COVENANT LOGISTICS GROUP INC

COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

CONDENSED CONSOLIDATED** STATEMENTS OF OPERATIONS**

**FOR THEthree and nine months ended September 30, 2024 and 2023 **

(In thousands, except per share data)

CONDENSED CONSOLIDATED** STATEMENTS OF****COMPREHENSIVE INCOME**

FOR THEthree and nine months ended September 30, 2024 and 2023

(Unaudited and in thousands***)***

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THEthree and nine months ended September 30, 2024 and 2023

(Unaudited and in thousands)

CONDENSED CONSOLIDATED** STATEMENTS OF CASH FLOWS**

FOR THE nine months ended September 30, 2024 and 2023

(Unaudited and in thousands)

NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Basis of Presentation

The condensed consolidated financial statements include the accounts of Covenant Logistics Group, Inc., a Nevada holding company, and its wholly owned subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer to Covenant Logistics Group, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form10-Q and Article10 of Regulation S-X promulgated under the Securities Act of1933. In preparing finan cial statem ents, it is necessary for management to make assumptions and estimates affecting the amounts reported in the condensed consolidated financial statements and related notes. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. In the opinion of management, the accompanying financial statements include all adjustments that are necessary for a fair presentation of the results for the interim periods presented, such adjustments being of a normal recurring nature.

Certain information and footnote disclosures have been condensed or omitted pursuant to such rules and regulations. The* December 31, 2023*, condensed consolidated balance sheet was derived from our audited balance sheet as of that date. Our operating results are subject to seasonal trends when measured on a quarterly basis; therefore, operating results for thenine months ended* September 30, 2024* arenot necessarily indicative of the results that* maybe expected for the year ending December 31, 2024*. These condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Form10-K for the year ended* December 31, 2023*. Results of operations in interim periods arenot necessarily indicative of results to be expected for a full year.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation for book purposes is determined using the straight-line method over the estimated useful lives of the assets. Depreciation of revenue equipment is our largest item of depreciation. We generally depreciate new tractors over five years to salvage values ranging from approximately 0% to 35% of their cost, depending on the utilization profile of the equipment. We generally depreciate new trailers over seven years for refrigerated trailers andten years for dry van trailers to salvage values of approximately 28% and 25% of their cost, respectively. We annually, or whenever events or changes in circumstances indicate that a review is warranted, review the reasonableness of our estimates regarding useful lives and salvage values of our revenue equipment and other long-lived assets, based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice. We performed a review of our estimates for certain subsets of revenue equipment during the quarter ended* June 30, 2024and, due to a weak used revenue equipment market, we increased the rate of depreciation on these units in the period. This change resulted in an additional $1.2 million and $3.8 million of depreciation expense during thethree* andnine months ended* September 30, 2024,respectively. Changes in the useful life or salvage value estimates, or fluctuations in market values that arenot* reflected in our estimates, could have a material effect on our results of operations. During thethree months ended* March 31, 2023,*we sold a Tennessee terminal resulting in a $7.6 million gain which is included in gain on disposition of property and equipment, net in the condensed consolidated statements of operations.

Recent Accounting Pronouncements

Accounting Standards not yet adopted

In* November 2023,the Financial Accounting Standards Board (“FASB”) issued ASUNo.* 2023-07, Improvements to Reportable Segment Disclosures (Topic280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024.Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.*

In* December 2023,the FASB issued ASU2023*-09, Improvements to Income Tax Disclosures. This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU2023-09 is effective for fiscal years beginning after* December 15, 2024.*Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.

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Basic income per share excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted income per share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. There were approximately 75,000 and 71,000 shares issuable upon conversion of unvested restricted shares for thethree andnine months ended* September 30, 2024*, respectively, and 254,000 and 247,000 shares issuable upon conversion of unvested restricted shares for thethree andnine months ended* September 30, 2023*, respectively. There wereno unvested shares excluded from the calculation of diluted earnings per share as anti-dilutive for either of thethree andnine months ended* September 30, 2024* and2023. There were approximately 649,000 and 619,000 shares issuable upon conversion of unvested employee stock options for thethree andnine months ended* September 30, 2024*, respectively, and 478,000 and 411,000 shares issuable upon conversion of unvested employee stock options for thethree andnine months ended* September 30, 2023*, respectively. There wereno unvested employee stock options excluded from the calculation of diluted earnings per share as anti-dilutive for thethree andnine months ended* September 30, 2024*, respectively, andno and 32,000 unvested employee stock options excluded from the calculation of diluted earnings per share as anti-dilutive for thethree andnine months ended* September 30, 2023*, respectively. Income per share is the same for both Class A and Class B shares.

The following table sets forth, for the periods indicated, the calculation of net income per share included in the condensed consolidated statements of operations:

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Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability.

The fair value of our interest rate swap agreements is determined using the market-standard methodology of netting the discounted future fixed-cash payments and the discounted expected variable-cash receipts. The variable-cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These analyses reflect the contractual terms of the swap, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatilities. The fair value calculation also includes an amount for risk of non-performance of our counterparties using "significant unobservable inputs" such as estimates of current credit spreads to evaluate the likelihood of default, which we have determined to be insignificant to the overall fair value of our interest rate swap agreements.

The fair value of the contingent consideration arrangement is based on inputs that arenot observable in the market and is estimated using a probability-weighted method. The significant unobservable inputs used in the fair value of the contingent consideration liability include the financial projections over the earn-out period, the volatility of the underlying financial metrics, and estimated discount rates.

The fair value of the life insurance policies was determined by the underwriting insurance company’s valuation models and represents the guaranteed value we would receive upon surrender of these policies as of the reporting date.

Athree-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

Financial Instruments Measured at Fair Value on a Recurring Basis

The carrying amount of cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, and current debt approximates their fair value because of the short-term maturity of these instruments.

Interest rates that are currently available to us for issuance of long-term debt with similar terms and remaining maturities are used to estimate the fair value of our long-term debt, which primarily consists of revenue equipment installment notes. The fair value of our revenue equipment installment notes approximated the carrying value as of* September 30, 2024*, as the weighted average interest rate on these notes approximates the market rate for similar debt. Borrowings under our revolving Credit Facility (as defined herein) approximate fair value due to the variable interest rate on that facility.

Contingent consideration arrangements require us to pay up to $20.0 million of additional consideration to AAT Carriers, Inc.'s ("AAT's") former shareholders based on AAT's results during thefirst two post-acquisition years, of which the final installment was made during2024, up to $30.0 million of additional consideration to Lew Thompson & Son Trucking, Inc.'s ("LTST's") former shareholders based on LTST's results during thefirst three calendar years following closing, and up to $12.0 million of additional consideration to Sims Transport Services, LLC's ("Sims") former shareholders based on Sims' results during thefirst four calendar years following closing. Refer to Note13, "Acquisition of Lew Thompson & Son Trucking, Inc.", for additional information regarding the LTST acquisition and Note12, "Acquisition of Sims Transport Services, LLC", for additional information regarding the Sims acquisition.

The fair value of the contingent consideration is adjusted at each reporting period based on changes to the expected cash flows and related assumptions. There wereno contingent consideration payments made during thethree months ended* September 30, 2024or2023,* and $10.0 million and $10.0 million paid during thenine months ended* September 30, 2024and2023,* respectively, based on AAT's results for thefirst andsecond post-acquisition years. Of the $10.0 million paid for the contingent consideration liability during2024, $7.0 million was classified as financing cash flows and $3.0 million was classified as operating cash flows within the condensed consolidated statements of cash flows. Of the $10.0 million paid for the contingent consideration liability during2023, $9.2 million was classified as financing cash flows and $0.8 million was classified as operating cash flows within the condensed consolidated statements of cash flows. The fair value of the contingent consideration increased $0.2 million and increased $9.0 million during thethree andnine months ended* September 30, 2024,respectively, and increased by $2.3 million and $14.3 million during thethree* andnine months ended* September 30, 2023,respectively. Of the2024* increases, increases of $0.7 million and $9.5 million related to a change in the fair value for the LTST contingent consideration arrangement for thethree andnine months ended* September 30, 2024partially offset by decreases of $0.5 million and $0.5 million related to a change in the fair value for the Sims contingent consideration arrangement. Of the2023* increases, $1.8 million was related to the initial recognition of the Sims contingent consideration arrangement and $0.5 million was due to a change in the fair value for the AAT contingent consideration arrangement for thethree month period and $10.0 million was related to the initial recognition of the LTST contingent consideration arrangement, $2.5 million was due to a change in the fair value for the AAT contingent consideration arrangement, and $1.8 million was related to the initial recognition of the Sims contingent consideration arrangement for thenine-month period. The adjustment to the fair value of the contingent consideration liability was recorded as a component of general supplies and expenses within the condensed consolidated statements of operations. The contingent consideration liability is included in accounts payable and other long-term liabilities in our condensed consolidated balance sheets.

The following table provides a summary (in thousands) of the activity for the contingent consideration liability for2024:

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As of* June 30, 2020,our former Factoring reportable segment was classified as discontinued operations as it: (i) was a component of the entity, (ii) met the criteria as held for sale, and (iii) had a material effect on the Company's operations and financial results. On July 8, 2020,*we closed on the disposition of substantially all of the operations and assets of Transport Financial Services ("TFS"), which included substantially all of the assets and operations of our Factoring reportable segment. The sale consisted primarily of $103.3 million of net accounts receivable, which included $108.7 million of gross accounts receivable, less advances and rebates of $5.4 million.

We have reflected the former Factoring reportable segment as discontinued operations in the condensed consolidated statements of operations for all periods presented.

The following table summarizes the results of our discontinued operations for thethree andnine months ended* September 30, 2024and2023*:

Reversal of contingent loss liability for thethree andnine months ended* September 30, 2024* and2023 relates to the reduced exposure of future indemnification by the Company to the purchaser of TFS, Triumph Bancorp, Inc. ("Triumph"), as a result of the collection of covered receivables identified in the amended purchase agreement.

The following table summarizes the major classes of assets and liabilities included as discontinued operations as of* September 30, 2024* and* December 31, 2023*:

There wereno operating cash outflows for thethree andnine months ended* September 30, 2024and2023*.

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We have four reportable segments:

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in our Form10-K for the year ended* December 31,*2023. Substantially all intersegment sales prices are market based. We evaluate performance based on operating income of the respective business units.

The following table summarizes our total revenue by ourfour reportable segments, as used by our chief operating decision maker in making decisions regarding allocation of resources etc., for thethree andnine months ended* September 30, 2024and2023*:

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Income tax expense in both2024 and2023 varies from the amount computed by applying the federal corporate income tax rates of 21% to income before income taxes, primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences the most significant of which is the effect of the per diem pay structure for drivers. Drivers who meet the requirements to receive per diem receive non-taxable per-diem pay in lieu of a portion of their taxable wages. This per diem program increases our drivers' net pay per mile, after taxes, while decreasing gross pay, before taxes. As a result, salaries, wages, and related expenses are slightly lower and our effective income tax rate is higher than the statutory rate. Generally, as pre-tax income increases, the impact of the driver per diem program on our effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pre-tax income, while in periods where earnings are at or near breakeven the impact of the per diem program on our effective tax rate is significant. Due to the partially nondeductible effect of per diem pay, our tax rate will fluctuate in future periods based on fluctuations in earnings.

Our liability recorded for uncertain tax positions as of* September 30, 2024* is unchanged since* December 31, 2023*.

The net deferred tax liability of $118.8 million primarily relates to differences in cumulative book versus tax depreciation of property and equipment, partially off-set by net operating loss carryovers and insurance claims that have been reserved butnot paid. The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we* maybe required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis, we assess the need for adjustment of the valuation allowance. The Company has determined that a valuation allowance wasnot* necessary at* September 30, 2024* for its deferred tax assets since it is more likely thannot they will be realized from the future reversals of temporary differences. If these estimates and related assumptions change in the future, we* may*be required to modify our valuation allowance against the carrying value of the deferred tax assets.

On* March 11, 2021,President Biden signed the American Rescue Plan ("ARPA") into law. The law includes several provisions meant to stimulate the U.S. economy. Of relevance to the Company, ARPA extended the reach of IRC Section162*(m) to include compensation paid to theeight highest-paid individuals other than the chief executive officer and the chief financial officers (rather than thethree highest), however, this change isnot effective until2027. There isno material impact to the financial statements at this time.

President Biden signed the Inflation Reduction Act (the "IRA") into law on* August 16, 2022.We donot* anticipate the IRA will have a significant impact on income tax expense or on other taxes. One of the most impactful provisions of the IRA includes the establishment of a Corporate Alternative Minimum Tax ("CAMT"). However, this tax only applies to corporations withthree-year average earnings in excess of*$1.0* billion. We will continue to monitor the CAMT each year to determine if we will become an applicable corporation. Additionally, the IRA enacted an excise tax on stock buybacks, which imposes a1% tax on stock buybacks, subject to netting provisions regarding stock awarded to employees as part of their compensation. We donot believe this will have a material impact on our active buyback program, but will continue to monitor IRS guidance and regulations on how the buyback tax will be imposed and administered.

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Current and long-term debt and lease obligations consisted of the following as of* September 30, 2024* and* December 31, 2023*:

We and substantially all of our subsidiaries are parties to the Third Amended and Restated Credit Agreement (the "Credit Facility") with Bank of America, N.A., as agent (the "Agent") and JPMorgan Chase Bank, N.A. (together with the Agent, the "Lenders"). The Credit Facility is a $110.0 million revolving credit facility, with an uncommitted accordion feature that, so long asno event of default exists, allows us to request an increase in the revolving credit facility of up to $75.0 million subject to Lender acceptance of the additional funding commitment. The Credit Facility includes a letter of credit sub facility in an aggregate amount of $105.0 million and a swing line sub facility in an aggregate amount equal to the greater of $10.0 million or 10% of the Lenders' aggregate commitments under the Credit Facility from time-to-time. The Credit Facility matures in* May 2027.*

Borrowings under the Credit Facility are classified as either "base rate loans" or "SOFR loans." Base rate loans accrue interest at a base rate equal to the greater of the Agent’s prime rate, the federal funds rate plus 0.5%, or SOFR for aone month period as of such day, plus an applicable margin ranging from 0.25% to 0.75%; while SOFR loans accrued interest at SOFR, plus an applicable margin ranging from 1.25% to 1.75%. The applicable rates are adjusted quarterly based on average pricing availability. The unused line fee is the product of 0.25% times the average daily amount by which the Lenders' aggregate revolving commitments under the Credit Facility exceed the outstanding principal amount of revolver loans and the aggregate undrawn amount of all outstanding letters of credit issued under the Credit Facility. The obligations under the Credit Facility are guaranteed by us and secured by a pledge of substantially all of our assets, with the notable exclusion of any real estate, revenue equipment pledged under other financing agreements, including revenue equipment installment notes and finance leases, and revenue equipment that we donot designate as being included in the borrowing base.

Borrowings under the Credit Facility are subject to a borrowing base limited to the lesser of (A)$110.0 million, minus the sum of the stated amount of all outstanding letters of credit; or (B) the sum of (i)87.5% of eligible accounts receivable, plus (ii) the least of (a)85% of the appraised net orderly liquidation value of eligible revenue equipment, (b)100% of the net book value of eligible revenue equipment, (c)60.0% of the Lenders' aggregate revolving commitments under the Credit Facility, or (d) $65.0 million.

We hadno borrowings outstanding under the Credit Facility as of* September 30, 2024*, undrawn letters of credit outstanding of approximately $19.7 million, and available borrowing capacity of $90.3 million. As of* September 30, 2024*, there wereno base rate andno SOFR loans. Based on availability as of* September 30, 2024* and2023, there wasno fixed charge coverage requirement.

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The Credit Facility includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the Credit Facility* maybe accelerated, and the Lenders' commitments may*be terminated. If an event of default occurs under the Credit Facility and the Lenders cause, or have the ability to cause, all of the outstanding debt obligations under the Credit Facility to become due and payable, this could result in a default under other debt instruments that contain acceleration or cross-default provisions. The Credit Facility contains certain restrictions and covenants relating to, among other things, debt, dividends, liens, acquisitions and dispositions outside of the ordinary course of business, and affiliate transactions. Failure to comply with the covenants and restrictions set forth in the Credit Facility could result in an event of default.

Pricing for the revenue equipment installment notes is quoted by the respective financial affiliates of our primary revenue equipment suppliers and other lenders at the funding of each group of equipment acquired and include fixed annual rates for new equipment under retail installment contracts. The notes included in the funding are due in monthly installments with final maturities at various dates ranging from* February 2028* to* March 2029*. The notes contain certain requirements regarding payment, insuring of collateral, and other matters, but donot have any financial or other material covenants or events of default except certain notes totaling $32.2 million are cross-defaulted with the Credit Facility. Additional borrowings from the financial affiliates of our primary revenue equipment suppliers and other lenders are expected to be available to fund new tractors expected to be delivered in2024, while any other property and equipment purchases, including trailers, are expected to be funded with a combination of available cash, notes, operating leases, finance leases, and/or from the Credit Facility.

In* August 2015,we financed a portion of the purchase of our corporate headquarters, a maintenance facility, and certain surrounding property in Chattanooga, Tennessee by entering into a $28.0 million variable rate note with athird*-party lender. The note contains certain restrictions and covenants that are usual and customary for a note of this nature. Failure to comply with the covenants and restrictions set forth in the note could result in an event of default. Concurrently with entering into the note, we entered into an interest rate swap to effectively fix the related interest rate to 4.2%. We expect to be in compliance with our debt covenants for the next12 months.

In connection with the settlement of a dispute related to the sale of TFS (the "TFS Settlement"), in* September 2020,TBK Bank, SSB, as lender and agent for Triumph (“TBK Bank”), provided the Company with a $45 million line of credit (the “Draw Note”), the proceeds of which are to be used solely to satisfy our indemnification obligations under the TFS Settlement. We mayborrow pursuant to the Draw Note until September 23, 2025.*

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The finance leases in effect at* September 30, 2024* terminate from* May 2025* through* November 2033* and contain guarantees of the residual value of the related equipment by us.

A summary of our lease obligations at* September 30, 2024and2023* are as follows:

As of* September 30, 2024*, and* December 31, 2023*, right-of-use assets of $42.9 million and $41.2 million for operating leases and $6.6 million and $6.4 million for finance leases, respectively, are included innet property and equipment in our condensed consolidated balance sheets. Operating lease right-of-use asset amortization is included in revenue equipment rentals and purchased transportation and general supplies and expenses, depending on the underlying asset, in the condensed consolidated statement of operations. Amortization of finance leased assets is included in depreciation and amortization expense in the condensed consolidated statement of operations.

Our future minimum lease payments as of* September 30, 2024*, are summarized as follows by lease category:

(1) Excludes thenine months ended* September 30, 2024*.

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Our Third Amended and Restated2006 Omnibus Incentive Plan, as amended (the "Incentive Plan") governs the issuance of equity awards and other incentive compensation to management and members of the Board of Directors (the "Board"). On* May 17, 2023,the stockholders, upon recommendation of the Board, approved the Third Amendment (the “Third Amendment”) to our Third Amended and Restated2006* Omnibus Incentive Plan (the "Incentive Plan"). The Third Amendment (i) increased the number of shares of Class A common stock available for issuance under the Incentive Plan by an additional 575,000 shares, (ii) re-set the term of the plan to expire on* May 1, 2033,and (iii) made other miscellaneous, administrative and conforming changes as necessary. The Incentive Plan includes (i) a fungible share reserve feature, under which shares subject to stock options and stock appreciation rights will be counted asone share for every share granted and shares subject to all other awards will be counted as 1.80 shares for every share granted, (ii) a double-trigger vesting requirement upon a change in control, and (iii) a maximum award granted or payable to anyone* participant under the Incentive Plan for a calendar year of 500,000 shares of Class A common stock or $4,000,000, in the event the award is paid in cash.

The Incentive Plan permits annual awards of shares of our Class A common stock to executives, other key employees, consultants, non-employee directors, and eligible participants under various types of options, restricted stock, or other equity instruments. As of* September 30, 2024*, there were 1,063,228 shares remaining of the 4,775,000 shares available for award under the Incentive Plan.No awards* maybe made under the Incentive Plan after May 1, 2033.*To the extent available, we have issued treasury stock to satisfy all share-based incentive plans.

Included in salaries, wages, and related expenses within the condensed consolidated statements of operations is stock-based compensation expense of $0.8 million and $1.7 million for the three months ended* September 30, 2024* and2023, respectively, and expense of $2.1 million and $4.7 million for thenine months ended* September 30, 2024and2023*, respectively. Included in general supplies and expenses within the condensed consolidated statements of operations is stock-based compensation expense for non-employee directors of $0.2 million and $0.2 million for each of thethree months ended* September 30, 2024* and2023, respectively, and $0.6 million and $0.5 million for thenine months ended* September 30, 2024and2023*, respectively. Of the stock compensation expense recorded for thethree months ended* September 30, 2024* and* September 30, 2023*, $0.8 million and $0.7 million relates to restricted shares, respectively. There wereno unvested employee stock options or related stock compensation expense for thethree months ended* September 30, 2024* and $1.0 million of stock compensation expense related to unvested employee stock options for thethree months ended* September 30, 2023*. Of the stock compensation expense recorded for thenine months ended* September 30, 2024and2023*, $1.5 million and $1.8 million relates to restricted shares, respectively, and $0.6 million and $2.9 million relates to unvested employee stock options, respectively.

The Incentive Plan allows participants to pay the federal and state minimum statutory tax withholding requirements related to awards that vest or allows participants to deliver to us shares of Class A common stock having a fair market value equal to the minimum amount of such required withholding taxes. To satisfy withholding requirements for shares that vested through* September 30, 2024*, certain participants elected to forfeit receipt of an aggregate of 6,879 shares of Class A common stock at a weighted average per share price of $49.27 based on the closing price of our Class A common stock on the dates the shares vested in2024, in lieu of the federal and state minimum statutory tax withholding requirements. We remitted $0.3 million to the proper taxing authorities in satisfaction of the employees' minimum statutory withholding requirements.

From time-to-time, we are a party to ordinary, routine litigation arising in the ordinary course of business, most of which involves claims for personal injury and/or property damage incurred in connection with the transportation of freight.

We had $19.7 million and $21.8 million of outstanding and undrawn letters of credit as of* September 30, 2024* and* December 31, 2023*. The letters of credit are maintained primarily to support our insurance programs. Additionally, we had $45.0 million of availability on a line of credit from Triumph solely to fund any indemnification owed to Triumph in relation to the sale of TFS. As of* September 30, 2024* the remaining contingent liability was $1.0 million.

We own a 49.0% interest in Transport Enterprise Leasing, LLC ("TEL"), a tractor and trailer equipment leasing company and used equipment reseller. There isno loss limitation on our49.0% interest in TEL. We havenot guaranteed any of TEL's debt and haveno obligation to provide funding, services, or assets. There areno current put rights to purchase or sell with any owners. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. There areno third-party liquidity arrangements, guarantees, and/or other commitments that* may*affect the fair value or risk of our interest in TEL.

During the quarter ended* March 31, 2024,we sold revenue equipment to TEL in exchange for the assumption of the related notes payable of $26.2 million and $0.5 million of cash. During thenine* months ended* September 30, 2024,we entered into revenue equipment operating leases with TEL, which resulted in an operating lease obligation to TEL of $10.7 million as of September 30, 2024*.No other transactions with TEL were material for thenine months ended* September 30, 2024and2023*.

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We have accounted for our investment in TEL using the equity method of accounting, and thus our financial results include our proportionate share of TEL's2024 net income through* September 30, 2024*, or $11.8 million.

Our accounts receivable from TEL, accounts payable to TEL, and investment in TEL as of* September 30, 2024* and* December 31,*2023 are as follows (in thousands):

Our accounts receivable from TEL related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL’s behalf.

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On* August 18, 2023,we acquired 100% of the equity interests of Sims, a specialized brokerage company, headquartered in Maysville, GA. The acquisition date fair value of the consideration transferred was $9.8 million. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Stock Purchase Agreement includes an earnout component of up to an aggregate of $12.0 million based on Sims' adjusted earnings before interest, taxes, depreciation, and amortization reported for thefirst* throughfourth calendar years following closing. The total purchase price, including any earnout achieved, is expected to range from $9.8 million to $20.0 million depending on the results achieved by Sims.

Sims' results have been included in the consolidated financial statements since the date of acquisition and are reported within our Managed Freight reportable segment.

The acquisition date fair value of the consideration transferred consisted of the following:

The contingent consideration arrangement requires us to pay up to $12.0 million of additional consideration to Sim's former equity-holders based on Sims' results during thefirst four calendar years following closing. We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputsnot observable in the market and thus represents a Level3 measurement. Refer to Note3, "Fair Value of Financial Instruments" for information regarding changes in the contingent consideration arrangement.

All goodwill related to the acquisition is deductible for tax purposes and there areno deferred income taxes arising from the acquisition.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.

During thenine months ended* September 30, 2024we recognized measurement period adjustments of $1.6 million, primarily related to the deductibility of goodwill and other intangibles, which decreased goodwill from $5.1 million as of December 31, 2023to $3.5 million as of September 30, 2024.The goodwill recognized is attributable primarily to expected cost synergies as a result of overhead support. Refer to Note14,* "Goodwill and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired.

The amounts of revenue and earnings of Sims included in the Company’s consolidated results of operations from the acquisition date of* August 18, 2023,to the periods ended September 30, 2024and2023* are as follows:

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On* April 26, 2023,we acquired 100% of the outstanding stock of LTST and related entities, headquartered in Huntsville, AR. LTST is a dedicated contract carrier specializing in poultry feed and live haul transportation in Northwest Arkansas and surrounding areas and was acquired to expand the Dedicated reportable segment into this niche market. The acquisition date fair value of the consideration transferred was $114.5 million. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Stock Purchase Agreement includes an earnout component of up to an aggregate of $30.0 million based on LTST's adjusted earnings before interest, taxes, depreciation, and amortization reported for the first, second, andthird* calendar years following closing. The total purchase, including any earnout achieved, is expected to range from $114.5 million to $134.5 million depending on the results achieved by LTST.

LTST's results have been included in the condensed consolidated financial statements since the date of acquisition and are reported within our Dedicated reportable segment.

The acquisition date fair value of the consideration transferred consisted of the following:

The contingent consideration arrangement requires us to pay up to $30.0 million of additional consideration to LTST's former shareholders based on LTST's results during thefirst three calendar years following closing. We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputsnot observable in the market and thus represents a Level3 measurement.

Because of our338(h)10 election, all goodwill related to the acquisition is deductible for tax purposes and there areno deferred income taxes arising from the acquisition.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:

During thenine months ended* September 30, 2024we recognized measurement period adjustments of $4.8 million, primarily related to the Section338*(h)10 election which increased goodwill from $12.4 million as of* December 31, 2023to $17.3 million as of September 30, 2024.The goodwill recognized is attributable primarily to expected cost synergies in the areas of fuel and purchases of revenue equipment. Refer to Note14,* "Goodwill and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired.

The amounts of revenue and earnings of LTST included in the Company’s consolidated results of operations from the acquisition date of* April 26, 2023,to the periods ended September**30,* 2024 and2023 are as follows:

The following unaudited pro forma consolidated results of operations assume that the acquisition of LTST occurred as of* January 1, 2023:*

The pro forma financial information for all periods presented above has been calculated after adjusting the results of LTST to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets as though the acquisition occurred as of the beginning of the Company’s fiscal year2023. The Company's historical consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The pro forma financial information is for informational purposes only and isnot indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the Company’s2023 fiscal year.

The Landair Holdings, Inc. ("Landair") trade name has a residual value of $0.5 million.

Amortization expense of $7.1 million and $5.1 million for thenine months ended* September 30, 2024and2023*, respectively, was included in depreciation and amortization in the condensed consolidated statements of operations.

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A summary of other intangible assets as of* September 30, 2024* and* December 31, 2023* is as follows:

The expected amortization of these assets for the nextfive successive years is as follows:

(1) Excludes thenine months ended* September 30, 2024*.

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The carrying amount of goodwill increased to $78.9 million at* September 30, 2024* from $75.7 million at* December 31, 2023*. A summary of the changes in carrying amount of goodwill is as follows:

On* May 18, 2022,our Board approved a stock repurchase authorization of up to $75.0 million of our Class A common stock, with any remaining amount available under prior authorizations being excluded andno* longer available. Under such authorization, we repurchased 2.0 million shares of our Class A common stock for $54.7 million during2022. On* January 30, 2023,the Board approved an amendment to the Company's stock repurchase program authorizing the purchase of up to an aggregate $55.0 million of our Class A common stock. The amendment added an incremental approximately $37.5 million to the approximately $17.5 million that was then-remaining under the program. Between May 2022and April 2023,we repurchased a total of 2.7 million shares of our Class A common stock. The program expired on January 31, 2024.*

On* February 15, 2023,our Board declared a cash dividend of $0.11 per share, which was paid on March 31, 2023,to stockholders of record on March 3, 2023.On May 17, 2023,our Board declared a cash dividend of $0.11 per share which was paid on June 30, 2023,to stockholders of record on June 2, 2023.On February 13, 2024,our Board declared a cash dividend of $0.11 per share which was paid on March 29, 2024,to stockholders of record on March 1, 2024.On May 15, 2024,our Board declared a cash dividend of $0.11 per share which was paid on June 28, 2024,to stockholders of record on June 7, 2024.On August 14, 2024,our Board declared a cash dividend of $0.11 per share which was paid on September**27,* 2024, to stockholders of record on* September 6, 2024.*

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