[X]
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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, 2017
OR
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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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Securities registered pursuant to Section 12(b) of the Act:
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$0.01 Par Value Class A Common Stock – The NASDAQ Global Select Market
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(Title of class)
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Securities registered pursuant to Section 12(g) of the Act:
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None
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Large accelerated filer
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[ ]
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Accelerated filer
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[X]
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Non-accelerated filer
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[ ] (Do not check if a smaller reporting company)
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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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17
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||
Item 1B.
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32
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||
Item 2.
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32
|
||
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.
|
34
|
||
Item 6.
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36
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||
Item 7.
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38
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||
Item 7A.
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58
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||
Item 8.
|
59
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||
Item 9.
|
59
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||
Item 9A.
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60
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||
Item 9B.
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60
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||
Part III
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|||
Item 10.
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61
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||
Item 11.
|
61
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||
Item 12.
|
61
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||
Item 13.
|
61
|
||
Item 14.
|
61
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||
Part IV
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|||
Item 15.
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62
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||
Item 16.
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65
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66
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||
67
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||
Financial Data
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||
69
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||
70
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||
71
|
||
72
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||
73
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||
74
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Distribution of Freight Revenue
Among Operating Subsidiaries
|
|
54%
|
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SRT
|
23%
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Solutions
(1)
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15%
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Star
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8%
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(1) All of Managed Freight is included within our Solutions subsidiary.
|
Average Freight Revenue Per Total Mile.
Our average freight revenue per total mile is primarily a function of 1) the allocation of assets among our subsidiaries and 2) the macro U.S. economic environment including supply/demand of freight and carriers. The year-over-year increase from 2013 to 2015 is a result of allocating more tractors to our niche/specialized service offerings that provide higher rates (including expedited/critical freight, high-value/constant security, and temperature-controlled). The 2017 recovery of the weaker 2016 pricing environment, due to the more favorable supply and demand balance, resulted in the slight increase from the previous year.
|
|
Average Freight Revenue Per Total Mile
(excludes fuel surcharge revenue)
|
2013
|
2014
|
2015
|
2016
|
2017
|
|
$1.49
|
$1.60
|
$1.69
|
$1.67
|
$1.70
|
Average Miles Per Tractor.
Average miles per tractor reflect economic demand, driver availability, regulatory constraints, and the allocation of tractors among the service offerings. Utilization in 2015 to 2017 declined from that of 2014 primarily due to a softer freight market and the increase in certain e-commerce freight that has a shorter length of haul, partially offset by the increase in the portion of tractors operated by teams.
|
|
Average Miles Per Tractor
|
2013
|
2014
|
2015
|
2016
|
2017
|
|
119,375
|
123,275
|
122,508
|
121,782
|
120,043
|
Average Freight Revenue Per Tractor Per Week.
We use average freight revenue per tractor per week as our main measure of asset productivity. This operating metric takes into account the effects of freight rates, non-revenue miles, and miles per tractor. In addition, because we calculate average freight revenue per tractor using all of our tractors, it takes into account the percentage of our fleet that is unproductive due to lack of drivers, repairs, and other factors. The changes in average freight revenue per tractor per week from 2015 to 2017 are primarily due to the 2016 deterioration and 2017 recovery of the percentage of our unseated tractors, specifically at SRT, and an increase in rates, partially offset by the previously noted decrease in utilization.
|
|
Average Freight Revenue Per Tractor Per Week
(excludes fuel surcharge revenue)
|
2013
|
2014
|
2015
|
2016
|
2017
|
|
$3,411
|
$3,777
|
$3,967
|
$3,881
|
$3,917
|
●
|
we may experience a reduction in overall freight levels, which may impair our asset utilization;
|
●
|
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;
|
●
|
freight patterns may change as supply chains are redesigned, resulting in an imbalance between our capacity and our customers' freight demand;
|
●
|
customers may solicit bids for freight from multiple trucking companies or select competitors that offer lower rates from among existing choices in an attempt to lower their costs, and we might be forced to lower our rates or lose freight;
|
●
|
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
|
●
|
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.
|
●
|
we compete with many other truckload carriers of varying sizes and, to a lesser extent, with (i) less-than-truckload carriers, (ii) railroads and intermodal companies, and (iii) other transportation and logistics companies, many of which have access to more equipment and greater capital resources than we do;
|
●
|
many of our competitors periodically reduce their freight rates to gain business, especially during times of reduced growth in the economy, which may limit our ability to maintain or increase freight rates or to maintain or expand our business or may require us to reduce our freight rates in order to maintain business and keep our equipment productive;
|
●
|
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;
|
●
|
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;
|
●
|
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;
|
●
|
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 owner operators 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;
|
●
|
economies of scale that procurement aggregation providers may pass on to smaller carriers may improve such carriers’ ability to compete with us;
|
●
|
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; and
|
●
|
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.
|
●
|
approval of premium rates for insurance;
|
●
|
standards of solvency;
|
●
|
minimum amounts of statutory capital surplus that must be maintained;
|
●
|
limitations on types and amounts of investments;
|
●
|
regulation of dividend payments and other transactions between affiliates;
|
●
|
regulation of reinsurance;
|
● |
regulation of underwriting and marketing practices;
|
● |
approval of policy forms;
|
● |
methods of accounting; and
|
● |
filing of annual and other reports with respect to financial condition and other matters.
|
●
|
our vulnerability to adverse economic and industry conditions and competitive pressures is heightened;
|
●
|
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;
|
●
|
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; 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;
|
·
|
we may assume liabilities that were not disclosed to us or otherwise exceed our estimates;
|
·
|
we may be unable to integrate acquired businesses successfully, or at all, and realize anticipated economic, operational and other benefits in a timely manner, which could result in substantial costs and delays or other operational, technical, or financial problems;
|
·
|
acquisitions could disrupt our ongoing business, distract our management and divert our resources;
|
·
|
we may experience difficulties operating in markets in which we have had no or only limited direct experience;
|
·
|
we could lose customers, employees and drivers of any acquired company; and
|
·
|
we may incur additional indebtedness.
|
Terminal Locations
|
Maintenance
|
Recruiting/
Orientation
|
Sales
|
Ownership
|
|||||||||
Chattanooga, Tennessee
|
x |
|
x |
|
x |
|
Owned
|
||||||
Texarkana, Arkansas
|
x |
|
x |
|
x |
|
Owned
|
||||||
Hutchins, Texas
|
x |
|
x |
|
Owned
|
||||||||
Pomona, California
|
x |
|
Owned
|
||||||||||
Allentown, Pennsylvania
|
Owned
|
||||||||||||
LaVergne, Tennessee
|
x |
|
x |
|
x |
|
Owned
|
||||||
Orlando, Florida
|
Owned
|
Period
|
High
|
Low
|
||||||
Calendar Year 2016:
|
||||||||
1
st
Quarter
|
$
|
25.77
|
$
|
13.60
|
||||
2
nd
Quarter
|
$
|
25.22
|
$
|
16.31
|
||||
3
rd
Quarter
|
$
|
23.51
|
$
|
16.50
|
||||
4
th
Quarter
|
$
|
22.61
|
$
|
14.26
|
||||
Calendar Year 2017:
|
||||||||
1
st
Quarter
|
$
|
22.40
|
$
|
17.25
|
||||
2
nd
Quarter
|
$
|
20.44
|
$
|
16.11
|
||||
3
rd
Quarter
|
$
|
29.58
|
$
|
15.86
|
||||
4
th
Quarter
|
$
|
30.61
|
$
|
24.79
|
Period
|
(a)
Total Number of Shares Purchased (1)
|
(b)
Average Price Paid per Share
|
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
(d)
Maximum Number of Class A Shares that May Yet Be Purchased Under the Publicly Announced Plans or Programs
|
||||||||||||
October 1-31, 2017
|
-
|
-
|
-
|
-
|
||||||||||||
November 1-30, 2017
|
390
|
$
|
28.91
|
-
|
-
|
|||||||||||
December 1-31, 2017
|
17,986
|
$
|
28.73
|
-
|
-
|
|||||||||||
Total
|
18,376
|
$
|
28.73
|
-
|
-
|
(1)
|
Includes 390 and 17,986 shares of Class A common stock withheld at $28.91 and $28.73 per share, respectively (under the terms of grants under the Covenant Transportation Group, Inc. Third Amended and Restated 2006 Omnibus Incentive Plan) to offset tax withholding obligations that occurred upon vesting and release of restricted shares. The withholding of shares was permitted under the applicable award agreements and was not part of any stock repurchase plan.
|
(In thousands, except per share and operating data amounts)
|
||||||||||||||||||||
Years Ended December 31
,
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Freight revenue
|
$
|
626,809
|
$
|
610,845
|
$
|
640,120
|
$
|
578,204
|
$
|
538,933
|
||||||||||
Fuel surcharge revenue
|
78,198
|
59,806
|
84,120
|
140,776
|
145,616
|
|||||||||||||||
Total revenue
|
$
|
705,007
|
$
|
670,651
|
$
|
724,240
|
$
|
718,980
|
$
|
684,549
|
||||||||||
Operating expenses:
|
||||||||||||||||||||
Salaries, wages, and related expenses
|
241,784
|
234,526
|
244,779
|
231,761
|
218,946
|
|||||||||||||||
Fuel expense
|
103,139
|
103,108
|
122,160
|
168,856
|
186,002
|
|||||||||||||||
Operations and maintenance
|
48,774
|
45,864
|
46,458
|
47,251
|
50,043
|
|||||||||||||||
Revenue equipment rentals and purchased transportation
|
141,954
|
117,472
|
118,583
|
111,772
|
102,954
|
|||||||||||||||
Operating taxes and licenses
|
9,878
|
11,712
|
11,016
|
10,960
|
10,969
|
|||||||||||||||
Insurance and claims (1)
|
33,155
|
32,596
|
31,909
|
39,594
|
30,305
|
|||||||||||||||
Communications and utilities
|
6.938
|
6,057
|
6,162
|
5,806
|
5,240
|
|||||||||||||||
General supplies and expenses
|
14,783
|
14,413
|
14,007
|
16,950
|
16,002
|
|||||||||||||||
Depreciation and amortization, including gains and losses on disposition of equipment and impairment of assets
|
76,447
|
72,456
|
61,384
|
46,384
|
43,694
|
|||||||||||||||
Total operating expenses
|
676,852
|
638,204
|
656,458
|
679,334
|
664,155
|
|||||||||||||||
Operating income
|
28,155
|
32,447
|
67,782
|
39,646
|
20,394
|
|||||||||||||||
Interest expense, net
|
8,258
|
8,226
|
8,445
|
10,794
|
10,397
|
|||||||||||||||
Income from equity method investment
|
(3,400
|
)
|
(3,000
|
)
|
(4,570
|
)
|
(3,730
|
)
|
(2,750
|
)
|
||||||||||
Income before income taxes
|
23,297
|
27,221
|
63,907
|
32,582
|
12,747
|
|||||||||||||||
Income tax (benefit) expense
|
(32,142
|
)
|
10,386
|
21,822
|
14,774
|
7,503
|
||||||||||||||
Net income
|
$
|
55,439
|
$
|
16,835
|
$
|
42,085
|
$
|
17,808
|
$
|
5,244
|
Basic income per share
|
$
|
3.03
|
$
|
0.93
|
$
|
2.32
|
$
|
1.17
|
$
|
0.35
|
||||||||||
Diluted income per share
|
$
|
3.02
|
$
|
0.92
|
$
|
2.30
|
$
|
1.15
|
$
|
0.35
|
||||||||||
Basic weighted average common shares outstanding
|
18,279
|
18,182
|
18,145
|
15,250
|
14,837
|
|||||||||||||||
Diluted weighted average common shares outstanding
|
18,372
|
18,266
|
18,311
|
15,517
|
15,039
|
Years Ended December 31
,
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||
Selected Balance Sheet Data:
|
||||||||||||||||||||
Net property and equipment
|
$
|
464,072
|
$
|
465,471
|
$
|
454,049
|
$
|
382,491
|
$
|
329,608
|
||||||||||
Total assets (2)
|
$
|
649,668
|
$
|
620,538
|
$
|
646,717
|
$
|
539,304
|
$
|
461,188
|
||||||||||
Long-term debt and capital lease obligations, less current maturities
|
$
|
186,242
|
$
|
188,437
|
$
|
206,604
|
$
|
172,903
|
$
|
182,677
|
||||||||||
Total stockholders' equity
|
$
|
295,201
|
$
|
236,414
|
$
|
202,160
|
$
|
169,204
|
$
|
100,360
|
||||||||||
Selected Operating Data:
|
||||||||||||||||||||
Capital expenditures (proceeds), net (3)
|
$
|
72,006
|
$
|
59,052
|
$
|
148,994
|
$
|
89,455
|
$
|
91,976
|
||||||||||
Average freight revenue per loaded mile (4)
|
$
|
1.89
|
$
|
1.86
|
$
|
1.89
|
$
|
1.77
|
$
|
1.66
|
||||||||||
Average freight revenue per total mile (4)
|
$
|
1.70
|
$
|
1.67
|
$
|
1.69
|
$
|
1.60
|
$
|
1.49
|
||||||||||
Average freight revenue per tractor per week (4)
|
$
|
3,917
|
$
|
3,881
|
$
|
3,967
|
$
|
3,777
|
$
|
3,411
|
||||||||||
Average miles per tractor per year
|
120,043
|
121,782
|
122,508
|
123,275
|
119,375
|
|||||||||||||||
Weighted average tractors for year (5)
|
2,557
|
2,593
|
2,700
|
2,609
|
2,777
|
|||||||||||||||
Total tractors at end of period (5)
|
2,559
|
2,535
|
2,656
|
2,665
|
2,688
|
|||||||||||||||
Total trailers at end of period (6)
|
6,846
|
7,389
|
6,978
|
6,722
|
6,861
|
|||||||||||||||
Team-driven tractors as percentage of fleet
|
38.1
|
%
|
38.7
|
%
|
35.3
|
%
|
32.1
|
%
|
29.2
|
%
|
(1)
|
2017 and 2014 insurance and claims expense includes $0.9 million and $7.5 million of additional reserves for 2008 cargo claim, respectively.
|
(2)
|
Adjusted for retrospective adoption of
ASU 2015-17.
|
(3)
|
Includes equipment purchased under capital leases.
|
(4)
|
Excludes fuel surcharge revenue.
|
(5)
|
Includes monthly rental tractors and tractors provided by owner operators.
|
(6)
|
Excludes monthly rental trailers.
|
●
|
Total revenue was $705.0 million, compared with $670.7 million for 2016, and freight revenue (which excludes revenue from fuel surcharges) was $626.8 million, compared with $610.8 million for 2016;
|
●
|
Operating income was $28.1 million, compared with operating income of $32.4 million for 2016;
|
●
|
Net income was $55.4 million, or $3.02 per diluted share, compared with net income of $16.8 million, or $0.92 per diluted share, for 2016;
|
●
|
Our equity investment in TEL provided $3.4 million of pre-tax earnings in 2017, compared to $3.0 million for 2016; and
|
●
|
Stockholders' equity and tangible book value at December 31, 2017, were $295.2 million, or $16.11 per basic share.
|
Operating Ratio (“OR”) From 2015 to 2017
|
||||||||||||||||||||||||
GAAP Operating Ratio:
|
2017
|
OR %
|
2016
|
OR %
|
2015
|
OR %
|
||||||||||||||||||
Total revenue
|
$
|
705,007
|
$
|
670,651
|
$
|
724,240
|
||||||||||||||||||
Total operating expenses
|
676,852
|
96.0
|
%
|
638,204
|
95.2
|
%
|
656,458
|
90.6
|
%
|
|||||||||||||||
Operating income
|
$
|
28,155
|
$
|
32,447
|
$
|
67,782
|
||||||||||||||||||
Adjusted Operating Ratio:
|
2017 |
Adj. OR %
|
2016 |
Adj. OR %
|
2015 |
Adj. OR %
|
||||||||||||||||||
Total revenue
|
$
|
705,007
|
$
|
670,651
|
$
|
724,240
|
||||||||||||||||||
Less: Fuel surcharge revenue:
|
78,198
|
59,806
|
84,120
|
|||||||||||||||||||||
Revenue (excluding fuel surcharge revenue)
|
626,809
|
610,845
|
640,120
|
|||||||||||||||||||||
Total operating expenses
|
676,852
|
638,204
|
656,458
|
|||||||||||||||||||||
Less: Fuel surcharge revenue
|
78,198
|
59,806
|
84,120
|
|||||||||||||||||||||
Total operating expenses (net of fuel surcharge revenue)
|
598,654
|
95.5
|
%
|
578,398
|
94.7
|
%
|
572,338
|
89.4
|
%
|
|||||||||||||||
Operating income
|
$
|
28,155
|
$
|
32,447
|
$
|
67,782
|
Year ended December 31,
|
||||||||||||
(in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Revenue:
|
||||||||||||
Freight revenue
|
$
|
626,809
|
$
|
610,845
|
$
|
640,120
|
||||||
Fuel surcharge revenue
|
78,198
|
59,806
|
84,120
|
|||||||||
Total revenue
|
$
|
705,007
|
$
|
670,651
|
$
|
724,240
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Salaries, wages, and related expenses
|
$
|
241,784
|
$
|
234,526
|
$
|
244,779
|
||||||
% of total revenue
|
34.3
|
%
|
35.0
|
%
|
33.8
|
%
|
||||||
% of freight revenue
|
38.6
|
%
|
38.4
|
%
|
38.2
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Fuel expense
|
$
|
103,139
|
$
|
103,108
|
$
|
122,160
|
||||||
% of total revenue
|
14.6
|
%
|
15.4
|
%
|
16.9
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Total fuel surcharge
|
$
|
78,198
|
$
|
59,806
|
$
|
84,120
|
||||||
Less: Fuel surcharge revenue reimbursed to owner operators and other third parties
|
7,997
|
6,250
|
7,790
|
|||||||||
Company fuel surcharge revenue
|
$
|
70,201
|
$
|
53,556
|
$
|
76,330
|
||||||
Total fuel expense
|
$
|
103,139
|
$
|
103,108
|
$
|
122,160
|
||||||
Less: Company fuel surcharge revenue
|
70,201
|
53,556
|
76,330
|
|||||||||
Net fuel expense
|
$
|
32,938
|
$
|
49,552
|
$
|
45,830
|
||||||
% of freight revenue
|
5.3
|
%
|
8.1
|
%
|
7.2
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Operations and maintenance
|
$
|
48,774
|
$
|
45,864
|
$
|
46,458
|
||||||
% of total revenue
|
6.9
|
%
|
6.8
|
%
|
6.4
|
%
|
||||||
% of freight revenue
|
7.8
|
%
|
7.5
|
%
|
7.3
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Revenue equipment rentals and purchased transportation
|
$
|
141,954
|
$
|
117,472
|
$
|
118,583
|
||||||
% of total revenue
|
20.1
|
%
|
17.5
|
%
|
16.4
|
%
|
||||||
% of freight revenue
|
22.6
|
%
|
19.2
|
%
|
18.5
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Operating taxes and licenses
|
$
|
9,878
|
$
|
11,712
|
$
|
11,016
|
||||||
% of total revenue
|
1.4
|
%
|
1.7
|
%
|
1.5
|
%
|
||||||
% of freight revenue
|
1.6
|
%
|
1.9
|
%
|
1.7
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Insurance and claims
|
$
|
33,155
|
$
|
32,596
|
$
|
31,909
|
||||||
% of total revenue
|
4.7
|
%
|
4.9
|
%
|
4.4
|
%
|
||||||
% of freight revenue
|
5.3
|
%
|
5.3
|
%
|
5.0
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Communications and utilities
|
$
|
6,938
|
$
|
6,057
|
$
|
6,162
|
||||||
% of total revenue
|
1.0
|
%
|
0.9
|
%
|
0.9
|
%
|
||||||
% of freight revenue
|
1.1
|
%
|
1.0
|
%
|
1.0
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
General supplies and expenses
|
$
|
14,783
|
$
|
14,413
|
$
|
14,007
|
||||||
% of total revenue
|
2.1
|
%
|
2.1
|
%
|
1.9
|
%
|
||||||
% of freight revenue
|
2.4
|
%
|
2.4
|
%
|
2.2
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Depreciation and amortization
|
$
|
76,447
|
$
|
72,456
|
$
|
61,384
|
||||||
% of total revenue
|
10.8
|
%
|
10.8
|
%
|
8.5
|
%
|
||||||
% of freight revenue
|
12.2
|
%
|
11.9
|
%
|
9.6
|
%
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Interest expense, net
|
$
|
8,258
|
$
|
8,226
|
$
|
8,445
|
||||||
% of total revenue
|
1.2
|
%
|
1.2
|
%
|
1.2
|
%
|
||||||
% of freight revenue
|
1.3
|
%
|
1.3
|
%
|
1.3
|
%
|
Year ended December 31,
|
||||||||||||
(in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Income from equity method investment
|
$
|
3,400
|
$
|
3,000
|
$
|
4,570
|
Year ended December 31,
|
||||||||||||
(dollars in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Income tax (benefit) expense
|
$
|
(32,142
|
)
|
$
|
10,386
|
$
|
21,822
|
|||||
% of total revenue
|
(4.6
|
)%
|
1.5
|
%
|
3.0
|
%
|
||||||
% of freight revenue
|
(5.1
|
)%
|
1.7
|
%
|
3.4
|
%
|
Year ended
December 31,
|
||||||||||||
(in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Revenues:
|
||||||||||||
Truckload
|
$
|
612,834
|
$
|
601,226
|
$
|
655,918
|
||||||
Managed Freight
|
92,173
|
69,425
|
68,322
|
|||||||||
Total
|
$
|
705,007
|
$
|
670,651
|
$
|
724,240
|
||||||
Operating Income (loss):
|
||||||||||||
Truckload
|
$
|
38,781
|
$
|
37,031
|
$
|
74,107
|
||||||
Managed Freight
|
8,588
|
7,631
|
5,768
|
|||||||||
Unallocated Corporate Overhead
|
(19,214
|
)
|
(12,215
|
)
|
(12,093
|
)
|
||||||
Total
|
$
|
28,155
|
$
|
32,447
|
$
|
67,782
|
Payments due by period:
(in thousands)
|
Total
|
2018
(less than
1 year)
|
2019
(1-3 years
)
|
2020
(1-3 years)
|
2021
(3-5 years)
|
2022
(3-5 years)
|
More than
5 years
|
|||||||||||||||||||||
Credit Facility (1)
|
$
|
10,187
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
10,187
|
$
|
-
|
$
|
-
|
||||||||||||||
Revenue equipment and property installment notes, including interest (2)
|
$
|
204,414
|
$
|
30,503
|
$
|
30,505
|
$
|
51,731
|
$
|
39,558
|
$
|
23,311
|
$
|
28,806
|
||||||||||||||
Operating leases (3)
|
$
|
219
|
$
|
73
|
$
|
73
|
$
|
73
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
Capital leases (4)
|
$
|
26,951
|
$
|
3,606
|
$
|
3,606
|
$
|
5,813
|
$
|
5,368
|
$
|
5,175
|
$
|
3,383
|
||||||||||||||
Lease residual value guarantees
|
$
|
3,968
|
$
|
2,961
|
$
|
1,007
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
Purchase obligations (5)
|
$
|
51,660
|
$
|
51,660
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
Total contractual cash obligations (6)
|
$
|
297,399
|
$
|
88,803
|
$
|
35,191
|
$
|
57,617
|
$
|
55,113
|
$
|
28,486
|
$
|
32,189
|
●
|
auto liability - $1.0 million
|
|
●
|
workers' compensation - $1.3 million
|
|
●
|
cargo - $0.3 million
|
|
●
|
employee medical - $0.4 million
|
|
●
|
physical damage - 100%
|
●
|
pertain to the maintenance of records, that in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
●
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
●
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
|
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
|
587,024
|
(1)
|
$
|
-
|
186,430
|
|||||||
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|||||||||
Total
|
587,024
|
$
|
-
|
186,430
|
(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 $18.14, which is not reflected in column (b), because restricted stock awards do not have an exercise price.
|
(a)
|
1.
|
Financial Statements.
|
|
Our audited consolidated financial statements are set forth at the following pages of this report:
|
|||
67
|
|||
69
|
|||
70
|
|||
71
|
|||
72
|
|||
73
|
|||
74
|
|||
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
|
Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 99.2 to the Company's Report on Form 8-K, filed May 29, 2007)
|
||
Second Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Company's Form 10-Q, filed May 13, 2011)
|
||
Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 99.2 to the Company's Report on Form 8-K, filed May 29, 2007)
|
||
Second Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Company's Form 10-Q, filed May 13, 2011)
|
||
*
|
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)
|
|
Form of Lease Agreement (Open End) used in connection with Daimler Facility (Incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q, filed August 11, 2008)
|
||
Amendment to Lease Agreement (Open End) used in connection with Daimler Facility (Incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q, filed August 11, 2008)
|
||
Form of Direct Purchase Money Loan and Security Agreement used in connection with Daimler Facility (Incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q, filed August 11, 2008)
|
Amendment to Direct Purchase Money Loan and Security Agreement used in connection with Daimler Facility (Incorporated by reference to Exhibit 10.6 to the Company's Form 10-Q, filed August 11, 2008)
|
||
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)
|
|
*
|
Description of Director Compensation Program (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q, filed May 8, 2015)
|
|
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)
|
||
*
|
Description of 2017 Cash Bonus Plan (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed May 10, 2017)
|
|
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.
|
|
#
|
List of Subsidiaries
|
|
#
|
Consent of Independent Registered Public Accounting Firm – KPMG LLP
|
|
#
|
Consent of Independent Auditor – LBMC, PC
|
|
#
|
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.
|
*
|
Management contract or compensatory plan or arrangement.
|
COVENANT TRANSPORTATION GROUP, INC.
|
||
Date: February 27, 2018
|
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
|
February 27, 2018
|
|
David R. Parker
|
||
Chairman of the Board and Chief Executive Officer
(principal executive officer)
|
||
/s/ Richard B. Cribbs
|
February 27, 2018
|
|
Richard B. Cribbs
|
||
Executive Vice President and Chief Financial Officer
(principal financial officer)
|
||
/s/ M. Paul Bunn
|
February 27, 2018
|
|
M. Paul Bunn
|
||
Chief Accounting Officer
(principal accounting officer)
|
||
/s/ Bradley A. Moline
|
February 27, 2018
|
|
Bradley A. Moline
|
||
Director
|
||
/s/ William T. Alt
|
February 27, 2018
|
|
William T. Alt
|
||
Director
|
||
/s/ Robert E. Bosworth
|
February 27, 2018
|
|
Robert E. Bosworth
|
||
Director
|
||
February 27, 2018
|
||
Herbert J. Schmidt
|
||
Director
|
||
/s/ W. Miller Welborn
|
February 27, 2018
|
|
W. Miller Welborn
|
||
Director
|
COVENANT TRANSPORTATION GROUP, INC. AND SUBSIDIARIES
DECEMBER 31, 2017 AND 2016
(In thousands, except share data)
|
||||||||
2017
|
2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
15,356
|
$
|
7,750
|
||||
Accounts receivable, net of allowance of $1,456 in 2017 and $1,345 in 2016
|
104,153
|
96,636
|
||||||
Drivers' advances and other receivables, net of allowance of $556 in 2017 and $519 in 2016
|
15,062
|
8,757
|
||||||
Inventory and supplies
|
4,232
|
3,980
|
||||||
Prepaid expenses
|
8,699
|
10,889
|
||||||
Assets held for sale
|
1,444
|
2,695
|
||||||
Income taxes receivable
|
11,551
|
4,256
|
||||||
Other short-term assets
|
1,817
|
-
|
||||||
Total current assets
|
162,314
|
134,963
|
||||||
Property and equipment, at cost
|
650,988
|
631,076
|
||||||
Less: accumulated depreciation and amortization
|
(186,916
|
)
|
(165,605
|
)
|
||||
Net property and equipment
|
464,072
|
465,471
|
||||||
Other assets, net
|
23,282
|
20,104
|
||||||
Total assets
|
$
|
649,668
|
$
|
620,538
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Checks outstanding in excess of bank balances
|
$
|
-
|
$
|
189
|
||||
Accounts payable
|
11,857
|
13,032
|
||||||
Accrued expenses
|
26,520
|
26,607
|
||||||
Current maturities of long-term debt
|
24,596
|
24,947
|
||||||
Current portion of capital lease obligations
|
2,962
|
2,441
|
||||||
Current portion of insurance and claims accrual
|
15,042
|
17,177
|
||||||
Other short-term liabilities
|
243
|
3,388
|
||||||
Total current liabilities
|
81,220
|
87,781
|
||||||
Long-term debt
|
164,465
|
168,676
|
||||||
Long-term portion of capital lease obligations
|
21,777
|
19,761
|
||||||
Insurance and claims accrual
|
21,836
|
20,866
|
||||||
Deferred income taxes
|
63,344
|
84,157
|
||||||
Other long-term liabilities
|
1,825
|
2,883
|
||||||
Total liabilities
|
354,467
|
384,124
|
||||||
Commitments and contingent liabilities
|
-
|
-
|
||||||
Stockholders' equity:
|
||||||||
Class A common stock, $.01 par value; 20,000,000 shares authorized; 15,979,703 shares issued and outstanding as of December 31, 2017; and 15,922,879 issued and 15,899,223 outstanding as of December 31, 2016
|
171
|
170
|
||||||
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
|
137,242
|
137,912
|
||||||
Treasury stock at cost; no shares as of December 31, 2017 and 23,656 shares as of December 31, 2016
|
-
|
(1,084
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
293
|
(2,640
|
)
|
|||||
Retained earnings
|
157,471
|
102,032
|
||||||
Total stockholders' equity
|
295,201
|
236,414
|
||||||
Total liabilities and stockholders' equity
|
$
|
649,668
|
$
|
620,538
|
COVENANT TRANSPORTATION GROUP, INC. AND SUBSIDIARIES
(In thousands, except per share data)
|
2017
|
2016
|
2015
|
||||||||||
Revenues
|
||||||||||||
Freight revenue
|
$
|
626,809
|
$
|
610,845
|
$
|
640,120
|
||||||
Fuel surcharge revenue
|
78,198
|
59,806
|
84,120
|
|||||||||
Total revenue
|
$
|
705,007
|
$
|
670,651
|
$
|
724,240
|
||||||
Operating expenses:
|
||||||||||||
Salaries, wages, and related expenses
|
241,784
|
234,526
|
244,779
|
|||||||||
Fuel expense
|
103,139
|
103,108
|
122,160
|
|||||||||
Operations and maintenance
|
48,774
|
45,864
|
46,458
|
|||||||||
Revenue equipment rentals and purchased transportation
|
141,954
|
117,472
|
118,583
|
|||||||||
Operating taxes and licenses
|
9,878
|
11,712
|
11,016
|
|||||||||
Insurance and claims
|
33,155
|
32,596
|
31,909
|
|||||||||
Communications and utilities
|
6,938
|
6,057
|
6,162
|
|||||||||
General supplies and expenses
|
14,783
|
14,413
|
14,007
|
|||||||||
Depreciation and amortization, including gains and losses on disposition of property and equipment
|
76,447
|
72,456
|
61,384
|
|||||||||
Total operating expenses
|
676,852
|
638,204
|
656,458
|
|||||||||
Operating income
|
28,155
|
32,447
|
67,782
|
|||||||||
Interest expense, net
|
8,258
|
8,226
|
8,445
|
|||||||||
Income from equity method investment
|
(3,400
|
)
|
(3,000
|
)
|
(4,570
|
)
|
||||||
Income before income taxes
|
23,297
|
27,221
|
63,907
|
|||||||||
Income tax (benefit) expense
|
(32,142
|
)
|
10,386
|
21,822
|
||||||||
Net income
|
$
|
55,439
|
$
|
16,835
|
$
|
42,085
|
||||||
Income per share:
|
||||||||||||
Basic income per share
|
$
|
3.03
|
$
|
0.93
|
$
|
2.32
|
||||||
Diluted income per share
|
$
|
3.02
|
$
|
0.92
|
$
|
2.30
|
||||||
Basic weighted average shares outstanding
|
18,279
|
18,182
|
18,145
|
|||||||||
Diluted weighted average shares outstanding
|
18,372
|
18,266
|
18,311
|
2017
|
2016
|
2015
|
||||||||||
Net income
|
$
|
55,439
|
$
|
16,835
|
$
|
42,085
|
||||||
Other comprehensive income (loss):
|
||||||||||||
Unrealized gain (loss) on effective portion of cash flow hedges, net of tax of $51, $2,696, and $8,722 in 2017, 2016 and 2015, respectively
|
149
|
4,307
|
(14,051
|
)
|
||||||||
Reclassification of cash flow hedge losses into statement of operations, net of tax of $1,719, $6,634, and $5,964 in 2017, 2016, and 2015, respectively
|
2,784
|
10,597
|
9,608
|
|||||||||
Total other comprehensive income (loss)
|
2,933
|
14,904
|
(4,443
|
)
|
||||||||
Comprehensive income
|
$
|
58,372
|
$
|
31,739
|
$
|
37,642
|
Common Stock
|
Additional
Paid-In
Capital
|
Treasury
Stock
|
Accumulated
Other
Comprehensive
(Loss) Income
|
Retained
Earnings
|
Total
Stockholders'
Equity
|
|||||||||||||||||||||||
Class A
|
Class B
|
|||||||||||||||||||||||||||
Balances at
December 31, 2014
|
$
|
168
|
$
|
24
|
$
|
141,248
|
$
|
-
|
$
|
(13,101
|
)
|
$
|
40,865
|
$
|
169,204
|
|||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
42,085
|
42,085
|
|||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(4,443
|
)
|
-
|
(4,443
|
)
|
|||||||||||||||||||
Purchase of treasury stock
|
-
|
-
|
-
|
(4,994
|
)
|
-
|
-
|
(4,994
|
)
|
|||||||||||||||||||
Stock-based employee compensation expense
|
1
|
-
|
1,295
|
-
|
-
|
-
|
1,296
|
|||||||||||||||||||||
Exercise of stock options
|
1
|
-
|
1,091
|
-
|
-
|
-
|
1,092
|
|||||||||||||||||||||
Issuance of restricted shares, net
|
-
|
-
|
(3,666
|
)
|
1,586
|
-
|
-
|
(2,080
|
)
|
|||||||||||||||||||
Balances at
December 31, 2015
|
$
|
170
|
$
|
24
|
$
|
139,968
|
$
|
(3,408
|
)
|
$
|
(17,544
|
)
|
$
|
82,950
|
$
|
202,160
|
||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
16,835
|
16,835
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
14,904
|
-
|
14,904
|
|||||||||||||||||||||
Effect of adoption of ASU 2016-09
|
-
|
-
|
-
|
-
|
-
|
2,247
|
2,247
|
|||||||||||||||||||||
Stock-based employee compensation expense
|
-
|
-
|
1,178
|
-
|
-
|
-
|
1,178
|
|||||||||||||||||||||
Exercise of stock options
|
-
|
-
|
(27
|
)
|
59
|
-
|
-
|
32
|
||||||||||||||||||||
Issuance of restricted shares, net
|
-
|
-
|
(3,207
|
)
|
2,265
|
-
|
-
|
(942
|
)
|
|||||||||||||||||||
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
|
2017
|
2016
|
2015
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$
|
55,439
|
$
|
16,835
|
$
|
42,085
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Provision (reversal) for losses on accounts receivable
|
454
|
(241
|
)
|
1,100
|
||||||||
Reversal of gain on sales to equity method investee
|
(179
|
)
|
(207
|
)
|
(26
|
)
|
||||||
Depreciation and amortization
|
72,422
|
71,647
|
62,010
|
|||||||||
Amortization of deferred financing fees
|
242
|
293
|
261
|
|||||||||
Unrealized (gain) loss on ineffective portion of fuel hedges
|
-
|
-
|
(1,454
|
)
|
||||||||
Return of (issuance of) cash collateral on fuel hedge
|
-
|
-
|
5,000
|
|||||||||
Deferred income tax (benefit) expense
|
(23,023
|
)
|
(922
|
)
|
20,701
|
|||||||
Income tax benefit arising from restricted share vesting and stock options exercised
|
457
|
1,108
|
-
|
|||||||||
Casualty premium credit
|
-
|
-
|
(3,600
|
)
|
||||||||
Income from equity method investment
|
(3,400
|
)
|
(3,000
|
)
|
(4,570
|
)
|
||||||
Return on investment in affiliated company
|
1,960
|
1,470
|
-
|
|||||||||
Loss (gain) on disposition of property and equipment
|
4,024
|
808
|
(626
|
)
|
||||||||
Stock-based compensation expense
|
1,201
|
1,378
|
1,496
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Receivables and advances
|
(23,670
|
)
|
21,207
|
(28,120
|
)
|
|||||||
Prepaid expenses and other assets
|
1,768
|
(1,464
|
)
|
2,688
|
||||||||
Inventory and supplies
|
(252
|
)
|
24
|
398
|
||||||||
Insurance and claims accrual
|
(1,165
|
)
|
(1,390
|
)
|
(1,304
|
)
|
||||||
Accounts payable and accrued expenses
|
(3,425
|
)
|
(5,116
|
)
|
(10,562
|
)
|
||||||
Net cash flows provided by operating activities
|
82,853
|
102,430
|
85,477
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Acquisition of property and equipment
|
(110,802
|
)
|
(112,794
|
)
|
(181,963
|
)
|
||||||
Proceeds from disposition of property and equipment
|
48,749
|
65,507
|
34,287
|
|||||||||
Net cash flows used by investing activities
|
(62,053
|
)
|
(47,287
|
)
|
(147,676
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Change in checks outstanding in excess of bank balances
|
(189
|
)
|
(4,509
|
)
|
4,698
|
|||||||
Proceeds from issuance of notes payable
|
121,210
|
69,432
|
113,077
|
|||||||||
Proceeds from exercise of stock options
|
-
|
32
|
1,092
|
|||||||||
Repayments of notes payable
|
(122,676
|
)
|
(120,630
|
)
|
(67,276
|
)
|
||||||
Repayments of capital lease obligations
|
(7,416
|
)
|
(4,140
|
)
|
(1,718
|
)
|
||||||
Proceeds under revolving credit facility
|
1,271,669
|
1,023,978
|
870,432
|
|||||||||
Repayments under revolving credit facility
|
(1,274,847
|
)
|
(1,014,796
|
)
|
(867,430
|
)
|
||||||
Common stock repurchased
|
-
|
-
|
(4,994
|
)
|
||||||||
Payment of minimum tax withholdings on stock compensation
|
(785
|
)
|
(1,142
|
)
|
(2,280
|
)
|
||||||
Debt refinancing costs
|
(160
|
)
|
(108
|
)
|
(242
|
)
|
||||||
Net cash flows (used in) provided by financing activities
|
(13,194
|
)
|
(51,883
|
)
|
45,359
|
|||||||
Net change in cash and cash equivalents
|
7,606
|
3,260
|
(16,840
|
)
|
||||||||
Cash and cash equivalents at beginning of year
|
7,750
|
4,490
|
21,330
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
15,356
|
$
|
7,750
|
$
|
4,490
|
Years ended December 31:
|
Beginning balance
January 1,
|
Additional provisions to (reversal of) allowance
|
Write-offs and other deductions
|
Ending balance December 31,
|
||||||||||||
2017
|
$
|
1,345
|
$
|
454
|
$
|
(343
|
)
|
$
|
1,456
|
|||||||
2016
|
$
|
1,857
|
$
|
(241
|
)
|
$
|
(271
|
)
|
$
|
1,345
|
||||||
2015
|
$
|
1,767
|
$
|
1,100
|
$
|
(1,010
|
)
|
$
|
1,857
|
●
|
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)
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Numerator:
|
||||||||||||
Net income
|
$
|
55,439
|
$
|
16,835
|
$
|
42,085
|
||||||
Denominator:
|
||||||||||||
Denominator for basic income per share – weighted-average shares
|
18,279
|
18,182
|
18,145
|
|||||||||
Effect of dilutive securities:
|
||||||||||||
Equivalent shares issuable upon conversion of unvested restricted shares
|
93
|
84
|
161
|
|||||||||
Equivalent shares issuable upon conversion of unvested employee stock options
|
-
|
-
|
5
|
|||||||||
Denominator for diluted income per share adjusted weighted-average shares and assumed conversions
|
18,372
|
18,266
|
18,311
|
|||||||||
Net income per share:
|
||||||||||||
Basic income per share
|
$
|
3.03
|
$
|
0.93
|
$
|
2.32
|
||||||
Diluted income per share
|
$
|
3.02
|
$
|
0.92
|
$
|
2.30
|
●
|
Level 1. Observable inputs such as quoted prices in active markets;
|
●
|
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
●
|
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
(1)
|
Includes derivative liabilities of $487 and assets of $26 at December 31, 2017 and 2016, respectively.
|
Number of
stock
awards
(in thousands)
|
Weighted
average grant
date fair
value
|
|||||||
Unvested at December 31, 2014
|
642
|
$
|
6.60
|
|||||
Granted
|
63
|
$
|
28.10
|
|||||
Vested
|
(246
|
)
|
$
|
4.97
|
||||
Forfeited
|
(129
|
)
|
$
|
5.38
|
||||
Unvested at December 31, 2015
|
330
|
$
|
12.43
|
|||||
Granted
|
120
|
$
|
18.92
|
|||||
Vested
|
(169
|
)
|
$
|
5.28
|
||||
Forfeited
|
(16
|
)
|
$
|
16.53
|
||||
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
|
Number of
options
(in thousands)
|
Weighted
average
exercise price
|
Weighted average
remaining
contractual term
|
Aggregate intrinsic
value
(in thousands)
|
|||||||||||||
Outstanding at December 31, 2014
|
76
|
$
|
14.73
|
0.5 years
|
$
|
945
|
||||||||||
Options granted
|
-
|
-
|
||||||||||||||
Options exercised
|
(73
|
)
|
$
|
14.79
|
||||||||||||
Options forfeited
|
-
|
-
|
||||||||||||||
Outstanding at December 31, 2015
|
3
|
$
|
12.79
|
0.4 years
|
$
|
15
|
||||||||||
Options granted
|
-
|
-
|
||||||||||||||
Options exercised
|
(3
|
)
|
$
|
12.79
|
|
|
||||||||||
Options forfeited
|
-
|
-
|
||||||||||||||
Outstanding at December 31, 2016
|
-
|
-
|
-
|
-
|
||||||||||||
Options granted
|
-
|
-
|
||||||||||||||
Options exercised
|
-
|
-
|
||||||||||||||
Options forfeited
|
-
|
-
|
||||||||||||||
Outstanding at December 31, 2017
|
-
|
-
|
-
|
-
|
||||||||||||
Exercisable at December 31, 2017
|
-
|
-
|
-
|
-
|
(in thousands)
|
Estimated Useful Lives
|
2017
|
2016
|
|||||||||
Revenue equipment
|
3-10 years
|
$
|
519,797
|
$
|
499,809
|
|||||||
Communications equipment
|
5-10 years
|
4,585
|
8,192
|
|||||||||
Land and improvements
|
0-10 years
|
25,061
|
24,979
|
|||||||||
Buildings and leasehold improvements
|
7-40 years
|
74,513
|
71,827
|
|||||||||
Construction in-progress
|
-
|
2,023
|
3,176
|
|||||||||
Other
|
2-7 years
|
25,009
|
23,093
|
|||||||||
$
|
650,988
|
$
|
631,076
|
(in thousands)
|
2017
|
2016
|
||||||
Investment in TEL
|
20,145
|
18,526
|
||||||
Other, net
|
3,137
|
1,578
|
||||||
Total other assets
|
$
|
23,282
|
$
|
20,104
|
December 31, 2017
|
December 31, 2016
|
|||||||||||||||
Current
|
Long-Term
|
Current
|
Long-Term
|
|||||||||||||
Borrowings under Credit Facility
|
$
|
-
|
$
|
9,007
|
$
|
-
|
$
|
12,185
|
||||||||
Revenue equipment installment notes; weighted average interest rate of 3.3% at December 31, 2017, and 3.3% December 31, 2016, due in monthly installments with final maturities at various dates ranging from January 2018 to September 2023, secured by related revenue equipment
|
23,732
|
130,946
|
23,986
|
127,840
|
||||||||||||
Real estate notes; interest rate of 3.1% at December 31, 2017 due in monthly installments with a fixed maturity at August 2035 and weighted average interest rate of 2.4% at December 31, 2016 due in monthly installments with fixed maturities at December 2018 and August 2035, secured by related real estate
|
1,004
|
24,810
|
1,224
|
28,907
|
||||||||||||
Deferred loan costs
|
(140
|
)
|
(298
|
)
|
(263
|
)
|
(256
|
)
|
||||||||
Total debt
|
24,596
|
164,465
|
24,947
|
168,676
|
||||||||||||
Principal portion of capital lease obligations, secured by related revenue equipment
|
2,962
|
21,777
|
2,441
|
19,761
|
||||||||||||
Total debt and capital lease obligations
|
$
|
27,558
|
$
|
186,242
|
$
|
27,388
|
$
|
188,437
|
(in thousands)
|
||||
2018
|
$
|
24,736
|
||
2019
|
25,578
|
|||
2020
|
47,957
|
|||
2021
|
46,410
|
|||
2022
|
22,018
|
|||
Thereafter
|
$
|
22,800
|
Operating
|
Capital
|
|||||||
2018
|
$
|
73
|
$
|
3,606
|
||||
2019
|
73
|
3,606
|
||||||
2020
|
73
|
5,813
|
||||||
2021
|
-
|
5,368
|
||||||
2022
|
-
|
5,175
|
||||||
Thereafter
|
-
|
3,383
|
||||||
Total minimum lease payments
|
$
|
219
|
$
|
26,951
|
||||
Less: amount representing interest
|
(2,212
|
)
|
||||||
Present value of minimum lease payments
|
24,739
|
|||||||
Less: current portion
|
(2,962
|
)
|
||||||
Capital lease obligations, long-term
|
$
|
21,777
|
2017
|
2016
|
2015
|
||||||||||
Revenue equipment rentals
|
$
|
12,055
|
$
|
10,773
|
$
|
12,611
|
||||||
Building and lot rentals
|
448
|
708
|
2,078
|
|||||||||
Other equipment rentals
|
261
|
254
|
340
|
|||||||||
$
|
12,764
|
$
|
11,735
|
$
|
15,029
|
(in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Federal, current
|
$
|
(7,780
|
)
|
$
|
11,951
|
$
|
124
|
|||||
Federal, deferred
|
(28,055
|
)
|
(2,925
|
)
|
18,185
|
|||||||
State, current
|
(1,737
|
)
|
1,811
|
426
|
||||||||
State, deferred
|
5,430
|
(451
|
)
|
3,087
|
||||||||
Actual income tax expense
|
$
|
(32,142
|
)
|
$
|
10,386
|
$
|
21,822
|
(in thousands)
|
2017
|
2016
|
2015
|
|||||||||
Computed "expected" income tax expense
|
$
|
8,154
|
$
|
9,527
|
$
|
22,368
|
||||||
State income taxes, net of federal income tax effect
|
862
|
953
|
2,237
|
|||||||||
Per diem allowances
|
2,145
|
2,205
|
2,329
|
|||||||||
Tax contingency accruals
|
(43
|
)
|
(273
|
)
|
1,599
|
|||||||
Valuation allowance, net
|
(1,167
|
)
|
-
|
218
|
||||||||
Tax credits
|
(1,084
|
)
|
(694
|
)
|
(7,151
|
)
|
||||||
Impact of Tax Cuts and Jobs Act remeasurement
|
(40,123
|
)
|
-
|
-
|
||||||||
Excess tax benefits on share-based compensation
|
(457
|
)
|
-
|
-
|
||||||||
Other, net
|
(429
|
)
|
(1,332
|
)
|
222
|
|||||||
Actual income tax expense
|
$
|
(32,142
|
)
|
$
|
10,386
|
$
|
21,822
|
(in thousands)
|
2017
|
2016
|
||||||
Deferred tax assets:
|
||||||||
Insurance and claims
|
$
|
8,797
|
$
|
15,147
|
||||
Net operating loss carryovers
|
4,755
|
3,326
|
||||||
Tax credits
|
11,875
|
6,409
|
||||||
Other
|
4,414
|
5,113
|
||||||
Deferred fuel hedge
|
-
|
1,653
|
||||||
Valuation allowance
|
(63
|
)
|
(1,219
|
)
|
||||
Total deferred tax assets
|
29,778
|
30,429
|
||||||
Deferred tax liabilities:
|
||||||||
Property and equipment
|
(76,325
|
)
|
(98,679
|
)
|
||||
Investment in partnership
|
(14,197
|
)
|
(9,730
|
)
|
||||
Deferred fuel hedge
|
(99
|
)
|
-
|
|||||
Other
|
-
|
(1,391
|
)
|
|||||
Prepaid expenses
|
(2,501
|
)
|
(4,786
|
)
|
||||
Total deferred tax liabilities
|
(93,122
|
)
|
(114,586
|
)
|
||||
Net deferred tax liability
|
$
|
(63,344
|
)
|
$
|
(84,157
|
)
|
2017
|
2016
|
2015
|
||||||||||
Balance as of January 1,
|
$
|
2,051
|
$
|
2,394
|
$
|
995
|
||||||
Increases related to prior year tax positions
|
19
|
-
|
1,737
|
|||||||||
Decreases related to prior year positions
|
(10
|
)
|
-
|
-
|
||||||||
Increases related to current year tax positions
|
-
|
-
|
-
|
|||||||||
Decreases related to settlements with taxing authorities
|
-
|
(88
|
)
|
(182
|
)
|
|||||||
Decreases related to lapsing of statute of limitations
|
(136
|
)
|
(255
|
)
|
(156
|
)
|
||||||
Balance as of December 31,
|
$
|
1,924
|
$
|
2,051
|
$
|
2,394
|
(in thousands)
|
As of the years ended December 31,
|
|||||||
2017
|
2016
|
|||||||
Current Assets
|
$
|
19,660
|
$
|
14,320
|
||||
Non-current Assets
|
183,905
|
146,081
|
||||||
Current Liabilities
|
53,981
|
34,766
|
||||||
Non-current Liabilities
|
117,135
|
96,140
|
||||||
Total Equity
|
$
|
32,449
|
$
|
29,495
|
(in thousands)
|
As of the years ended December 31,
|
|||||||||||
2017
|
2016
|
2015
|
||||||||||
Revenue
|
$
|
84,865
|
$
|
94,432
|
$
|
104,838
|
||||||
Operating Expenses
|
72,868
|
83,475
|
91,644
|
|||||||||
Operating Income
|
11,997
|
10,957
|
13,194
|
|||||||||
Net Income
|
$
|
6,954
|
$
|
6,598
|
$
|
9,061
|
Details about OCI Components
|
Amount Reclassified from OCI for the years ended
December 31,
|
Affected Line Item in the Statement of Operations
|
|||||||||||
2017
|
2016
|
2015
|
|||||||||||
(Losses) gains on cash flow hedges
|
|||||||||||||
Commodity derivative contracts
|
$
|
(4,065
|
)
|
$
|
(16,674
|
)
|
$
|
(15,313
|
)
|
Fuel expense
|
|||
1,554
|
6,419
|
5,865
|
Income tax expense
|
||||||||||
$
|
(2,511
|
)
|
$
|
(10,255
|
)
|
$
|
(9,448
|
)
|
Net of tax
|
||||
$
|
(438
|
)
|
$
|
(557
|
)
|
$
|
(259
|
)
|
Interest expense
|
||||
165
|
215
|
99
|
Income tax expense
|
||||||||||
$
|
(273
|
)
|
$
|
(342
|
)
|
$
|
(160
|
)
|
Net of tax
|
(in thousands)
|
||||||||||||||||
Truckload
|
Managed Freight
|
Unallocated Corporate Overhead
|
Consolidated
|
|||||||||||||
Revenue
|
$
|
612,834
|
$
|
98,182
|
$
|
-
|
$
|
711,016
|
||||||||
Intersegment revenue
|
-
|
(6,009
|
)
|
-
|
(6,009
|
)
|
||||||||||
Operating income (loss)
|
38,781
|
8,588
|
(19,214
|
)
|
28,155
|
|||||||||||
Depreciation and amortization (1)
|
75,013
|
24
|
1,410
|
76,447
|
||||||||||||
Total assets
|
557,399
|
42,479
|
49,790
|
649,668
|
||||||||||||
Capital expenditures, net (2)
|
70,300
|
810
|
896
|
72,006
|
||||||||||||
Year Ended December 31, 2016
|
||||||||||||||||
Revenue
|
$
|
601,226
|
$
|
73,602
|
$
|
-
|
$
|
674,828
|
||||||||
Intersegment revenue
|
-
|
(4,177
|
)
|
-
|
(4,177
|
)
|
||||||||||
Operating income (loss)
|
37,031
|
7,631
|
(12,215
|
)
|
32,447
|
|||||||||||
Depreciation and amortization (1)
|
71,173
|
22
|
1,261
|
72,456
|
||||||||||||
Total assets
|
548,882
|
31,289
|
40,367
|
620,538
|
||||||||||||
Capital expenditures, net (2)
|
57,242
|
43
|
1,767
|
59,052
|
||||||||||||
Year Ended December 31, 2015
|
||||||||||||||||
Revenue
|
$
|
655,918
|
$
|
71,057
|
$
|
-
|
$
|
726,975
|
||||||||
Intersegment revenue
|
-
|
(2,735
|
)
|
-
|
(2,735
|
)
|
||||||||||
Operating income (loss)
|
74,107
|
5,768
|
(12,093
|
)
|
67,782
|
|||||||||||
Depreciation and amortization (1)
|
60,138
|
13
|
1,233
|
61,384
|
||||||||||||
Total assets
|
580,506
|
26,315
|
39,896
|
646,717
|
||||||||||||
Capital expenditures, net (2)
|
147,896
|
29
|
1,069
|
148,994
|
(1) |
Includes gains and losses on disposition of equipment.
|
(2) |
Includes equipment purchased under capital leases.
|
(in thousands except per share amounts)
|
||||||||||||||||
Quarters ended
|
Mar. 31,
2017
|
June 30,
2017
|
Sep. 30,
2017
|
Dec. 31,
2017(1)
|
||||||||||||
Total revenue
|
$
|
158,744
|
$
|
164,326
|
$
|
178,631
|
$
|
203,306
|
||||||||
Operating income
|
309
|
3,962
|
9,041
|
14,843
|
||||||||||||
Net (loss) income
|
(39
|
)
|
1,548
|
4,632
|
49,298
|
|||||||||||
Basic income per share
|
(0.00
|
)
|
0.08
|
0.25
|
2.70
|
|||||||||||
Diluted income per share
|
(0.00
|
)
|
0.08
|
0.25
|
2.69
|
(1)
|
Includes $40.1 million one-time benefit related to the Tax Cuts and Jobs Act.
|
(2)
|
Adjusted from 10-Q as filed due to implementation of ASU 2016-09.
|
(a)
|
By deleting the definition of “First Tennessee Swap Account” in Section 1.1 of the Credit Agreement.
|
(b)
|
By deleting the definition of “Real Estate Amortization Amount” in Section 1.1 of the Credit Agreement and by substituting in lieu thereof the following:
|
(c)
|
By deleting the definition of “Real Estate Formula Amount” in Section 1.1 of the Credit Agreement and by substituting in lieu thereof the following:
|
(d)
|
By deleting the definition of “Revolver Termination Date” in Section 1.1 of the Credit Agreement and by substituting in lieu thereof the following:
|
(a)
|
evidence of Parent’s contribution of the Equity Interests of CTS to Star;
|
(b)
|
a copy of CTS’s certificate of conversion (or equivalent document) filed with the Secretary of State of the State of Nevada (the “
NV SOS
”) that is certified by the NV SOS;
|
(c)
|
a copy of CTS’ certificate of formation (or equivalent document) filed with the NV SOS that is certified by the NV SOS;
|
(d)
|
a copy of CTS’s operating agreement, certified by the secretary or Senior Officer of CTS; and
|
(e)
|
a good standing certificate of CTS issued by the NV SOS.
|
(a)
|
one or more counterparts of this Amendment duly executed by each of Borrowers, Guarantors and Required Lenders;
|
(b)
|
duly executed amendments to the Mortgages previously delivered with respect to Borrowers’ real Property located in Texarkana, Arkansas and LaVergne, Tennessee;
|
(c)
|
the amendment fee referred to in
Section 12
hereof; and
|
(d)
|
such other documents, agreements, and instruments that Agent may reasonably request.
|
(a)
|
Parent hereby consents, acknowledges and agrees to the amendments set forth herein and hereby confirms and ratifies in all respects the Parent Guaranty (including without limitation, the continuation of Parent's payment and performance obligations thereunder upon and after the effectiveness of this Amendment and the amendments contemplated hereby) and the enforceability of the Parent Guaranty against the Parent in accordance with its terms.
|
(b)
|
DAS hereby consents, acknowledges and agrees to the amendments set forth herein and hereby confirms and ratifies in all respects its Guaranty (including without limitation, the continuation of DAS’s payment and performance obligations thereunder upon and after the effectiveness of this Amendment and the amendments contemplated hereby) and the enforceability of its Guaranty against DAS in accordance with its terms.
|
(a)
|
Compliance with Credit Agreement
. On the date hereof, no Default or Event of Default has occurred and is continuing;
|
(b)
|
Representations and Warranties
. On the date hereof, the representations and warranties of each Obligor in the Loan Documents are true and correct in all material respects (except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date);
|
(c)
|
Power and Authority
. Each Obligor is duly authorized to execute, deliver and perform this Amendment. The execution, delivery and performance of this Amendment and the Credit Agreement, as amended hereby, have been duly authorized by all necessary action, and do not (i) require any consent or approval of the holders of Equity Interests of the Obligors, other than those already obtained; (ii) contravene the Organic Documents of any Obligor; (iii) violate or cause a default under any Applicable Law, Material Contract or Material License; or (iv) result in or require the imposition of any Lien (other than Permitted Liens) on any Property of any Obligor; and
|
(d)
|
Enforceability
. This Amendment and the Credit Agreement, as amended hereby, are legal, valid and binding obligations of each Obligor, enforceable in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
|
BORROWERS:
|
||
COVENANT TRANSPORT, INC.
|
||
By:
|
/s/ Richard B. Cribbs | |
Name:
|
Richard B. Cribbs | |
Title:
|
Executive Vice President and Chief Financial Officer | |
CTG LEASING COMPANY
|
||
COVENANT ASSET MANAGEMENT, LLC
|
||
By:
|
/s/ Richard B. Cribbs | |
Name:
|
Richard B. Cribbs | |
Title:
|
Vice President | |
COVENANT TRANSPORT SOLUTIONS, INC.
|
||
SOUTHERN REFRIGERATED TRANSPORT, INC.
|
||
STAR TRANSPORTATION, INC.
|
||
By:
|
/s/ Richard B. Cribbs | |
Name:
|
Richard B. Cribbs | |
Title:
|
Executive Vice President and Chief Financial Officer |
|
GUARANTORS:
|
|
COVENANT TRANSPORTATION GROUP, INC.
|
||
By:
|
/s/ Richard B. Cribbs | |
Name:
|
Richard B. Cribbs | |
Title:
|
Executive Vice President and Chief Financial Officer | |
DRIVEN ANALYTIC SOLUTIONS, LLC
|
||
By:
|
/s/ Richard B. Cribbs | |
Name:
|
Richard B. Cribbs | |
Title:
|
Executive Vice President, Chief Financial Officer, and Treasurer | |
AGENT AND LENDERS:
|
||
BANK OF AMERICA, N.A.
,
as Agent and Lender
|
||
By:
|
/s/Douglas Cowan | |
Name:
|
Douglas Cowan | |
Title:
|
Senior Vice President |
|
JPMORGAN CHASE BANK, N.A.
, as a Lender
|
|
By:
|
/s/Angela Leake | |
Name:
|
Angela Leake | |
Title:
|
Authorized Officer |
Date: February 28, 2018
|
/s/ David R. Parker
|
|
David R. Parker
|
|
Principal Executive Officer
|
Date: February 28, 2018
|
/s/ Richard B. Cribbs
|
|
Richard B. Cribbs
|
|
Principal Financial Officer
|
Date: February 28, 2018
|
/s/ David R. Parker
|
|
David R. Parker
|
|
Chief Executive Officer
|
/s/ Richard B. Cribbs
|
|
|
Richard B. Cribbs
|
|
Chief Financial Officer
|
|
|
Page
|
Independent Auditors' Report
|
1
|
|
|
|
|
Financial Statements:
|
|
|
|
|
|
|
Balance Sheets
|
2
|
|
|
|
Statements of Income and Changes in Members' Equity | 3 | |
Statements of Cash Flows | 4 | |
Notes to the Financial Statements | 5 - 12 |
Assets
|
||||||||
Current assets:
|
2017 |
2016
|
||||||
Cash
|
$ | 6,873,507 |
$
|
4,797,808
|
||||
Accounts receivable, net of allowance for doubtful accounts
|
4,672,310 |
2,798,784
|
||||||
Net investment in direct financing leases, current
|
930,618 |
723,472
|
||||||
Inventory
|
3,210,676 |
2,819,925
|
||||||
Prepaid expenses
|
363,727 |
295,416
|
||||||
Restricted cash
|
3,609,170 |
2,884,260
|
||||||
Total current assets
|
19,660,008 |
14,319,665
|
||||||
Net investment in direct financing leases, excluding current portion
|
- |
1,691,983
|
||||||
Property and equipment, net
|
183,258,334 |
143,883,423
|
||||||
Other assets
|
646,494 |
506,032
|
||||||
Total assets
|
$ | 203,564,836 |
$
|
160,401,103
|
Liabilities and Members' Equity
|
||||||||
Current liabilities:
|
||||||||
Trade accounts payable
|
$ | 2,427,489 |
$
|
382,025
|
||||
Accounts payable to related party
|
8,647,356 |
3,668,411
|
||||||
Current portion of long‑term debt
|
37,104,925 |
25,982,642
|
||||||
Accrued liabilities
|
5,801,457 |
4,732,576
|
||||||
Total current liabilities
|
53,981,227 |
34,765,654
|
||||||
Long‑term debt, excluding current maturities
|
115,407,966 |
94,413,444
|
||||||
Deferred income taxes
|
1,726,722 |
1,726,722
|
||||||
Total liabilities
|
171,115,915 |
130,905,820
|
||||||
Members' equity
|
32,448,921 |
29,495,283
|
||||||
Total liabilities and members' equity
|
$ | 203,564,836 |
$
|
160,401,103
|
2017 |
2016
|
|||||||
Sales and lease revenue
|
$ | 84,865,141 |
$
|
94,431,994
|
||||
Operating costs and expenses:
|
||||||||
Cost of sales
|
37,342,707 |
55,398,764
|
||||||
Depreciation
|
29,165,485 |
21,103,637
|
||||||
Administrative and selling expenses
|
5,962,641 |
5,600,195
|
||||||
(Gain) loss on disposals of property and equipment
|
(229,397 | ) |
985,585
|
|||||
Other operating expenses, net
|
626,882 |
387,172
|
||||||
Total operating costs and expenses
|
72,868,318 |
83,475,353
|
||||||
Operating income
|
11,996,823 |
10,956,641
|
||||||
Interest expense, net
|
5,043,185 |
4,444,149
|
||||||
Income before income taxes
|
6,953,638 |
6,512,492
|
||||||
Income taxes benefit
|
-
|
(85,403
|
)
|
|||||
Net income
|
6,953,638 |
6,597,895
|
||||||
Distributions paid
|
(4,000,000 | ) |
(3,000,000
|
)
|
||||
Members' equity at beginning of year
|
29,495,283 |
25,897,388
|
||||||
Members' equity at end of year
|
$ | 32,448,921 |
$
|
29,495,283
|
2017 |
2016
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 6,953,638 |
$
|
6,597,895
|
||||
Adjustments to reconcile net income to cash flows provided by operating activities:
|
||||||||
Depreciation
|
29,165,485 |
21,103,637
|
||||||
Bad debt expense
|
292,620 |
252,262
|
||||||
(Gain) loss on disposals of property and equipment
|
(229,397 | ) |
985,585
|
|||||
Other
|
- |
(15,081
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(2,166,146 | ) |
(1,221,001
|
)
|
||||
Inventory
|
(390,751 | ) |
3,009,175
|
|||||
Prepaid expenses
|
(68,311 | ) |
(46,602
|
)
|
||||
Restricted cash
|
(724,910 | ) |
(934,260
|
)
|
||||
Accounts payable
|
7,024,409 |
(1,434,050
|
)
|
|||||
Accrued liabilities
|
1,068,881 |
1,463,195
|
||||||
Net cash provided by operating activities
|
40,925,518 |
29,760,755
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
(79,719,226 | ) |
(48,988,990
|
)
|
||||
Collections on direct financing leases
|
1,149,917 |
1,656,746
|
||||||
Proceeds from disposals of property and equipment
|
11,743,147 |
7,662,619
|
||||||
Other
|
(140,462 | ) | (276,037 | ) | ||||
Net cash used in investing activities
|
(66,966,624 | ) | (39,945,662 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from line of credit
|
4,000,000 |
1,998,130
|
||||||
Payments of line of credit
|
(4,000,000
|
)
|
(1,998,130
|
)
|
||||
Proceeds from long‑term debt
|
69,063,355
|
66,503,324
|
||||||
Payments of long‑term debt
|
(36,946,550
|
)
|
(49,765,936
|
)
|
||||
Distributions to members
|
(4,000,000
|
)
|
(3,000,000
|
)
|
||||
Net cash provided by financing activities
|
28,116,805
|
13,737,388
|
||||||
Change in cash
|
2,075,699
|
3,552,481
|
||||||
Cash at beginning of year
|
4,797,808
|
1,245,327
|
||||||
Cash at end of year
|
$
|
6,873,507
|
$
|
4,797,808
|
(1) |
Nature of operations
|
(2) |
Summary of significant accounting policies
|
(a) |
Accounts receivable and credit policies
|
(b) |
Inventory
|
(c) |
Restricted cash
|
(d) |
Property and equipment
|
(e) |
Income taxes
|
(f) |
Revenue recognition
|
(g) |
Use of estimates
|
(h) |
Events occurring after reporting date
|
(3) |
Credit risk and other concentrations
|
(4) |
Accounts receivable
|
2017 |
2016
|
|||||||
Trade receivables
|
$ | 4,672,310 |
$
|
2,814,360
|
||||
Less allowance for doubtful accounts
|
- |
15,576
|
||||||
$ | 4,672,310 |
$
|
2,798,784
|
(5) |
Net investment in direct financing leases
|
2017 |
2016
|
|||||||
Total minimum lease payments to be received
|
$ | 498,019 |
$
|
1,807,130
|
||||
Estimated residual values
|
463,519 |
1,006,521
|
||||||
Less unearned income
|
(30,920 | ) |
(398,196
|
)
|
||||
Net investment in direct financing leases
|
930,618 |
2,415,455
|
||||||
Less: current portion
|
(930,618 | ) |
(723,472
|
)
|
||||
Net investment in direct financing leases, excluding current portion
|
$ | - |
$
|
1,691,983
|
(6) |
Operating leases
|
Year
|
Amount
|
|||
2018
|
$
|
45,414,094
|
||
2019
|
35,987,972
|
|||
2020
|
21,724,530
|
|||
2021 |
10,197,235
|
|||
2022 |
1,696,013
|
|||
$
|
115,019,844
|
(7) |
Property and equipment
|
2017
|
2016
|
|||||||
Assets subject to operating leases:
|
||||||||
Tractors
|
$ | 149,550,381 |
$
|
109,046,757
|
||||
Trailers
|
76,472,128 |
57,795,652
|
||||||
226,022,509
|
166,842,409
|
|||||||
Accumulated depreciation
|
(51,326,492
|
)
|
(33,239,074
|
)
|
||||
174,696,017
|
133,603,335
|
|||||||
Other equipment
|
235,920
|
292,013
|
||||||
Accumulated depreciation
|
(114,501
|
)
|
(138,532
|
)
|
||||
121,419
|
153,481
|
|||||||
Assets held for lease
|
8,440,898
|
10,126,607
|
||||||
$ | 183,258,334 |
$
|
143,883,423
|
(8) |
Accrued liabilities
|
|
2017
|
2016
|
||||||
Maintenance escrow
|
$
|
3,498,391
|
$
|
2,837,863
|
||||
Security deposits
|
1,788,843
|
1,389,352
|
||||||
Other
|
347,499
|
384,477
|
||||||
Accrued interest
|
166,724
|
120,884
|
||||||
|
$
|
5,801,457
|
$
|
4,732,576
|
(9) |
Long‑term debt
|
|
2017
|
2016
|
||||||
Revenue equipment installment notes; weighted average interest rate of 3.75% and 3.69% at December 31, 2017 and 2016, respectively; due in monthly installments with final maturities at various dates ranging from January 2018 to December 2021; collateralized by tractors and trailers.
|
$
|
152,512,891
|
$
|
120,396,086
|
||||
Less current installments
|
(37,104,925
|
)
|
(25,982,642
|
)
|
||||
Long‑term debt, excluding current installments
|
$
|
115,407,966
|
$
|
94,413,444
|
Year
|
Installment Payments
|
|
|
|||||||||
2018
|
$
|
27,072,603
|
$
|
10,032,322
|
$
|
37,104,925
|
||||||
2019
|
23,453,882
|
24,117,806
|
47,571,688
|
|||||||||
2020
|
14,013,098
|
19,767,534
|
33,780,632
|
|||||||||
2021
|
6,487,210
|
27,568,436
|
34,055,646
|
|||||||||
|
$
|
71,026,793
|
$
|
81,486,098
|
$
|
152,512,891
|
(10) |
Income taxes
|
(11) |
Contingent liabilities
|
(12) |
Other commitments
|
(13) |
Related party transactions
|
·
|
Purchases of previously owned equipment amounting to $228,000 and $352,000, respectively.
|
·
|
Payment of fees for miscellaneous equipment items, equipment maintenance, and management services amounting to $5,853,195 and $4,967,085, respectively.
|
·
|
Receipt of lease payments for use of equipment amounting to $504,542 and $102,355, respectively.
|
(14) |
Supplemental disclosures of cash flow statement information
|
2017
|
2016
|
|||||||
Interest paid
|
$ | 4,996,868 |
$
|
4,427,638
|