LONG-TERM DEBT AND FINANCING ARRANGEMENTS

3 Months Ended

Mar. 31, 2024

LONG-TERM DEBT AND FINANCING ARRANGEMENTS

LONG-TERM DEBT AND FINANCING ARRANGEMENTS

NOTE G – LONG-TERM DEBT AND FINANCING ARRANGEMENTS

Long-Term Debt Obligations

Long-term debt consisted of borrowings outstanding under the Company’s revolving credit facility, which is further described in Financing Arrangements within this Note, and notes payable related to the financing of revenue equipment (tractors and trailers used primarily in Asset-Based segment operations) and certain other equipment were as follows:

	March 31		December 31
	2024		2023
	(in thousands)
Credit Facility (interest rate of 6.6%(1) at March 31, 2024)	$	50,000	$	50,000
Notes payable (weighted-average interest rate of 3.9% at March 31, 2024)		162,171		178,938
		212,171		228,938
Less current portion		63,179		66,948
Long-term debt, less current portion	$	148,992	$	161,990

(1) The interest rate swap mitigates interest rate risk by effectively converting the $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.55% based on the margin of the Credit Facility as of both March 31, 2024 and December 31, 2023.

Scheduled maturities of long-term debt obligations as of March 31, 2024, were as follows:

			Credit		Notes
	Total		Facility(1)		Payable
	(in thousands)
Due in one year or less	$	71,602	$	3,142	$	68,460
Due after one year through two years		50,181		2,690		47,491
Due after two years through three years		38,552		2,502		36,050
Due after three years through four years		69,270		51,273		17,997
Due after four years through five years		3,433		—		3,433
Due after five years		—		—		—
Total payments		233,038		59,607		173,431
Less amounts representing interest		20,867		9,607		11,260
Long-term debt	$	212,171	$	50,000	$	162,171

(1) The future interest payments included in the scheduled maturities due are calculated using variable interest rates based on the SOFR swap curve, plus the anticipated applicable margin, exclusive of payments on the interest rate swap.

Assets securing notes payable were included in property, plant and equipment as follows:

	March 31		December 31
	2024		2023
	(in thousands)
Revenue equipment	$	300,161	$	300,922
Service, office and other equipment		38,138		38,138
Total assets securing notes payable		338,299		339,060
Less accumulated depreciation(1)		145,630		135,305
Net assets securing notes payable	$	192,669	$	203,755

(1) Depreciation of assets securing notes payable is included in depreciation expense.

Financing Arrangements

Credit Facility

As of March 31, 2024, the Company has a revolving credit facility (the “Credit Facility”) under its Fourth Amended and Restated Credit Agreement (the “Credit Agreement”), with an initial maximum credit amount of $250.0 million, including

a swing line facility in an aggregate amount of up to $40.0 million and a letter of credit sub-facility providing for the issuance of letters of credit up to an aggregate amount of $20.0 million. The Company may request additional revolving commitments or incremental term loans thereunder up to an aggregate amount of up to $125.0 million, subject to the satisfaction of certain additional conditions as provided in the Credit Agreement. As of March 31, 2024, the Company had available borrowing capacity of $200.0 million under the initial maximum credit amount of the Credit Facility.

Principal payments under the Credit Facility are due upon maturity of the facility on October 7, 2027; however, borrowings may be repaid, at the Company’s discretion, in whole or in part at any time, without penalty, subject to required notice periods and compliance with minimum prepayment amounts. In addition, the Credit Facility requires the Company to pay a fee on unused commitments. The Credit Agreement contains conditions, representations and warranties, events of default, and indemnification provisions that are customary for financings of this type, including, but not limited to, a minimum interest coverage ratio, a maximum adjusted leverage ratio, and limitations on incurrence of debt, investments, liens on assets, certain sale and leaseback transactions, transactions with affiliates, mergers, consolidations, and sales of assets. The Company was in compliance with the covenants under the Credit Agreement at March 31, 2024.

Interest Rate Swap

As noted in the table above, the Company has an interest rate swap agreement with a $50.0 million notional amount, which will end on October 1, 2024. The Company receives floating-rate interest amounts based on one-month SOFR in exchange for fixed-rate interest payments of 0.33% throughout the remaining term of the agreement. The fair value of the interest rate swap of $1.2 million and $1.7 million was recorded in other long-term assets at March 31, 2024 and December 31, 2023, respectively.

The unrealized gain or loss on the interest rate swap instrument in effect at the balance sheet date was reported as a component of accumulated other comprehensive income, net of tax, in stockholders’ equity at March 31, 2024 and December 31, 2023, and the change in the unrealized gain or loss on the interest rate swap for the three months ended March 31, 2024 and 2023 was reported in other comprehensive income (loss), net of tax, in the consolidated statements of comprehensive income. The interest rate swap is subject to certain customary provisions that could allow the counterparty to request immediate settlement of the fair value liability or asset upon violation of any or all of the provisions. The Company was in compliance with all provisions of the interest rate swap agreement at March 31, 2024.

Accounts Receivable Securitization Program

The Company’s accounts receivable securitization program, which matures on July 1, 2024, provides available cash proceeds of $50.0 million under the program and has an accordion feature allowing the Company to request additional borrowings up to $100.0 million, subject to certain conditions.

Under this program, certain subsidiaries of the Company continuously sell a designated pool of trade accounts receivables to a wholly owned subsidiary which, in turn, may borrow funds on a revolving basis. This wholly owned consolidated subsidiary is a separate bankruptcy-remote entity, and its assets would be available only to satisfy the claims related to the lenders’ interest in the trade accounts receivables. Borrowings under the accounts receivable securitization program bear interest based upon SOFR, plus a margin, and an annual facility fee. The securitization agreement contains representations and warranties, affirmative and negative covenants, and events of default that are customary for financings of this type, including a maximum adjusted leverage ratio covenant. The Company was in compliance with the covenants under the accounts receivable securitization program at March 31, 2024.

The accounts receivable securitization program includes a provision under which the Company may request, and the letter of credit issuer may issue standby letters of credit, primarily in support of workers’ compensation and third-party casualty claims liabilities in various states in which the Company is self-insured. The outstanding standby letters of credit reduce the availability of borrowings under the program. As of March 31, 2024, standby letters of credit of $16.8 million have been issued under the program, which reduced the available borrowing capacity to $33.2 million.

Letter of Credit Agreements and Surety Bond Programs

As of March 31, 2024, the Company had letters of credit outstanding of $17.4 million (including $16.8 million issued under the accounts receivable securitization program). The Company has programs in place with multiple surety

companies for the issuance of surety bonds in support of its self-insurance program. As of March 31, 2024, surety bonds outstanding related to the self-insurance program totaled $67.7 million.