☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2019
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Nevada
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88-0320154
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(State / other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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400 Birmingham Hwy.
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|
Chattanooga, TN
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37419
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code:
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423 - 821-1212
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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$0.01 Par Value Class A common stock
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CVTI
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The NASDAQ Global Select Market
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Large accelerated filer
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☐
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Accelerated filer
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☒
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Non-accelerated filer
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☐
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Smaller reporting company
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☒
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Emerging growth company
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☐
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Part I
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Item 1.
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4
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Item 1A.
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16
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Item 1B.
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32
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Item 2.
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32
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Item 3.
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32
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Item 4.
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33
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Part II
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Item 5.
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34
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Item 6.
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35
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Item 7.
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37
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Item 7A.
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51
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Item 8.
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52
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Item 9.
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52
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Item 9A.
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53
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Item 9B.
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53
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Part III
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Item 10.
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54
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Item 11.
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54
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Item 12.
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54
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Item 13.
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54
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Item 14.
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54
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Part IV
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Item 15.
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55
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Item 16.
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57
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58
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|||
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59
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|||
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60
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|||
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Financial Data
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||
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61
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||
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62
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||
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63
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||
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64
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65
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66
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ITEM 1.
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● |
Highway Services
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● |
Managed Freight
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Distribution of Freight Revenue Among Service Offerings
|
||||
Highway Services:
|
||||
Expedited
|
29
|
%
|
||
OTR
|
10
|
%
|
||
Total Highway Services
|
39
|
%
|
||
|
||||
Dedicated
|
36
|
%
|
||
|
||||
Managed Freight:
|
||||
Brokerage
|
13
|
%
|
||
TMS
|
5
|
%
|
||
Warehousing
|
6
|
%
|
||
Total Managed Freight
|
24
|
%
|
||
|
||||
Factoring
|
1
|
%
|
||
|
||||
Total
|
100
|
%
|
|
2018
|
2019
|
||||||
Average freight revenue per total mile
|
$
|
2.03
|
$
|
1.93
|
||||
Average miles per tractor
|
126,116
|
124,228
|
||||||
Average freight revenue per tractor per week
|
$
|
4,908
|
$
|
4,595
|
|
2018
|
2019
|
||||||
Average freight revenue per total mile
|
$
|
1.79
|
$
|
1.81
|
||||
Average miles per tractor
|
95,652
|
91,318
|
||||||
Average freight revenue per tractor per week
|
$
|
3,275
|
$
|
3,168
|
|
●
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the worker is free from control and direction in the performance of services; and
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●
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the worker is performing work outside the usual course of business of the hiring company; and
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●
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the worker is customarily engaged in an independently established trade, occupation, or business.
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ITEM 1A.
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●
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we may experience a reduction in overall freight levels, which may impair our asset utilization;
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●
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certain of our customers may face credit issues and could experience 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;
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●
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freight patterns may change as supply chains are redesigned, resulting in an imbalance between our capacity and our customers' freight demand;
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●
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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;
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●
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we may be forced to accept more freight from freight brokers, where freight rates are typically lower, or may be forced to incur more non-revenue miles to obtain
loads; and
|
|
●
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lack of access to current sources of credit or lack of lender access to capital, leading to an inability to secure credit financing on satisfactory terms, or at all.
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●
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we compete with many other truckload carriers of varying sizes and, to a lesser extent, with (i) less-than-truckload carriers, (ii) railroads, intermodal companies,
and (iii) other transportation and logistics companies, many of which have access to more equipment and greater capital resources than we do;
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|
●
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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;
|
|
●
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many of our customers, including several in our top ten, are other transportation companies or also operate their own private trucking fleets, and they may decide to
transport more of their own freight;
|
|
●
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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 customer demand;
|
|
●
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a significant portion of our business is in the retail industry, which continues to undergo a shift away from the traditional brick and mortar model towards
e-commerce, and this shift could impact the manner in which our customers source or utilize our services;
|
|
●
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many customers reduce the number of carriers they use by selecting so-called "core carriers" as approved service providers or by engaging dedicated providers, and we
may not be selected;
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|
●
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many customers periodically accept bids from multiple carriers for their shipping needs, and this process may depress freight rates or result in the loss of some of
our business to competitors;
|
|
●
|
the trend toward consolidation in the trucking industry may create large carriers with greater financial resources and other competitive advantages relating to their
size, and we may have difficulty competing with these larger carriers;
|
|
●
|
the market for qualified drivers is increasingly competitive, and our inability to attract and retain drivers could reduce our equipment utilization or cause us to
increase compensation to our drivers and independent contractors we engage, both of which would adversely affect our profitability;
|
|
●
|
competition from freight logistics and freight brokerage companies may adversely affect our customer relationships and freight rates;
|
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●
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economies of scale that procurement aggregation providers may pass on to smaller carriers may improve such carriers’ ability to compete with us;
|
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●
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advances in technology may require us to increase investments in order to remain competitive, and our customers may not be willing to accept higher freight rates to
cover the cost of these investments;
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|
●
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the Covenant brand name is a valuable asset that is subject to the risk of adverse publicity (whether or not justified),which could result in the loss of value
attributable to our brand and reduced demand for our services; and
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|
●
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higher fuel prices and, in turn, higher fuel surcharges to our customers may cause some of our customers to consider freight transportation alternatives, including
rail transportation.
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●
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finance working capital requirements, capital investments, or refinance existing indebtedness;
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●
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develop or enhance our technological infrastructure and our existing products and services;
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●
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fund strategic relationships;
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●
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respond to competitive pressures; and
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●
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acquire complementary businesses, technologies, products, or services.
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●
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approval of premium rates for insurance;
|
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●
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standards of solvency;
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●
|
minimum amounts of statutory capital surplus that must be maintained;
|
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●
|
limitations on types and amounts of investments;
|
|
●
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regulation of dividend payments and other transactions between affiliates;
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●
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regulation of reinsurance;
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●
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regulation of underwriting and marketing practices;
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●
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approval of policy forms;
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●
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methods of accounting; and
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●
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filing of annual and other reports with respect to financial condition and other matters.
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●
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our vulnerability to adverse economic and industry conditions and competitive pressures is heightened;
|
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●
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we will continue to be required to dedicate a substantial portion of our cash flows from operations to lease payments and repayment of debt, limiting the availability
of cash for our operations, capital expenditures, and future business opportunities;
|
|
●
|
our flexibility in planning for, or reacting to, changes in our business and industry will be limited;
|
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●
|
our profitability is sensitive to fluctuations in interest rates because some of our debt obligations are subject to variable interest rates, and future borrowings and
lease financing arrangements will be affected by any such fluctuations;
|
|
●
|
our ability to obtain additional financing in the future for working capital, capital expenditures, debt service requirements, acquisitions, or other purposes may be
limited;
|
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●
|
it may be difficult for us to comply with the multitude of financial covenants, borrowing conditions, or other obligations contained in our debt agreements, thereby
increasing the risk that we trigger certain cross-default provisions; and
|
|
●
|
we may be required to issue additional equity securities to raise funds, which would dilute the ownership position of our stockholders.
|
|
●
|
some of the acquired businesses may not achieve anticipated revenue, earnings or cash flows;
|
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●
|
we may assume liabilities that were not disclosed to us or otherwise exceed our estimates;
|
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●
|
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;
|
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●
|
transaction costs and acquisition-related integration costs could adversely affect our results of operations in the period in which such charges are recorded;
|
|
●
|
we may incur future impairment charges, write-offs, write-downs, or restructuring charges that could adversely impact our results of operations;
|
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●
|
acquisitions could disrupt our ongoing business, distract our management and divert our resources;
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●
|
we may experience difficulties operating in markets in which we have had no or only limited direct experience;
|
|
●
|
we could lose customers, employees and drivers of any acquired company; and
|
|
●
|
we may incur additional indebtedness.
|
ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
|
ITEM 6.
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2019
|
2018
|
2017
|
2016
|
2015
|
|||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Freight revenue
|
$
|
800,401
|
$
|
779,729
|
$
|
626,809
|
$
|
610,845
|
$
|
640,120
|
||||||||||
Fuel surcharge revenue
|
94,127
|
105,726
|
78,198
|
59,806
|
84,120
|
|||||||||||||||
Total revenue
|
$
|
894,528
|
$
|
885,455
|
$
|
705,007
|
$
|
670,651
|
$
|
724,240
|
||||||||||
|
||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Salaries, wages, and related expenses
|
321,997
|
304,447
|
241,784
|
234,526
|
244,779
|
|||||||||||||||
Fuel expense
|
115,307
|
121,264
|
103,139
|
103,108
|
122,160
|
|||||||||||||||
Operations and maintenance
|
59,505
|
55,505
|
48,774
|
45,864
|
46,458
|
|||||||||||||||
Revenue equipment rentals and purchased transportation
|
204,655
|
183,645
|
141,954
|
117,472
|
118,583
|
|||||||||||||||
Operating taxes and licenses
|
13,024
|
11,831
|
9,878
|
11,712
|
11,016
|
|||||||||||||||
Insurance and claims (1)
|
47,724
|
43,333
|
33,155
|
32,596
|
31,909
|
|||||||||||||||
Communications and utilities
|
6,969
|
7,061
|
6,938
|
6,057
|
6,162
|
|||||||||||||||
General supplies and expenses
|
30,434
|
23,227
|
14,783
|
14,413
|
14,007
|
|||||||||||||||
Depreciation and amortization, including gains and losses on disposition of equipment
|
78,879
|
76,156
|
76,447
|
72,456
|
61,384
|
|||||||||||||||
Total operating expenses
|
878,494
|
826,469
|
676,852
|
638,204
|
656,458
|
|||||||||||||||
Operating income
|
16,034
|
58,986
|
28,155
|
32,447
|
67,782
|
|||||||||||||||
Interest expense, net
|
11,110
|
8,708
|
8,258
|
8,226
|
8,445
|
|||||||||||||||
Income from equity method investment
|
(7,017
|
)
|
(7,732
|
)
|
(3,400
|
)
|
(3,000
|
)
|
(4,570
|
)
|
||||||||||
Income before income taxes
|
11,941
|
58,010
|
23,297
|
27,221
|
63,907
|
|||||||||||||||
Income tax expense (benefit)
|
3,464
|
15,507
|
(32,142
|
)
|
10,386
|
21,822
|
||||||||||||||
Net income
|
$
|
8,477
|
$
|
42,503
|
$
|
55,439
|
$
|
16,835
|
$
|
42,085
|
||||||||||
|
||||||||||||||||||||
Basic income per share
|
$
|
0.46
|
$
|
2.32
|
$
|
3.03
|
$
|
0.93
|
$
|
2.32
|
||||||||||
|
||||||||||||||||||||
Diluted income per share
|
$
|
0.45
|
$
|
2.30
|
$
|
3.02
|
$
|
0.92
|
$
|
2.30
|
||||||||||
|
||||||||||||||||||||
Basic weighted average common shares outstanding
|
18,435
|
18,340
|
18,279
|
18,182
|
18,145
|
|||||||||||||||
|
||||||||||||||||||||
Diluted weighted average common shares outstanding
|
18,635
|
18,469
|
18,372
|
18,266
|
18,311
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2019
|
2018
|
2017
|
2016
|
2015
|
|||||||||||||||
Selected Balance Sheet Data:
|
||||||||||||||||||||
Net property and equipment
|
$
|
517,203
|
$
|
450,595
|
$
|
464,072
|
$
|
465,471
|
$
|
454,049
|
||||||||||
Total assets (2)
|
$
|
881,640
|
$
|
773,524
|
$
|
649,668
|
$
|
620,538
|
$
|
646,717
|
||||||||||
Long-term debt and finance lease obligations, less current maturities
|
$
|
267,069
|
$
|
201,754
|
$
|
186,242
|
$
|
188,437
|
$
|
206,604
|
||||||||||
Total stockholders' equity
|
$
|
350,111
|
$
|
343,142
|
$
|
295,201
|
$
|
236,414
|
$
|
202,160
|
||||||||||
|
||||||||||||||||||||
Selected Operating Data:
|
||||||||||||||||||||
Capital expenditures, net (3)
|
$
|
91,664
|
$
|
33,093
|
$
|
72,006
|
$
|
59,052
|
$
|
148,994
|
||||||||||
Average freight revenue per loaded mile (4)
|
$
|
2.07
|
$
|
2.13
|
$
|
1.89
|
$
|
1.86
|
$
|
1.89
|
||||||||||
Average freight revenue per total mile (4)
|
$
|
1.87
|
$
|
1.94
|
$
|
1.70
|
$
|
1.67
|
$
|
1.69
|
||||||||||
Average freight revenue per tractor per week (4)
|
$
|
3,778
|
$
|
4,191
|
$
|
3,917
|
$
|
3,881
|
$
|
3,967
|
||||||||||
Average miles per tractor per year
|
105,379
|
112,736
|
120,043
|
121,782
|
122,508
|
|||||||||||||||
Weighted average tractors for year (5)
|
3,073
|
2,843
|
2,557
|
2,593
|
2,700
|
|||||||||||||||
Total tractors at end of period (5)
|
3,021
|
3,154
|
2,559
|
2,535
|
2,656
|
|||||||||||||||
Total trailers at end of period (6)
|
6,739
|
6,950
|
6,846
|
7,389
|
6,978
|
|||||||||||||||
Team-driven tractors as percentage of fleet
|
27.4
|
%
|
30.8
|
%
|
38.1
|
%
|
38.7
|
%
|
35.3
|
%
|
(1)
|
2017 insurance and claims expense includes $0.9 million of additional reserves for 2008 cargo claim.
|
(2)
|
Adjusted for retrospective adoption of ASU 2015-17.
|
(3)
|
Includes equipment purchased under finance leases.
|
(4)
|
Excludes fuel surcharge revenue.
|
(5)
|
Includes monthly rental tractors and tractors provided by independent contractors.
|
(6)
|
Excludes monthly rental trailers.
|
ITEM 7.
|
Segment
|
2019
|
2018
|
||||||
Highway Services
|
$
|
356,521
|
$
|
469,308
|
||||
Dedicated
|
342,473
|
257,739
|
||||||
Managed Freight
|
186,394
|
153,346
|
||||||
Factoring
|
9,140
|
5,062
|
||||||
Total
|
$
|
894,528
|
$
|
885,455
|
|
●
|
Total revenue was $894.5 million, compared with $885.5 million for 2018, and freight revenue (which excludes revenue from fuel surcharges) was $800.4 million, compared
with $779.7 million for 2018;
|
|
|
|
|
●
|
Operating income was $16.0 million, compared with operating income of $59.0 million for 2018;
|
|
|
|
|
●
|
Net income was $8.5 million, or $0.45 per diluted share, compared with net income of $42.5 million, or $2.30 per diluted share, for 2018;
|
|
|
|
|
●
|
With available borrowing capacity of $59.8 million under our Credit Facility as of December 31, 2019, we do not expect to be required to test our fixed charge covenant
in the foreseeable future;
|
|
|
|
|
●
|
Our equity investment in TEL provided $7.0 million of pre-tax earnings in 2019, compared to $7.7 million for 2018;
|
|
|
|
|
●
|
Since December 31, 2018, total indebtedness, net of cash, increased by $112.3 million to $304.6 million however, $60.3 million of this increase related to recording
right of use operating lease liabilities under ASU 842 in 2019, which was not required in 2018; and
|
|
|
|
|
●
|
Stockholders' equity and tangible book value at December 31, 2019 were $350.1 million and $278.0 million, respectively.
|
|
Year ended December 31,
|
|||||||
(in thousands)
|
2019
|
2018
|
||||||
Revenue:
|
||||||||
Freight revenue
|
$
|
800,401
|
$
|
779,729
|
||||
Fuel surcharge revenue
|
94,127
|
105,726
|
||||||
Total revenue
|
$
|
894,528
|
$
|
885,455
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Salaries, wages, and related expenses
|
$
|
321,997
|
$
|
304,447
|
||||
% of total revenue
|
36.0
|
%
|
34.4
|
%
|
||||
% of freight revenue
|
40.2
|
%
|
39.0
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Fuel expense
|
$
|
115,307
|
$
|
121,264
|
||||
% of total revenue
|
12.9
|
%
|
13.7
|
%
|
||||
% of freight revenue
|
14.4
|
%
|
15.6
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Total fuel surcharge
|
$
|
94,127
|
$
|
105,726
|
||||
Less: Fuel surcharge revenue reimbursed to independent contractors and other third parties
|
11,673
|
12,635
|
||||||
Company fuel surcharge revenue
|
$
|
82,454
|
$
|
93,091
|
||||
Total fuel expense
|
$
|
115,307
|
$
|
121,264
|
||||
Less: Company fuel surcharge revenue
|
82,454
|
93,091
|
||||||
Net fuel expense
|
$
|
32,853
|
$
|
28,173
|
||||
% of freight revenue
|
4.1
|
%
|
3.6
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Operations and maintenance
|
$
|
59,505
|
$
|
55,505
|
||||
% of total revenue
|
6.7
|
%
|
6.3
|
%
|
||||
% of freight revenue
|
7.4
|
%
|
7.1
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Revenue equipment rentals and purchased transportation
|
$
|
204,655
|
$
|
183,645
|
||||
% of total revenue
|
22.9
|
%
|
20.7
|
%
|
||||
% of freight revenue
|
25.6
|
%
|
23.6
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Operating taxes and licenses
|
$
|
13,024
|
$
|
11,831
|
||||
% of total revenue
|
1.5
|
%
|
1.3
|
%
|
||||
% of freight revenue
|
1.6
|
%
|
1.5
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Insurance and claims
|
$
|
47,724
|
$
|
43,333
|
||||
% of total revenue
|
5.3
|
%
|
4.9
|
%
|
||||
% of freight revenue
|
6.0
|
%
|
5.6
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Communications and utilities
|
$
|
6,969
|
$
|
7,061
|
||||
% of total revenue
|
0.8
|
%
|
0.8
|
%
|
||||
% of freight revenue
|
0.9
|
%
|
0.9
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
General supplies and expenses
|
$
|
30,434
|
$
|
23,227
|
||||
% of total revenue
|
3.4
|
%
|
2.6
|
%
|
||||
% of freight revenue
|
3.8
|
%
|
3.0
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Depreciation and amortization
|
$
|
78,879
|
$
|
76,156
|
||||
% of total revenue
|
8.8
|
%
|
8.6
|
%
|
||||
% of freight revenue
|
9.9
|
%
|
9.8
|
%
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Interest expense, net
|
$
|
11,110
|
$
|
8,708
|
||||
% of total revenue
|
1.2
|
%
|
1.0
|
%
|
||||
% of freight revenue
|
1.4
|
%
|
1.1
|
%
|
|
Year ended December 31,
|
|||||||
(in thousands)
|
2019
|
2018
|
||||||
Income from equity method investment
|
$
|
7,017
|
$
|
7,732
|
|
Year ended December 31,
|
|||||||
(dollars in thousands)
|
2019
|
2018
|
||||||
Income tax expense (benefit)
|
$
|
3,464
|
$
|
15,507
|
||||
% of total revenue
|
0.4
|
%
|
1.8
|
%
|
||||
% of freight revenue
|
0.4
|
%
|
2.0
|
%
|
|
||||||||
|
Year ended December 31,
|
|||||||
(in thousands)
|
2019
|
2018
|
||||||
Revenues:
|
||||||||
Highway Services:
|
||||||||
Expedited
|
$
|
262,764
|
$
|
317,244
|
||||
OTR
|
93,757
|
152,064
|
||||||
Total Highway Services
|
356,521
|
469,308
|
||||||
|
||||||||
Dedicated
|
342,473
|
257,739
|
||||||
|
||||||||
Managed Freight:
|
||||||||
Brokerage
|
102,479
|
102,730
|
||||||
TMS
|
36,136
|
27,036
|
||||||
Warehousing
|
47,779
|
23,580
|
||||||
Total Managed Freight
|
186,394
|
153,346
|
||||||
|
||||||||
Factoring
|
9,140
|
5,062
|
||||||
|
||||||||
Total revenues
|
$
|
894,528
|
$
|
885,455
|
||||
|
||||||||
Operating Income:
|
||||||||
Highway Services:
|
||||||||
Expedited
|
$
|
10,629
|
$
|
25,877
|
||||
OTR
|
(11,727
|
)
|
6,816
|
|||||
Total Highway Services
|
(1,098
|
)
|
32,693
|
|||||
|
||||||||
Dedicated
|
1,026
|
12,699
|
||||||
|
||||||||
Managed Freight:
|
||||||||
Brokerage
|
314
|
3,805
|
||||||
TMS
|
3,014
|
3,457
|
||||||
Warehousing
|
5,520
|
2,873
|
||||||
Total Managed Freight
|
8,848
|
10,135
|
||||||
|
||||||||
Factoring
|
7,258
|
3,459
|
||||||
|
||||||||
Total operating income
|
$
|
16,034
|
$
|
58,986
|
Payments due by period:
|
2020
|
2021
|
2022
|
2023
|
2024
|
More than
|
||||||||||||||||||||||
(in thousands)
|
Total
|
(less than 1 year)
|
(1-3 years)
|
(1-3 years)
|
(3-5 years)
|
(3-5 years)
|
5 years
|
|||||||||||||||||||||
Credit Facility (1)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
Revenue equipment and property installment notes, including interest (2)
|
$
|
279,645
|
$
|
63,317
|
$
|
77,543
|
$
|
85,843
|
$
|
28,710
|
$
|
2,077
|
$
|
22,155
|
||||||||||||||
Operating leases (3)
|
$
|
65,952
|
$
|
21,991
|
$
|
18,223
|
$
|
16,014
|
$
|
7,293
|
$
|
439
|
$
|
1,992
|
||||||||||||||
Finance leases (4)
|
$
|
35,642
|
$
|
8,184
|
$
|
7,719
|
$
|
9,269
|
$
|
9,080
|
$
|
1,390
|
$
|
-
|
||||||||||||||
Purchase obligations (5)
|
$
|
68,422
|
$
|
68,422
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
Total contractual cash obligations (6)
|
$
|
446,846
|
$
|
159,099
|
$
|
103,485
|
$
|
111,126
|
$
|
45,083
|
$
|
3,906
|
$
|
24,147
|
(1)
|
Represents principal owed at December 31, 2019 and interest on such principal amount through maturity. The borrowings consist of draws under our Credit Facility, with fluctuating borrowing
amounts and variable interest rates. In determining future contractual interest and principal obligations, for variable interest rate debt, the interest rate and principal amount in place at December 31, 2019, was utilized. The table assumes
long-term debt is held to maturity. Refer to Note 6, "Debt" of the accompanying consolidated financial statements for further information.
|
(2)
|
Represents principal and interest payments owed at December 31, 2019. The borrowings consist of installment notes with finance companies, with fixed borrowing amounts and fixed interest rates,
except for a variable rate real estate note, for which the interest rate is effectively fixed through an interest rate swap. The table assumes these installment notes are held to maturity. Refer to Note 6, "Debt" of the accompanying
consolidated financial statements for further information.
|
(3)
|
Represents future monthly rental payment obligations under operating leases for tractors, trailers, and terminal properties, and computer and office equipment. Substantially all lease agreements
for revenue equipment have fixed payment terms based on the passage of time. The tractor lease agreements generally stipulate maximum miles and provide for mileage penalties for excess miles. These leases generally run for a period of three
to five years for tractors and five to seven years for trailers. Refer to Note 7, "Leases" of the accompanying consolidated financial statements for further information.
|
(4)
|
Represents principal and interest payments owed at December 31, 2019. The borrowings consist of finance leases with one finance company, with fixed borrowing amounts and fixed interest rates or
rates that are floating but effectively fixed through related interest rate swaps. Borrowings in 2019 and thereafter include the residual value guarantees on the related equipment as balloon payments. Refer to Note 6, "Debt" of the
accompanying consolidated financial statements for further information.
|
(5)
|
Represents purchase obligations for revenue equipment totaling approximately $68.4 million in 2019. These commitments are cancelable, subject to certain adjustments in the underlying obligations
and benefits. These purchase commitments are expected to be financed by operating leases, finance leases, long-term debt, proceeds from sales of existing equipment, and/or cash flows from operations. Refer to Notes 6 and 7, "Debt" and
"Leases," respectively, of the accompanying consolidated financial statements for further information.
|
(6)
|
Excludes any amounts accrued for unrecognized tax benefits as we are unable to reasonably predict the ultimate amount or timing of settlement of such unrecognized tax benefits.
|
GAAP Operating Ratio:
|
2019
|
OR %
|
2018
|
OR %
|
||||||||||||
Total revenue
|
$
|
894,528
|
$
|
885,455
|
||||||||||||
Total operating expenses
|
878,494
|
98.2
|
%
|
826,469
|
93.3
|
%
|
||||||||||
Operating income
|
$
|
16,034
|
$
|
58,986
|
Adjusted Operating Ratio:
|
2019
|
Adj. OR %
|
2018
|
Adj. OR %
|
||||||
Total revenue
|
$
|
894,528
|
|
$
|
885,455
|
|
||||
Fuel surcharge revenue
|
(94,127
|
)
|
|
(105,726
|
)
|
|
||||
Freight revenue (total revenue, excluding fuel surcharge)
|
800,401
|
|
779,729
|
|
||||||
|
|
|
||||||||
Total operating expenses
|
878,494
|
|
826,469
|
|
||||||
Adjusted for:
|
|
|
||||||||
Fuel surcharge revenue
|
(94,127
|
)
|
|
(105,726
|
)
|
|
||||
Amortization of intangibles
|
(2,923
|
)
|
|
(1,462
|
)
|
|
||||
Adjusted operating expenses
|
781,444
|
97.6%
|
719,281
|
92.2%
|
||||||
Adjusted operating income
|
$
|
18,957
|
|
$
|
60,448
|
|
|
●
|
auto liability - $1.0 million
|
|
●
|
workers' compensation - $1.3 million
|
|
●
|
cargo - $0.3 million
|
|
●
|
employee medical - $0.4 million
|
|
●
|
physical damage - 100%
|
ITEM 7A.
|
ITEM 8.
|
ITEM 9.
|
ITEM 9A.
|
|
●
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
|
●
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
|
|
●
|
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.
|
ITEM 9B.
|
ITEM 10.
|
ITEM 11.
|
ITEM 12.
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
Weighted average exercise price of outstanding options, warrants and rights
|
Number of securities remaining eligible for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|||||||||||
|
(a)
|
(b)
|
(c)
|
|||||||||||
Equity compensation plans approved by security holders
|
787,460
|
(1) | |
|
-
|
477,245
|
||||||||
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|||||||||||
Total
|
787,460
|
-
|
477,245
|
(1)
|
Represents unvested restricted shares granted under the 2006 Omnibus Incentive Plan, as amended. The weighted average stock price on the date of grant for outstanding restricted stock awards was
$18.25, which is not reflected in column (b), because restricted stock awards do not have an exercise price.
|
ITEM 13.
|
ITEM 14.
|
ITEM 15.
|
|
||
|
|
|
|
(a)
|
1.
|
Financial Statements.
|
|
|
|
|
|
|
|
Our audited consolidated financial statements are set forth at the following pages of this report:
|
|
|
|
59
|
|
|
|
60
|
|
|
|
61
|
|
|
|
62
|
|
|
|
63
|
|
|
|
64
|
|
|
|
65
|
|
|
|
66
|
|
|
|
|
|
|
2.
|
Financial Statement Schedules.
|
|
|
|
|
|
|
|
Financial statement schedules are not required because all required information is included in the financial statements or is not applicable.
|
|
|
|
|
|
|
3.
|
Exhibits.
|
|
|
|
|
|
|
|
The exhibits required to be filed by Item 601 of Regulation S-K are listed under paragraph (b) below and on the Exhibit Index appearing at the end of this report. Management contracts and
compensatory plans or arrangements are indicated by an asterisk.
|
|
|
|
|
|
(b)
|
|
Exhibits.
|
|
|
|
The following exhibits are filed with this Form 10-K or incorporated by reference to the document set forth next to the exhibit listed below.
|
Exhibit Number
|
Reference
|
Description
|
|
Stock Purchase Agreement, dated July 3, 2018, by and among Landair Holdings, Inc., the Stockholders of Landair Holdings, Inc. and Covenant Transportation Group, Inc. (Incorporated by reference
to Exhibit 2.1 to the Company's Form 10-Q, filed November 9, 2018)
|
|
3.1 |
|
Second Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q, filed May 10, 2019)
|
3.2 |
|
Third Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Company's Report on Form 8-K, filed March 14, 2019)
|
4.1 |
|
Second Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q, filed May 10, 2019)
|
4.2 |
|
Third Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Company's Report on Form 8-K, filed March 14, 2019)
|
#
|
Description of the Registrant’s Securities
|
|
*
|
Form of Indemnification Agreement between Covenant Transport, Inc. and each officer and director, effective May 1, 2004 (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q,
filed August 5, 2004)
|
|
*
|
Form of Restricted Stock Award Notice under the 2006 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.22 to the Company's Form 10-Q, filed August 9, 2006)
|
|
*
|
Form of Restricted Stock Special Award Notice under the 2006 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.23 to the Company's Form 10-Q, filed August 9, 2006)
|
|
|
Third Amended and Restated Credit Agreement, dated September 23, 2008, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc.,
Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A., and Textron Financial Corporation (Incorporated by reference to Exhibit 10.14 to the
Company's Form 10-K, filed March 30, 2010)
|
|
*
|
Covenant Transportation Group, Inc. Third Amended and Restated 2006 Omnibus Incentive Plan (Incorporated by reference to Appendix A to the Company's Schedule 14A, filed April 19, 2013)
|
|
Amendment No. 1 to Third Amended and Restated Credit Agreement, dated March 27, 2009, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset
Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A., and Textron Financial Corporation (Incorporated by reference to Exhibit
10.1 to the Company's Form 10-Q, filed May 15, 2009)
|
|
|
Second Amendment to Third Amended and Restated Credit Agreement, dated February 25, 2010, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset
Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A., and Textron Financial Corporation (Incorporated by reference to Exhibit
10.1 to the Company's Form 10-Q, filed May 17, 2010)
|
|
|
Third Amendment to Third Amended and Restated Credit Agreement, dated July 30, 2010, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset
Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Form
10-Q, filed November 9, 2010)
|
|
|
Fourth Amendment to Third Amended and Restated Credit Agreement, dated August 31, 2010, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset
Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.2 to the Company's Form
10-Q, filed November 9, 2010)
|
|
|
Fifth Amendment to Third Amended and Restated Credit Agreement, dated September 1, 2011, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset
Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Report
on Form 8-K, filed October 28, 2011)
|
|
|
Sixth Amendment to Third Amended and Restated Credit Agreement, dated effective as of October 24, 2011, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company,
Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.2 to the
Company's Report on Form 8-K, filed October 28, 2011)
|
|
|
Seventh Amendment to Third Amended and Restated Credit Agreement, dated effective as of March 29, 2012, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company,
Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the
Company's Report on Form 8-K, filed April 2, 2012)
|
|
|
Eighth Amendment to Third Amended and Restated Credit Agreement, dated effective as of December 31, 2012, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing
Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1
to the Company's Report on Form 8-K, filed January 31, 2013)
|
|
|
Ninth Amendment to Third Amended and Restated Credit Agreement and Related Security Documents, dated effective as of August 6, 2014, among Covenant Transportation Group, Inc., Covenant
Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by
reference to Exhibit 10.1 to the Company's Form 10-Q, filed November 13, 2014)
|
|
|
Tenth Amendment to Third Amended and Restated Credit Agreement and Related Security Documents, dated effective as of September 8, 2014, among Covenant Transportation Group, Inc., Covenant
Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by
reference to Exhibit 10.2 to the Company's Form 10-Q, filed November 13, 2014)
|
|
*
|
Consulting Agreement (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed November 9, 2016)
|
|
|
Joinder, Supplement and Eleventh Amendment to Third Amended and Restated Credit Agreement, dated effective as of August 6, 2015, among Covenant Transportation Group, Inc., Covenant Transport,
Inc., CTG Leasing Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Driven Analytic Solutions, LLC, Covenant Properties, LLC, Bank of America, N.A.,
and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed November 9, 2015)
|
|
|
Twelfth Amendment to Third Amended and Restated Credit Agreement, dated effective as of February 25, 2016, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing
Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Driven Analytic Solutions, LLC, Covenant Properties, LLC, Bank of America, N.A., and JPMorgan Chase
Bank, N.A. (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q, filed May 10, 2016)
|
|
Thirteenth Amendment to Third Amended and Restated Credit Agreement, dated effective as of December 16, 2016, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing
Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Driven Analytic Solutions, LLC, Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated
by reference to Exhibit 10.26 to the Company's Form 10-K, filed March 14, 2017)
|
|
*
|
First Amendment to Consulting Agreement (Incorporated by reference to Exhibit 10.27 to the Company's Form 10-K, filed March 14, 2017)
|
|
|
Fourteenth Amendment to Third Amended and Restated Credit Agreement, dated effective as of November 28, 2017, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing
Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Driven Analytic Solutions, LLC, Transport Management Services, LLC, Bank of America, N.A., and
JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.27 to the Company's Form 10-K, filed February 28, 2018)
|
|
|
Fifteenth Amendment to Third Amended and Restated Credit Agreement, dated effective as of June 19, 2018, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company,
Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, LLC, Star Transportation, Inc., Covenant Logistics, Inc., Driven Analytic Solutions, LLC, Transport Management Services, LLC, Bank of
America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed August 8, 2018)
|
|
|
Sixteenth Amendment to Third Amended and Restated Credit Agreement, dated effective as of July 3, 2018, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company,
Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, LLC, Star Transportation, Inc., Covenant Logistics, Inc., Driven Analytic Solutions, LLC, Transport Management Services, LLC, Landair
Holdings, Inc., Landair Transport, Inc., Landair Logistics, Inc., Landair Leasing, Inc., Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed November 9, 2018)
|
|
First Amendment to the Covenant Transportation Group, Inc. Third Amended and Restated 2006 Omnibus Incentive Plan (Incorporated by reference to Appendix A to the Company's Definitive Proxy
Statement filed with the SEC on April 8, 2019 in connection with the 2019 Annual Meeting of Stockholders)
|
||
*
|
Form of Restricted Stock Award Notice under the Third Amended and Restated 2006 Omnibus Incentive Plan, as amended (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q, filed
August 9, 2019)
|
|
#
|
List of Subsidiaries
|
|
#
|
Consent of Independent Registered Public Accounting Firm – KPMG LLP
|
|
#
|
Consent of Independent Auditor – Coulter & Justus, P.C.
|
|
#
|
Consent of Independent Registered Public Accounting Firm – Coulter & Justus, P.C.
|
|
#
|
Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Principal Executive Officer
|
|
#
|
Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Richard B. Cribbs, the Company's Principal Financial Officer
|
|
##
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Chief Executive Officer
|
|
##
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Richard B. Cribbs, the Company's Chief Financial Officer
|
|
#
|
Financial Statements of Transport Enterprise Leasing, LLC
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
#
|
Filed herewith.
|
##
|
Furnished herewith.
|
*
|
Management contract or compensatory plan or arrangement.
|
ITEM 16.
|
|
COVENANT TRANSPORTATION GROUP, INC.
|
|
|
|
|
|
|
|
|
|
|
Date: March 9, 2020
|
By:
|
/s/ Richard B. Cribbs
|
|
|
|
Richard B. Cribbs
|
|
|
|
Executive Vice President and Chief Financial Officer in his capacity as such and on behalf of the issuer.
|
|
Signature and Title
|
|
Date
|
|
|
|
/s/ David R. Parker
|
|
March 9, 2020
|
David R. Parker
|
|
|
Chairman of the Board and Chief Executive Officer
(principal executive officer)
|
|
|
|
|
|
/s/ Richard B. Cribbs
|
|
March 9, 2020
|
Richard B. Cribbs
|
|
|
Executive Vice President and Chief Financial Officer
(principal financial officer)
|
|
|
|
|
|
/s/ James S. Grant
|
|
March 9, 2020
|
James S. Grant
|
|
|
Corporate Controller
(principal accounting officer)
|
|
|
|
|
|
/s/ Bradley A. Moline
|
|
March 9, 2020
|
Bradley A. Moline
|
|
|
Director
|
|
|
|
|
|
/s/ William T. Alt
|
|
March 9, 2020
|
William T. Alt
|
|
|
Director
|
|
|
|
|
|
/s/ Robert E. Bosworth
|
|
March 9, 2020
|
Robert E. Bosworth
|
|
|
Director
|
|
|
|
|
|
/s/ Herbert J. Schmidt
|
|
March 9, 2020
|
Herbert J. Schmidt
|
|
|
Director
|
|
|
|
|
|
/s/ W. Miller Welborn
|
|
March 9, 2020
|
W. Miller Welborn
|
|
|
Director
|
|
|
CONSOLIDATED BALANCE SHEETS
|
DECEMBER 31, 2019 AND 2018
|
(In thousands, except share data)
|
|
2019
|
2018
|
||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
43,591
|
$
|
23,127
|
||||
Accounts receivable, net of allowance of $1,944 in 2019 and $1,985 in 2018
|
167,825
|
151,093
|
||||||
Drivers' advances and other receivables, net of allowance of $692 in 2019 and $626 in 2018
|
8,507
|
16,675
|
||||||
Inventory and supplies
|
4,210
|
4,067
|
||||||
Prepaid expenses
|
11,707
|
11,579
|
||||||
Assets held for sale
|
12,010
|
2,559
|
||||||
Income taxes receivable
|
5,403
|
1,109
|
||||||
Other short-term assets
|
1,132
|
1,435
|
||||||
Total current assets
|
254,385
|
211,644
|
||||||
|
||||||||
Property and equipment, at cost
|
725,383
|
638,770
|
||||||
Less: accumulated depreciation and amortization
|
(208,180
|
)
|
(188,175
|
)
|
||||
Net property and equipment
|
517,203
|
450,595
|
||||||
|
||||||||
Goodwill
|
42,518
|
41,598
|
||||||
Other intangibles, net
|
29,615
|
32,538
|
||||||
Other assets, net
|
37,919
|
37,149
|
||||||
|
||||||||
Total assets
|
$
|
881,640
|
$
|
773,524
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Checks outstanding in excess of bank balances
|
$
|
592
|
$
|
1,857
|
||||
Accounts payable
|
25,745
|
22,101
|
||||||
Accrued expenses
|
31,840
|
49,503
|
||||||
Current maturities of long-term debt
|
54,377
|
28,710
|
||||||
Current portion of finance lease obligations
|
7,258
|
5,374
|
||||||
Current portion of operating lease obligations
|
19,460
|
-
|
||||||
Current portion of insurance and claims accrual
|
21,800
|
19,787
|
||||||
Other short-term liabilities
|
185
|
-
|
||||||
Total current liabilities
|
161,257
|
127,332
|
||||||
|
||||||||
Long-term debt
|
200,177
|
166,635
|
||||||
Long-term portion of finance lease obligations
|
26,010
|
35,119
|
||||||
Long-term portion of operating lease obligations
|
40,882
|
-
|
||||||
Insurance and claims accrual
|
20,295
|
22,193
|
||||||
Deferred income taxes
|
80,330
|
77,467
|
||||||
Other long-term liabilities
|
2,578
|
1,636
|
||||||
Total liabilities
|
531,529
|
430,382
|
||||||
Commitments and contingent liabilities
|
-
|
-
|
||||||
Stockholders' equity:
|
||||||||
Class A common stock, $.01 par value; 40,000,000 shares authorized; 16,165,145 shares issued and outstanding as of December 31, 2019; and 20,000,000 authorized; 16,015,708
shares issued and outstanding as of December 31, 2018
|
173
|
171
|
||||||
Class B common stock, $.01 par value; 5,000,000 shares authorized; 2,350,000 shares issued and outstanding
|
24
|
24
|
||||||
Additional paid-in-capital
|
141,885
|
142,177
|
||||||
Accumulated other comprehensive income
|
(1,014
|
)
|
204
|
|||||
Retained earnings
|
209,043
|
200,566
|
||||||
Total stockholders' equity
|
350,111
|
343,142
|
||||||
Total liabilities and stockholders' equity
|
$
|
881,640
|
$
|
773,524
|
|
2019
|
2018
|
2017
|
|||||||||
Revenues
|
||||||||||||
Freight revenue
|
$
|
800,401
|
$
|
779,729
|
$
|
626,809
|
||||||
Fuel surcharge revenue
|
94,127
|
105,726
|
78,198
|
|||||||||
Total revenue
|
$
|
894,528
|
$
|
885,455
|
$
|
705,007
|
||||||
|
||||||||||||
Operating expenses:
|
||||||||||||
Salaries, wages, and related expenses
|
321,997
|
304,447
|
241,784
|
|||||||||
Fuel expense
|
115,307
|
121,264
|
103,139
|
|||||||||
Operations and maintenance
|
59,505
|
55,505
|
48,774
|
|||||||||
Revenue equipment rentals and purchased transportation
|
204,655
|
183,645
|
141,954
|
|||||||||
Operating taxes and licenses
|
13,024
|
11,831
|
9,878
|
|||||||||
Insurance and claims
|
47,724
|
43,333
|
33,155
|
|||||||||
Communications and utilities
|
6,969
|
7,061
|
6,938
|
|||||||||
General supplies and expenses
|
30,434
|
23,227
|
14,783
|
|||||||||
Depreciation and amortization, including gains and losses on disposition of property and equipment
|
78,879
|
76,156
|
76,447
|
|||||||||
Total operating expenses
|
878,494
|
826,469
|
676,852
|
|||||||||
Operating income
|
16,034
|
58,986
|
28,155
|
|||||||||
Interest expense, net
|
11,110
|
8,708
|
8,258
|
|||||||||
Income from equity method investment
|
(7,017
|
)
|
(7,732
|
)
|
(3,400
|
)
|
||||||
Income before income taxes
|
11,941
|
58,010
|
23,297
|
|||||||||
Income tax expense (benefit)
|
3,464
|
15,507
|
(32,142
|
)
|
||||||||
Net income
|
$
|
8,477
|
$
|
42,503
|
$
|
55,439
|
||||||
|
||||||||||||
Income per share:
|
||||||||||||
Basic income per share
|
$
|
0.46
|
$
|
2.32
|
$
|
3.03
|
||||||
|
||||||||||||
Diluted income per share
|
$
|
0.45
|
$
|
2.30
|
$
|
3.02
|
||||||
|
||||||||||||
Basic weighted average shares outstanding
|
18,435
|
18,340
|
18,279
|
|||||||||
|
||||||||||||
Diluted weighted average shares outstanding
|
18,635
|
18,469
|
18,372
|
|
2019
|
2018
|
2017
|
|||||||||
|
||||||||||||
Net income
|
$
|
8,477
|
$
|
42,503
|
$
|
55,439
|
||||||
|
||||||||||||
Other comprehensive income:
|
||||||||||||
|
||||||||||||
Unrealized (loss) gain on effective portion of cash flow hedges, net of tax of $437, $377, and $51 in 2019, 2018 and 2017, respectively
|
(1,278
|
)
|
993
|
149
|
||||||||
|
||||||||||||
Reclassification of cash flow hedge gains (losses) into statement of operations, net of tax of ($5), $408, and $1,719 in 2019, 2018 and 2017, respectively
|
15
|
(1,076
|
)
|
2,784
|
||||||||
|
||||||||||||
Unrealized holding gain (loss) on investments classified as available-for-sale
|
45
|
(6
|
)
|
-
|
||||||||
Total other comprehensive (loss) income
|
(1,218
|
)
|
(89
|
)
|
2,933
|
|||||||
|
||||||||||||
Comprehensive income
|
$
|
7,259
|
$
|
42,414
|
$
|
58,372
|
|
Accumulated
|
|||||||||||||||||||||||||||
|
Additional
|
Other
|
Total
|
|||||||||||||||||||||||||
|
Common Stock
|
Paid-In
|
Treasury
|
Comprehensive
|
Retained
|
Stockholders
|
||||||||||||||||||||||
|
Class A
|
Class B
|
Capital
|
Stock
|
Income (Loss)
|
Earnings
|
Equity
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balances at December 31, 2016
|
$
|
170
|
$
|
24
|
$
|
137,912
|
$
|
(1,084
|
)
|
$
|
(2,640
|
)
|
$
|
102,032
|
$
|
236,414
|
||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
55,439
|
55,439
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
2,933
|
-
|
2,933
|
|||||||||||||||||||||
Stock-based employee compensation expense
|
-
|
-
|
951
|
-
|
-
|
-
|
951
|
|||||||||||||||||||||
Issuance of restricted shares, net
|
1
|
-
|
(1,621
|
)
|
1,084
|
-
|
-
|
(536
|
)
|
|||||||||||||||||||
Balances at December 31, 2017
|
$
|
171
|
$
|
24
|
$
|
137,242
|
$
|
-
|
$
|
293
|
$
|
157,471
|
$
|
295,201
|
||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
42,503
|
42,503
|
|||||||||||||||||||||
Effect of adoption of ASU 2014-09
|
-
|
-
|
-
|
-
|
-
|
592
|
592
|
|||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(89
|
)
|
-
|
(89
|
)
|
|||||||||||||||||||
Stock-based employee compensation expense
|
-
|
-
|
4,802
|
-
|
-
|
-
|
4,802
|
|||||||||||||||||||||
Issuance of restricted shares, net
|
-
|
-
|
133
|
-
|
-
|
-
|
133
|
|||||||||||||||||||||
Balances at December 31, 2018
|
$
|
171
|
$
|
24
|
$
|
142,177
|
$
|
-
|
$
|
204
|
$
|
200,566
|
$
|
343,142
|
||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
8,477
|
8,477
|
|||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(1,218
|
)
|
-
|
(1,218
|
)
|
|||||||||||||||||||
Stock-based employee compensation expense
|
-
|
-
|
819
|
-
|
-
|
-
|
819
|
|||||||||||||||||||||
Issuance of restricted shares, net
|
2
|
-
|
(1,111
|
)
|
-
|
-
|
-
|
(1,109
|
)
|
|||||||||||||||||||
Balances at December 31, 2019
|
$
|
173
|
$
|
24
|
$
|
141,885
|
$
|
-
|
$
|
(1,014
|
)
|
$
|
209,043
|
$
|
350,111
|
|
2019
|
2018
|
2017
|
|||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$
|
8,477
|
$
|
42,503
|
$
|
55,439
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Provision for losses on accounts receivable
|
255
|
507
|
454
|
|||||||||
Reversal of gain on sales to equity method investee
|
(7
|
)
|
(189
|
)
|
(179
|
)
|
||||||
Depreciation and amortization
|
80,529
|
75,859
|
72,422
|
|||||||||
Amortization of deferred financing fees
|
147
|
148
|
242
|
|||||||||
Deferred income tax expense (benefit)
|
3,454
|
13,840
|
(23,023
|
)
|
||||||||
Income tax (expense) benefit arising from restricted share vesting and stock options exercised
|
(105
|
)
|
(44
|
)
|
457
|
|||||||
Stock-based compensation expense
|
819
|
5,177
|
1,201
|
|||||||||
Equity in income of affiliate
|
(7,017
|
)
|
(7,732
|
)
|
(3,400
|
)
|
||||||
Return on investment in affiliated company
|
1,225
|
1,960
|
1,960
|
|||||||||
(Gain) loss on disposition of property and equipment
|
(2,829
|
)
|
298
|
4,024
|
||||||||
Return on investment in available-for-sale securities
|
13
|
(13
|
)
|
-
|
||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Receivables and advances
|
(6,706
|
)
|
(27,199
|
)
|
(23,670
|
)
|
||||||
Prepaid expenses and other assets
|
487
|
(2,127
|
)
|
1,768
|
||||||||
Inventory and supplies
|
(143
|
)
|
168
|
(252
|
)
|
|||||||
Insurance and claims accrual
|
945
|
2,412
|
(1,165
|
)
|
||||||||
Operating lease right-of-use asset amortization
|
553
|
-
|
-
|
|||||||||
Accounts payable and accrued expenses
|
(16,066
|
)
|
19,232
|
(3,425
|
)
|
|||||||
Net cash flows provided by operating activities
|
64,031
|
124,800
|
82,853
|
|||||||||
|
||||||||||||
Cash flows from investing activities:
|
||||||||||||
Acquisition of Landair Holdings, Inc., net of cash acquired
|
-
|
(105,946
|
)
|
-
|
||||||||
Purchase of available-for-sale securities
|
(1,365
|
)
|
(1,496
|
)
|
-
|
|||||||
Acquisition of property and equipment
|
(138,273
|
)
|
(75,142
|
)
|
(110,802
|
)
|
||||||
Proceeds from disposition of property and equipment
|
46,609
|
61,687
|
48,749
|
|||||||||
Net cash flows used by investing activities
|
(93,029
|
)
|
(120,897
|
)
|
(62,053
|
)
|
||||||
|
||||||||||||
Cash flows from financing activities:
|
||||||||||||
Change in checks outstanding in excess of bank balances
|
(1,265
|
)
|
1,857
|
(189
|
)
|
|||||||
Proceeds from issuance of notes payable
|
107,251
|
100,811
|
121,210
|
|||||||||
Repayments of notes payable
|
(44,278
|
)
|
(89,569
|
)
|
(122,676
|
)
|
||||||
Repayments of finance lease obligations
|
(7,225
|
)
|
(3,883
|
)
|
(7,416
|
)
|
||||||
Proceeds under revolving credit facility
|
1,734,338
|
1,598,213
|
1,271,669
|
|||||||||
Repayments under revolving credit facility
|
(1,738,249
|
)
|
(1,603,309
|
)
|
(1,274,847
|
)
|
||||||
Payment of minimum tax withholdings on stock compensation
|
(1,110
|
)
|
(242
|
)
|
(785
|
)
|
||||||
Debt refinancing costs
|
-
|
(10
|
)
|
(160
|
)
|
|||||||
Net cash flows provided by (used in) financing activities
|
49,462
|
3,868
|
(13,194
|
)
|
||||||||
|
||||||||||||
Net change in cash and cash equivalents
|
20,464
|
7,771
|
7,606
|
|||||||||
|
||||||||||||
Cash and cash equivalents at beginning of year
|
23,127
|
15,356
|
7,750
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
43,591
|
$
|
23,127
|
$
|
15,356
|
||||||
|
||||||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest, net of capitalized interest
|
$
|
11,026
|
$
|
8,568
|
$
|
8,268
|
||||||
Income taxes
|
$
|
752
|
$
|
(5,388
|
)
|
$
|
(2,222
|
)
|
||||
Equipment purchased under finance leases
|
$
|
-
|
$
|
19,638
|
$
|
9,953
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
●
|
Non-dedicated truckload services ("Highway Services"), which consists of two truckload service offerings that are aggregated because they have similar economic characteristics and meet the
aggregation criteria. The two truckload service offerings include: (i) expedited and (ii) over-the-road (“OTR”).
|
|
●
|
Dedicated contract truckload services (“Dedicated”), which consists of our truckload business that involves longer-term contracts that allocate a specified number of tractors and trailers to a
specific customer, with fixed and variable compensation.
|
|
●
|
Freight brokerage, transportation management services (“TMS”), and warehousing services (“Managed Freight”), which consists of three service offerings that are aggregated because they have
similar economic characteristics and meet the aggregation criteria. The three service offerings that comprise our Managed Freight segment are as follows: (i) Freight brokerage (“Brokerage”); (ii) TMS, (iii) and Warehousing (“Warehousing”).
|
|
●
|
Accounts receivable factoring services (“Factoring”), which assists current and potential capacity providers with improving their cash flows through secured invoice factoring services.
|
|
Years ended
|
|||||||||||
|
December 31,
|
|||||||||||
(in thousands)
|
2019
|
2018
|
2017
|
|||||||||
Revenues:
|
||||||||||||
Highway Services:
|
||||||||||||
Expedited
|
$
|
262,764
|
$
|
317,244
|
$
|
314,579
|
||||||
OTR
|
93,757
|
152,064
|
153,413
|
|||||||||
Total Highway Services
|
356,521
|
469,308
|
467,992
|
|||||||||
|
||||||||||||
Dedicated
|
342,473
|
257,739
|
144,845
|
|||||||||
|
||||||||||||
Managed Freight:
|
||||||||||||
Brokerage
|
102,479
|
102,730
|
79,630
|
|||||||||
TMS
|
36,136
|
27,036
|
9,412
|
|||||||||
Warehousing
|
47,779
|
23,580
|
-
|
|||||||||
Total Managed Freight
|
186,394
|
153,346
|
89,042
|
|||||||||
|
||||||||||||
Factoring
|
9,140
|
5,062
|
3,128
|
|||||||||
|
||||||||||||
Total revenues
|
$
|
894,528
|
$
|
885,455
|
$
|
705,007
|
Years ended December 31:
|
Beginning balance January 1,
|
Additional provisions to (reversal of) allowance
|
Write-offs and other adjustments
|
Ending balance December 31,
|
||||||||||||
|
||||||||||||||||
2019
|
$
|
1,985
|
$
|
255
|
$
|
(296
|
)
|
$
|
1,944
|
|||||||
|
||||||||||||||||
2018
|
$
|
1,456
|
$
|
507
|
$
|
22
|
$
|
1,985
|
||||||||
|
||||||||||||||||
2017
|
$
|
1,345
|
$
|
454
|
$
|
(343
|
)
|
$
|
1,456
|
|
●
|
auto liability - $1.0 million
|
|
●
|
workers' compensation - $1.3 million
|
|
●
|
cargo - $0.3 million
|
|
●
|
employee medical - $0.4 million
|
|
●
|
physical damage - 100%
|
(in thousands except per share data)
|
||||||||||||
|
2019
|
2018
|
2017
|
|||||||||
Numerator:
|
||||||||||||
|
||||||||||||
Net income
|
$
|
8,477
|
$
|
42,503
|
$
|
55,439
|
||||||
|
||||||||||||
Denominator:
|
||||||||||||
|
||||||||||||
Denominator for basic income per share – weighted-average shares
|
18,435
|
18,340
|
18,279
|
|||||||||
Effect of dilutive securities:
|
||||||||||||
Equivalent shares issuable upon conversion of unvested restricted shares
|
200
|
129
|
93
|
|||||||||
Denominator for diluted income per share adjusted weighted-average shares and assumed conversions
|
18,635
|
18,469
|
18,372
|
|||||||||
|
||||||||||||
Net income per share:
|
||||||||||||
Basic income per share
|
$
|
0.46
|
$
|
2.32
|
$
|
3.03
|
||||||
Diluted income per share
|
$
|
0.45
|
$
|
2.30
|
$
|
3.02
|
2.
|
LIQUIDITY
|
3.
|
STOCK-BASED COMPENSATION
|
|
Number of
|
Weighted
|
||||||
|
stock
|
average grant
|
||||||
|
awards
|
date fair
|
||||||
|
(in thousands)
|
value
|
||||||
|
||||||||
Unvested at December 31, 2016
|
265
|
$
|
18.63
|
|||||
|
||||||||
Granted
|
434
|
$
|
16.69
|
|||||
Vested
|
(96
|
)
|
$
|
12.78
|
||||
Forfeited
|
(16
|
)
|
$
|
19.25
|
||||
Unvested at December 31, 2017
|
587
|
$
|
18.14
|
|||||
|
||||||||
Granted
|
153
|
$
|
30.32
|
|||||
Vested
|
(35
|
)
|
$
|
25.97
|
||||
Forfeited
|
(30
|
)
|
$
|
27.58
|
||||
Unvested at December 31, 2018
|
675
|
$
|
20.08
|
|||||
|
||||||||
Granted
|
351
|
$
|
15.42
|
|||||
Vested
|
(191
|
)
|
$
|
19.22
|
||||
Forfeited
|
(48
|
)
|
$
|
19.33
|
||||
Unvested at December 31, 2019
|
787
|
$
|
18.25
|
4.
|
PROPERTY AND EQUIPMENT
|
(in thousands)
|
Estimated Useful Lives (Years)
|
2019
|
2018
|
|||||||||
Revenue equipment
|
3-10
|
$
|
588,828
|
$
|
504,192
|
|||||||
Communications equipment
|
5-10
|
6,189
|
3,850
|
|||||||||
Land and improvements
|
0-15
|
23,398
|
25,240
|
|||||||||
Buildings and leasehold improvements
|
7-40
|
75,471
|
75,134
|
|||||||||
Construction in-progress
|
-
|
400
|
3,121
|
|||||||||
Other
|
2-10
|
31,097
|
27,233
|
|||||||||
|
$
|
725,383
|
$
|
638,770
|
5.
|
GOODWILL, OTHER INTANGIBLE, AND OTHER ASSETS
|
(in thousands)
|
December 31, 2019
|
|||
|
Gross/net goodwill
|
|||
Dedicated
|
$
|
15,320
|
||
Managed Freight
|
27,198
|
|||
Total goodwill
|
$
|
42,518
|
(in thousands)
|
December 31, 2019
|
|||||||||||||||
|
Gross intangible assets
|
Accumulated amortization
|
Net intangible assets
|
Remaining Life (months)
|
||||||||||||
Trade name:
|
||||||||||||||||
Dedicated
|
$
|
2,402
|
$
|
(240
|
)
|
$
|
2,162
|
|||||||||
Managed Freight
|
1,998
|
(200
|
)
|
1,798
|
||||||||||||
Total trade name
|
4,400
|
(440
|
)
|
3,960
|
162
|
|||||||||||
Non-Compete agreement:
|
||||||||||||||||
Dedicated
|
914
|
(274
|
)
|
640
|
||||||||||||
Managed Freight
|
486
|
(146
|
)
|
340
|
||||||||||||
Total non-compete agreement
|
1,400
|
(420
|
)
|
980
|
42
|
|||||||||||
Customer relationships:
|
||||||||||||||||
Dedicated
|
14,072
|
(1,759
|
)
|
12,313
|
||||||||||||
Managed Freight
|
14,128
|
(1,766
|
)
|
12,362
|
||||||||||||
Total customer relationships:
|
28,200
|
(3,525
|
)
|
24,675
|
126
|
|||||||||||
Total other intangible assets
|
$
|
34,000
|
$
|
(4,385
|
)
|
$
|
29,615
|
(in thousands)
|
December 31, 2018
|
|||
|
Gross/net goodwill
|
|||
Goodwill
|
$
|
41,598
|
(in thousands)
|
December 31, 2018
|
|||||||||||||||
|
Gross intangible assets
|
Accumulated amortization
|
Net intangible assets
|
Remaining Life (months)
|
||||||||||||
Trade name
|
$
|
4,400
|
$
|
(147
|
)
|
$
|
4,253
|
174
|
||||||||
Non-Compete agreement
|
1,400
|
(140
|
)
|
1,260
|
54
|
|||||||||||
Customer relationships
|
28,200
|
(1,175
|
)
|
27,025
|
138
|
|||||||||||
Total other intangible assets
|
$
|
34,000
|
$
|
(1,462
|
)
|
$
|
32,538
|
|
(In thousands)
|
|||
2020
|
$
|
2,923
|
||
2021
|
2,923
|
|||
2022
|
2,923
|
|||
2023
|
2,783
|
|||
2024
|
2,643
|
|||
Thereafter
|
15,420
|
(in thousands)
|
2019
|
2018
|
||||||
Investment in TEL
|
$
|
31,906
|
$
|
26,106
|
||||
Other assets, net
|
6,013
|
11,043
|
||||||
Total other assets, net
|
$
|
37,919
|
$
|
37,149
|
6.
|
DEBT
|
(in thousands)
|
December 31, 2019
|
December 31, 2018
|
||||||||||||||
|
Current
|
Long-Term
|
Current
|
Long-Term
|
||||||||||||
Borrowings under Credit Facility
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
3,911
|
||||||||
Revenue equipment installment notes; weighted average interest rate of 3.7% at December 31, 2019, and 3.7% December 31, 2018, due in monthly installments
with final maturities at various dates ranging from January 2020 to July 2023, secured by related revenue equipment
|
53,431
|
177,514
|
27,809
|
139,115
|
||||||||||||
|
||||||||||||||||
Real estate notes; interest rate of 3.3% at December 31, 2019 and 4.1% at December 31, 2018 due in monthly installments with a fixed maturity at August 2035,
secured by related real estate
|
1,093
|
22,670
|
1,048
|
23,763
|
||||||||||||
Deferred loan costs
|
(147
|
)
|
(7
|
)
|
(147
|
)
|
(154
|
)
|
||||||||
Total debt
|
54,377
|
200,177
|
28,710
|
166,635
|
||||||||||||
Principal portion of finance lease obligations, secured by related revenue equipment
|
7,258
|
26,010
|
5,374
|
35,119
|
||||||||||||
Principal portion of operating lease obligations, secured by related equipment
|
19,460
|
40,882
|
-
|
-
|
||||||||||||
Total debt and lease obligations
|
$
|
81,095
|
$
|
267,069
|
$
|
34,084
|
$
|
201,754
|
|
(in thousands)
|
|||
2020
|
$
|
54,524
|
||
2021
|
71,231
|
|||
2022
|
82,150
|
|||
2023
|
27,703
|
|||
2024
|
1,294
|
|||
Thereafter
|
17,806
|
7.
|
LEASES
|
(dollars in thousands)
|
Twelve Months Ended
|
|||
|
December 31, 2019
|
|||
Finance lease cost:
|
||||
Amortization of right-of-use assets
|
$
|
5,469
|
||
Interest on lease liabilities
|
1,107
|
|||
Operating lease cost
|
24,393
|
|||
Variable lease cost
|
326
|
|||
|
||||
Total lease cost
|
$
|
31,295
|
||
|
||||
Other information
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||
Operating cash flows for finance leases
|
$
|
7,226
|
||
Operating cash flows for operating leases
|
$
|
24,393
|
||
Financing cash flows for finance leases
|
$
|
1,107
|
||
Right-of-use assets obtained in exchange for new finance lease liabilities
|
$
|
-
|
||
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
37,080
|
||
Weighted-average remaining lease term—finance leases
|
2.9 years
|
|||
Weighted-average remaining lease term—operating leases
|
3.4 years
|
|||
Weighted-average discount rate—finance leases
|
3.0
|
%
|
||
Weighted-average discount rate—operating leases
|
5.2
|
%
|
(in thousands)
|
Operating
|
Finance
|
||||||
2020
|
$
|
21,991
|
$
|
8,185
|
||||
2021
|
18,223
|
7,719
|
||||||
2022
|
16,014
|
9,269
|
||||||
2023
|
7,293
|
9,080
|
||||||
2024
|
439
|
1,390
|
||||||
Thereafter
|
1,992
|
-
|
||||||
Total minimum lease payments
|
$
|
65,952
|
$
|
35,643
|
||||
Less: amount representing interest
|
(5,610
|
)
|
(2,375
|
)
|
||||
Present value of minimum lease payments
|
60,342
|
33,268
|
||||||
Less: current portion
|
(19,460
|
)
|
(7,258
|
)
|
||||
Lease obligations, long-term
|
$
|
40,882
|
$
|
26,010
|
(in thousands)
|
2019
|
2018
|
2017
|
|||||||||
Revenue equipment rentals
|
$
|
20,989
|
$
|
14,682
|
$
|
12,055
|
||||||
Building and lot rentals
|
2,898
|
1,339
|
448
|
|||||||||
Other equipment rentals
|
506
|
881
|
261
|
|||||||||
Total rental expense
|
$
|
24,393
|
$
|
16,902
|
$
|
12,764
|
8.
|
INCOME TAXES
|
(in thousands)
|
2019
|
2018
|
2017
|
|||||||||
Federal, current
|
$
|
(1,174
|
)
|
$
|
-
|
$
|
(7,780
|
)
|
||||
Federal, deferred
|
3,976
|
14,117
|
(28,055
|
)
|
||||||||
State, current
|
1,077
|
1,410
|
(1,737
|
)
|
||||||||
State, deferred
|
(415
|
)
|
(20
|
)
|
5,430
|
|||||||
Income tax expense (benefit)
|
$
|
3,464
|
$
|
15,507
|
$
|
(32,142
|
)
|
(in thousands)
|
2019
|
2018
|
2017
|
|||||||||
Computed "expected" income tax expense
|
$
|
2,508
|
$
|
12,182
|
$
|
8,154
|
||||||
State income taxes, net of federal income tax effect
|
(351
|
)
|
2,610
|
862
|
||||||||
831(b) election
|
(393
|
)
|
(200
|
)
|
(290
|
)
|
||||||
Per diem allowances
|
1,450
|
1,446
|
2,145
|
|||||||||
Tax contingency accruals
|
601
|
(57
|
)
|
(43
|
)
|
|||||||
Valuation allowance, net
|
321
|
-
|
(1,167
|
)
|
||||||||
Tax credits
|
(377
|
)
|
(968
|
)
|
(1,352
|
)
|
||||||
Impact of Tax Act remeasurement
|
-
|
-
|
(40,123
|
)
|
||||||||
Excess tax benefits on share-based compensation
|
105
|
50
|
(457
|
)
|
||||||||
Change in prior year estimates
|
(420
|
)
|
-
|
-
|
||||||||
Other, net
|
20
|
444
|
129
|
|||||||||
Income tax expense (benefit)
|
$
|
3,464
|
$
|
15,507
|
$
|
(32,142
|
)
|
(in thousands)
|
2019
|
2018
|
||||||
Deferred tax assets:
|
||||||||
Insurance and claims
|
$
|
10,269
|
$
|
9,593
|
||||
Net operating loss carryovers
|
25,849
|
10,260
|
||||||
Tax credits
|
10,942
|
11,985
|
||||||
Leased liability
|
15,668
|
-
|
||||||
Capital lease obligation |
8,483 | - | ||||||
State bonus
|
6,576
|
5,938
|
||||||
Other
|
2,160
|
2,412
|
||||||
Valuation allowance
|
(385
|
)
|
(63
|
)
|
||||
Total deferred tax assets
|
79,562
|
40,125
|
||||||
|
||||||||
Deferred tax liabilities:
|
||||||||
Property and equipment
|
(97,066
|
)
|
(87,939
|
)
|
||||
Investment in partnership
|
(36,669
|
)
|
(26,066
|
)
|
||||
Deferred fuel hedge
|
-
|
(73
|
)
|
|||||
ROU Asset- leases
|
(15,280
|
)
|
-
|
|||||
481(a) – Capital leases
|
(7,462
|
)
|
-
|
|||||
Other
|
(449
|
)
|
(569
|
)
|
||||
Prepaid expenses
|
(2,966
|
)
|
(2,945
|
)
|
||||
Total deferred tax liabilities
|
(159,892
|
)
|
(117,592
|
)
|
||||
|
||||||||
Net deferred tax liability
|
$
|
(80,330
|
)
|
$
|
(77,467
|
)
|
|
2019
|
2018
|
2017
|
|||||||||
Balance as of January 1,
|
$
|
1,796
|
$
|
1,924
|
$
|
2,051
|
||||||
Increases related to prior year tax positions
|
2,969
|
4
|
19
|
|||||||||
Decreases related to prior year positions
|
-
|
(9
|
)
|
(10
|
)
|
|||||||
Increases related to current year tax positions
|
287
|
-
|
-
|
|||||||||
Decreases related to settlements with taxing authorities
|
(4,200
|
)
|
-
|
-
|
||||||||
Decreases related to lapsing of statute of limitations
|
(29
|
)
|
(123
|
)
|
(136
|
)
|
||||||
Balance as of December 31,
|
$
|
823
|
$
|
1,796
|
$
|
1,924
|
(in thousands)
|
As of the years ended December 31,
|
|||||||
|
2019
|
2018
|
||||||
Current Assets
|
$
|
28,577
|
$
|
25,877
|
||||
Non-current Assets
|
346,014
|
273,987
|
||||||
Current Liabilities
|
85,751
|
78,530
|
||||||
Non-current Liabilities
|
232,992
|
176,389
|
||||||
Total Equity
|
$
|
55,848
|
$
|
44,945
|
(in thousands)
|
As of the years ended December 31,
|
|||||||||||
|
2019
|
2018
|
2017
|
|||||||||
Revenue
|
$
|
110,298
|
$
|
108,801
|
$
|
84,865
|
||||||
Cost of Sales
|
20,404
|
37,307
|
37,343
|
|||||||||
Operating Expenses
|
65,058
|
47,281
|
35,525
|
|||||||||
Operating Income
|
24,836
|
24,213
|
11,997
|
|||||||||
Net Income
|
$
|
13,403
|
$
|
16,496
|
$
|
6,954
|
10.
|
DEFERRED PROFIT SHARING EMPLOYEE BENEFIT PLAN
|
11.
|
RELATED PARTY TRANSACTIONS
|
12.
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
13.
|
SEGMENT INFORMATION
|
●
|
Highway Services: Includes the Company’s Expedited and OTR services, which are typically ad-hoc and do not include long-term contracts.
|
||
|
●
|
Expedited services primarily involves high service freight with delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows. Expedited services
generally require two-person driver teams on equipment either owned or leased by the Company.
|
|
|
●
|
OTR services provide customers with one-way load capacity over irregular routes for loads that are typically shorter in nature.
|
|
●
|
Dedicated: Specializes in providing customers with committed capacity over extended contract periods using equipment either owned or leased by the Company.
|
||
●
|
Managed Freight: Includes the Company’s Brokerage, TMS and Warehousing services.
|
||
|
●
|
Brokerage services provide logistics capacity by outsourcing the carriage of customers’ freight to contractual third parties.
|
|
|
●
|
TMS provides comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.
|
|
|
●
|
Warehousing services provides day-to-day warehouse management services to customers who have chosen to outsource this function.
|
|
●
|
Factoring services assist freight capacity providers with improving cash flows by purchasing accounts receivables at a discount and collecting them directly from the
end consumer.
|
(in thousands)
|
||||||||||||||||||||
Year Ended December 31, 2019
|
Highway Services
|
Dedicated
|
Managed Freight
|
Factoring
|
Consolidated
|
|||||||||||||||
Total revenue from external customers
|
$
|
356,521
|
$
|
342,473
|
$
|
186,394
|
$
|
9,140
|
$
|
894,528
|
||||||||||
Intersegment revenue
|
10,302
|
-
|
-
|
-
|
10,302
|
|||||||||||||||
Operating (loss) income
|
(1,098
|
)
|
1,026
|
8,848
|
7,258
|
16,034
|
||||||||||||||
Depreciation and amortization (1)
|
38,325
|
37,944
|
2,583
|
27
|
78,879
|
|||||||||||||||
|
||||||||||||||||||||
Year Ended December 31, 2018
|
Highway Services
|
Dedicated
|
Managed Freight
|
Factoring
|
Consolidated
|
|||||||||||||||
Total revenue from external customers
|
$
|
469,308
|
$
|
257,739
|
$
|
153,346
|
$
|
5,062
|
$
|
885,455
|
||||||||||
Intersegment revenue
|
7,298
|
-
|
-
|
-
|
7,298
|
|||||||||||||||
Operating income
|
32,693
|
12,699
|
10,135
|
3,459
|
58,986
|
|||||||||||||||
Depreciation and amortization (1)
|
46,931
|
28,515
|
695
|
15
|
76,156
|
|||||||||||||||
|
||||||||||||||||||||
Year Ended December 31, 2017
|
Highway Services
|
Dedicated
|
Managed Freight
|
Factoring
|
Consolidated
|
|||||||||||||||
Total revenue from external customers
|
$
|
467,992
|
$
|
144,845
|
$
|
89,042
|
$
|
3,128
|
$
|
705,007
|
||||||||||
Intersegment revenue
|
6,009
|
-
|
-
|
-
|
6,009
|
|||||||||||||||
Operating income
|
14,323
|
5,244
|
6,388
|
2,200
|
28,155
|
|||||||||||||||
Depreciation and amortization (1)
|
56,925
|
19,498
|
11
|
13
|
76,447
|
|
(1)
|
Includes gains and losses on disposition of equipment.
|
(in thousands)
|
For the years ended December 31,
|
|||||||||||
|
2019
|
2018
|
2017
|
|||||||||
Total external revenues for reportable segments
|
$
|
894,528
|
$
|
885,455
|
$
|
705,007
|
||||||
Intersegment revenues for reportable segments
|
10,302
|
7,298
|
6,009
|
|||||||||
Elimination of intersegment revenues
|
(10,302
|
)
|
(7,298
|
)
|
(6,009
|
)
|
||||||
Total consolidated revenues
|
$
|
894,528
|
$
|
885,455
|
$
|
705,007
|
14.
|
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
|
|
||||||||||||||||
(in thousands except per share amounts)
|
||||||||||||||||
|
Mar. 31,
|
June 30,
|
Sep. 30,
|
Dec. 31,
|
||||||||||||
Quarters ended
|
2019
|
2019
|
2019
|
2019
|
||||||||||||
|
||||||||||||||||
Total revenue
|
$
|
219,181
|
$
|
219,298
|
$
|
222,914
|
$
|
233,135
|
||||||||
Operating income (loss)
|
5,426
|
8,844
|
(1,931
|
)
|
3,695
|
|||||||||||
Net income (loss)
|
4,433
|
6,071
|
(3,189
|
)
|
1,162
|
|||||||||||
Basic income (loss) per share
|
0.24
|
0.33
|
(0.17
|
)
|
0.06
|
|||||||||||
Diluted income (loss) per share
|
0.24
|
0.33
|
(0.17
|
)
|
0.05
|
|
||||||||||||||||
(in thousands except per share amounts)
|
||||||||||||||||
|
Mar. 31,
|
June 30,
|
Sep. 30,
|
Dec. 31,
|
||||||||||||
Quarters ended
|
2018
|
2018
|
2018
|
2018
|
||||||||||||
|
||||||||||||||||
Total revenue
|
$
|
173,566
|
$
|
196,318
|
$
|
243,303
|
$
|
272,268
|
||||||||
Operating income
|
6,425
|
14,065
|
16,181
|
22,315
|
||||||||||||
Net income
|
4,417
|
9,971
|
11,614
|
16,501
|
||||||||||||
Basic income per share
|
0.24
|
0.54
|
0.63
|
0.91
|
||||||||||||
Diluted income per share
|
0.24
|
0.54
|
0.63
|
0.89
|
•
|
the designation and number of shares;
|
•
|
the dividend rate and preferences, if any, which dividends on that series of preferred stock will have compared to any other class or series of our capital stock;
|
•
|
the voting rights, if any;
|
•
|
the conversion or exchange privileges, if any, applicable to that series;
|
•
|
the redemption price or prices and the other terms of redemption, if any, applicable to that series; and
|
•
|
any purchase, retirement, or sinking fund provisions applicable to that series.
|
(1) |
On May 31, 2011, we acquired a 49% interest in TEL. We account for our investment in TEL using the equity method of accounting.
|
Date: March 9, 2020
|
/s/ David R. Parker
|
|
David R. Parker
|
|
Principal Executive Officer
|
Date: March 9, 2020
|
/s/ Richard B. Cribbs
|
|
Richard B. Cribbs
|
|
Principal Financial Officer
|
Date: March 9, 2020
|
/s/ David R. Parker
|
|
David R. Parker
|
|
Chief Executive Officer
|
Date: March 9, 2020
|
/s/ Richard B. Cribbs
|
|
Richard B. Cribbs
|
|
Chief Financial Officer
|
Page
|
||
Report of Independent Registered Public Accounting Firm
|
1
|
|
Independent Auditor’s Report
|
2
|
|
Financial Statements:
|
||
Balance Sheets
|
3
|
|
Statements of Income and Changes in Members’ Equity
|
4
|
|
Statements of Cash Flows
|
5
|
|
Notes to the Financial Statements
|
6-17
|
Assets
|
||||||||
2019
|
2018
|
|||||||
Current assets:
|
||||||||
Cash
|
$
|
6,566,090
|
$
|
8,302,072
|
||||
Accounts receivable, net of allowance for doubtful accounts
|
6,763,448
|
5,190,669
|
||||||
Net investment in direct financing leases
|
995,675
|
558,462
|
||||||
Inventory
|
7,463,324
|
6,254,212
|
||||||
Prepaid expenses
|
488,939
|
408,080
|
||||||
Restricted cash
|
3,422,255
|
4,873,414
|
||||||
Restricted investments (at fair value)
|
2,001,660
|
-
|
||||||
Other current assets
|
875,661
|
289,651
|
||||||
Total current assets
|
28,577,052
|
25,876,560
|
||||||
Property and equipment, net
|
345,037,378
|
273,581,365
|
||||||
Other assets
|
976,760
|
406,145
|
||||||
Total assets
|
$
|
374,591,190
|
$
|
299,864,070
|
||||
Liabilities and Members' Equity
|
||||||||
Current liabilities:
|
||||||||
Trade accounts payable
|
$
|
674,824
|
$
|
213,497
|
||||
Accounts payable to related party
|
1,250,794
|
7,189,952
|
||||||
Line of credit
|
6,700,000
|
-
|
||||||
Current portion of long‑term debt
|
66,481,231
|
61,689,436
|
||||||
Accrued liabilities
|
10,644,593
|
9,436,796
|
||||||
Total current liabilities
|
85,751,442
|
78,529,681
|
||||||
Long‑term debt, excluding current maturities
|
231,575,490
|
174,662,347
|
||||||
Deferred income taxes
|
1,416,367
|
1,726,722
|
||||||
Total liabilities
|
318,743,299
|
254,918,750
|
||||||
Members' equity
|
55,847,891
|
44,945,320
|
||||||
Total liabilities and members' equity
|
$
|
374,591,190
|
$
|
299,864,070
|
2019
|
2018
|
2017 (Unaudited)*
|
||||||||||
Revenues
|
$
|
110,298,080
|
$
|
108,801,015
|
$
|
84,865,141
|
||||||
Operating costs and expenses:
|
||||||||||||
Cost of sales
|
20,403,760
|
37,307,456
|
37,342,707
|
|||||||||
Depreciation
|
53,746,434
|
41,198,544
|
29,165,485
|
|||||||||
Administrative and selling expenses
|
16,398,845
|
8,494,116
|
6,589,523
|
|||||||||
Net gain on disposals of property and equipment
|
(5,086,848
|
)
|
(2,412,233
|
)
|
(229,397
|
)
|
||||||
Total operating costs and expenses
|
85,462,191
|
84,587,883
|
72,868,318
|
|||||||||
Operating income
|
24,835,889
|
24,213,132
|
11,996,823
|
|||||||||
Interest income
|
(202,752
|
)
|
(171,761
|
)
|
(30,023
|
)
|
||||||
Interest expense
|
11,946,225
|
7,888,694
|
5,073,208
|
|||||||||
Interest expense, net
|
11,743,473
|
7,716,933
|
5,043,185
|
|||||||||
Income before income taxes
|
13,092,416
|
16,496,199
|
6,953,638
|
|||||||||
Deferred state income tax benefit
|
310,355
|
–
|
–
|
|||||||||
Net income
|
13,402,771
|
16,496,199
|
6,953,638
|
|||||||||
Distributions to members
|
(2,500,200
|
)
|
(3,999,800
|
)
|
(4,000,000
|
)
|
||||||
Members' equity at beginning of year
|
44,945,320
|
32,448,921
|
29,495,283
|
|||||||||
Members' equity at end of year
|
$
|
55,847,891
|
$
|
44,945,320
|
$
|
32,448,921
|
2019
|
2018
|
2017 (Unaudited)*
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$
|
13,402,771
|
$
|
16,496,199
|
$
|
6,953,638
|
||||||
Adjustments to reconcile net income to cash flows provided by operating activities:
|
||||||||||||
Depreciation
|
53,746,434
|
41,198,544
|
29,165,485
|
|||||||||
Bad debt expense
|
5,922,882
|
614,010
|
292,620
|
|||||||||
Deferred state income tax benefit
|
(310,355
|
)
|
-
|
-
|
||||||||
Net gain on disposals of property and equipment
|
(5,086,848
|
)
|
(2,412,233
|
)
|
(229,397
|
)
|
||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
(7,495,661
|
)
|
(1,132,369
|
)
|
(2,166,146
|
)
|
||||||
Inventory
|
(1,209,112
|
)
|
(3,043,536
|
)
|
(390,751
|
)
|
||||||
Prepaid expenses
|
(80,859
|
)
|
(44,353
|
)
|
(68,311
|
)
|
||||||
Other current and non-current assets
|
(79,591
|
)
|
-
|
-
|
||||||||
Accounts payable related party
|
(5,939,158
|
)
|
(1,457,404
|
)
|
4,978,945
|
|||||||
Accounts payable other
|
461,327
|
(2,213,992
|
)
|
2,045,464
|
||||||||
Accrued liabilities
|
1,207,797
|
3,635,339
|
1,068,881
|
|||||||||
Net cash provided by operating activities
|
54,539,627
|
51,640,205
|
41,650,428
|
|||||||||
Cash flows used in investing activities:
|
||||||||||||
Purchases of property and equipment
|
(170,333,585
|
)
|
(149,154,690
|
)
|
(79,719,226
|
)
|
||||||
Collections on direct financing leases
|
1,706,606
|
2,348,888
|
1,149,917
|
|||||||||
Proceeds from disposals of property and equipment, related party
|
10,509,600
|
1,760,400
|
-
|
|||||||||
Proceeds from disposals of property and equipment, other
|
37,564,567
|
16,308,216
|
11,743,147
|
|||||||||
Purchases of restricted investments
|
(2,001,660
|
)
|
-
|
-
|
||||||||
Other
|
(1,077,034
|
)
|
(49,302
|
)
|
(140,462
|
)
|
||||||
Net cash used in investing activities
|
(123,631,506
|
)
|
(128,786,488
|
)
|
(66,966,624
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from line of credit
|
8,500,000
|
1,625,000
|
4,000,000
|
|||||||||
Payments of line of credit
|
(1,800,000
|
)
|
(1,625,000
|
)
|
(4,000,000
|
)
|
||||||
Proceeds from long‑term debt
|
167,567,450
|
143,641,199
|
69,063,355
|
|||||||||
Payments of long‑term debt
|
(105,862,512
|
)
|
(59,802,307
|
)
|
(36,946,550
|
)
|
||||||
Distributions to members
|
(2,500,200
|
)
|
(3,999,800
|
)
|
(4,000,000
|
)
|
||||||
Net cash provided by financing activities
|
65,904,738
|
79,839,092
|
28,116,805
|
|||||||||
Change in cash and restricted cash
|
(3,187,141
|
)
|
2,692,809
|
2,800,609
|
||||||||
Cash and restricted cash at beginning of year
|
13,175,486
|
10,482,677
|
7,682,068
|
|||||||||
Cash and restricted cash at end of year
|
$
|
9,988,345
|
$
|
13,175,486
|
$
|
10,482,677
|
(2) |
Summary of significant accounting policies
|
(a) |
Accounts receivable and credit policies
|
(b) |
Inventory
|
(c) |
Restricted Cash
|
(d) |
Restricted Investments
|
(e) |
Property and equipment
|
(f) |
Income taxes
|
(g) |
Revenue recognition
|
(h) |
Use of estimates
|
(i) |
Reclassifications
|
(j) |
Events occurring after reporting date
|
(3) |
Credit risk and other concentrations
|
2019
|
2018
|
2017
|
||||||||||
Operating lease revenues
|
$
|
87,342,886
|
$
|
68,422,222
|
$
|
44,925,960
|
||||||
Equipment sales
|
22,225,912
|
40,327,004
|
39,773,633
|
|||||||||
Consulting revenue
|
660,333
|
-
|
-
|
|||||||||
Direct finance leases
|
68,949
|
51,789
|
165,548
|
|||||||||
Total revenues
|
$
|
110,298,080
|
$
|
108,801,015
|
$
|
84,865,141
|
(5) |
Accounts receivable
|
2019
|
2018
|
|||||||
Accounts receivable
|
$
|
11,120,913
|
$
|
5,385,712
|
||||
Less allowance for doubtful accounts
|
(4,357,465
|
)
|
(195,043
|
)
|
||||
Total accounts receivable
|
$
|
6,763,448
|
$
|
5,190,669
|
(6) |
Net investment in direct financing leases
|
Year
|
Amount
|
|||
2020
|
$
|
68,399,947
|
||
2021
|
56,113,855
|
|||
2022
|
32,725,565
|
|||
2023
|
7,855,828
|
|||
2024
|
794,140
|
|||
2025 and beyond
|
1,056,255
|
|||
Total
|
$
|
166,945,590
|
2019
|
2018
|
|||||||
Assets Subject to operating leases:
|
||||||||
Tractors
|
$
|
310,184,998
|
$
|
240,415,537
|
||||
Trailers
|
128,841,380
|
102,137,832
|
||||||
439,026,378
|
342,553,369
|
|||||||
Accumulated depreciation
|
(103,108,764
|
)
|
(76,846,362
|
)
|
||||
335,917,614
|
265,707,007
|
|||||||
Other equipment
|
586,974
|
473,338
|
||||||
Accumulated depreciation
|
(265,402
|
)
|
(162,178
|
)
|
||||
321,572
|
311,160
|
|||||||
Assets held for lease
|
8,798,192
|
7,563,198
|
||||||
Total property and equipment
|
$
|
345,037,378
|
$
|
273,581,365
|
2019
|
2018
|
|||||||
Maintenance escrow
|
$
|
5,174,527
|
$
|
4,742,211
|
||||
Security deposits
|
3,461,090
|
2,950,855
|
||||||
Accrued payroll
|
961,968
|
1,109,644
|
||||||
Other
|
539,865
|
326,763
|
||||||
Accrued interest
|
507,143
|
307,323
|
||||||
Total accrued liabilities
|
$
|
10,644,593
|
$
|
9,436,796
|
2019
|
2018
|
|||||||
Revenue equipment installment notes; weighted average interest rate of 4.22% and 4.24% at December 31, 2019 and 2018, respectively; due in monthly installments with final
maturities at various dates ranging from January 2020 to January 2024; collateralized by substantially all property and equipment.
|
||||||||
$
|
298,056,721
|
$
|
236,351,783
|
|||||
Less current installments
|
(66,481,231
|
)
|
(61,689,436
|
)
|
||||
Long-term debt, excluding current installments
|
$
|
231,575,490
|
$
|
174,662,347
|
Year
|
Installment Payment
|
Balloon Payments
|
Total
|
|||||||||
2020
|
$
|
51,445,596
|
$
|
15,035,635
|
$
|
66,481,231
|
||||||
2021
|
45,506,014
|
24,926,232
|
70,432,246
|
|||||||||
2022
|
31,970,667
|
46,512,939
|
78,483,606
|
|||||||||
2023
|
11,002,980
|
70,838,057
|
81,841,037
|
|||||||||
2024
|
-
|
818,601
|
818,601
|
|||||||||
Total
|
$
|
139,925,257
|
$
|
158,131,464
|
$
|
298,056,721
|
|
2019
|
2018
|
||||||
State deferred tax assets:
|
||||||||
State net operating loss carryforwards
|
$
|
3,420,789
|
$
|
2,797,179
|
||||
Allowance for doubtful accounts
|
118,297
|
12,678
|
||||||
Total state deferred tax assets
|
3,539,086
|
2,809,857
|
||||||
|
||||||||
State deferred tax liability:
|
||||||||
Property and equipment, principally due to differences in depreciation
|
4,955,453
|
4,536,579
|
||||||
Net state deferred tax liabilities
|
$
|
1,416,367
|
$
|
1,726,722
|
•
|
Purchases of previously owned equipment amounting to $0, $39,500 and $228,000, respectively.
|
•
|
Payment of fees for miscellaneous equipment items, equipment maintenance, and management services amounting to $9,447,865, $8,187,683 and $5,853,195, respectively.
|
•
|
Receipt of lease payments for use of equipment amounting to $607,200, $928,012 and $504,542, respectively.
|
Level 1 |
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets the Company has the ability to access.
|
Level 2 |
Inputs to the methodology include:
|
-
|
Quoted prices for similar assets or liabilities in active markets;
|
-
|
Quoted prices for identical or similar assets or liabilities in inactive markets;
|
-
|
Inputs other than quoted prices that are observable for the asset or liability;
|
-
|
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
Level 3 |
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
Amortized Cost Basis
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Aggregate Fair Value
|
|||||||||||||
Level 1
|
||||||||||||||||
US government securities
|
$
|
320,469
|
$
|
-
|
$
|
-
|
$
|
320,469
|
||||||||
Mutual funds
|
210,723
|
-
|
-
|
210,723
|
||||||||||||
531,192
|
-
|
-
|
531,192
|
|||||||||||||
Level 2
|
||||||||||||||||
Corporate debt securities
|
1,470,468
|
-
|
-
|
1,470,468
|
||||||||||||
Total restricted investments
|
$
|
2,001,660
|
$
|
-
|
$
|
-
|
$
|
2,001,660
|
Year
|
U.S. Government Securities
|
Corporate Bonds
|
Total
|
|||||||||
2020
|
$
|
200,617
|
$
|
239,941
|
$
|
440,558
|
||||||
2021
|
119,852
|
364,286
|
484,138
|
|||||||||
2022
|
—
|
746,755
|
746,755
|
|||||||||
2023
|
—
|
119,486
|
119,486
|
|||||||||
Total
|
$
|
320,469
|
$
|
1,470,468
|
$
|
1,790,937
|
Note 6 - Debt |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] |
Current and long-term debt consisted of the following at December 31, 2019 2018
We and substantially all of our subsidiaries (collectively, the "Borrowers") are parties to the Credit Facility with Bank of America, N.A., as agent (the "Agent") and JPMorgan Chase Bank, N.A. ("JPM," and together with the Agent, the "Lenders"). The Credit Facility is a $95.0 million revolving credit facility, with an uncommitted accordion feature that, so long as no event of default exists, allows us to request an increase in the revolving credit facility of up to $50.0 million subject to Lender acceptance of the additional funding commitment. The Credit Facility includes, within our $95.0 million revolving credit facility, a letter of credit sub facility in an aggregate amount of $95.0 million and a swing line sub facility in an aggregate amount equal to the greater of $10.0 million or 10% of the Lenders' aggregate commitments under the Credit Facility from time-to-time. The Credit Facility matures in September 2021. Borrowings under the Credit Facility are classified as either "base rate loans" or "LIBOR loans." Base rate loans accrue interest at a base rate equal to the greater of the Agent’s prime rate, the federal funds rate plus 0.5%, or LIBOR plus 1.0%, plus an applicable margin ranging from 0.5% to 1.0%; while LIBOR loans accrue interest at LIBOR, plus an applicable margin ranging from 1.5% to 2.0%. The applicable rates are adjusted quarterly based on average pricing availability. The unused line fee is the product of 0.25% times the average daily amount by which the Lenders' aggregate revolving commitments under the Credit Facility exceed the outstanding principal amount of revolver loans and the aggregate undrawn amount of all outstanding letters of credit issued under the Credit Facility. The obligations under the Credit Facility are guaranteed by us and secured by a pledge of substantially all of our assets, with the notable exclusion of any real estate or revenue equipment pledged under other financing agreements, including revenue equipment installment notes and finance leases.Borrowings under the Credit Facility are subject to a borrowing base limited to the lesser of (A) $95.0 million, minus the sum of the stated amount of all outstanding letters of credit; or (B) the sum of (i) 85% of eligible accounts receivable, plus (ii) the lesser of (a) 85% of the appraised net orderly liquidation value of eligible revenue equipment, (b) 95% of the net book value of eligible revenue equipment, or (c) 35% of the Lenders' aggregate revolving commitments under the Credit Facility, plus (iii) the lesser of (a) $25.0 million or (b) 75% of the appraised fair market value of eligible real estate, as reduced by a periodic amortization amount. We had no December 31, 2019 $35.2 million$59.8 million December 31, 2019 2018 no 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. If an event of default occurs under the Credit Facility and the Lenders cause all of the outstanding debt obligations under the Credit Facility to become due and payable, this could result in a default under other debt instruments that contain acceleration or cross-default provisions. The Credit Facility contains certain restrictions and covenants relating to, among other things, debt, dividends, liens, acquisitions and dispositions outside of the ordinary course of business, and affiliate transactions. Failure to comply with the covenants and restrictions set forth in the Credit Facility could result in an event of default.Pricing for the revenue equipment installment notes is quoted by the respective financial affiliates of our primary revenue equipment suppliers and other lenders at the funding of each group of equipment acquired and include fixed annual rates for new equipment under retail installment contracts. The notes included in the funding are due in monthly installments with final maturities at various dates ranging from January 2020 July 2023 not have any financial or other material covenants or events of default except certain notes totaling $204.7 million2020, while any other property and equipment purchases, including trailers, are expected to be funded with a combination of available cash, notes, operating leases, finance leases, and/or from the Credit Facility.In August 2015, we financed a portion of the purchase of our corporate headquarters, a maintenance facility, and certain surrounding property in Chattanooga, Tennessee by entering into a $28.0 million variable rate note with a third party lender. Concurrently with entering into the note, we entered into an interest rate swap to effectively fix the related interest rate to 4.2%. As of December 31, 2019 7 are as follows:
|
Note 2 - Liquidity |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 | |||
Notes to Financial Statements | |||
Liquidity Disclosure1 [Text Block] |
Our business requires significant capital investments over the short-term and the long-term. We generally finance our capital requirements with borrowings under our Credit Facility, cash flows from operations, long-term operating leases, finance leases, secured installment notes with finance companies, and proceeds from the sale of our used revenue equipment. We had working capital (total current assets less total current liabilities) of $93.1 million$84.3 million December 31, 2019 2018 As of December 31, 2019 no $35.2 million$59.8 millionnot funded through notes payable, as well as the nature and timing of collection of accounts receivable, payments of accrued expenses, and receipt of proceeds from disposals of property and equipment. |
Note 10 - Deferred Profit Sharing Employee Benefit Plan |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 | |||
Notes to Financial Statements | |||
Compensation Related Costs, General [Text Block] |
We have a deferred profit sharing and savings plan under which all of our employees with at least six months of service are eligible to participate. Employees may contribute a percentage of their annual compensation up to the maximum amount allowed by the Internal Revenue Code. We may make discretionary contributions as determined by a committee of our Board of Directors. We made contributions of $1.9 million2019 $1.7 million2018 $0.9 million2017 |
Note 14 - Quarterly Results of Operations (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information [Table Text Block] |
|
Note 1 - Summary of Significant Accounting Policies - Calculation of Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2019 |
[1] | Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
[1] | Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|||
Numerator: | |||||||||||||||
Net income | $ 1,162 | $ (3,189) | $ 6,071 | $ 4,433 | $ 16,501 | $ 11,614 | $ 9,971 | $ 4,417 | $ 8,477 | $ 42,503 | $ 55,439 | ||||
Denominator: | |||||||||||||||
Denominator for basic income per share – weighted-average shares (in shares) | 18,435 | 18,340 | 18,279 | ||||||||||||
Effect of dilutive securities: | |||||||||||||||
Equivalent shares issuable upon conversion of unvested restricted shares (in shares) | 200 | 129 | 93 | ||||||||||||
Diluted weighted average shares outstanding (in shares) | 18,635 | 18,469 | 18,372 | ||||||||||||
Income per share: | |||||||||||||||
Basic income per share (in dollars per share) | $ 0.06 | $ (0.17) | $ 0.33 | $ 0.24 | $ 0.91 | $ 0.63 | $ 0.54 | $ 0.24 | $ 0.46 | $ 2.32 | $ 3.03 | ||||
Diluted income per share (in dollars per share) | $ 0.05 | $ (0.17) | $ 0.33 | $ 0.24 | $ 0.89 | $ 0.63 | $ 0.54 | $ 0.24 | $ 0.45 | $ 2.30 | $ 3.02 | ||||
|
Note 7 - Leases (Details Textual) - Net Property and Equipment [Member] - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Operating Lease, Right-of-Use Asset | $ 58.8 | $ 42.5 |
Finance Lease, Right-of-Use Asset | $ 35.6 | $ 40.5 |
Note 5 - Goodwill, Other Intangible, and Other Assets (Details Textual) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Jul. 03, 2018 |
|
Goodwill, Period Increase (Decrease), Total | $ 0.9 | |||
Finite-Lived Intangible Asset, Useful Life | 10 years 240 days | 11 years 240 days | ||
Amortization of Intangible Assets, Total | $ 2.9 | $ 1.5 | $ 0.2 | |
Landair Holdings Inc [Member] | ||||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% |
Note 5 - Goodwill, Other Intangible, and Other Assets - Summary of Other Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Equity Method Investments | $ 31,906 | $ 26,106 |
Other assets, net | 6,013 | 11,043 |
Total other assets, net | $ 37,919 | $ 37,149 |
Note 10 - Deferred Profit Sharing Employee Benefit Plan (Details Textual) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Defined Contribution Plan, Cost | $ 1.9 | $ 1.7 | $ 0.9 |
Note 8 - Income Taxes - Unrecognized Tax Benefits Activity (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Balance | $ 1,796 | $ 1,924 | $ 2,051 |
Increases related to prior year tax positions | 2,969 | 4 | 19 |
Decreases related to prior year positions | (9) | (10) | |
Increases related to current year tax positions | 287 | ||
Decreases related to settlements with taxing authorities | (4,200) | ||
Decreases related to lapsing of statute of limitations | (29) | (123) | (136) |
Balance | $ 823 | $ 1,796 | $ 1,924 |
Note 14 - Quarterly Results of Operations (Unaudited) - Quarterly Results of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2019 |
[1] | Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
[1] | Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|||
Revenue | $ 233,135 | $ 222,914 | $ 219,298 | $ 219,181 | $ 272,268 | $ 243,303 | $ 196,318 | $ 173,566 | $ 894,528 | $ 885,455 | $ 705,007 | ||||
Operating income (loss) | 3,695 | (1,931) | 8,844 | 5,426 | 22,315 | 16,181 | 14,065 | 6,425 | 16,034 | 58,986 | 28,155 | ||||
Net income | $ 1,162 | $ (3,189) | $ 6,071 | $ 4,433 | $ 16,501 | $ 11,614 | $ 9,971 | $ 4,417 | $ 8,477 | $ 42,503 | $ 55,439 | ||||
Basic income (loss) per share (in dollars per share) | $ 0.06 | $ (0.17) | $ 0.33 | $ 0.24 | $ 0.91 | $ 0.63 | $ 0.54 | $ 0.24 | $ 0.46 | $ 2.32 | $ 3.03 | ||||
Diluted income (loss) per share (in dollars per share) | $ 0.05 | $ (0.17) | $ 0.33 | $ 0.24 | $ 0.89 | $ 0.63 | $ 0.54 | $ 0.24 | $ 0.45 | $ 2.30 | $ 3.02 | ||||
|
Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Unrealized (loss) gain on effective portion of cash flow hedges, tax | $ 437 | $ 377 | $ 51 |
Reclassification of cash flow hedge gains (losses) into statement of operations, tax | $ (5) | $ 408 | $ 1,719 |
Note 4 - Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Property, Plant and Equipment [Table Text Block] |
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Note 14 - Quarterly Results of Operations (Unaudited) |
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Quarterly Financial Information [Text Block] |
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Note 5 - Goodwill, Other Intangible, and Other Assets - Expected Future Amortization (Details) $ in Thousands |
Dec. 31, 2019
USD ($)
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2020 | $ 2,923 |
2021 | 2,923 |
2022 | 2,923 |
2023 | 2,783 |
2024 | 2,643 |
Thereafter | $ 15,420 |
Note 12 - Commitments and Contingent Liabilities (Details Textual) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Letters of Credit Outstanding, Amount | $ 35,200 | $ 36,300 |
Revenue Equipment [Member] | ||
Purchase Commitment, Remaining Minimum Amount Committed | $ 68,400 | $ 156,300 |
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands |
Common Stock [Member]
Common Class A [Member]
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Common Stock [Member]
Common Class B [Member]
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Additional Paid-in Capital [Member] |
Treasury Stock [Member] |
AOCI Attributable to Parent [Member] |
Retained Earnings [Member] |
Total |
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Balance at Dec. 31, 2016 | $ 170 | $ 24 | $ 137,912 | $ (1,084) | $ (2,640) | $ 102,032 | $ 236,414 |
Net income | 55,439 | 55,439 | |||||
Other comprehensive income (loss) | 2,933 | 2,933 | |||||
Stock-based employee compensation expense | 951 | 951 | |||||
Issuance of restricted shares, net | 1 | (1,621) | 1,084 | (536) | |||
Balance at Dec. 31, 2017 | 171 | 24 | 137,242 | 293 | 157,471 | 295,201 | |
Net income | 42,503 | 42,503 | |||||
Other comprehensive income (loss) | (89) | (89) | |||||
Stock-based employee compensation expense | 4,802 | 4,802 | |||||
Issuance of restricted shares, net | 133 | 133 | |||||
Balance at Dec. 31, 2018 | 171 | 24 | 142,177 | 204 | 200,566 | 343,142 | |
Effect of adoption of ASU 2014-09 | 592 | 592 | |||||
Net income | 8,477 | 8,477 | |||||
Other comprehensive income (loss) | (1,218) | (1,218) | |||||
Stock-based employee compensation expense | 819 | 819 | |||||
Issuance of restricted shares, net | 2 | (1,111) | (1,109) | ||||
Balance at Dec. 31, 2019 | $ 173 | $ 24 | $ 141,885 | $ (1,014) | $ 209,043 | $ 350,111 |
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Accounts receivable allowance | $ 1,944 | $ 1,985 |
Driver's advances and other receivables, allowance | $ 692 | $ 626 |
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 40,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 16,165,145 | 16,015,708 |
Common stock, shares outstanding (in shares) | 16,165,145 | 16,015,708 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Common stock, shares issued (in shares) | 2,350,000 | 2,350,000 |
Common stock, shares outstanding (in shares) | 2,350,000 | 2,350,000 |
Note 5 - Goodwill, Other Intangible, and Other Assets (Tables) |
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Schedule of Goodwill [Table Text Block] |
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Schedule of Finite-Lived Intangible Assets [Table Text Block] |
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] |
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Schedule of Other Assets [Table Text Block] |
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Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting, Policy [Policy Text Block] | Segment Realignment In 2019, we made a number of changes to our organizational structure. These changes impacted the company’s reportable operating segments but did not impact the company’s Consolidated Financial Statements. Under this revised reporting structure, we have four reportable operating segments, which include:
The following table summarizes our revenue by our four reportable operating segment, disaggregated to the service offering level, as used by our chief operating decision maker in making decisions regarding allocation of resources, etc., organized first by reporting operating segment and then by service offering for the years ended December 31, 2019, 2018, and 2017:
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Consolidation, Policy [Policy Text Block] | Principles of Consolidation The consolidated financial statements include the accounts of Covenant Transportation Group, Inc., a holding company incorporated in the state of Nevada in 1994, and its wholly owned subsidiaries: Covenant Transport, Inc., a Tennessee corporation; Southern Refrigerated Transport, Inc., an Arkansas corporation; Star Transportation, Inc., a Tennessee corporation, each d/b/a Covenant Transport Services; Covenant Transport Solutions, LLC., a Nevada limited liability company, d/b/a Transport Financial Services; Covenant Logistics, Inc., a Nevada corporation; Covenant Asset Management, LLC., a Nevada limited liability corporation; CTG Leasing Company, a Nevada corporation; IQS Insurance Risk Retention Group, Inc., a Vermont corporation; Driven Analytic Solutions, LLC, a Nevada limited liability company; Heritage Insurance, Inc., a Tennessee corporation; Landair Holdings, Inc., a Tennessee corporation; Landair Transport, Inc., a Tennessee corporation; Landair Logistics, Inc., a Tennessee corporation; Landair Leasing, Inc., a Tennessee corporation; and Transport Management Services, LLC, a Tennessee limited liability company.References in this report to "it," "we," "us," "our," the "Company," and similar expressions refer to Covenant Transportation Group, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
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Equity Method Investments [Policy Text Block] | Investment in Transport Enterprise Leasing, LLC Transport Enterprise Leasing, LLC ("TEL") is a tractor and trailer equipment leasing company and used equipment reseller. We evaluated our investment in TEL to determine whether it should be recorded on a consolidated basis. Our percentage of ownership interest ( 49% ), an evaluation of control, and whether a variable interest entity ("VIE") existed were all considered in our consolidation assessment. Based on the analysis, the Company is not the primary beneficiary of TEL and TEL should not be consolidated. We have accounted for our investment in TEL using the equity method of accounting given our 49% ownership interest and ability to exercise significant influence over operating and financial policies. Under the equity method, the cost of our investment is adjusted for our share of equity in the earnings of TEL and reduced by distributions received and our proportionate share of TEL's net income is included in our earnings.On a periodic basis, we assess whether there are any indicators that the fair value of our investment in TEL may be impaired. The investment is impaired only if the estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss would be measured as the excess of the carrying amount of the investment over the fair value of the investment. As a result of TEL's earnings, no impairment indicators were noted that would provide for impairment of our investment. |
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Revenue [Policy Text Block] | Revenue Recognition Revenue, drivers' wages, and other direct operating expenses generated by our Highway Services and Dedicated reportable segments are recognized proportionally as the transportation service is performed based on the percentage of miles completed as of the period end, as opposed to recognizing revenue upon the completion of the load, which was our historic practice prior to the adoption of ASU 2014 -09 on January 1, 2018. Revenue is recognized on a gross basis at amounts charged to our customers because we control and are primarily responsible for the fulfillment of the promised service. Revenue includes transportation revenue, fuel surcharges, loading and unloading activities, equipment detention, and other accessorial services.Revenue generated by our Managed Freight and Factoring segments is recognized upon completion of the services provided. Revenue is recorded on a gross basis, without deducting third party purchased transportation costs, as we act as a principal with substantial risks as primary obligor, except for transactions whereby equipment from our Highway Services and Dedicated segments perform the related services, which we record on a net basis in accordance with the related authoritative guidance. Revenue for the factoring business is recognized on a net basis after giving effect to receivables payments we make to the factoring client, given we are acting as an agent and are not the primary generator of the factored receivables in these transactions. Revenue for the warehousing business is generally recognized as the service is performed, based upon a weekly rate. |
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Use of Estimates, Policy [Policy Text Block] | Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make decisions based upon estimates, assumptions, and factors we consider as relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of our estimates and assumptions. Accordingly, actual results could differ from those anticipated. |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less at acquisition to be cash equivalents. Additionally, we are also subject to concentrations of credit risk related to deposits in banks in excess of the Federal Deposit Insurance Corporation limits. |
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Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block] | Accounts Receivable and Concentration of Credit Risk We extend credit to our customers in the normal course of business. We perform ongoing credit evaluations and generally do not require collateral. Trade accounts receivable are recorded at their invoiced amounts, net of allowance for doubtful accounts. We evaluate the adequacy of our allowance for doubtful accounts quarterly. Accounts outstanding longer than contractual payment terms are considered past due and are reviewed individually for collectability. We maintain reserves for potential credit losses based upon its loss history and specific receivables aging analysis. Receivable balances are written off when collection is deemed unlikely.Accounts receivable are comprised of a diversified customer base that mitigates the level of concentration of credit risk. During 2019, 2018, and 2017 ten customers generated 45% 49% 49% 2019 2018, one 10% of our consolidated revenue in each year. In 2017, there were two such customers. The carrying amount reported in the consolidated balance sheet for accounts receivable approximates fair value based on the fact that the receivables collection averaged approximately 33 days32 days2019 2018 Included in accounts receivable is $86.6 million$53.6 million December 31, 2019 2018 $0.5 million$0.4 million85% to 95% of each receivable factored and retain the remainder as collateral for collection issues that might arise. The retained amounts are returned to the clients after the related receivable has been collected, net of interest and fees on the amount we advanced. At December 31, 2019 $1.8 million30–40 days due to the combination of the short-term nature of the financing transaction and the underlying quality of the receivables.The following table provides a summary (in thousands) of the activity in the allowance for doubtful accounts for 2019, 2018, and 2017
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Inventory, Policy [Policy Text Block] | Inventories and Supplies Inventories and supplies consist of parts, tires, fuel, and supplies. Tires on new revenue equipment are capitalized as a component of the related equipment cost when the tractor or trailer is placed in service and recovered through depreciation over the life of the vehicle. Replacement tires and parts on hand at year end are recorded at the lower of cost or net realizable value with cost determined using the first -in, first -out (FIFO) method. Replacement tires are expensed when placed in service. |
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Assets Held for Sale Policy [Policy Text Block] | Assets Held for Sale Assets held for sale include property and revenue equipment no longer utilized in continuing operations which are available and held 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. We periodically review the carrying value of these assets for possible impairment. We expect to sell these assets within twelve months. |
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Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment Property and equipment is stated at cost less accumulated depreciation. Depreciation for book purposes is determined using the straight-line method over the estimated useful lives of the assets. Depreciation of revenue equipment is our largest item of depreciation. We generally depreciate new tractors (excluding day cabs) over five years to salvage values of approximately 15% of their cost. We generally depreciate new trailers over seven years for refrigerated trailers and ten years for dry van trailers to salvage values of approximately 25 %not reflected in our estimates, could have a material effect on our results of operations. Gains and losses on the disposal of revenue equipment are included in depreciation expense in the consolidated statements of operations.We lease certain revenue equipment under finance and operating leases with terms of approximately 48 to 84 months. Amortization of assets under finance and operating leases are included in depreciation and amortization expense and revenue and equipment rentals and purchased transportation, respectively.A portion of our tractors are protected by non-binding indicative trade-in values or binding trade-back agreements with the manufacturers. The remainder of our tractors and substantially all of our owned trailers are subject to fluctuations in market prices for used revenue equipment. Moreover, our trade-back agreements are contingent upon reaching acceptable terms for the purchase of new equipment. Declines in the price of used revenue equipment or failure to reach agreement for the purchase of new tractors with the manufacturers issuing trade-back agreements could result in impairment of, or losses on the sale of, revenue equipment. |
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Goodwill and Intangible Assets, Policy [Policy Text Block] | Goodwill and Other Intangible Assets We classify intangible assets into two categories: (i) intangible assets with finite lives subject to amortization and (ii) goodwill. We test goodwill for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred. We test intangible assets with finite lives for impairment if conditions exist that indicate the carrying value may not be recoverable. Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations. We record an impairment charge when the carrying value of the finite lived intangible asset is not recoverable by the cash flows generated from the use of the asset.We determine the useful lives of our identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful lives include the contractual term of any agreement, the history of the asset, our long-term strategy for the use of the asset, any laws or other local regulations which could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have finite lives are amortized, generally on a straight-line basis, over their useful lives, ranging from 5 to 15 years. |
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Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairment of Long-Lived Assets Pursuant to applicable accounting standards, revenue equipment and other long-lived assets are tested for impairment whenever an event occurs that indicates an impairment may exist. Expected future cash flows are used to analyze whether an impairment has occurred. If the sum of 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. |
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Insurance And Other Claims [Policy Text Block] | Insurance and Other Claims The primary claims arising against us consist of auto liability (personal injury and property damage), workers' compensation, cargo, commercial liability, and employee medical expenses. At December 31, 2019
Due to our significant self-insured retention amounts, we have exposure to fluctuations in the number and severity of claims and to variations between our estimated and actual ultimate payouts. We accrue the estimated cost of the uninsured portion of pending claims and an estimate for allocated loss adjustment expenses including legal and other direct costs associated with a claim. Estimates require judgments concerning the nature and severity of the claim, historical trends, advice from third -party administrators and insurers, the size of any potential damage award based on factors such as the specific facts of individual cases, the jurisdictions involved, the prospect of punitive damages, future medical costs, and inflation estimates of future claims development, and the legal and other costs to settle or defend the claims. We have significant exposure to fluctuations in the number and severity of claims. If there is an increase in the frequency and severity of claims, or we are required to accrue or pay additional amounts if the claims prove to be more severe than originally assessed, or any of the claims would exceed the limits of our insurance coverage, our profitability could be adversely affected.In addition to estimates within our self-insured retention layers, we also must make judgments concerning claims where we have third party insurance and for claims outside our coverage limits. Upon settling claims and expenses associated with claims where we have third party coverage, we are generally required to initially fund payment to the claimant and seek reimbursement from the insurer. Receivables from insurers for claims and expenses we have paid on behalf of insurers were $0.3 million$3.0 million December 31, 2019 2018 $2.1 million$5.1 million December 31, 2019 2018 may exceed such limits and, if so, by how much. If one or more claims were to exceed our then effective coverage limits, our financial condition and results of operations could be materially and adversely affected.We also make judgments regarding the ultimate benefit versus risk of commuting certain periods within our auto liability policy. If we commute a policy, we assume 100% risk for covered claims in exchange for a policy refund.Effective April 2018, we entered into new auto liability policies with a three -year term. The policy includes a limit for a single loss of $9.0 million, an aggregate of $18.0 million for each policy year, and a $30.0 million aggregate for the 36 month term ended March 31, 2021. The policy included a policy release premium refund or commutation option of up to $14.0 million, less any future amounts paid on claims by the insurer. A decision with respect to commutation of the policy could be made before April 1, 2021. Additionally, our prior auto liability policy that ran from October 1, 2014 through March 31, 2018, included a commutation provision if we were to commute the policy for the entire 42 months. Based on claims paid to date the policy premium release refund could range from zero to $5.2 million, depending on actual claims settlements in the future. Management cannot predict whether or not future claims or the development of existing claims will justify a commutation of either policy period, and accordingly, no related amounts were recorded at December 31, 2019 |
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Interest Capitalization, Policy [Policy Text Block] | Interest We capitalize interest on major projects during construction. Interest is capitalized based on the average interest rate on related debt. Capitalized interest was $0.1 million2019 and less than $0.1 2018 and 2017, respectively. |
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, available-for-sale securities, accounts payable, debt, and interest rate swaps. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, and current debt approximates their fair value because of the short-term maturity of these instruments. The carrying value of the factored receivables approximates the fair value, as the receivables are generally repaid directly to us by the client's customer within 30–40 days due to the combination of the short-term nature of the financing transaction and the underlying quality of the receivables. 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, 2019 14 and are valued based on quoted prices in active markets. The fair value of our interest rate swap agreements is determined using the market-standard methodology of netting the discounted future fixed-cash payments and the discounted expected variable-cash receipts. The variable-cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These analyses reflect the contractual terms of the swap, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatilities. The fair value calculation also includes an amount for risk of non-performance of our counterparties using "significant unobservable inputs" such as estimates of current credit spreads to evaluate the likelihood of default, which we have determined to be insignificant to the overall fair value of our interest rate swap agreements. |
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Income Tax, Policy [Policy Text Block] | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. 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 in income in the period that includes the enactment date. We have reflected the net liability after offsetting our deferred tax assets and liabilities in the deferred income taxes line in the accompanying consolidated balance sheets. We believe the future tax deductions will be realized principally through future reversals of existing taxable temporary differences and future taxable income, except for when a valuation allowance has been provided as discussed in Note 8. In the ordinary course of business there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Potential accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense.Our policy is to recognize income tax benefit arising from the exercise of stock options and restricted share vesting based on the ordering provisions of the tax law as prescribed by the Internal Revenue Code, including indirect tax effects, if any. |
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Lessee, Leases [Policy Text Block] | Lease Accounting At the commencement date of a new lease agreement with contractual terms longer than twelve months, we recognize an asset and a lease liability on the balance sheet and categorize the lease as either finance or operating. Certain lease agreements have lease and nonlease components, and we have elected to account for these components separately.Right-of-use assets and lease liabilities are initially recorded based on the present value of lease payments over the term of the lease. When the rate implicit in the lease is readily determinable, this rate is used for calculating the present value of remaining lease payments; otherwise, our incremental borrowing rate is used. Right-of-use assets also include prepaid lease expenses and initial direct costs of executing the leases, which are reduced by landlord incentives. Options to extend or terminate a lease agreement are included in or excluded from the lease term, respectively, when those options are reasonably certain to be exercised. Right-of-use assets are tested for impairment in the same manner as long-lived assets. Finance lease obligations are utilized to finance a portion of our revenue equipment and are entered into with certain finance companies who are not parties to our Credit Facility and may contain guarantees of the residual value of the related equipment by us. As such, the residual guarantees are included in the related debt balance as a balloon payment at the end of the related term as well as included in the future minimum finance lease payments. These lease agreements require us to pay personal property taxes, maintenance, and operating expenses. Our operating lease obligations do not typically include residual value guarantees or material restrictive covenants.Right-of-use assets are included in net property and equipment. For finance leases, right-of-use assets are amortized on a straight-line basis over the shorter of the expected useful life or the lease term, and the carrying amount of the lease liability is adjusted to reflect interest expense, which is recorded in interest expense, net. Operating lease right-of-use assets are amortized over the lease term on a straight-line basis, and the lease liability is measured at the present value of the remaining lease payments. Variable lease payments not included in the lease liability for mileage charges on leased revenue equipment are expensed as incurred. Operating lease costs are recognized on a straight-line basis over the term of the lease within operating expenses. |
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Stockholders' Equity, Policy [Policy Text Block] | Capital Structure The shares of Class A and B common stock are substantially identical except that the Class B shares are entitled to two votes per share and immediately convert to Class A shares if beneficially owned by anyone other than our Chief Executive Officer or certain members of his immediate family, while Class A shares are entitled to one vote per share. The terms of any future issuances of preferred shares will be set by our Board of Directors. |
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Earnings Per Share, Policy [Policy Text Block] | Income Per Share Basic income per share excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted income per share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. The calculation of diluted earnings per share includes approximately 0.2 million December 31, 2019, 2018, and 2017 The following table sets forth the calculation of net income per share included in the consolidated statements of operations for each of the three years ended December 31:
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Share-based Payment Arrangement [Policy Text Block] | Stock-Based Employee Compensation We issue several types of stock-based compensation, including awards that vest based on service and performance conditions or a combination of the conditions. Performance-based awards vest contingent upon meeting certain performance criteria established by the Compensation Committee of the Board of Directors. All awards require future service. For performance-based awards, determining the appropriate amount to expense in each period is based on likelihood and timing of achieving the stated targets for performance-based awards and requires judgment, including forecasting future financial results. The estimates are revised periodically based on the probability and timing of achieving the required performance and adjustments are made as appropriate. Awards that are only subject to time vesting provisions are amortized using the straight-line method. |
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New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements Accounting Standards adopted In May 2014 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2014 -09, which supersedes virtually all existing revenue guidance. The new standard introduces a five -step model to determine when and how revenue is recognized. The premise of the new model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires enhanced disclosures regarding the nature, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The new standard became effective for us for our annual and interim reporting periods beginning January 1, 2018. The guidance permits the use of either a full retrospective or modified retrospective adoption approach with a cumulative effect adjustment recorded in either scenario as necessary upon transition.As permitted by the guidance, we elected the modified retrospective approach and thus recognized the cumulative effect of adoption of $0.6 million, net of tax, as a positive adjustment to retained earnings in the first quarter of 2018 as a result of the initial recording of in process revenue and associated direct expenses. Based on our review of our customer shipping arrangements and the related guidance, we have concluded that we will recognize revenue from loads proportionally as the transportation service is performed based on the percentage of miles completed as of the period end, as opposed to recognizing revenue upon the completion of the load, which was our historic practice. Revenue will be recognized on a gross basis at amounts charged to our customers because we control and are primarily responsible for the fulfillment of the promised service. Our recognition of revenue under the new standard approximates our recognition of revenue under the prior standard, as there will generally be a consistent amount of freight in process at the beginning and end of the period; however, seasonality and the day on which the period ends may cause minor differences.In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016 -02, which establishes Topic 842 to replace Topic 840 regarding accounting for leases. Topic 842 requires lessees to recognize a right-of-use asset and a lease liability for most leases on the balance sheet. Leases that were previously described as capital leases are now called finance leases, and operating leases with a term of at least twelve months are now required to be recorded on the balance sheet. We adopted this standard on January 1, 2019 using the modified retrospective approach.In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016 -02, which establishes Topic 842 to replace Topic 840 regarding accounting for leases. Topic 842 requires lessees to recognize a right-of-use asset and a lease liability for most leases on the balance sheet. Leases that were previously described as capital leases are now called finance leases, and operating leases with a term of at least twelve months are now required to be recorded on the balance sheet. We adopted this standard on January 1, 2019 using the modified retrospective approach.In July 2018, FASB issued ASU 2018 -11, which provides an optional transition method allowing application of Topic 842 as of the adoption date and recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, with no restatement of comparative prior periods. We have adopted the standard using this optional transition method.Within Topic 842, FASB has provided a number of practical expedients for applying the new lease standard in relation to leases that commenced prior to the standard's effective date. We have elected the package of practical expedients which allowed us, among other things, to carry forward the operating and capital lease classifications from Topic 840 to the new operating and finance lease classifications under Topic 842. The adoption of this ASU resulted in the initial recognition of operating lease assets of $40.1 million and liabilities totaling $41.0 million, comprised of $15.3 million of current operating lease obligations and $25.7 million of long-term operating lease obligations.Accounting Standards not yet adoptedIn June 2016, FASB issued ASU 2016 -13, Financial Instruments - Measurement of Credit Losses on Financial Instruments , which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. This update will be effective for us for our annual reporting period beginning January 1, 2023, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impacts the adoption of this standard will have on the consolidated financial statements. |
Note 11 - Related Party Transactions |
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Notes to Financial Statements | |||
Related Party Transactions Disclosure [Text Block] |
Other than those associated with TEL, there are no material related party transactions. See Note 9 for discussions of the related party transactions associated with TEL. |
Note 7 - Leases |
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Lessee, Operating Leases [Text Block] |
We finance a portion of our revenue equipment, office and terminal properties, computer and office equipment, and other equipment using leases. A number of these leases include one or more options to renew or extend the agreements beyond the expiration date or to terminate the agreement prior to the lease expiration date, and such options are included in or excluded from the lease term, respectively, when those options are reasonably certain to be exercised. Finance lease obligations are utilized to finance a portion of our revenue equipment and are entered into with certain finance companies who are not parties to our Credit Facility. The leases in effect at December 31, 2019 terminate in January 2020 through November 2024 and contain guarantees of the residual value of the related equipment by us. As such, the residual guarantees are included in the related debt balance as a balloon payment at the end of the related term as well as included in the future minimum finance lease payments. These lease agreements require us to pay personal property taxes, maintenance, and operating expenses. Our operating lease obligations do not typically include residual value guarantees or material restrictive covenants.A summary of our lease obligations for the twelve months ended December 31, 2019 are as follows:
At December 31, 2019 $58.8 million$35.6 million December 31, 2018, we had operating lease commitments of $42.5 million, which were off-balance sheet, and finance leases of $40.5 million included in net property and equipment in our consolidated balance sheets. Operating lease right-of-use asset amortization is included in revenue equipment rentals and purchased transportation, communication and utilities, and general supplies and expenses, depending on the underlying asset, in the consolidated statement of operations. Amortization of finance leased assets is included in depreciation and amortization expense in the consolidated statement of operations.Our future minimum lease payments as of December 31, 2019
Certain leases contain cross-default provisions with other financing agreements and additional charges if the unit's mileage exceeds certain thresholds defined in the lease agreement. Rental expense is summarized as follows for each of the three years ended December 31:
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Note 3 - Stock-based Compensation |
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Share-based Payment Arrangement [Text Block] |
Our Third Amended and Restated 2006 Omnibus Incentive Plan, as amended (the "Incentive Plan") governs the issuance of equity awards and other incentive compensation to management and members of the board of directors. On May 8, 2019, the stockholders, upon recommendation of the board of directors, approved the First Amendment (the “First Amendment”) to the Third Amended and Restated Incentive Plan. The First Amendment (i) increases the number of shares of Class A common stock available for issuance under the Incentive Plan by an additional 750,000 shares, (ii) implements additional changes designed to comply with certain shareholder advisory group guidelines and best practices, (iii) makes technical updates related to Section 162 (m) of the Internal Revenue Code in light of the 2017 Tax Cuts and Jobs Act, (iv) re-sets the term of the Incentive Plan to expire with respect to the ability to grant new awards on March 31, 2029, and (v) makes such other miscellaneous, administrative and conforming changes as were necessary.The Incentive Plan permits annual awards of shares of our Class A common stock to executives, other key employees, non-employee directors, and eligible participants under various types of options, restricted share awards, or other equity instruments. At December 31, 2019 477,245 2,300,000 No participant in the Incentive Plan may receive awards of any type of equity instruments in any calendar-year that relates to more than 200,000 shares of our Class A common stock. No awards may be made under the Incentive Plan after March 31, 2023. To the extent available, we have issued treasury stock to satisfy all share-based incentive plans.Included in salaries, wages, and related expenses within the consolidated statements of operations is stock-based compensation expense of $0.4 million$4.8 million$1.0 million2019, 2018, and 2017 $ 0.4 2019 2018 $0.3 million2017 2019, 2018, and 2017 no $ 0.1 2019 2018 $0.3 million2017 The Incentive Plan allows participants to pay the federal and state minimum statutory tax withholding requirements related to awards that vest or allows the participant to deliver to us shares of Class A common stock having a fair market value equal to the minimum amount of such required withholding taxes. To satisfy withholding requirements for shares that vested, certain participants elected to deliver to us 62,255 11,052 31,297 $17.75 $21.89 $25.09 2019, 2018, and 2017 $1.1 million$0.2 million$0.8 million2019, 2018, and 2017 The following table summarizes our restricted share award activity for the fiscal years ended December 31, 2019, 2018, and 2017
The unvested shares at December 31, 2019 250,112 2020 2026 537,348 December 31, 2019 534,086 not probable, and 3,262 December 31, 2019 through 2022 and have less than of unrecognized compensation cost.$0.1 millionThe fair value of restricted share awards that vested in 2019, 2018, and 2017 $3.4 million$0.7 million$2.4 million December 31, 2019 $3.3 million250,112 3,262 2019 through 2022 performance periods, which is probable to be recognized over a weighted average period of approximately 20 monthsnot be issued until the relevant restrictions are satisfied.There were no December 31, 2019, 2018, and 2017 |
Note 13 - Segment Information (Tables) |
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Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Note 1 - Summary of Significant Accounting Policies - Summary of Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Beginning balance | $ 1,985 | $ 1,456 | $ 1,345 |
Provision for losses on accounts receivable | 255 | 507 | 454 |
Write-offs and other adjustments | (296) | 22 | (343) |
Ending balance | $ 1,944 | $ 1,985 | $ 1,456 |
Note 8 - Income Taxes - Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Federal, current | $ (1,174) | $ (7,780) | |
Federal, deferred | 3,976 | 14,117 | (28,055) |
State, current | 1,077 | 1,410 | (1,737) |
State, deferred | (415) | (20) | 5,430 |
Income tax expense (benefit) | $ 3,464 | $ 15,507 | $ (32,142) |
Note 7 - Leases - Lease Obligations (Details) $ in Thousands |
12 Months Ended |
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Dec. 31, 2019
USD ($)
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Amortization of right-of-use assets | $ 5,469 |
Interest on lease liabilities | 1,107 |
Operating lease cost | 24,393 |
Variable lease cost | 326 |
Total lease cost | 31,295 |
Operating cash flows for finance leases | 7,226 |
Operating cash flows for operating leases | 24,393 |
Financing cash flows for finance leases | 1,107 |
Right-of-use assets obtained in exchange for new finance lease liabilities | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 37,080 |
Weighted-average remaining lease term—finance leases (Year) | 2 years 328 days |
Weighted-average remaining lease term—operating leases (Year) | 3 years 146 days |
Weighted-average discount rate—finance leases | 3.00% |
Weighted-average discount rate—operating leases | 5.20% |
Note 13 - Segment Information - Segment Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||
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Dec. 31, 2019 |
[1] | Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
[1] | Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Revenue | $ 233,135 | $ 222,914 | $ 219,298 | $ 219,181 | $ 272,268 | $ 243,303 | $ 196,318 | $ 173,566 | $ 894,528 | $ 885,455 | $ 705,007 | ||||||
Operating (loss) income | $ 3,695 | $ (1,931) | $ 8,844 | $ 5,426 | $ 22,315 | $ 16,181 | $ 14,065 | $ 6,425 | 16,034 | 58,986 | 28,155 | ||||||
Operating Segments [Member] | |||||||||||||||||
Revenue | 894,528 | 885,455 | 705,007 | ||||||||||||||
Operating (loss) income | 16,034 | 58,986 | 28,155 | ||||||||||||||
Depreciation and amortization (1) | [2] | 78,879 | 76,156 | 76,447 | |||||||||||||
Intersegment Eliminations [Member] | |||||||||||||||||
Revenue | 10,302 | 7,298 | 6,009 | ||||||||||||||
Consolidation, Eliminations [Member] | |||||||||||||||||
Revenue | (10,302) | (7,298) | (6,009) | ||||||||||||||
Highway Services [Member] | |||||||||||||||||
Revenue | 356,521 | 469,308 | 467,992 | ||||||||||||||
Highway Services [Member] | Operating Segments [Member] | |||||||||||||||||
Revenue | 356,521 | 469,308 | 467,992 | ||||||||||||||
Operating (loss) income | (1,098) | 32,693 | 14,323 | ||||||||||||||
Depreciation and amortization (1) | [2] | 38,325 | 46,931 | 56,925 | |||||||||||||
Highway Services [Member] | Intersegment Eliminations [Member] | |||||||||||||||||
Revenue | 10,302 | 7,298 | 6,009 | ||||||||||||||
Dedicated [Member] | |||||||||||||||||
Revenue | 342,473 | 257,739 | 144,845 | ||||||||||||||
Dedicated [Member] | Operating Segments [Member] | |||||||||||||||||
Revenue | 342,473 | 257,739 | 144,845 | ||||||||||||||
Operating (loss) income | 1,026 | 12,699 | 5,244 | ||||||||||||||
Depreciation and amortization (1) | [2] | 37,944 | 28,515 | 19,498 | |||||||||||||
Dedicated [Member] | Intersegment Eliminations [Member] | |||||||||||||||||
Revenue | |||||||||||||||||
Managed Freight [Member] | |||||||||||||||||
Revenue | 186,394 | 153,346 | 89,042 | ||||||||||||||
Managed Freight [Member] | Operating Segments [Member] | |||||||||||||||||
Revenue | 186,394 | 153,346 | 89,042 | ||||||||||||||
Operating (loss) income | 8,848 | 10,135 | 6,388 | ||||||||||||||
Depreciation and amortization (1) | [2] | 2,583 | 695 | 11 | |||||||||||||
Managed Freight [Member] | Intersegment Eliminations [Member] | |||||||||||||||||
Revenue | |||||||||||||||||
Factoring [Member] | |||||||||||||||||
Revenue | 9,140 | 5,062 | 3,128 | ||||||||||||||
Factoring [Member] | Operating Segments [Member] | |||||||||||||||||
Revenue | 9,140 | 5,062 | 3,128 | ||||||||||||||
Operating (loss) income | 7,258 | 3,459 | 2,200 | ||||||||||||||
Depreciation and amortization (1) | [2] | 27 | 15 | 13 | |||||||||||||
Factoring [Member] | Intersegment Eliminations [Member] | |||||||||||||||||
Revenue | |||||||||||||||||
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Note 9 - Equity Method Investment - TEL's Summarized Financial Information - Income Statement (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Revenue | $ 110,298 | $ 108,801 | $ 84,865 |
Cost of Sales | 20,404 | 37,307 | 37,343 |
Operating Expenses | 65,058 | 47,281 | 35,525 |
Operating Income | 24,836 | 24,213 | 11,997 |
Net Income | $ 13,403 | $ 16,496 | $ 6,954 |
Note 3 - Stock-based Compensation - Restricted Stock Activity (Details) - $ / shares shares in Thousands |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Number of stock awards, unvested, beginning of period (in shares) | 675 | 587 | 265 |
Weighted average grant date fair value, unvested, beginning of period (in dollars per share) | $ 20.08 | $ 18.14 | $ 18.63 |
Granted (in shares) | 351 | 153 | 434 |
Granted, weighted average grant date fair value (in dollars per share) | $ 15.42 | $ 30.32 | $ 16.69 |
Vested (in shares) | (191) | (35) | (96) |
Vested, weighted average grant date fair value (in dollars per share) | $ 19.22 | $ 25.97 | $ 12.78 |
Forfeited (in shares) | (48) | (30) | (16) |
Forfeited, weighted average grant date fair value (in dollars per share) | $ 19.33 | $ 27.58 | $ 19.25 |
Number of stock awards, unvested, end of period (in shares) | 787 | 675 | 587 |
Weighted average grant date fair value, unvested, end of period (in dollars per share) | $ 18.25 | $ 20.08 | $ 18.14 |
Note 5 - Goodwill, Other Intangible, and Other Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Goodwill | $ 42,518 | $ 41,598 |
Dedicated [Member] | ||
Goodwill | 15,320 | |
Managed Freight [Member] | ||
Goodwill | $ 27,198 |
Note 3 - Stock-based Compensation (Tables) |
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Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity [Table Text Block] |
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Note 13 - Segment Information |
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Segment Reporting Disclosure [Text Block] |
As discussed in Note 1, in 2019 the Company made a number of changes to its organizational structure. To align with how our Chief Operating Decision Maker (“CODM”) allocates resources and assesses performance against key growth strategies, we have made changes to the company’s reportable segments. As a result, it was determined that the Company has four reportable segments consisting of Highway Services, Dedicated, Managed Freight and our accounts receivable Factoring.With respect to the four reportable segments:
These changes impacted the company’s reportable segments but did not impact the company’s Consolidated Financial Statements. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Substantially all intersegment sales prices are market based. We evaluate performance based on operating income of the respective business units.The following table summarizes our segment information for 2019, 2018, and 2017:
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Note 7 - Leases (Tables) |
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Lease, Cost [Table Text Block] |
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Lessee, Lease Liability, Maturity [Table Text Block] |
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Schedule of Rent Expense [Table Text Block] |
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Note 1 - Summary of Significant Accounting Policies |
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Significant Accounting Policies [Text Block] |
Nature of Business Covenant Transportation Group, Inc., a Nevada holding company, together with its wholly owned subsidiaries offers transportation and logistics services to customers throughout the continental United States. Segment Realignment In 2019, we made a number of changes to our organizational structure. These changes impacted the company’s reportable operating segments but did not impact the company’s Consolidated Financial Statements. Under this revised reporting structure, we have four reportable operating segments, which include:
The following table summarizes our revenue by our four reportable operating segment, disaggregated to the service offering level, as used by our chief operating decision maker in making decisions regarding allocation of resources, etc., organized first by reporting operating segment and then by service offering for the years ended December 31, 2019, 2018, and 2017:
Principles of Consolidation The consolidated financial statements include the accounts of Covenant Transportation Group, Inc., a holding company incorporated in the state of Nevada in 1994, and its wholly owned subsidiaries: Covenant Transport, Inc., a Tennessee corporation; Southern Refrigerated Transport, Inc., an Arkansas corporation; Star Transportation, Inc., a Tennessee corporation, each d/b/a Covenant Transport Services; Covenant Transport Solutions, LLC., a Nevada limited liability company, d/b/a Transport Financial Services; Covenant Logistics, Inc., a Nevada corporation; Covenant Asset Management, LLC., a Nevada limited liability corporation; CTG Leasing Company, a Nevada corporation; IQS Insurance Risk Retention Group, Inc., a Vermont corporation; Driven Analytic Solutions, LLC, a Nevada limited liability company; Heritage Insurance, Inc., a Tennessee corporation; Landair Holdings, Inc., a Tennessee corporation; Landair Transport, Inc., a Tennessee corporation; Landair Logistics, Inc., a Tennessee corporation; Landair Leasing, Inc., a Tennessee corporation; and Transport Management Services, LLC, a Tennessee limited liability company.References in this report to "it," "we," "us," "our," the "Company," and similar expressions refer to Covenant Transportation Group, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Investment in Transport Enterprise Leasing, LLC Transport Enterprise Leasing, LLC ("TEL") is a tractor and trailer equipment leasing company and used equipment reseller. We evaluated our investment in TEL to determine whether it should be recorded on a consolidated basis. Our percentage of ownership interest ( 49% ), an evaluation of control, and whether a variable interest entity ("VIE") existed were all considered in our consolidation assessment. Based on the analysis, the Company is not the primary beneficiary of TEL and TEL should not be consolidated. We have accounted for our investment in TEL using the equity method of accounting given our 49% ownership interest and ability to exercise significant influence over operating and financial policies. Under the equity method, the cost of our investment is adjusted for our share of equity in the earnings of TEL and reduced by distributions received and our proportionate share of TEL's net income is included in our earnings.On a periodic basis, we assess whether there are any indicators that the fair value of our investment in TEL may be impaired. The investment is impaired only if the estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss would be measured as the excess of the carrying amount of the investment over the fair value of the investment. As a result of TEL's earnings, no impairment indicators were noted that would provide for impairment of our investment.Revenue Recognition Revenue, drivers' wages, and other direct operating expenses generated by our Highway Services and Dedicated reportable segments are recognized proportionally as the transportation service is performed based on the percentage of miles completed as of the period end, as opposed to recognizing revenue upon the completion of the load, which was our historic practice prior to the adoption of ASU 2014 -09 on January 1, 2018. Revenue is recognized on a gross basis at amounts charged to our customers because we control and are primarily responsible for the fulfillment of the promised service. Revenue includes transportation revenue, fuel surcharges, loading and unloading activities, equipment detention, and other accessorial services.Revenue generated by our Managed Freight and Factoring segments is recognized upon completion of the services provided. Revenue is recorded on a gross basis, without deducting third party purchased transportation costs, as we act as a principal with substantial risks as primary obligor, except for transactions whereby equipment from our Highway Services and Dedicated segments perform the related services, which we record on a net basis in accordance with the related authoritative guidance. Revenue for the factoring business is recognized on a net basis after giving effect to receivables payments we make to the factoring client, given we are acting as an agent and are not the primary generator of the factored receivables in these transactions. Revenue for the warehousing business is generally recognized as the service is performed, based upon a weekly rate.Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make decisions based upon estimates, assumptions, and factors we consider as relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of our estimates and assumptions. Accordingly, actual results could differ from those anticipated.Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less at acquisition to be cash equivalents. Additionally, we are also subject to concentrations of credit risk related to deposits in banks in excess of the Federal Deposit Insurance Corporation limits.Accounts Receivable and Concentration of Credit Risk We extend credit to our customers in the normal course of business. We perform ongoing credit evaluations and generally do not require collateral. Trade accounts receivable are recorded at their invoiced amounts, net of allowance for doubtful accounts. We evaluate the adequacy of our allowance for doubtful accounts quarterly. Accounts outstanding longer than contractual payment terms are considered past due and are reviewed individually for collectability. We maintain reserves for potential credit losses based upon its loss history and specific receivables aging analysis. Receivable balances are written off when collection is deemed unlikely.Accounts receivable are comprised of a diversified customer base that mitigates the level of concentration of credit risk. During 2019, 2018, and 2017 ten customers generated 45% 49% 49% 2019 2018, one 10% of our consolidated revenue in each year. In 2017, there were two such customers. The carrying amount reported in the consolidated balance sheet for accounts receivable approximates fair value based on the fact that the receivables collection averaged approximately 33 days32 days2019 2018 Included in accounts receivable is $86.6 million$53.6 million December 31, 2019 2018 $0.5 million$0.4 million85% to 95% of each receivable factored and retain the remainder as collateral for collection issues that might arise. The retained amounts are returned to the clients after the related receivable has been collected, net of interest and fees on the amount we advanced. At December 31, 2019 $1.8 million30–40 days due to the combination of the short-term nature of the financing transaction and the underlying quality of the receivables.The following table provides a summary (in thousands) of the activity in the allowance for doubtful accounts for 2019, 2018, and 2017
Inventories and Supplies Inventories and supplies consist of parts, tires, fuel, and supplies. Tires on new revenue equipment are capitalized as a component of the related equipment cost when the tractor or trailer is placed in service and recovered through depreciation over the life of the vehicle. Replacement tires and parts on hand at year end are recorded at the lower of cost or net realizable value with cost determined using the first -in, first -out (FIFO) method. Replacement tires are expensed when placed in service.Assets Held for Sale Assets held for sale include property and revenue equipment no longer utilized in continuing operations which are available and held 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. We periodically review the carrying value of these assets for possible impairment. We expect to sell these assets within twelve months.Property and Equipment Property and equipment is stated at cost less accumulated depreciation. Depreciation for book purposes is determined using the straight-line method over the estimated useful lives of the assets. Depreciation of revenue equipment is our largest item of depreciation. We generally depreciate new tractors (excluding day cabs) over five years to salvage values of approximately 15% of their cost. We generally depreciate new trailers over seven years for refrigerated trailers and ten years for dry van trailers to salvage values of approximately 25 %not reflected in our estimates, could have a material effect on our results of operations. Gains and losses on the disposal of revenue equipment are included in depreciation expense in the consolidated statements of operations.We lease certain revenue equipment under finance and operating leases with terms of approximately 48 to 84 months. Amortization of assets under finance and operating leases are included in depreciation and amortization expense and revenue and equipment rentals and purchased transportation, respectively.A portion of our tractors are protected by non-binding indicative trade-in values or binding trade-back agreements with the manufacturers. The remainder of our tractors and substantially all of our owned trailers are subject to fluctuations in market prices for used revenue equipment. Moreover, our trade-back agreements are contingent upon reaching acceptable terms for the purchase of new equipment. Declines in the price of used revenue equipment or failure to reach agreement for the purchase of new tractors with the manufacturers issuing trade-back agreements could result in impairment of, or losses on the sale of, revenue equipment. Goodwill and Other Intangible Assets We classify intangible assets into two categories: (i) intangible assets with finite lives subject to amortization and (ii) goodwill. We test goodwill for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred. We test intangible assets with finite lives for impairment if conditions exist that indicate the carrying value may not be recoverable. Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations. We record an impairment charge when the carrying value of the finite lived intangible asset is not recoverable by the cash flows generated from the use of the asset.We determine the useful lives of our identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful lives include the contractual term of any agreement, the history of the asset, our long-term strategy for the use of the asset, any laws or other local regulations which could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have finite lives are amortized, generally on a straight-line basis, over their useful lives, ranging from 5 to 15 years.Impairment of Long-Lived Assets Pursuant to applicable accounting standards, revenue equipment and other long-lived assets are tested for impairment whenever an event occurs that indicates an impairment may exist. Expected future cash flows are used to analyze whether an impairment has occurred. If the sum of 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.Insurance and Other Claims The primary claims arising against us consist of auto liability (personal injury and property damage), workers' compensation, cargo, commercial liability, and employee medical expenses. At December 31, 2019
Due to our significant self-insured retention amounts, we have exposure to fluctuations in the number and severity of claims and to variations between our estimated and actual ultimate payouts. We accrue the estimated cost of the uninsured portion of pending claims and an estimate for allocated loss adjustment expenses including legal and other direct costs associated with a claim. Estimates require judgments concerning the nature and severity of the claim, historical trends, advice from third -party administrators and insurers, the size of any potential damage award based on factors such as the specific facts of individual cases, the jurisdictions involved, the prospect of punitive damages, future medical costs, and inflation estimates of future claims development, and the legal and other costs to settle or defend the claims. We have significant exposure to fluctuations in the number and severity of claims. If there is an increase in the frequency and severity of claims, or we are required to accrue or pay additional amounts if the claims prove to be more severe than originally assessed, or any of the claims would exceed the limits of our insurance coverage, our profitability could be adversely affected.In addition to estimates within our self-insured retention layers, we also must make judgments concerning claims where we have third party insurance and for claims outside our coverage limits. Upon settling claims and expenses associated with claims where we have third party coverage, we are generally required to initially fund payment to the claimant and seek reimbursement from the insurer. Receivables from insurers for claims and expenses we have paid on behalf of insurers were $0.3 million$3.0 million December 31, 2019 2018 $2.1 million$5.1 million December 31, 2019 2018 may exceed such limits and, if so, by how much. If one or more claims were to exceed our then effective coverage limits, our financial condition and results of operations could be materially and adversely affected.We also make judgments regarding the ultimate benefit versus risk of commuting certain periods within our auto liability policy. If we commute a policy, we assume 100% risk for covered claims in exchange for a policy refund.Effective April 2018, we entered into new auto liability policies with a three -year term. The policy includes a limit for a single loss of $9.0 million, an aggregate of $18.0 million for each policy year, and a $30.0 million aggregate for the 36 month term ended March 31, 2021. The policy included a policy release premium refund or commutation option of up to $14.0 million, less any future amounts paid on claims by the insurer. A decision with respect to commutation of the policy could be made before April 1, 2021. Additionally, our prior auto liability policy that ran from October 1, 2014 through March 31, 2018, included a commutation provision if we were to commute the policy for the entire 42 months. Based on claims paid to date the policy premium release refund could range from zero to $5.2 million, depending on actual claims settlements in the future. Management cannot predict whether or not future claims or the development of existing claims will justify a commutation of either policy period, and accordingly, no related amounts were recorded at December 31, 2019 Interest We capitalize interest on major projects during construction. Interest is capitalized based on the average interest rate on related debt. Capitalized interest was $0.1 million2019 and less than $ 0.1 2018 and 2017, respectively.Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, available-for-sale securities, accounts payable, debt, and interest rate swaps. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, and current debt approximates their fair value because of the short-term maturity of these instruments. The carrying value of the factored receivables approximates the fair value, as the receivables are generally repaid directly to us by the client's customer within 30–40 days due to the combination of the short-term nature of the financing transaction and the underlying quality of the receivables. 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, 2019 14 and are valued based on quoted prices in active markets. The fair value of our interest rate swap agreements is determined using the market-standard methodology of netting the discounted future fixed-cash payments and the discounted expected variable-cash receipts. The variable-cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These analyses reflect the contractual terms of the swap, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatilities. The fair value calculation also includes an amount for risk of non-performance of our counterparties using "significant unobservable inputs" such as estimates of current credit spreads to evaluate the likelihood of default, which we have determined to be insignificant to the overall fair value of our interest rate swap agreements.Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. 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 in income in the period that includes the enactment date. We have reflected the net liability after offsetting our deferred tax assets and liabilities in the deferred income taxes line in the accompanying consolidated balance sheets. We believe the future tax deductions will be realized principally through future reversals of existing taxable temporary differences and future taxable income, except for when a valuation allowance has been provided as discussed in Note 8. In the ordinary course of business there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Potential accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense.Our policy is to recognize income tax benefit arising from the exercise of stock options and restricted share vesting based on the ordering provisions of the tax law as prescribed by the Internal Revenue Code, including indirect tax effects, if any. Lease Accounting At the commencement date of a new lease agreement with contractual terms longer than twelve months, we recognize an asset and a lease liability on the balance sheet and categorize the lease as either finance or operating. Certain lease agreements have lease and nonlease components, and we have elected to account for these components separately.Right-of-use assets and lease liabilities are initially recorded based on the present value of lease payments over the term of the lease. When the rate implicit in the lease is readily determinable, this rate is used for calculating the present value of remaining lease payments; otherwise, our incremental borrowing rate is used. Right-of-use assets also include prepaid lease expenses and initial direct costs of executing the leases, which are reduced by landlord incentives. Options to extend or terminate a lease agreement are included in or excluded from the lease term, respectively, when those options are reasonably certain to be exercised. Right-of-use assets are tested for impairment in the same manner as long-lived assets. Finance lease obligations are utilized to finance a portion of our revenue equipment and are entered into with certain finance companies who are not parties to our Credit Facility and may contain guarantees of the residual value of the related equipment by us. As such, the residual guarantees are included in the related debt balance as a balloon payment at the end of the related term as well as included in the future minimum finance lease payments. These lease agreements require us to pay personal property taxes, maintenance, and operating expenses. Our operating lease obligations do not typically include residual value guarantees or material restrictive covenants.Right-of-use assets are included in net property and equipment. For finance leases, right-of-use assets are amortized on a straight-line basis over the shorter of the expected useful life or the lease term, and the carrying amount of the lease liability is adjusted to reflect interest expense, which is recorded in interest expense, net. Operating lease right-of-use assets are amortized over the lease term on a straight-line basis, and the lease liability is measured at the present value of the remaining lease payments. Variable lease payments not included in the lease liability for mileage charges on leased revenue equipment are expensed as incurred. Operating lease costs are recognized on a straight-line basis over the term of the lease within operating expenses.Capital Structure The shares of Class A and B common stock are substantially identical except that the Class B shares are entitled to two votes per share and immediately convert to Class A shares if beneficially owned by anyone other than our Chief Executive Officer or certain members of his immediate family, while Class A shares are entitled to one vote per share. The terms of any future issuances of preferred shares will be set by our Board of Directors.Income Per Share Basic income per share excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted income per share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. The calculation of diluted earnings per share includes approximately 0.2 million December 31, 2019, 2018, and 2017 The following table sets forth the calculation of net income per share included in the consolidated statements of operations for each of the three years ended December 31:
Stock-Based Employee Compensation We issue several types of stock-based compensation, including awards that vest based on service and performance conditions or a combination of the conditions. Performance-based awards vest contingent upon meeting certain performance criteria established by the Compensation Committee of the Board of Directors. All awards require future service. For performance-based awards, determining the appropriate amount to expense in each period is based on likelihood and timing of achieving the stated targets for performance-based awards and requires judgment, including forecasting future financial results. The estimates are revised periodically based on the probability and timing of achieving the required performance and adjustments are made as appropriate. Awards that are only subject to time vesting provisions are amortized using the straight-line method. Recent Accounting Pronouncements Accounting Standards adopted In May 2014 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2014 -09, which supersedes virtually all existing revenue guidance. The new standard introduces a five -step model to determine when and how revenue is recognized. The premise of the new model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires enhanced disclosures regarding the nature, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The new standard became effective for us for our annual and interim reporting periods beginning January 1, 2018. The guidance permits the use of either a full retrospective or modified retrospective adoption approach with a cumulative effect adjustment recorded in either scenario as necessary upon transition.As permitted by the guidance, we elected the modified retrospective approach and thus recognized the cumulative effect of adoption of $0.6 million, net of tax, as a positive adjustment to retained earnings in the first quarter of 2018 as a result of the initial recording of in process revenue and associated direct expenses. Based on our review of our customer shipping arrangements and the related guidance, we have concluded that we will recognize revenue from loads proportionally as the transportation service is performed based on the percentage of miles completed as of the period end, as opposed to recognizing revenue upon the completion of the load, which was our historic practice. Revenue will be recognized on a gross basis at amounts charged to our customers because we control and are primarily responsible for the fulfillment of the promised service. Our recognition of revenue under the new standard approximates our recognition of revenue under the prior standard, as there will generally be a consistent amount of freight in process at the beginning and end of the period; however, seasonality and the day on which the period ends may cause minor differences.In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016 -02, which establishes Topic 842 to replace Topic 840 regarding accounting for leases. Topic 842 requires lessees to recognize a right-of-use asset and a lease liability for most leases on the balance sheet. Leases that were previously described as capital leases are now called finance leases, and operating leases with a term of at least twelve months are now required to be recorded on the balance sheet. We adopted this standard on January 1, 2019 using the modified retrospective approach.In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016 -02, which establishes Topic 842 to replace Topic 840 regarding accounting for leases. Topic 842 requires lessees to recognize a right-of-use asset and a lease liability for most leases on the balance sheet. Leases that were previously described as capital leases are now called finance leases, and operating leases with a term of at least twelve months are now required to be recorded on the balance sheet. We adopted this standard on January 1, 2019 using the modified retrospective approach.In July 2018, FASB issued ASU 2018 -11, which provides an optional transition method allowing application of Topic 842 as of the adoption date and recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, with no restatement of comparative prior periods. We have adopted the standard using this optional transition method.Within Topic 842, FASB has provided a number of practical expedients for applying the new lease standard in relation to leases that commenced prior to the standard's effective date. We have elected the package of practical expedients which allowed us, among other things, to carry forward the operating and capital lease classifications from Topic 840 to the new operating and finance lease classifications under Topic 842. The adoption of this ASU resulted in the initial recognition of operating lease assets of $40.1 million and liabilities totaling $41.0 million, comprised of $15.3 million of current operating lease obligations and $25.7 million of long-term operating lease obligations.Accounting Standards not yet adoptedIn June 2016, FASB issued ASU 2016 -13, Financial Instruments - Measurement of Credit Losses on Financial Instruments , which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. This update will be effective for us for our annual reporting period beginning January 1, 2023, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impacts the adoption of this standard will have on the consolidated financial statements. |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Net income | $ 8,477 | $ 42,503 | $ 55,439 |
Other comprehensive income: | |||
Unrealized (loss) gain on effective portion of cash flow hedges, net of tax of $437, $377, and $51 in 2019, 2018 and 2017, respectively | (1,278) | 993 | 149 |
Reclassification of cash flow hedge gains (losses) into statement of operations, net of tax of ($5), $408, and $1,719 in 2019, 2018 and 2017, respectively | 15 | (1,076) | 2,784 |
Unrealized holding gain (loss) on investments classified as available-for-sale | 45 | (6) | |
Total other comprehensive (loss) income | (1,218) | (89) | 2,933 |
Comprehensive income | $ 7,259 | $ 42,414 | $ 58,372 |
Note 2 - Liquidity (Details Textual) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Working Capital (Deficit) | $ 93,100 | $ 84,300 |
Long-term Line of Credit, Total | 0 | |
Letters of Credit Outstanding, Amount | 35,200 | $ 36,300 |
Line of Credit Facility, Remaining Borrowing Capacity | $ 59,800 |
Note 8 - Income Taxes (Tables) |
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Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] |
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Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] |
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Schedule of Deferred Tax Assets and Liabilities [Table Text Block] |
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Summary of Income Tax Contingencies [Table Text Block] |
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Note 9 - Equity Method Investment |
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment [Text Block] | 9. EQUITY METHOD INVESTMENTWe own a 49.0% interest in TEL, a tractor and trailer equipment leasing company and used equipment reseller. We have not guaranteed any of TEL's debt and have no obligation to provide funding, services, or assets. In May 2016, the operating agreement with TEL was amended to, among other things, remove the previously agreed to fixed date purchase options. Our option to acquire up to the remaining 51% of TEL would have expired May 31, 2016, and TEL’s majority owners would have received the option to purchase our ownership in TEL. There are no current put rights to purchase or sell with any owners. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. For the years ended December 31, 2019 2018 2017 we sold tractors and trailers to TEL for none less than , and $0.1 million$0.1 million, respectively, and received $9.4 million$8.2 million$0.5 million, respectively, for providing various maintenance services, certain back-office functions, and for miscellaneous equipment. Equipment purchased from TEL totaled $10.5 million, $ million, and 1.8 none in 2019 2018, and 2017, respectively. Additionally, we paid $0.6 million$0.9 million$0.1 million to TEL for leases of revenue equipment in 2019 2018 2017, respectively.less than and $0.1 million$0.2 million December 31, 2019 2018 49 %third party. Deferred gains totaling $ 0.2 December 31, 2019 2018 December 31, 2019 2018 $1.3 million$7.2 millionWe have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income, which amounted to $7.0 million2019 $7.7 million2018 $3.4 million2017 $1.2 million2019 $2.0 million in each of 2018 2017 $31.9 million$26.1 million December 31, 2019 2018 $4.9 million cash investment and our equity in TEL's earnings since our investment, partially offset by dividends received since our investment for minimum tax withholdings as noted above and the abovementioned deferred gains on sales of equipment to TEL.See TEL's summarized financial information below.
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Note 5 - Goodwill, Other Intangible, and Other Assets |
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Goodwill and Intangible Assets Disclosure [Text Block] |
On July 3, 2018, we acquired 100% of the outstanding stock of Landair Holdings, Inc., a Tennessee corporation ("Landair"). Landair is a dedicated and for-hire truckload carrier, as well as a supplier of transportation management, warehousing, and inventory management services. Landair's results have been included in the consolidated financial statements since the date of acquisition. The Company's only goodwill and other intangible assets are a result of the Landair acquisition. In 2019, the allocation of the Landair purchase price was subject to change based on finalization of the valuation of long lived and intangible assets and self-insurance reserves, as well as our ongoing evaluation of Landair's accounting principles of consistency with ours. The impact of this assessment was an increase of $0.9 million to the carrying value of goodwill in 2019. The final assignment of goodwill and intangible assets to our reportable operating segments was completed as of June 30, 2019. The Company conducted its annual impairment assessments and tests of goodwill for each reporting unit as of October 1, 2019. The first step of the goodwill impairment test is the Company's assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, including goodwill. When performing the qualitative assessment, the Company considers the impact of factors including, but not limited to, macroeconomic and industry conditions, overall financial performance of each reporting unit, litigation and new legislation. If based on the qualitative assessments, the Company believes it more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, or periodically as deemed appropriate by management, the Company will prepare an estimation of the respective reporting unit's fair value utilizing a quantitative approach.If the estimation of fair value indicates that impairment potentially exists, the Company will then measure the amount of the impairment, if any. Goodwill impairment exists when the estimated implied fair value of goodwill is less than its carrying value. Changes in strategy or market conditions could significantly impact these fair value estimates and require adjustments to recorded asset balances. A summary of indefinite-lived goodwill and other intangible assets, by reportable operating segment as of December 31, 2019 2018
The above finite-lived intangible assets have a weighted average remaining life of 128 140 months as of December 31, 2019 2018 $2.9 million$1.5 million$0.2 million2019, 2018, and 2017 five years is as follows:
A summary of other assets as of December 31, 2019 2018
Additionally, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Impairment is recognized on assets classified as held and used when the sum of undiscounted estimated cash flows expected to result from the use of the asset is less than the carrying value. If such measurement indicates a possible impairment, the estimated fair value of the asset is compared to its net book value to measure the impairment charge, if any. |