Schneider National Inc

Previous wording

On August 1, 2023, the Company completed the acquisition of M&M, a privately held truckload carrier based in West Bridgewater, Massachusetts. M&M is a dedicated carrier that complements our growing dedicated operations. The results of M&M are reported in dedicated operations as part of our Truckload segment beginning in the third quarter of 2023. Refer to Note 2, Acquisitions, for additional details on our recent acquisitions.

Current wording

On December 2, 2024, the Company completed the acquisition of Cowan Systems, a privately held truckload carrier based in Baltimore, Maryland. Cowan Systems provides mainly dedicated and logistics services for retail and manufacturing customers that complement our operations. The operating results of Cowan Systems are reported in Dedicated and Logistics operations as part of our Truckload and Logistics segments beginning on the closing date of the acquisition. Refer to Note 2, Acquisitions, for additional details on our recent acquisitions.

Previous wording

We seek to deliver a superior portfolio of services that enables our business to grow revenue, profitability, and shareholder returns and perform resiliently through economic and freight cycles. We believe our competitive strengths position us to pursue our strategy as follows:

Current wording

We seek to deliver a superior portfolio of services that enables our business to grow revenue, profitability, and shareholder returns and perform resiliently through economic and freight cycles. We believe our competitive strengths position us to pursue

Previous wording

Create a differentiated driver and associate experience that enables us to attract and retain top talent at all levels

Current wording

Create differentiated driver and associate experiences that enable us to attract and retain top talent at all levels

Previous wording

Our people are our strongest assets, and we believe they are key to growing our customer base and driving our performance. Our goal is to be the employer of choice; attract, develop, engage, and retain the best talent in the industry. We strive for a high-performance culture that seeks individuals who are passionate about our business and fit our culture, and that promotes diversity, equality, and inclusion through a collaborative environment. We value the direct relationship we have with our associates, and we intend to continue working together to provide professional growth and a quality work environment. Our compensation structure is performance-based and aligns with our strategic objectives.

Current wording

Our people are our strongest assets, and we believe they are key to growing our customer base and driving our performance. Our goal is to be the employer of choice; attract, develop, engage, and retain the best talent in the industry. We strive for a high-performance culture that seeks individuals who are passionate about our business and commit to work together in an inclusive and collaborative environment. We value the direct relationship we have with our associates, and we intend to continue working together to provide professional growth opportunities and a quality work environment for all. Our compensation structure is performance-based and aligns with our strategic objectives.

Previous wording

In this section of our report, we present the following non-GAAP financial measures: (1) revenues (excluding fuel surcharge), (2) adjusted income from operations, (3) adjusted operating ratio, and (4) adjusted net income. We also provide reconciliations of these measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Current wording

In this section of our report, we present the following non-GAAP financial measures: (1) revenues (excluding fuel surcharge), (2) adjusted income from operations, (3) adjusted total operating expenses, net of fuel surcharge revenues, (4) adjusted operating ratio, (5) adjusted net income, (6) adjusted EBITDA, and (7) free cash flow. We also provide reconciliations of these measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Previous wording

Management believes the use of each of these non-GAAP measures assists investors in understanding our business by (1) removing the impact of items from our operating results that, in our opinion, do not reflect our core operating performance, (2) providing investors with the same information our management uses internally to assess our core operating performance, and (3) presenting comparable financial results between periods. In addition, in the case of revenues (excluding fuel surcharge), we believe the measure is useful to investors because it isolates volume, price, and cost changes directly related to industry demand and the way we operate our business from the external factor of fluctuating fuel prices and the programs we have in place to manage such fluctuations. Fuel-related costs and their impact on our industry are important to our results of operations, but they are often independent of other, more relevant factors affecting our results of operations and our industry.

Current wording

Management believes the use of each of these non-GAAP measures assists investors in understanding our business by (1) removing the impact of items from our operating results that, in our opinion, do not reflect our core operating performance, (2) providing investors with the same information our management uses internally to assess our core operating performance, and (3) presenting comparable financial results between periods. In addition, in the case of revenues (excluding fuel surcharge) and adjusted total operating expenses, net of fuel surcharge revenues, we believe these measures are useful to investors because they isolate volume, price, and cost changes directly related to industry demand and the way we operate our business from the external factor of fluctuating fuel prices and the programs we have in place to manage such fluctuations. Fuel-related costs and their impact on our industry are important to our results of operations, but they are often independent of other, more relevant factors affecting our results of operations and our industry. Free cash flow is used as a measure to assess overall liquidity and does not represent residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt.

Previous wording

(3)We define “adjusted operating ratio” as operating expenses, adjusted to exclude material items that do not reflect our core operating performance, divided by revenues (excluding fuel surcharge). Included below is a reconciliation of operating ratio, which is the most directly comparable GAAP measure, to adjusted operating ratio. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”

Current wording

(4)We define “adjusted operating ratio” as total operating expenses, adjusted to exclude material items that do not reflect our core operating performance, divided by revenues (excluding fuel surcharge). Included below is a reconciliation of operating ratio, which is the most directly comparable GAAP measure, to adjusted operating ratio. Excluded expenses for the periods shown are explained below under our explanation of “adjusted income from operations.”

Previous wording

(4)We define “adjusted net income” as net income, adjusted to exclude material items that do not reflect our core operating performance. Included below is a reconciliation of net income, which is the most directly comparable GAAP measure, to adjusted net income. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”

Current wording

(5)We define “adjusted net income” as net income, adjusted to exclude material items that do not reflect our core operating performance. Included below is a reconciliation of net income, which is the most directly comparable GAAP measure, to adjusted net income. Excluded expenses for the periods shown are explained below under our explanation of “adjusted income from operations.”

Previous wording

(2)Includes $2.9 million and $5.2 million in charges related to an adverse audit assessment for prior period state sales tax on rolling stock equipment used within that state for the years ended December 31, 2023 and December 31, 2022, respectively.

Current wording

(1)Includes $2.9 million in charges related to an adverse audit assessment for prior period state sales tax on rolling stock equipment used within that state for the year ended December 31, 2023. Refer to Note 13, Commitments and Contingencies, for more information.

Previous wording

(3)Advisory, legal, and accounting costs related to the Company’s acquisitions. Refer to Note 2, Acquisitions, for additional details.

Current wording

(2)Advisory, legal, and accounting costs related to the Company’s acquisitions. Refer to Note 2, Acquisitions, for additional details.

Previous wording

(5)Amortization expense related to intangible assets acquired through recent business acquisitions. Refer to Note 6, Goodwill and Other Intangible Assets, for additional details. As we finalized our purchase accounting adjustments related to intangible assets, and to better reflect our ongoing operations, we made the decision to exclude the related amortization expense from non-GAAP income beginning in the fourth quarter of 2023. Amortization expense for 2022 was $1.0 million and overall not material to the organization.

Current wording

(3)Amortization expense related to intangible assets acquired through recent business acquisitions. Refer to Note 6, Goodwill and Other Intangible Assets, for additional details. As we finalized our purchase accounting adjustments related to intangible assets, and to better reflect our ongoing operations, we made the decision to exclude the related amortization expense from non-GAAP income beginning in the fourth quarter of 2023. See Note 1, Summary of Significant Accounting Policies, for additional details.

Previous wording

(1)Our estimated tax rate on non-GAAP items is determined annually using the applicable consolidated federal and state effective tax rate, modified to remove the impact of tax credits and adjustments that are not applicable to the specific items. Due to differences in the tax treatment of items excluded from non-GAAP income, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP items may differ from our GAAP tax rate and from our actual tax liabilities. There were no income tax effects related to the sale of business in 2022.

Current wording

(1)Our estimated tax rate on non-GAAP items is determined annually using the applicable consolidated federal and state effective tax rate, modified to remove the impact of tax credits and adjustments that are not applicable to the specific items. Due to differences in the tax treatment of items excluded from non-GAAP income, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP items may differ from our GAAP tax rate and from our actual tax liabilities.

Previous wording

Enterprise net income decreased $219.3 million, approximately 48%, in the year ended December 31, 2023 compared to 2022, primarily due to a $304.0 million decrease in income from operations, partially offset by the corresponding decrease in the provision for income taxes, and a $6.1 million favorable change in total other income—net primarily related to our equity investments. Pre-tax equity investment net gains were $19.7 million and $13.7 million for 2023 and 2022, respectively.

Current wording

Enterprise net income decreased $121.5 million, approximately 51%, for the year ended December 31, 2024 compared to 2023, driven by a $131.2 million decrease in income from operations and a $22.7 million unfavorable change in total other expense (income)—net primarily related to our equity investments, partially offset by the corresponding decrease in the provision for income taxes. Pre-tax equity investment net gains were $2.3 million and $19.7 million for 2024 and 2023, respectively.

Previous wording

Enterprise operating revenues decreased $1,105.5 million, approximately 17%, in the year ended December 31, 2023 compared to 2022.

Current wording

Enterprise operating revenues decreased $208.4 million, approximately 4%, for the year ended December 31, 2024 compared to 2023.

Previous wording

•a $562.5 million decrease in Logistics segment revenues (excluding fuel surcharge) driven by decreased revenue per order due to a softer demand environment, a decline in brokerage volumes, and a reduction in port dray revenues;

Current wording

•a $112.4 million decrease in Logistics segment revenues (excluding fuel surcharge) driven by decreased revenue per order and a decline in brokerage volumes related to freight market conditions, partially offset by revenues recorded from the Cowan Systems acquisition;

Previous wording

•a $178.2 million decrease in fuel surcharge revenues resulting from decreased fuel prices in 2023 compared to 2022; and

Current wording

•a $108.1 million decrease in fuel surcharge revenues resulting from decreased fuel prices in 2024 compared to 2023;

Previous wording

•an $80.9 million decrease in Truckload segment revenues (excluding fuel surcharge) driven by a decline in revenue per truck per week within our network business, partially offset by an increase in dedicated volumes due to organic growth and the M&M acquisition and revenue per truck per week.

Current wording

•a $15.0 million decrease in Truckload segment revenues (excluding fuel surcharge) driven by declines within our Network business mainly from decreases in Network trucks, partially offset by Dedicated growth, including the M&M and Cowan Systems acquisitions, and increases in Dedicated revenue per truck per week; and

Previous wording

•a $236.7 million decrease in Intermodal segment revenues (excluding fuel surcharge) due to a decrease in revenue per order and orders;

Current wording

•a $9.5 million decrease in Intermodal segment revenues (excluding fuel surcharge) related to a decrease in revenue per order, partially offset by an increase in volume.

Previous wording

•Purchased transportation decreased $718.4 million, or 25%, year over year, primarily resulting from decreased third-party carrier costs within Logistics due to lower purchased transportation costs per order and brokerage volumes, as well as lower rail purchased transportation resulting from a decrease in both rail cost per mile and orders in Intermodal. Owner-operator purchased transportation costs also declined due to lower pay per mile and a reduction in owner-operator capacity within Truckload.

Current wording

•Purchased transportation decreased $193.2 million, or 9%, year over year, primarily resulting from decreased third-party carrier costs within Logistics due to lower purchased transportation costs per order and brokerage volumes, as well as a decline in owner-operator purchased transportation costs from a reduction in owner-operator capacity within Truckload.

Previous wording

•Fuel and fuel taxes for company trucks decreased $83.6 million, or 16%, year over year, driven by a decrease in cost per gallon, partially offset by an increase in company driver miles within Truckload. A significant portion of fuel costs are recovered through our fuel surcharge programs.

Current wording

•Fuel and fuel taxes for company trucks decreased $39.2 million, or 9%, year over year, driven by a decrease in cost per gallon, partially offset by an increase in company driver miles within Dedicated. A significant portion of fuel costs are recovered through our fuel surcharge programs.

Previous wording

•Depreciation and amortization increased $32.5 million, or 9%, year over year, mainly due to additional depreciation expense resulting from trailer growth within Truckload, inflationary unit cost increases for new equipment, a reduction in tractor age of fleet, and incremental depreciation and amortization expense related to the M&M acquisition.

Current wording

•Depreciation and amortization increased $31.2 million, or 8%, year over year, mainly due to additional depreciation expense resulting from trailer and tractor growth within Dedicated (inclusive of Cowan and M&M), ongoing impacts from the increased cost of equipment, and incremental depreciation and amortization expense related to the M&M and Cowan Systems acquisitions.

Previous wording

•Operating supplies and expenses—net increased $42.0 million, or 8%, year over year, driven by a $50.9 million net gain in 2022 related to the sale of the Company’s Canadian facility and higher cost of goods sold in our leasing business due to lease mix and an increase in lease activity in 2023. These factors were partially offset by a decrease in equipment rental expense as a result of improved port fluidity, lower port dray volumes, and an increase in the percentage of dray moves performed by company drivers in 2023; lower rail storage expense due to improved yard fluidity; and an increase in gains on sales of equipment due to a higher quantity of units sold.

Current wording

•Operating supplies and expenses—net increased $60.5 million, or 11%, year over year, driven by higher cost of goods sold in our leasing business due to an increase in lease adds and a reduction in gains on equipment sales due to a decrease in average sales price per unit. These factors were partially offset by lower rail storage expense and a decrease in equipment rental expense as a result of improved port fluidity.

Previous wording

•Insurance and related expenses increased $11.3 million, or 11%, year over year, primarily due to an increase in auto liability insurance costs relating to unfavorable claims severity largely related to two recent claims, as well as higher cargo and collision losses in 2023 compared to 2022.

Current wording

•Insurance and related expenses increased $37.2 million, or 33%, year over year, primarily due to an increase in auto liability insurance costs related to an increase in premiums and claims development arising from prior claim periods.

Previous wording

Total other income increased $6.1 million in the year ended December 31, 2023 compared to 2022, driven primarily by pre-tax net gains on our equity investments of $19.7 million in 2023 compared to $13.7 million in 2022 and an increase in interest income of $4.1 million due to higher interest rates. These factors were partially offset by an increase in interest expense of $4.6 million due to higher debt balances in 2023 compared to 2022. See Note 5, Investments, for more information on our equity investments.

Current wording

Total other income decreased $22.7 million for the year ended December 31, 2024 compared to 2023, driven by pre-tax net gains on our equity investments of $2.3 million in 2024 compared to $19.7 million in 2023. Interest income decreased $2.7 million in 2024 compared to 2023 primarily due to lower rates and less excess cash invested in marketable securities, and interest expense increased $2.4 million due to increased borrowings. See Note 5, Investments, for more information on our equity investments.

Previous wording

Our provision for income taxes decreased $78.6 million, approximately 54%, in the year ended December 31, 2023 compared to 2022 due to lower taxable income and a lower effective income tax rate. Our effective income tax rate was 22.1% for the year ended December 31, 2023 compared to 24.2% in 2022 with the decrease driven by valuation allowance changes and increases in tax credits for new electric vehicles and qualified research and development costs. While we anticipate that our ongoing effective tax rate will be 24.0% - 25.0%, our provision for income taxes may fluctuate in future periods to the extent there are changes to tax laws and regulations.

Current wording

Our provision for income taxes decreased $32.4 million, approximately 48%, for the year ended December 31, 2024 compared to 2023 due to lower taxable income, partially offset by a higher effective income tax rate. Our effective income tax rate was 23.1% for the year ended December 31, 2024 compared to 22.1% in 2023. While we anticipate that our ongoing effective tax rate will be 23.0% - 24.0%, our provision for income taxes may fluctuate in future periods to the extent there are changes to tax laws and regulations.

Previous wording

Intermodal revenues (excluding fuel surcharge) decreased $236.7 million, approximately 18%, in the year ended December 31, 2023 compared to 2022. This was driven by a decrease in revenue per order of $315, or 11%, primarily due to a decrease in price and a change in mix. Additionally, orders decreased 8% driven by market conditions.

Current wording

Intermodal revenues (excluding fuel surcharge) decreased $9.5 million, approximately 1%, for the year ended December 31, 2024 compared to 2023. This was driven by market conditions which led to a decrease in revenue per order of $56, or 2%, partially offset by an increase in volume.

Previous wording

The following table presents the KPI for our Logistics segment for the periods indicated.

Current wording

The following table presents the KPI for our Logistics segment for the periods indicated. Cowan Systems’ logistics operations are included in Logistics beginning in December 2024.

Previous wording

Logistics revenues (excluding fuel surcharge) decreased $562.5 million, approximately 29%, in the year ended December 31, 2023 compared to 2022. This was mainly the result of a decrease in revenue per order and volume within our brokerage business. Port dray revenues decreased as well due to reduced freight volume and improved port fluidity in 2023.

Current wording

Logistics revenues (excluding fuel surcharge) decreased $112.4 million, approximately 8%, for the year ended December 31, 2024 compared to 2023. This was mainly the result of decreases in revenue per order and volume within our brokerage business, as well as reduced port dray revenues, partially offset by revenues recorded for the logistics operations for Cowan Systems.

Previous wording

Historically, our primary source of liquidity has been cash flow from operations. In addition, we have a $250.0 million revolving credit facility maturing in November 2027 and a $150.0 million receivables purchase agreement maturing in July 2024, for which our combined available capacity as of December 31, 2023 was $213.2 million. Our revolving credit facility also allows us to request an additional increase in total commitment by up to $150.0 million. We had maximum borrowings under the facilities of $141.0 million during the year ended December 31, 2023. We anticipate that cash generated from operations, together with amounts available under our credit and receivables purchase agreement, will be sufficient to meet our requirements for the foreseeable future. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that we will obtain these funds through additional borrowings, equity offerings, or a combination of these potential sources of liquidity. Our ability to fund future operating expenses and capital expenditures, as well as our ability to meet future debt service obligations or refinance our indebtedness, will depend on our future operating performance, which will be affected by general economic, financial, and other factors beyond our control.

Current wording

Historically, our primary source of liquidity has been cash flow from operations. In addition, we have a $250.0 million revolving credit facility maturing in November 2027 and a $200.0 million receivables purchase agreement maturing in May 2027, for which our combined available capacity as of December 31, 2024 was $281.8 million. Our revolving credit facility allows us to request an additional increase in total commitment by up to $150.0 million. We also have a $400.0 million delayed-draw term loan facility with available capacity of $100.0 million as of December 31, 2024 and available to be drawn through August 2025. We anticipate that cash generated from operations, together with amounts available under our credit and receivables purchase agreements and delayed-draw term loan facility, will be sufficient to meet our requirements for the foreseeable future. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that we will obtain these funds through additional borrowings, equity offerings, or a combination of these potential sources of liquidity. Our ability to fund future operating expenses and capital expenditures, as well as our ability to meet future debt service obligations or refinance our indebtedness, will depend on our future operating performance, which will be affected by general economic, financial, and other factors beyond our control.

Previous wording

At December 31, 2023, we were in compliance with all financial covenants under our credit agreements and the agreements governing our senior notes. See Note 7, Debt and Credit Facilities, for information about our financing arrangements.

Current wording

On December 31, 2024, we were in compliance with all financial covenants under our credit agreements and the agreements governing our senior notes. See Note 7, Debt and Credit Facilities, for information about our financing arrangements.

Previous wording

Net cash provided by operating activities decreased $176.4 million, approximately 21%, during 2023 compared to 2022. The decrease was a result of a decrease in net income adjusted for various noncash charges and an increase in cash used for working capital. Working capital changes were driven by an increase in cash used for other liabilities largely related to the decrease in accrued performance-based incentive compensation along with a decrease in cash provided by other receivables, partially offset by a decrease in cash used for other assets and payables and an increase in cash provided by trade accounts receivable which corresponds with the decrease in revenues.

Current wording

Net cash provided by operating activities increased $6.1 million, approximately 1%, during 2024 compared to 2023. The increase resulted from of an increase in cash provided by working capital, mostly offset by a decrease in net income adjusted for various noncash charges. Working capital changes were driven by increases in cash provided by other liabilities related to timing of payments for accrued wages and incentive compensation; receivables primarily from tax receivables offset partially by changes to trade receivables and bad debt adjustments; claims reserves from higher auto insurance accruals; and other assets.

Previous wording

Net cash used in investing activities increased $308.8 million, approximately 52%, during 2023 compared to 2022. The increase was primarily driven by an increase in cash used for acquisitions related to the 2023 acquisition of M&M and an increase in net capital expenditures.

Current wording

Net cash used in investing activities decreased $116.1 million, approximately 13%, during 2024 compared to 2023. The decrease was primarily driven by a decrease in net capital expenditures and purchases of lease equipment, partially offset by an increase in cash used for acquisitions related to the 2024 acquisition of Cowan Systems compared to 2023 acquisition of M&M.

Previous wording

As of December 31, 2023, we had contractual obligations related to our long-term debt, inclusive of our credit and receivables purchase agreement, of $290.0 million and $20.8 million for principal borrowings and interest, respectively, which become due through 2027. See Note 7, Debt and Credit Facilities, for additional information regarding our debt obligations. We also have contractual obligations for finance and operating leases and purchase commitments related to agreements to purchase transportation equipment. See Note 8, Leases, and Note 13, Commitments and Contingencies, respectively, for additional information regarding our lease and purchase commitment obligations.

Current wording

As of December 31, 2024, we had contractual obligations related to our long-term debt, inclusive of our credit and receivables purchase agreement, of $515.0 million and $101.4 million for principal borrowings and interest, respectively, which become due through 2029. See Note 7, Debt and Credit Facilities, for additional information regarding our debt obligations. We also have contractual obligations for finance and operating leases and purchase commitments related to agreements to purchase transportation equipment. See Note 8, Leases, and Note 13, Commitments and Contingencies, respectively, for additional information regarding our lease and purchase commitment obligations.

Previous wording

Reserves are established based on estimated or expected losses for claims. The primary claims arising for the Company consist of accident-related claims for personal injury, collision, and comprehensive compensation, in addition to workers’ compensation, property damage, cargo, and wage and benefit claims. We maintain self-insurance levels for these various areas of risk and have established reserves to cover self-insured liabilities. The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates, policy exhaustion, and claim type. We also maintain insurance to cover liabilities in excess of the self-insurance amounts to limit our exposure to catastrophic claim costs or damages. We are substantially self-insured for loss of and damage to our owned and leased equipment. The current claims settlement environment within the industry has resulted in excess insurance carriers decreasing coverage and increasing premiums. As a result of this trend, we may experience increases in our insurance and claims expense.

Current wording

Reserves are established based on estimated or expected losses for claims. The primary claims arising for the Company consist of accident-related claims for personal injury, collision, and comprehensive compensation, in addition to workers’ compensation, property damage, cargo, and wage and benefit claims. We maintain self-insurance levels for these various areas of risk and have established reserves to cover self-insured liabilities. The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates, policy exhaustion, and claim type. We also maintain insurance to cover liabilities in excess of the self-insurance amounts to limit our exposure to catastrophic claim costs or damages. We are substantially self-insured for loss of and damage to our owned and leased equipment. The current claims litigation and settlement environment within the industry has resulted in increases in our insurance premiums and claims expense, as well as excess insurance carriers decreasing coverage.

Previous wording

Our reserves represent accruals for the estimated self-insured and reinsured portions of pending claims, including adverse development of known claims, as well as incurred but not reported claims. Our estimates require judgments concerning the nature and severity of the claim, historical trends, advice from third-party administrators and insurers, consultation with actuarial experts, the specific facts of individual cases, the jurisdictions involved, estimates of future claims development, and the legal and other costs to settle or defend the claims. The actual cost to settle our self-insured claim liabilities can differ from our reserve estimates because of a number of uncertainties, including the inherent difficulty in estimating the severity of a claim and the potential amount to defend and settle a claim. At December 31, 2023 and 2022, we had an accrual of $178.4 million and $164.9 million, respectively, for estimated claims net of reinsurance receivables.

Current wording

Our reserves represent accruals for the estimated self-insured and reinsured portions of pending claims, including adverse development of known claims, as well as incurred but not reported claims. Our estimates require judgments concerning the nature and severity of the claim, historical trends, advice from third-party administrators and insurers, consultation with actuarial experts, the specific facts of individual cases, the jurisdictions involved, estimates of future claims development, and the legal and other costs to settle or defend the claims. The actual cost to settle our self-insured claim liabilities can differ from our reserve estimates because of a number of uncertainties, including the inherent difficulty in estimating the severity of a claim and the potential amount to defend and settle a claim. As of December 31, 2024 and 2023, we had net accruals of $236.6 million and $178.4 million, respectively, for estimated claims inclusive of $54.2 million and $3.5 million of reinsurance receivables.

Previous wording

Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators or outside counsel, as well as legal, economic, and regulatory factors. Our insurance and claims personnel work directly with representatives from the insurance companies to provide updated estimates of the potential loss associated with each tendered claim. The ultimate cost of a claim is developed over time as additional information regarding the nature, timing, and extent of damages claimed becomes available.

Current wording

Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators or outside counsel, as well as legal, economic, and regulatory factors. Our insurance and claims personnel work directly with representatives from the insurance companies to provide updated estimates of the potential loss associated with each tendered claim. The ultimate cost of a claim is developed over time as additional information regarding the nature, timing, and extent of damages claimed becomes

Previous wording

To expand our business offerings, we have, on occasion, acquired other companies. In a business combination, the consideration is first assigned to identifiable assets and liabilities based on estimated fair values, with any excess recorded as goodwill. Determining fair value requires significant estimates and assumptions based on an evaluation of a number of factors, such as marketplace participants, history, future expansion and profitability expectations, amount and timing of future cash flows, and the discount rate applied to the cash flows. Goodwill is not amortized but is assessed for impairment at least annually and more frequently if a triggering event indicates that impairment may exist.

Current wording

To expand our business offerings, we have, acquired other companies. In a business combination, the consideration is first assigned to identifiable assets and liabilities based on estimated fair values, with any excess recorded as goodwill. Determining fair value requires significant estimates and assumptions based on an evaluation of a number of factors, such as marketplace participants, history, future expansion and profitability expectations, amount and timing of future cash flows, and the discount rate applied to the cash flows. Goodwill is not amortized but is assessed for impairment at least annually and more frequently if a triggering event indicates that impairment may exist.

Previous wording

Our goodwill balance at December 31, 2023 and 2022 was $331.7 million and $228.2 million, respectively. Goodwill is evaluated for impairment annually at the reporting unit level, or more frequently if events or circumstances indicate the carrying value is not recoverable. A reporting unit can be a segment or business within a segment, and reporting units can be aggregated to the extent they share similar economic characteristics. When reviewing goodwill for impairment, we consider the amount of excess fair value over the carrying value of each reporting unit, the period of time since a reporting unit’s last quantitative test, the extent a reorganization or disposition changes the composition of one or more of our reporting units, and other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, we assess numerous factors to determine whether it is more likely than not that the fair values of our reporting units are less than their respective carrying values. Examples of qualitative factors that are assessed include our share price, financial performance, market and competitive factors in our industry, and other events specific to our reporting units. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative impairment test. In the quantitative impairment evaluation, the carrying value of a reporting unit, including goodwill, is compared with its fair value. We base our fair value estimation on a valuation, which uses a combination of (1) an income approach based on the present value of estimated future cash flows and (2) market approaches based on EBITDA valuation multiples of comparable companies and transactions. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded equal to that excess.

Current wording

Our goodwill balance as of December 31, 2024 and 2023 was $377.9 million and $331.7 million, respectively. Goodwill is evaluated for impairment annually at the reporting unit level, or more frequently if events or circumstances indicate the carrying value is not recoverable. A reporting unit can be a segment or business within a segment, and reporting units can be aggregated to the extent they share similar economic characteristics. When reviewing goodwill for impairment, we consider the amount of excess fair value over the carrying value of each reporting unit, the period of time since a reporting unit’s last quantitative test, the extent a reorganization or disposition changes the composition of one or more of our reporting units, and other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, we assess numerous factors to determine whether it is more likely than not that the fair values of our reporting units are less than their respective carrying values. Examples of qualitative factors that are assessed include our share price, financial performance, market and competitive factors in our industry, and other events specific to our reporting units. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative impairment test. In the quantitative impairment evaluation, the carrying value of a reporting unit, including goodwill, is compared with its fair value. We base our fair value estimation on a valuation, which uses a combination of (1) an income approach based on the present value of estimated future cash flows and (2) market approaches based on EBITDA valuation multiples of comparable companies and transactions. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded equal to that excess. Significant judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate future cash flows. Assumptions used in impairment evaluations, such as forecasted growth rates and our cost of capital, are based on the best available market information and are consistent with our internal forecasts and operating plans. These assumptions could be adversely impacted by certain risks discussed earlier in this document.

Previous wording

The Company acquired M&M in 2023 and deBoer in 2022. As a result of these acquisitions, we recorded additions to our goodwill of $103.5 million and $6.1 million, respectively, within the VTL-Dedicated reporting unit.

Current wording

The Company acquired Cowan Systems on December 2, 2024 and M&M on August 1, 2023. As a result of these acquisitions, we recorded additions to goodwill of $46.2 million and $103.5 million, respectively, within the Dedicated reporting unit. The amount for Cowan Systems is preliminary and may be adjusted as we finalize our purchase price allocations.

Previous wording

Prior to the fourth quarter of 2023, the Company had three reporting units with goodwill subject to impairment testing: MLS, VTL-Dedicated, and Import/Export. Quantitative goodwill impairment tests were performed for all three reporting units as of October 31, 2023, and their fair values were substantially in excess of their respective carrying values.

Current wording

We completed the required annual goodwill impairment assessment for our two reporting units with goodwill as of October 31, 2024 using quantitative assessments. The fair values of our Dedicated and Import/Export reporting units were substantially in excess of their respective carrying values.