Company Quick10K Filing
Echo Global Logistics
Price23.13 EPS1
Shares27 P/E31
MCap622 P/FCF9
Net Debt128 EBIT27
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-07-29
10-Q 2020-03-31 Filed 2020-04-23
10-K 2019-12-31 Filed 2020-02-28
10-Q 2019-09-30 Filed 2019-10-25
10-Q 2019-06-30 Filed 2019-07-25
10-Q 2019-03-31 Filed 2019-04-25
10-K 2018-12-31 Filed 2019-02-22
10-Q 2018-09-30 Filed 2018-10-25
10-Q 2018-06-30 Filed 2018-07-26
10-Q 2018-03-31 Filed 2018-04-26
10-K 2017-12-31 Filed 2018-02-27
10-Q 2017-09-30 Filed 2017-10-26
10-Q 2017-06-30 Filed 2017-07-28
10-Q 2017-03-31 Filed 2017-04-27
10-K 2016-12-31 Filed 2017-02-24
10-Q 2016-09-30 Filed 2016-10-27
10-Q 2016-06-30 Filed 2016-07-28
10-Q 2016-03-31 Filed 2016-04-29
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-08-07
10-Q 2015-03-31 Filed 2015-05-08
10-K 2014-12-31 Filed 2015-02-26
10-Q 2014-09-30 Filed 2014-10-30
10-Q 2014-06-30 Filed 2014-07-31
10-Q 2014-03-31 Filed 2014-05-01
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-11-01
10-Q 2013-06-30 Filed 2013-08-02
10-Q 2013-03-31 Filed 2013-05-03
10-K 2012-12-31 Filed 2013-03-15
10-Q 2012-09-30 Filed 2012-11-01
10-Q 2012-06-30 Filed 2012-08-02
10-Q 2012-03-31 Filed 2012-05-03
10-K 2011-12-31 Filed 2012-03-07
10-Q 2011-09-30 Filed 2011-11-04
10-Q 2011-06-30 Filed 2011-08-02
10-Q 2011-03-31 Filed 2011-05-05
10-K 2010-12-31 Filed 2011-03-11
10-Q 2010-09-30 Filed 2010-11-08
10-Q 2010-06-30 Filed 2010-08-13
10-Q 2010-03-31 Filed 2010-05-14
10-K 2009-12-31 Filed 2010-03-17
8-K 2020-07-22 Earnings, Exhibits
8-K 2020-06-12
8-K 2020-04-22
8-K 2020-02-05
8-K 2020-01-24
8-K 2019-10-23
8-K 2019-07-24
8-K 2019-06-14
8-K 2019-04-30
8-K 2019-04-24
8-K 2019-02-06
8-K 2018-11-01
8-K 2018-10-24
8-K 2018-10-23
8-K 2018-09-10
8-K 2018-07-25
8-K 2018-06-15
8-K 2018-04-25
8-K 2018-02-07

ECHO 10Q Quarterly Report

Part I. Financial Information
Item 1. Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 echo-2020630x10qxex311.htm
EX-31.2 echo-2020630x10qxex312.htm
EX-32.1 echo-2020630x10qxex321.htm
EX-32.2 echo-2020630x10qxex322.htm

Echo Global Logistics Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin


Washington, D.C. 20549
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2020
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ______ to _______

Commission file number 001-34470
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer Identification No.)
600 West Chicago Avenue
Suite 725
Chicago, Illinois 60654
Phone: (800354-7993
(Address (including zip code) and telephone number (including area code)
of registrant's principal executive offices)

Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.0001 per shareECHONASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No: 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No: 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes:      No: 

As of July 28, 2020, the registrant had 26,609,681 shares of Common Stock, par value $0.0001 per share, outstanding.



Table of Contents

Item 1.    Consolidated Financial Statements

Echo Global Logistics, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended June 30,Six Months Ended June 30,
(In thousands, except per share data)2020201920202019
Revenue$514,719  $553,775  $1,065,768  $1,091,858  
Costs and expenses:
Transportation costs426,674  453,173  887,815  892,489  
Selling, general and administrative expenses75,481  80,138  155,135  160,333  
Depreciation and amortization9,804  9,793  19,596  19,261  
Income from operations2,761  10,672  3,222  19,775  
Interest expense(1,398) (3,555) (4,186) (6,968) 
Income (Loss) before provision for income taxes1,363  7,117  (965) 12,807  
Income tax expense(412) (2,050) (1,017) (4,244) 
Net income (loss)$951  $5,067  $(1,981) $8,564  
Earnings (Loss) per common share:
Basic$0.04  $0.19  $(0.08) $0.32  
Diluted$0.04  $0.19  $(0.08) $0.32  
Note: Amounts may not foot due to rounding.
See accompanying notes.


Table of Contents
Echo Global Logistics, Inc. and Subsidiaries
Consolidated Balance Sheets
 June 30, 2020December 31, 2019
(In thousands, except share data)(Unaudited)
Current assets:  
Cash and cash equivalents$35,438  $34,626  
Accounts receivable, net of allowance for doubtful accounts of $4,457 and $4,255 at June 30, 2020 and December 31, 2019, respectively
304,865  286,989  
Income taxes receivable1,797  2,473  
Prepaid expenses7,473  8,999  
Other current assets2,474  3,106  
Total current assets352,048  336,193  
Noncurrent assets:
Property and equipment, net of accumulated depreciation of $142,803 and $130,320 at June 30, 2020 and December 31, 2019, respectively
54,201  58,620  
Goodwill309,589  309,589  
Intangible assets, net of accumulated amortization of $87,241 and $81,656 at June 30, 2020 and December 31, 2019, respectively
92,177  97,762  
Operating lease assets18,084  19,638  
Other noncurrent assets3,564  4,863  
Total noncurrent assets477,616  490,473  
Total assets$829,664  $826,666  
Liabilities and stockholders' equity 
Current liabilities: 
Accounts payable$213,760  $187,524  
Due to seller, current953  937  
Accrued expenses34,137  35,229  
Other current liabilities4,543  6,719  
Total current liabilities253,394  230,409  
Noncurrent liabilities:
Long-term debt, net143,822    
Convertible notes, net  156,298  
Due to seller, noncurrent708  770  
Other noncurrent liabilities642  641  
Deferred income taxes23,935  23,761  
Noncurrent operating lease liabilities29,747  31,475  
Total noncurrent liabilities198,853  212,945  
Total liabilities452,247  443,353  
Stockholders' equity: 
Common stock, par value $0.0001 per share, 100,000,000 shares authorized, 31,709,190 shares issued and 25,942,090 shares outstanding at June 30, 2020; 31,507,247 shares issued and 26,229,809 shares outstanding at December 31, 2019
3  3  
Treasury stock, 5,767,100 and 5,277,438 shares at June 30, 2020 and December 31, 2019, respectively
(118,679) (109,239) 
Additional paid-in capital362,126  356,600  
Retained earnings133,967  135,948  
Total stockholders' equity377,417  383,312  
Total liabilities and stockholders' equity$829,664  $826,666  
Note: Amounts may not foot due to rounding.
See accompanying notes.

Table of Contents
Echo Global Logistics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 Six Months Ended June 30,
(In thousands)20202019
Operating activities  
Net (loss) income$(1,981) $8,564  
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes291  2,788  
Noncash stock compensation expense6,927  5,230  
Noncash interest expense 1,711  4,202  
Change in contingent consideration due to seller(46) 490  
Depreciation and amortization19,596  19,261  
Change in assets:
Accounts receivable(17,876) 15,778  
Income taxes receivable675  2,328  
Prepaid expenses and other assets2,166  900  
Change in liabilities:
Accounts payable26,121  3,785  
Accrued expenses and other liabilities(1,822) (11,023) 
Payments of contingent consideration in excess of costs over estimated earnings  (1,097) 
Net cash provided by operating activities35,760  51,206  
Investing activities 
Purchases of property and equipment(10,184) (13,166) 
Payments for acquisitions, net of cash acquired  (33) 
Net cash used in investing activities(10,184) (13,198) 
Financing activities  
Payments of contingent consideration due to seller  (253) 
Proceeds from exercise of stock options381  37  
Employee tax withholdings related to net share settlements of equity-based awards(1,592) (2,027) 
Purchases of treasury stock(10,349) (26,108) 
Purchases of Convertible Notes(88,961) (33,915) 
Settlement of Convertible Notes(69,242)   
Proceeds from borrowing on ABL facility170,000  15,000  
Repayments of amounts borrowed on ABL facility(25,000) (15,000) 
Net cash used in financing activities(24,763) (62,266) 
Increase (Decrease) in cash and cash equivalents813  (24,259) 
Cash and cash equivalents, beginning of period34,626  40,281  
Cash and cash equivalents, end of period$35,438  $16,022  
Note: Amounts may not foot due to rounding.

Supplemental disclosure of cash flow information  
Cash paid during the period for interest$3,020  $2,904  
Cash paid during the period for income taxes49  2,476  
Cash received during the period for income taxes refunded$  $3,348  
See accompanying notes.

Table of Contents
Echo Global Logistics, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
 Common StockTreasury StockAdditional
(In thousands, except share data)SharesAmountSharesAmountRetained
Balance at December 31, 201931,507,247  $3  (5,277,438) $(109,239) $356,600  $135,948  $383,312  
Share compensation expense—  —  —  —  4,608  —  4,608  
Exercise of stock options32,000  0  —  —  381  —  381  
Common stock issued for vested restricted stock247,224  0  —  —  (0) —    
Common shares withheld and retired to satisfy employee tax withholding obligations upon vesting of restricted stock(82,802) (0) —  —  (1,541) —  (1,541) 
Repurchase of convertible notes, net of deferred taxes—  —  —  —  (190) —  (190) 
Purchases of treasury stock—  —  (489,662) (9,440) —  —  (9,440) 
Net loss—  —  —  —  —  (2,933) (2,933) 
Balance at March 31, 202031,703,669  3  (5,767,100) (118,679) 359,857  133,015  374,197  
Share compensation expense—  —  —  —  2,319  —  2,319  
Common stock issued for vested restricted stock8,105  0  —  —  (0) —    
Common shares withheld and retired to satisfy employee tax withholding obligations upon vesting of restricted stock(2,584) (0) —  —  (51) —  (51) 
Net income—  —  —  —  —  951  951  
Balance at June 30, 202031,709,190  $3  (5,767,100) $(118,679) $362,126  $133,967  $377,417  
Note: Amounts may not foot due to rounding.


Table of Contents
Echo Global Logistics, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
 Common StockTreasury StockAdditional
(In thousands, except share data)SharesAmountSharesAmountRetained
Balance at December 31, 201831,345,220  $3  (3,947,460) $(79,571) $348,397  $121,102  $389,932  
Share compensation expense—  —  —  —  2,806  —  2,806  
Exercise of stock options3,000  0  —  —  37  —  37  
Common stock issued for vested restricted stock215,071  0  —  —  (0) —    
Common stock issued for vested performance shares13,267  0  —  —  (0) —    
Common shares withheld and retired to satisfy employee tax withholding obligations upon vesting of restricted stock(81,936) (0) —  —  (1,978) —  (1,978) 
Repurchase of convertible notes, net of deferred taxes—  —  —  —  36  —  36  
Purchases of treasury stock—  —  (452,350) (10,629) —  —  (10,629) 
Net income—  —  —  —  —  3,497  3,497  
Balance at March 31, 201931,494,622  3  (4,399,810) (90,199) 349,298  124,599  383,700  
Share compensation expense—  —  —  —  2,425  —  2,425  
Common stock issued for vested restricted stock5,789  0  —  —  (0) —    
Common shares withheld and retired to satisfy employee tax withholding obligations upon vesting of restricted stock(2,252) (0) —  —  (49) —  (49) 
Repurchase of convertible notes, net of deferred taxes—  —  —  —  66  —  66  
Purchases of treasury stock—  —  (701,773) (15,480) —  —  (15,480) 
Net income—  —  —  —  —  5,067  5,067  
Balance at June 30, 201931,498,159  $3  (5,101,583) $(105,679) $351,739  $129,666  $375,729  
Note: Amounts may not foot due to rounding.

See accompanying notes.

Table of Contents
Echo Global Logistics, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
Six Months Ended June 30, 2020 and 2019
1. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Echo Global Logistics, Inc. and its subsidiaries (the "Company" or "Echo"). All significant intercompany accounts and transactions have been eliminated in the consolidation. The consolidated statements of operations include the results of entities or assets acquired from the effective date of the acquisition for accounting purposes.

The preparation of the consolidated financial statements is in conformity with the rules and regulations of the Securities and Exchange Commission ("SEC") and accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules or regulations. In the opinion of management, the accompanying unaudited financial statements reflect all adjustments considered necessary for a fair presentation of the results for the period and those adjustments are of a normal recurring nature. The operating results for the six months ended June 30, 2020 are not necessarily indicative of the results expected for the full year 2020. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's audited financial statements for the year ended December 31, 2019.

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results can differ from those estimates.

Adoption of ASC Topic 326, "Financial Instruments - Credit Loss"

On January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses Topic 326, using the prospective approach. Results for reporting periods beginning on or after January 1, 2020 are presented under Topic 326. Prior period amounts are not adjusted and continue to be reported in accordance with the accounting standards in effect for those periods.

The Company is exposed to potential credit losses related to its trade receivables, which the Company categorizes as either Transactional or Managed Transportation. For its Transactional trade receivables, the Company utilizes historical loss information to develop an estimate for future expected credit losses. For its Managed Transportation trade receivables, the Company estimates its potential future expected credit losses on a customer specific basis. The Company considers current economic conditions and forecasts when determining its credit loss estimate based on the aging schedule. The Company transacts with customers in a variety of industries and adjusts its estimate accordingly if it becomes aware of financial difficulties for a specific customer.

The Company extends credit to certain clients as part of its business model. These clients are subject to an approval process prior to any extension of credit or increase in their current credit limit. The Company reviews each credit request and considers, among other factors, payment history, current billing status, recommendations by various rating agencies and capitalization. Clients that satisfy the credit review may receive a line of credit or an increase in their existing credit amount. The Company believes this review and approval process helps mitigate the risk of client defaults on extensions of credit and any potential credit losses. Additionally, the Company maintains a credit insurance policy for certain accounts.


Table of Contents
Echo Global Logistics, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
Six Months Ended June 30, 2020 and 2019
The following table summarizes the components of the allowance as of June 30, 2020 (in thousands):
Allowance for Doubtful Accounts
Balance at December 31, 2019$4,255  
Provision, charged to expense1,393  
Balance at June 30, 2020$4,457  

Fair Value of Financial Instruments

The carrying values of the Company's financial instruments, which consist of cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values due to their short-term nature. The fair values due to seller liabilities are determined based on the likelihood of the Company making contingent earn-out payments (see Note 4). The fair value of the liability component of the Notes (as defined in Note 11) was determined using the discounted cash flow analysis discussed in Note 11.

2. Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which replaces the incurred loss methodology previously employed to measure credit losses for most financial assets and requires the use of a forward-looking expected loss model. This update requires financial assets to be measured at amortized costs less a reserve and equal to the net amount expected to be collected.

The Company adopted this standard on January 1, 2020 using the prospective approach. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. At June 30, 2020, the Company reported $304.9 million of accounts receivable, net of allowance of $4.5 million. Changes in the allowance were not material for three and six months ended June 30, 2020. The Company fully describes the adoption and impact of this standard in Note 1. As part of the adoption of this standard, the Company implemented changes to its accounting policies, practices and internal controls over financial reporting.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement, which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This new accounting standard was effective for annual periods beginning after December 15, 2019. The Company adopted the standard on January 1, 2020. The adoption of this new standard did not have a material impact on the Company's consolidated financial statements.

Recently issued accounting pronouncements not yet adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (LIBOR). This new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is evaluating the effects that the adoption of this guidance will have on its disclosures.

3. Revenue

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to receive in exchange for its services. The Company generates revenue from two different client types: Transactional and Managed Transportation. Most clients are categorized as Transactional clients. For its Transactional business, the Company provides brokerage and transportation management services on a shipment-by-shipment basis. Carrier selection, dispatch, load management and tracking are integrated services that occur within the

Table of Contents
Echo Global Logistics, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
Six Months Ended June 30, 2020 and 2019
brokerage and transportation management performance obligation. For the brokerage and transportation management services performance obligation, revenue is recognized as the client's shipment travels from origin to destination by a third-party carrier. The Company is the principal in these transactions and recognizes revenue on a gross and relative transit time basis.

The Company categorizes a client as a Managed Transportation client if there is an agreement with the client for the provision of services, typically for a multi-year term. Brokerage and transportation management services is typically the performance obligation for the Company's Managed Transportation clients. For this performance obligation, revenue is recognized gross as the Company is the principal in these transactions, and is recognized as the Managed Transportation client's shipment travels from origin to destination on a relative transit time basis. Other performance obligations for Managed Transportation clients may include transportation management services, which includes the integrated services of dispatch, tracking and carrier payment. For these types of transactions, revenue is recorded on a net basis, as the Company does not have latitude in carrier selection or establish rates with the carrier. The Company also performs project-based services, such as compliance management, customized re-billing services and freight studies for certain Managed Transportation clients.

The following table presents the Company's revenue disaggregated by client type (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
Client Type2020201920202019
Transactional$396,794  $428,224  $825,168  $840,369  
Managed Transportation117,925  125,551  240,600  251,490  
Revenue$514,719  $553,775  $1,065,768  $1,091,858  
Note: Amounts may not foot due to rounding.

Revenue recognized per shipment varies depending on the transportation mode. The primary modes of shipment in which the Company transacts are truckload and less than truckload. Other transportation modes include intermodal, small parcel, domestic air, expedited and international.

The following table presents the Company's revenue disaggregated by mode (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
Truckload$352,192  $362,254  $719,972  $716,572  
Less than truckload141,557  165,046  299,502  319,985  
Other revenue20,971  26,476  46,294  55,301  
Revenue$514,719  $553,775  $1,065,768  $1,091,858  
Note: Amounts may not foot due to rounding.


The Company recognizes commission expense when incurred because the amortization period is less than one year. Commission expense is recognized on a relative transit time basis, which aligns with the Company's revenue recognition policy.

Variable Consideration

Certain customers may receive rebates based on the terms of their agreement with the Company, which are accounted for as variable consideration. Rebates are estimated based on the expected amount to be provided to customers and reduce revenue recognized. The Company also estimates for possible additional fees based on a portfolio approach.


Table of Contents
Echo Global Logistics, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
Six Months Ended June 30, 2020 and 2019
4. Fair Value Measurement

The Company applies ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820"), for its financial assets and financial liabilities. The guidance requires disclosures about assets and liabilities measured at fair value. The Company's financial liabilities primarily relate to contingent earn-out payments due to sellers in connection with various acquisitions. The fair value due to seller liabilities at June 30, 2020 and December 31, 2019 was $1.7 million. The potential earn-out payments and performance periods are defined in the individual purchase agreements for each acquisition. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is the performance target defined and measured to determine the earn-out payment due, if any, after each defined measurement period.

ASC Topic 820 includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on observable or unobservable inputs to valuation techniques that are used to measure fair value. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels:

Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable and market-corroborated inputs, which are derived principally from or corroborated by observable market data.
Level 3: Inputs that are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The significant inputs used to derive the fair value of the amounts due to seller include financial forecasts of future operating results, the probability of reaching the forecast and an appropriate discount rate for each contingent liability. Probabilities are estimated by reviewing financial forecasts and assessing the likelihood of reaching the required performance measures based on factors specific to each acquisition as well as the Company’s historical experience with similar arrangements. If an acquisition reaches the required performance measure, the estimated probability would be increased to 100% and would still be classified as a contingent liability on the balance sheet. If the measure is not reached, the probability would be reduced to reflect the amount earned, if any, depending on the terms of the agreement. Discount rates used in determining the fair value of the contingent consideration due to seller ranged from 2% to 3%. Historical results of the respective acquisitions serve as the basis for the financial forecasts used in the valuation.

Quantitative factors are also considered in these forecasts, including acquisition synergies, growth and sales potential, and potential operational efficiencies gained. Changes to the significant inputs used in determining the fair value of the contingent consideration due to seller could result in a change in the fair value of the contingent consideration. However, the correlation and inverse relationship between higher projected financial results to the discount rate applied and probability of meeting the financial targets mitigates the effect of any changes to the unobservable inputs.

The following tables set forth the Company's financial liabilities measured at fair value on a recurring basis and the basis of measurement at June 30, 2020 and December 31, 2019 (in thousands):
Fair Value Measurements as of June 30, 2020
 TotalLevel 1Level 2Level 3
Contingent consideration due to seller$(1,661)     $(1,661) 

Fair Value Measurements as of December 31, 2019
 TotalLevel 1Level 2Level 3
Contingent consideration due to seller$(1,707)     $(1,707) 


Table of Contents
Echo Global Logistics, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
Six Months Ended June 30, 2020 and 2019
The following table provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3) (in thousands):
 Due to Seller Liability
Balance at December 31, 2019$(1,707) 
Change in fair value of contingent consideration due to seller46  
Balance at June 30, 2020$(1,661) 

For the three months ended June 30, 2020 and 2019, the Company recognized a benefit of $76 thousand and incurred expense of $200 thousand, respectively. For the six months ended June 30, 2020 and 2019, the Company recognized a benefit of $46 thousand and incurred expense of $490 thousand, respectively. These changes in fair value resulted from using revised forecasts that took into account the most recent performance of each acquired business.

During the six months ended June 30, 2020, the Company did not make any contingent earn-out payments. During the six months ended June 30, 2019, the Company made contingent earn-out payments of $1.4 million to the sellers of businesses acquired by the Company.

5. Intangibles and Goodwill

The balance of goodwill was $309.6 million as of June 30, 2020 and December 31, 2019, as no changes occurred during the period.

The following is a summary of amortizable intangible assets as of June 30, 2020 and December 31, 2019 (in thousands):
 June 30, 2020December 31, 2019
CostAccumulated AmortizationNetCostAccumulated AmortizationNet
Customer relationships$150,239  $(72,020) $78,219  $150,239  $(67,317) $82,922  
Carrier relationships18,300  (5,472) 12,828  18,300  (4,934) 13,366  
Non-compete agreements5,239  (4,109) 1,130  5,239  (3,765) 1,474  
Trade names5,640  (5,640)   5,640