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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________
 FORM 10-Q
_____________________________________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
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: 001-38054 
_____________________________________________________________________________
Schneider National, Inc.
(Exact Name of Registrant as Specified in Its Charter)
_____________________________________________________________________________
Wisconsin 39-1258315
(State of Incorporation) (IRS Employer Identification No.)
3101 South Packerland Drive
Green BayWisconsin54313
(Address of Registrant’s Principal Executive Offices and Zip Code)
(920) 592-2000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Class B common stock, no par valueSNDRNew York Stock Exchange
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 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, a smaller reporting company, or an emerging growth company. See the 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 October 21, 2022, the registrant had 83,029,500 shares of Class A common stock, no par value, outstanding and 94,982,780 shares of Class B common stock, no par value, outstanding.


SCHNEIDER NATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended September 30, 2022
TABLE OF CONTENTS
 
  Page
ITEM 1.
  Page 
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
 

i

GLOSSARY OF TERMS
3PLProvider of outsourced logistics services. In logistics and supply chain management, it means a company’s use of third-party businesses, the 3PL(s), to outsource elements of the company’s distribution, fulfillment, and supply chain management services.
ASCAccounting Standards Codification
ASUAccounting Standards Update
BNSFBurlington Northern Santa Fe Railway Company
CARESCoronavirus Aid, Relief, and Economic Security
ChemDirectFortem Invenio, Inc.
CODMChief Operating Decision Maker
COVID-19Coronavirus disease 2019, including its variants
deBoerdeBoer Transportation, Inc.
FASBFinancial Accounting Standards Board
GAAPUnited States Generally Accepted Accounting Principles
ILWU
International Longshore and Warehouse Union
IPOInitial Public Offering
KPIKey Performance Indicator
LIBORLondon InterBank Offered Rate
MLSMidwest Logistics Systems, Ltd. and affiliated entities holding assets comprising substantially all of its business.
MLSIMastery Logistics Systems, Inc.
NASDAQNational Association of Securities Dealers Automated Quotations
PMAPacific Maritime Association
PSIPlatform Science, Inc.
SECUnited States Securities and Exchange Commission
TuSimpleTuSimple Holdings, Inc. (formerly TuSimple (Cayman) Limited)
UPUnion Pacific Railroad Company
U.S.United States
WSLWatkins and Shepard Trucking, Inc. and Lodeso, Inc. These businesses were acquired simultaneously in June 2016.
ii

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current expectations, beliefs, plans, or forecasts with respect to, among other things, future events and financial performance and trends in the business and industry. The words “may,” “will,” “could,” “should,” “would,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “prospects,” “potential,” “budget,” “forecast,” “continue,” “predict,” “seek,” “objective,” “goal,” “guidance,” “outlook,” “effort,” “target,” and similar words, expressions, terms, and phrases among others, generally identify forward-looking statements, which speak only as of the date the statements were made. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks, and uncertainties. Readers are cautioned that a forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement.
The risks, uncertainties, and other factors that could cause or contribute to actual results differing materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: inflation, both in the U.S. and globally; our ability to successfully manage the demand, supply, and operational challenges and disruptions (including the impact of reduced freight volumes) associated with the COVID-19 pandemic and the associated responses of federal, state, and local governments and businesses; economic and business risks inherent in the truckload and transportation industry, including inflation and competitive pressures pertaining to pricing, capacity, and service; our ability to effectively manage tight truck capacity brought about by driver shortages and successfully execute our yield management strategies; our ability to maintain key customer and supply arrangements (including dedicated arrangements) and to manage disruption of our business due to factors outside of our control, such as natural disasters, acts of war or terrorism, disease outbreaks, or pandemics; volatility in the market valuation of our investments in strategic partners and technologies; our ability to manage and effectively implement our growth and diversification strategies and cost saving initiatives; our dependence on our reputation and the Schneider brand and the potential for adverse publicity, damage to our reputation, and the loss of brand equity; risks related to demand for our service offerings; risks associated with the loss of a significant customer or customers; capital investments that fail to match customer demand or for which we cannot obtain adequate funding; fluctuations in the price or availability of fuel, the volume and terms of diesel fuel purchase agreements, our ability to recover fuel costs through our fuel surcharge programs, and potential changes in customer preferences (e.g. truckload vs. intermodal services) driven by diesel fuel prices; fluctuations in the value and demand for our used Class 8 heavy-duty tractors and trailers; our ability to attract and retain qualified drivers and owner-operators; our reliance on owner-operators to provide a portion of our truck fleet; our dependence on railroads in the operation of our intermodal business; our ability to successfully transition from BNSF to UP as our primary intermodal rail service provider by January 2023; potential port congestion or interruptions that may result from contract negotiations between the ILWU and west coast port owners; service instability, availability, and/or increased costs from third-party capacity providers used by our business; changes in the outsourcing practices of our third-party logistics customers; difficulty in obtaining material, equipment, goods, and services from our vendors and suppliers; variability in insurance and claims expenses and the risks of insuring claims through our captive insurance company; the impact of laws and regulations that apply to our business, including those that relate to the environment, taxes, associates, owner-operators, and our captive insurance company; changes to those laws and regulations; and the increased costs of compliance with existing or future federal, state, and local regulations; political, economic, and other risks from cross-border operations and operations in multiple countries; risks associated with financial, credit, and equity markets, including our ability to service indebtedness and fund capital expenditures and strategic initiatives; negative seasonal patterns generally experienced in the trucking industry during traditionally slower shipping periods and winter months; risks associated with severe weather and similar events; significant systems disruptions, including those caused by cybersecurity events and firmware defects; exposure to claims and lawsuits in the ordinary course of business; our ability to adapt to new technologies and new participants in the truckload and transportation industry; and those risks and uncertainties discussed in (1) our most recently filed Annual Report on Form 10-K in (a) Part I, Item 1A. “Risk Factors,” (b) Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and (c) Part II, Item 8. “Financial Statements and Supplementary Data: Note 14, Commitments and Contingencies,” (2) this Quarterly Report on Form 10-Q in (a) Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” (b) Part I, Item 1. “Financial Statements: Note 12, Commitments and Contingencies,” and (c) Part II, Item 1A. “Risk Factors,” and (3) other factors discussed in filings with the SEC by the Company.
The Company undertakes no obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.

WHERE TO FIND MORE INFORMATION
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information that the Company files electronically with the SEC. These documents are also available to the public from commercial document retrieval services and at the “Investors” section of our website at www.schneider.com. Information disclosed or available on our website shall not be deemed incorporated into, or to be a part of, this Report.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCHNEIDER NATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in millions, except per share data)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2022202120222021
Operating revenues$1,675.3 $1,444.5 $5,042.7 $4,033.9 
Operating expenses:
Purchased transportation735.0 692.3 2,254.0 1,900.4 
Salaries, wages, and benefits356.0 290.2 1,034.4 832.9 
Fuel and fuel taxes133.4 70.3 390.9 204.1 
Depreciation and amortization88.2 74.2 258.3 220.5 
Operating supplies and expenses—net149.7 108.7 392.0 362.0 
Insurance and related expenses26.5 19.3 78.0 60.7 
Other general expenses41.1 35.8 178.0 97.6 
Total operating expenses1,529.9 1,290.8 4,585.6 3,678.2 
Income from operations145.4 153.7 457.1 355.7 
Other expenses (income):
Interest income(0.8)(0.6)(1.5)(1.8)
Interest expense2.1 3.3 7.1 9.7 
Other expenses (income)—net(23.6)4.0 (12.3)(14.8)
Total other expenses (income)—net (22.3)6.7 (6.7)(6.9)
Income before income taxes167.7 147.0 463.8 362.6 
Provision for income taxes41.9 37.0 116.1 91.3 
Net income125.8 110.0 347.7 271.3 
Other comprehensive income (loss):
Foreign currency translation adjustment—net(0.1)(0.1) 0.1 
Net unrealized loss on marketable securities—net of tax(1.3)(0.2)(3.9)(0.6)
Total other comprehensive loss—net(1.4)(0.3)(3.9)(0.5)
Comprehensive income$124.4 $109.7 $343.8 $270.8 
Weighted average shares outstanding178.0 177.7 177.9 177.5 
Basic earnings per share$0.71 $0.62 $1.95 $1.53 
Weighted average diluted shares outstanding178.7 177.9 178.6 177.8 
Diluted earnings per share$0.70 $0.62 $1.95 $1.53 
See notes to consolidated financial statements (unaudited).
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SCHNEIDER NATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except share data)
September 30,December 31,
20222021
Assets
Current Assets:
Cash and cash equivalents$349.7 $244.8 
Marketable securities44.6 49.3 
Trade accounts receivable—net of allowance of $10.9 million and $5.2 million, respectively
729.7 705.4 
Other receivables31.3 35.9 
Current portion of lease receivables—net of allowance of $1.4 million and $1.1 million, respectively
112.7 110.6 
Inventories43.1 27.4 
Prepaid expenses and other current assets97.2 75.1 
Total current assets1,408.3 1,248.5 
Noncurrent Assets:
Property and equipment:
Transportation equipment3,346.3 3,056.2 
Land, buildings, and improvements217.3 215.7 
Other property and equipment176.1 175.1 
Total property and equipment3,739.7 3,447.0 
Less accumulated depreciation1,538.6 1,396.0 
Net property and equipment2,201.1 2,051.0 
Lease receivables168.8 160.1 
Internal use software and other noncurrent assets299.4 237.2 
Goodwill228.3 240.5 
Total noncurrent assets2,897.6 2,688.8 
Total Assets$4,305.9 $3,937.3 
Liabilities and Shareholders’ Equity
Current Liabilities:
Trade accounts payable$374.9 $331.7 
Accrued salaries, wages, and benefits96.5 104.5 
Claims accruals—current75.0 83.9 
Current maturities of debt and finance lease obligations72.6 61.4 
Other current liabilities115.2 108.7 
Total current liabilities734.2 690.2 
Noncurrent Liabilities:
Long-term debt and finance lease obligations140.1 208.9 
Claims accruals—noncurrent94.4 88.5 
Deferred income taxes528.9 451.0 
Other noncurrent liabilities70.4 74.9 
Total noncurrent liabilities833.8 823.3 
Total Liabilities1,568.0 1,513.5 
Commitments and Contingencies (Note 12)
Shareholders’ Equity:
Preferred shares, no par value, 50,000,000 shares authorized, no shares issued or outstanding
  
Class A common shares, no par value, 250,000,000 shares authorized, 83,029,500 shares issued and outstanding
  
Class B common shares, no par value, 750,000,000 shares authorized, 95,643,248 and 95,701,868 shares issued, and 94,980,485 and 94,626,740 shares outstanding, respectively
  
Additional paid-in capital1,579.8 1,566.0 
Retained earnings1,162.0 857.8 
Accumulated other comprehensive loss(3.9) 
Total Shareholders’ Equity
2,737.9 2,423.8 
Total Liabilities and Shareholders’ Equity
$4,305.9 $3,937.3 
See notes to consolidated financial statements (unaudited).
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SCHNEIDER NATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Nine Months Ended September 30,
20222021
Operating Activities:
Net income$347.7 $271.3 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization258.3 220.5 
Gains on sales of property and equipment—net(75.2)(48.0)
Proceeds from lease receipts62.3 54.7 
Deferred income taxes72.4 21.6 
Long-term incentive and share-based compensation expense12.6 11.3 
Gains on investments in equity securities—net(15.8)(17.1)
Other noncash items—net(15.2)0.6 
Changes in operating assets and liabilities:
Receivables(26.5)(112.3)
Other assets(53.8)(53.3)
Payables5.0 68.0 
Claims reserves and other receivables—net6.3 1.1 
Other liabilities0.2 (22.4)
Net cash provided by operating activities578.3 396.0 
Investing Activities:
Purchases of transportation equipment(321.1)(296.9)
Purchases of other property and equipment(38.4)(33.4)
Proceeds from sale of property and equipment101.1 145.2 
Proceeds from sale of off-lease inventory19.9 13.2 
Purchases of lease equipment(80.4)(72.8)
Proceeds from marketable securities4.2 11.7 
Purchases of marketable securities(4.6)(11.6)
Investments in equity securities(24.1)(5.0)
Acquisition of businesses, net of cash acquired(28.1) 
Net cash used in investing activities(371.5)(249.6)
Financing Activities:
Payments of debt and finance lease obligations(61.3)(0.5)
Dividends paid(41.4)(37.2)
Other financing activities0.8  
Net cash used in financing activities(101.9)(37.7)
Net increase in cash and cash equivalents104.9 108.7 
Cash and Cash Equivalents:
Beginning of period244.8 395.5 
End of period$349.7 $504.2 
Additional Cash Flow Information:
Noncash investing and financing activity:
Transportation and lease equipment purchases in accounts payable$50.4 $43.7 
Dividends declared but not yet paid16.1 14.0 
Sale of assets in exchange for notes receivable2.3  
Cash paid during the period for:
Interest8.3 10.0 
Income taxes—net of refunds38.0 77.7 
See notes to consolidated financial statements (unaudited).
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SCHNEIDER NATIONAL, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
(in millions, except per share data)
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive IncomeTotal
Balance—December 31, 2020$ $1,552.2 $502.5 $0.8 $2,055.5 
Net income  54.8  54.8 
Other comprehensive loss   (0.7)(0.7)
Share-based compensation expense 4.5   4.5 
Dividends declared at $0.07 per share of Class A and Class B common shares  (12.6) (12.6)
Share issuances 0.1   0.1 
Exercise of employee stock options 0.7   0.7 
Shares withheld for employee taxes (2.4)  (2.4)
Balance—March 31, 2021 1,555.1 544.7 0.1 2,099.9 
Net income  106.5  106.5 
Other comprehensive income   0.5 0.5 
Share-based compensation expense 3.3   3.3 
Dividends declared at $0.07 per share of Class A and Class B common shares  (12.5) (12.5)
Share issuances 0.7   0.7 
Balance—June 30, 2021 1,559.1 638.7 0.6 2,198.4 
Net income  110.0  110.0 
Other comprehensive loss   (0.3)(0.3)
Share-based compensation expense 3.4   3.4 
Dividends declared at $0.07 per share of Class A and Class B common shares  (12.5) (12.5)
Share issuances 0.1   0.1 
Balance—September 30, 2021$ $1,562.6 $736.2 $0.3 $2,299.1 
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Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
Balance—December 31, 2021$ $1,566.0 $857.8 $ $2,423.8 
Net income  92.1  92.1 
Other comprehensive loss   (1.5)(1.5)
Share-based compensation expense 5.4   5.4 
Dividends declared at $0.08 per share of Class A and Class B common shares  (14.9) (14.9)
Share issuances 0.1   0.1 
Exercise of employee stock options 2.3   2.3 
Shares withheld for employee taxes (2.4)  (2.4)
Balance—March 31, 2022 1,571.4 935.0 (1.5)2,504.9 
Net income  129.8  129.8 
Other comprehensive loss   (1.0)(1.0)
Share-based compensation expense 3.4   3.4 
Dividends declared at $0.08 per share of Class A and Class B common shares  (14.2) (14.2)
Exercise of employee stock options 0.9   0.9 
Balance—June 30, 2022 1,575.7 1,050.6 (2.5)2,623.8 
Net income  125.8  125.8 
Other comprehensive loss   (1.4)(1.4)
Share-based compensation expense 4.1   4.1 
Dividends declared at $0.08 per share of Class A and Class B common shares  (14.4) (14.4)
Balance—September 30, 2022$ $1,579.8 $1,162.0 $(3.9)$2,737.9 
See notes to consolidated financial statements (unaudited).

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SCHNEIDER NATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. GENERAL

Nature of Operations

Schneider National, Inc. and its subsidiaries (together “Schneider,” the “Company,” “we,” “us,” or “our”) are among the largest providers of surface transportation and logistics solutions in North America. We offer a multimodal portfolio of services and possess an array of capabilities and resources that leverage artificial intelligence, data science, and analytics to provide innovative solutions that coordinate the movement of customer products timely, safely, and effectively. The Company offers truckload, intermodal, and logistics services to a diverse customer base throughout the continental United States, Canada, and Mexico, thus adding value to their supply chains.

Principles of Consolidation and Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in conformity with GAAP and the rules and regulations of the SEC applicable to quarterly reports on Form 10-Q. Therefore, these consolidated financial statements and footnotes do not include all disclosures required by GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021. Financial results for an interim period are not necessarily indicative of the results for a full year. All intercompany transactions have been eliminated in consolidation.

In the opinion of management, these statements reflect all adjustments (consisting only of normal, recurring adjustments) necessary for the fair presentation of our financial results for the interim periods presented.

Property and Equipment

Gains and losses on property and equipment are recognized at the time of sale or disposition and are classified in operating supplies and expenses—net on the consolidated statements of comprehensive income. For the three months ended September 30, 2022 and 2021, we recognized $11.4 million and $32.0 million of net gains on the sale of property and equipment, respectively, and for the nine months ended September 30, 2022 and 2021, we recognized $75.2 million and $48.0 million of net gains on the sale of property and equipment, respectively. Net gains during the nine months ended September 30, 2022 were primarily related to the sale of the Company’s Canadian facility.

Accounting Standards Recently Adopted

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This standard requires business entities to disclose information about transactions with a government that are accounted for by applying a grant or contribution model by analogy (for example, International Financial Reporting Standards guidance in International Accounting Standards 20 or guidance on contributions for not-for-profit entities in ASC 958-605), including information about the nature and significant terms and conditions of the transaction, as well as the amounts and specific financial statement line items affected by the transaction. ASU 2021-10 is effective for us beginning with our December 31, 2022 financial statements. The adoption of this standard did not have a material impact on our consolidated financial statements or disclosures.

2. ACQUISITIONS

deBoer Transportation, Inc.

We entered into a Securities Purchase Agreement, dated June 7, 2022, to acquire 100% of the outstanding equity of deBoer, a regional, dedicated carrier headquartered in Blenker, WI. The acquisition provided Schneider the opportunity to expand our tractor and trailer fleet primarily within our dedicated Truckload operations, as well as our company driver capacity. During the third quarter, the Company successfully transitioned equipment and employees from deBoer to Schneider, deBoer operations ceased, and drivers and equipment were deployed primarily within our Truckload segment.

The aggregate purchase price of the acquisition was approximately $34.6 million inclusive of certain cash and net working capital adjustments, and the assets acquired consisted primarily of rolling stock. The acquisition was accounted for under the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized on the consolidated
7


balance sheets at their fair values as of the acquisition date. The fair values of consideration transferred and net assets acquired were determined using Level 3 inputs, and the excess of the purchase price over the estimated fair value of the net assets resulted in $7.7 million of goodwill being recorded within the Truckload reportable segment at the time of acquisition. During the third quarter of 2022, $0.9 million of purchase price adjustments were made relating to deferred taxes and certain working capital amounts resulting in an adjusted goodwill balance of $6.8 million as of September 30, 2022. Certain amounts recorded in connection with the acquisition are still considered preliminary as we continue to gather the necessary information to finalize our fair value estimates and provisional amounts.

Acquisition-related costs, which consisted of fees incurred for advisory, legal, and accounting services, were $0.1 million and $0.3 million for the three and nine months ended September 30, 2022, respectively, and were included in other general expenses in the Company’s consolidated statements of comprehensive income.

Operating results for deBoer are included in our consolidated results of operations from the acquisition date. Pro forma information for this acquisition is not provided as it did not have a material impact on the Company’s consolidated operating results.

Midwest Logistics Systems, Ltd.

We entered into a Securities Purchase Agreement, dated December 31, 2021, to acquire 100% of the outstanding equity of MLS, a dedicated trucking company based in Celina, OH, and certain affiliated entities holding assets comprising substantially all of MLS’s business. MLS is a premier dedicated carrier in the central U.S. that we believe complements our growing dedicated operations.

The aggregate purchase price of the acquisition was approximately $268.8 million inclusive of $5.7 million in net working capital and other post-acquisition adjustments received in the second quarter of 2022 and a deferred payment of $3.2 million made in January 2022. Proceeds from the total purchase consideration were used to settle $26.9 million of MLS’s outstanding debt as of the acquisition date.

The acquisition of MLS was accounted for under the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized on the consolidated balance sheets at their fair values as of the acquisition date. These inputs represent Level 3 measurements in the fair value hierarchy and required significant judgments and estimates at the time of valuation. Fair value estimates of acquired property and equipment were based on an independent appraisal, giving consideration to the highest and best use of the assets. Key assumptions used in the transportation equipment appraisals were based on the market approach, while key assumptions used in the land, buildings and improvements, and other property and equipment appraisals were based on a combination of the income (direct capitalization) and sales comparison approaches, as appropriate.

The excess of the purchase price over the estimated fair values of assets acquired and liabilities assumed was recorded as goodwill within the Truckload reportable segment. The goodwill is attributable to expected synergies and growth opportunities within our dedicated business and is expected to be deductible for tax purposes.

Acquisition-related costs, which consisted of fees incurred for advisory, legal, and accounting services, were $1.9 million and were included in other general expenses in the Company’s consolidated statements of comprehensive income for the year ended December 31, 2021.

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The following table summarizes the preliminary purchase price allocation for MLS, including any adjustments during the measurement period.
Recognized amounts of identifiable assets acquired and liabilities assumed (in millions)
December 31, 2021
Opening Balance Sheet
AdjustmentsAdjusted December 31, 2021 Opening Balance Sheet
Cash and cash equivalents$ $1.8 $1.8 
Trade accounts receivable—net of allowance18.6 (6.1)12.5 
Other receivables0.9 1.5 2.4 
Prepaid expenses and other current assets1.6  1.6 
Net property and equipment148.9 (0.8)148.1 
Internal use software and other noncurrent assets 11.7 11.7 
Goodwill122.7 (19.0)103.7 
Total assets acquired292.7 (10.9)281.8 
Trade accounts payable1.8 1.6 3.4 
Accrued salaries, wages, and benefits1.7 0.9 2.6 
Claims accruals—current7.5 (3.0)4.5 
Other current liabilities7.2 (3.9)3.3 
Deferred income taxes (1.1)(1.1)
Other noncurrent liabilities 0.3 0.3 
Total liabilities assumed18.2 (5.2)13.0 
Net assets acquired$274.5 $(5.7)$268.8 

The above adjustments made during the measurement period were primarily related to working capital, property and equipment, leases, claims accruals, deferred taxes, and intangible assets. The fair values of identifiable intangible assets, including customer relationships and trademarks, were based on valuations using income-based approaches. No material statement of comprehensive income effects were identified with these adjustments. While we may continue to adjust provisional amounts through December 31, 2022, we do not anticipate any material adjustments.

Combined unaudited pro forma operating revenues of the Company and MLS would have been approximately $1,495.0 million, and $4,189.0 million, during the three and nine months ended September 30, 2021, respectively, and our earnings for the same periods would not have been materially different.

3. LEASES

As Lessee

We lease real estate and equipment under operating and finance leases. Our real estate operating leases include operating centers, distribution warehouses, offices, and drop yards. Our non-real estate operating leases and finance leases include transportation, office, yard, and warehouse equipment, in addition to truck washes. The majority of our leases include an option to extend the lease, and a small number include an option to terminate the lease early, which may include a termination payment.
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Additional information related to our leases is as follows:
Nine Months Ended
September 30,
(in millions)20222021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases$24.6 $23.3 
Operating cash flows for finance leases0.1  
Financing cash flows for finance leases1.3 0.5 
Right-of-use assets obtained in exchange for new lease liabilities
Operating leases$17.8 $23.7 
Finance leases3.8 1.2 

As of September 30, 2022, we had signed leases that had not yet commenced totaling $23.7 million. These leases will commence during the remainder of 2022 or the beginning of 2023 and have lease terms of one to seven years.

As Lessor

We finance various types of transportation-related equipment for independent third parties under lease contracts, which are generally for one to three years and are accounted for as sales-type leases with fully guaranteed residual values. Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount. This contract residual amount is estimated to approximate the fair value of the equipment. Lease payments primarily include base rentals and guaranteed residual values.

As of September 30, 2022 and December 31, 2021, investments in lease receivables were as follows:
(in millions)September 30, 2022December 31, 2021
Future minimum payments to be received on leases$204.6 $193.9 
Guaranteed residual lease values128.2 123.3 
Total minimum lease payments to be received332.8 317.2 
Unearned income(51.3)(46.5)
Net investment in leases$281.5 $270.7 

Prior to entering a lease contract, we assess the credit quality of the potential lessee using credit checks and other relevant factors, ensuring that the inherent credit risk is consistent with our existing lease portfolio. Given our leases have fully guaranteed residual values and we can take possession of the transportation-related equipment in the event of default, we do not categorize net investment in leases by different credit quality indicators upon origination. We monitor our lease portfolio weekly by tracking amounts past due, days past due, and outstanding maintenance account balances, including performing subsequent credit checks as needed. Our net investment in leases with any portion past due as of September 30, 2022 was $39.5 million, which includes both current and future lease payments.

Lease payments are generally due on a weekly basis and are classified as past due when the weekly payment is not received by its due date. As of September 30, 2022, our lease payments past due were $3.9 million.

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The table below provides additional information on our sales-type leases. Revenue and cost of goods sold are recorded in operating revenues and operating supplies and expenses—net in the consolidated statements of comprehensive income, respectively.
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)2022202120222021
Revenue$53.1 $57.2 $146.2 $169.8 
Cost of goods sold(43.5)(49.0)(121.0)(146.1)
Operating profit$9.6 $8.2 $25.2 $23.7 
Interest income on lease receivable$9.4 $8.5 $27.3 $23.6 

4. REVENUE RECOGNITION

Disaggregated Revenues

The majority of our revenues are related to transportation and have similar characteristics. MLS and deBoer revenues since the acquisition dates are included within Transportation revenues, consistent with the remainder of our Truckload segment. The following table summarizes our revenues by type of service.
Three Months Ended
September 30,
Nine Months Ended
September 30,
Disaggregated Revenues (in millions)
2022202120222021
Transportation$1,551.1 $1,326.3 $4,663.2 $3,700.4 
Logistics Management66.5 56.4 221.1 149.7 
Other57.7 61.8 158.4 183.8 
Total operating revenues$1,675.3 $1,444.5 $5,042.7 $4,033.9 

Quantitative Disclosure

The following table provides information related to transactions and expected timing of revenue recognition for performance obligations that are fixed in nature and relate to contracts with terms greater than one year as of the date shown.
Remaining Performance Obligations (in millions)
September 30, 2022
Expected to be recognized within one year
Transportation$16.9 
Logistics Management10.8 
Expected to be recognized after one year
Transportation28.9 
Logistics Management9.7 
Total$66.3 

This disclosure does not include revenue related to performance obligations that are part of a contract with an original expected duration of one year or less, nor does it include expected consideration related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice (e.g., usage-based pricing terms).

The following table provides information related to contract balances associated with our contracts with customers as of the dates shown.
Contract Balances (in millions)
September 30, 2022December 31, 2021
Other current assets—Contract assets$36.2 $33.8 
Other current liabilities—Contract liabilities4.0 3.2 

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We generally receive payment within 40 days of completion of performance obligations. Contract assets in the table above relate to revenue in transit at the end of the reporting period. Contract liabilities relate to amounts that customers paid in advance of the associated services.

Non-monetary Consideration

Occasionally we provide freight movements to customers in exchange for non-monetary services. The fair value of non-monetary consideration on these freight movements is included in operating revenues on the consolidated statements of comprehensive income and consists primarily of transportation equipment. The amount of operating revenues recorded for these services was $2.3 million and $15.6 million during the three and nine months ended September 30, 2022, respectively, and $1.3 million during the three and nine months ended September 30, 2021.

5. FAIR VALUE

Fair value is the estimated price that would be received to sell an asset or paid to transfer a liability. Inputs to valuation techniques used to measure fair value fall into three broad levels (Levels 1, 2, and 3) as follows:

Level 1—Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that we have the ability to access at the measurement date.

Level 2—Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities.

Level 3—Unobservable inputs reflecting the reporting entity’s estimates of the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The table below sets forth the Company’s financial assets that are measured at fair value on a recurring, monthly basis in accordance with ASC 820.
Fair Value
(in millions)Level in Fair
 Value Hierarchy
September 30, 2022December 31, 2021
Equity investment in TuSimple (1)
1$2.7 $12.7 
Marketable securities (2)
244.6 49.3 
(1)Our equity investment in TuSimple is classified as Level 1 in the fair value hierarchy as shares of TuSimple’s Class A common stock are traded on the NASDAQ. See Note 6, Investments, for additional information.
(2)Marketable securities are classified as Level 2 in the fair value hierarchy as they are valued based on quoted prices for similar assets in active markets or quoted prices for identical or similar assets in markets that are not active. See Note 6, Investments, for additional information.

The fair value of the Company’s debt was $197.3 million and $276.7 million as of September 30, 2022 and December 31, 2021, respectively. The carrying value of the Company’s debt was $205.0 million and $265.0 million as of September 30, 2022 and December 31, 2021, respectively. The fair value of our debt was calculated using a fixed rate debt portfolio with similar terms and maturities, which is based on the borrowing rates available to us in the applicable period. This valuation used Level 2 inputs.

The recorded values of cash, trade accounts receivable, lease receivables, and trade accounts payable approximate fair values.

As part of the MLS and deBoer acquisitions, certain assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date. Refer to Note 2, Acquisitions, for further details.

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6. INVESTMENTS

Marketable Securities

Our marketable securities are classified as available-for-sale and carried at fair value in current assets on the consolidated balance sheets. While our intent is to hold our securities to maturity, sudden changes in the market or our liquidity needs may cause us to sell certain securities in advance of their maturity date.

Any unrealized gains and losses, net of tax, are included as a component of accumulated other comprehensive income on the consolidated balance sheets, unless we determine that the amortized cost basis is not recoverable. If we determine that the amortized cost basis of the impaired security is not recoverable, we recognize the credit loss by increasing the allowance for those losses. We did not have an allowance for credit losses on our marketable securities as of September 30, 2022 or December 31, 2021. Cost basis is determined using the specific identification method.

The following table presents the maturities and values of our marketable securities as of the dates shown.
 September 30, 2022December 31, 2021
(in millions, except maturities in months)MaturitiesAmortized CostFair ValueAmortized CostFair Value
U.S. treasury and government agencies14 to 101$20.0 $17.2 $19.9 $19.6 
Corporate debt securities2 to 6017.0 15.8 20.3 20.4 
State and municipal bonds4 to 15712.4 11.6 9.1 9.3 
Total marketable securities$49.4 $44.6 $49.3 $49.3 

Equity Investments without Readily Determinable Fair Values

The Company’s primary strategic equity investments without readily determinable fair values include PSI, a provider of telematics and fleet management tools, MLSI, a transportation technology development company, and ChemDirect, a business to business digital marketplace for the chemical industry. These investments are being accounted for under ASC 321, Investments - Equity Securities, using the measurement alternative, and their combined values as of September 30, 2022 and December 31, 2021 were $86.0 million and $36.2 million, respectively. If the Company identifies observable price changes for identical or similar securities of the same issuer, the equity security is measured at fair value as of the date the observable transaction occurred using Level 3 inputs.

As of September 30, 2022, our cumulative upward adjustments were $52.0 million. The following table summarizes the activity related to these equity investments during the periods presented.
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)2022202120222021
Investment in equity securities$20.0 $ $24.0 $ 
Upward adjustments (1)
25.8 9.0 25.8 9.0 
(1)Our updated investment values in 2022 and 2021 were determined using the backsolve method, a valuation approach that primarily uses an option pricing model to value shares based on the price paid for recently issued shares.

Equity Investments with Readily Determinable Fair Values

In 2021, the Company purchased a $5.0 million non-controlling interest in TuSimple, a global self-driving technology company. Upon completion of its IPO in April 2021, our investment in TuSimple was converted into Class A common shares and is now being accounted for under ASC 321, Investments - Equity Securities. In the three and nine months ended September 30, 2022, the Company recognized a pre-tax net gain of $0.1 million and a pre-tax net loss of $10.0 million on its investment in TuSimple, respectively. In the three and nine months ended September 30, 2021, the Company recognized a pre-tax net loss of $12.1 million and a pre-tax net gain of $8.1 million, respectively. See Note 5,