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 Annual Report on Form 10-K, 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K, 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 Annual Report on Form 10-K 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

inflationary increases in operating expenses and corresponding reductions of profitability;

Current wording

inflationary increases in expenses and corresponding reductions of profitability;

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 revenue per shipment 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 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 3.2 percent in 2023 compared to 2022. The increase was due to increased yield, excluding fuel surcharges, as a result of pricing actions and changes in business mix, which included 6.5 and 7.5 percent general rate increases on January 30, 2023 and December 4, 2023, respectively, for customers subject to general rate increases. Additionally, the Company experienced year over year increases in shipments and tonnage partially as a result of the redistribution of freight due to industry consolidation mid-year. These increases were offset by a decrease in fuel surcharge revenue, resulting from lower diesel fuel prices.

Current wording

The Company’s operating revenue increased by 11.4 percent in 2024 compared to 2023. The increase was a result of increased volume and pricing actions, which included 7.9, 7.5 and 6.5 percent general rate increases on October 21, 2024, December 4, 2023 and January 30, 2023, respectively, for customers subject to general rate increases. Additionally, the Company experienced year over year increases in shipments and tonnage partially as a result of the redistribution of freight due to industry consolidation mid-year 2023. These increases were offset by a decrease in fuel surcharge revenue, resulting from lower diesel fuel prices.

Previous wording

Consolidated operating income declined to $460.5 million for 2023 compared to $470.5 million in 2022. The decrease in 2023 operating income resulted primarily from increases in salaries, wages and benefits and depreciation expense which was partially offset by increased revenue and decreased purchased transportation.

Current wording

Consolidated operating income increased to $482.2 million for 2024 compared to $460.5 million in 2023. The increase in 2024 operating income resulted primarily from increased volumes partially offset by increases in salaries, wages and benefits, including workers' compensation claims and related expense, and depreciation expense.

Previous wording

The Company generated $577.9 million in net cash provided by operating activities in 2023 versus $473.0 million in 2022. The Company used $448.7 million of net cash in investing activities during 2023 compared to $365.5 million during 2022.

Current wording

The Company generated $583.7 million in net cash provided by operating activities in 2024 versus $577.9 million in 2023. The Company used $1,035.9 million of net cash in investing activities during 2024 compared to $448.7 million during 2023.

Previous wording

Saia is a transportation company headquartered in Johns Creek, Georgia that provides less-than-truckload (LTL) services through a single integrated organization. While more than 97% of its revenue is derived from transporting LTL shipments across 45 states, the Company also offers customers a wide range of other value-added services, including non-asset truckload, expedited and logistics services across the United States.

Current wording

Saia is a transportation company headquartered in Johns Creek, Georgia that provides less-than-truckload (LTL) services through a single integrated organization. While more than 97% of its revenue is derived from transporting LTL shipments across the United States, the Company also offers customers a wide range of other value-added services, including non-asset truckload, expedited and logistics services across North America.

Previous wording

Our business is highly correlated to non-service sectors of the general economy. Our business also is impacted by a number of other factors as discussed under “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A., “Risk Factors.” The key factors that affect our operating results are the volumes of shipments transported through our network, as measured by our average daily shipments and tonnage; the prices we obtain for our services, as measured by revenue per hundredweight (a measure of yield) and revenue per shipment; our ability to manage our cost structure for capital expenditures and operating expenses such as salaries, wages and benefits; purchased transportation; claims and insurance expense; fuel and maintenance; and our ability to match operating costs to shifting volume levels.

Current wording

Our business is highly correlated to non-service sectors of the general economy. Our business also is impacted by a number of other factors as discussed under “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A., “Risk Factors.” The key factors that affect our operating results are the volumes of shipments transported through our network, as measured by our average daily shipments and tonnage; the prices we obtain for our services, as measured by revenue per shipment and revenue per hundredweight (a measure of yield), whether including or excluding fuel surcharge revenue; our ability to manage our cost structure for capital expenditures and operating expenses such as salaries, wages and benefits; purchased transportation; claims and insurance expense; fuel and maintenance; and our ability to match operating costs to shifting volume levels.

Previous wording

Consolidated revenue increased 3.2 percent to $2.9 billion primarily due to increased volume and yield, excluding fuel surcharges. These increases were the result of a redistribution of freight due to industry consolidation mid-year, as well as pricing actions and changes in business mix. Improved customer service and targeted marketing initiatives have positively impacted the Company's ability to implement measured pricing actions to improve yield. As a result of these increased rates, Saia’s LTL revenue per hundredweight (a measure of yield), excluding fuel surcharges, increased 6.9 percent to $20.99 for 2023. Saia’s LTL tonnage also increased 1.3 percent while LTL shipments increased 3.9 percent for 2023. Overall LTL revenue per shipment, excluding fuel surcharges, increased 4.2 percent in 2023 due to the yield improvements discussed above. For 2023 and 2022, approximately 75 percent of Saia’s operating revenue was subject to specific customer price adjustment negotiations that occur throughout the year. The remaining 25 percent of operating revenue was subject to a general rate increase which is based on market conditions. For customers subject to general rate increases, 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, among other things, impact the extent to which customer rate increases are retained over time.

Current wording

Consolidated revenue increased 11.4 percent to $3.2 billion primarily due to increased shipments and tonnage, partially as a result of a redistribution of freight due to a competitor bankruptcy in 2023. Saia’s LTL tonnage increased 8.9 percent while LTL shipments increased 12.4 percent for 2024. Overall LTL revenue per shipment, excluding fuel surcharges, increased 1.1 percent in 2024 as a result of pricing actions and changes in business mix. For 2024 and 2023, approximately 75 percent of Saia’s operating revenue was subject to specific customer price adjustment negotiations that occur throughout the year. The remaining 25 percent of operating revenue was subject to a general rate increase which is based on market conditions. For customers subject to general rate increases, Saia implemented 7.9, 7.5 and 6.5 percent general rate increases on October 21, 2024, December 4, 2023 and January 30, 2023, respectively. Competitive factors, customer turnover and mix changes, among other things, impact the extent to which customer rate increases are retained over time.

Previous wording

Operating revenue includes fuel surcharge revenue from the Company’s fuel surcharge program. This program is designed to reduce the Company’s 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 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 decreased to 16.9 percent of operating revenue in 2023 compared to 19.9 percent in 2022 primarily as a result of decreases in the cost of diesel fuel.

Current wording

Operating revenue includes fuel surcharge revenue from the Company’s fuel surcharge program. This program is designed to reduce the Company’s 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 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 decreased to 15.0 percent of operating revenue in 2024 compared to 16.9 percent in 2023 primarily as a result of decreases in the cost of diesel fuel.

Previous wording

Consolidated operating income declined to $460.5 million in 2023 compared to $470.5 million in 2022. The decrease in 2023 operating income resulted primarily from increases in salaries, wages and benefits and depreciation expense which was partially offset by increased revenue and decreased purchased transportation. The 2023 operating ratio (operating expenses divided by operating revenue) was 84.0 percent as compared to 83.1 percent in 2022.

Current wording

Consolidated operating income increased to $482.2 million in 2024 compared to $460.5 million in 2023. The increase in 2024 operating income resulted primarily from increased volumes which were partially offset by increases in salaries, wages and benefits, including workers' compensation claims and related expense, and depreciation expense. The 2024 operating ratio (operating expenses divided by operating revenue) was 85.0 percent as compared to 84.0 percent in 2023.

Previous wording

Salaries, wages and employees’ benefits expense increased $131.7 million in 2023 compared to 2022 largely due to increased head count to support increased volumes, ongoing business growth and network expansion. Additionally, in July 2023 the Company implemented a salary and wage increase of approximately 4.1 percent. Purchased transportation expense decreased $77.2 million in 2023 compared to 2022 primarily due to both a decrease in miles utilized and a decrease in cost per mile. Fuel, operating expenses and supplies increased by $5.2 million primarily driven by increased repairs, maintenance and facility costs in addition to investments in information technology network support. These changes were partially offset by decreases in costs of fuel during the period. In addition, claims and insurance expense in 2023 was $11.4 million higher than 2022 largely due to increased premiums, claim development and claim costs in 2023. The Company experiences volatility in accident expense from time to time as a result of utilizing self-insurance as a part of its risk management program. Depreciation and amortization expense increased $21.6 million in 2023 compared to 2022 primarily due to ongoing investments in revenue equipment and network expansion.

Current wording

Salaries, wages and employees’ benefits expense increased $186.6 million in 2024 compared to 2023. This increase was largely driven by increased head count to support increased volumes, ongoing business growth and network expansion, as well as, increased training hours and a Company-wide wage increase in July 2024 of approximately 4.1 percent, excluding executives. In addition, other employee related costs increased, including an increase in the number and costs of workers' compensation claims and unfavorable development of historical claims. Purchased transportation expense decreased $1.4 million in 2024 compared to 2023 primarily due to a decrease in cost per mile. Fuel, operating expenses and supplies increased by $65.7 million primarily driven by increased facility costs and administrative costs related to increased volumes and expanded footprint. Claims and insurance expense in 2024 was $9.7 million higher than 2023 largely due to increased auto liability and cargo claims activity and development of open claims. The Company experiences volatility in accident expense from time to time as a result of utilizing self-insurance as a part of its risk management program. Depreciation and amortization expense increased $31.3 million in 2024 compared to 2023 primarily due to ongoing investments in revenue equipment and network expansion.

Previous wording

Interest expense in 2023 was $0.1 million less than 2022 due to decreased finance lease obligations in 2023. Interest income in 2023 was $6.0 million greater than 2022 due to increased interest rates on higher average deposit balances during the period. The effective income tax rate was 23.9 percent and 23.6 percent for the years ended December 31, 2023 and 2022, respectively.

Current wording

Interest expense in 2024 was $6.4 million greater than 2023 due to interest expense related to increased borrowings under the credit arrangements in 2024. Interest income in 2024 was $5.2 million less than 2023 due to due to decreased deposit balances during the period. The effective income tax rate was 23.9 percent for the years ended December 31, 2024 and 2023.

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 this revenue initiative 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 I, 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, changes in regulatory conditions and international trade relations, including higher tariffs, 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 and further expanding our geographic and terminal network. On October 21, 2024, Saia implemented a 7.9 percent general rate increases for customers comprising approximately 25 percent of Saia’s operating revenue. The 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 I, Item 1A., “Risk Factors.”

Previous wording

Effective July 2023, the Company implemented a salary and wage increase of approximately 4.1 percent for all of its employees, other than executives. The total cost of the compensation increase is expected to be approximately $46.1 million annually, and the Company anticipates the impact will be partially offset by productivity and efficiency gains.

Current wording

Effective July 2024, the Company implemented a salary and wage increase of approximately 4.1 percent for all of its employees, excluding executives. The total cost of the compensation increase is expected to be approximately $59.0 million annually, and the Company anticipates the impact will be partially offset by productivity and efficiency gains.

Previous wording

If the Company builds market share, including through its geographic and terminal expansion, it expects there to be numerous operating leverage cost benefits. Conversely, should the economy soften, the Company plans 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

The strategic objective of the Company is to build market share through excellent customer service, continued operating efficiencies and through its geographic and terminal expansion which should result in numerous operating leverage cost benefits. However, should the economy soften, the Company plans 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

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” Under this ASU, interim and annual segment disclosures are expanded primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. Additionally, the standard requires all entities with a single reportable segment to apply all segment disclosure requirements. This standard is effective for annual reporting periods beginning after December 15, 2023 and interim reporting periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Current wording

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The standard requires all entities with a single reportable segment to apply all segment disclosure requirements. This standard became effective for annual reporting periods beginning after December 15, 2023 and interim reporting periods beginning after December 15, 2024. The Company adopted the standard on a retrospective basis for the 2024 annual reporting period with the impact limited to incremental disclosures in our consolidated financial statements.

Previous wording

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 326): Improvements to Income Tax Disclosures.” Under this ASU income tax disclosures are expanded primarily by requiring the disaggregation of the rate reconciliation and income taxes paid disclosures. This standard is effective for annual reporting periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Current wording

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” Under this ASU income tax disclosures are expanded primarily by requiring the disaggregation of the rate reconciliation and income taxes paid disclosures. This standard is effective for annual reporting periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Previous wording

The Company's liquidity needs arise primarily from capital investment in new equipment, land and structures, information technology and letters of credit required under insurance programs, as well as funding working capital requirements.

Current wording

The Company's liquidity needs arise primarily from capital investment in new equipment, land and structures, information technology and letters of credit and surety bonds required under insurance programs, as well as funding working capital requirements.

Previous wording

Working capital at December 31, 2023 was $326.6 million compared to $256.8 million at December 31, 2022. This increase is primarily due to an increase in cash and cash equivalents and accounts receivable, partially offset by an increase in accounts payable.

Current wording

Working capital at December 31, 2024 was $157.4 million compared to $326.6 million at December 31, 2023. This decrease is primarily due to a decrease in cash and cash equivalents of $276.7 million to fund the Yellow Corporation real estate acquisitions and additional revenue equipment used to support higher volumes and expanded footprint, partially offset by an increase in income taxes receivable and decreases in accounts payable and wages, vacation and employees' benefits.

Previous wording

Cash flows from operating activities were $577.9 million for 2023 versus $473.0 million for 2022 largely driven by changes in net operating assets and liabilities. For 2023, net cash used in investing activities was $448.7 million versus $365.5 million in 2022 primarily due to increased capital expenditures during 2023 as the Company continues to expand its footprint and add density in markets. Net cash used in financing activities was $20.4 million in 2023 versus $26.7 million in 2022 as a result of decreased finance lease payments during 2023.

Current wording

Cash flows from operating activities were $583.7 million for 2024 versus $577.9 million for 2023 largely driven by increased depreciation and amortization and deferred income taxes, partially offset by changes in other assets and liabilities. For 2024, net cash used in investing activities was $1,035.9 million versus $448.7 million in 2023 primarily due to the acquisition of terminals from Yellow Corporation in January 2024 in addition to increased purchases of revenue equipment to support higher volumes and expanded footprint. Net cash used in financing activities was $175.4 million in 2024 versus $20.4 million in 2023 as a result of borrowings to fund capital expenditures during 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 and its operating cash flows. Additionally, as of December 31, 2023, the Company has $267.9 million of availability under its 2023 Credit Agreement, $100 million of committed financing and $250 million of uncommitted financing under the Company's Private Shelf Agreement, subject to certain conditions. 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. The Company was in compliance with its debt covenants at December 31, 2023.

Current wording

The Company has historically generated cash flows from operations to fund a large portion of its capital expenditure requirements. 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. As of December 31, 2024, the Company has $473.8 million of availability under its Revolving Credit Facility and $250 million of uncommitted financing under the Company's Private Shelf Agreement, subject to certain conditions. 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. The Company was in compliance with its debt covenants at December 31, 2024.

Previous wording

Net capital expenditures pertain primarily to investments in tractors and trailers and other revenue equipment, information technology, land and structures. Projected net capital expenditures for 2024 are expected to be approximately $1 billion compared to 2023 net capital expenditures of $437.2 million. Estimated 2024 capital expenditures include $235.7 million to acquire Yellow Corporation terminals, a normal replacement cycle of revenue equipment and technology investments for our operations, and additional revenue equipment and real estate investments to support our growth initiatives.

Current wording

Net capital expenditures pertain primarily to investments in tractors and trailers and other revenue equipment, information technology, land and structures. Projected net capital expenditures for 2025 are expected to be over $700 million compared to 2024 net capital expenditures of $1.0 billion. Estimated 2025 capital expenditures include a normal replacement cycle of revenue equipment and technology investments for our operations, and additional revenue equipment and real estate investments to support our growth initiatives.

Previous wording

In addition to the amounts disclosed in the table above, the Company had an additional $50.9 million in capital expenditures for revenue equipment that was received but not paid for prior to December 31, 2023.

Current wording

In addition to the amounts disclosed in the table above, the Company had an additional $24.4 million in capital expenditures for revenue equipment that was received but not paid for prior to December 31, 2024.

Previous wording

On February 3, 2023, the Company entered into a new unsecured credit agreement with a banking group (the 2023 Credit Agreement) and terminated its previous credit agreement. The 2023 Credit Agreement maintains the amount of the previous line of credit of $300 million and extends the term until February 2028. The 2023 Credit Agreement 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 2023 Credit Agreement 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 will be 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 will be between 0.0125% and 0.025% based on the Company’s consolidated net lease adjusted leverage ratio. Under the 2023 Credit Agreement, 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 2023 Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default. Under the 2023 Credit Agreement, if an event of default occurs, the banks will be entitled to take various actions, including the acceleration of amounts due.

Current wording

The Company is a party to an unsecured credit agreement with its banking group (the Revolving Credit Facility). On December 9, 2024, the Company entered into an amendment to the Revolving Credit Facility. The amendment increased commitments under the Revolving Credit Facility by $300 million to an aggregate commitment of $600 million and expanded the accordion feature, subject to certain conditions and availability of lender commitments, from $150 million to $300 million. This amendment also extended the maturity date of the Revolving Credit Facility from February 3, 2028, to December 9, 2029. 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. Additionally, the amendment adjusted the applicable margin such that the applicable margin is now between 1.25% and 2.00% per annum for term SOFR loans and between 0.25% and 1.00% per annum for alternate base rate loans, in each case based on the Company’s consolidated net lease adjusted leverage ratio. The amendment also modified the fees that the Company accrues based on the daily unused portion of the credit facility, which will now range between 0.175% and 0.30% based on the Company’s consolidated net lease adjusted leverage ratio. 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. 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 Company was in compliance with its debt covenants under the Revolving Credit Facility at December 31, 2024.

Previous wording

At December 31, 2023 and 2022, the Company had no outstanding borrowings and outstanding letters of credit of $32.1 million and $31.2 million, respectively, under the credit agreements.

Current wording

At December 31, 2024, the Company had outstanding borrowings of $94.0 million and outstanding letters of credit of $32.2 million under the Revolving Credit Facility. At December 31, 2023, the Company had no outstanding borrowings and outstanding letters of credit of $32.1 million under the Revolving Credit Facility.

Previous wording

On November 9, 2023, the Company entered into a $350 million uncommitted Private Shelf Agreement (the Shelf Agreement), by and among the Company, PGIM, Inc. (Prudential), and certain affiliates and managed accounts of Prudential (the Note Purchasers) which allows the Company, from time to time, to offer for sale to Prudential and its affiliates, in one or a series of transactions, senior notes of the Company, through November 9, 2026.

Current wording

On November 9, 2023, the Company entered into a $350 million uncommitted Private Shelf Agreement (the Shelf Agreement), with PGIM, Inc. (Prudential), and certain affiliates and managed accounts of Prudential (the Note Purchasers) which allows the Company, from time to time, to offer for sale to Prudential and its affiliates, in one or a series of transactions, senior notes of the Company, through November 9, 2026.

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 2023 Credit Agreement 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 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 under the Shelf Agreement at December 31, 2024.

Previous wording

The Company is obligated under finance leases with seven-year terms for revenue equipment totaling $16.5 million and $31.0 million as of December 31, 2023 and 2022, respectively. Amortization of assets held under the finance leases is included in depreciation expense. The weighted average interest rates for the finance leases at December 31, 2023 and 2022 were 3.95% and 3.74%, respectively.

Current wording

The Company is obligated under finance leases with seven-year terms for revenue equipment totaling $6.3 million and $16.5 million as of December 31, 2024 and 2023, respectively. Amortization of assets held under the finance leases is included in depreciation expense. The weighted average interest rates for the finance leases at December 31, 2024 and 2023 were 4.09% and 3.95%, 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 Company’s 2023 Credit Agreement or Shelf Agreement. Total contractual obligations for operating leases at December 31, 2023 totaled $142.6 million. This includes 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 $17.1 million at December 31, 2023, which include both principal and interest components. Purchase obligations at December 31, 2023 were $314.9 million. As of December 31, 2023 there was no outstanding principal balance under the 2023 Credit Agreement or Shelf Agreement. For further information see the Notes to the accompanying audited Consolidated Financial Statements in this Form 10-K.

Current 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 arrangements. Total contractual obligations for operating leases at December 31, 2024 totaled $147.3 million. This includes 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 $6.4 million at December 31, 2024, which include both principal and interest components. Purchase obligations at December 31, 2024 were $27.7 million. As of December 31, 2024 the Revolving Credit Facility had $94.0 million outstanding principal balance and the Shelf Agreement had $100.0 million outstanding principal balance. See Note 2, "Debt and Financing Arrangements" of the accompanying audited Consolidated Financial Statements for more information on the credit arrangements.

Previous wording

Other commercial commitments of the Company typically include letters of credit and surety bonds required for collateral under insurance agreements. As of December 31, 2023 the Company had total outstanding letters of credit of $33.9 million and $56.7 million in surety bonds.

Current wording

Other commercial commitments of the Company typically include letters of credit and surety bonds required for collateral under insurance agreements. As of December 31, 2024 the Company had total outstanding letters of credit of $32.2 million and $60.6 million in surety bonds.

Previous wording

In addition to any principal amounts disclosed, the Company has interest obligations of approximately $1.4 million for 2024, based on borrowings and commitments outstanding at December 31, 2023.

Current wording

In addition to any principal amounts disclosed, the Company has interest obligations of approximately $13.4 million for 2025, based on borrowings and commitments outstanding at December 31, 2024.

Previous wording

The Company has accrued approximately $4.7 million for uncertain tax positions and accrued interest and penalties of $0.5 million related to the uncertain tax positions as of December 31, 2023.

Current wording

The Company has accrued approximately $3.2 million for uncertain tax positions and accrued interest and penalties of $0.4 million related to the uncertain tax positions as of December 31, 2024.

Previous wording

At December 31, 2023, the Company has $103.0 million accrued for claims, insurance and other liabilities.

Current wording

At December 31, 2024, the Company has $109.5 million accrued for claims, insurance and other liabilities.

Previous wording

Judgments and Uncertainties: Claims and insurance accruals for these claims are established by management based on estimates of losses that the Company will ultimately incur on reported claims and on claims that have been incurred but not yet reported. Accruals are calculated on reported claims based on an evaluation of the nature and severity of the claim, historical loss experience and on legal, economic and other factors. Actuarial analysis is also used in calculating the accrual for workers’ compensation and bodily injury and property damage claims.

Current wording

Judgments and Uncertainties: Claims and insurance accruals for these claims are established by management based on estimates of losses that the Company will ultimately incur on reported claims and on claims that have been incurred but not yet reported. Accruals are calculated on reported claims based on an evaluation of the nature and severity of the claim, historical loss experience and on legal, economic and other factors. Actuarial analysis is also used in calculating the accruals for workers’ compensation and bodily injury and property damage claims.

Previous wording

Judgments and Uncertainties: Revenue is recognized in a systematic process whereby estimates related to shipments in transit are based upon actual bills of lading received near period end and the estimated percentage of completion of the service at period end. Estimates for credit losses and billing adjustments are based upon historical experience. Billing adjustments are primarily made for discounts and billing corrections.

Current wording

Judgments and Uncertainties: Revenue is recognized in a systematic process whereby estimates related to shipments in transit are based upon actual bills of lading received near period end and the estimated percentage of completion of the service at period end. Estimates for credit losses and billing adjustments are based upon historical experience.

Previous wording

Sensitivity of Estimate to Change: Actual useful lives and residual values could differ from these assumptions based on market conditions and other factors, thereby impacting the estimated amount or timing of depreciation expense. There have been no material effects of changes to judgments related to depreciation expense for the year ended December 31, 2023.

Current wording

Sensitivity of Estimate to Change: Actual useful lives and residual values could differ from these assumptions based on market conditions and other factors, thereby impacting the estimated amount or timing of depreciation expense. See Note 1, "Description of Business and Summary of Accounting Policies" of the accompanying audited Consolidated Financial Statements, for discussion of the effects of changes to judgments related to depreciation expense for the year ended December 31, 2024.