on our revenue, profitability and cash flows.
Previous wording
Total consolidated operating revenue decreased 5% to $986 million in 2024 from $1,040 million in 2023.
Current wording
Total consolidated operating revenue decreased 4% to $987 million in 2024 from $1,025 million in 2023.
Previous wording
Purchased transportation and warehousing costs declined as compared to prior year due to rail cost decreases, lower outside carrier costs, lower accessorial costs and lower fuel costs, partially offset by higher volumes in intermodal.
Current wording
Purchased transportation and warehousing costs declined as compared to prior year due to reductions in external third-party carrier costs and lower accessorial costs, partially offset by network alignment costs.
Previous wording
Salaries and benefits remained consistent at $142 million in 2024 and 2023. As a percentage of revenue, salaries and benefits increased to 14.4% in 2024 from 13.6% in 2023.
Current wording
Salaries and benefits increased to $143 million in 2024 from $139 million in 2023. As a percentage of revenue, salaries and benefits increased to 14.5% in 2024 from 13.5% in 2023.
Previous wording
While an increase of $10 million was primarily due to the acquisition of FAFM on December 20, 2023, this increase was partially offset by decreases in driver costs of $7 million and office employee compensation expense of $3 million, both related to lower headcount, which excludes FAFM.
Current wording
While an increase of $9 million was primarily due to the final mile acquisition on December 20, 2023, this increase was partially offset by decreases in driver costs of $5 million resulting from lower driver headcount.
Previous wording
Headcount, which includes drivers, warehouse personnel and office employees, was 5,813, which includes 582 employees of FAFM, as of June 30, 2024 and 5,851 as of June 30, 2023, respectively. The decrease in headcount related primarily to drivers, partially offset by increases in office and warehouse employees due to the FAFM acquisition.
Current wording
Headcount, which includes drivers, warehouse personnel and office employees, was 5,900, which includes 572 employees of final mile, as of September 30, 2024 and 5,600 as of September 30, 2023, respectively. The increase in headcount of office and warehouse employees was primarily due to the final mile acquisition, partially offset by a decrease in the number of drivers.
Previous wording
Depreciation and amortization expense increased to $76 million in 2024 from $71 million in 2023. This increase was related primarily to the amortization of intangibles related to the acquisition of FAFM, as well as increased technology, container and warehouse depreciation expense. This expense, as a percentage of revenue, increased to 3.8% in 2024 from 3.2% in 2023. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.
Current wording
Depreciation and amortization expense decreased to $32 million in 2024 from $36 million in 2023. This decrease was primarily related to decreased container depreciation expense resulting from changes made in the third quarter of 2024 to the estimated useful lives of our containers. This decrease was partially offset by an increase in the amortization of intangibles related to the final mile acquisition. This expense, as a percentage of revenue, decreased to 3.3% in 2024 from 3.5% in 2023. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.
Previous wording
Insurance and claims expense increased to $13 million in 2024 from $12 million in 2023. This increase was primarily due to increased auto liability expense related to claim costs. These expenses, as a percentage of revenue, increased to 1.3% in 2024 from 1.1% in 2023.
Current wording
Insurance and claims expense decreased to $10 million in 2024 from $12 million in 2023. This decrease was primarily due to a decrease in auto liability expense related to claim costs. These expenses, as a percentage of revenue, decreased to 1.0% in 2024 from 1.1% in 2023.
Previous wording
General and administrative expenses increased to $55 million in 2024 from $52 million in 2023. These expenses, as a percentage of revenue, increased to 2.8% in 2024 from 2.4% in 2023.
Current wording
General and administrative expenses increased to $30 million in 2024 from $24 million in 2023. These expenses, as a percentage of revenue, increased to 3.0% in 2024 from 2.4% in 2023.
Previous wording
Net gains on the sale of equipment decreased to $0.4 million in 2024 from $1 million in 2023. This decrease resulted from both less units sold and a lower average gain per unit sold in 2024 as compared to 2023.
Current wording
Net gains on the sale of equipment decreased to $0.4 million in 2024 from $0.8 million in 2023. This decrease resulted from both less units sold and a lower average gain per unit sold in 2024 as compared to 2023.
Previous wording
The provision for income taxes decreased to $9 million in 2024 from $15 million in 2023 due primarily to lower pre-tax income in 2024. We provided for income taxes using an effective rate of 22.8% in 2024 and an effective rate of 23.9% in 2023. The second quarter 2024 effective tax rate of 22.8% was lower than the rate from 2023, as in 2024 we received a one-time benefit from amending state tax returns.
Current wording
The provision for income taxes decreased to $7 million in 2024 from $11 million in 2023 due primarily to a decrease in pre-tax income. We provided for income taxes using an effective rate of 23.2% in 2024 and an effective rate of 26.9% in 2023. The third quarter 2024 effective tax rate of 23.2% was lower than the 2023 effective tax rate as our state apportionment was lower is 2024 and there was a valuation allowance recorded for a state tax credit in 2023.
Previous wording
Total consolidated operating revenue decreased 9% to $1,986 million in 2024 from $2,193 million in 2023.
Current wording
Total consolidated operating revenue decreased 8% to $2,973 million in 2024 from $3,218 million in 2023.
Previous wording
Purchased transportation and warehousing costs declined as compared to prior year due to rail cost decreases, lower outside carrier costs, lower accessorial costs, lower fuel costs and lower volumes.
Current wording
Purchased transportation and warehousing costs declined as compared to prior year due to reductions in external third-party carrier costs and lower accessorial costs, partially offset by network alignment costs.
Previous wording
Salaries and benefits increased to $286 million in 2024 from $279 million in 2023. As a percentage of revenue, salaries and benefits increased to 14.4% in 2024 from 12.7% in 2023.
Current wording
Salaries and benefits increased to $429 million in 2024 from $418 million in 2023. As a percentage of revenue, salaries and benefits increased to 14.4% in 2024 from 13.0% in 2023.
Previous wording
Decreases in driver related expenses of $11 million related to lower driver headcount, lower office compensation expense of $7 million and lower restricted stock expense of $1 million were more than offset by increases primarily due to the acquisition of FAFM, as well as increases in incentive compensation expense of $5 million and payroll tax expense of $2 million.
Current wording
The increase was due primarily to the final mile acquisition, as well as an increase in incentive compensation expense of $5 million, partially offset by decreases in driver related expenses of $16 million related to lower driver headcount, lower office compensation expense of $7 million and lower restricted stock expense of $2 million.
Previous wording
Depreciation and amortization expense increased to $38 million in 2024 from $35 million in 2023. This increase was related primarily to the amortization of intangibles related to the acquisition of FAFM on December 20, 2023, as well as increased technology, container and warehouse depreciation expense. This expense, as a percentage of revenue, increased to 3.8% in 2024 from 3.4% in 2023. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.
Current wording
Depreciation and amortization expense increased to $108 million in 2024 from $107 million in 2023. This increase was related primarily to the amortization of intangibles related to the final mile acquisition, as well as increased technology and warehouse equipment depreciation expense. These increases were partially offset by decreased container depreciation expense resulting from changes made in the third quarter of 2024 to the estimated useful lives of our containers. This expense, as a percentage of revenue, increased to 3.6% in 2024 from 3.3% in 2023. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.
Previous wording
Insurance and claims expense increased to $25 million in 2024 from $24 million in 2023. This increase was primarily due to increased claim costs. These expenses, as a percentage of revenue, increased to 1.3% in 2024 from 1.1% in 2023.
Current wording
Insurance and claims expense decreased to $35 million in 2024 from $36 million in 2023. This decrease was primarily due to less claim expenses related to both auto liability and workers compensation claims in 2024. These expenses, as a percentage of revenue, increased to 1.2% in 2024 from 1.1% in 2023.
Previous wording
General and administrative expenses increased to $28 million in 2024 from $27 million in 2023. These expenses, as a percentage of revenue, increased to 2.8% in 2024 from 2.6% in 2023.
Current wording
General and administrative expenses increased to $85 million in 2024 from $76 million in 2023. These expenses, as a percentage of revenue, increased to 2.9% in 2024 from 2.4% in 2023.
Previous wording
This increase in general and administrative expenses was primarily due to the acquisition of FAFM on December 20, 2023, as well as increases in use tax expense and legal expense of $1 million each, partially offset by less impairment of right-of-use assets of $2 million and a decrease in bad debt expense of $1 million.
Current wording
This expense increase was primarily due to the final mile acquisition on December 20, 2023, as well as transaction-related costs associated with the EASO investment agreement, increases in legal expense and IT software expense. These increases were partially offset by less impairment of right-of-use assets of $2 million and a decrease in bad debt expense.
Previous wording
Net gains on the sale of equipment decreased to $1 million in 2024 from $5 million in 2023. The decrease resulted from both less units sold and a lower average gain per unit sold in 2024 as compared to 2023.
Current wording
Net gains on the sale of equipment decreased to $1 million in 2024 from $6 million in 2023. This decrease resulted from both less units sold and a lower average gain per unit sold in 2024 as compared to 2023.
Previous wording
Other expense increased to $2 million in 2024 from $1 million in 2023 primarily due to an increase in interest expense due to higher interest rates on our debt.
Current wording
Other expense, net increased to $6 million in 2024 from $3 million in 2023 due primarily to an increase in interest expense due to higher interest rates on our debt as well as a decrease of $1 million of interest income due to lower average cash balances.
Previous wording
The provision for income taxes decreased to $16 million in 2024 from $29 million in 2023 due primarily to lower pre-tax income in 2024. We provided for income taxes using an effective rate of 22.2% in 2024 as compared to an effective rate of 21.4% in 2023. The effective tax rate was lower in 2023 as compared to 2024 as a change in state apportionment methodology made in 2023 had a larger impact on the 2023 tax rate than it did in 2024.
Current wording
The provision for income taxes decreased to $23 million in 2024 from $41 million in 2023 due primarily to a decrease in pre-tax income. We provided for income taxes using an effective rate of 22.5% in 2024 as compared to an effective rate of 22.7% in 2023. The lower effective tax rate in 2024 resulted primarily from lower state apportionment in 2024.
Previous wording
Our financing and liquidity strategy is to fund operating cash payments through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment. As of June 30, 2024, we had $220 million of cash and $21.0 million of restricted investments. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes. In prior years, we have funded our business acquisitions from cash on hand. Payments for our other investing activities, such as the construction of our office buildings and our capitalized technology investments, have been funded by cash on hand or cash flows from operations. Cash used in financing activities, including the purchase of treasury stock and dividend payments have been funded by cash from operations or cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed. Based on past performance and current expectations, we believe cash on hand and cash received from the provision of services, along with our Credit Facility and other potential financing sources, will provide us the necessary capital to fund transactions and achieve our planned growth for the next twelve months and the foreseeable future.
Current wording
Our financing and liquidity strategy is to fund operating cash payments and future dividends through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment. As of September 30, 2024, we had $186 million of cash and cash equivalents and $21 million of restricted investments. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes. In prior years, we have funded our business acquisitions from cash on hand. Our investment agreement with EASO in October 2024 is consistent with this approach. See Note 8 of the condensed consolidated financial statements for details to this transaction. Payments for our other investing activities, such as the construction of our office buildings and our capitalized technology investments, have been funded by cash on hand or cash flows from operations. Cash used in financing activities including the purchase of treasury stock has been funded by cash from operations or cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed. Based on past performance and current expectations, we believe cash on hand and cash received from the provision of services, along with other financing sources, will provide us the necessary capital to fund transactions and achieve our planned growth for the next twelve months and the foreseeable future.
Previous wording
Cash provided by operating activities for the six months ended June 30, 2024 was approximately $150 million, which resulted primarily from net income of $56 million plus non-cash charges of $98 million, partially offset by the changes in operating assets and liabilities of $4 million.
Current wording
Cash provided by operating activities for the nine months ended September 30, 2024 was $194 million, which resulted primarily from net income of $80 million plus non-cash charges of $147 million, partially offset by the changes in operating assets and liabilities of $33 million.
Previous wording
Cash provided by operating activities totaled $150 million in 2024 compared to $221 million in 2023. The $71 million decrease in cash flow was primarily due to a decrease in net income of $52 million, a decrease in non-cash charges of $12 million and a negative change in operating assets and liabilities of $7 million, primarily due to the change in accounts receivable.
Current wording
Cash provided by operating activities totaled $194 million in 2024 compared to $323 million in 2023. The $129 million decrease in cash flow was primarily due to a decrease in net income of $59 million, a decrease in the change in assets and liabilities of $49 million and a decrease in non-cash charges of $21 million.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2024 was $22 million which resulted from capital expenditures of $31 million, partially offset by proceeds from the sale of equipment of $6 million and $4 million related to the FAFM acquisition. Capital expenditures of $31 million related primarily to tractors of $14 million, technology investments of $9 million and warehouse equipment of $6 million.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2024 was $30 million which included capital expenditures of $43 million, partially offset by proceeds from the sale of equipment of $10 million and $4 million related to the final mile acquisition. Capital expenditures of $43 million related primarily to tractors of $16 million, technology investments of $15 million, warehouse equipment of $7 million and the remainder for other transportation equipment.
Previous wording
Capital expenditures decreased by approximately $34 million in 2024 as compared to 2023. The 2024 decrease was due to lower spend on tractors of $21 million, decreases in container purchases of $11 million, leasehold improvements of $2 million and warehouse equipment of $1 million. These decreases were partially offset by increases in the technology investments of $1 million.
Current wording
Capital expenditures decreased by approximately $62 million in 2024 as compared to 2023. The 2024 decrease was due primarily to decreases in tractor purchases of $33 million, container purchases of $32 million as well as warehouse equipment and leasehold improvements of $2 million each. These decreases were partially offset by increased technology spend of $4 million.
Previous wording
Net cash used in financing activities for the six months ended June 30, 2024 was $96 million which includes repayments of long-term debt of $53 million, purchases of treasury stock of $33 million, dividends paid of $15 million, cash for stock tendered for payments of withholding taxes of $9 million and finance lease payments of $1 million, partially offset by proceeds from the issuance of debt of $16 million. Debt incurred in 2024 was used to fund the purchase of transportation equipment.
Current wording
Net cash used in financing activities for the nine months ended September 30, 2024 was $165 million which includes cash used for repayments of long-term debt of $81 million, the purchase of treasury stock of $68 million, dividends paid of $23 million, cash used for stock tendered for payments of withholding taxes of $9 million and finance lease payments of $2 million, partially offset by proceeds from the issuance of debt of $18 million. Debt incurred in 2024 was used to fund the purchase of transportation equipment.
Previous wording
The $20 million decrease in cash used in financing activities for 2024 versus 2023 was primarily due to the decrease in the purchase of treasury stock of $67 million and less repayments of long-term debt of $3 million, partially offset by less proceeds from the issuance of debt of $35 million and an increase in dividends paid of $15 million.
Current wording
The $42 million increase in cash used in financing activities for 2024 versus 2023 was primarily due to an increase in dividends paid of $23 million, an increase in cash paid for stock related to employee withholding taxes of $1 million and a decrease in proceeds from the issuance of debt of $67 million, partially offset by a decrease in the purchase of treasury stock of $49 million.
Previous wording
We have standby letters of credit that expire in 2024 and 2025. As of both June 30, 2024 and December 31, 2023, our letters of credit were $1 million.
Current wording
We have standby letters of credit that expire in 2025. Our letters of credit were $1 million as of both September 30, 2024 and December 31, 2023.
Previous wording
As of both June 30, 2024, and December 31, 2023, we had no borrowings under the Credit Agreement and our unused and available borrowings were $349 million. We were in compliance with our debt covenants as of June 30, 2024 and December 31, 2023.
Current wording
As of September 30, 2024, and December 31, 2023, we had no borrowings under the Credit Agreement. Our unused and available borrowings were $349 million as of both September 30, 2024 and December 31, 2023. We were in compliance with our debt covenants as of September 30, 2024 and December 31, 2023.
Previous wording
Refer to the company's 2023 10-K for a complete discussion regarding our critical accounting policies and estimates. As of June 30, 2024, there were no material changes to our critical accounting policies and estimates.
Current wording
Refer to our 2023 10-K for a complete discussion regarding our critical accounting policies and estimates. As of September 30, 2024, there were no material changes to our critical accounting policies and estimates.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Other expense increased to $5 million in 2024 from $3 million 2023 primarily due to an increase in interest expense due to higher interest rates on our debt.