2021
ANNUAL REPORT
MISSION
WE’RE ON A
WE’RE ON A MISSION
TO MAKE GOODS MOVE
BETTER EVERY DAY
The past two years have demonstrated the
critical role professional truck drivers and
companies like U.S. Xpress play in keeping
goods moving.
The hoped-for “return to normal” in 2021 did not materialize. Instead,
the pandemic continued to drive supply chain delays and strong
demand for tangible goods. “Supply chain” became part of the
American lexicon as manufacturers waited for the raw materials they
needed to build their products, and retailers struggled to keep shelves
stocked amid a perfect storm of inventory delays and increased
demand for goods causing prices to surge.
Meanwhile, consumers who previously took for granted that goods
were always available on store shelves — until they weren’t — began
to understand and appreciate how important our industry is to their
quality of life.
At U.S. Xpress, we continued to execute our multi-year digital
transformation, adopting technology to improve the experience for
our customers, professional truck drivers, and third-party carriers.
During the year, we continued to expand capacity in Variant, our
digitally enabled over-the-road (OTR) fleet, expand our carrier network
in our brokerage segment, and drive adoption of technology-enabled
solutions throughout the enterprise designed to help goods move
better every day — now and in the years to come.
U.S. XPRESS ENTERPRISES, INC. 2021 ANNUAL REPORT
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U.S. XPRESS ENTERPRISES, INC. 2021 ANNUAL REPORT
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COMBINING TALENT
AND TECHNOLOGY
TO DRIVE IMPROVED
RESULTS
Variant, our driver-first, digitally enabled
OTR fleet, grew to more than 1,500 trucks —
surpassing our year-end goal.
In 2021, we introduced the latest version of our Optimizer, Variant’s
fleet optimization platform, that was developed to streamline route
planning and load matching to maximize miles and home time for our
professional truck drivers, and profitability for the company.
The Optimizer is a purpose-built technology stack that analyzes data
including current and forecasted truck position, telematics data,
current and forecasted hours of service, freight orders, and other
operational characteristics.
It’s another example of how we are making goods move better
every day.
Sandeep Madamanchi,
Head of Engineering & Cloud Operations
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Our Dedicated division provides committed
capacity for shippers who want a private fleet-
like experience without having to manage a
private fleet.
Our Dedicated division works with some of the nation’s largest retailers,
keeping goods and shelves stocked throughout the year’s supply chain
challenges and the most stressful days of the pandemic.
This year, our Dedicated division was honored by several
major customers:
FedEx Ground Carrier of the Year based on high performance in
on-time service and customer contact
Michaels Stores Dedicated Carrier of the Year for volume of hauls
and on-time service
Procter & Gamble Driver of the Year went to George Dalhouse for
his attitude, safety record, and great working relationship
Doug Morales,
Manager of Dedicated Training
U.S. XPRESS ENTERPRISES, INC. 2021 ANNUAL REPORT
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U.S. XPRESS ENTERPRISES, INC. 2021 ANNUAL REPORT
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Xpress Technologies, our reimagined brokerage
segment, provides selectivity for our assets
along with expanded capacity solutions for our
customers.
Xpress Technologies rolled out a new operating system in 2021,
making it easier than ever for carriers to connect and plan loads
and overall operations. The new app saves carriers time by
understanding preferred lanes and freight characteristics and making
recommendations for future loads they may take. From there, it
recommends profitable loads, meaning they can spend less time
searching for loads and more time on the road.
Our brokerage division grew load count 8.4% in 2021 compared to the
previous year, demonstrating our ability to provide expanded capacity
for our customers while also providing additional selectivity for our
asset-based fleet.
Tracy Marshall,
Head of Program Delivery
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INVESTING IN
OUR PEOPLE AND
PARTNERSHIPS
We’re focused on creating an inclusive and
diverse workforce and believe in giving back to
the causes our people feel passionately about.
U.S. Xpress places a priority on serving and engaging with the
communities where we do business, particularly supporting
organizations aligned with our four pillars of giving: safety and well-
being, military veterans’ programs, education and innovation, and
families and health. Last year, our company and our people gave
generously to causes aligned with these pillars. We also continued
our Full Ride program, which provides free college education to our
professional drivers, shop technicians, and their dependents.
This year, we also expanded our commitment to inclusion and diversity,
bringing on our first chief inclusion partner and launching three
Employee Resource Groups in a journey to make our workplace more
inclusive. We also launched an English as a second language (ESL)
program that aims to recruit more diverse professional drivers and
operations support roles.
Continuing momentum in the years to come
We’re excited about the progress U.S. Xpress made in 2021 across our
Variant, Xpress Technologies, and Dedicated divisions and are eager to
continue this momentum in the years ahead. We’re combining some of
the best minds in technology with established operational experience
to continue our digital transformation. Along the way, we’re improving
the experience for our people and our partners.
In short, we’re on a mission to make goods move better every day.
Sharia Sandoval,
ESL operations support
U.S. XPRESS ENTERPRISES, INC. 2021 ANNUAL REPORT
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U.S. XPRESS ENTERPRISES, INC. 2021 ANNUAL REPORT
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2021: A YEAR
OF SIGNIFICANT
GROWTH IN THE
FACE OF INCREDIBLE
CHALLENGES
Letter to Shareholders
As I sat down to write this year’s letter,
I was struck by the sheer amount of
change that’s impacted our world, our
industry, and our company over the past
couple of years. For the previous two,
I’ve opened with a nod to COVID-19, and
unfortunately, 2021 is no different.
Eric Fuller,
President and Chief Executive Officer
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As the pandemic slogged on, “supply chain” became part of the nation’s lexicon. It put a
spotlight on how goods move — how one click online leads to a package on your front door
a day or two later. It also highlighted how easily the magic of one-click ordering can be
strained, as shortages of everything from computer chips to cream cheese rippled globally.
For me, and many in our industry, this pandemic reaffirmed that professional truck
drivers are truly the heroes of our economy. These hard-working men and women never
had the choice to work from home or quarantine. While many of us were able to work
remotely and purchase groceries and other goods online from the comfort of our homes,
professional drivers have been on the road, delivering necessary goods and keeping store
shelves stocked throughout this now two-plus-year pandemic.
I remain in awe of not only our professional drivers, but of all our employees who have
continued to support our customers while juggling family responsibilities, health and
safety protocols, and constantly changing information. These folks are committed to our
mission to make goods move better every day.
U.S. Xpress is accomplishing that mission through three complementary service offerings.
These include our established Dedicated fleet servicing some of the nation’s largest shippers;
Variant, our driver-first over-the-road fleet; and our brokerage segment, Xpress Technologies,
that provides additional capacity for our shipper customers, and for third-party carriers, tools,
and resources to help grow and better manage their businesses.
First, I’d like to take a moment to discuss Variant.
We incubated Variant outside of our headquarters, in non-traditional infrastructure, with
many individuals new to our industry. We gave it the autonomy and investment necessary
to build something substantial. During this process it was important to identify the point
where Variant moves toward maturity and where we need to make the transition from
nimble startup to a sustainable, growing business.
The second half of 2021 saw this inflection point, and we made the decision to begin
implementing a more disciplined management approach focused on metrics and
earnings growth. With organizational changes late in the year, we’re bringing more
domain knowledge to the Variant team, combining that with our truly innovative
technology team.
I’m confident in Variant’s business model and continue to believe we can use technology
to better serve our customers while providing a better experience for our professional
drivers. With a few refinements to our technology and more structure and discipline in our
processes, I believe we can get back on track quickly. We remain committed to our long-
term Variant strategy, and we’re moving full speed ahead.
U.S. XPRESS ENTERPRISES, INC. 2021 ANNUAL REPORT
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We launched Variant in the summer of 2019 with just a handful of trucks. We closed out
2021 surpassing our truck count goal with more than 1,500 seated tractors in the fleet. This
was accomplished during a global pandemic with unprecedented headwinds.
Additional progress with Variant is illustrated in the release of our next-generation
Optimizer, our fleet optimization platform that drastically reduces manual touchpoints,
helping drive greater efficiency in load planning and scheduling, and gets our
professional drivers more pay and more reliable home time. We also grew our first-in-
the-industry Ambassador program in which our drivers earn cents per mile for every
professional driver they recruit. This is one example of how we are building what we
expect to be a stable and reliable pipeline of professional drivers as the broader industry
continues to struggle with a persistent driver shortage.
While our attention remains focused on growing Variant and implementing operational
improvements, we also saw incredible progress with our Xpress Technologies brokerage
segment, which delivered solid revenue and increased gross margin in 2021. We continued
to grow revenue per load and overall load count, with more than three quarters of loads
processed on our purpose-built digital platform during the year.
Serving some of the nation’s largest shippers, our Dedicated division delivered steady
improvement throughout the year with revenue per tractor per week increasing
sequentially each quarter. I’m thrilled with the progress that both the Xpress Technologies
and Dedicated teams continue to make.
We continue to make significant investments in bringing on talented people with diverse
technology experience in deep learning, artificial intelligence, and software engineering.
These investments are paying off now and we expect will well into the future through the
fine-tuning of our Variant Optimizer, digital brokerage tools and resources, and enterprise-
wide IT systems. In fact, CIO Magazine recognized our deep IT bench in 2021, naming U.S.
Xpress to its “CIO 100,” which recognizes the world’s most innovative IT teams and initiatives.
To attract and retain the nation’s best talent, I’m also focused on building a culture of
inclusivity here at U.S. Xpress. In 2021, we established three Employee Resource Groups
to better support specific segments of our workforce. This includes groups for women,
veterans, and multicultural employees, each with an executive sponsor and individual
leadership. We also grew our existing Inclusion & Diversity Council and brought on our first
chief inclusion partner to define goals, map strategies, and outline deliverables toward
becoming a more inclusive organization.
I’m proud of the work that our teams have done in creating a more inclusive and diverse
workplace. This work culminated in multiple awards in 2021 including being named a
Great Place to Work, a Military Friendly company, and U.S. Xpress was honored by Women
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in Trucking for our commitment to advancing women in our industry. In addition, earlier
this year, we made our debut on the Human Rights Campaign’s Corporate Equality Index,
further proof of the progress we are making in our inclusion and diversity efforts.
In 2021, we published our first Corporate Responsibility Report, which outlined our
commitment to the environment, safety, and the communities where we do business.
This past year we also developed an enterprise wide ESG strategy focused on our long-
term ESG goals and objectives. We are in the early stages of this journey, but we believe
continuing to advance our environmental stewardship is key to our long-term success.
To date, our environmental efforts have focused mainly on improving the efficiency of
our fleet and lowering energy and water consumption within our facilities.
The safe operation of our fleet remains one of our top priorities. In 2021, we saw continued
improvement in our key safety metrics including our preventable accident rate per million
miles, which declined 21% year-over-year. Our improved safety metrics are due in part to new
safety technology and processes, including those to prevent lapses in driver credentials, pre-
employment hair testing for drugs, and our in-cab event recorders and driver coaching.
In our Corporate Responsibility Report, we also outlined our four pillars of community
giving: safety and well-being, military veterans’ programs, education and innovation, and
families and health. U.S. Xpress and our people gave generously to causes aligned with
these pillars last year, and we hope to strengthen these partnerships in the coming years.
Additionally, since launching in 2018, our Full Ride program has funded more than $1.1
million in college coursework for more than 850 drivers, shop technicians, and their
dependents. Through this unique program, we’re continuing to put education first among
many who once thought it was out of reach.
I’m proud of the progress we made in 2021. All these accomplishments were in the face
of a prolonged global pandemic, ongoing supply chain constraints, and an industry wide
driver shortage. Our accomplishments in 2021 give me confidence in the future of the
company and our place in the global supply chain. I couldn’t be prouder of our people and
the progress we’re making in transforming our company. On behalf of all our employees, I
thank you for your continued support and investment in U.S. Xpress.
Eric Fuller
President and Chief Executive Officer
MISSION
2021
ANNUAL REPORT
WE’RE ON A
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BUSINESS
Cautionary Note Regarding Forward-looking Statements
This Annual Report (this “Annual Report”) contains certain statements that may be considered forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and such statements are
subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as
amended. All statements, other than statements of historical or current fact, are statements that could be deemed
forward-looking statements, including without limitation: any projections of earnings, revenues or other financial
items; any statement of plans, strategies, outlook, growth prospects or objectives of management for future operations;
our operational and financial targets; general economic trends, performance or conditions and trends in the industry
and markets; the competitive environment in which we operate; any statements concerning proposed new services,
technologies or developments; and any statement of belief and any statements of assumptions underlying any of the
foregoing. In this Annual Report, statements relating to the impact of new accounting standards, future tax rates,
expenses, and deductions, expected freight demand, capacity, and volumes, potential results of a default under our
Credit Facility or other debt agreements, expected sources of working capital and liquidity (including our mix of debt,
finance leases, and operating leases as means of financing revenue equipment), as well as the adequacy of working
capital and liquidity, expected capital expenditures, expected fleet age and mix of owned versus leased equipment,
expected impact of technology, including our strategic initiatives, our ability to profitably scale and achieve
operational efficiencies in Variant, as well as our Brokerage segment, future performance of our Dedicated division,
including pricing and margins, future customer relationships, future utilization of independent contractors, future
fluctuations in purchased transportation expense and fuel surcharge reimbursement, future driver market conditions
and driver turnover and retention rates, any projections of earnings, revenues, cash flows, dividends, capital
expenditures, operating ratio, margins, or other financial items, expected cash flows, expected operating
improvements, any statements regarding future economic conditions or performance, any statement of plans,
strategies, programs and objectives of management for future operations, including the anticipated impact of such
plans, strategies, programs and objectives, future rates and prices, future utilization, future depreciation and
amortization, future salaries, wages, and related expenses, including driver compensation, future insurance and
claims expense, future fluctuations in fuel costs and fuel surcharge revenue, including the future effectiveness of our
fuel surcharge program, strategies for managing fuel costs, political conditions, legislation, and regulations, future
fleet size and management, including allocation of trucks among Variant, Dedicated and legacy Over-the-Road, future
shortages and pricing of new revenue equipment, any statements concerning proposed acquisition plans, new services
or developments, the anticipated impact of legal proceedings on our financial position and results of operations, the
future impact and the anticipated effect of the COVID-19 pandemic and any related vaccination mandates on our
business and results of operations, among others, are forward-looking statements. Such statements may be identified
by their use of terms or phrases such as “believe,” “may,” “could,” “should,” “expects,” “estimates,” “projects,”
“anticipates,” “plans,” “intends,” “outlook,” “strategy,” “target,” “optimistic,” “focus,” “seek,” “potential,”
“goal,” “continue,” “will,” derivations thereof, and similar terms and phrases. Such statements are based on
currently available operating, financial and competitive information. Forward-looking statements are inherently
subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events
and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking
statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed
in the section entitled “Risk Factors,” set forth below. Readers should review and consider the factors discussed in
“Risk Factors,” along with various disclosures in our press releases, stockholder reports, and other filings with the
Securities and Exchange Commission (“SEC”).
All such forward-looking statements speak only as of the date of this Annual Report. You are cautioned not to place
undue reliance on such forward-looking statements. We expressly disclaim any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our
expectations with regard thereto or any change in the events, conditions, or circumstances on which any such
statement is based.
References in this Annual Report to “we,” “us,” “our,” or the “Company” or similar terms refer to U.S. Xpress
Enterprises, Inc., and its subsidiaries.
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GENERAL
Our Business
We are one of the largest asset-based truckload carriers in the United States by revenue, generating over $1.9 billion
in total operating revenue in 2021. We provide services primarily throughout the United States, with a focus in the
densely populated and economically diverse eastern half of the United States. We offer customers a broad portfolio
of services using our own truckload fleet and third-party carriers through our non-asset-based truck brokerage network.
As of December 31, 2021, our fleet consisted of approximately 6,400 tractors and approximately 13,600 trailers,
including approximately 1,200 tractors provided by independent contractors. Our terminal network is established and
capable of handling significantly larger volumes without meaningful additional investment.
For much of our history, we focused primarily on scaling our fleet and expanding our service offerings to support
sustainable, multi-faceted relationships with customers. More recently, we have focused on our core service offerings
and refined our network to focus on shorter, more profitable lanes with more density, which we believe are more
attractive to drivers. We believe we have the strategy, management team, revenue base, modern fleet, and capital
structure that position us very well to execute upon our initiatives, drive further operational gains, and deliver long
term value for our stockholders.
We are currently focused on three main priorities. The first is optimizing our Truckload network and resulting average
revenue per tractor per week through repositioning equipment and allocating capacity to our Dedicated service offering
and Variant, our digital fleet, from certain portions of our Over-the-Road (“OTR”) service offering. The second is
improving the experience of our professional truck drivers, including their safety and security. The third is advancing
our technology initiatives centered on digitization of our loads and business, automated load acceptance and
prioritization. During 2021, we continued to see tangible, financial benefits of our strategic initiatives focused on
utilizing technology to improve our processes, accelerate the velocity of our business, reduce the number of our
preventable accidents, improve our customers’ and drivers’ satisfaction, and lower our costs.
We intend to continue successfully developing and implementing these digital initiatives that we believe are re-
engineering our Company to be a market leader in growth and profitability over the next decade. We believe the result
of these initiatives will provide for a more scalable model with significantly lower costs.
Our Service Offerings
We organize our service offerings into two reportable segments, Truckload and Brokerage. The Truckload segment
offers asset-based truckload services, including the OTR and dedicated contract services described below. Our
Brokerage segment is principally engaged in non-asset-based freight brokerage services. We believe many customers
seek truckload operators that offer both asset-based and non-asset-based services to help ensure capacity will be
available as needed. We believe that each of our service offerings, on a stand-alone revenue basis, would represent
one of the largest participants in its respective market.
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Below is a brief overview of our service offerings:
Approximate
% of 2021
Revenue(1)
Description
Truckload (75%)
OTR
43%
Transports a full trailer of freight for a single customer
from
origin
to
destination,
typically
without
intermediate stops or handling
Includes our Variant fleet
Short-term contracts and spot moves that include
irregular route moves without volume and capacity
commitments
Tractors are operated with one driver or a team of two
drivers to handle more time-sensitive, higher margin
freight
Routes are generally between 450 and 1,050 miles in
length
Fuel surcharge programs help us offset most of the
negative impact of rising fuel prices associated with
loaded or billed miles
Dedicated
Contract
32%
Contractually assigned equipment, drivers and on-site
personnel to address customers’ needs for committed
capacity and service levels
Multi-year initial contract term with guaranteed
volumes and pricing
We have renewed substantially all of our dedicated
contracts after the initial contract term
Fuel costs are typically more predictable and less
volatile under the fixed and variable pricing of these
contracts
Historically,
our
dedicated
contract
customers
generally adjust pricing to account for driver wage
increases, although these adjustments may not be
contractually required
Brokerage
23%
Non-asset-based freight brokerage service through
which loads are contracted to third-party carriers
Allocation strategy designed to maximize profitability
of our Truckload fleet before outsourcing loads to
third-party carriers
In the past 12 months, we have utilized the capacity of
approximately 24,000 third-party carriers
(1) Based on revenue, before fuel surcharge. Approximately 2% of revenue is attributable to other ancillary services.
We primarily operate in the eastern half of the United States. We also have business to and from Mexico via a more
variable cost model using third party carriers. The revenue from such model is generated in the United States. During
2021 and 2020, all of our operating revenue was generated in the United States.
Customer Relationships
We maintain a diverse, long-standing customer base that includes many Fortune 500 companies, including Dollar
General, Dollar Tree, FedEx, Home Depot, Kroger, Procter & Gamble, Target, Tractor Supply and Walmart. Our
customers fall within a broad spectrum of geographies and end markets, including retail, food and beverage,
e-commerce and packages, manufacturing, consumer products and third-party logistics. No other category comprised
more than five percent of the end markets we served at December 31, 2021. Relationships with our top ten customers
exceed ten years on average. For the year ended December 31, 2021, our largest customer accounted for approximately
11% of our revenue, excluding fuel surcharge.
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Tractor and Trailer Fleets
We operate a modern fleet of approximately 5,200 company-owned tractors and approximately 13,600 trailers, and
we also contract for additional tractor capacity through approximately 1,200 independent contractors, who provide
both the tractor and a driver and, except for the trailer, which we generally provide, bear the operating expenses of
each load. Our company tractor fleet continues to include the most advanced technology in today’s market including
electronic logging devices (“ELDs”), electronic speed limiters, electronic roll stability, improved aerodynamics and
fuel efficiency technologies, enhanced tractor connectivity with remote updating capabilities, improved automatic
transmissions, lane departure and collision warning / avoidance systems, upgraded braking systems and event
recorders. Each of our company tractors is also equipped with onboard communication units that offer real time freight
positioning to our customers and instant communication between our drivers and us.
Tractors and trailers represent our most substantial capital investments. In general, we expect to operate a tractor for
approximately 475,000 to 575,000 miles, which when averaged across our fleet as of December 31, 2021 equates to
approximately 4.5 years of operation and a trailer for up to 10 years or more of operation. We depreciate or finance
our equipment over their useful lives and down to salvage values that we expect to represent fair market value at the
expected time of sale. Our ongoing capital expenditures are significant, and our annual depreciation expense is
expected to be approximately equal to maintenance capital expenditures, net of proceeds of dispositions, assuming a
constant percentage of leased versus owned equipment and a constant trade cycle. In practice, we vary our trade cycle
and financing based on the market for new and used tractors, the quality, dependability and cost per mile to operate
the equipment, our capital budget, expected tax benefits and other factors. Based on the volumes we purchase, we
believe that we have a cost advantage in the procurement of new tractors and trailers compared to the prices paid by
small trucking companies.
Our company tractors had an average age of approximately 1.7 years at December 31, 2021.
Our Competitive Strengths
We believe the following competitive strengths provide us with a strong foundation to continue to improve our
profitability and stockholder value:
Industry leading truckload operator with significant scale
We are one of the largest asset-based truckload carriers in the United States in 2021 by total operating revenue and
we believe our large scale provides us with significant benefits. These benefits include economies of scale on major
expenditures such as tractors, trailers and fuel, as well as our overall infrastructure. Additionally, we can offer an
enhanced value proposition for large customers who seek efficiency in sourcing capacity from a limited number of
carriers and flexible capacity to accommodate seasonal surge volumes. Our established and well-maintained terminal
network is capable of handling meaningfully larger volumes without meaningful additional investment.
Complementary mix of services to afford flexibility and stability throughout economic cycles
Our service offerings have unique characteristics and are subject to differing market forces, which we believe allows
us to respond effectively through economic cycles.
OTR
OTR business involves short-term customer contracts without pricing or volume guarantees that allow us to benefit
from periods of supply and demand imbalance and price volatility. This is the largest part of our business and the
overall truckload market.
Dedicated
Dedicated business features committed rates, lanes and volumes under contracts that generally afford us greater
revenue predictability over the contract period and help smooth the impact of market cycles. Additionally, our
dedicated contract service offering generally has higher driver retention rates than our OTR service offering, which
we believe is because our professional drivers prefer the more predictable time at home that dedicated routes offer. In
addition, this increased visibility allows us to commit and invest fleet resources with a more predictable return profile.
We intend to grow this portion of our business as a percentage of our average tractors.
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Brokerage
Brokerage capacity allows us to aggregate volume and to flex the amount allocated to our own fleet with freight cycles.
Typically, we allocate more loads to our OTR fleet during slow freight demand to keep our assets productive, and
more loads to third-party carriers during higher freight demand to maintain control over customer freight and make a
margin on outsourcing the moves. By retaining control over significantly more freight than we are able to serve with
our own assets, and allocating the available loads first to our own tractors, we have more choices for optimizing the
utilization and pricing of our fleet every day and throughout market cycles.
Technology
We are focused on continual development and implementation of the digital initiatives that we believe are re-
engineering our company to be a market leader in growth and profitability over the next decade. Within our Truckload
reportable segment, Variant represents an entirely new paradigm for operating trucks in an Over-the-Road
environment utilizing artificial intelligence and digital platforms to recruit, plan, dispatch and manage its fleet. The
division’s operating model, powered by cutting edge technology, has generated improvement in utilization while
significantly reducing driver turnover, and preventable accidents per million miles, all as compared to our legacy OTR
fleet. During the second half of 2021, Variant’s turnover, utilization, and revenue per tractor per week began to
deteriorate and those trends accelerated in the fourth quarter. In December 2021, the Variant team began to transition
its focus from idea generation to execution and scale the product that was developed. Since December 2021, the
operational changes that we have made have translated to improvements in utilization, revenue per truck and overhead
per truck.
During 2020, we purchased a small business with a technology platform and an experienced and talented team. Their
approach to the brokerage business is to utilize a digital framework for handling transactions which we expect to be
scalable. Importantly, we believe this platform will enable our team to continue scaling the business and drive a high
level of growth in the years to come. Our team processed 76.7% of our Brokerage transactions digitally in 2021. As
we drive more volume over our digital platform, we believe our Brokerage segment will become much more scalable
and allow us to profitably drive growth as we look to the years ahead.
Long-standing, diverse and resilient customer base
We maintain a long-standing customer base that includes many Fortune 500 companies with national footprints,
including Dollar General, Dollar Tree, FedEx, Home Depot, Kroger, Procter & Gamble, Target, Tractor Supply and
Walmart. As of December 31, 2021, relationships with our top ten customers exceeded ten years on average. Our
portfolio of blue-chip customers allows us to benefit from the less cyclical and more-stable demand from grocery and
dollar stores in addition to increasing demand due to secular growth trends in end-markets such as e-commerce. We
also benefit from significant cross-selling opportunities among large key customers, as all of our top ten customers
use at least two of our three service offerings, which allows us to have multiple points of contact with our customers
and take advantage of varying bid cycles.
Modern fleet and maintenance system designed to optimize life cycle investment and minimize operating costs
Our fleet represents our largest capital investment, a visible representation of our brand for customers and drivers and
a large portion of our controllable costs. We select, maintain and dispose of our fleet based on rigorous analysis of our
investments and operating costs.
Our modern and well-maintained fleet consisted of approximately 5,200 company tractors with an average age of
approximately 1.7 years and approximately 13,600 trailers at December 31, 2021. We also contracted for
approximately 1,200 tractors provided by independent contractors at December 31, 2021. We equip our tractors with
carefully selected components based on initial cost, maintenance requirements, warranty coverage, safety and
efficiency advantages, driver preference and resale value. Our company tractor fleet is technologically advanced and
equipped with safety and efficiency features, including using electronic logs since 2012, electronic speed limiters,
automatic transmissions, lane departure and collision warning systems, air disc brakes and high performance wide
brake drums, electronic roll stability and event recorders.
Over the past several years, we have developed a disciplined and effective in-house maintenance program designed
to actively manage these assets based on customized timetables for preventive maintenance and replacement of parts.
We believe this approach, coupled with our in-house maintenance facilities and in-house technicians dedicated to fleet
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maintenance, helps us effectively manage our maintenance cost per mile, keeps drivers on the road efficiently and
creates an attractive asset and record for resale.
Motivated management team focused on tactical execution and leadership in the truckload market
Our management and operations team has been carefully assembled to obtain a mix of industry veterans from
successful competitors and high-performing internal candidates, all of whom are motivated to perform in our
transparent, metric-driven environment. Our President and Chief Executive Officer, Eric Fuller, has over 20 years of
experience at U.S. Xpress and has been responsible for developing the team and spearheading our transformation
program over the last several years. Our management team’s compensation and ownership of our common stock
provide further incentive to improve business performance and profitability. In addition, with active positions in
industry associations, such as the American Trucking Associations, Inc. (“ATA”), our management team provides us
with a key role in the discussions that we believe are shaping the future of the industry. We believe our leadership
team is well-positioned to execute our strategy and remains a key driver of our financial and operational success.
Our Strategies
We believe we possess the scale, infrastructure and service offerings to compete effectively in our markets, our
opportunity for further improvement is significant, and our strategies are designed to enhance stockholder value.
Improve profitability and grow revenue
Improve asset productivity by using advanced technology to optimize dispatch miles in all cycles and
actively upgrade freight mix when volumes permit
Control non-essential costs and seek efficiencies throughout the enterprise
Pursue driver training and safety initiatives as a core cultural value
Continue to leverage our service mix to manage through all market cycles
Grow our revenue base prudently with a focus on dedicated contract service and brokerage by
cross-selling our services with existing customers and pursuing new customer opportunities
Capitalize on high return on investment potential of advanced technology, automation, and optimization
Continue to use our scale and relationships to gain early access to technological advances and evaluate
the costs and benefits
Incubate, develop, and implement operating efficiencies across our enterprise using our USX Variant
technology development group
Pursue use of artificial intelligence to accommodate individual drivers’ preferences with the goal of
improving driver satisfaction and retention
Apply data analytics across the billions of dollars of freight spend we see every year to capture and
optimize the execution of our customers’ loads and our network
Partner with equipment manufacturers to test, evaluate and refine electric, autonomous and other
advanced vehicle technology
Maintain flexibility through long-term enterprise planning and conservative financial policies
Maximize our free cash flow generation by managing expenses, taxes and capital expenditures
Convert equipment financing over time toward owned equipment from operating leased equipment to
gain tax benefits and flexibility in trade cycles
Allocate capital toward dedicated contract services, which offers more predictable revenue streams and
greater asset productivity, Variant, which is our digital fleet and brokerage, which requires limited capital
investment and affords network-balancing freight volumes
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Target a conservative leverage profile, taking into consideration both owned and leased financing
Use of digital technologies to reduce the impact of market cycle downturns
Independent Contractors
In addition to the company drivers that we employ, we enter into contracts with independent contractors. Independent
contractors operate their own tractors (although some employ drivers they hire) and provide their services to us under
contractual arrangements. Except for generally providing independent contractors with the use of our trailers, they are
responsible for the ownership and operating expenses and are compensated by us primarily on a rate per mile basis.
By operating safely and productively, independent contractors can improve their own profitability and ours. We
believe that the fleet of independent contractors we engage provides significant advantages that primarily arise from
the motivation of business ownership. Independent contractors tend to produce more miles per tractor per week. As
of December 31, 2021, the approximately 1,200 independent contractors we engage comprised approximately 17% of
our available capacity, as measured by tractor count.
Services offered to independent contractors include insurance, maintenance and fuel. Through our wholly owned
insurance captive subsidiary, Xpress Assurance, Inc. (“Xpress Assurance”), independent contractors can purchase
occupational accident, physical damage and other types of insurance. Independent contractors also are able to procure
at their expense fuel and maintenance services at our truckload service centers.
Human Capital Resources
General
As of December 31, 2021, we employed approximately 8,689 employees, of whom approximately 5,952 were drivers,
approximately 321 were maintenance technicians and approximately 2,416 were office employees, including
operations staff, sales and marketing, recruiting, safety and other support personnel. None of our employees are
covered by a collective bargaining agreement.
To attract and retain the best-qualified talent, we offer competitive benefits, including market-competitive
compensation, healthcare, paid time off, 401(k), employee stock purchase, tuition assistance, employee skills
development and leadership development.
Professional truck drivers are the backbone of our success and the heart of the Company. Responsibility for driver
retention flows throughout our organization and every office and maintenance employee is expected to take the
necessary steps to keep our drivers satisfied and productive. Keeping our drivers satisfied and safe is the guiding
principle behind our modern fleet, training programs and driver compensation. We continue to focus on driver centric
initiatives such as increased miles and modern equipment, to both retain the professional drivers who have chosen to
partner with us and attract new professional drivers to our team.
Corporate Culture & Diversity
We recruit, develop, and retain diverse talent. This strategy is paying huge dividends – not only for the organization,
but for our employees. To foster their and our joint success, we seek to create an environment where people can do
their best work—a place where they can proudly be their authentic selves, and where they know their needs can be
met. Over the past several years we have committed to providing increased transparency on our inclusion and diversity
commitments and are making progress in applying and advancing inclusiveness and diversity practices across our
workplace.
Workforce culture is key to successfully achieving our operational objectives. In an industry that changes rapidly and
as part of our intentional efforts to lead digital transformation throughout the organization, we understand ongoing
training and development is needed for all employees. To address these evolving needs, we fill skill gaps through
talent acquisition and through numerous training programs for our employees such as Leadership Excellence at the
Peak, Leadership Excellence Fundamentals for new managers, Leadership Excellence Relationomics, Digital
Communities of Practice, Digital Upskilling, access to over 4,000 courses through our learning management system.
For our drivers we have re-envisioned our driver training program and developed and launched our new Professional
Driver Onboarding Program in 2021.
We aspire to the highest standards of inclusiveness, diversity and equity. During 2021, we continued to focus on
inclusion as we partnered with Wade Hinton as our Chief Inclusion Partner to conduct a detailed assessment of our
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inclusion and diversity efforts and develop a best-in-class strategy focused on culture of place and inclusion for the
future. We launched our self-identify survey to assist in making decisions from an inclusion and diversity
standpoint. We launched three Employee Resource Groups (“ERG”), Women’s ERG, Multi-Cultural ERG and
Veteran’s ERG with great participation from our employees. We have a strong commitment to creating a culture
where everyone is included and respected. We are committed to diverse representation across all levels of the
workforce while working to find the most qualified candidate for every position. We believe our differences make us
stronger as a team, and it is through creating an environment that maximizes each individual’s contributions,
intentional focus on our cultural goals, and continuous training and development that we and our employees succeed.
Safety
We are committed to pursue safety as one of our core cultural values. Our drivers are subject to certain hiring
guidelines related to driving history, accident and safety history, physical standards and drug and alcohol testing. Upon
meeting certain criteria, applicants are invited to attend an orientation at one of our service centers. The on-site
orientation is focused on introducing a driver to the concepts and training necessary to be a successful, professional
driver, including training related to safety, life on the road, our operations and equipment and electronic log operation.
The on-site orientation also includes a road test. As a result of the COVID-19 pandemic, we have leveraged our new
driver training program as well as created a virtual orientation program that allows new drivers to complete work
remotely and, therefore, avoiding a majority of classroom work.
In addition to our hiring criteria, our tractors are equipped with electronic speed limiters, automatic transmissions,
lane departure and collision warning systems, air disc brakes and high performance wide brake drums, electronic roll
stability and, more recently, forward-facing cameras.
COVID-19 Update
In response to the COVID-19 pandemic, we moved quickly to enable our office employees to work remotely starting
March 2020. Since then, non-remote personnel have largely been limited to employees working on-site at customer
locations and shop technicians working in our facilities, all of whom are following strict protocols to ensure their
safety and the safety of our customers.
We have instituted policies to facilitate effective communication in this environment. For non-driving employees, we
ensure multiple daily contacts with direct reports and have developed key performance indicators, facilitated by our
digital capabilities, to measure our operational effectiveness. We have also implemented a hotline and support staff to
ensure employees have access to necessary medical services as well as ensuring an adequate supply of safety
equipment, including masks and gloves, for our workers who are on the frontlines, and providing regular cleaning and
disinfecting of our facilities. U.S. Xpress’ employees are playing an essential role in the country’s fight against
COVID-19 as they work to keep critical supplies moving and store shelves stocked. We are working daily with our
drivers to keep them informed and safe in this rapidly changing environment.
Insurance
We retain high deductibles on a significant portion of our claims exposure and related expenses associated with third
party bodily injury and property damage, employee medical expenses, workers’ compensation, physical damage to
our equipment and cargo loss. See “Risk Factors.” We currently carry the following material types of insurance, which
generally have the retention amounts, maximum benefits per claim and other limitations noted:
commercial automobile liability excess coverage: approximately $75.0 million of coverage per
occurrence effective September 1, 2020, subject to a $3.0 million retention per occurrence with annual
aggregate limits within the $3.0 to $10.0 million layer of $14.0 million and a three-year policy aggregate
of $28.0 million;
general liability, business auto liability and excess employer’s liability coverage: approximately $75.0
million of coverage per occurrence subject to a $25,000 deductible per occurrence for general liability
claims, $50,000 deductible per occurrence for business auto claims and $500,000 deductible for excess
employer’s liability:
cargo damage and loss: $2.0 million limit per tractor or trailer subject to a $250,000 retention per
occurrence;
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workers’ compensation/employers’ liability: statutory coverage limits subject to a $500,000 retention
for each accident or disease;
employment practices and wage and hour liability: $25.0 million aggregate limit in coverage subject to
a $1.0 million retention for employment practices and $2.5 million retention for wage and hour for either
a single claim or a class action;
directors’ and officers’ insurance: $75.0 million aggregate limit of coverage subject to a $1.0 million
retention with various sub-limits;
fiduciary liability policy: $10.0 million aggregate limit of coverage subject to a $10,000 retention;
employee healthcare: we retain each employee health care claim and maintain stop loss insurance of
$1.0 million;
crime insurance: $5.0 million of coverage subject to a $250,000 retention; and
underground storage tank liability: $5.0 million in coverage with deductibles ranging from $25,000 to
$75,000.
Regulation
Transportation Regulations
Our operations are regulated and licensed by various government agencies, including the Department of
Transportation (“DOT”), Environmental Protection Agency (“EPA”) and the Department of Homeland security
(“DHS”). These and other federal and state agencies also regulate our equipment, operations, drivers and third-party
carriers.
The DOT, through the Federal Motor Carrier Safety Administration (“FMCSA”), imposes safety and fitness
regulations on us and our drivers, including rules that restrict driver hours-of-service. Changes to such hours-of-service
rules can negatively impact our productivity and affect our operations and profitability by reducing the number of
hours per day or week our drivers may operate and/or disrupting our network. However, in August 2019, the FMCSA
issued a proposal to make changes to its hours-of-service rules that would allow truck drivers more flexibility with
their 30-minute rest break and with dividing their time in the sleeper berth. It also would extend by two hours the duty
time for drivers encountering adverse weather, and extend the shorthaul exemption by lengthening the drivers’
maximum on-duty period from 12 hours to 14 hours. In June 2020 the FMCSA adopted a final rule substantially as
proposed, which became effective in September 2020. Certain industry groups have challenged these rules in court,
and it remains unclear what, if anything, will come from such challenges. Any future changes to hours-of-service rules
could materially adversely affect our results of operations and profitability.
There are two methods of evaluating the safety and fitness of carriers. The first method is the application of a safety
rating that is based on an onsite investigation and affects a carrier’s ability to operate in interstate commerce. We
currently have a satisfactory DOT safety rating for our U.S. operations under this method, which is the highest
available rating under the current safety rating scale. If we were to receive a conditional or unsatisfactory DOT safety
rating, it could materially adversely affect our business, as some of our existing customer contracts require a
satisfactory DOT safety rating. In January 2016, the FMCSA published a Notice of Proposed Rulemaking outlining a
revised safety rating measurement system, which would replace the current methodology. Under the proposed rule,
the current three safety ratings of “satisfactory,” “conditional” and “unsatisfactory” would be replaced with a single
safety rating of “unfit,” and a carrier would be deemed fit when no rating was assigned. Moreover, the proposed rules
would use roadside inspection data in addition to investigations and onsite reviews to determine a carrier’s safety
fitness on a monthly basis. Under the current rules, a safety rating can only be given upon completion of a
comprehensive onsite audit or review. Under the proposed rules, a carrier would be evaluated each month and could
be given an “unfit” rating if the data collected from roadside inspections, investigations and onsite reviews did not
meet certain standards. The proposed rule underwent a public comment period extending into May 2016 and several
industry groups and lawmakers have expressed their disagreement with the proposed rule, arguing that it violates the
requirements of the Fixing America’s Surface Transportation Act (the “FAST Act”), and that the FMCSA must first
finalize its review of the Compliance, Safety, Accountability program (“CSA”) scoring system, described in further
detail below. Based on this feedback and other concerns raised by industry stakeholders, in March 2017, the FMCSA
withdrew the Notice of Proposed Rulemaking related to the new safety rating system. In its notice of withdrawal, the
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FMCSA noted that a new rulemaking related to a similar process may be initiated in the future. Therefore, it is
uncertain if, when or under what form any such rule could be implemented. The FMCSA has also indicated that it is
in the early phases of a new study on the causation of crashes. Although it remains unclear whether such study will
ultimately be completed, the results of such study could spur further proposed and/or final rules in regard to safety
and fitness.
In addition to the safety rating system, the FMCSA has adopted the CSA program as an additional safety enforcement
and compliance model that evaluates and ranks fleets on certain safety-related standards. The CSA program analyzes
data from roadside inspections, moving violations, crash reports from the last two years and investigation results. The
data is organized into seven categories. Carriers are grouped by category with other carriers that have a similar number
of safety events (e.g., crashes, inspections or violations) and carriers are ranked and assigned a rating percentile to
prioritize them for interventions if they are above a certain threshold. Currently, these scores do not have a direct
impact on a carrier’s safety rating. However, the occurrence of unfavorable scores in one or more categories may
(i) affect driver recruiting and retention by causing high-quality drivers to seek employment with other carriers,
(ii) cause our customers to direct their business away from us and to carriers with higher fleet rankings, (iii) subject
us to an increase in compliance reviews and roadside inspections, (iv) cause us to incur greater than expected expenses
in our attempts to improve unfavorable scores or (v) increase our insurance expenses, any of which could adversely
affect our results of operations and profitability.
Under the CSA, these scores were initially made available to the public in five of the seven categories. However,
pursuant to the FAST Act which was signed into law in December 2015, the FMCSA was required to remove from
public view the previously available CSA scores while it reviews the reliability of the scoring system. During this
period of review by the FMCSA, we will continue to have access to our own scores and will still be subject to
intervention by the FMCSA when such scores are above the intervention thresholds. A study was conducted and
delivered to the FMCSA in June 2017 with several recommendations to make the CSA program more fair, accurate,
and reliable. In late June 2018, the FMCSA provided a report to Congress outlining the changes it may make to the
CSA program in response to the study. Such changes include the testing and possible adoption of a revised risk
modeling theory, potential collection and dissemination of additional carrier data and revised measures for
intervention thresholds. The adoption of such changes is contingent on the results of the new modeling theory and
additional public feedback. Therefore, it is unclear if, when and to what extent such changes to the CSA program will
occur. However, any changes that increase the likelihood of us receiving unfavorable scores could materially adversely
affect our results of operations and profitability.
In May 2020 the FMCSA announced that effective immediately it is making permanent a pilot program that will not
count a crash in which a motor carrier was not at fault when calculating the carrier’s safety measurement profile, called
the Crash Preventability Demonstration Program (“CPDP”). The CPDP will expand the types of eligible crashes,
modify the Safety Measurement System to exclude crashes with not preventable determinations from the prioritization
algorithm and note the not preventable determinations in the Pre-Employment Screening Program. Under the program,
carriers with eligible crashes that occurred on or after August 2019, may submit a Request for Data Review with the
required police accident report and other supporting documents, photos or videos through the FMCSA’s DataQs
website. If the FMCSA determines the crash was not preventable, it will be listed on the Safety Measurement System
but not included when calculating a carrier’s Crash Indicator Behavior Analysis and Safety Improvement Category
measure in SMS. Additionally, the not preventable determinations will be noted on a driver’s Pre-Employment
Screening Program report.
The final rule requiring the use of ELDs was published in December 2015. This rule required drivers of commercial
motor vehicles that are required to keep logs to be ELD-compliant by December 2017. Use of automatic onboard
recording devices was permitted until December 2019, at which time use of ELDs became required. We were fully
converted to ELDs by the December 2019 deadline. We believe that more effective hours-of-service enforcement
under this rule may improve our competitive position by causing all carriers to adhere more closely to hours-of-service
requirements.
In December 2016, the FMCSA issued a final rule establishing a national clearinghouse for drug and alcohol testing
results and requiring motor carriers and medical review officers to provide records of violations by commercial drivers
of FMCSA drug and alcohol testing requirements. Motor carriers are required to query the clearinghouse to ensure
drivers and driver applicants do not have violations of federal drug and alcohol testing regulations that prohibit them
from operating commercial motor vehicles. The final rule became effective in January 2017, with a compliance date
in January 2020. In December 2019, however, the FMCSA announced a final rule extending by three years the date
for state driver’s licensing agencies to comply with certain Drug and Alcohol Clearinghouse requirements. The
December 2016 commercial driver’s license rule required states to request information from the Clearinghouse about
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individuals prior to issuing, renewing, upgrading or transferring a CDL. This new action will allow states’ compliance
with the requirement, which was set to begin January 2020, to be delayed until January 2023. That being said, the
FMCSA has indicated it will allow states the option to voluntarily query Clearinghouse information beginning January
2020. The compliance date of January 2020 remained in place for all other requirements set forth in the Clearinghouse
final rule, however. Upon implementation, the rule may reduce the number of available drivers in an already
constrained driver market. Pursuant to a new rule finalized by the FMCSA, effective November 2021, states are
required to query the Clearinghouse when issuing, renewing, transferring, or upgrading a commercial driver’s license
and must revoke a driver’s commercial driving privileges if such driver is prohibited from driving a motor vehicle for
one or more drug or alcohol violations.
In September 2020, the Department of Health and Human Services (“DHHS”) announced proposed mandatory
guidelines to allow employers to drug test truck drivers and other federal workers for pre-employment and random
testing using hair specimens. However, the proposal also requires a second sample using either urine or an oral swab
test if a hair test is positive, if a donor is unable to provide a sufficient amount of hair for faith-based or medical
reasons, or due to an insufficient amount or length of hair. The proposal specifically requires that the second test be
done simultaneously at the collection event or when directed by the medical review officer after review and
verification of laboratory-reported results for the hair specimen. DHHS indicated the two-test approach is intended to
protect federal workers from issues that have been identified as limitations of hair testing, and related legal deficiencies
identified in two prior court cases. The American Trucking Associations (“ATA”) has voiced concerns with the new
guidelines, characterizing them as “weak” and “misguided,” and specially taking issue with the second sample
requirement, which the ATA feels diminishes the value of hair testing. It is unclear if, and when, a final rule may be
put in place. Any final rule may reduce the number of available drivers. We currently perform hair follicle testing and
will continue monitor any developments in this area to ensure compliance.
Other rules have been recently proposed or made final by the FMCSA, including (i) a rule requiring the use of speed
limiting devices on heavy duty tractors to restrict maximum speeds, which was proposed in 2016, and (ii) a rule setting
forth minimum driver-training standards for new drivers applying for commercial driver’s licenses for the first time
and to experienced drivers upgrading their licenses or seeking a hazardous materials endorsement, which was made
final in December 2016, with a compliance date in February 2020. However, in May 2020, the FMCSA approved an
interim rule delaying implementation of the final rule by two years which extended the compliance date to February
2022. In July 2017, the DOT announced that it would no longer pursue a speed limiter rule, but left open the possibility
that it could resume such a pursuit in the future. In May 2021, however, the Cullum Owings Large Truck Safe
Operating Speed Act was reintroduced into the U.S. House of Representatives and would require commercial motor
vehicles with a gross weight of more than 26,000 pounds to be equipped with a speed limiter that would limit the
vehicle’s speed to no more than 65 M.P.H. The effect of these rules, to the extent they become effective, could result
in a decrease in fleet production and driver availability, either of which could materially adversely affect our business,
financial condition and results of operations.
The Infrastructure Investment and Jobs Act (“IIJA”), signed into law by President Biden in November 2021, created
an apprenticeship program for drivers younger than 21 to eventually qualify to drive commercial trucks in interstate
commerce. The provision drew certain mechanics from the bills introduced in Congress in 2019 related to lowering
the age requirements for interstate commercial driving. The FMCSA announced the establishment of this
apprenticeship program in January 2022 in an effort to help the industry’s ongoing driver shortage. The program is
open to 18 to 20-year-old drivers who already hold intrastate commercial driver’s licenses and sets a strict training
regimen for participating drivers and carriers to comply with. Motor carriers interested in participating must complete
an application for participation and submit monthly data on an apprentice’s driver activity, safety outcomes, and
additional supporting information. It remains unclear whether any regulatory changes will stem from the
apprenticeship program.
In December 2018, the FMCSA granted a petition filed by the ATA and in doing so determined that federal law does
preempt California’s wage and hour laws, and interstate truck drivers are not subject to such laws. The FMCSA’s
decision has been appealed by labor groups, and multiple lawsuits have been filed in federal courts seeking to overturn
the decision. In January 2021, the Ninth Circuit upheld the FMCSA’s determination that federal law does preempt
California’s meal and rest break laws, as applied to drivers of property-carrying commercial motor vehicles. Other
current and future state and local wage and hour laws, including laws related to employee meal breaks and rest periods,
may also vary significantly from federal law. Further, driver piece rate compensation, which is an industry standard,
has been attacked as non-compliant with state minimum wage laws and lawsuits have recently been filed and/or
adjudicated against carriers demanding compensation for sleeper berth time, layovers, rest breaks and pre-trip and
post-trip inspections, the outcome of which could have major implications for the treatment of time that drivers spend
off-duty (whether in a truck’s sleeper berth or otherwise) under applicable wage laws. Both of these issues are
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adversely impacting the Corporation and the industry as a whole, with respect to the practical application of the laws,
thereby resulting in additional cost. As a result, we, along with other companies in our industry, are subject to an
uneven patchwork of wage and hour laws throughout the United States. In the past, certain legislators have proposed
federal legislation to preempt state and local wage and hour laws; however, passage of such legislation is uncertain.
If federal legislation is not passed, we will either need to comply with the most restrictive state and local laws across
our entire fleet, or revise our management systems to comply with varying state and local laws. Either solution could
result in increased compliance and labor costs, driver turnover, decreased efficiency, and amplified legal exposure.
Tax and other regulatory authorities, as well as independent contractors themselves, have increasingly asserted that
independent contractor drivers in the trucking industry are employees rather than independent contractors and our
classification of independent contractors has been the subject of audits by such authorities from time to time. Federal
legislation has been introduced in the past that would make it easier for tax and other authorities to reclassify
independent contractors as employees, including legislation to increase the recordkeeping requirements for those that
engage independent contractor drivers and to increase the penalties for companies who misclassify their employees
and are found to have violated employees’ overtime and/or wage requirements. The most recent example being the
Protecting the Rights to Organize (“PRO”) Act, which was passed by the House of Representatives and received by
the Senate in March 2021 and remains with the Senate’s Committee on Health, Education, Labor, and Pensions. The
PRO Act proposes to apply the “ABC Test” for classifying workers under Federal Fair Labor Standards Act claims.
It is unknown whether any of the proposed legislation will become law or whether any industry-based exemptions
from any resulting law will be granted. Additionally, federal legislators have sought to abolish the current safe harbor
allowing taxpayers meeting certain criteria to treat individuals as independent contractors if they are following a
long-standing, recognized practice, extend the Fair Labor Standards Act to independent contractors and impose notice
requirements based on employment or independent contractor status and fines for failure to comply. Some states have
put initiatives in place to increase their revenue from items such as unemployment, workers’ compensation and income
taxes and a reclassification of independent contractors as employees would help states with this initiative.
Recently, courts in certain states have issued decisions that could result in a greater likelihood that independent
contractors would be judicially classified as employees in such states. In September 2019, California enacted A.B. 5
(“AB5”), a new law that changed the landscape of the state’s treatment of employees and independent contractors.
AB5 provides that the three-pronged “ABC Test” must be used to determine worker classification in wage-order
claims. Under the ABC Test, a worker is presumed to be an employee—and the burden to demonstrate their
independent contractor status is on the hiring company through satisfying all 3 of the following criteria:
the worker is free from control and direction in the performance of services; and
the worker is performing work outside the usual course of the business of the hiring company; and
the worker is customarily engaged in an independently established trade, occupation, or business.
How AB5 will be enforced is still to be determined. In January 2021, however, the California Supreme Court ruled
that the ABC Test could apply retroactively to all cases not yet final as of the date the original decision was rendered,
April 30, 2018. While AB5 was set to go into effect in January 2020, a federal judge in California issued a preliminary
injunction barring the enforcement of AB5 on the trucking industry while the California Trucking Association
(“CTA”) moves forward with its suit seeking to invalidate AB5. The Ninth Circuit Court of Appeals rejected the
reasoning behind the injunction in April 2021, ruling that AB5 is not pre-empted by federal law, but granted a stay of
the AB5 mandate in June 2021 (preventing its application and temporarily continuing the injunction) while the CTA
petitioned the U.S. Supreme Court (the “Supreme Court”) to review the decision. In November 2021, the Supreme
Court requested that the U.S. solicitor general weigh in on the case. The injunction will remain in place until the
Supreme Court makes a decision on whether to proceed in hearing the case. While the stay of the AB5 mandate
provides temporary relief to the enforcement of AB5, it remains unclear how long such relief will last, and whether
the CTA will ultimately be successful in invalidating the law. It is also possible AB5 will spur similar legislation in
states other than California, which could adversely affect our results of operations and profitability.
Further, class actions and other lawsuits have been filed against certain members of our industry seeking to reclassify
independent contractors as employees for a variety of purposes, including workers’ compensation and health care
coverage. Taxing and other regulatory authorities and courts apply a variety of standards in their determination of
independent contractor status. If independent contractors we contract with are determined to be employees, we would
incur additional exposure under federal and state tax, workers’ compensation, unemployment benefits, labor,
employment and tort laws, including for prior periods, as well as potential liability for employee benefits and tax
withholdings.
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Environmental Regulations
From time to time we engage in the transportation of hazardous substances. Additionally, some of our tractor terminals
are located in areas where groundwater or other forms of environmental contamination could occur. Our operations
involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among others.
Certain of our facilities have wash facilities, waste oil or fuel storage tanks and fueling islands. If we are involved in
a spill or other accident involving hazardous substances, if there are releases of hazardous substances we transport, if
soil or groundwater contamination is found at our facilities or results from our operations, or if we are found to be in
violation of applicable laws or regulations, we could be subject to cleanup costs and liabilities, including substantial
fines or penalties or civil and criminal liability, any of which could have a materially adverse effect on our business,
financial condition and results of operations.
In August 2011, the National Highway Traffic Safety Administration (the “NHTSA”) and the EPA adopted a new
rule that established the first-ever fuel economy and greenhouse gas standards for medium and heavy-duty vehicles,
including the tractors we employ (the “Phase 1 Standards”). The Phase 1 Standards apply to tractor model years 2014
to 2018 and require the achievement of an approximate 20 percent reduction in fuel consumption by the 2018 model
year, which equates to approximately four gallons of fuel for every 100 miles traveled. In addition, in February 2014,
President Obama announced that his administration would begin developing the next phase of tighter fuel efficiency
and greenhouse gas standards for medium-and heavy-duty tractors and trailers (the “Phase 2 Standards”). In October
2016, the EPA and NHTSA published the final rule mandating that the Phase 2 Standards will apply to trailers
beginning with model year 2018 and tractors beginning with model year 2021. The Phase 2 Standards require nine
percent and 25 percent reductions in emissions and fuel consumption for trailers and tractors, respectively, by 2027.
The final rule was effective in December 2016, but has since faced challenges and delays. In October 2017, the EPA
announced a proposal to repeal the Phase 2 Standards as they relate to gliders (which mix refurbished older
components, including transmissions and pre-emission-rule engines, with a new frame, cab, steer axle, wheels, and
other standard equipment). The outcome of such proposal is still undetermined. Additionally, implementation of the
Phase 2 Standards as they relate to trailers has been challenged in the U.S. Court of Appeals for the District of
Columbia. In November 2021, a panel for the U.S. Court of Appeals for the District of Columbia ruled in favor of the
association challenging the standards and vacated all portions of the Phase 2 Standards that applied to trailers, and
consequently, the Phase 2 Standards will only require reductions in emissions and fuel consumption for tractors. The
Company’s new tractor purchases in 2021 complied with the emission and fuel consumption reductions required by
the Phase 2 Standards. Even though the trailer provisions of the Phase 2 standards have been removed, we will still
need to ensure the majority of our fleet is compliant with the California Phase 2 standards.
In January 2020, the EPA announced it is seeking input on reducing emissions of nitrogen oxides and other pollutants
from heavy-duty trucks. The EPA anticipates taking final action on the new plan, commonly referred to as the “Cleaner
Trucks Initiative,” as soon as 2022. The EPA is targeting 2027 for these new standards to take effect and is also
working on enacting more stringent greenhouse gas emission standards (beginning with model year 2030 vehicles) by
the end of 2024.
The California Air Resources Board (“CARB”) also adopted emission control regulations that will be applicable to
all heavy-duty tractors that pull 53-foot or longer box-type trailers within the State of California. The tractors and
trailers subject to these CARB regulations must be either EPA SmartWay certified or equipped with low-rolling
resistance tires and retrofitted with SmartWay-approved aerodynamic technologies. Enforcement of these CARB
regulations for 2011 model year equipment began in January 2010 and have been phased in over several years for
older equipment. In order to comply with the CARB regulations, we submitted a large fleet compliance plan to CARB
in June 2010. In addition, in February 2017 CARB proposed California Phase 2 standards that would generally align
with the federal Phase 2 Standards, with some minor additional requirements, and as proposed would stay in place
even if the federal Phase 2 Standards are affected. In February 2019, the California Phase 2 standards became final.
Thus, even though the trailer provisions of the Phase 2 Standards were removed, we will still need to ensure the
majority of our fleet is compliant with the California Phase 2 standards, which may result in increased equipment costs
and could adversely affect our operating results and profitability. CARB has also recently announced intentions to
adopt regulations ensuring that 100% of tractors operating in California are operating with battery or fuel cell-electric
engines in the future. Whether these regulations will ultimately be adopted remains unclear. We will continue
monitoring our compliance with the CARB regulations. Federal and state lawmakers also have proposed potential
limits on carbon emissions under a variety of climate-change proposals. Compliance with such regulations has
increased the cost of our new tractors, may increase the cost of any new trailers that will operate in California, may
require us to retrofit certain of our pre-2011 model year trailers that operate in California and could impair equipment
productivity and increase our operating expenses. These adverse effects, combined with the uncertainty as to the
reliability of the newly designed diesel engines and the residual values of these vehicles, could materially increase our
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costs or otherwise materially adversely affect our business, financial condition and results of operations. In June 2020
CARB also passed the Advanced Clean Trucks (“ACT”) regulation, which became effective in March 2021 and
generally requires original equipment manufacturers to begin shifting towards greater production of zero-emission
heavy duty tractors starting in 2024. Under ACT, by 2045, every new tractor sold in California will need to be zero-
emission. While ACT does not apply to those simply operating tractors in California, it could affect the cost and/or
supply of traditional diesel tractors and may lead to similar legislation in other states or at the federal level.
In order to reduce exhaust emissions, some states and municipalities have begun to restrict the locations and amount
of time where diesel-powered tractors may idle. These restrictions could force us to purchase on-board power units
that do not require the engine to idle or to alter its drivers’ behavior, which could result in increased costs.
In addition to the foregoing laws and regulations, our operations are subject to other federal, state and local
environmental laws and regulations, many of which are implemented by the EPA and similar state agencies. Such
laws and regulations generally govern the management and handling of hazardous materials, discharge of pollutants
into the air, surface water and other environmental media, and groundwater preservation and disposal of certain
various substances. We do not believe that our compliance with these statutory and regulatory measures has had a
material adverse effect on our business, financial condition and results of operations.
Food Safety Regulations
In April 2016, the Food and Drug Administration (“FDA”) published a final rule establishing requirements for
shippers, loaders, carriers by motor vehicle and rail vehicle and receivers engaged in the transportation of food, to use
sanitary transportation practices to ensure the safety of the food they transport as part of the Food Safety Modernization
Act (“FSMA”). This rule sets forth requirements related to (i) the design and maintenance of equipment used to
transport food, (ii) the measures taken during food transportation to ensure food safety, (iii) the training of carrier
personnel in sanitary food transportation practices and (iv) maintenance and retention of records of written procedures,
agreements and training related to the foregoing items. These requirements took effect for larger carriers such as us in
April 2017. The FSMA is applicable to us not only as a carrier, but we are also considered a shipper when acting in
the role of broker. We believe we have been in compliance with the FSMA since the compliance date. However, if we
are found to be in violation of applicable laws or regulations related to the FSMA or if we transport food or goods that
are contaminated or are found to cause illness and/or death, we could be subject to substantial fines, lawsuits, penalties
and/or criminal and civil liability, any of which could have a material adverse effect on our business, financial
condition and results of operations.
As the FDA continues its efforts to modernize food safety, it is likely additional food safety regulations will take effect
in the future. In July 2020, the FDA released its “New Era of Smarter Food Safety” blueprint, which creates a ten year
roadmap to create a more digital, traceable and safer food system. This blueprint builds on the work done under the
FSMA, and while it is still unclear what, if any, changes to the current governing framework may ultimately take
effect, further regulation in this area could negatively affect our business by increasing our compliance obligations
and related expenses going forward.
Executive and Legislative Climate
It is still to be determined how President Biden’s leadership will impact our industry. That being said, President Biden
has indicated his intent to make a green infrastructure package a top priority for his administration. Any measure in
furtherance thereof could draw from the Build Back Better Act (the “BBB”), which passed the U.S. House of
Representatives, but is facing resistance in the U.S. Senate. As currently proposed, the BBB would impact
transportation by allocating funds to address various industry related issues such as port congestion and traffic safety
enforcement. The bill also promotes a myriad of low-emission programs, transit services and clean energy projects,
as well as funding for climate change research. It is unclear whether these legislative initiatives will be signed into
law and what changes they may undergo. However, adoption and implementation could negatively impact our business
by increasing our compliance obligations and related expenses.
President Biden also has indicated an intention to make substantial changes to the current U.S. tax laws during his
administration, including changes to the way capital gains are treated. Any changes to U.S. tax laws may have an
adverse impact on our business and profitability.
The United States Mexico Canada Agreement (“USMCA”) was entered into effect in July 2020. The USMCA is
designed to modernize food and agriculture trade, advance rules of origin for automobiles and trucks, and enhance
intellectual property protections, among other matters, according to the Office of the U.S. Trade Representative. It is
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difficult to predict at this stage what could be the impact of the USMCA on the economy, including the transportation
industry. However, given the amount of North American trade that moves by truck, it could have a significant impact
on supply and demand in the transportation industry, and could adversely impact the amount, movement and patterns
of freight we transport.
The IIJA was signed into law by President Biden in November 2021. The roughly $1.2 trillion bill contains an
estimated $550 billion in new spending, which will impact transportation. In particular, it dedicates more than $100
billion for surface transportation networks and roughly $66 billion for freight and passenger rail operations. Among
provisions in the law specific to trucking is the aforementioned apprenticeship program for drivers younger than 21
to eventually qualify to drive commercial trucks in interstate commerce. It remains unclear how the IIJA will be
implemented into and effect our industry. The IIJA may result in increased compliance and implementation related
expenses, which could have a negative impact on our operations.
Given COVID-19’s considerable effect on our industry, the FMCSA issued and/or extended various temporary
responsive measures throughout the year. Although, to date, these measures have largely been enacted in order to
assist industry participants in operating under adverse circumstances, any further responsive measures remain unclear
and could have a negative impact on our operations.
In November 2021, the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”)
published an emergency temporary standard (the “Emergency Rule”) requiring all employers with at least 100
employees to ensure that their employees are fully vaccinated or require any employees who remain unvaccinated to
produce a negative COVID-19 test result on at least a weekly basis before coming to work. The Emergency Rule has
been blocked by the Supreme Court. Effective January 2022, the U.S. is prohibiting unvaccinated foreigners from
crossing the U.S.-Mexico border and U.S.-Canada border. Furthermore, effective January 2022, Canada is prohibiting
unvaccinated foreigners, including U.S. citizens, from crossing their border. These border requirements, as well as
any future vaccination, testing or mask mandates that are allowed to go into effect, could, among other things, (i)
cause our unvaccinated employees to go to smaller employers, if such employers are not subject to future mandates,
or leave us or the trucking industry, especially our unvaccinated drivers, (ii) result in logistical issues, increased
expenses, and operational issues from arranging for weekly tests of our unvaccinated employees, especially our
unvaccinated drivers, (iii) result in increased costs for recruiting and retention of drivers, as well as the cost of weekly
testing, and (iv) result in decreased revenue if we are unable to recruit and retain drivers. Any vaccination, testing or
mask mandates that are interpreted as applying to drivers would significantly reduce the pool of drivers available to
us and our industry, which would further impact the extreme shortage of available drivers. Accordingly, any
vaccination, testing or mask mandates, if allowed to go into effect, could have a material adverse effect on our
business, financial condition, and results of operations.
For further discussion regarding these laws and regulations, please see the section entitled “Risk Factors.”
Seasonality
In the trucking industry, revenue has historically decreased as customers reduce shipments following the winter
holiday season and as inclement weather impedes operations. At the same time, operating expenses have generally
increased, with fuel efficiency declining because of engine idling and weather, causing more physical damage
equipment repairs and insurance claims and costs. For the reasons stated, first quarter results historically have been
lower than results in each of the other three quarters of the year. Over the past several years, we have seen increases
in demand at varying times, including surges between Thanksgiving and the year-end holiday season.
Available Information
Our website address is investor.usxpress.com. Our Annual Report on Form 10-K, our quarterly reports on Form 10-
Q, our current reports on Form 8-K and all other reports filed with the Securities and Exchange Commission pursuant
to Section 13(a) or 15 (d) of the Securities Exchange Act of 1934, can be obtained free of charge by visiting our
website. Information contained in or available through our website is not incorporated by reference into, and you
should not consider such information to be part of, this Annual Report. The SEC maintains an internet site that
contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC at www.sec.gov.
We are a Nevada corporation. We were founded by Max Fuller and Patrick Quinn in 1985 and commenced operations
in the transportation business in 1986.
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RISK FACTORS
When evaluating the Company, the following discussion of risk factors, which contains forward-looking statements
as discussed in “Cautionary Note Regarding Forward-looking Statements” above, should be considered in conjunction
with the other information contained in this Annual Report. If we are unable to mitigate and/or are exposed to any of
the following risks in the future, then there could be a material, adverse effect on our business, financial condition and
results of operations.
STRATEGIC RISKS
Our business is subject to economic, business and regulatory factors affecting the truckload industry that are
largely beyond our control, any of which could have a material adverse effect on our results of operations.
The truckload industry is highly cyclical, and our business is dependent on a number of factors that may have a
negative impact on our results of operations, many of which are beyond our control. We believe that some of the most
significant of these factors are economic changes that affect supply and demand in transportation markets that could
have a material adverse effect, such as:
Economic conditions that decrease shipping demand or increase the supply of available tractors and trailers can exert
downward pressure on rates and equipment utilization, thereby decreasing asset productivity. The risks associated
with these factors are heightened when the U.S. economy is weakened. Some of the principal risks during such times
are as follows:
we may experience low overall freight levels, which may impair our asset utilization;
certain of our customers may face credit issues and cash flow problems that may lead to payment delays,
increased credit risk, bankruptcies and other financial hardships that could result in even lower freight
demand and may require us to increase our allowance for doubtful accounts;
freight patterns may change as supply chains are redesigned, resulting in an imbalance between our
capacity and our customers’ freight demand;
customers may solicit bids for freight from multiple trucking companies or select competitors that offer
lower rates from among existing choices in an attempt to lower their costs, and we might be forced to
lower our rates or lose freight; and
we may be forced to accept more loads from freight brokers, where freight rates are typically lower, or
may be forced to incur more non-revenue miles to obtain loads.
We are also subject to cost increases outside our control that could materially reduce our profitability if we are unable
to increase our rates sufficiently. Such cost increases include, but are not limited to, increases in fuel prices, driver
and office employee wages, purchased transportation costs, interest rates, taxes, tolls, license and registration fees,
insurance, revenue equipment and related maintenance, tires and other components and healthcare and other benefits
for our employees. Further, we may not be able to appropriately adjust our costs to changing market demands. In order
to maintain high variability in our business model, it is necessary to adjust staffing levels to changing market demands.
In periods of rapid change, it is more difficult to match our staffing level to our business needs. Further, we may not
be able to appropriately adjust our costs to changing market demands.
In addition, events outside our control, such as deterioration of U.S. transportation infrastructure and reduced
investment in such infrastructure, strikes or other work stoppages at our facilities or at customer, port, border or other
shipping locations, armed conflicts or terrorist attacks, efforts to combat terrorism, military action against a foreign
state or group located in a foreign state or heightened security requirements could lead to wear, tear and damage to
our equipment, driver dissatisfaction, reduced economic demand and freight volumes, reduced availability of credit,
increased prices for fuel or temporary closing of the shipping locations or U.S. borders. Such events or enhanced
security measures in connection with such events could impair our operating efficiency and productivity and result in
higher operating costs.
We may not be successful in achieving our business strategies.
Many of our business strategies require time, significant management and financial resources and successful
implementation. Consequently, we may be unable to effectively and successfully implement our business strategies.
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We also cannot ensure that our operating results, including our operating margins, will not be materially adversely
affected by future changes in and expansion of our business, including our continued focus on expanding Variant,
while finding the proper balance of domain expertise and focusing on execution and scale, or by changes in economic
conditions. Further, many of our strategic initiatives are focused on the development and deployment of technology.
These new technology-driven initiatives have a high degree of risk, as they involve unproven business strategies and
technologies with which we have limited or no prior experience. Because such offerings and technologies are new,
they may involve unforeseen expenses and regulatory and other risks. There can be no assurance that these initiatives
will generate sufficient revenue to offset any new expenses or liabilities associated with these new investments. It is
also possible that technology developed or deployed by others will render our technology noncompetitive or obsolete.
Further, our development and deployment efforts with respect to new technologies could distract management from
current operations, and will divert capital and other resources from our historical operations. Despite the
implementation of our operational and tactical strategies and initiatives, we may be unsuccessful in achieving cost
reductions and revenue expansion in the time frames we expect or at all. Further, our results of operations may be
materially adversely affected by a failure to transition our legacy OTR fleet to Variant, further penetrate our existing
customer base, cross-sell our services, secure new customer opportunities and manage the operations and expenses of
new or growing services, including Variant. There is no assurance that we will be successful in achieving any of our
business strategies. Even if we are successful in executing our business strategies, we still may not achieve our goals.
We have invested significant resources to develop and grow our Variant fleet and we had 1,555 tractors in this fleet
at December 31, 2021. Variant’s operations are performing below our expectations. Additionally, in December 2021,
we announced a leadership change at Variant. If we are unable to improve the performance of Variant, we could be
forced to re-integrate Variant’s operations into our OTR and Dedicated operations, which would be disruptive, could
result in further write-offs of intangibles and loss of drivers, and could have a material adverse effect on our results of
operations.
We operate in a highly competitive and fragmented industry, and numerous competitive factors could impair our
ability to improve our profitability and materially adversely affect our results of operations.
Numerous competitive factors could impair our ability to improve our profitability and materially adversely affect our
results of operations, including:
we compete with many other truckload carriers of varying sizes and service offerings (including
intermodal) and, to a lesser extent, with (i) less-than-truckload carriers, (ii) railroads and (iii) other
transportation and brokerage companies, several of which have access to more equipment and greater
capital resources than we do;
many of our competitors periodically reduce their freight rates to gain business, especially during times
of reduced growth in the economy, which may limit our ability to maintain or increase freight rates or
to maintain or expand our business or may require us to reduce our freight rates in order to maintain
business and keep our equipment productive;
we may increase the size of our fleet during periods of high freight demand during which our competitors
also increase their capacity, and we may experience losses in greater amounts than such competitors
during subsequent cycles of softened freight demand if we are required to dispose of assets at a loss to
match reduced freight demand;
we may have difficulty recruiting and retaining drivers because upgrades of our tractor fleet to match
or exceed those of our competitors may not increase our cost savings or profitability;
some of our larger customers are other transportation companies and/or also operate their own private
trucking fleets, and they may decide to transport more of their own freight;
some shippers have reduced or may reduce the number of carriers they use by selecting preferred carriers
as approved service providers or by engaging dedicated providers, and we may not be selected;
consolidation in the trucking industry may create other large carriers with greater financial resources
and other competitive advantages, and we may have difficulty competing with them;
our competitors may have better safety records than us or a perception of better safety records;
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competition from freight brokerage companies may materially adversely affect our customer
relationships and freight rates;
new digital entrants with cheaper sources of capital could inhibit our ability to compete;
our competitors may have better technology that may lead to increased operating efficiencies, reduced
costs, a better ability to recruit drivers and more demand for their services, and
economies of scale that procurement aggregation providers may pass on to smaller carriers may improve
such carriers’ ability to compete with us.
We may not make acquisitions in the future, which could impede growth, or if we do, we may not be successful in
integrating any acquired businesses, either of which could have a material adverse effect on our business.
Historically, a key component of our growth strategy has been to pursue acquisitions of complementary businesses.
We currently do not expect to make any material acquisitions over the next few years, which could impede growth. If
we do make acquisitions, we cannot assure that we will be successful in negotiating, consummating or integrating the
acquisitions. If we succeed in consummating future acquisitions, our business, financial condition and results of
operations, may be materially adversely affected because:
some of the acquired businesses may not achieve anticipated revenue, earnings or cash flows;
we may assume liabilities that were not disclosed to us or otherwise exceed our estimates;
we may be unable to integrate acquired businesses successfully, or at all, and realize anticipated
economic, operational and other benefits in a timely manner, which could result in substantial costs and
delays or other operational, technical or financial problems;
acquisitions could disrupt our ongoing business, distract our management and divert our resources;
we may experience difficulties operating in markets in which we have had no or only limited direct
experience;
we may incur transactions costs and acquisition-related integration costs;
we could lose customers, employees and drivers of any acquired company;
we may incur additional indebtedness; and
we may issue additional shares of our Class A common stock, which would dilute the ownership of our
then-existing stockholders.
OPERATIONAL RISKS
Increases in driver compensation or difficulties attracting and retaining qualified drivers could materially adversely
affect our profitability and ability to maintain or grow our fleet.
Like many truckload carriers, we experience substantial difficulty in attracting and retaining sufficient numbers of
qualified drivers, which includes the engagement of independent contractors. Our industry is subject to a shortage of
qualified drivers. Such shortage is exacerbated during periods of economic expansion, in which alternative
employment opportunities, including in the construction and manufacturing industries, which may offer better
compensation and/or more time at home, are more plentiful and freight demand increases, or during periods of
economic downturns, in which unemployment benefits might be extended and financing is limited for independent
contractors who seek to purchase equipment, or the scarcity or growth of loans for students who seek financial aid for
driving school. Furthermore, capacity at driving schools may be limited by COVID-19 related social distancing
requirements. Regulatory requirements, including those related to safety ratings, ELDs, hours-of-service changes
COVID-19 mitigation measures, such as vaccination, testing, and mask mandates, and an improved economy could
further reduce the pool of eligible drivers or force us to increase driver compensation to attract and retain drivers. We
have seen evidence that stricter hours-of-service regulations adopted by the DOT in the past have tightened, and, to
the extent new regulations are enacted, may continue to tighten, the market for eligible drivers. The lack of adequate
tractor parking along some U.S. highways and congestion caused by inadequate highway funding may make it more
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difficult for drivers to comply with hours-of-service regulations and cause added stress for drivers, further reducing
the pool of eligible drivers. We have implemented driver pay increases to address this shortage and we are
implementing initiatives aimed at reducing the daily friction faced by our drivers in hopes of reducing turnover.
However, the compensation we offer our drivers and independent contractor expenses are subject to market conditions
and our initiatives to reduce driver turnover may prove unsuccessful, therefore we may find it necessary to further
increase driver compensation, change the structure of our driver compensation and/or become subject to increased
independent contractor expenses in future periods, which could materially adversely affect our growth and
profitability.
In addition, we suffer from a high turnover rate of drivers and our turnover rate is higher than the industry average
and compared to our peers. This high turnover rate requires us to spend significant resources recruiting a substantial
number of drivers in order to operate existing revenue equipment and subjects us to a higher degree of risk with respect
to driver shortages than our competitors. Our use of team-driven tractors in our expedited service offering requires
two drivers per tractor, which further increases the number of drivers we must recruit and retain in comparison to
operations that require one driver per tractor. Our driver hiring standards, including hair follicle drug testing, could
further reduce the pool of available drivers from which we would hire. If we are unable to continue to attract and retain
a sufficient number of drivers, we could be forced to, among other things, continue to adjust our compensation
packages or operate with fewer tractors and face difficulty meeting shipper demands, either of which could materially
adversely affect our growth and profitability.
Our engagement of independent contractors to provide a portion of our capacity exposes us to different risks than
we face with our tractors driven by company drivers.
As independent business owners, independent contractors may make business or personal decisions that may conflict
with our best interests such as denying loads of freight from time to time. Additionally, independent contractors may
be unable to obtain or retain equipment financing, which could affect their ability to continue to act as a third-party
service provider for the Company. In these circumstances, we must be able to deliver the freight timely in order to
maintain relationships with customers, and if we fail to meet certain customer needs or incur increased expenses to do
so, this could materially adversely affect our relationship with customers and our results of operations.
Our contracts with independent contractors are governed by the federal leasing regulations, which impose specific
requirements on us and the independent contractors. If more stringent federal leasing regulations are adopted,
independent contractors could be deterred from becoming independent contractor drivers, which could materially
adversely affect our goal of maintaining our current fleet levels of independent contractors.
We provide financing to certain qualified independent contractors. If we are unable to provide such financing in the
future, due to liquidity constraints or other restrictions, we may experience a decrease in the number of independent
contractors we are able to engage. Further, if independent contractors we engage default under or otherwise terminate
the financing arrangement and we are unable to find a replacement independent contractor or seat the tractor with a
company driver, we may incur losses on amounts owed to us with respect to the tractor.
We have several major customers, and the loss of, or significant reduction of business with, one or more of them
could have a material adverse effect on our business, financial condition and results of operations.
A significant portion of our revenue is generated from a small number of major customers, the loss of, or significant
reduction of business with, one or more of which could have a material adverse effect on our business. A substantial
portion of our freight is from customers in the retail industry. As such, our volumes are largely dependent on consumer
spending and retail sales, and our results may be more susceptible to trends in unemployment and retail sales than
carriers that do not have this concentration. In addition, our major customers engage in bid processes and other
activities periodically (including currently) in an attempt to lower their costs of transportation. We may not choose to
participate in these bids or, if we participate, may not be awarded the freight, either of which circumstances could
result in a reduction of our freight volumes with these customers. In this event, we could be required to replace the
volumes elsewhere at uncertain rates and volumes, suffer reduced equipment utilization or reduce the size of our fleet.
Failure to retain our existing customers, or enter into relationships with new customers, each on acceptable terms,
could materially impact our business, financial condition, results of operations and ability to meet our current and
long-term financial forecasts.
Our customers’ financial difficulties can negatively impact our results of operations and financial condition and our
ability to comply with the covenants under our debt agreements, especially if they were to delay or default on payments
to us. Generally, we do not have contractual relationships that guarantee any minimum volumes with our customers,
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and we cannot assure you that our customer relationships will continue as presently in effect. Our dedicated contract
service offering is typically subject to longer term written contracts than our OTR service offering. However, certain
of these contracts contain cancellation clauses, including our “evergreen” contracts, which automatically renew for
one year terms but that can be terminated more easily. There is no assurance any of our customers, including our
dedicated contract customers, will continue to utilize our services, renew our existing contracts, or continue at the
same volume levels. Despite the existence of contractual arrangements with our customers, certain of our customers
may nonetheless engage in competitive bidding processes that could negatively impact our contractual relationship.
In addition, certain of our major customers may increasingly use their own truckload and delivery fleets, which would
reduce our freight volumes. A reduction in or termination of our services by one or more of our major customers,
including our dedicated contract customers, could have a material adverse effect on our business, financial condition
and results of operations.
Fluctuations in the price or availability of fuel or surcharge collection may increase our costs of operation, which
could materially adversely affect our profitability.
Fuel is one of our largest operating expenses. Diesel fuel prices fluctuate greatly due to factors beyond our control,
such as supply and demand, political events, terrorist activities, armed conflicts, commodity futures trading,
depreciation of the dollar against other currencies, weather events and other natural disasters, which could increase in
frequency and severity due to climate change, as well as other man-made disasters, each of which may lead to an
increase in the cost of fuel. Fuel prices also are affected by the rising demand for fuel in developing countries, including
China, and could be materially adversely affected by the use of crude oil and oil reserves for purposes other than fuel
production and by diminished drilling activity. Such events may lead not only to increases in fuel prices, but also to
fuel shortages and disruptions in the fuel supply chain. Because our operations are dependent upon diesel fuel,
significant diesel fuel cost increases, shortages, rationings, or supply disruptions would materially adversely affect our
business, financial condition and results of operations.
Increases in fuel costs, to the extent not offset by rate per mile increases or fuel surcharges, have a material adverse
effect on our operations and profitability. While we have fuel surcharge programs in place with a majority of our
customers, which historically have helped us offset the majority of the negative impact of rising fuel prices associated
with loaded or billed miles, we also incur fuel costs that cannot be recovered even with respect to customers with
which we maintain fuel surcharge programs, such as those associated with non-revenue generating miles, the time
when our engines are idling and fuel for refrigeration units on our refrigerated trailers. Moreover, the terms of each
customer’s fuel surcharge program vary, and certain customers have sought to modify the terms of their fuel surcharge
programs to minimize recoverability for fuel price increases. In addition, because our fuel surcharge recovery lags
behind changes in fuel prices, our fuel surcharge recovery may not capture the increased costs we pay for fuel,
especially when prices are rising. This could lead to fluctuations in our levels of reimbursement, which have occurred
in the past. During periods of low freight volumes, shippers can use their negotiating leverage to impose fuel surcharge
policies that provide a lower reimbursement of our fuel costs. There is no assurance that our fuel surcharge program
can be maintained indefinitely or will be sufficiently effective. Our results of operations would be negatively affected
to the extent we cannot recover higher fuel costs or fail to improve our fuel price protection through our fuel surcharge
program.
We depend on third-party service providers, particularly in our Brokerage segment, and service instability from
these providers could increase our operating costs and reduce our ability to offer brokerage services, which could
materially adversely affect our revenue, business, financial condition, results of operations and customer
relationships.
Our Brokerage segment is dependent upon the services of third-party carriers, including other truckload carriers. For
this business, we do not own or control the transportation assets that deliver our customers’ freight and we do not
employ the providers directly involved in delivering the freight. These third-party providers may seek other freight
opportunities and/or require increased compensation in times of improved freight demand or tight truckload capacity.
If we are unable to secure the services of these third parties or if we become subject to increases in the prices we must
pay to secure such services, our business, financial condition and results of operations may be materially adversely
affected, and we may be unable to serve our customers on competitive terms. Our ability to secure sufficient equipment
or other transportation services may be affected by many risks beyond our control, including equipment shortages,
increased equipment prices, new entrants with different business models, interruptions in service due to labor disputes,
driver shortage, changes in regulations impacting transportation and changes in transportation rates.
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We are dependent on systems, networks and other information technology assets (and the data contained therein)
and a failure in the foregoing, including those caused by cybersecurity breaches, could cause a significant
disruption to our business and we may incur increasing costs in efforts to minimize those risks and comply with
regulatory standards.
Our business depends on the efficient and uninterrupted operation of our systems, networks and other information
technology assets (and the data contained therein). This includes information and electronic data interchange systems
that we have developed, both by creating these systems in-house or by adapting purchased or off-the-shelf applications
to suit our needs. Our information and electronic data interchange systems are used for receiving and planning loads,
dispatching drivers and other capacity providers, billing customers and load tracking and storing the data related to
the foregoing activities. If we are unable to prevent system violations or other unauthorized access to our systems,
networks and other information technology assets (and the data contained therein), we could be subject to significant
fines and lawsuits and our reputation could be damaged, or our business operations could be interrupted, any of which
could have a material adverse effect on our financial performance and business operations. Furthermore, recently
enacted data privacy laws, such as the California Consumer Privacy Act that became effective on January 1, 2020 and
provides new data privacy rights for consumers and operational requirements for companies, may result in increased
liability and amplified compliance and monitoring costs, any of which could have a material adverse effect on our
financial performance and business operations.
Our operations, and those of our technology and communications service providers are vulnerable to interruption by
natural disasters, such as fires, storms, and floods, which may increase in frequency and severity due to climate change,
as well as power loss, telecommunications failure, network disruptions, cyber-attacks, terrorist attacks, Internet
failures, malicious intrusions, computer viruses and other events that may be beyond our control. Furthermore, many
of our strategic initiatives would require further integration of technology into our operations, which could exacerbate
the effects of any such interruption. In addition, remote or flexible work options for our employees could create
increased demand for information technology resources and increase the avenues for unauthorized access to sensitive
information, phishing, and other cyberattacks. If any of our critical information technology assets fail or become
otherwise unavailable, whether as a result of a cybersecurity breach, upgrade project or otherwise, we would have to
perform certain functions manually, which could temporarily impact our ability to manage our fleet efficiently,
respond to customers’ requests effectively, maintain billing and other records reliably, and bill for services and prepare
financial statements accurately or in a timely manner. Although we maintain business interruption insurance, it may
be inadequate to protect us in the event of an unforeseeable and extreme catastrophe. Any significant system failure,
upgrade complication, security breach or other system disruption could interrupt or delay our operations, damage our
reputation, cause us to lose customers or impact our ability to manage our operations and report our financial
performance, any of which could have a material adverse effect on our business, financial condition and results of
operations. In addition, we are currently dependent on a single vendor platform to support certain information
technology functions. If the stability or capability of such vendor is compromised and we were forced to migrate to a
new platform, it could materially adversely affect our business, financial condition and results of operations.
We are exposed to the credit, reputational and relationship risks of certain of our former equity investments.
Certain of our former equity investments, including Parker Global Enterprises, Inc. (“Parker”), XPS Logisti-K
Systems, S.A.P.I. de C.V. (“Logisti-K”), Dylka Distribuciones Logisti-K S.A. de C.V. (“Dylka”) and Xpress
Internacional, have amounts owing to us. Furthermore, we may have overlapping customers and vendors with Parker,
Logisti-K, Dylka and Xpress Internacional. Any financial hardships of Parker, Logisti-K, Dylka, or Xpress
Internacional could lead to delay or nonpayment of amounts owed to us, strain our relationships with overlapping
customers and vendors, and damage our reputation. The occurrence of any of the foregoing events could have a
material adverse effect on our business, financial condition and results of operations. Such risks may be heightened
during a weak freight environment.
Management and key employee turnover or failure to attract and retain qualified management and other key
personnel, could materially adversely affect our business, financial condition and results of operations.
We depend on the leadership and expertise of our executive management team and other key personnel to design and
execute our strategic and operating plans. While we have employment agreements in place with these executives,
there can be no assurance we will continue to retain their services and we may become subject to significant severance
payments if our relationship with these executives is terminated under certain circumstances. Further, turnover,
planned or otherwise, in these or other key leadership positions may materially adversely affect our ability to manage
our business efficiently and effectively, and such turnover can be disruptive and distracting to management, may lead
to additional departures of existing personnel and could have a material adverse effect on our operations and future
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profitability. We must recruit, develop and retain a core group of managers to realize our goal of expanding our
operations, improving our earnings consistency and positioning ourselves for long-term operating revenue growth.
Our business depends on our reputation and the value of the U.S. Xpress and Variant brands.
We believe that the U.S. Xpress and Variant brand names symbolizes high-quality service and reliability and are a
significant sales and marketing tool to which we devote substantial resources to promote and protect. Adverse
publicity, whether or not justified, related to activities by our drivers, independent contractors or agents, such as
accidents, customer service issues or noncompliance with laws, could tarnish our reputation and reduce the value of
our brands. Damage to our reputation and loss of value in our brands could reduce the demand for our services and
have a material adverse effect on our financial condition and results of operations, and require additional resources to
rebuild our reputation and restore the value of our brands.
Difficulty in obtaining materials, equipment, goods and services from our vendors and suppliers could adversely
affect our business.
We are dependent upon our suppliers for certain products and materials, including our tractors, trailers and chassis. If
we fail to maintain favorable relationships with our vendors and suppliers, or if our vendors and suppliers are unable
to provide the products and materials we need or undergo financial hardship, we could experience difficulty in
obtaining needed goods and services because of production interruptions, limited material availability or other reasons,
or we may not be able to obtain favorable pricing or other terms. As a result, our business and operations could be
adversely affected.
Furthermore, a decrease in vendor output may have a materially adverse effect on our ability to purchase a quantity
of new revenue equipment that is sufficient to sustain our desired growth rate and to maintain a late-model fleet.
Tractor and trailer vendors may reduce their manufacturing output in response to lower demand for their products in
economic downturns or shortages of component parts. Currently, tractor and trailer manufacturers are experiencing
significant shortages of semiconductor chips and other component parts and supplies, including steel, forcing many
manufacturers to curtail or suspend their production, which has led to a lower supply of tractors and trailers, higher
prices, and lengthened trade cycles, which could have a material adverse effect on our business, financial condition,
and results of operations, particularly our maintenance expense and driver retention.
Seasonality and the impact of weather and other catastrophic events affect our operations and profitability.
Our tractor productivity decreases during the winter season because inclement weather impedes operations and some
shippers reduce their shipments after the winter holiday season. Revenue may also be adversely affected by inclement
weather and holidays, since revenue is directly related to available working days of shippers. At the same time,
operating expenses increase and fuel efficiency declines because of engine idling and harsh weather creating higher
accident frequency, increased claims and higher equipment repair expenditures. We also may suffer from natural
disasters and weather events, such as tornadoes, hurricanes, blizzards, ice storms, floods and fires, which may increase
in frequency and severity due to climate change, as well as other man-made disasters. These events may disrupt fuel
supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, damage or destroy our
assets or adversely affect the business or financial condition of our customers, any of which could materially adversely
affect our results of operations or make our results of operations more volatile.
COMPLIANCE RISKS
We retain high deductibles on a significant portion of our claims exposure, which could significantly increase the
volatility of, and decrease the amount of, our earnings and materially adversely affect our results of operations.
We retain high deductibles on a significant portion of our claims exposure and related expenses associated with
third-party bodily injury and property damage, employee medical expenses, workers’ compensation, physical damage
to our equipment and cargo loss. With respect to our third-party insurance, reduced capacity in the insurance market
for trucking risks can make it more difficult to obtain both primary and excess insurance, can necessitate procuring
insurance offshore, and could result in increases in collateral requirements on those primary lines that require
securitization. For a description of our insurance coverage, please see “Insurance” under “Business.”
If any claim were to exceed coverage limits, we would bear the excess in addition to our other retained amounts. Our
insurance and claims expense could increase, or we could find it necessary to raise our retained amounts or decrease
our coverage limits when our policies are renewed or replaced. Our initiatives aimed at reducing insurance premiums
and claims expense, such as installation of forward-facing event recorders, hair follicle drug testing, and additional
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driver training, could prove unsuccessful. In addition, although we endeavor to limit our exposure arising with respect
to such claims, we also may have exposure if carriers hired by our Brokerage segment are inadequately insured for
any accident. Our results of operations and financial condition may be materially adversely affected if (i) these
expenses increase, (ii) we are unable to find excess coverage in amounts we deem sufficient, (iii) we experience a
claim in excess of our coverage limits, (iv) we experience a claim for which we do not have coverage or for which our
insurance carriers fail to pay or (v) we experience increased accidents. We have in the past, and may in the future,
incur significant expenses for deductibles and retentions due to our accident experience.
If we are required to accrue or pay additional amounts because claims prove to be more severe than our recorded
liabilities, our financial condition and results of operations may be materially adversely affected.
We accrue the costs of the uninsured portion of pending claims based on estimates derived from our evaluation of the
nature and severity of individual claims and an estimate of future claims development based upon historical claims
development trends. Actual settlement of our retained claim liabilities could differ from our estimates due to a number
of uncertainties, including evaluation of severity, legal costs and claims that have been incurred but not reported. Due
to our high retained amounts, we have significant exposure to fluctuations in the number and severity of claims. If we
are required to accrue or pay additional amounts because our estimates are revised or the claims ultimately prove to
be more severe than originally assessed, our financial condition and results of operations may be materially adversely
affected.
Increases in collateral requirements that support our insurance program and could materially adversely affect our
operations.
To comply with certain state insurance regulatory requirements, cash and/or cash equivalents must be paid to certain
of our third-party insurers, to state regulators and to our captive insurance companies and restricted as collateral to
ensure payment for anticipated losses. Significant future increases in the amount of collateral required by third-party
insurance carriers and regulators would reduce our liquidity and could materially adversely affect our business,
financial condition, results of operations and capital resources.
Insuring risk through our captive insurance companies could materially adversely affect our operations.
We utilize two captive insurers to transfer or fund risks. Mountain Lake Risk Retention Group, Inc. (“Mountain Lake
RRG”) is a state-regulated, captive risk retention group owned by two of our operating subsidiaries, U.S. Xpress, Inc.
and Total Transportation of Mississippi LLC (“Total”). Mountain Lake RRG writes the primary auto insurance
liability policies for U.S. Xpress, Inc. and Total; a portion of this risk is transferred to Mountain Lake RRG and the
remaining risk is retained as a deductible by the insured subsidiaries. Through our second captive insurer, Xpress
Assurance, we participate as a reinsurer in certain third party risks related to various types of insurance policies sold
to drivers who carry passengers in tractors and independent contractors engaged by U.S. Xpress, Inc. and Total. The
use of the captives necessarily involves retaining certain risks that might otherwise be covered by traditional insurance
products, and increases in the number or severity of claims that Mountain Lake RRG and Xpress Assurance insure
have in the past, and could in the future, materially adversely affect our earnings, business, financial condition and
results of operations.
We operate in a highly regulated industry, and increased direct and indirect costs of compliance with, or liability
for violations of, existing or future regulations could have a material adverse effect on our business.
We, our drivers, and our equipment are regulated by the DOT, the EPA, the DHS and other agencies in states in which
we operate. For further discussion of the laws and regulations applicable to us, our drivers, and our equipment, please
see "Regulation" under “Business.” Future laws and regulations may be more stringent, require changes in our
operating practices, influence the demand for transportation services or require us to incur significant additional costs.
Higher costs incurred by us, or by our suppliers who pass the costs onto us through higher supplies and materials
pricing, or liabilities we may incur related to our failure to comply with existing or future regulations could adversely
affect our results of operations.
If the independent contractors we contract with are deemed by regulators or judicial process to be employees, our
business, financial condition and results of operations could be materially adversely affected.
Tax and other regulatory authorities, as well as independent contractors themselves, have increasingly asserted that
independent contractor drivers in the trucking industry are employees rather than independent contractors, and our
classification of independent contractors has been the subject of audits by such authorities from time to time.
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Companies that use lease-purchase independent contractor programs, such as us, have been more susceptible to
reclassification lawsuits, and several recent decisions have been made in favor of those seeking to classify independent
contractor truck drivers as employees. If the independent contractors with whom we contract are determined to be
employees, we would incur additional exposure under federal and state tax, workers’ compensation, unemployment
benefits, labor, employment and tort laws, including for prior periods, as well as potential liability for employee
benefits and tax withholdings, and our business, financial condition and results of operations could be materially
adversely affected. For further discussion of legislation regarding independent contractors, please see “Regulation”
under “Business.”
Developments in labor and employment law and any unionizing efforts by employees could have a material adverse
effect on our results of operations.
We face the risk that Congress, federal agencies or one or more states could approve legislation or regulations
significantly affecting our businesses and our relationship with our employees which would have substantially
liberalized the procedures for union organization. None of our domestic employees are currently covered by a
collective bargaining agreement, but any attempt by our employees to organize a labor union could result in increased
legal and other associated costs. Additionally, given the National Labor Relations Board’s “speedy election” rule, our
ability to timely and effectively address any unionizing efforts would be difficult. If we entered into a collective
bargaining agreement with our domestic employees, the terms could materially adversely affect our costs, efficiency
and ability to generate acceptable returns on the affected operations.
Safety-related evaluations and rankings under CSA could materially adversely affect our profitability and
operations, our ability to maintain or grow our fleet and our customer relationships.
Under the CSA program, fleets are evaluated and ranked against their peers based on certain safety-related standards.
As a result, our fleet could be ranked poorly as compared to peer carriers, which could have an adverse effect on our
business, financial condition and results of operations. We recruit and retain first-time drivers to be part of our fleet,
and these drivers may have a higher likelihood of creating adverse safety events under CSA. The occurrence of future
deficiencies could affect driver recruitment by causing high-quality drivers to seek employment with other carriers or
limit the pool of available drivers or could cause our customers to direct their business away from us and to carriers
with higher fleet safety rankings, either of which would materially adversely affect our business, financial condition
and results of operations. In addition, future deficiencies could increase our insurance expenses. Further, we may incur
greater than expected expenses in our attempts to improve unfavorable scores.
Certain of our subsidiaries are currently exceeding the established intervention thresholds in one or more of the seven
CSA safety-related categories. Based on these unfavorable ratings, we may be prioritized for an intervention action or
roadside inspection, either of which could materially adversely affect our business, financial condition and results of
operations. In addition, customers may be less likely to assign loads to us. For further discussion of the CSA program,
please see “Regulation” under “Business”
Receipt of an unfavorable DOT safety rating could have a material adverse effect on our operations and
profitability.
All of our motor carriers currently have a satisfactory DOT safety rating, which is the highest available rating under
the current safety rating scale. If one of our motor carriers were to receive a conditional or unsatisfactory DOT safety
rating, it could materially adversely affect our business, financial condition and results of operations as customer
contracts may require a satisfactory DOT safety rating, and a conditional or unsatisfactory rating could materially
adversely affect or restrict our operations. For further discussion of the DOT safety rating system, please see
“Regulation” under “Business”
Changes to trade regulation, quotas, duties or tariffs, caused by the changing U.S. and geopolitical environments
or otherwise, may increase our costs and materially adversely affect our business.
The imposition of additional tariffs or quotas or changes to certain trade agreements, including tariffs applied to goods
traded between the United States and China, could, among other things, increase the costs of the materials used by our
suppliers to produce new revenue equipment or increase the price of fuel. Such cost increases for our revenue
equipment suppliers would likely be passed on to us, and to the extent fuel prices increase, we may not be able to fully
recover such increases through rate increases or our fuel surcharge program, either of which could have a material
adverse effect on our business.
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We face litigation risks that could have a material adverse effect on the operation of our business.
Our business is subject to the risk of litigation by employees, applicants, independent contractor drivers, customers,
vendors, government agencies, stockholders and other parties through private actions, class actions, administrative
proceedings, regulatory actions and other processes. Recently, we and several other trucking companies have been
subject to lawsuits, including class action lawsuits, alleging violations of various federal and state wage and hour laws
regarding, among other things, minimum wage, meal and rest periods, overtime eligibility and failure to pay for all
hours worked. A number of these lawsuits have resulted in the payment of substantial settlements or damages by other
carriers.
The outcome of litigation, particularly class action lawsuits, such as our pending wage and hour class action lawsuit,
the independent contractor putative class action lawsuit and the putative class action lawsuits arising out of our IPO,
and regulatory actions, is difficult to assess or quantify, and the magnitude of the potential loss relating to such lawsuits
may remain unknown for substantial periods of time. See “Legal Proceeding.” Additionally, the cost to defend
litigation may also be significant. Not all claims are covered by our insurance (including wage and hour claims), and
there can be no assurance that our coverage limits will be adequate to cover all amounts in dispute. To the extent we
experience claims that are uninsured, exceed our coverage limits, involve significant aggregate use of our retention
amounts, or cause increases in future premiums, the resulting expenses could have a material adverse effect on our
business, financial condition and results of operations.
In addition, we may be subject, and have been subject in the past, to litigation resulting from trucking accidents. The
number and severity of litigation claims may be worsened by distracted driving by both truck drivers and other
motorists. These lawsuits have resulted, and may result in the future, in the payment of substantial settlements or
damages and increases of our insurance costs.
Increasing attention on environmental, social and governance (“ESG”) matters may have a negative impact
on our business, impose additional costs on us, and expose us to additional risks.
Companies are facing increasing attention from stakeholders relating to ESG matters, including environmental
stewardship, social responsibility, and diversity and inclusion. Organizations that provide information to investors
on corporate governance and related matters have developed ratings processes for evaluating companies on their
approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions.
Unfavorable ESG ratings may lead to negative investor sentiment toward the Company, which could have a negative
impact on our stock price.
We recently published our Corporate Responsibility Report. This report reflects our current initiatives and is not a
guarantee that we will be able to achieve them. Our ability to successfully execute these initiatives and accurately
report our progress presents numerous operational, financial, legal, reputational and other risks, many of which are
outside our control, and all of which could have a material negative impact on our business. Additionally, the
implementation of these initiatives imposes additional costs on us. If our ESG initiatives fail to satisfy our
stakeholders, then our reputation, our ability to attract or retain employees, and our attractiveness as an investment
and business partner could be negatively impacted. Similarly, our failure, or perceived failure, to pursue or fulfill our
goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could
also have similar negative impacts and expose us to government enforcement actions and private litigation.
FINANCIAL RISKS
Our existing and future indebtedness could limit our flexibility in operating our business or adversely affect our
business and our liquidity position.
We have significant amounts of indebtedness outstanding, including obligations under the credit facility we entered
into in January 2020 that is structured as a $250.0 million revolving credit facility (the “Credit Facility”), equipment
installment notes, finance leases and secured notes. As of December 31, 2021, we had indebtedness of $376.0 million.
Our indebtedness may increase from time to time in the future for various reasons, including fluctuations in results of
operations, capital expenditures and potential acquisitions. Any indebtedness we incur and restrictive covenants
contained in financing agreements governing such indebtedness could:
make it difficult for us to satisfy our obligations, including making interest payments on our debt
obligations;
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limit our ability to obtain additional financing to operate our business;
require us to dedicate a substantial portion of our cash flow to payments on our debt, reducing our ability
to use our cash flow to fund capital expenditures and working capital and other general operational
requirements;
expose us to the risk of increased interest rates relating to any of our indebtedness at variable rates;
limit our flexibility to plan for and react to changes in our business and/or changing market conditions;
place us at a competitive disadvantage relative to some of our competitors that have less, or less
restrictive, debt than us;
limit our ability to pursue acquisitions or cause us to make non-strategic divestitures; and
increase our vulnerability to general adverse economic and industry conditions, including changes in
interest rates or a downturn in our business or the economy.
The occurrence of any one of these events could have a material adverse effect on our business, financial condition
and results of operations or cause a significant decrease in our liquidity and impair our ability to pay amounts due on
our indebtedness. Significant repayment penalties may limit our flexibility. In addition, our Credit Facility contains
usual and customary restrictive covenants for a facility of this nature including, among other things, restrictions on
our ability to incur certain additional indebtedness or issue guarantees, to create liens on our assets, to make
distributions on or redeem equity interests, to make investments and to engage in mergers, consolidations, or
acquisitions, and, if our excess availability is less than a specified amount, requires us to maintain a fixed charge
coverage ratio of at least 1:00:1:00.
In the future, we may need to obtain additional financing that may not be available or, if it is available, may result
in a reduction in the percentage ownership of our then-existing stockholders.
We may need to raise additional funds in order to:
finance unanticipated working capital requirements, capital investments or refinance existing
indebtedness;
develop or enhance our technological infrastructure and our existing products and services;
fund strategic relationships;
respond to competitive pressures;
acquire complementary businesses, technologies, products or services; and
successfully scale our Variant fleet.
If the economy and/or the credit markets weaken, or we are unable to enter into capital or operating leases to acquire
revenue equipment on terms favorable to us, our business, financial results and results of operations could be
materially adversely affected, especially if consumer confidence declines and domestic spending decreases. If
adequate funds are not available or are not available on acceptable terms, our ability to fund our strategic initiatives,
take advantage of unanticipated opportunities, develop or enhance technology or services or otherwise respond to
competitive pressures could be significantly limited. If we raise additional funds by issuing equity or convertible debt
securities, the percentage ownership of our then-existing stockholders may be reduced, and holders of these securities
may have rights, preferences or privileges senior to those of our then-existing stockholders.
Our profitability may be materially adversely impacted if our capital investments do not match customer demand
for invested resources or if there is a decline in the availability of funding sources for these investments.
The truckload industry generally, and our truckload offering in particular, is capital intensive and asset heavy, and our
policy of maintaining a young, technology-equipped fleet requires us to expend significant amounts in capital
expenditures annually. The amount and timing of such capital expenditures depend on various factors, including
anticipated freight demand and the price and availability of assets, as well as the availability and price of revenue
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equipment. If anticipated demand differs materially from actual usage, our capital-intensive Truckload segment may
have too many or too few assets. Moreover, resource requirements vary based on customer demand, which may be
subject to seasonal or general economic conditions. During periods of decreased customer demand, our asset
utilization may suffer.
We expect to pay for projected capital expenditures with cash flows from operations or financing available under our
existing debt instruments and new debt instruments. Although our business volume is not highly concentrated, our
customers’ financial failures or loss of customer business may materially adversely affect us. If we were unable to
generate sufficient cash from operations, we would need to seek alternative sources of capital, including financing, to
meet our capital requirements. In the event that we are unable to generate sufficient cash from operations or obtain
financing on favorable terms in the future, we may have to limit our fleet size, enter into less favorable financing
arrangements or operate our revenue equipment for longer periods, any of which could have a materially adverse
effect on our profitability.
Increased prices for new revenue equipment, design changes of new engines, future use of autonomous tractors,
and volatility in the used equipment market, could materially adversely affect our business, financial condition,
results of operations and profitability.
We are subject to risk with respect to higher prices for new tractors. We have at times experienced an increase in
prices for new tractors, including significant increase in recent quarters, and the resale value of the tractors have not
always increased to the same extent. Prices have increased and may continue to increase, due, in part, to (i) government
regulations applicable to newly manufactured tractors and diesel engines, (ii) increases in commodity prices, (iii)
shortages of component parts, such as semiconductors and steel, and (iv) and due to the pricing discretion of equipment
manufacturers in periods of high demand. Compliance with EPA regulations has increased the cost of our new tractors
and could impair equipment productivity, result in lower fuel mileage and increase our operating expenses. These
adverse effects, combined with the uncertainty as to the reliability of the vehicles equipped with the newly designed
diesel engines and the residual values realized from the disposition of these vehicles, could increase our costs or
otherwise materially adversely affect our business, financial condition and results of operations as the regulations
become effective. Furthermore, future use of autonomous tractors could increase the price of new tractors and decrease
the value of used non-autonomous tractors.
A depressed market for used equipment could require us to trade our revenue equipment at depressed values or to
record losses on disposal or impairments of the carrying values of our revenue equipment that is not protected by
residual value arrangements. Used equipment prices are subject to substantial fluctuations based on freight demand,
supply of used tractors, availability of financing, the presence of buyers for export to foreign countries and commodity
prices for scrap metal. If there is a deterioration of resale prices, it could have a material adverse effect on our business,
financial condition and results of operations.
Certain of our revenue equipment financing arrangements have balloon payments at the end of the finance terms equal
to the values we expect to be able to obtain in the used market. To the extent the used market values are lower than
such balloon payments, we may be forced to sell the equipment at a loss and our results of operations would be
materially adversely affected.
We have a history of net losses.
We have generated a profit in three of the last five years. Improving profitability depends upon numerous factors,
including our ability to successfully execute both our ongoing and planned strategic initiatives, such as increasing our
fleet efficiency and utilization, decreasing driver turnover and further refinement of our business mix profile. We may
not be able to improve profitability in the future. If we are unable to improve our profitability, our liquidity, business,
financial condition and results of operations may be materially adversely affected.
Our total assets include goodwill and other intangibles. If we determine that these items have become impaired in
the future, net income could be materially adversely affected.
As of December 31, 2021, we had recorded goodwill of $59.2 million and other intangible assets of $24.1 million
primarily as a result of certain customer relationships connected with certain acquisition-related transactions and trade
names. Goodwill represents the excess of the consideration paid by us over the estimated fair value of identifiable net
assets acquired by us. We may never realize the full value of our goodwill or intangible assets. Any future
determination requiring the write-off of a significant portion of goodwill or other intangible assets would have a
material adverse effect on our business, financial condition and results of operations.
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We are a defendant in putative class action lawsuits and a stockholder derivative lawsuit arising out of our IPO
and we may be involved in additional litigation in the future. Such lawsuits could result in substantial costs and
divert management's attention.
In 2018, a putative class action lawsuit alleging violations of federal securities laws was filed naming us and certain
of our officers and directors as defendants. Plaintiffs also named as defendants the underwriters in our IPO. Since
then, several other actions making substantially the same allegations have been filed. The plaintiffs in these lawsuits
generally allege that our registration statement and prospectus related to our IPO contained materially false or
misleading statements. Additionally, one of these lawsuits alleges that the Company, its Chief Executive Officer and
its Chief Financial Officer made false and/or misleading statements and/or material omissions in press releases,
earnings calls, investor conferences, television interviews, and filings made with the SEC subsequent to our IPO.
Furthermore, a stockholder derivative lawsuit was filed against five of our executives and our independent board
members (the “Individual Defendants”), naming the Company as a nominal defendant. The complaint alleges that the
Company made false and/or misleading statements in the registration statement and prospectus filed with the SEC in
connection with our IPO and that the Individual Defendants breached their fiduciary duties by causing or allowing the
Company to make such statements. The complaint alleges that the Company has been damaged by the alleged
wrongful conduct as a result of, among other things, being subjected to the time and expense of the securities class
action lawsuits that have been filed relating to our IPO. In addition to a claim for alleged breach of fiduciary duties,
the lawsuit alleges claims against the Individual Defendants for unjust enrichment, abuse of control, gross
mismanagement, and waste of corporate assets.
These lawsuits may divert financial and management resources that would otherwise be used to benefit our operations.
Although we deny the material allegations in the lawsuits and intend to defend ourselves vigorously, defending the
lawsuits could result in substantial costs. No assurances can be given that the results of these matters will be favorable
to us. In addition, we may be the target of securities-related litigation in the future, both related and unrelated to the
existing class action lawsuits. Such litigation could divert our management’s attention and resources, result in
substantial damages, costs and expense and have an adverse effect on our business, financial condition and results of
operations.
We are generally obligated to indemnify our current and former directors and officers in connection with lawsuits and
related litigation or settlement amounts. We maintain director and officer insurance to protect us from such lawsuits,
however, we are responsible for meeting certain deductibles under the policies. In addition, we cannot assure you that
such policies will adequately protect us from lawsuits or that costs and expenses related to lawsuits will not exceed
the coverage provided under such policies. Further, as a result of the pending lawsuits, the costs of director and officer
insurance may increase and the availability of coverage may decrease. As a result, we may not be able to maintain our
current levels of director and officer insurance at a reasonable cost, or at all, which might make it more difficult to
attract qualified candidates to serve as executive officers or directors. The effect of these lawsuits involving our
officers and directors and the resolution of these matters may result in significant damages, costs and expenses, which
could have a material adverse impact on our business, financial condition and results of operations.
We evaluate these and other litigation claims and legal proceedings to assess the probability of unfavorable outcomes
and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish
reserves or disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates
are based on the information available to management at the time and involve a significant amount of management
judgment. Actual outcomes or losses may differ materially from our current assessments and estimates, and any
adverse resolution of litigation pending or threatened against us could have a material adverse impact on our business,
financial condition and results of operations.
The dual class structure of our common stock has the effect of concentrating voting control with certain members
of the Fuller and Quinn families (or trusts for the benefit of any of them or entities owned by any of them), which
limits or precludes the ability of other stockholders to influence corporate matters.
Our Class B common stock has five votes per share, and our Class A common stock has one vote per share.
Stockholders who hold shares of Class B common stock, Messrs. Max Fuller and Eric Fuller and Ms. Lisa Pate
(collectively, the "Qualifying Stockholders") and certain trusts for the benefit of any of them or their family members
or certain entities owned by any of them or their family members (collectively with the Qualifying Stockholders, the
"Class B Stockholders"), hold more than a majority of the voting power of our outstanding capital stock. Because of
the five-to-one voting ratio between our Class B common stock and Class A common stock, the Class B Stockholders
collectively will continue to control a majority of the combined voting power of our common stock and therefore be
able to control all matters submitted to our stockholders for approval so long as the shares of Class B common stock
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represent at least 16.7% of all outstanding shares of our Class A common stock and Class B common stock. This
concentrated control will limit or preclude the ability of our other stockholders to influence corporate matters for the
foreseeable future. The interests of the Class B Stockholders may conflict with the interests of our other stockholders,
and they may take actions affecting us with which other stockholders disagree. For example, the Class B Stockholders
could take actions that would have the effect of delaying, deterring or preventing a change in control or other business
combination that might otherwise be beneficial to us and our stockholders. In addition, certain of the Class B
Stockholders have been engaged from time to time in certain related party transactions with us. Further, Messrs. Eric
Fuller and Max Fuller and Mses. Pate and Janice Fuller, the wife of Max Fuller, have entered into a voting agreement
(the "Voting Agreement") under which each has granted a voting proxy with respect to the shares of Class B common
stock subject to the voting agreement. Mr. Eric Fuller and Ms. Janice Fuller have initially designated Mr. Max Fuller
as his or her proxy and Mr. Max Fuller and Ms. Pate have each initially designated Mr. Eric Fuller as his or her proxy.
Accordingly, upon death or incapacity of any of Messrs. Eric Fuller or Max Fuller or Ms. Pate, voting control would
remain concentrated with certain members of the Fuller and/or Quinn families.
Furthermore, as a "controlled company" within the meaning of the NYSE rules, we qualify for and, in the future, may
opt to rely on, exemptions from certain corporate governance requirements, including having a majority of
independent directors, as well as having nominating and corporate governance and compensation committees
composed entirely of independent directors. If in the future we choose to rely on such exemptions, the interests of our
Qualifying Stockholders may differ from those of our other stockholders and the other stockholders may not have the
same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for
NYSE-listed companies. Our status as a controlled company could make our Class A common stock less attractive to
some investors or otherwise harm our stock price.
The price of our Class A common stock may fluctuate significantly.
The trading price of our Class A common stock has been and is likely to continue to be volatile and subject to wide
price fluctuations in response to various factors outside of our control.
In addition, certain index providers, such as FTSE Russell and S&P Dow Jones, have announced restrictions that limit
or preclude inclusion of companies with multiple-class share structures in certain indexes. Because of our dual-class
structure, we may be excluded from these indexes and we cannot assure you that other stock indexes will not take
similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indexes,
exclusion from stock indexes would likely preclude investment by many of these funds and could make our Class A
common stock less attractive to other investors. These and other factors may cause the market price and demand for
our Class A common stock to fluctuate substantially, which may limit or prevent investors from readily selling their
shares of Class A common stock and may otherwise adversely affect the price or liquidity of our Class A common
stock.
The large number of shares of our Class B common stock pledged could depress the market price of our Class A
common stock and increase volatility.
Entities affiliated with Mr. Max Fuller have negatively pledged 8,261,776 shares of Class B common stock as security
for a loan, as well as the equity of the entities holding such shares. If the lender for such loan were to foreclose on the
entities holding such shares and sell such shares into the market, it could result in (i) a decrease of the market price of
the outstanding share of Class A stock, (ii) an increase volatility in the market price of the outstanding shares of Class
A common stock and (iii) a change in control of the Company. Our Third Amended and Restated Articles of
Incorporation ("Articles of Incorporation") allow trusts and entities affiliated with Messrs. Max Fuller and Eric Fuller
and Ms. Pate to pledge shares of Class B common stock without automatic conversion to Class A common stock, in
addition to their ability to pledge shares of Class B common stock individually without automatic conversion to Class
A common stock. Accordingly, to the extent allowed by our Executive and Director Stock Ownership, Retention, and
Anti-Hedging and Pledging Policy, all shares of Class B common stock are eligible for pledging.
Provisions in our charter documents or Nevada law may inhibit a takeover, which could limit the price investors
might be willing to pay for our Class A common stock.
Our Articles of Incorporation, our Third Amended and Restated Bylaws ("Bylaws"), and Nevada corporate law contain
provisions that could delay, discourage or prevent a change of control or changes in our Board of Directors or
management that a stockholder might consider favorable. For example, our Articles of Incorporation authorize our
Board of Directors to issue preferred stock without stockholder approval and to set the rights, preferences and other
terms thereof, including voting rights of those shares; our Articles of Incorporation do not provide for cumulative
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voting in the election of directors, which would otherwise allow holders of less than a majority of stock to elect some
directors; our Class B common stock possesses disproportionate voting rights; and our Bylaws provide that a
stockholder must provide advance notice of business to be brought before an annual meeting or to nominate candidates
for election as directors at an annual meeting of stockholders. These provisions will apply even if the change may be
considered beneficial by some of our stockholders, and thereby negatively affect the price that investors might be
willing to pay in the future for our Class A common stock. In addition, to the extent that these provisions discourage
an acquisition of our company or other change in control transaction, they could deprive stockholders of opportunities
to realize takeover premiums for their shares of our Class A common stock.
If we fail to maintain an effective system of internal controls in the future, we may not be able to accurately or
timely report our financial condition or results of operations, which may adversely affect investor confidence in us
and, as a result, the value of our Class A common stock.
If we identify future material weaknesses in our internal controls over financial reporting, or if we are unable to comply
with the demands that have been placed upon us as a public company, including the requirements of Section 404 of
the Sarbanes-Oxley Act, in a timely manner, we may be unable to accurately report our financial results, or report
them within the timeframes required by the SEC. We also could become subject to sanctions or investigations by the
NYSE, the SEC or other regulatory authorities. In addition, if we are unable to assert that our internal control over
financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion
as to the effectiveness of our internal control over financial reporting, when required, investors may lose confidence
in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our
stock price may be adversely affected.
Changes in taxation could lead to an increase of our tax exposure and could affect the Company’s financial results.
President Biden has provided some informal guidance on what federal tax law changes he supports, such as an increase
in the corporate tax rate from its current top rate of 21%. If an increase in the corporate tax rate is passed by Congress
and signed into law, it could have a materially adverse effect on our financial results and financial position. At
December 31, 2021, the Company had a total deferred income tax liability of $24.3 million. The amount of deferred
tax liability is determined by using the enacted tax rates in effect for the year in which differences between the financial
statement and tax basis of assets and liabilities are expected to reverse. Accordingly, our net current tax liability has
been determined based on the currently enacted rate of 21%. If the current rate were increased due to legislation, it
would have an immediate revaluation of our deferred tax assets and liabilities in the year of enactment.
COVID-19 RISKS
We could be negatively impacted by the COVID-19 outbreak or other similar outbreaks.
Certain of our operations and personnel at our headquarters in Chattanooga, Tennessee, and other locations have
already been working remotely, which could disrupt our management, business, finance, and financial reporting teams,
and which could intensify over time. We have experienced absences and terminations among our driver and non-
driver personnel due to the outbreak of COVID-19. Further, our operations, particularly in areas of increased COVID-
19 infections, could be disrupted. Negative financial results, operational disruptions, driver and non-driver absences,
uncertainties in the market, and a tightening of credit markets, caused by COVID-19, including its variants, other
similar outbreaks, or a recession, could have a material adverse effect on our liquidity, reduce credit options available
to us, make it more difficult to obtain amendments, extensions, and waivers, and adversely impact our ability to
effectively meet our short- and long-term obligations. Furthermore, government vaccination, testing, and mask
mandates could increase our turnover and make recruiting more difficult, particularly among our driver and
maintenance personnel. See "Regulation" in “Business.”, for additional details regarding COVID-19 vaccine, testing,
and mask mandates.
The outbreak of COVID-19 has significantly increased uncertainty in the economy. Risks related to a slowdown or
recession are described in our risk factor titled “Our business is subject to economic, business and regulatory factors
affecting the truckload industry that are largely beyond our control, any of which could have a material adverse
effect on our results of operations.”
Developments related to COVID-19 have been unpredictable and the extent to which further developments could
impact our operations, financial condition, liquidity, results of operations, and cash flows is highly uncertain. Such
developments may include the duration of the virus, the distribution and availability of vaccines, vaccine hesitancy,
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the severity of the disease and the actions that may be taken by various governmental authorities and other third
parties in response to the outbreak.
PROPERTIES
We own or lease administrative offices and truck terminals (which may include fleet operations, equipment
maintenance, driver orientation/training, fuel station and equipment parking) throughout the continental United States,
none of which are individually material.
LEGAL PROCEEDINGS
We are involved in various litigation and claims primarily arising in the normal course of business, which include
claims for personal injury or property damage incurred in the transportation of freight. Our insurance program for
liability, physical damage and cargo damage involves varying risk retention levels. Claims in excess of these risk
retention levels are covered by insurance in amounts that management considers to be adequate. Based on its
knowledge of the facts and, in certain cases, advice of outside counsel, management believes the resolution of claims
and pending litigation, taking into account existing reserves, will not have a materially adverse effect on us.
Information relating to legal proceedings is included in Note 12 of the accompanying consolidated financial
statements, and is incorporated herein by reference.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our Class A common stock is traded on The New York Stock Exchange, under the symbol “USX.”
Holders of Record
As of February 18, 2022, we had approximately two stockholders of record of our Class A common stock; however,
we estimate our actual number of stockholders is much higher because a substantial number of our shares are held of
record by brokers or dealers for their customers in street names. As of February 18, 2022, Messrs. Eric and Max
Fuller and Ms. Lisa Quinn Pate, together with certain trusts for the benefit of any of them and certain entities owned
by any of them, owned all of the outstanding Class B common stock.
Dividend Policy
We currently intend to retain all available funds and any future earnings for use in the development and expansion of
our business, the repayment of debt and for general corporate purposes. Any future determination to pay dividends
and other distributions will be at the discretion of our Board of Directors. Such determinations will depend on then-
existing conditions, including our financial condition and results of operations, contractual restrictions, including
restrictive covenants contained in our financing agreements, capital requirements and other factors that our Board of
Directors may deem relevant.
Securities Authorized for Issuance under Equity Compensation Plans
See “Equity Compensation Plan Information” of this Annual Report for certain information concerning shares of our
Class A and Class B common stock authorized for issuance under our equity compensation plans.
Issuer Purchases of Equity Securities
We did not purchase any of our Class A or Class B common stock during the year ended December 31, 2021.
32
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together
with “Business” in this Annual Report, as well as the consolidated financial statements and accompanying footnotes
in this Annual Report. This discussion contains forward-looking statements as a result of many factors, including those
set forth under “Risk Factors” and “Cautionary Note Regarding Forward-looking Statements” of this Annual Report,
and elsewhere in this report. These statements are based on current expectations and assumptions that are subject to
risks and uncertainties. Actual results could differ materially from those discussed.
Overview
Total revenue for 2021 increased by $206.4 million to $1.9 billion as compared to 2020. The increase was primarily
a result of a 66.5% increase in Brokerage revenue to $381.0 million, a $31.3 million increase in fuel surcharge and a
$22.9 million increase in Truckload revenue. Excluding the impact of fuel surcharge revenue, revenue increased
$175.1 million to $1.8 billion, an increase of 10.8% as compared to the prior year.
Operating income for 2021 was $18.4 million compared to $43.6 million in 2020. We delivered a 99.1% operating
ratio for the year compared to 97.5% in 2020. Our profitability decreased largely as a result of decreased revenue
miles per tractor of 7.8%, a 6.3% decrease in available tractors combined with increases in technology and personnel
expenses and higher net fuel costs partially offset by an increase in our Brokerage gross margin to 12.6% compared
to 8.5% in 2020 on higher Brokerage revenue.
We are continuing to focus on our driver centric initiatives, such as increased miles and modern equipment, to both
retain the professional drivers who have chosen to partner with us and attract new professional drivers to our team.
During the second quarter of 2020 we launched our digital fleet, Variant, which is largely recruited, planned,
dispatched and managed using artificial intelligence and digital platforms. Variant is a completely new paradigm for
operating trucks in an OTR environment that is provided to the driver through a proprietary app-based driver
experience. We developed the concept as a hypothesis in 2018 based in part on the business models of the digital
freight brokerages. As digital brokers began to enter the market utilizing cutting edge technology and a new operating
model, we believed there was an opportunity to take this approach and apply it to our asset based business in order to
drive improved profitability and growth. During 2019, we began building our technology leadership and teams to
construct the necessary databases, applications, and processes to launch a pilot fleet with a small number of trucks in
the fourth quarter of 2019. The test proved successful and we expanded the pilot fleet to approximately 100 trucks in
the first quarter of 2020. Given the positive results of the first quarter pilot we moved to a full production model,
scaling the business to approximately 700 trucks at the end of 2020. Variant exited 2021 with 1,555 tractors, achieving
our goal of 1,500 tractors by year end. Variant continued to not only scale but outperform the legacy OTR fleet from
2019 in key metrics such as turnover, utilization, preventable accidents per million miles, and average revenue per
tractor per week. During the second half of 2021, Variant’s turnover, utilization, and revenue per tractor per week
began to deteriorate and those trends accelerated in the fourth quarter. In December the Variant team began to
transition its focus from idea generation to execution and scale the product that was developed. Since December, the
operational changes that we have made have translated to improvements in utilization, revenue per truck and overhead
per truck. While the conversion will not be linear, we expect our margins to expand further over time. We believe that
we can further scale this platform while maintaining these positive results and continuing to further enhance the
capabilities of this new technology. We will continue to focus on implementing and executing our initiatives that we
expect will continue to drive sustainable improved performance over time.
While we believe our margins will expand as we continue to convert more of our trucks to our Variant platform, we
also see tremendous growth opportunity given the highly fragmented nature of the U.S. trucking market. We believe
our Variant business model directly addresses our drivers’ frustrations as our model delivers higher utilization and
pay which has directly contributed to a significant drop in turnover. We reached a major milestone in 2021 as Variant
tractor count growth outpaced attrition in the legacy OTR division, driving total tractor count growth sequentially.
During 2020, we purchased a small business with a technology platform and an experienced and talented team. Their
approach to the brokerage business is to utilize a digital framework for handling transactions which we expect to be
scalable. Importantly, we believe this platform will enable our team to continue scaling the business and drive a high
level of growth in the years to come. Our team processed 76.7% of our Brokerage transactions digitally in 2021. We
continue to grow revenue, load count, and the percentage of transactions processed on our digital platform in our
Brokerage segment in line with our near-term profitability expectations for this business. Our focus remains on
capturing market share and growing load count from a more diverse customer base, building out our carrier network
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density, and delivering purpose built technological products to our customers. We believe these actions will all
positively contribute to operating margin improvement in the Brokerage segment at scale.
In our Dedicated division, our team successfully addressed pricing in certain Dedicated accounts as a result of driver
and capacity cost inflation. As a result, our overall Dedicated rates increased 6.6% in 2021 compared to 2020.
We expect a robust freight market early in the year that moderates as the year goes on, due to improvements in the
supply chain, inventory restocking, and perhaps some slowing of manufacturing and imports based on the Federal
Reserve tightening interest rates and a return to consumer spending on services. On the supply side, the market for
experienced drivers remains challenging and shortages of new tractors and trailers should limit capacity expansion.
These conditions are expected to continue to support increases in our OTR contract rates and lesser in Dedicated, at
least the first half of the year.
Investment in TuSimple
On April 15, 2021, TuSimple completed its initial public offering at a price of $40.00 per share. Our $5.0 million
investment consisted of 353,604 shares of TuSimple and at December 31, 2021, the fair value of our investment was
$12.7 million and we recorded an unrealized gain on investment of $7.7 million during the year in other expense
(income) within the consolidated statements of comprehensive income (loss).
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this
document generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020.
Discussions of 2019 items and year-to-year comparisons between 2020 and 2019 that are not included in this document
can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part
II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Reportable Segments
Our business is organized into two reportable segments, Truckload and Brokerage. Our Truckload segment offers
truckload services, including OTR trucking (including Variant) and dedicated contract services. Our OTR service
offering transports a full trailer of freight for a single customer from origin to destination, typically without
intermediate stops or handling pursuant to short-term contracts and spot moves that include irregular route moves
without volume and capacity commitments. Tractors are operated with a solo driver or, when handling more
time-sensitive, higher-margin freight, a team of two drivers. Our dedicated contract service offering provides similar
freight transportation services, but with contractually assigned equipment, drivers and on-site personnel to address
customers’ needs for committed capacity and service levels pursuant to multi-year contracts with guaranteed volumes
and pricing. Our Brokerage segment is principally engaged in non-asset-based freight brokerage services, where loads
are contracted to third-party carriers.
Truckload Segment
In our Truckload segment, we generate revenue by transporting freight for our customers in our OTR and dedicated
contract service offerings. Our OTR service offering provides solo and expedited team services through one-way
movements of freight over routes throughout the United States, including through Variant. While we primarily operate
in the eastern half of the United States, we provide services into and out of Mexico through a variable cost model
using third party carriers. The revenue from such model is generated in the United States. Our dedicated contract
service offering devotes the use of equipment to specific customers and provides services through long-term contracts.
Our Truckload segment provides services that are geographically diversified but have similar economic and other
relevant characteristics, as they all provide truckload carrier services of general commodities and durable goods to
similar classes of customers.
We are typically paid a predetermined rate per load or per mile for our Truckload services. We enhance our revenue
by charging for tractor and trailer detention, loading and unloading activities and other specialized services. Consistent
with industry practice, our typical customer contracts (other than those contracts in which we have agreed to dedicate
certain tractor and trailer capacity for use by specific customers) do not guarantee load levels or tractor availability.
This gives us and our customers a certain degree of flexibility to negotiate rates up or down in response to changes in
freight demand and trucking capacity. In our dedicated contract service offering, which comprised approximately
42.9% of our Truckload operating revenue, and approximately 43.3% of our Truckload revenue, before fuel surcharge,
for 2021, we provide service under contracts with fixed terms, volumes and rates. Dedicated contracts are often used
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by our customers with high-service and high-priority freight, sometimes to replace private fleets previously operated
by them. We expect to grow our dedicated business as a percentage of our average tractors.
Generally, in our Truckload segment, we receive fuel surcharges on the miles for which we are compensated by
customers. Fuel surcharge revenue mitigates the effect of price increases over a negotiated base rate per gallon of fuel;
however, these revenues may not fully protect us from all fuel price increases. Our fuel surcharges to customers may
not fully recover all fuel increases due to engine idle time, out-of-route miles and non-revenue generating miles that
are not generally billable to the customer, as well as to the extent the surcharge paid by the customer is insufficient.
The main factors that affect fuel surcharge revenue are the price of diesel fuel and the number of revenue miles we
generate. Although our surcharge programs vary by customer, we generally attempt to negotiate an additional penny
per mile charge for every five-cent increase in the U.S. Department of Energy’s (the “DOE”) national average diesel
fuel index over an agreed baseline price. Our fuel surcharges are billed on a lagging basis, meaning we typically bill
customers in the current week based on a previous week’s applicable index. Therefore, in times of increasing fuel
prices, we do not recover as much as we are currently paying for fuel. In periods of declining prices, the opposite is
true. Based on the current status of our empty miles percentage and the fuel efficiency of our tractors, we believe that
our fuel surcharge recovery is effective.
The main factors that affect our operating revenue in our Truckload segment are the average revenue per mile we
receive from our customers, the percentage of miles for which we are compensated and the number of shipments and
miles we generate. Our primary measures of revenue generation for our Truckload segment are average revenue per
loaded mile and average revenue miles per tractor per period, in each case excluding fuel surcharge revenue.
In our Truckload segment, our most significant operating expenses vary with miles traveled and include (i) fuel,
(ii) driver-related expenses, such as wages, benefits, training and recruitment and (iii) costs associated with
independent contractors (which are primarily included in the “Purchased transportation” line item). Expenses that
have both fixed and variable components include maintenance and tire expense and our total cost of insurance and
claims. These expenses generally vary with the miles we travel, but also have a controllable component based on
safety, fleet age, efficiency and other factors. Our main fixed costs include vehicle rent and depreciation of long-term
assets, such as revenue equipment and service center facilities, the compensation of non-driver personnel and other
general and administrative expenses.
Our Truckload segment requires substantial capital expenditures for purchase of new revenue equipment. We use a
combination of operating leases and secured financing to acquire tractors and trailers, which we refer to as revenue
equipment. When we finance revenue equipment acquisitions with operating leases, we record an operating lease right
of use asset and an operating lease liability on our consolidated balance sheet, and the lease payments in respect of
such equipment are reflected in our consolidated statement of comprehensive income (loss) in the line item “Vehicle
rents.” When we finance revenue equipment acquisitions with secured financing, the asset and liability are recorded
on our consolidated balance sheet, and we record expense under “Depreciation and amortization” and “Interest
expense.” Typically, the aggregate monthly payments are similar under operating lease financing and secured
financing. We use a mix of finance leases and operating leases with individual decisions being based on competitive
bids, tax projections and contractual restrictions. We expect our vehicle rents, depreciation and amortization and
interest expense will be impacted by changes in the percentage of our revenue equipment acquired through operating
leases versus equipment owned or acquired through finance leases. Because of the inverse relationship between
vehicle rents and depreciation and amortization, we review both line items together.
Approximately 17% of our total tractor fleet was operated by independent contractors at December 31, 2021.
Independent contractors provide a tractor and a driver and are responsible for all of the costs of operating their
equipment and drivers, including interest and depreciation, vehicle rents, driver compensation, fuel and other
expenses, in exchange for a fixed payment per mile or percentage of revenue per invoice plus a fuel surcharge pass-
through. Payments to independent contractors are recorded in the “Purchased transportation” line item. When
independent contractors increase as a percentage of our total tractor fleet, our “Purchased transportation” line item
typically will increase, with offsetting reductions in employee driver wages and related expenses, net of fuel (assuming
all other factors remain equal). The reverse is true when the percentage of our total fleet operated by company drivers
increases.
Brokerage Segment
In our Brokerage segment, we retain the customer relationship, including billing and collection, and we outsource the
transportation of the loads to third-party carriers. For this segment, we rely on brokerage employees to procure
third-party carriers, as well as information systems to match loads and carriers.
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Our Brokerage segment revenue is mainly affected by the rates we obtain from customers, the freight volumes we
ship through our third-party carriers and our ability to secure third-party carriers to transport customer freight. We
generally do not have contracted long-term rates for the cost of third-party carriers, and we cannot assure that our
results of operations will not be adversely impacted in the future if our ability to obtain third-party carriers changes or
the rates of such providers increase.
The most significant expense of our Brokerage segment, which is primarily variable, is the cost of purchased
transportation that we pay to third-party carriers, and is included in the “Purchased transportation” line item. This
expense generally varies depending upon truckload capacity, availability of third-party carriers, rates charged to
customers and current freight demand and customer shipping needs. Other operating expenses are generally fixed and
primarily include the compensation and benefits of non-driver personnel (which are recorded in the “Salaries, wages
and benefits” line item) and depreciation and amortization expense.
The key performance indicator in our Brokerage segment is gross margin percentage (which is calculated as brokerage
revenue less purchased transportation expense expressed as a percentage of total operating revenue). Gross
margin percentage can be impacted by the rates charged to customers and the costs of securing third-party carriers.
Our Brokerage segment does not require significant capital expenditures and is not asset-intensive like our Truckload
segment.
Results of Operations
Revenue
We generate revenue from two primary sources: transporting freight for our customers (including related fuel
surcharge revenue) and arranging for the transportation of customer freight by third-party carriers. We have two
reportable segments: our Truckload segment and our Brokerage segment. Truckload revenue, before fuel surcharge
and truckload fuel surcharge are primarily generated through trucking services provided by our two Truckload service
offerings (OTR and dedicated contract). Brokerage revenue is primarily generated through brokering freight to
third-party carriers.
Our total operating revenue is affected by certain factors that relate to, among other things, the general level of
economic activity in the United States, customer inventory levels, specific customer demand, the level of capacity in
the truckload and brokerage industry, the success of our marketing and sales efforts and the availability of drivers,
independent contractors and third-party carriers.
A summary of our revenue generated by type for the periods indicated is as follows:
Year Ended December 31,
2021
2020
(in thousands)
Revenue, before fuel surcharge
$ 1,794,278 $ 1,619,199
Fuel surcharge
154,248 122,902
Total operating revenue
$ 1,948,526 $ 1,742,101
The primary factors driving the increases in total operating revenue and revenue, before fuel surcharge, were increased
pricing and volumes in our Brokerage segment, increased miscellaneous revenues combined with increased fuel
surcharge revenues.
A summary of our revenue generated by segment for the periods indicated is as follows:
Year Ended December 31,
2021
2020
(in thousands)
Truckload revenue, before fuel surcharge
$ 1,413,272 $ 1,390,374
Fuel surcharge
154,248 122,902
Total Truckload operating revenue
1,567,520 1,513,276
Brokerage operating revenue
381,006 228,825
Total operating revenue
$ 1,948,526 $ 1,742,101
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The following is a summary of our key Truckload segment performance indicators, before fuel surcharge, for the
periods indicated.
Year Ended
December 31,
2021
2020
Over the road
Average revenue per tractor per week
$ 3,732 $ 3,650
Average revenue per mile
$ 2.333 $ 1.976
Average revenue miles per tractor per week
1,600 1,847
Average tractors
3,442 3,675
Dedicated
Average revenue per tractor per week
$ 4,359 $ 4,084
Average revenue per mile
$ 2.518 $ 2.363
Average revenue miles per tractor per week
1,731 1,728
Average tractors
2,564 2,735
Consolidated
Average revenue per tractor per week
$ 4,000 $ 3,835
Average revenue per mile
$ 2.416 $ 2.135
Average revenue miles per tractor per week
1,656 1,796
Average tractors
6,006 6,410
The primary factors driving the changes in Truckload revenue, were a 13.2% increase in average revenue per loaded
mile primarily due to an approximate 9.0% increase in contractual rates combined with a greater than 40% increase
in spot rates, and an increase of $54.2 million in miscellaneous revenue partially offset by a 7.8% decrease in average
revenue miles per tractor per week and a 6.3% decrease in average available tractors. Fuel surcharge revenue increased
by $31.3 million, or 25.5%, to $154.2 million, compared with $122.9 million in 2020. The DOE national weekly
average fuel price per gallon averaged approximately $0.72 per gallon higher for 2021 compared to 2020. The increase
in fuel surcharge revenue primarily relates to increased fuel prices partially offset by a 13.8% decrease in revenue
miles compared to 2020.
The key performance indicator of our Brokerage segment is gross margin percentage (brokerage revenue less
purchased transportation expense expressed as a percentage of total operating revenue). Gross margin percentage can
be impacted by the rates charged to customers and the costs of securing third-party carriers. The following table lists
the gross margin percentage for our Brokerage segment for the years ended December 31, 2021 and 2020.
Year Ended
December 31,
2021
2020
Gross margin percentage
12.6 %
8.5 %
The primary factors driving the increase in Brokerage revenue were a 53.7% increase in average revenue per load
combined with an 8.4% increase in load count. We experienced an increase in our gross margin to 12.6% in 2021,
compared to 8.5% in 2020. The increase in gross margin was due to the increase in revenue per load of 53.7%
exceeding the 46.8% increase in cost per load as compared to 2020.
Operating Expenses
For comparison purposes in the discussion below, we use total operating revenue and revenue, before fuel surcharge
when discussing changes as a percentage of revenue. As it relates to the comparison of expenses to revenue, before
fuel surcharge, we believe that removing fuel surcharge revenue, which is sometimes a volatile source of revenue
affords a more consistent basis for comparing the results of operations from period-to-period.
Individual expense line items as a percentage of total operating revenue also are affected by fluctuations in
the percentage of our revenue generated by independent contractor and brokerage loads.
Salaries, wages, and related expenses
Salaries, wages and benefits consist primarily of compensation for all employees. Salaries, wages and benefits are
primarily affected by the total number of miles driven by company drivers, the rate per mile we pay our company
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drivers, employee benefits such as health care and workers’ compensation, and to a lesser extent by the number of,
and compensation and benefits paid to, non-driver employees.
The following is a summary of our salaries, wages and benefits for the periods indicated:
Year Ended December 31,
2021
2020
(dollars in thousands)
Salaries, wages and benefits
$ 619,983
$ 556,507
% of total operating revenue
31.8 %
31.9 %
% of revenue, before fuel surcharge
34.6 %
34.4 %
The increase in absolute dollar terms was due primarily to $32.8 million in higher office wages due in part to a 11.0%
increase in average headcount combined with a 11.3% increase in average wages per employee as we continue to
invest in our digital and strategic initiatives to create a platform that we believe will allow for us to significantly
increase our revenues. Our driver wages increased $25.8 million despite a 6.0% decrease in company driver miles due
primarily to a 14.9% increase in driver pay per mile. During 2021, our group health and workers’ compensation
expense increased approximately 13.3%, due to increased group health claims expense partially offset by a slight
decrease in our workers’ compensation premiums compared to 2020. In the near term, we believe salaries, wages and
benefits will increase as a result of a tight driver market, wage inflation and higher healthcare costs. As a percentage
of revenue, we expect salaries, wages and benefits will fluctuate based on our ability to generate offsetting increases
in average revenue per total mile and the percentage of revenue generated by independent contractors and brokerage
operations, for which payments are reflected in the “Purchased transportation” line item.
Fuel and fuel taxes
Fuel and fuel taxes consist primarily of diesel fuel expense and fuel taxes for our company-owned and leased tractors.
The primary factors affecting our fuel and fuel taxes expense are the cost of diesel fuel, the miles per gallon we realize
with our equipment and the number of miles driven by company drivers.
We believe that the most effective protection against net fuel cost increases in the near term is to maintain an effective
fuel surcharge program and to operate a fuel-efficient fleet by incorporating fuel efficiency measures, such as auxiliary
heating units, installation of aerodynamic devices on tractors and trailers and low-rolling resistance tires on our
tractors, engine idle limitations and computer-optimized fuel-efficient routing of our fleet.
The following is a summary of our fuel and fuel taxes for the periods indicated:
Year Ended December 31,
2021
2020
(dollars in thousands)
Fuel and fuel taxes
$ 182,875
$ 136,677
% of total operating revenue
9.4 %
7.8 %
% of revenue, before fuel surcharge
10.2 %
8.4 %
To measure the effectiveness of our fuel surcharge program, we calculate “net fuel expense” by subtracting fuel
surcharge revenue (other than the fuel surcharge revenue we reimburse to independent contractors, which is included
in purchased transportation) from our fuel expense. Our net fuel expense as a percentage of revenue, before fuel
surcharge, is affected by the cost of diesel fuel net of surcharge collection, the percentage of miles driven by company
tractors and our percentage of non-revenue generating miles, for which we do not receive fuel surcharge revenues.
Net fuel expense as a percentage of revenue, before fuel surcharge, is shown below:
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Year Ended
December 31,
2021
2020
(dollars in thousands)
Total fuel surcharge revenue
$ 154,248
$ 122,902
Less: fuel surcharge revenue reimbursed to independent
contractors
32,503
31,585
Company fuel surcharge revenue
$ 121,745
$ 91,317
Total fuel and fuel taxes
$ 182,875
$ 136,677
Less: company fuel surcharge revenue
121,745
91,317
Net fuel expense
$ 61,130
$ 45,360
% of total operating revenue
3.1 %
2.6 %
% of revenue, before fuel surcharge
3.4 %
2.8 %
During 2021, the increase in net fuel expenses was primarily the result of a 42.5% increase in the average company
fuel price per gallon, partially offset by a 1.5% increase in average miles per gallon and a $30.4 million increase in
company fuel surcharge revenue as compared to 2020. In the near term, our net fuel expense is expected to fluctuate
as a percentage of total operating revenue and revenue, before fuel surcharge, based on factors such as diesel fuel
prices, the percentage recovered from fuel surcharge programs, the percentage of uncompensated miles,
the percentage of revenue generated by independent contractors, and the percentage of revenue generated by
team-driven tractors (which tend to generate higher miles and lower revenue per mile, thus proportionately more fuel
cost as a percentage of revenue).
Vehicle Rents and Depreciation and Amortization
Vehicle rents consist primarily of payments for tractors and trailers financed with operating leases. The primary factors
affecting this expense item include the size and age of our tractor and trailer fleets, the cost of new equipment and the
relative percentage of owned versus leased equipment.
Depreciation and amortization consists primarily of depreciation for owned tractors and trailers and to a lesser extent
computer software amortization. The primary factors affecting these expense items include the size and age of our
tractor and trailer fleets, the cost of new equipment and the relative percentage of owned equipment and equipment
acquired through debt or finance leases versus equipment leased through operating leases. We use a mix of finance
leases and operating leases to finance our revenue equipment with individual decisions being based on competitive
bids and tax projections. Gains or losses realized on the sale of owned revenue equipment are included in depreciation
and amortization for reporting purposes.
Vehicle rents and depreciation and amortization are closely related because both line items fluctuate depending on the
relative percentage of owned equipment and equipment acquired through finance leases versus equipment leased
through operating leases. Vehicle rents increase with greater amounts of equipment acquired through operating leases,
while depreciation and amortization increases with greater amounts of owned equipment and equipment acquired
through finance leases. Because of the inverse relationship between vehicle rents and depreciation and amortization,
we review both line items together.
The following is a summary of our vehicle rents and depreciation and amortization for the periods indicated:
Year Ended December 31,
2021
2020
(dollars in thousands)
Vehicle rents
$ 90,085
$ 86,684
Depreciation and amortization, net of (gains) losses on sale of
property
81,976
102,827
Vehicle rents and depreciation and amortization of property
and equipment
$ 172,061
$ 189,511
% of total operating revenue
8.8 %
10.9 %
% of revenue, before fuel surcharge
9.6 %
11.7 %
The increase in vehicle rents was primarily due to increased tractors and trailers financed under operating leases
compared to 2020 partially offset by decreased short term trailer rentals. The decrease in depreciation and
amortization, net of (gains) losses on sale of property, is primarily due to a gain on sale of equipment of $1.0 million
compared to a loss of $12.7 million combined with a decrease in number of tractors owned compared to 2020. The
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decrease in loss on sale is due in part to the equipment mix sold and the favorable used tractor and trailer market
compared to 2020. Looking forward to 2022, excluding any change in our percentage allocation of owned versus
leased equipment due to available financing terms, we expect to spend approximately $130.0 to $150.0 million in net
capital expenditures which will keep the average age of our equipment relatively constant. This amount could expand
to fund additional profitable growth opportunities. The balance of our equipment procurement will be funded through
operating leases.
Purchased Transportation
Purchased transportation consists of the payments we make to independent contractors, including fuel surcharge
reimbursements paid to independent contractors, in our Truckload segment, and payments to third-party carriers in
our Brokerage segment.
The following is a summary of our purchased transportation for the periods indicated:
Year Ended December 31,
2021
2020
(dollars in thousands)
Purchased transportation
$ 634,271
$ 516,196
% of total operating revenue
32.6 %
29.6 %
% of revenue, before fuel surcharge
35.3 %
31.9 %
Because we reimburse independent contractors for fuel surcharges we receive, we subtract fuel surcharge revenue
reimbursed to them from our purchased transportation. The result, referred to as purchased transportation, net of fuel
surcharge reimbursements, is evaluated as a percentage of total operating revenue and as a percentage of revenue,
before fuel surcharge, as shown below:
Year Ended December 31,
2021
2020
(dollars in thousands)
Purchased transportation
$ 634,271
$ 516,196
Less: fuel surcharge revenue reimbursed to independent
contractors
32,503
31,585
Purchased transportation, net of fuel surcharge reimbursement $ 601,768
$ 484,611
% of total operating revenue
30.9 %
27.8 %
% of revenue, before fuel surcharge
33.5 %
29.9 %
The increase in purchased transportation reflected a 46.8% increase in cost per Brokerage load, an 8.4% increase in
our Brokerage load count, partially offset by a 32.6% decrease in independent contractor miles as compared to 2020.
This expense category will fluctuate with the number and percentage of loads hauled by independent contractors and
third-party carriers, as well as the amount of fuel surcharge revenue passed through to independent contractors. If
industry-wide trucking capacity continues to tighten in relation to freight demand, we may need to increase the
amounts we pay to third-party carriers and independent contractors, which could increase this expense category on an
absolute basis and as a percentage of total operating revenue and revenue, before fuel surcharge, absent an offsetting
increase in revenue. We continue to actively attempt to expand our Brokerage segment and recruit independent
contractors. Our success in growing our lease-purchase program and independent contractor drivers have contributed
to increased purchased transportation expense. If we are successful in continuing these efforts, we would expect this
line item to increase as a percentage of total operating revenue and revenue, before fuel surcharge.
Operating Expenses and Supplies
Operating expenses and supplies consist primarily of ordinary vehicle repairs and maintenance costs, driver
on-the-road expenses, tolls and driver recruiting and training costs. Operating expenses and supplies are primarily
affected by the age of our company-owned and leased fleet of tractors and trailers, the number of miles driven in a
period and driver turnover.
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The following is a summary of our operating expenses and supplies for the periods indicated:
Year Ended December 31,
2021
2020
(dollars in thousands)
Operating expenses and supplies
$ 147,779
$ 133,356
% of total operating revenue
7.6 %
7.7 %
% of revenue, before fuel surcharge
8.2 %
8.2 %
The primary factors driving the increase in operating expenses and supplies were increased driver recruiting costs
partially offset by decreased maintenance related to our lease program as compared to 2020. During 2021, the number
of trucks we leased to independent contractors decreased by approximately 30% compared to 2020.
Insurance Premiums and Claims
Insurance premiums and claims consists primarily of retained amounts for liability (personal injury and property
damage), physical damage and cargo damage, as well as insurance premiums. The primary factors affecting our
insurance premiums and claims are the frequency and severity of accidents, trends in the development factors used in
our actuarial accruals and developments in large, prior year claims. The number of accidents tends to increase with
the miles we travel. With our significant retained amounts, insurance claims expense may fluctuate significantly and
impact the cost of insurance premiums and claims from period-to-period, and any increase in frequency or severity of
claims or adverse loss development of prior period claims would adversely affect our financial condition and results
of operations.
The following is a summary of our insurance premiums and claims expense for the periods indicated:
Year Ended December 31,
2021
2020
(dollars in thousands)
Insurance premiums and claims
$ 83,376
$ 87,053
% of total operating revenue
4.3 %
5.0 %
% of revenue, before fuel surcharge
4.6 %
5.4 %
Insurance premiums and claims decreased primarily due to decreased physical damage claims primarily as a result of
reduced frequency partially offset by increased auto liability premiums as compared to 2020. Our liability claims
expense remained essentially constant as we incurred two large claims in the fourth quarter of 2021. We renewed our
liability insurance policies effective September 1, 2021 and decreased our premiums 2.8% while preserving our
coverage limits at $75.0 million per occurrence.
We believe we have an opportunity to continue to reduce our claims expense over time as a result of the launch of
Variant, our digital fleet, which is currently experiencing fewer preventable accidents per million miles than our OTR
legacy fleet from 2019, combined with the suspension of our OTR student program. During 2021 we experienced
approximately 31% fewer preventable accidents than we did in the prior year which we believe contributed greatly to
our lower insurance and claims expense despite higher premiums. Although a decrease in frequency in claims reduced
our expense during the year, to the extent we have an increase in severity these savings could be partially or fully
offset.
General and Other Operating Expenses
General and other operating expenses consist primarily of legal and professional services fees, general and
administrative expenses and other costs.
The following is a summary of our general and other operating expenses for the periods indicated:
Year Ended December 31,
2021
2020
(dollars in thousands)
General and other operating expenses
$ 62,623
$ 55,176
% of total operating revenue
3.2 %
3.2 %
% of revenue, before fuel surcharge
3.5 %
3.4 %
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General and other expenses increased primarily due to other professional and administrative expenses along with
increased travel and entertainment expense as compared to 2020.
Other
During 2021, we recorded an unrealized gain of $7.7 million related to our investment in TuSimple. During 2020, we
sold our interest in Arnold and recorded a $2.0 million loss on the sale.
Interest
Interest expense consists of cash interest, amortization of original issuance discount and deferred financing fees.
The following is a summary of our interest expense for the periods indicated:
Year Ended December 31,
2021
2020
(in thousands)
Interest expense, excluding non-cash items
$ 13,919 $ 17,757
Original issue discount and deferred financing amortization
613
1,090
Interest expense, net
$ 14,532 $ 18,847
For 2021, interest expense decreased $4.3 million, primarily due to decreased borrowings and lower average interest
rates as compared to 2020. In January 2020, we entered into a new $250.0 million revolving Credit Facility paying
off our higher interest rate existing credit facility.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our business requires substantial amounts of cash to cover operating expenses as well as to fund capital expenditures,
working capital changes, principal and interest payments on our obligations, lease payments, letters of credit to support
insurance requirements and tax payments when we generate taxable income. Recently, we have financed our capital
requirements with borrowings under our Credit Facility, cash flows from operating activities, direct equipment
financing, operating leases and proceeds from equipment sales.
We make substantial net capital expenditures to maintain a modern company tractor fleet, refresh our trailer fleet and
strategically expand our fleet. During 2022, we currently plan to replace owned tractors with new owned tractors as
they reach approximately 475,000 to 575,000 miles. Additionally, we expect to replace our tractor lease maturities
with a mix of owned and leased replacements as we convert a portion of our leased tractors to owned. Our mix of
owned and leased equipment may vary over time due to tax treatment, financing options and flexibility of terms,
among other factors.
We believe we can fund our expected cash needs, including debt repayment, in the short-term with projected cash
flows from operating activities, borrowings under our Credit Facility and direct debt and lease financing we believe
to be available for at least the next 12 months. Over the long-term, we expect that we will continue to have significant
capital requirements, which may require us to seek additional borrowings, lease financing or equity capital. We have
obtained a significant portion of our revenue equipment under operating leases, which are not reflected as net capital
expenditures but are recorded as operating lease liabilities on our balance sheet. The availability of financing and
equity capital will depend upon our financial condition and results of operations as well as prevailing market
conditions.
Sources of Liquidity
Credit Facility
On January 28, 2020, we entered into the Credit Facility and contemporaneously with the funding of the Credit Facility
paid off obligations under our then existing credit facility and terminated such facility. The Credit Facility is a $250.0
million revolving credit facility, with an uncommitted accordion feature that, so long as no event of default exists,
allows the Company to request an increase in the revolving credit facility of up to $75.0 million.
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The Credit Facility is a five-year facility scheduled to terminate on January 28, 2025. Borrowings under the Credit
Facility are classified as either “base rate loans” or “eurodollar rate loans”. Base rate loans accrue interest at a base
rate equal to the highest of (A) the Federal Funds Rate plus 0.50%, (B) the Agent’s prime rate, and (C) LIBOR plus
1.00% plus an applicable margin that was set at 0.50% through June 30, 2020 and adjusted quarterly thereafter between
0.25% and 0.75% based on the ratio of the daily average availability under the Credit Facility to the daily average of
the lesser of the borrowing base or the revolving credit facility. Eurodollar rate loans accrue interest at LIBOR plus
an applicable margin that was set at 1.50% through June 30, 2020 and adjusted quarterly thereafter between 1.25%
and 1.75% based on the ratio of the daily average availability under the Credit Facility to the daily average of the
lesser of the borrowing base or the revolving credit facility. The Credit Facility includes, within its $250.0 million
revolving credit facility, a letter of credit sub-facility in an aggregate amount of $75.0 million and a swingline sub-
facility in an aggregate amount of $25.0 million. An unused line fee of 0.25% is applied to the average daily amount
by which the lenders’ aggregate revolving commitments exceed the outstanding principal amount of revolver loans
and aggregate undrawn amount of all outstanding letters of credit issued under the Credit Facility. The Credit Facility
is secured by a pledge of substantially all of the Company’s assets, excluding, among other things, any real estate or
revenue equipment financed outside the Credit Facility.
Borrowings under the Credit Facility are subject to a borrowing base limited to the lesser of (A) $250.0 million; or
(B) the sum of (i) 87.5% of eligible billed accounts receivable, plus (ii) 85.0% of eligible unbilled accounts receivable
(less than 30 days), plus (iii) 85.0% of the net orderly liquidation value percentage applied to the net book value of
eligible revenue equipment, plus (iv) the lesser of (a) 80.0% the fair market value of eligible real estate or (b) $25.0
million. The Credit Facility contains a single springing financial covenant, which requires a consolidated fixed charge
coverage ratio of at least 1.0 to 1.0. The financial covenant is tested only in the event excess availability under the
Credit Facility is less than the greater of (A) 10.0% of the lesser of the borrowing base or revolving credit facility or
(B) $20.0 million. Based on excess availability as of December 31, 2021, there was no fixed charge coverage ratio
requirement.
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 may
be accelerated, and the lenders’ commitments may be terminated. The Credit Facility contains certain restrictions and
covenants relating to, among other things, dividends, liens, acquisitions and dispositions, affiliate transactions, and
other indebtedness.
The Company has letters of credit of $28.1 million outstanding as of December 31, 2021. The letters of credit are
maintained primarily to support the Company’s insurance program.
See Notes 9 and 10 to the accompanying consolidated financial statements for additional disclosures regarding our
debt and leases, respectively.
Cash Flows
Our summary statements of cash flows for the periods indicated are set forth in the table below:
Year Ended December 31,
2021
2020
(in thousands)
Net cash provided by operating activities
$ 78,567 $ 150,889
Net cash used in investing activities
(96,997) (111,603)
Net cash provided by (used in) financing activities
18,620 (39,468)
Operating Activities
For 2021, we generated cash flows from operating activities of $78.6 million, a decrease of $72.3 million compared
to 2020. The decrease was due primarily to a $41.2 million decrease in net income adjusted for noncash items,
combined with a $41.6 million increase in our operating assets partially offset by increased operating liabilities. Our
operating assets increased $41.6 million due in part to increased revenues during 2021 as compared to 2020, combined
with increased long term prepaids and other receivables offset by increased accounts payable and accrued wages and
benefits related to timing of payments offset by decreased claims and insurance accruals. Our decrease in net income
adjusted for noncash items was due in part to lower available tractors, decreased average revenue miles per tractor per
week, increased fuel costs per mile combined with increased office and driver payroll offset by increases in our
Brokerage gross margin, increased revenue per mile of 13.2%, decreased insurance premiums and claims along with
decreased interest and other expense.
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Investing Activities
For 2021, net cash flows used in investing activities were $97.0 million, a decrease of $14.6 million compared to 2020.
This decrease is primarily the result of decreased net capital expenditures of $7.7 million combined with decreased
other investment outflows of $6.9 million. Our net equipment purchases as compared to 2020 decreased slightly while
our technology capital expenditures increased as we continue to invest in our digital initiatives. During 2021, proceeds
increased as a result of the equipment mix sold combined with a favorable used tractor and trailer market as compared
to the same period in 2020. We expect our net capital expenditures for calendar year 2022 will approximate $130.0
million to $150.0 million to execute our equipment replacement strategy and will be financed with cash from
operations, borrowings on the Credit Facility and secured debt financing.
Financing Activities
For 2021, net cash flows provided by financing activities were $18.6 million compared to $39.5 million used in 2020.
During 2021, our debt borrowing in excess of debt repayments were $11.0 million compared to $37.1 million debt
repayments in excess of debt borrowing during 2020. At the end of 2021, our book overdraft which is comprised of
payments issued in excess of cash on hand was $7.1 million.
Working Capital
As of December 31, 2021, we had a working capital deficit of $80.1 million, representing a $12.7 million decrease in
our working capital from December 31, 2020. When we analyze our working capital, we typically exclude balloon
payments in the current maturities of long-term debt and current portion of operating lease liabilities as these payments
are typically either funded with the proceeds from equipment sales or addressed by extending the maturity of such
payments. We believe this facilitates a more meaningful analysis of our changes in working capital from period-to-
period. Excluding balloon payments included in current maturities of long-term debt and current portion of operating
lease liabilities as of December 31, 2021, we had a working capital deficit of $54.1 million, compared with a working
capital deficit of $56.5 million at December 31, 2020. The increase in working capital was primarily the result of
increased accounts receivable and other current assets partially offset by increased accounts payable and accrued
wages and benefits.
Working capital deficits are common to many trucking companies that operate by financing revenue equipment
purchases through borrowing or finance leases and who use operating leases. When we finance revenue equipment
through borrowing or finance leases, the principal amortization scheduled for the next twelve months is categorized
as a current liability, although the revenue equipment is classified as a long-term asset. Consequently, each purchase
of revenue equipment financed with borrowing or finance leases decreases working capital. Similarly, our operating
lease right of use assets are classified as long-term, while a portion of the corresponding lease liabilities are classified
as a current liability. We believe a working capital deficit has little impact on our liquidity. Based on our expected
financial condition, net capital expenditures, results of operations, related net cash flows, installment notes, and other
sources of financing, we believe our working capital and sources of liquidity will be adequate to meet our current and
projected needs and we do not expect to experience material liquidity constraints in the foreseeable future.
Contractual Obligations and Commercial Commitments
The table below summarizes our contractual obligations as of December 31, 2021:
Payments Due by Period
Less than
More than
1 year
1 ‑ 3 years
3 ‑ 5 years
5 years
Total
(in thousands)
Long‑term debt obligations(1)
$ 95,377 182,696 95,572 26,118 $ 399,763
Finance lease obligations(2)
1,948
2,812
1,152 4,035
9,947
Operating lease obligations(3)
97,874 135,047 50,054 41,864 324,839
Purchase obligations(4)
94,206
5,002
5,002
104,210
Total contractual obligations(5)
$ 289,405 $ 325,557 $ 151,780 $ 72,017 $ 838,759
(1) Including interest obligations on long-term debt, excluding fees. The table assumes long-term debt is held to
maturity and does not reflect events subsequent to December 31, 2021.
(2) Including interest obligations on finance lease obligations.
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(3) We lease certain revenue and service equipment and office and service center facilities under long-term, non-
cancelable operating lease agreements expiring at various dates through September 2036. Revenue equipment
lease terms are generally three to five years for tractors and five to eight years for trailers. The lease terms and
any subsequent extensions generally represent the estimated usage period of the equipment, which is generally
substantially less than the economic lives. Certain revenue equipment leases provide for guarantees by us of a
portion of the specified residual value at the end of the lease term. The maximum potential amount of future
payments (undiscounted) under these guarantees is approximately $141.7 million at December 31, 2021. The
residual value of a portion of the related leased revenue equipment is covered by repurchase or trade agreements
between us and the equipment manufacturer.
(4) We had commitments outstanding at December 31, 2021 to acquire revenue and other equipment of $84.2 million,
terminal improvements of $8.1 million and software licenses of $11.9 million. The revenue equipment
commitments are cancelable, subject to certain adjustments in the underlying obligations and benefits. These
purchase commitments are expected to be financed by operating leases, long-term debt, proceeds from sales of
existing equipment and cash flows from operating activities.
(5) Excludes deferred taxes and long or short-term portion of self-insurance claims accruals.
INFLATION
Inflation in the price of revenue equipment, tires, diesel fuel, health care, operating tolls and taxes and other items has
impacted our operating costs over the past several years. A prolonged or more severe period of inflation in these or
other items would adversely affect our results of operations unless freight rates correspondingly increase. Historically,
the majority of the increase in fuel costs has been passed on to our customers through a corresponding increase in fuel
surcharge revenue, making the impact of the increased fuel costs on our results of operations less severe. Inflation
related to other costs is not directly covered from our customers through a surcharge mechanism. Because these
potential cost increases would be relatively consistent across the industry, we would expect corresponding rate
increases generally to offset these increased costs over time. If these and other costs escalate and we are unable to
recover such costs timely with effective fuel surcharges and rate increases, it would have an adverse effect on our
operations and profitability.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of
results of operations and financial position in the preparation of our financial statements in conformity with GAAP.
Actual results could differ significantly from those estimates under different assumptions and conditions. We believe
that the following discussion addresses our most critical accounting policies, which are those that are most important
to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective
and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently
uncertain. See Note 2 of the accompanying consolidated financial statements for additional information about our
critical accounting policies and estimates.
Income Taxes
Significant management judgment is required in determining our provision for income taxes and in determining
whether deferred tax assets will be realized in full or in part. Deferred tax assets and liabilities are measured using
enacted tax rates that are expected to apply to taxable income in years in which the temporary differences are expected
to be recovered or settled. When it is more likely than not that all or some portion of specific deferred tax assets, such
as state tax credit carry-forwards or state net operating loss carry-forwards will not be realized, a valuation allowance
must be established for the amount of the deferred tax assets that are determined to be not realizable.
The determination of the combined tax rate used to calculate our provision for income taxes for both current and
deferred income taxes also requires significant judgment by management. We value the net deferred tax asset or
liability by using enacted tax rates that we believe will be in effect when these temporary differences are recovered or
settled. We use the combined tax rates at the time the financial statements are prepared since more accurate information
is not available. If changes in the federal statutory rate or significant changes in the statutory state and local tax rates
occur prior to or during the reversal of these items or if our filing obligations were to change materially, this could
change the combined rate and, by extension, our provision for income taxes. We account for uncertain tax positions
in accordance with ASC 740, Income Taxes and record a liability when such uncertainties meet the more likely than
not recognition threshold.
45
Property and Equipment
Property and equipment are carried at cost. Depreciation of property and equipment is computed using the straight-
line method for financial reporting purposes and accelerated methods for tax purposes over the estimated useful lives
of the related assets (net of estimated salvage value or trade-in value). We generally use estimated useful lives of three
to five years for tractors and ten or more years for trailers with estimated salvage values ranging from 25% to 50% of
the capitalized cost. The depreciable lives of our revenue equipment represent the estimated usage period of the
equipment, which is generally substantially less than the economic lives. The residual value of a substantial portion
of our equipment is covered by repurchase or trade agreements between us and the equipment manufacturer.
Periodically, we evaluate the useful lives and salvage values of our revenue equipment and other long-lived assets
based upon, but not limited to, our experience with similar assets including gains or losses upon dispositions of such
assets, conditions in the used equipment market and prevailing industry practices. Changes in useful lives or salvage
value estimates, or fluctuations in market values that are not reflected in our estimates, could have a material impact
on our financial results. Further, if our equipment manufacturer does not perform under the terms of the agreements
for guaranteed trade-in values, such non-performance could have a materially negative impact on financial results.
We review our property and equipment whenever events or circumstances indicate the carrying amount of the asset
may not be recoverable. An impairment loss equal to the excess of carrying amount over fair value would be
recognized if the carrying amount of the asset is not recoverable.
Claims and Insurance Accruals
Claims and insurance accruals consist of estimates of cargo loss, physical damage, group health, liability (personal
injury and property damage) and workers’ compensation claims and associated legal and other expenses within our
established retention levels. Claims in excess of retention levels are generally covered by insurance in amounts we
consider adequate. Claims accruals represent the uninsured portion of pending claims including estimates of adverse
development of known claims, plus an estimated liability for incurred but not reported claims and the associated
expense. Accruals for cargo loss, physical damage, group health, liability and workers’ compensation claims are
estimated based on our evaluation of the type and severity of individual claims and historical information, primarily
our own claims experience, along with assumptions about future events combined with the assistance of independent
actuaries in the case of workers’ compensation and liability. Changes in assumptions as well as changes in actual
experience could cause these estimates to change in the near future.
Workers’ compensation and liability claims are particularly subject to a significant degree of uncertainty due to the
potential for growth and development of the claims over time. Claims and insurance reserves related to workers’
compensation and liability are estimated by a third-party actuary and we refer to these estimates in establishing the
reserve. Liability reserves are estimated based on historical experience and trends, the type and severity of individual
claims and assumptions about future costs. Further, in establishing the workers’ compensation and liability reserves,
we must take into account and estimate various factors, including, but not limited to, assumptions concerning the
nature and severity of the claim, the effect of the jurisdiction on any award or settlement, the length of time until
ultimate resolution, inflation rates in health care and in general, interest rates, legal expenses and other factors. Our
actual experience may be different than our estimates, sometimes significantly. Changes in assumptions made in
actuarial studies could potentially have a material effect on the provision for workers’ compensation and liability
claims. Additionally, if any claim were to exceed our coverage limits, we would have to accrue for and pay the excess
amount, which could have a material adverse effect on our financial condition, results of operations and cash flows.
Recent Accounting Pronouncements
See Note 2 of the accompanying consolidated financial statements for information about recent accounting
pronouncements.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
Our market risk is affected by changes in interest rates. Historically, we have used a combination of fixed rate and
variable rate obligations to manage our interest rate exposure. Fixed rate obligations expose us to the risk that interest
rates might fall. Variable rate obligations expose us to the risk that interest rates might rise. We currently do not have
any interest rate swaps although we may enter into such swaps in the future.
We are exposed to variable interest rate risk principally from our Credit Facility. We are exposed to fixed interest rate
risk principally from equipment notes and mortgages. At December 31, 2021 we had net borrowings totaling $375.5
million comprised $351.6 million of fixed rate borrowings and $23.9 million of variable rate borrowings. Accordingly,
holding other variables constant (including borrowing levels), the earnings impact of a one-percentage point
increase/decrease in interest rates would not have a significant impact on our consolidated financial statements.
COMMODITY PRICE RISK
Fuel is one of our largest expenditures. The price and availability of diesel fuel fluctuate due to changes in production,
seasonality and other market factors generally outside our control. Most of our customer contracts contain fuel
surcharge provisions to mitigate increases in the cost of fuel. Fuel surcharges to customers do not fully recover all fuel
increases because customers generally pay surcharges on a mileage basis and therefore do not generally pay for fuel
consumed while traveling out-of-route or non-revenue generating miles, while the tractor is idling and in certain other
instances. We believe that our fuel surcharge program adequately protects us from risks relating to fluctuating fuel
prices, and accordingly, we do not expect to enter into fuel purchase arrangements in the near term. We cannot predict
the extent to which fuel prices will increase or decrease in the future or the extent to which fuel surcharges could be
collected.
FINANCIAL STATEMENTS
The consolidated financial statements of U.S. Xpress Enterprises, Inc. and subsidiaries, including the consolidated
balance sheets as of December 31, 2021 and 2020, and the related consolidated statements of comprehensive income
(loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2021,
together with the related notes, the report of Grant Thornton LLP, our independent registered public accounting firm
as of December 31, 2021 and for each of the two years in the period ended December 31, 2021, and the report of
PricewaterhouseCoopers LLP, our independent registered public accounting firm as of December 31, 2019 and for
the year ended December 31, 2019, are set forth at pages 50 through 77 elsewhere in this report.
47
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There has been no change in or disagreement with accountants on accounting or financial disclosure during our two
most recent fiscal years.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), has
evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of December 31, 2021. This evaluation is performed to determine if our
disclosure controls and procedures are effective to provide reasonable assurance that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to
management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure
and are effective to provide reasonable assurance that such information is recorded, processed, summarized and
reported within the time periods specified by the SEC’s rules and forms. The CEO and CFO have concluded that our
disclosure controls and procedures were effective to provide reasonable assurance as of December 31, 2021.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process
that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from
human failures. Internal control over financial reporting also can be circumvented by collusion or improper
management override. Because of such limitations, there is a risk that material misstatements will not be prevented or
detected on a timely basis by internal control over financial reporting. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
Management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of our
internal control over financial reporting as of December 31, 2021. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal
Control - Integrated Framework (2013).
The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Grant
Thornton LLP, an independent registered public accounting firm, as stated in their report, which appears in this 2021
Annual Report.
Changes in Internal Control Over Financial Reporting
During the fiscal quarter ended December 31, 2021, there were no material changes that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.
48
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
U.S. Xpress Enterprises, Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of U.S. Xpress Enterprises, Inc. (a Nevada corporation)
and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in the 2013 Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework
issued by COSO
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31,
2021, and our report dated March 1, 2022 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ GRANT THORNTON LLP
Tulsa, Oklahoma
March 1, 2022
49
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Equity Compensation Plan Information
The following table provides certain information, as of December 31, 2021, with respect to our compensation plans
and other arrangements under which shares of our Class A common stock are authorized for issuance.
Number of securities
remaining eligible for future
Number of securities to be
issuance under equity
issued upon exercise of
Weighted average exercise
compensation plans
outstanding options,
price of outstanding options,
(excluding securities
Plan category
warrants and rights
warrants and rights
reflected in column (a))
(a)
(b)
(c)
Equity compensation plans
approved by security holders
2,206,684 (1) $
12.10 (2)
6,873,045 (3)
Equity compensation plans not
approved by security holders
—
—
—
Total
2,206,684
$
12.10
6,873,045
(1) Represents 100,017 shares of Class A common stock underlying unvested Class A RSUs granted under our
Restricted Membership Units Plan (the “RMUP”) prior to the IPO and 994,540 shares of Class A common stock
underlying unvested Class A RSUs, 796,229 shares of Class A common stock underlying unvested Class A
restricted stock awards and 315,898 shares of Class A common stock underlying unexercised Class A options
granted under our 2018 Omnibus Incentive Plan (the “Incentive Plan”).
(2) The weighted-average exercise price does not reflect the shares that will be issued in connection with the
settlement of RSUs and restricted stock awards, since they have no exercise price.
(3) Includes 5,090,899 Class A shares available for issuance under the Incentive Plan and 1,782,146 Class A shares
available for issuance under our Employee Stock Purchase Plan of which 145,484 were subsequently issued on
January 2, 2022.
The following table provides certain information, as of December 31, 2021, with respect to our compensation plans
and other arrangements under which shares of our Class B common stock are authorized for issuance.
Number of securities
remaining eligible for future
Number of securities to be
issuance under equity
issued upon exercise of
Weighted average exercise
compensation plans
outstanding options,
price of outstanding options,
(excluding securities
Plan category
warrants and rights
warrants and rights
reflected in column (a))
(a)
(b)
(c)
Equity compensation plans approved
by security holders
360,023 (1) $
— (2)
—
Equity compensation plans not
approved by security holders
—
—
—
Total
360,023 $
—
—
(1) Represents unvested Class B RSUs granted under the RMUP prior to the IPO.
(2) There is no weighted-average exercise price since RSUs have no exercise price.
We incorporate by reference the information set forth under the section entitled “Security Ownership of Certain
Beneficial Owners and Management” in the Proxy Statement.
A copy of our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities
and Exchange Commission, may be obtained by stockholders of record without charge upon written request to
Nathan Harwell, Executive Vice President, Chief Legal Officer, and Secretary, at 4080 Jenkins Road,
Chattanooga, Tennessee 37421.
50
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
U.S. Xpress Enterprises, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of U.S. Xpress Enterprises, Inc. (a Nevada
corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements
of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the two years in the
period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period
ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of
America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021, based on
criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”), and our report dated March 1, 2022 expressed an unqualified
opinion.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Auto Liability Claims Reserve Accrual
As described further in Note 2 to the consolidated financial statements, the Company’s deductible is $3.0 million per
claim, and the Company is self-insured for this portion of its risk related to auto liability. The Company, with the
assistance of an actuary, accrues for the cost of the self-insured portion of unpaid claims reserves plus an estimated
liability for incurred but not reported claims and the associated expense by evaluating the nature and severity of
individual claims and by estimating future claims development based upon historical trends. The actual cost to settle
self-insured claim liabilities may differ from the Company’s reserve estimates due to legal costs, claims that have been
incurred but not reported, and various other uncertainties. We identified the estimation of the auto liability claims
reserve subject to self-insurer retention as a critical audit matter.
Auto liability unpaid claims reserves are determined by projecting the estimated ultimate loss related to a claim, less
actual costs paid to date. These estimates rely on the assumption that historical claim patterns are an accurate
representation of future claims that have been incurred but not completely paid. The principal considerations for
51
assessing auto liability claims as a critical audit matter are the high level of estimation uncertainty related to
determining the severity of these types of claims, and the inherent subjectivity in management’s judgment in
estimating the total costs to settle or dispose of these claims.
Our audit procedures related to this critical audit matter included the following, among others:
We tested the design and operating effectiveness of controls over auto liability claims, including the
completeness and accuracy of claim expenses and payments.
We tested the claims data used in the actuarial calculation by selecting samples of historical claims data and
inspecting source documents to test key attributes of the claims data.
We tested management’s process for determining the auto liability claims reserve, including evaluating the
reasonableness of the methods and assumptions used in estimating the ultimate claim losses with the
assistance of an actuarial specialist.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2020.
Tulsa, Oklahoma
March 1, 2022
52
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of U.S. Xpress Enterprises, Inc.
Opinion on the Financial Statements
We have audited the consolidated statements of comprehensive income, stockholders’ equity (deficit), and cash flows
of U.S. Xpress Enterprises, Inc. and its subsidiaries (the “Company”) for the year ended December 31, 2019, including
the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the results of operations and cash flows of the Company
for the year ended December 31, 2019 in conformity with accounting principles generally accepted in the United
States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that
our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Birmingham, AL
March 4, 2020
We served as the Company's auditor from 2015 to 2020.
U.S. Xpress Enterprises, Inc.
Consolidated Balance Sheets
December 31, 2021 and 2020
53
December 31,
December 31,
(in thousands, except share amounts)
2021
2020
Assets
Current assets
Cash and cash equivalents
$
5,695
$
5,505
Customer receivables, net of allowance of $11 and $157 at December 31, 2021 and December 31, 2020,
respectively
231,687
189,869
Other receivables
18,046
19,203
Prepaid insurance and licenses
13,867
14,265
Operating supplies
9,550
8,953
Assets held for sale
11,831
12,382
Other current assets
32,020
16,263
Total current assets
322,696
266,440
Property and equipment, at cost
890,933
896,264
Less accumulated depreciation and amortization
(370,112)
(394,603)
Net property and equipment
520,821
501,661
Other assets
Operating lease right of use assets
292,347
287,251
Goodwill
59,221
59,221
Intangible assets, net
24,129
25,513
Other
50,829
39,504
Total other assets
426,526
411,489
Total assets
$
1,270,043
$
1,179,590
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable
$
126,910
$
83,621
Book overdraft
7,096
—
Accrued wages and benefits
45,011
40,095
Claims and insurance accruals, current
44,309
47,667
Other accrued liabilities
5,962
5,986
Current portion of operating lease liabilities
88,375
78,193
Current maturities of long-term debt and finance leases
85,117
103,690
Total current liabilities
402,780
359,252
Long-term debt and finance leases, net of current maturities
290,392
255,287
Less unamortized discount and debt issuance costs
(357)
(314)
Net long-term debt and finance leases
290,035
254,973
Deferred income taxes
24,301
25,162
Other long-term liabilities
14,457
14,615
Claims and insurance accruals, long-term
54,819
55,420
Noncurrent operating lease liabilities
205,362
209,311
Commitments and contingencies (Note 12)
—
—
Stockholders' equity
Common stock Class A, $.01 par value, 140,000,000 shares authorized at December 31, 2021 and
December 31, 2020, respectively, 34,831,118 and 33,981,185 issued and outstanding at
December 31, 2021 and December 31, 2020, respectively
348
340
Common stock Class B, $.01 par value, 35,000,000 authorized at December 31, 2021 and
December 31, 2020, respectively, 15,657,089 and 15,647,095 issued and outstanding at
December 31, 2021 and December 31, 2020, respectively
157
157
Additional paid-in capital
267,621
261,338
Retained earnings (deficit)
8,440
(2,430)
Stockholders' equity
276,566
259,405
Noncontrolling interest
1,723
1,452
Total stockholders' equity
278,289
260,857
Total liabilities and stockholders' equity
$
1,270,043
$
1,179,590
See Notes to Consolidated Financial Statements
U.S. Xpress Enterprises, Inc.
Consolidated Statements of Comprehensive Income (Loss)
December 31, 2021, 2020 and 2019
54
(in thousands, except per share amounts)
2021
2020
2019
Operating revenue
Revenue, before fuel surcharge
$ 1,794,278 $ 1,619,199 $ 1,538,450
Fuel surcharge
154,248 122,902 168,911
Total operating revenue
1,948,526 1,742,101 1,707,361
Operating expenses
Salaries, wages, and benefits
619,983 556,507 530,801
Fuel and fuel taxes
182,875 136,677 189,174
Vehicle rents
90,085
86,684
80,064
Depreciation and amortization, net of (gain) loss on sale of property
81,976 102,827
94,337
Purchased transportation
634,271 516,196 481,589
Operating expenses and supplies
147,779 133,356 142,248
Insurance premiums and claims
83,376
87,053
88,959
Operating taxes and licenses
14,490
15,084
13,849
Communications and utilities
12,639
8,990
8,928
General and other operating expenses
62,623
55,176
52,173
Gain on sale of subsidiary
—
—
(831)
Total operating expenses
1,930,097 1,698,550 1,681,291
Operating income
18,429
43,551
26,070
Other expense (income)
Interest expense, net
14,532
18,847
21,635
Impairment of equity method investments or note receivable
—
—
6,793
Equity in loss of affiliated companies
—
—
270
Other expense (income)
(7,677)
2,000
26
6,855
20,847
28,724
Income (loss) before income tax provision
11,574
22,704
(2,654)
Income tax provision
433
5,072
389
Net total and comprehensive income (loss)
11,141
17,632
(3,043)
Net total and comprehensive income (loss) attributable to
noncontrolling interest
271
(920)
604
Net total and comprehensive income (loss) attributable to controlling
interest
$
10,870 $
18,552 $
(3,647)
Earnings (loss) per share
Basic earnings (loss) per share
$
0.22 $
0.37 $
(0.07)
Basic weighted average shares outstanding
50,370
49,528
48,788
Diluted earnings (loss) per share
$
0.21 $
0.35 $
(0.07)
Diluted weighted average shares outstanding
52,167
50,674
48,788
See Notes to Consolidated Financial Statements
U.S. Xpress Enterprises, Inc.
Consolidated Statements of Stockholders’ Equity
December 31, 2021, 2020 and 2019
55
Additional
Non
Total
Class A
Class B
Paid
Retained
Controlling
Stockholders'
(in thousands, except share amounts)
Stock
Stock
In Capital
Earnings (Deficit)
Interest
Equity
Balances at December 31, 2018
$
329
$
155
$
251,742
$
(17,335)
$
3,496
$
238,387
Share based compensation
—
—
3,846
—
—
3,846
Vesting of restricted stock
3
2
(49)
—
—
(44)
Issuance of common stock under ESPP
1
—
348
—
—
349
Purchase of noncontrolling interest
—
—
(5,187)
(3,472)
(8,659)
Net income (loss)
—
—
—
(3,647)
604
(3,043)
Balances at December 31, 2019
333
157
250,700
(20,982)
628
230,836
Share based compensation
—
—
4,395
—
—
4,395
Vesting of restricted units
4
1
(140)
—
—
(135)
Conversion of Class B stock to Class A stock
1
(1)
—
—
—
—
Issuance of subsidiary shares in business combination
—
—
5,534
—
1,744
7,278
Issuance of common stock under ESPP
2
—
849
—
—
851
Net income (loss)
—
—
—
18,552
(920)
17,632
Balances at December 31, 2020
340
157
261,338
(2,430)
1,452
260,857
Share based compensation
—
—
6,244
—
—
6,244
Vesting of restricted units
5
1
(1,243)
—
—
(1,237)
Conversion of Class B stock to Class A stock
1
(1)
—
—
—
—
Issuance of common stock under ESPP
2
—
1,282
—
—
1,284
Net income
—
—
—
10,870
271
11,141
Balances at December 31, 2021
$
348
$
157
$
267,621
$
8,440
$
1,723
$
278,289
See Notes to Consolidated Financial Statements
U.S. Xpress Enterprises, Inc.
Consolidated Statements of Cash Flows
December 31, 2021, 2020 and 2019
56
(in thousands)
2021
2020
2019
Operating activities
Net income (loss)
$
11,141
$
17,632 $
(3,043)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairments of assets held for sale and equity method investments and note receivable
—
—
6,793
Equity in loss of affiliated companies
—
—
270
Deferred income tax provision (benefit)
(861)
4,470
714
Depreciation and amortization
82,975
90,116
90,484
(Gains) Losses on sale of equipment
(999)
12,711
3,853
Share based compensation
6,244
4,395
3,846
Other
684
3,367
660
Unrealized gain on equity investment
(7,677)
—
—
Gain on sale of subsidiary
—
—
(831)
Changes in operating assets and liabilities, net of acquisitions:
Receivables
(38,556)
(10,048)
7,149
Prepaid insurance and licenses
398
(2,939)
(3,294)
Operating supplies
(465)
(900)
70
Other assets
(20,578)
(3,718)
(7,790)
Accounts payable and other accrued liabilities
41,345
19,940
5,572
Accrued wages and benefits
4,916
15,863
(704)
Net cash provided by operating activities
78,567
150,889 103,749
Investing activities
Payments for purchases of property and equipment
(192,366)
(186,122) (151,751)
Proceeds from sales of property and equipment
95,369
81,399
77,966
Other
—
(6,880)
(2,000)
Sale of subsidiary, net of cash
—
—
(5,845)
Net cash used in investing activities
(96,997)
(111,603) (81,630)
Financing activities
Borrowings under lines of credit
334,512
278,654 107,300
Payments under lines of credit
(310,612)
(278,654) (107,300)
Borrowings under long-term debt
124,721
263,992 106,341
Payments of long-term debt and finance leases
(137,661)
(301,059) (136,228)
Payments of financing costs
(100)
(1,391)
(190)
Payments of long-term consideration for business acquisition
—
(1,000)
(990)
Tax withholding related to net share settlement of restricted stock awards
(1,237)
(135)
(44)
Proceeds from issuance of common stock under ESPP
1,284
851
349
Purchase of noncontrolling interest
—
—
(8,659)
Proceeds from long-term consideration for sale of subsidiary
617
587
—
Book overdraft
7,096
(1,313)
1,313
Net cash provided by (used in) financing activities
18,620
(39,468) (38,108)
Cash included in assets held for sale
—
—
11,784
Net change in cash and cash equivalents
190
(182)
(4,205)
Cash and cash equivalents
Beginning of year
5,505
5,687
9,892
End of period
$
5,695
$
5,505 $
5,687
Supplemental disclosure of cash flow information
Cash paid during the year for interest
$
13,916
$
17,620 $
21,136
Cash paid during the year for income taxes
995
705
58
Supplemental disclosure of significant noncash investing and financing activities
Subsidiary stock issued in business combination
$
—
$
7,278 $
—
Finance lease additions
5,572
—
40
Debt obligations relieved in conjunction with the divesture of Xpress Internacional
—
—
7,109
Uncollected proceeds from asset sales
2,581
406
62
Property and equipment amounts accrued in accounts payable
1,656
867
3,552
See Notes to Consolidated Financial Statements
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
57
1. Organization and Operations
U.S. Xpress Enterprises, Inc. and its consolidated subsidiaries (collectively, the “Company”, “we”, “us”, “our”,
and similar expressions) provide transportation services throughout the United States, with a focus in the
densely populated and economically diverse eastern half of the United States. The Company offers its
customers a broad portfolio of services using its own asset-based truckload fleet and third-party carriers through
our non-asset-based truck brokerage network. The Company has two reportable segments, Truckload and
Brokerage. Our Truckload segment offers asset-based truckload services, including over-the-road (“OTR”)
trucking and dedicated contract services. Our Brokerage segment is principally engaged in non-asset-based
freight brokerage services, where loads are contracted to third-party carriers.
U.S. Xpress Enterprises, Inc. completed its initial public offering in June 2018 (the “IPO” or the “offering”).
Prior to the offering U.S. Xpress Enterprises, Inc. was wholly owned by New Mountain Lake Holdings, LLC
(“New Mountain Lake”). New Mountain Lake was formed on October 12, 2007 solely for the purpose of taking
U.S. Xpress Enterprises, Inc. private and holding 100% ownership of U.S. Xpress Enterprises, Inc.
Immediately prior to the effectiveness of the offering, we completed a series of transactions (collectively, the
“Reorganization”) pursuant to which New Mountain Lake merged with and into the Company, with the
Company continuing as the surviving corporation.
In connection with the Reorganization, we adopted the Second Amended and Restated Certificate of
Incorporation of the Company, and converted into and exchanged the issued and outstanding membership units
of New Mountain Lake immediately prior to the Reorganization for the Company’s common stock. We
provided for the issuance of 4.6666667 shares of Class A common stock for each Class B non-voting
membership unit in New Mountain Lake and 4.6666667 shares of Class B common stock for each Class A
voting membership unit in New Mountain Lake. The holders of Class A common stock are entitled to one vote
per share and the holders of Class B common stock are entitled to five votes per share. In the offering, the
Company sold 16,668,000 shares of Class A common stock at a price of $16 per share to the public and received
net proceeds of $246.6 million, after deducting underwriting discounts and commissions and offering expenses.
Under our Articles of Incorporation, our authorized capital stock consists of 140,000,000 shares of Class A
common stock, par value $0.01 per share, 35,000,000 shares of Class B common stock, par value $0.01 per
share, and 9,333,333 shares of preferred stock, the rights and preferences of which may be designated by the
Board of Directors.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned and majority-
owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.
Reclassifications
Certain reclassifications have been made to the prior year financial statements to conform to the current
presentation. The reclassification consisted primarily of $23.1 million of largely driver expenses reclassified
from General and other expenses to Operating expenses and supplies for the year ended December 31, 2019.
These reclassifications had no effect on previously issued Total operating expenses, Operating income, or Net
total and comprehensive income (loss).
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles
(GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates, and such differences could be material. Significant estimates include useful lives of property and
equipment and related salvage value, claims reserves for liability and workers’ compensation claims and
valuation allowance for deferred tax assets.
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
58
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investment instruments with an original maturity of three
months or less. Cash balances with institutions may be in excess of Federal Deposit Insurance Corporation
("FDIC") limits or may be invested in sweep accounts that are not insured by the institution, the FDIC, or any
other government agency.
Customer Receivables and Allowances
Customer receivables are recorded at the invoiced amount, net of allowances for uncollectible accounts and
revenue adjustments. The allowances for uncollectible accounts and revenue adjustments are based on
historical experience as well as any known trends or uncertainties related to customer billing and account
collectability. The Company reviews the adequacy of its allowance for doubtful accounts on a quarterly basis.
Past due balances over contractual payment terms and exceeding specified amounts are reviewed individually
for collectability. Receivable balances are written off when collection is deemed unlikely.
Operating Supplies
Operating supplies consist primarily of parts, materials and supplies for servicing the Company’s revenue and
service equipment. Operating supplies are recorded at the lower of cost (on a first-in, first-out basis) or market.
Tires purchased as part of revenue and service equipment are capitalized as part of the cost of the equipment.
Replacement tires are charged to expense when placed in service.
Assets Held for Sale
Assets held for sale are comprised primarily of revenue equipment no longer being utilized in continuing
operations which are available and ready for sale. Assets held for sale are no longer subject to depreciation and
are recorded at the lower of depreciated book value or fair market value less selling costs. The Company
expects to sell these assets within the next twelve months. At December 31, 2021, assets held for sale was
comprised of revenue equipment and land. At December 31, 2020, assets held for sale was comprised of
revenue equipment.
Property and Equipment
Property and equipment are carried at cost. Depreciation of property and equipment is computed using the
straight-line method for financial reporting purposes and accelerated methods for tax purposes over the
estimated useful lives of the related assets (net of salvage values ranging from 25.0% to 50.0% of revenue
equipment). The Company periodically evaluates the estimated useful lives and salvage values of its revenue
equipment, due to changes in business needs and expected usage of the equipment. Upon the retirement of
property and equipment, the related asset cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in depreciation and amortization expense in the Company’s consolidated
statements of comprehensive income (loss). Expenditures for normal maintenance and repairs are expensed.
Renewals or betterments that affect the nature of an asset or increase its useful life are capitalized.
Leases
We determine if an arrangement is a lease or contains a lease at inception and perform an analysis to determine
whether the lease is an operating lease or a finance lease. We measure right-of-use (“ROU”) assets and lease
liabilities at the lease commencement date based on the present value of the remaining lease payments. As
most of our leases do not provide a readily determinable implicit rate, we estimate an incremental borrowing
rate based on the credit quality of the Company and by comparing interest rates available in the market for
similar borrowings, and adjusting this amount based on the impact of collateral over the term of each lease.
We use this rate to discount the remaining lease payments in measuring the ROU asset and lease liability. We
use the implicit rate when readily determinable. We recognize lease expense for operating leases on a straight-
line basis over the lease term. For our finance leases, we recognize amortization expense from the amortization
of the ROU asset and interest expense on the related lease liability. We do not separate lease and nonlease
components of contracts, except for certain leased information technology assets that are embedded within
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
59
various service agreements. The lease components included in those agreements are included in the ROU asset
and lease liability, and the amounts are not significant.
Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheet. We
recognize lease expense for these leases on a straight-line basis over the lease term.
Impairment of Long Lived Assets
The Company reviews its long-lived assets, including property and equipment, for impairment whenever
events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Expected
future cash flows are used to analyze whether an impairment has occurred. If the sum of the expected
undiscounted cash flows is less than the carrying value of the long-lived asset, then an impairment loss is
recognized. We measure the impairment loss by comparing the fair value of the asset to its carrying value. Fair
value is determined based on a discounted cash flow analysis or the appraised value of the assets, as appropriate.
During 2021, we incurred a non-cash adjustment of $4.3 million due to an obsolete technology write off and
recognized $2.7 million in depreciation and amortization expense, $1.3 million in communications and utilities
expense and the remaining $0.3 million in operating expenses and supplies expense.
Goodwill
We assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill
impairment test. Under current accounting standards, we are not required to calculate the fair value of a
reporting unit unless we determine, based on the qualitative review, that is more likely than not that its fair
value is less than its carrying value. The standard includes events and circumstances for the Company to
consider when conducting the qualitative assessment.
The Company performs an annual goodwill impairment analysis at the reporting unit level as of October 1 each
year or when an event occurs which might cause or indicate impairment. The Company performed the
qualitative assessment in the fourth quarter of 2021 and 2020 and concluded it was more likely than not that
the fair value of the reporting units were greater than their carrying amounts.
Intangible Assets
Customer relationships are valued as part of acquisition-related transactions using the income appraisal
methodology. The income appraisal methodology includes a determination of the present value of future
monetary benefits to be derived from the anticipated income, or ownership, of the subject asset. The value of
customer relationships includes the value expected to be realized from existing contracts as well as from
expected renewals of such contracts and is calculated using unweighted and weighted total undiscounted cash
flows as part of the income appraisal methodology. Customer relationships are amortized over seven to fifteen
years. The Company tests intangible assets with definite lives for impairment if conditions exist that indicate
the carrying value may not be recoverable. There was no impairment of customer relationships in 2021 and
2020.
Trade names are valued based on various factors including the projected revenue stream associated with the
intangible asset. The Company’s trade names have an indefinite life and are not amortized. In the fourth
quarter of 2021 and 2020, the Company performed the qualitative assessment of its trade name assets and
concluded it was more likely than not that the fair value of each of the assets is greater than its carrying amount.
Therefore, the Company concluded it was not necessary to perform the quantitative impairment test.
Book Overdraft
Book overdraft represents outstanding checks in excess of current cash levels. The Company funds its book
overdraft from its line of credit and operating cash flows.
Deferred Financing Costs
The Company presents debt issuance costs as a direct deduction from the related debt, consistent with debt
discounts. Debt issuance costs associated with revolving line-of-credit arrangements are presented as an asset.
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
60
All such debt issuance costs are amortized ratably over the term of the arrangement. Term loan debt issuance
costs, net of accumulated amortization was $0.4 million and $0.3 million at December 31, 2021 and 2020,
respectively. Revolver gross debt issuance costs were $4.0 million and $4.1 million at December 31, 2021 and
2020, respectively, offset by accumulated amortization of $2.4 million and $1.8 million at December 31, 2021
and 2020, respectively. Revolver and term debt issuance cost amortization expense was $0.6 million, $1.1
million and $0.6 million in 2021, 2020 and 2019, respectively. On January 28, 2020, the Company entered into
a new revolving credit facility and paid off its existing term loan which increased the revolver debt issuance
costs and decreased the term loan debt issuance cost.
Recognition of Revenue
The Company generates revenues primarily from shipments executed by the Company’s Truckload and
Brokerage operations. Those shipments are the Company’s performance obligations, arising under contracts
we have entered into with customers. Under such contracts, revenue is recognized when obligations are
satisfied, which occurs over time with the transit of shipments from origin to destination. This is appropriate
as the customer simultaneously receives and consumes the benefits as the Company performs its obligation.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for providing
services. The most significant judgment used in recognition of revenue is the determination of miles driven as
the basis for determining the amount of revenue to be recognized for partially fulfilled obligations. Accessorial
charges for fuel surcharge, loading and unloading, stop charges, and other immaterial charges are part of the
consideration we receive for the single performance obligation of delivering shipments. Contracts entered into
with our customers do not contain material financing components.
The majority of revenue contracts with our customers have a duration of one year or less and do not require
any significant start-up costs, and as such, costs incurred to obtain contracts associated with these contracts are
expensed as incurred. For contracts with durations exceeding one year, incremental start-up costs are
capitalized and amortized on a straight line basis over the contract period which materially represents the period
of revenue generation. Incremental capitalized start-up costs totaled $2.0 million and $1.9 million at December
31, 2021 and 2020, respectively, and are included in other current assets in our consolidated balance sheets.
Amortization expense associated with our start up costs was $1.2 million, $1.1 million, and $1.5 million in
2021, 2020 and 2019, respectively.
Through the Company’s Brokerage operations, the Company outsources the transportation of the loads to third-
party carriers. The Company is a principal in these arrangements, and therefore records revenue associated
with these contracts on a gross basis. The Company has the primary responsibility to meet the customer’s
requirements. The Company invoices and collects from its customers and also maintains discretion over
pricing. Additionally, the Company is responsible for selection of third-party transportation providers to the
extent used to satisfy customer freight requirements.
The timing of revenue recognition, billings, cash collections, and allowance for doubtful accounts results in
billed and unbilled receivables on our consolidated balance sheet. The Company receives the unconditional
right to bill when shipments are delivered to their destination. We generally receive payment within 40 days
of completion of performance obligations. Unbilled receivables recorded on the consolidated balance sheet
were $7.0 million and $3.6 million at December 31, 2021 and 2020, respectively and are included in customer
receivables in the consolidated balance sheets.
Income Taxes
Income taxes are accounted for under the asset-and-liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statements carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the
period that includes the enactment date.
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
61
The Company evaluates the need for a valuation allowance on deferred tax assets based on whether it believes
that it is more likely than not all deferred tax assets will be realized. A consideration of future taxable income
is made as well as on-going prudent feasible tax planning strategies in assessing the need for valuation
allowances. In the event it is determined all or part of a deferred tax asset would not be able to be realized,
management would record an adjustment to the deferred tax asset and recognize a charge against income at
that time.
The Company’s estimate of the potential outcome of any uncertain tax issue is subject to its assessment of
relevant risks, facts and circumstances existing at that time. The Company accounts for uncertain tax positions
in accordance with ASC 740, Income Taxes, and records a liability when such uncertainties meet the more
likely than not recognition threshold. Potential accrued interest and penalties related to unrecognized tax
benefits are recognized as a component of income tax expense.
Concentration of Credit Risk
Concentrations of credit risk with respect to customer receivables are limited due to the large number of entities
comprising the Company’s customer base and their dispersion across many different industries. Revenues from
the Company’s largest customer accounted for 10.9% of total consolidated revenues before fuel surcharge
during 2021. The Company performs ongoing credit evaluations and generally does not require collateral.
Stock-Based Compensation
The Company has stock-based compensation plans that provide for grants of equity to its management in the
form of stock options, stock appreciation rights, stock awards, restricted stock units, performance awards,
performance units, and any other form established by the Compensation Committee. Stock-based
compensation is recognized over the period for which an employee is required to provide service in exchange
for the award. Stock-based compensation expense is included in salaries, wages, and benefits in the
consolidated statements of comprehensive income (loss).
Claims and Insurance Accruals
Claims and insurance accruals consist of cargo loss, physical damage, group health, liability (personal injury
and property damage) and workers’ compensation claims and associated legal and other expenses within the
Company’s established retention levels. Claims in excess of retention levels are generally covered by insurance
in amounts the Company considers adequate. Claims accruals represent the uninsured portion of the loss and
if we are the primary obligor, the insured portion of pending claims at December 31, 2021 and 2020, plus an
estimated liability for incurred but not reported claims and the associated expense. Accruals for cargo loss,
physical damage, group health, liability and workers’ compensation claims are estimated based on the
Company’s evaluation of the type and severity of individual claims and future development based on historical
trends. At December 31, 2021 and 2020, the amount recorded for both workers’ compensation and auto liability
were based in part upon actuarial studies performed by a third-party actuary.
At December 31, 2021, the Company had a claim accrual and corresponding receivable for the amount above
its self-insured retention of $0.6 million. As of December 31, 2020, the Company did not have any claim
accrual or corresponding receivable for claims in excess of its retention level.
Recently Adopted Accounting Standards
In December 2019, the FASB issued ASU 2019-12, which modifies Accounting Standards Codification
(“ASC”) 740 to simplify the accounting for income taxes. We adopted ASU 2019-12 effective January 1, 2021
and the application of this guidance did not have a material impact on our financial statements.
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
62
3. Income Taxes
The components of income (loss) before income taxes are as follows (in thousands):
2021
2020
2019
Domestic
$ 11,574 $ 22,704 $ (2,848)
Mexico
—
—
194
Income (loss) before income tax provision
$ 11,574 $ 22,704 $ (2,654)
The income tax provision (benefit) for 2021, 2020 and 2019 consists of the following (in thousands):
2021
2020
2019
Current
Federal
$
— $
— $
—
State
1,294
602 (325)
1,294
602 (325)
Deferred
Federal
(65) 3,998 (546)
State
(796)
472 1,260
(861) 4,470
714
Income tax provision
$ 433 $ 5,072 $
389
A reconciliation of the income tax provision (benefit) as reported in the consolidated statements of
comprehensive income to the amounts computed by applying federal statutory rate of 21% is as follows (in
thousands):
2021
2020
2019
Federal income tax at statutory rate
$ 2,430 $ 4,768 $ (558)
State income taxes, net of federal income tax benefit
499
877 1,633
Nondeductible per diem paid to drivers
— 1,277 1,173
Xpress Internacional activity
—
—
(71)
Tax credits
(2,054) (1,198) (1,341)
Provision to return adjustment
(919) (775) (138)
Valuation allowance
(31) (372)
567
Change in reserve for uncertain tax positions and
settlements
—
— (755)
Tax shortfall/(windfall) on share-based compensation
(675)
25 (459)
Executive compensation limitation
1,380
—
—
Other, net
(197)
470
338
Income tax provision
$
433 $ 5,072 $
389
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
63
The tax effect of temporary differences that give rise to significant portions of deferred tax assets and liabilities
at December 31, 2021 and 2020, consists of the following (in thousands):
2021
2020
Deferred tax assets
Allowance for doubtful accounts
$
4,229 $
3,144
Insurance and claims reserves
20,023 20,100
Compensation and employee benefits
7,883
9,011
Net operating loss and credit carryforwards
32,822 23,850
Capital loss carryforward
4,985
4,301
Finance lease obligations
705
1,619
Investment in subsidiaries
(288)
572
Operating lease liabilities
72,751 70,861
Notes receivable reserve
—
2,638
Other
758
502
Valuation allowance
(5,694) (6,022)
Total deferred tax assets
$ 138,174 $ 130,576
Deferred tax liabilities
Property and equipment
$ 78,833 $ 76,128
Intangibles
6,965
7,208
Prepaid license fees
1,894
1,324
Right of use assets
72,750 70,861
Unrealized gain on investments
1,708
—
Other
325
217
Total deferred tax liabilities
$ 162,475 $ 155,738
Net deferred tax liability
$ 24,301 $ 25,162
The Company had approximately $22.7 million and $19.5 million of federal capital loss carryforwards, $41.5
million and $21.6 million of federal operating loss carryforwards, $147.3 million and $113.7 million of state
operating loss carryforwards and $0.8 million and $0.5 million of state tax credit carryforwards at December
31, 2021 and 2020, respectively. Federal operating losses created after 2017 of $41.5 million do not expire and
may be carried forward indefinitely. The federal credit carryforward of $15.9 million will begin to expire in
the years 2031 through 2041. The state loss carryforwards of $149.0 million begin to expire in the years 2022
and forward, depending on the state and may be used to offset otherwise taxable income. State tax credit
carryforwards of $0.8 million expire in the years 2022 through 2035.
The Company has a valuation allowance of $5.7 million and $6.0 million at December 31, 2021 and 2020,
respectively, to offset the tax benefit of certain state operating loss carryforwards, state credit carryforwards,
and federal capital loss carryforwards. The valuation allowance decreased by $0.3 million and $0.4 million
during the year ended December 31, 2021 and 2020, respectively, due to the change in capital deferred tax
assets, certain separate company state operating loss carryforwards and certain state tax credit carryforwards
which the Company does not currently believe it will be able to utilize before the applicable expiration date of
each item.
Deferred tax valuation
allowances
Balance at
beginning of Charges to costs Charges to other
Balance at end
period
and expenses
accounts
Deductions
of period
Fiscal year ended
December 31, 2019
$ 5,826 $
1,839 $
— $ 1,272 $
6,393
December 31, 2020
$ 6,393 $
456 $
— $
827 $
6,022
December 31, 2021
$ 6,022 $
61 $
— $
389 $
5,694
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
64
For the years ended December 31, 2021, 2020 and 2019, the Company had a balance of unrecognized tax
benefits of $0, $0 and $0 million respectively, which is a component of other long-term liabilities.
2021
2020
2019
Beginning balance
$
— $
— $
829
Additions based on tax positions taken in prior years
—
Reductions due to settlements
—
—
(829)
Reductions as a result of a lapse of the applicable statute of
limitations
—
—
—
Balance at December 31
$
— $
— $
—
Interest and penalties related to uncertain tax positions are classified as income tax expense in the consolidated
statement of comprehensive income. This amounted to $0 million for 2021, 2020 and 2019, respectively.
Only tax years 2015 and forward remain subject to examination by federal and state tax jurisdictions, other
than the current IRS audit. This audit is focused on amended federal income tax returns filed for 2009-2012
and relates only to reported changes in fuel tax credits and agricultural chemicals security credits. Due to events
related to this IRS exam that occurred in 2018, the Company has released the reserve related to these items.
4. Divesture of Xpress Internacional
On January 17, 2019, we sold our 95% interest in Xpress Internacional as well as our equity method
investments with operations in Mexico (Dylka Distribuciones Logisti-K, S.A. DE C.V. and XPS Logisti-K
Systems, S.A.P.I. de C.V.). The purchase price was $4.5 million in cash, a $6.0 million note receivable and
approximately $2.5 million in contingent consideration related to the completion of selling 110 tractors. The
fair value of the tractors approximated $2.5 million on January 17, 2019. During 2019, we updated the fair
value of the tractors to $1.7 million from the previously recorded $2.5 million and recorded an additional net
cash receivable for $1.6 million as a result of lower than expected purchase expenses at Xpress Internacional.
The results of operations from the business classified as assets held for sale were not material to our
consolidated revenues or consolidated operating income. During 2018, we recognized a held for sale
impairment in the amount of $11.6 million related to the disposal group as the net carrying value exceeded the
fair value. We recognized a subsequent gain during 2019 of $0.8 million.
5. Property and Equipment
The cost and lives at December 31, 2021 and 2020, are as follows (in thousands):
Approximate
Cost
Lives
2021
2020
Land and land improvements
$ 11,671 $ 18,297
Buildings and building improvements
10 − 40 years 80,191 71,550
Revenue and service equipment
3 − 15 years 582,176 622,722
Furniture and equipment
3 − 7 years 50,442 52,164
Leasehold improvements
lesser of
useful life or
lease terms 24,698 16,717
Computer software
3 − 7 years 141,755 114,814
$ 890,933 $ 896,264
The Company recognized $70.7 million, $80.4 million and $84.6 million in depreciation expense in 2021, 2020
and 2019, respectively. The Company recognized $(1.0) million, $12.7 million and $3.9 million of (gains)
losses on the sale of equipment in 2021, 2020 and 2019, respectively, which is included in depreciation and
amortization expense in the consolidated statements of comprehensive income (loss). The Company enters into
finance leases for certain revenue equipment and terminal facility with terms ranging from 36 - 144 months.
At December 31, 2021 and 2020, property and equipment included finance leases with costs of $14.2 million
and $19.2 million, and accumulated amortization of $6.8 million and $12.1 million, respectively. Amortization
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
65
of finance leases is also included in depreciation expense. The Company recognized $10.9 million, $8.0 million
and $4.1 million of computer software amortization expense in 2021, 2020 and 2019, respectively.
Accumulated amortization for computer software was $81.7 million and $72.2 million as of December 31,
2021 and 2020, respectively.
6. Goodwill
Our U.S. Xpress and Total Transportation of Mississippi (“Total”) reporting units, both of which aggregate
into our Truckload reportable segment, have goodwill with carrying amounts of $52.8 million at U.S. Xpress
and $4.9 million at Total at December 31, 2021 and 2020. During the second quarter of 2020, we acquired a
small business with a technology platform increasing our goodwill at our Brokerage segment by $1.5 million.
Total
Balance at December 31, 2019
$ 57,708
Acquisition activity
1,513
Balance at December 31, 2020
59,221
Balance at December 31, 2021
$ 59,221
7. Intangible Assets
The gross amount of the customer relationships was $21.7 million as of December 31, 2021 and 2020,
respectively. The Company recognized $1.4 million, $1.7 million and $1.7 million of amortization expense in
2021, 2020 and 2019, respectively and accumulated amortization was $20.9 million and $19.5 million as of
December 31, 2021 and 2020, respectively. The weighted average remaining useful life for the customer
relationships was 2.3 years at December 31, 2021.
The gross carrying value of the indefinite lived trade names was $23.3 million as of December 31, 2021 and
2020, respectively.
Scheduled amortization expense related to customer relationships for future years is as follows (in thousands):
Customer
Relationship
2022
345
2023
345
2024
115
2025
—
2026
—
Thereafter
—
$
805
8. Equity and Other Investments
During 2011 and 2012, the Company obtained common unit ownership interests in DriverTech, LLC
(DriverTech). DriverTech is a provider of onboard computers designed for in-cab use and related software for
the trucking industry. The Company owns 20.73% and certain members of management of the Company own
12.00%. The remaining 67.27% is owned by other investors. The carrying value of our investment in
DriverTech was $0 at December 31, 2021 and 2020, respectively.
In conjunction with the sale of Arnold Transportation, Inc. (Arnold) to Parker Global Enterprises, Inc. (Parker),
the Company received common stock representing 45% of the outstanding equity interests of Parker. The
investment in Parker was accounted for under the equity method of accounting and was initially recognized at
fair value of $10.4 million on January 2, 2013. The carrying amount of the Company’s investment in Parker
was $0 as of December 31, 2019. In February 2020, we sold our interest in Parker to the management of Parker
and recorded a loss of $2.0 million.
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
66
In December 2020, we invested $5.0 million consisting of 353,604 shares in TuSimple, a self-driving
technology company. Effective April 15, 2021, TuSimple completed their initial public offering at a closing
price of $40.00 per share. As we now have a readily determinable fair value based on quoted market prices,
which makes this a Level 1 fair value measurement, we adjust the investment to fair value at each reporting
period. During the year ending ended December 31, 2021 we recognized an unrealized gain of $7.7 million in
other expense (income), within the consolidated statements of comprehensive income (loss). The fair value of
the investment is $12.7 million and is included in other noncurrent assets on the accompanying consolidated
balance sheets.
9. Long-Term Debt
Long-term debt at December 31, 2021 and 2020 consists of the following (in thousands):
December 31, 2021 December 31, 2020
Line of credit, maturing January 2025
$
23,900 $
—
Revenue equipment installment notes with finance companies, weighted
average interest rate of 3.7% and 4.0% at December 31, 2021 and
December 31, 2020, due in monthly installments with final maturities
at various dates through March 2027, secured by related revenue
equipment with a net book value of $316.9 million and $317.2 million
at December 31, 2021 and December 31, 2020
310,420
315,163
Mortgage note payables, interest rates ranging from 4.17% to 6.99% at
December 31, 2021 and December 31, 2020 due in monthly
installments with final maturities at various dates through September
2031, secured by real estate with a net book value of $33.0 million and
$31.8 million at December 31, 2021 and December 31, 2020
24,587
25,977
Other
8,444
11,245
367,351
352,385
Less: Debt issuance costs
(357)
(314)
Less: Current maturities of long-term debt
(83,584)
(99,955)
$
283,410 $
252,116
Credit Facilities
On January 28, 2020, we entered into the credit facility (the “Credit Facility”) and contemporaneously with the
funding of the Credit Facility paid off obligations under our then existing credit facility and terminated such
facility. The Credit Facility is a $250.0 million revolving credit facility, with an uncommitted accordion feature
that, so long as no event of default exists, allows the Company to request an increase in the revolving credit
facility of up to $75.0 million.
The Credit Facility is a five-year facility scheduled to terminate on January 28, 2025. Borrowings under the
Credit Facility are classified as either “base rate loans” or “eurodollar rate loans”. Base rate loans accrue
interest at a base rate equal to the highest of (A) the Federal Funds Rate plus 0.50%, (B) the Agent’s prime
rate, and (C) LIBOR plus 1.00% plus an applicable margin that was set at 0.50% through June 30, 2020 and
adjusted quarterly thereafter between 0.25% and 0.75% based on the ratio of the daily average availability
under the Credit Facility to the daily average of the lesser of the borrowing base or the revolving credit facility.
Eurodollar rate loans accrue interest at LIBOR plus an applicable margin that was set at 1.50% through June
30, 2020 and adjusted quarterly thereafter between 1.25% and 1.75% based on the ratio of the daily average
availability under the Credit Facility to the daily average of the lesser of the borrowing base or the revolving
credit facility. The Credit Facility includes, within its $250.0 million revolving credit facility, a letter of credit
sub-facility in an aggregate amount of $75.0 million and a swingline sub-facility in an aggregate amount of
$25.0 million. An unused line fee of 0.25% is applied to the average daily amount by which the lenders’
aggregate revolving commitments exceed the outstanding principal amount of revolver loans and aggregate
undrawn amount of all outstanding letters of credit issued under the Credit Facility. The Credit Facility is
secured by a pledge of substantially all of the Company’s assets, excluding, among other things, any real estate
or revenue equipment financed outside the Credit Facility.
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
67
Borrowings under the new Credit Facility are subject to a borrowing base limited to the lesser of (A) $250.0
million; or (B) the sum of (i) 87.5% of eligible billed accounts receivable, plus (ii) 85.0% of eligible unbilled
accounts receivable (less than 30 days), plus (iii) 85.0% of the net orderly liquidation value percentage applied
to the net book value of eligible revenue equipment, plus (iv) the lesser of (a) 80.0% the fair market value of
eligible real estate or (b) $25.0 million. The Credit Facility contains a single springing financial covenant,
which requires a consolidated fixed charge coverage ratio of at least 1.0 to 1.0. The financial covenant is tested
only in the event excess availability under the Credit Facility is less than the greater of (A) 10.0% of the lesser
of the borrowing base or revolving credit facility or (B) $20.0 million. Based on excess availability as of
December 31, 2021, there was no fixed charge coverage ratio requirement.
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 may be accelerated, and the lenders’ commitments may be terminated. The Credit Facility
contains certain restrictions and covenants relating to, among other things, dividends, liens, acquisitions and
dispositions, affiliate transactions, and other indebtedness.
At December 31, 2021, the Credit Facility had issued collateralized letters of credit in the face amount of $28.1
million, with $23.9 borrowings outstanding and $183.2 million available to borrow.
Debt Maturities
As of December 31, 2021, the scheduled principal payments of long-term debt, excluding unamortized discount
and debt issuance costs and finance leases are as follows (in thousands):
2022
$ 83,584
2023
99,133
2024
69,788
2025
76,751
2026
14,334
Thereafter
23,761
$ 367,351
10. Leases
We have operating and finance leases with terms of 1 year to 16 years for certain revenue and service equipment
and office and terminal facilities.
The table below presents the lease-related assets and liabilities recorded on the balance sheet (in thousands):
Leases
Classification
December 31, 2021
Assets
Operating
Operating lease right-of-use assets
$
292,347
Finance
Property and equipment, net
7,447
Total leased assets
$
299,794
Liabilities
Current
Operating
Current portion of operating lease liabilities
$
88,375
Finance
Current maturities of long-term debt and finance leases
1,533
Noncurrent
Operating
Noncurrent operating lease liabilities
205,362
Finance
Long-term debt and finance leases, net of current maturities
6,625
Total lease liabilities
$
301,895
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
68
The table below presents certain information related to the lease costs for finance and operating leases (in
thousands):
Year Ended
December 31,
Lease Cost
Classification
2021
2020
2019
Operating lease cost
Vehicle rents and General and other operating $ 95,540 $ 86,847 $ 81,467
Finance lease cost:
Amortization of
finance lease assets
Depreciation and amortization
1,696 1,751 3,102
Interest on lease
liabilities
Interest expense
510
518 1,093
Short-term lease cost Vehicle rents and General and other operating
4,260 7,949 4,111
Total lease cost
$ 102,006 $ 97,065 $ 89,773
Year Ended
December 31,
Cash Flow Information
2021
2020
Cash paid for operating leases included in operating activities
$ 95,540 $ 86,847
Cash paid for finance leases included in operating activities
$
511 $
518
Cash paid for finance leases included in financing activities
$ 1,901 $ 4,632
Operating lease right-of-use assets obtained in exchange for lease
obligations
$ 87,019 $ 93,042
Noncash lease expense was $96.7 million, $87.5 million and $81.1 million during 2021, 2020 and 2019,
respectively.
December 31, 2021
Weighted‑Average
Weighted-
Remaining Lease
Average
Lease Term and Discount Rate
Term (years)
Discount Rate
Operating leases
4.8
3.8 %
Finance leases
8.1
4.7 %
December 31, 2020
Weighted‑Average
Weighted-
Remaining Lease
Average
Lease Term and Discount Rate
Term (years)
Discount Rate
Operating leases
5.0
4.1 %
Finance leases
2.8
5.4 %
As of December 31, 2021, future maturities of lease liabilities were as follows (in thousands):
December 31, 2021
Finance Operating
2022
$ 1,948 $ 97,874
2023
1,962 83,297
2024
850 51,750
2025
568 32,544
2026
584 17,510
Thereafter
3,996 41,864
9,908 324,839
Less: Amount representing interest
(1,750) (31,102)
Total
$ 8,158 $ 293,737
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
69
During the fourth quarter of 2019, the Company entered into a sale leaseback transaction involving three
terminals. The Company received proceeds of $23.5 million from the sale of the terminals which was used to
pay down our term loan. The Company will lease back the terminals with an initial lease term of fifteen years
at an approximate initial annual rate of $1.7 million that increases by 1.7% per year throughout the term. The
Company accounted for the leases as operating leases and recorded a right of use asset and operating lease
liability in the amount of $20.8 million. The transaction resulted in a gain of approximately $1.2 million which
is included in (gain) loss on sale of property.
Certain revenue equipment leases provide for guarantees by the Company of a portion of the specified residual
value at the end of the lease term. The maximum potential amount of future payments (undiscounted) under
these guarantees is approximately $141.7 million at December 31, 2021. The residual value of a portion of the
related leased revenue equipment is covered by repurchase or trade agreements between the Company and the
equipment manufacturer.
We lease tractors to independent contractors under operating leases and recognized lease income under these
leases of $26.0 million, $39.8 million and $31.5 million during 2021, 2020, and 2019 respectively.
11. Related-Party Transactions
The Company and two principal stockholders of the Company collectively own 32.73% of the outstanding
stock of DriverTech. Total payments by the Company to this provider were $1.9 million, $2.2 million and $2.4
million in 2021, 2020 and 2019, respectively, primarily for communications hardware. During 2021, the
Company began replacing the communications hardware and services provided by Driver Tech and incurred a
charge to income of $2.9 million.
In connection with the sale of Arnold to Parker, the Company entered into a number of agreements with Parker.
Under the Transition Services Agreement, the Company agreed to perform certain services for Parker, such as
accounting, payroll, human resources, information technology and others. Parker paid the Company
approximately $0.2 million under this agreement during 2019.
The Company entered into a ten-year lease with Arnold for the use of real property located in Grand Prairie,
Texas. Arnold paid the Company approximately $0.4 million under these agreements during 2019.
During 2019, the Company converted $5.0 million in trade receivables to a promissory note and under the note
advanced an additional $2.0 million. In the fourth quarter of 2019, Company recorded a $6.8 million
impairment charge as the collectability of the note was remote. At December 31, 2019, $0.2 million was due
from Arnold and was included in other receivables in the accompanying consolidated balance sheets. During
the first quarter of 2020, the Company sold its interest in Arnold and recorded a $2.0 million loss on sale.
12. Commitments and Contingencies
The Company is party to certain legal proceedings incidental to its business. The ultimate disposition of these
matters, in the opinion of management, based in part on the advice of legal counsel, is not expected to have a
materially adverse effect on the Company’s financial position or results of operations.
For the cases described below, management is unable to provide a meaningful estimate of the possible loss or
range of loss because, among other reasons, (1) the proceedings are in various stages; (2) damages have not
been sought; (3) damages are unsupported and/or exaggerated; (4) there is uncertainty as to the outcome of the
proceedings, including pending appeals; and/or (5) there are significant factual issues to be resolved. For these
cases, however, management does not believe, based on currently available information, that the outcomes of
these proceedings will have a material adverse effect on our financial condition, though the outcomes could be
material to our operating results for any particular period, depending, in part, upon the operating results for
such period.
California Wage and Hour Class Action Litigation
On December 23, 2015, a former driver filed a class action lawsuit against the Company and its subsidiary
U.S. Xpress, Inc. in the Superior Court of California, County of San Bernardino. The Company removed the
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
70
case from state court to the U.S. District Court for the Central District of California. The district court denied
plaintiff’s initial motion for class certification of a class comprised of any employee driver who has driven in
California at any time since December 23, 2011, without prejudice, under Rule 23 due to lack of commonality
amongst the putative class members. The Court granted the plaintiff’s revised Motion for Class Certification,
and the certified class now consists of all employee drivers who resided in California and who have driven in
the State of California on behalf of U.S. Xpress, Inc. at any time since December 23, 2011. The case alleges
that class members were not paid for off-the-clock work, were not provided duty free meal or rest breaks, and
were not paid premium pay in their absence, were not paid the California minimum wage for all hours worked
in that state, were not provided accurate and complete itemized wage statements and were not paid all accrued
wages at the end of their employment, all in violation of California law. The class seeks a judgment for
compensatory damages and penalties, injunctive relief, attorney fees, costs and pre- and post-judgment interest.
On May 2, 2019, the district court dismissed the claims alleging failure to provide duty free meal and rest
breaks or premium pay for failure to provide such breaks under California law on grounds of preemption. The
Ninth Circuit Court of Appeals recently upheld the administrative ruling that formed the basis for the district
court’s ruling. The parties also filed cross-motions for summary judgment on the remaining claims, and the
Company filed a motion to decertify the class. The court issued its ruling on the pending cross-motions: (1) the
court denied the Company’s motion to decertify the class; (2) the court granted the Company’s motion for
summary judgment on the plaintiff’s minimum wage claim for non-driving duties such as pre-trip and post-
trip inspection, fueling, receiving dispatches, waiting to load or unload, and handling paperwork for the loads
for January 1, 2013 forward (leaving the minimum wage claim only for the approximate one-year time period
from December 23, 2011 to December 31, 2012); (3) the court granted the plaintiff’s motion for summary
judgment for the time spent taking U.S. Department of Transportation-required 10-hour breaks while hauling
high value loads in California for solo drivers and for the designated team driver responsible for the load during
those breaks; and (4) the court denied the balance of cross-motions. The plaintiff filed a petition for permission
to file an interlocutory appeal of the court’s decision on the minimum wage claim, which the district court and
the Ninth Circuit both granted. On June 22, 2021, the Ninth Circuit issued its memorandum decision upholding
the district court’s ruling in favor of the Company on the plaintiff’s claim for payment of the minimum wage
for certain non-driving work they claim was left uncompensated by the Company’s piece rate pay plan after
January 1, 2013. The district court held a status conference on June 15, 2021 and set a trial date for March 1,
2022. Discovery has been completed. On January 20, 2022, the Court vacated the trial date and all associated
deadlines due to the ongoing Covid-19 pandemic. We are currently not able to predict the probable outcome
or to reasonably estimate a range of potential losses, if any. We intend to vigorously defend the merits of these
claims.
Stockholder Claims
As set forth below, between November 2018 and April 2019, eight substantially similar putative securities
class action complaints were filed against the Company and certain other defendants: five in the Circuit Court
of Hamilton County, Tennessee (“Tennessee State Court Cases”), two in the U.S. District Court for the Eastern
District of Tennessee (“Federal Court Cases”), and one in the Supreme Court of the State of New York (“New
York State Court Case”). All of these matters are in preliminary stages of litigation. We are currently not able
to predict the probable outcome or to reasonably estimate a range of potential losses, if any. We believe the
allegations made in the complaints are without merit and intend to defend ourselves vigorously in these matters.
As to the Tennessee State Court Cases, two of five complaints were voluntarily dismissed and the remaining
three were consolidated with a Consolidated Amended Class Action Complaint (the “Consolidated State Court
Complaint”) filed on May 10, 2019 in the Circuit Court of Hamilton County, Tennessee against the Company,
five of our current and former officers or directors, and the seven underwriters who participated in our
June 2018 initial public offering (“IPO”), alleging violations of Sections 11, 12(a)(2) and 15 of the Securities
Act of 1933 (the “Securities Act”). The putative class action lawsuit is based on allegations that the Company
made false and/or misleading statements in the registration statement and prospectus filed with the Securities
and Exchange Commission (“SEC”) in connection with the IPO. The lawsuit is purportedly brought on behalf
of a putative class of all persons or entities who purchased or otherwise acquired the Company’s Class A
common stock pursuant and/or traceable to the IPO, and seeks, among other things, compensatory damages,
costs and expenses (including attorneys’ fees) on behalf of the putative class.
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
71
On June 28, 2019, the defendants filed a Motion to Dismiss the Tennessee State Court Cases for failure to
allege facts sufficient to support a violation of Section 11, 12 or 15 of the Securities Act. On November 13,
2020, the court presiding over the Tennessee State Court Cases entered an order, granting in part and denying
in part the defendants’ Motions to Dismiss the Consolidated State Court Complaint. The court held that the
plaintiffs failed to state a claim for violation of the Securities Act with respect to the majority of statements
challenged as false or misleading in the Consolidated State Court Complaint. The court, however, held that the
Consolidated State Court Complaint sufficiently alleged violations of the Securities Act with respect to one
statement from the June 2018 IPO registration statement and prospectus that the plaintiffs alleged to be false
or misleading, both on theories of alleged misrepresentations and material omissions. Accordingly, the court
allowed this action to proceed beyond the pleading stage, but only with respect to the statement deemed
sufficient to support a Securities Act claim when assuming the truth of the plaintiffs’ allegations. On April 29,
2021, plaintiffs filed a Motion for Class Certification, which is currently pending. The Tennessee State Court
Cases are currently in discovery.
As to the Federal Court Cases, the operative amended complaint was filed on October 8, 2019 (“Amended
Federal Complaint”), which named the same defendants as the Tennessee State Court Cases. The Amended
Federal Complaint is made on behalf of a putative class. In addition to claims for alleged violations of Section
11 and 15 of the Securities Act, the Amended Federal Complaint alleges violations of Section 10(b) and 20(a)
of the Securities Exchange Act of 1934 (“Exchange Act”) against the Company, its Chief Executive Officer
and its Chief Financial Officer. On December 23, 2019, the defendants filed a Motion to Dismiss the Amended
Federal Complaint in its entirety for failure to allege facts sufficient to state a claim under either the Securities
Act or the Exchange Act. The plaintiffs filed their Opposition to that Motion on March 9, 2020, and the
defendants filed their Reply brief on April 23, 2020.
On June 30, 2020, the court presiding over the Federal Court Cases issued its ruling granting in part and denying
in part the defendants’ Motions to Dismiss the Amended Federal Complaint. The court dismissed entirely the
plaintiffs’ claims for alleged violations of the Exchange Act and further held that the plaintiffs failed to state a
claim for violation of the Securities Act with respect to the majority of statements challenged as false or
misleading in the Amended Federal Complaint. The court, however, held that the Federal Amended Complaint
sufficiently alleged violations of the Securities Act with respect to two statements from the June 2018 IPO
registration statement and prospectus that the plaintiffs alleged to be false or misleading, both on theories of
alleged misrepresentations and material omissions. Accordingly, the court allowed this action to proceed
beyond the pleading stage, but only with respect to the statements deemed sufficient to support a Securities
Act claim when assuming the truth of the plaintiffs’ allegations. On February 12, 2021, the Court granted
plaintiffs’ Motion for Class Certification and certified a class consisting of all persons or entities who purchased
or otherwise acquired USX stock pursuant to and/or traceable to the IPO and who were damaged thereby. The
Federal Court Cases are currently in discovery.
As to the New York State Case, on March 14, 2019, a substantially similar putative class action complaint was
filed in the Supreme Court of the State of New York, County of New York, by a different plaintiff alleging
claims under Sections 11 and 15 of the Securities Act against the same defendants as in the Tennessee State
Court Cases. On December 18, 2020, defendants filed a Motion to Dismiss or Stay the New York State Case
both on the merits and in deference to the pending actions in Tennessee. On March 5, 2021, the court residing
over the New York State Case dismissed the case, and on January 13, 2022, the court entered a motion denying
plaintiff’s motion for reconsideration.
Stockholder Derivative Action
On June 7, 2019, a stockholder derivative lawsuit was filed in the District Court for Clark County, Nevada
against five of our executives and all five of our independent board members (collectively, the “Individual
Defendants”), and naming the Company as a nominal defendant. The complaint alleges that the Company made
false and/or misleading statements in the registration statement and prospectus filed with the SEC in connection
with the IPO and that the Individual Defendants breached their fiduciary duties by causing or allowing the
Company to make such statements. The complaint alleges that the Company has been damaged by the alleged
wrongful conduct as a result of, among other things, being subjected to the time and expense of the securities
class action lawsuits that have been filed relating to the IPO. In addition to a claim for alleged breach of
fiduciary duties, the lawsuit alleges claims against the Individual Defendants for unjust enrichment, abuse of
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
72
control, gross mismanagement, and waste of corporate assets. The parties have stipulated to a stay of this
proceeding pending entry of a final judgment in the Tennessee State Court Cases, Federal Court Case, and the
New York State Case. This matter is in the preliminary stages of litigation. We are currently not able to predict
the probable outcome or to reasonably estimate a range of potential losses, if any. We believe the allegations
made in the complaint are without merit and intend to defend ourselves vigorously in this matter.
Independent Contractor Class Action
On March 26, 2019, a putative class action complaint was filed in the U.S. District Court for the Eastern District
of Tennessee against the Company and its subsidiaries U.S. Xpress, Inc. and U.S. Xpress Leasing, Inc. The
putative class includes all individuals who performed work for U.S. Xpress, Inc. or U.S. Xpress Leasing, Inc.
as lease purchase drivers from March 26, 2016 to present. The complaint alleges that independent contractors
are improperly designated as such and should be designated as employees and thus subject to the Fair Labor
Standards Act (“FLSA”). The complaint further alleges that U.S. Xpress, Inc.’s pay practices for the putative
class members violated the minimum wage provisions of the FLSA for the period from March 26, 2016 to
present. The complaint further alleges that the Company violated the requirements of the Truth in Leasing Act
with regard to the independent contractor agreements and lease purchase agreements it entered into with the
putative class members. The complaint further alleges that the Company failed to comply with the terms of the
independent contractor agreements and lease purchase agreements entered into with the putative class
members, that it violated the provisions of the Tennessee Consumer Protection Act in advertising, describing
and marketing the lease purchase program to the putative class members, and that it was unjustly enriched as
a result of the foregoing allegations. The Company filed a Motion to Compel Arbitration on October 18, 2019.
On January 17, 2020, the court granted that motion, in part, compelling arbitration on all of the plaintiff’s
claims and denying the plaintiff’s motion for conditional certification of a collective action. The court further
stayed the matter pending arbitration, rather than dismissing it entirely. On March 6, 2020, the plaintiff
petitioned the court to certify the decision for an interlocutory appeal. The Company filed an opposition to
plaintiff’s motion on March 20, 2020, and plaintiff filed her reply on April 3, 2020, purportedly relying, in
part, on a recent case from Massachusetts. In response to that newly cited case, the Company was granted leave
to file a surreply, which it filed on April 13, 2020. On September 3, 2020, the district court denied the plaintiff’s
petition. The plaintiff initiated arbitration on December 16, 2020. On March 25, 2021, the arbitrator issued a
scheduling order, setting a final arbitration hearing for June 6, 2022. On November 23, 2021, the parties
reached a nominal settlement. The parties are currently in the process of finalizing the settlement
documentation. We believe the allegations made in the complaint and demand are without merit and intend to
defend ourselves vigorously in this matter.
On June 25, 2020, a second putative collective and class action complaint was filed against the Company and
its subsidiaries U.S. Xpress, Inc. and U.S. Xpress Leasing, Inc. in the U.S. District Court for the Eastern District
of Tennessee. The putative class and collective action includes all current and former over-the-road truck
drivers classified as independent contractors who performed work for the Company during the applicable
statute of limitations. The complaint alleges that independent contractors are improperly designated as such
and should be designated as employees subject to the FLSA. The complaint alleges that U.S. Xpress, Inc.’s
pay practices for the putative collective and class members violated the minimum wage provisions of the FLSA
for the period from June 25, 2017 to the present. The complaint further alleges that we failed to pay the plaintiff
and members of the class for all miles they drove and breached the contract between the parties and that we
were unjustly enriched as a result of the foregoing allegations. The plaintiff agreed to submit his claims to
individual arbitration and filed an arbitration demand on July 31, 2020. The parties agreed to settle the matter
for a nominal amount and have finalized the settlement agreement and submitted it to the court for approval.
On February 8, 2022, the Court approved the settlement and dismissed the case with prejudice.
The Company has letters of credit of $28.1 million outstanding as of December 31, 2021. The letters of credit
are maintained primarily to support the Company’s insurance program.
The Company had cancelable commitments outstanding at December 31, 2021 to acquire revenue and other
equipment, terminal improvements for approximately $92.3 million in 2022, software licenses for
approximately $1.9 million in 2022 and $2.5 million in each year for 2023, 2024, 2025 and 2026. These
purchase commitments are expected to be financed by operating leases, long-term debt, proceeds from sales of
existing equipment, and cash flows from operations.
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
73
13. Share-based Compensation
2018 Omnibus Incentive Plan
In June 2018, the Board approved the 2018 Omnibus Incentive Plan (the “Incentive Plan”) to become effective
in connection with the initial public offering. The Company had reserved an aggregate of 3.2 million shares of
its Class A common stock for issuance of awards under the Incentive Plan. In May 2020, the stockholders
approved the Amended and Restated Omnibus Plan which, among other things, increased the number of shares
remaining to issue to 5.8 million shares. Participants in the Incentive Plan will be selected by the Compensation
Committee from the executive officers, directors, employees and consultants of the Company. Awards under
the Incentive Plan may be made in the form of stock options, stock appreciation rights, stock awards, restricted
stock units, performance awards, performance units, and any other form established by the Compensation
Committee pursuant to the Incentive Plan.
The following is a summary of the Incentive Plan restricted stock and restricted stock unit activity from
December 31, 2019 to December 31, 2021:
Weighted
Number of
Average Grant
Units
Date Fair Value
Unvested at December 31, 2019
908,088 $
8.73
Granted
1,024,557
5.05
Vested
(233,604)
8.85
Forfeited
(183,165)
6.82
Unvested at December 31, 2020
1,515,876 $
6.50
Granted
1,164,581
9.14
Vested
(577,628)
7.07
Forfeited
(312,060)
7.42
Unvested at December 31, 2021
1,790,769 $
7.91
Service based restricted stock grants vest over periods of one to five years and account for 1,667,169 of the
unvested shares. Performance based awards account for 123,600 of the unvested shares and vest based upon
achievement of certain performance goals, as defined by the Company. The Company recognized
compensation expense related to service based awards of $4.9 million, $2.8 million and $2.2 million during
2021, 2020 and 2019, respectively. The Company recognized compensation expense of $0.2 million and $0.6
million related to performance awards during 2021 and 2020, respectively. At December 31, 2021, the
Company had $9.2 million in unrecognized compensation expense related to the service based restricted stock
awards which is expected to be recognized over a weighted average period of approximately 2.8 years.
The following is a summary of the Incentive Plan stock option activity from December 31, 2019 to December
31, 2021:
Weighted
Number of
Average Grant
Units
Date Fair Value
Unvested at December 31, 2019
359,259 $
4.95
Vested
(87,476)
5.05
Forfeited/Canceled
(68,026)
4.78
Unvested at December 31, 2020
203,757 $
4.96
Vested
(78,974)
5.12
Unvested at December 31, 2021
124,783 $
4.86
The stock options vest over a period of four years and expire ten years from the date of grant. The Company
recognized compensation expense of $0.3 million, $0.3 million and $0.6 million during 2021, 2020 and 2019,
respectively. The fair value of the stock option grant in 2019 was estimated using the Black-Scholes method
as of the grant date using the following assumptions:
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
74
2019
Strike price
$
9.40
Risk-free interest rate
2.50 %
Expected dividend yield
0 %
Expected volatility
45.65 %
Expected term (in years)
6.25
At December 31, 2021, the Company had $0.3 million in unrecognized compensation expense related to the
stock option awards which is expected to be recognized over a period of approximately 1.0 year. As of
December 31, 2021, 191,115 options were exercisable with a weighted exercise price of $12.84 and a weighted
remaining contractual life of 6.8 years.
Restricted Stock Units
In August 2008, the U.S. Xpress Enterprises board approved the 2008 Restricted Stock Plan that provided for
restricted membership unit awards in New Mountain Lake in order to compensate the Company’s employees
and to promote the success of the Company’s business.
Redeemable restricted units were subject to certain put rights at the option of the holder or upon the occurrence
of an event that was not solely under the control of the Company. Under the terms of the stock plan, a portion
of the units held by employees of the Company for at least nine months could be put back to the Company at
the option of the holder during a specified period each year and under certain circumstances after termination.
These equity instruments were redeemable at fair value and were classified as temporary equity on the 2017
consolidated balance sheets in accordance with ASC 480.
As part of the Reorganization (see Note 1), all of the redeemable restricted units of New Mountain Lake were
converted into restricted stock units of the Company, with the same vesting schedules. Therefore, we refer to
redeemable restricted units issued prior to the Reorganization as restricted stock units. At the time of
conversion, the restricted stock unit amounts were reclassified to additional paid in capital. The following is a
summary of the Company’s restricted stock unit activity for 2021 and 2020:
Number of
Weighted
Units
Average
Unvested at December 31, 2019
842,888 $ 2.14
Vested
(217,858)
2.11
Unvested at December 31, 2020
625,030 $ 2.15
Vested
(164,990)
2.15
Unvested at December 31, 2021
460,040 $ 2.15
The vesting schedule for these restricted unit grants range from 3 to 7 years. The Company recognized
compensation expense of $0.3 million, $0.4 million and $0.5 million during 2021, 2020 and 2019, respectively.
At December 31, 2021, the Company had approximately $0.7 million in unrecognized compensation expense
related to restricted units, which is expected to be recognized over a period of approximately 2.2 years. The
fair value of the restricted units and corresponding compensation expense was determined using the income
approach.
Employee Stock Purchase Plan
In June 2018, our Employee Stock Purchase Plan (the “ESPP”) became effective. The Company has reserved
an aggregate of 2.3 million shares of its Class A common stock for issuance of under the ESPP. Eligible
employees may elect to purchase shares of our Class A common stock through payroll deductions up to 15%
of eligible compensation. The purchase price of the shares during each offering period will be 85% of the lower
of the fair market value of our Class A common stock on the first trading day of each offering period or the
last trading day of the offering period. The common stock will be purchased in January and July of each year.
The first offering period commenced on January 1, 2019 and we recognized compensation expense of $0.5
million, $0.3 million and $0.2 million during 2021, 2020 and 2019, respectively, associated with the plan. The
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
75
employees purchased 241,443 and 196,471 shares of the Company’s Class A common stock during 2021 and
2020, respectively.
14. Employee Benefit Plan
The Company has a 401(k) retirement plan covering substantially all employees of the Company, whereby
participants may contribute a percentage of their compensation, as allowed under applicable laws. The Plan
provides for discretionary matching contributions by the Company. Participants are 100% vested in participant
contributions. The Company recognized $3.2 million, $2.8 million and $2.3 million in expense under this
employee benefit plan each year for 2021, 2020 and 2019, respectively and is included in salaries, wages and
benefits in the consolidated statements of comprehensive income (loss).
The Company has a nonqualified deferred compensation plan that allows eligible employees to defer a portion
of their compensation. Participants can defer up to 85% of their base salary and up to 100% of their bonus for
the year. Each participant is fully vested in all deferred compensation and earnings; however, these amounts
are subject to general creditor claims until distributed to the participant. The total liability under the deferred
compensation plan was $4.1 million and $3.5 million as of December 31, 2021 and 2020, and is included in
other long-term liabilities in the accompanying consolidated balance sheets. The Company purchased life
insurance policies to fund the future liability. The life insurance policies had a value of $3.5 million and $3.1
million as of December 31, 2021 and 2020, respectively and are included in other assets in the consolidated
balance sheets.
15. Fair Value Measurements
The carrying values of cash and cash equivalents, customer and other receivables and accounts payable are
reasonable estimates of their fair values because of the short maturity of these financial 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 at December 31, 2021, as the weighted average interest rate on these notes approximates the
market rate for similar debt. Borrowings under our revolving Credit Facility approximate fair average interest
rate on these notes approximates the market rate for similar debt. Our TuSimple investment is a Level 1 fair
value measurement as the shares of TuSimple are traded on NASDAQ. See Note 8, Equity and Other
Investments for additional information.
16. Income (Loss) per Share
Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to common stockholders
by the weighted average shares of common stock outstanding during the period, without consideration for
common stock equivalents. Prior to the offering, there were no common stock equivalents which could have
had a dilutive effect on earnings (loss) per share. The Company excluded 445,972, 614,143 and 2,148,390
equity awards from our diluted shares for the years ended December 31, 2021, 2020 and 2019, respectively as
inclusion would be anti-dilutive.
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
76
The basic and diluted earnings per share calculations for the years ended December 31, 2021, 2020 and 2019,
respectively, are presented below (in thousands, except per share amounts):
Year Ended December 31,
2021
2020
2019
Numerator - Basic
Net income (loss)
$ 11,141 $ 17,632 $ (3,043)
Net income (loss) attributable to noncontrolling interest
271
(920)
604
Net income (loss) attributable to common stockholders
$ 10,870 $ 18,552 $ (3,647)
Numerator - Dilutive
Net income (loss)
$ 11,141 $ 17,632 $ (3,043)
Net income (loss) attributable to noncontrolling interest
(74)
(69)
604
Net income (loss) attributable to common stockholders
$ 11,215 $ 17,701 $ (3,647)
Basic weighted average of outstanding shares of common stock
50,370 49,528 48,788
Dilutive effect of equity awards
918
826
—
Dilutive effect of assumed subsidiary share conversion
879
320
—
Diluted weighted average of outstanding shares of common stock
52,167 50,674 48,788
Basic earnings (loss) per share
$
0.22 $
0.37 $ (0.07)
Diluted earnings (loss) per share
$
0.21 $
0.35 $ (0.07)
17. Segment Information
The Company’s business is organized into two reportable segments, Truckload and Brokerage. The Truckload
segment offers asset-based truckload services, including OTR trucking and dedicated contract services. These
services are aggregated because they have similar economic characteristics and meet the aggregation criteria
described in the accounting guidance for segment reporting. The Company’s OTR service offering provides
solo and expedited team services through one-way movements of freight over routes throughout the United
States. The Company’s dedicated contract service offering devotes the use of equipment to specific customers
and provides services through long-term contracts. The Company’s dedicated contract service offering
provides similar freight transportation services, but does so pursuant to agreements where it makes equipment,
drivers and on-site personnel available to a specific customer to address needs for committed capacity and
service levels.
The Company’s Brokerage segment is principally engaged in non-asset-based freight brokerage services,
where it outsources the transportation of loads to third-party carriers. For this segment, the Company relies on
brokerage employees to procure third-party carriers, as well as information systems to match loads and carriers.
The following table summarizes our segment information (in thousands):
Year Ended December 31,
2021
2020
2019
Revenues
Truckload
$ 1,567,520 $ 1,513,276 $ 1,521,494
Brokerage
381,006 228,825 185,867
Total Operating Revenue
$ 1,948,526 $ 1,742,101 $ 1,707,361
Operating Income (Loss)
Truckload
$
15,323 $
56,267 $
24,071
Brokerage
3,106
(12,716)
1,999
Total Operating Income
$
18,429 $
43,551 $
26,070
U.S. Xpress Enterprises, Inc.
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
77
A measure of assets is not applicable, as segment assets are not regularly reviewed by the Chief Operating
Decision Maker (CODM) for evaluating performance or allocating resources.
Information about the geographic areas in which the Company conducts business is summarized below (in
thousands) as of and for the years ended December 31, 2021, 2020 and 2019. Operating revenues for foreign
countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services
provided in that country. If both the origin and destination are in a foreign country, the revenues are attributed
to the country of origin.
Year Ended December 31,
2021
2020
2019
Revenues
United States
$ 1,948,526 $ 1,742,101 $ 1,704,989
Foreign countries
Mexico
—
—
2,372
Total
$ 1,948,526 $ 1,742,101 $ 1,707,361
CORPORATE INFORMATION
EXECUTIVE MANAGEMENT
Eric Fuller
President & Chief Executive Officer
Max Fuller
Co-Founder & Executive Chairman
Joel Gard
Chief Technology Officer
Jason Grear
Chief Accounting Officer
Justin Harness
President, Dedicated Operations
Nathan Harwell
Chief Legal Officer and Secretary
Bryan Johnson, Ed.D
Chief of Staff
Jacob Lawson
Chief Commercial Officer
Eric Peterson
Chief Financial Officer and Treasurer
Amanda Thompson
Chief People Officer
BOARD OF DIRECTORS
Max Fuller
Co-Founder & Executive Chairman of
the Board, U.S. Xpress Enterprises, Inc.
Jon Beizer
Investment Partner at
Western Technology Investment
Edward “Ned” Braman
Former Audit Partner at
Ernst & Young LLP
Brig. Gen. Jennifer G. Buckner,
USA, Ret.
Deputy Chief Information Security
Officer and Senior Vice President,
for Mastercard Inc.
Michael Ducker
Former President
& Chief Executive Officer
of FedEx Freight
Eric Fuller
President & Chief Executive Officer,
U.S. Xpress Enterprises, Inc.
Dennis Nash
Executive Chairman,
Kenan Advantage Group, Inc.
John C. Rickel
Former Senior Vice President
and Chief Financial Officer of
Group 1 Automotive, Inc.
CORPORATE HEADQUARTERS
U.S. Xpress Enterprises, Inc.
4080 Jenkins Road
Chattanooga, TN 37421
STOCK EXCHANGE
The company’s Class A common stock is
listed on the New York Stock Exchange
under the ticker symbol “USX.”
STOCK TRANSFER AGENT
American Stock Transfer
& Trust Company, LLC
T: 800.937.5449
ANNUAL MEETING OF
STOCKHOLDERS
U.S. Xpress Enterprises, Inc.’s
stockholders are invited to participate
in our 2022 Annual Meeting of
Stockholders, which will be held on
Wednesday, May 25, 2022, at 11:30 a.m.
Eastern Daylight Time, by
teleconference.
INVESTOR RELATIONS
Information regarding U.S. Xpress’
filings with the U.S. Securities and
Exchange Commission (“SEC”), annual
reports on Form 10-K, quarterly reports,
and other financial information can be
accessed at investor.usxpress.com or
obtained by contacting:
U.S. Xpress Investor Relations
4080 Jenkins Rd.
Chattanooga, TN 37421
T: 833.879.7737
E: investors@usxpress.com
U.S. Xpress Enterprises, Inc.
4080 Jenkins Road
Chattanooga, TN 37421
USXPRESS.COM