The table below presents the lease-related assets and liabilities recorded on the balance sheet (in thousands):


Leases	Classification	June 30, 2019
Assets
Operating	Operating lease right-of-use assets	$	200,734
Finance	Property and equipment, net		18,927
Total leased assets		$	219,661

Liabilities
Current
Operating	Current portion of operating lease liabilities	$	58,162
Finance	Current maturities of long-term debt and finance leases		7,897
Noncurrent
Operating	Noncurrent operating lease liabilities		142,356
Finance	Long-term debt and finance leases, net of current maturities		7,831
Total lease liabilities		$	216,246

The table below presents certain information related to the lease ~~agreements expiring at various dates through October 2027. Rental expense under noncancelable~~costs for finance and operating leases ~~was approximately $20.1 million and $14.7 million for the three months ended~~(in thousands):


			Three Months		Six Months
			Ended		Ended
Lease Cost	Classification	June 30, 2019		June 30, 2019
Operating lease cost	Vehicle rents and General and other operating	$	19,072	$	39,239
Finance lease cost:
Amortization of finance lease assets	Depreciation and amortization		797		1,605
Interest on lease liabilities	Interest expense		278		596
Short-term lease cost	General and other operating		792		1,103
Total lease cost		$	20,939	$	42,543


	Six Months
	Ended June
Cash Flow Information	30, 2019
Cash paid for operating leases included in operating activities	$	39,239
Cash paid for finance leases included in operating activities	$	596
Cash paid for finance leases included in financing activities	$	4,544

Operating lease right-of-use assets obtained in exchange for lease obligations	$	54,053
Operating lease right-of-use assets and liabilities relieved in conjunction with divesture of Xpress Internacional	$	2,018


	Weighted‑Average	Weighted-
	Remaining Lease	Average
Lease Term and Discount Rate	Term (years)	Discount Rate
Operating leases	4.2	5.0	%
Finance leases	3.3	5.3	%

Page 11

As of June 30, ~~2018 and 2017, respectively, and $39.9 million and $40.2 million for the six months ended June 30, 2018 and 2017, respectively. Revenue equipment~~2019, future maturities of lease terms for new equipment are generally three to five years for tractors and five to eight years for trailers. The lease terms generally represent the estimated usage period of the equipment, which is generally substantially less than the economic lives. The Company leases certain of its revenue equipment under capital lease agreements. The terms of the capital leases expire at various dates through April 2024. Certain revenue equipment leases provide for guarantees by the Company of a portion of the specified residual value at the end of the lease term. The maximum potential amount of future payments (undiscounted) under these guarantees is approximately $28.3 million at June 30, 2018. The residual value of a portion of the related leased revenue equipment is covered by repurchase or trade agreements between the Company and the equipment manufacturer.liabilities were as follows (in thousands):


	June 30, 2019
	Finance		Operating
2019	$	2,667	$	35,232
2020		7,522		60,236
2021		4,081		49,226
2022		1,423		34,454
2023		1,423		23,187
Thereafter		296		21,893
		17,412		224,228
Less: Amount representing interest		(1,684)		(23,710)
Total	$	15,728	$	200,518

~~Page 12~~

6.	~~Related-Party Transactions~~

~~The Company had a $25.5 million note payable to a limited liability company controlled by certain officers of the Company as~~

As of December 31, ~~2017. The Company repaid the note in the amount of $26.6 million which included paid in kind interest of $8.6 million~~2018, minimum lease payments under capital and operating leases were as ~~of the payoff date.~~follows (in thousands):


	December 31, 2018
	Capital		Operating
2019	$	7,797	$	60,303
2020		7,564		42,632
2021		4,086		35,302
2022		1,427		20,751
2023		1,427		15,884
Thereafter		297		14,080
		22,598	$	188,952
Less: Amount representing interest		(2,285)
		20,313
Less: Current portion		(6,711)
	$	13,602

~~The Company leased a terminal facility from entities owned by the two principal stockholders of New Mountain Lake~~

8. Commitments and their respective family trusts. The lease agreement was set to expire in 2020. Rent expense of approximately $0.5 million and $0.5 million was recognized in connection with this lease during the six months ended June 30, 2018 and 2017, respectively. The Company purchased the terminal facility with proceeds from the offering for $7.5 million.

7.	~~Commitments and Contingencies~~

Contingencies

The Company is party to certain legal proceedings incidental to its business. The ultimate disposition of these matters, in the opinion of management, based in part on the advice of legal counsel, is not expected to have a materially adverse effect on the Company’s financial position or results of operations.

For the cases described below, management is unable to provide a meaningful estimate of the possible loss or range of loss because, among other reasons, (1) the proceedings are in various stages; (2) damages have not been sought; (3) damages are unsupported and/or exaggerated; (4) there is uncertainty as to the outcome of the proceedings, including pending appeals; and/or (5) there are significant factual issues to be resolved. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

California Wage and Hour Class Action Litigation

On December 23, 2015, a class action lawsuit was filed against us and our subsidiary U.S. Xpress, Inc. in the Superior Court of California, County of San Bernardino. The case was transferred to the U.S. District Court for the Central District of California. The putative class includes current and former truck drivers employed by us who worked or work in California after the completion of their training while residing in California since December 23, 2011 to present. The case alleges that class members were not paid for off-the-clock work, were not provided duty free meal or break times, and were not paid premium pay in their absence, were not paid minimum wage for all hours worked, were not provided accurate and complete time and pay records and were not paid all accrued wages

Page 12

at the end of their employment, all in violation of California law. The class seeks a judgment for compensatory damages and penalties, injunctive relief, attorney fees and costs and pre- and post-judgment interest. On May 2, 2019, the court dismissed on grounds of preemption the claims alleging failure to provide duty free meal and rest breaks or to pay premium pay for failure to provide such breaks under California law. The matter is currently in discovery, and a jury trial has been requested. There is ~~set for December 4, 2018.~~currently no trial date set. We are currently ~~unable~~not able to ~~determine~~predict the ~~possible loss~~probable outcome or to reasonably estimate a range of ~~loss.~~potential losses, if any. We intend to vigorously defend the merits of these claims.

Telephone Consumer Protection Act Claim

~~In December 2017, a~~

A class action was filed against usour subsidiary U.S. Xpress, Inc. in the U.S. District Court for the Western District of Virginia on December 11, 2017 and amended on March 7, 2018, alleging violations of the Telephone Consumer Protection Act, for two separate proposed classes. The putative classes ~~include~~included all persons within the United States to whom the Company either initiated a telephone call to a cellular telephone number using an automatic telephone dialing system or initiated a call to a residential telephone number using an artificial or pre-recorded voice at any time from December 11, 2013 to present. ~~The~~Prior to certification of the class, the parties reached a settlement agreement, and the court dismissed the lawsuit ~~seeks statutory damages~~with prejudice on July 23, 2019.

Stockholder Claims

As set forth below, between November 2018 and April 2019, eight substantially similar putative securities class action complaints were filed against us and certain other defendants: five in the Circuit Court of Hamilton County, Tennessee (“Tennessee State Court Cases”), two in the U.S. District Court for ~~each violation, injunctive relief~~the Eastern District of Tennessee (“Federal Court Cases”), and ~~attorneys’ fees and costs. The Company has moved to dismiss certain claims, including but not limited to claims for all purported class members residing outside~~one in the Supreme Court of the State of ~~Virginia~~New York (“New York State Court Case”). Two of the Tennessee State Court Cases and one of the Federal Court Cases have been voluntarily dismissed. All of these matters are in preliminary stages of litigation, and discovery has not yet begun. We are currently not able to predict the probable outcome or to reasonably estimate a range of potential losses, if any.

On November 21, 2018, a putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee against us, five of our officers or directors, and the seven underwriters who participated in our June 2018 initial public offering (“IPO”), alleging violations of Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”). The class action lawsuit is based on allegations that the Company made false and/or misleading statements in the registration statement and prospectus filed with the Securities and Exchange Commission (“SEC”) in connection with the IPO. The lawsuit is purportedly brought on behalf of a putative class of all persons or entities who purchased or otherwise acquired the Company’s Class A common stock pursuant and/or traceable to the IPO, and seeks, among other things, compensatory damages, costs and expenses (including attorneys’ fees) on behalf of the putative class.

On January 23, 2019, a substantially similar putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018. On March 7, 2019, this case was voluntarily dismissed by the plaintiff.

On January 30, 2019, a substantially similar putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018, and also alleging a claim under Section 12 of the Securities Act.

On February 5, 2019, a substantially similar putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018, and also alleging a claim under Section 12 of the Securities Act.

Page 13

On February 6, 2019, a substantially similar putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee, by different plaintiffs alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018. On March 19, 2019, this case was voluntarily dismissed by the plaintiff.

On March 8, 2019, a substantially similar putative class action complaint was filed in the U.S. District Court for ~~lack~~the Eastern District of ~~personal jurisdiction.~~Tennessee by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018. On May 9, 2019, this case was voluntarily dismissed by the plaintiff..

On March 14, 2019, a substantially similar putative class action complaint was filed in the Supreme Court of the State of New York, County of New York, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018. The parties have stipulated to extend the time for defendants to respond to the complaint in this matter pending resolution of the motions to dismiss filed (or to be filed) in the remaining of the Tennessee State Court Cases and the Federal Court Cases.

On April 2, 2019, a substantially similar putative class action complaint was filed in the U.S. District Court for the Eastern District of Tennessee, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against us and the same five of our officers and directors as in the action commenced on November 21, 2018. Unlike the previously filed complaints, this complaint did not name as defendants any of the seven underwriters who participated in our IPO.

The three remaining Tennessee State Court Cases have been consolidated, and discovery is currently stayed pending a decision on a motion to dismiss filed by us and the other defendants. On July 18, 2019, the court presiding over the remaining of the Federal Court Cases issued an order appointing lead plaintiff and lead counsel. Pursuant to a stipulation entered in that matter, the appointed lead plaintiff is expected to file an amended complaint.

The complaints in all the actions listed above allege that the Company made false and/or misleading statements in the registration statement and prospectus filed with the SEC in connection with the IPO, and that, as a result of such alleged statements, the plaintiffs and the members of the putative classes suffered damages. We believe the allegations made in the complaints are without merit and intend to defend ourselves vigorously in these matters.

Stockholder Derivative Action

On June 7, 2019, a stockholder derivative lawsuit was filed in the District Court for Clark County, Nevada against five of our executives and all five of our independent board members (collectively, the “Individual Defendants”), and naming the Company as a nominal defendant. The complaint alleges that the Company made false and/or misleading statements in the registration statement and prospectus filed with the SEC in connection with the IPO and that the Individual Defendants breached their fiduciary duties by causing or allowing the Company to make such statements. The complaint alleges that the Company has been damaged by the alleged wrongful conduct as a result of, among other things, being subjected to the time and expense of the securities class action lawsuits that have been filed relating to the IPO. In addition to a claim for alleged breach of fiduciary duties, the lawsuit alleges claims against the Individual Defendants for unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. The parties have stipulated to a stay of this proceeding pending the filing of an answer or a dismissal in the remaining of the Tennessee State Court Cases or the Federal Court Cases. This matter is in the preliminary stages of litigation and discovery has not yet begun. We are currently not able to predict the probable outcome or to reasonably estimate a range of potential losses, if any. We believe the allegations made in the complaint are without merit and intend to defend ourselves vigorously in these matters.

Independent Contractor Class Action

On March 26, 2019, a putative class action complaint was filed in the U.S. District Court for the Eastern District of Tennessee against us and our subsidiaries U.S. Xpress, Inc. and U.S. Xpress Leasing, Inc. The putative class

Page 14

includes individuals who performed work as lease operators, who leased equipment from us, and who were designated as independent contractors. The complaint alleges that independent contractors are improperly designated as such and should be designated as employees and thus subject to the Fair Labor Standards Act (“FLSA”). The complaint further alleges that U.S. Xpress, Inc.’s pay practices with regard to the putative class members violated the minimum wage provisions of the FLSA for the period from March 26, 2016 to present. The complaint further alleges that we violated the requirements of the Truth in Leasing Act with regard to the independent contractor agreements and lease purchase agreements we entered into with the putative class members. The complaint further alleges that we failed to comply with the terms of the independent contractor agreements and lease purchase agreements entered into with the putative class members, that we violated the provisions of the Tennessee Consumer Protection Act in advertising, describing and marketing the lease purchase program to the putative class members, and that we were unjustly enriched as a result of the foregoing allegations. The matter is not yet in discovery, and we are currently not able to predict the probable outcome or to reasonably estimate a range of potential losses, if any. We believe the allegations made in ~~discovery. We~~the complaint are without merit and intend to defend ourselves vigorously ~~defend~~against the ~~merits of these claims.~~

complaints relating to such actions.

Other

The Company had letters of credit of ~~$37.6 million and $34.5~~$31.7 million outstanding as of June 30, ~~2018 and December 31, 2017, respectively.~~2019. The letters of credit are maintained primarily to support the Company’s insurance program.

The Company had cancelable commitments outstanding at June 30, ~~2018~~2019 to acquire revenue ~~and other~~ equipment for approximately ~~$193.8~~$178.2 million during the remainder of ~~2018 and $6.1 million during~~ 2019. These purchase commitments are expected to be financed by long-term debt, operating leases, proceeds from sales of existing equipment, and cash flows from operations.

8.	~~Share-based Compensation~~

~~Stock Appreciation Rights~~

In conjunction with the offering, the Company vested all remaining stock appreciation rights (“SARS”) and settled the resulting liabilities related thereto. As a result, the Company recorded additional compensation expense in the amount of $3.2 million in the second quarter of 2018.

~~The total intrinsic value of SARS outstanding was $0.5 million as of December 31, 2017.~~

~~Page 13~~9.

~~Restricted Stock Units~~

As part of the Reorganization, all of the redeemable restricted units of New Mountain Lake were converted into restricted stock units of the Company, with the same vesting schedules. Therefore, we refer to redeemable restricted units issued prior to the Reorganization as restricted stock units. At the time of conversion, the restricted stock unit amounts were reclassified to additional paid in capital. The following is a summary of the Company’s restricted stock unit activity for the six months ended June 30, 2018:

Number of
Units

Weighted
Average
Unvested at December 31, 2017 446,000              9.14
Granted -
Vested-pre IPO 105,307              7.74
Forfeited-pre IPO 6,667              7.52
Unvested at June 13, 2018 334,026              9.62
Conversion in connection with IPO 4.6666667
Unvested post-IPO 1,558,787              2.06
Vested-post IPO 93,333              2.96
Unvested at June 30, 2018 1,465,454              2.01

These restricted stock unit grants vest over periods ranging from three to seven years. The Company recognized compensation expense of $0.6 million and $0.3 million during the six months ended June 30, Share-based Compensation

2018 and 2017, respectively. At June 30, 2018 and December 31, 2017, the Company had $2.5 million and $3.2 million in unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a period of approximately 5.2 and 5.4 years, respectively.

Omnibus Incentive Plan

In June 2018, the Board approved the 2018 Omnibus Incentive Plan (the “Incentive Plan”) to become effective in connection with the offering. The Company has reserved an aggregate of ~~3,200,000~~3.2 million shares of its Class A common stock for issuance of awards under the Incentive Plan. Participants in the Incentive Plan will be selected by the Compensation Committee from the executive officers, directors, employees and consultants of the Company. Awards under the Incentive Plan may be made in the form of stock options, stock appreciation rights, stock awards, restricted stock units, performance awards, performance units, and any other form established by the Compensation Committee pursuant to the Incentive Plan.

~~Page 14~~

~~In June 2018, the Company granted the~~

The following ~~equity awards under~~is a summary of the Incentive ~~Plan:~~Plan restricted stock and restricted stock unit activity for the six months ended June 30, 2019:


		Weighted
	Number of	Average Grant
	Units	Date Fair Value
Unvested at December 31, 2018	270,742	$	14.20
Granted	730,211		8.21
Vested	(83,157)		14.16
Forfeited	(99,523)		8.43
Unvested at June 30, 2019	818,273	$	9.55

Number of Shares Granted Vesting Period in Years Grant Date Fair Value
Restricted shares 73,158 4 $ 16.00
Restricted stock units 140,757 4 $ 16.00
Stock options 192,203 4 $ 6.09

Service based restricted stock grants vest over periods of one to five years and account for 643,273 of the unvested shares. Performance based awards account for 175,000 of the unvested shares and vest based upon achievement of certain performance goals, as defined by the Company. The Company recognized compensation expense related to service based awards of $0.6 million and $1.2 million during the three and six months ended June 30, 2019, respectively and $0 for the three and six months ended June 30, 2018. At June 30, ~~2018,~~2019, the Company had ~~$4.6~~ $5.5

Page 15

million in unrecognized compensation expense related to the ~~above~~service based restricted stock awards which is expected to be recognized over a weighted average period of approximately ~~4.0~~3.7 years. The performance based awards have $1.3 million of unrecognized compensation expense.

The following is a summary of the Incentive Plan stock option activity from December 31, 2018 to June 30, 2019:


		Weighted
	Number of	Average Grant
	Options	Date Fair Value
Unvested at December 31, 2018	177,260	$	6.09
Granted	244,785		4.41
Vested	(44,312)		6.09
Forfeited	(18,474)		6.09
Unvested at June 30, 2019	359,259	$	4.95

The stock options vest over a period of four years and expire ten years from the date of grant. The Company recognized compensation expense of $0.2 million and $0.3 million during the three and six months ended June 30, 2019, respectively and $0 for the three and six months ended June 30, 2018. The fair value of the stock option grant was estimated using the Black-Scholes method as of the grant date using the following assumptions:


Strike price	$	9.40
Risk-free interest rate		2.50	%
Expected dividend yield		—	%
Expected volatility		45.65	%
Expected term (in years)		6.25

At June 30, 2019, the Company had $1.5 million in unrecognized compensation expense related to the stock option awards which is expected to be recognized over a weighted average period of approximately 2.9 years.

Pre-IPO Restricted Stock Units

The following is a summary of the activity related to restricted stock units issued prior to the IPO for the six months ended June 30, 2019:


	Number of	Weighted
	Units	Average
Unvested at December 31, 2018	1,401,674	$	2.00
Vested	(450,221)		1.70
Forfeited	(100,006)		2.15
Unvested at June 30, 2019	851,447	$	2.14

The vesting schedule for these restricted unit grants range from 3 to 7 years. The Company recognized compensation expense of $0.1 million and $0.3 million during the three and six months ended June 30, 2019, respectively, and $0.4 million and $0.6 million during the three and six months ended June 30, 2018, respectively. At June 30, 2019, the Company had approximately $1.7 million in unrecognized compensation expense related to restricted units, which is expected to be recognized over a weighted average period of approximately 4.4 years. The fair value of the restricted units and corresponding compensation expense was determined using the income approach.

Employee Stock Purchase Plan

In June 2018, our Employee Stock Purchase Plan became effective. The Company has reserved an aggregate of 2.3 million shares of its Class A common stock for issuance of under the ESPP. Eligible employees may elect to purchase shares of our Class A common stock through payroll deductions up to 15% of eligible compensation. The

9.	~~Fair Value Measurements~~

Page 16

purchase price of the shares during each offering period will be 85% of the lower of the fair market value of our Class A common stock on the first trading day of each offering period or the last trading day of the offering period. The common stock will be purchased in January and July of each year. The first offering period commenced on January 1, 2019 and we recognized compensation expense of $0.1 million associated with the plan.

10. Fair Value Measurements

Accounting standards, among other things, define fair value, establish a framework for measuring fair value and expand disclosure about such fair value measurements. Assets and liabilities measured at fair value are based on one or more of three valuation techniques provided for in the ~~standards.~~

standard.

The standards clarify that fair value is an exit price, representing the amount that would be received to sell an asset, based on the highest and best use of the asset, or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for evaluating such assumptions, the standards establish a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value as follows:

~~Level 1~~

Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

~~Level 2~~

Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs).

~~Level 3~~

~~Unobservable inputs, only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability.~~

~~Page 15~~

Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs).

Level 3 Unobservable inputs, only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability.

The following table summarizes liabilities measured at fair value at June 30, ~~2018~~2019 and December 31, ~~2017~~2018 (in thousands):


	2019
	Fair Value		Input Level
Liabilities
Forward Contract	$	—	—


	2018
	Fair Value		Input Level
Liabilities
Forward Contract	$	1,793	3

2018
Fair Value Input Level
Liabilities
Forward Contract $ 2,156 3

Page 17

2017
Fair Value Input Level
Liabilities
Forward Contract $ 1,985 3

The following table summarizes the changes in the fair value of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):


	Six Months Ended
	June 30,
	2019		2018
Balance at beginning of year	$	1,793	$	1,985
Divesture of Xpress Internacional		(1,793)		—
Forward Contract Adjustment		—		171
Balance at end of period	$	—	$	2,156

June 30, 2018 June 30, 2017
Balance at beginning of year $ 1,985 $ 2,683
Cash Settlement - -
Forward Contract Adjustment 171 (366 )
Balance at end of period $ 2,156 $ 2,317

~~The Company has a commitment to purchase~~

At December 31, 2018, the ~~remaining 5% of Xpress Internacional no later than 2020, based on an earnings calculation. The obligation is considered a~~ physically settled forward contract was reclassified to long term liabilities associated with assets held for sale and in January 2019 relieved in conjunction with the commitment liability is included in other long-term liabilities on the accompanying unaudited condensed consolidated balance sheets. This liability is classified as Level 3 under the fair value hierarchy and is accreted through interest to equal the settlement amount at each reporting date.

~~10.~~

~~Earnings (Loss) per Share~~

disposal of Xpress Internacional.

11. Earnings per Share

Basic earnings ~~(loss)~~ per share is calculated by dividing net income ~~(loss)~~ attributable to common stockholders by the weighted average shares of common stock outstanding during the period, without consideration for common stock equivalents. Prior to the offering, there were no common stock equivalents which could have had a dilutive effect on earnings ~~(loss)~~ per share. The Company excluded ~~406,118~~759,513 and 712,750 equity awards for the three and six months ended June 30, ~~2018~~2019 as inclusion would be anti-dilutive.

~~Page 16~~

The basic and diluted earnings ~~(loss)~~ per share calculations for the three and six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, are presented below (in thousands, except per share amounts):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Net income	$	2,986	$	1,035	$	8,005	$	2,417
Net income attributable to noncontrolling interest		314		420		612		643
Net income attributable to common stockholders	$	2,672	$	615	$	7,393	$	1,774

Basic weighted average of outstanding shares of common stock		48,742		14,214		48,569		10,321
Dilutive effect of equity awards		570		242		615		122
Diluted weighted average of outstanding shares of common stock		49,312		14,456		49,184		10,443

Basic earnings per share	$	0.05	$	0.04	$	0.15	$	0.17
Diluted earnings per share	$	0.05	$	0.04	$	0.15	$	0.17

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Net income (loss) $ 1,035 $ (8,397 ) $ 2,417 $ (12,804 )
Net income attributable to noncontrolling interest 420 55 643 80
Net income (loss) attributable to common stockholders $ 615 $ (8,452 ) $ 1,774 $ (12,884 )

Basic weighted average of outstanding shares of common stock 14,214 6,385 10,321 6,385
Dilutive effect of equity awards 242 - 122 -
Diluted weighted average of outstanding shares of common stock 14,456 6,385 10,443 6,385

Basic earnings (loss) per share $ 0.04 $ (1.32 ) $ 0.17 $ (2.02 )
Diluted earnings (loss) per share $ 0.04 $ (1.32 ) $ 0.17 $ (2.02 )

~~11.~~

~~Segment Information~~

12. Segment Information

The Company’s business is organized into two reportable segments, Truckload and Brokerage.

The Truckload segment offers asset-based truckload services, including OTR trucking and dedicated contract services. These services are aggregated because they have similar economic characteristics and meet the aggregation criteria described in the accounting guidance for segment reporting. The Company’s OTR service offering provides solo and expedited team services through one-way movements of freight over routes throughout the United States and, prior to the divesture of Xpress Internacional, cross-border into and out of Mexico. The Company’s dedicated contract service offering devotes the use of equipment to specific customers and provides services through long-term contracts. The Company’s dedicated contract service offering provides similar freight transportation services, but does so pursuant to agreements where it makes equipment, drivers and on-site personnel available to a specific customer to address needs for committed capacity and service levels.

Page 18

The Company’s Brokerage segment is principally engaged in non-asset-based freight brokerage services, where it outsources the transportation of loads to third-party carriers. For this segment, the Company relies on brokerage employees to procure third-party carriers, as well as information systems to match loads and carriers.

The following table summarizes our segment information (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenues
Truckload	$	374,405	$	391,397	$	743,524	$	762,564
Brokerage		39,457		58,361		85,701		112,902
Total Operating Revenue	$	413,862	$	449,758	$	829,225	$	875,466

Operating Income
Truckload	$	7,503	$	18,590	$	17,344	$	31,093
Brokerage		1,284		1,428		4,081		3,779
Total Operating Income	$	8,787	$	20,018	$	21,425	$	34,872

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Revenues
Truckload $ 391,397 $ 332,982 $ 762,564 $ 658,876
Brokerage 58,361 37,368 112,902 75,150
Total Operating Revenue $ 449,758 $ 370,350 $ 875,466 $ 734,026

Operating Income
Truckload $ 18,590 $ 3,295 $ 31,093 $ 4,997
Brokerage 1,428 (606 ) 3,779 (380 )
Total Operating Income $ 20,018 $ 2,689 $ 34,872 $ 4,617

A measure of assets is not applicable, as segment assets are not regularly reviewed by the Chief Operating Decision Maker for evaluating performance or allocating resources.

~~Page 17~~

Information about the geographic areas in which the Company conducted business during the three and six months ended June 30, 2019 and 2018 is summarized below (in thousands). Operating revenues for foreign countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services provided in that country. If both the origin and destination are in a foreign country, the revenues are attributed to the country of origin. ~~Information about the geographic areas in which the Company conducts business is summarized below as~~In January 2019, we disposed of ~~and for the three and six months ended June 30, 2018 and 2017 (in thousands):~~our Mexican business.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenues
United States	$	413,862	$	436,227	$	826,853	$	849,078
Foreign countries
Mexico		—		13,531		2,372		26,388
Total	$	413,862	$	449,758	$	829,225	$	875,466

Page 19

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Revenues
United States $ 436,227 $ 357,721 $ 849,078 $ 708,893
Foreign countries
Mexico 13,531 12,629 26,388 25,133
Total $ 449,758 $ 370,350 $ 875,466 $ 734,026

As of As of
June 30, December 31,
2018 2017
Long-lived Assets
United States $ 450,252 $ 459,021
Foreign countries
Mexico 5,404 4,884
Total $ 455,656 $ 463,905

~~Page 18~~

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The unaudited condensed consolidated financial statements include the accounts of U.S. Xpress Enterprises, Inc., a Nevada corporation, and its consolidated subsidiaries. References in this report to “we,” “us,” “our,” the “Company,” and similar expressions refer to U.S. Xpress Enterprises, Inc. and its consolidated subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.

This report contains certain statements that may be considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation: any projections of earnings, revenues or other financial items; any statement of plans, strategies, outlook, growth prospects or objectives of management for future operations; our operational and financial targets; general economic trends, performance or conditions and trends in the industry and markets; the competitive environment in which we operate; any statements concerning proposed new services, technologies or developments; and any statement of belief and any statements of assumptions underlying any of the foregoing. In this Form ~~10-Q,~~10‑Q, statements relating to the impact of new accounting standards, future tax rates, expenses, and deductions, expected freight demand, capacity, and volumes, potential results of a default under our Credit Facility or other debt agreements, expected sources of working capital and liquidity (including our mix of debt ~~capital leases,~~ and ~~operating leases~~lease arrangements as means of financing revenue equipment), future interest expense, expected capital expenditures, expected fleet age and mix of owned versus leased equipment, expected impact of technology, including the impact of event recorders, future customer relationships, future use of dedicated contracts, future growth in independent contractors and related purchased transportation expense and fuel surcharge reimbursement, future growth of our lease-purchase program, future driver market conditions and driver turnover and retention rates, any projections of earnings, revenues, cash flows, dividends, capital expenditures, or other financial items, expected cash flows, expected operating improvements, including improvements in our Adjusted Operating ~~Ratio~~Income and working capital,any statements regarding future economic conditions or performance, any statement of plans, strategies, programs and objectives of management for future operations, including the anticipated impact of such plans, strategies, programs and objectives, future rates and prices, future utilization, future depreciation and amortization, future salaries, wages, and related expenses, including driver compensation and recognition of incentive plan awards, future insurance and claims expense, including the impact of the installation of event recorders, future fluctuations in fuel costs and fuel surcharge revenue, including the future effectiveness of our fuel surcharge program, strategies for managing fuel costs, future fluctuations in operating expenses and supplies, future fleet size and management, the market value of used equipment, including gain on sale, future residual value guarantees, any statements concerning proposed acquisition plans, new services or developments, the anticipated impact of legal proceedings on our financial position and results of operations, future incentive plan awards, excepted progress of internal control remediation efforts, among others, are forward-looking statements. Forward-looking statements may be identified by ~~the~~their use of terms or phrases such as “believe,” “may,” “could,” “expects,” “estimates,” “projects,” “anticipates,” “plans,” ~~“intends”~~“intends,” and similar terms and phrases. Such statements are based on currently available operating, financial and competitive information. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled ~~“Risk~~“Item 1A. Risk Factors,” set forth in our prospectus dated June 13, 2018, filed with the Securities and Exchange Commission (the “Commission”) pursuant to Rule 424(b) of the Securities Act, which is deemed to be part of our Registration StatementAnnual Report on Form ~~S-1 (File No. 333-224711), as amended (“Prospectus”).~~10‑K for the year ended December 31, 2018. Readers should review and consider the factors discussed in ~~“Risk~~“Item 1A. Risk Factors,” set forth in our ~~Prospectus,~~Annual Report on Form 10‑K for the year ended December 31, 2018, along with various disclosures in our press releases, stockholder reports, and other filings with the ~~Commission.~~

SEC.

All such forward-looking statements speak only as of the date of this Form ~~10-Q.~~10‑Q. You are cautioned not to place undue reliance on such forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in the events, conditions, or circumstances on which any such statement is based.

Page 20

~~Page 19~~

Overview

We are the fifth largest asset‑based truckload carrier in the United States by revenue, generating over ~~$1.5~~$1.8 billion in total operating revenue in ~~2017.~~2018. We provide services primarily throughout the United States, with a focus in the densely populated and economically diverse eastern half of the United States. We offer customers a broad portfolio of services using our own truckload fleet and third‑party carriers through our non‑asset‑based truck brokerage network. As of June 30, ~~2018,~~2019, our fleet consisted of approximately ~~6,800~~6,900 tractors and approximately ~~16,000~~15,000 trailers, including approximately ~~1,500~~2,000 tractors provided by independent contractors. All of our tractors have been equipped with electronic logs since 2012, and our systems and network are engineered for compliance with the recent federal electronic log mandate. Our terminal network and information technology infrastructure are established and capable of handling significantly larger volumes without meaningful additional investment.

For much of our history, we focused primarily on scaling our fleet and expanding our service offerings to support sustainable, multi-faceted relationships with customers. More recently, we have focused on our core service offerings and refined our network to focus on shorter, more profitable lanes with more density, which we believe are more attractive to drivers. Over the last ~~three~~four years, we have recruited and developed new executive and operational management teams with significant industry experience and instilled a new culture of professional management. These changes, which are ongoing, helped us to maintain relatively stable profitability during the weak truckload market of 2016 and early 2017, and drive significant improvements to profitability during the strong truckload market beginning in the second half of 2017. This momentum waswere reflected in our 2018 and the first quarter of 2019 financial results where we delivered the highest earnings of any first quarter in the history of the Company. During the second quarter of ~~2018,~~2019, the freight market we experienced was challenging driven by weaker than seasonal demand combined with capacity growth as a result of more favorable market conditions in 2018. This supply-demand imbalance severely pressured spot pricing through the quarter which ~~produced a 380 basis point improvement in~~adversely impacted parts of our ~~operating ratio, compared~~business. Looking forward, we expect conditions to ~~our second quarter of 2017, and a 510 basis point improvement in our Adjusted Operating Ratio for~~firm, as capacity slowly exits the market while at the same ~~period.~~ time we approach a more seasonally busy time of the year. We believe we have the strategy, management team, revenue base, modern fleet, and capital structure that position us very well to execute upon our initiatives, drive further operational gains, and deliver long term value for our stockholders. For the ~~definition~~balance of ~~Adjusted Operating Ratio~~2019 we are focused on three main priorities. The first is optimizing our Truckload network and resulting average revenue per tractor per week through repositioning equipment and allocating capacity between our Dedicated and Over-the-Road service offerings. The second is improving the experience of our professional truck drivers, including their safety and security. And, the third is advancing our technology initiatives centered on digital load matching, automated load acceptance and prioritization, and our goal of achieving a ~~reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Information.”~~

100% frictionless order.

Total revenue for the second quarter of ~~2018 increased~~2019 decreased by ~~$79.4~~$35.9 million to ~~$449.8~~$413.9 million as compared to the second quarter of ~~2017.~~2018. The ~~increase~~decrease was primarily a result of ~~an 11.4% increase~~a 32.4% decrease in ~~our average revenue per loaded mile (excluding fuel surcharge revenue), a 56.2% increase in brokerage~~Brokerage revenue to ~~$58.4~~$39.5 million, and a ~~$15.1~~$4.3 million ~~increase~~decrease in fuel surcharge revenue. Excluding the impact of fuel surcharge revenue, second quarter revenue ~~increased $64.3~~decreased $31.6 million to ~~$402.8~~$371.2 million, ~~an increase~~a decrease of ~~19.0%~~7.9% as compared to the prior year quarter.

Our Mexico operations accounted for $0 of our total operating revenue for the three months ended June 30, 2019, compared to $13.5 million in the second quarter of 2018.

Operating income for the second quarter of ~~2018~~2019 was ~~$20.0~~$8.8 million ~~which compares favorably~~compared to the ~~$2.7~~$20.0 million achieved in the second quarter of ~~2017.~~2018. Excluding ~~one-time~~ costs related to the ~~IPO completed in June 2018,~~transition of our Mexico operations and the associated gain recognized, second quarter Adjusted Operating Income was $9.3 million compared to Adjusted Operating Income of $26.5 ~~million.~~million for the second quarter of 2018, which excludes $6.4 million of IPO related costs. This decrease is primarily attributable to the challenging freight environment described above. For the definition of Adjusted Operating Income and a reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Information.” Our operating ratio for the second quarter of 2018 was 95.3% and our Adjusted Operating Ratio was 93.4%, which represents our lowest Adjusted Operating Ratio in 20 years, and we expect to see year-over-year quarterly Adjusted Operating Ratio improvement for the next six quarters, absent changes in macroeconomic conditions.

We ~~continue to see an erosion of professional driver availability. As a result, we~~ are continuing to focus on our driver centric initiatives, such as increased miles and modern equipment, to both retain the professional drivers who have chosen to partner with us and attract new professional drivers to our team. ~~We believe this focus allowed us~~In an effort to ~~offset the difficult conditions which have~~improve driver satisfaction we created a ~~significant professional~~new driver ~~supply challenge~~development program. This program provides continuous learning opportunities for our drivers with the ~~broader industry.~~goal of providing the knowledge, skills and abilities necessary for a successful career. While still early in its implementation, we are seeing positive results from those drivers who have completed this training versus those who have not. We ~~slightly increased~~are optimistic that, overtime, this training will improve our ~~tractor count during~~drivers’ satisfaction and retention while also reducing their accident rate and the ~~second quarter of 2018 and had an 11% reduction in our driver turnover percentage, which we expect will continue to improve.~~Company’s insurance expense. We will continue to focus on implementing and executing our initiatives that we expect will continue to drive sustainable improved performance over time.

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Reportable Segments

Our business is organized into two reportable segments, Truckload and Brokerage. Our Truckload segment offers truckload services, including over-the-road (“OTR”) trucking and dedicated contract services. Our OTR service offering transports a full trailer of freight for a single customer from origin to destination, typically without intermediate stops or handling pursuant to short‑term contracts and spot moves that include irregular route moves without volume and capacity commitments. Tractors are operated with a solo driver or, when handling more time‑sensitive, higher‑margin freight, a team of two drivers. Our dedicated contract service offering provides similar freight transportation services, but with contractually assigned equipment, drivers and on‑site personnel to address customers’ needs for committed capacity and service levels pursuant to multi‑year contracts with guaranteed volumes and pricing. Our Brokerage segment is principally engaged in non‑asset‑based freight brokerage services, where loads are contracted to third‑party carriers.

~~Page 20~~

Truckload Segment

In our Truckload segment, we generate revenue by transporting freight for our customers in our OTR and dedicated contract service offerings. Our OTR service offering provides solo and expedited team services through one way movements of freight over routes throughout the United States and prior to the divesture of our Mexico business, cross border into and out of Mexico. Our dedicated contract service offering devotes the use of equipment to specific customers and provides services through long term contracts. Our Truckload segment provides services that are geographically diversified but have similar economic and other relevant characteristics, as they all provide truckload carrier services of general commodities and durable goods to similar classes of customers.

We are typically paid a predetermined rate per load or per mile for our Truckload services. We enhance our revenue by charging for tractor and trailer detention, loading and unloading activities and other specialized services. Consistent with industry practice, our typical customer contracts (other than those contracts in which we have agreed to dedicate certain tractor and trailer capacity for use by specific customers) do not guarantee load levels or tractor availability. This gives us and our customers a certain degree of flexibility to negotiate rates up or down in response to changes in freight demand and trucking capacity. In our dedicated contract service offering, which comprised approximately ~~36.2%~~37.5% of our Truckload operating revenue, and approximately ~~36.8%~~38.0% of our Truckload revenue, before fuel surcharge, for ~~2017,~~2018, we provide service under contracts with fixed terms, volumes and rates. Dedicated contracts are often used by our customers with high service and high priority freight, sometimes to replace private fleets previously operated by them.

Generally, in our Truckload segment, we receive fuel surcharges on the miles for which we are compensated by customers. Fuel surcharge revenue mitigates the effect of price increases over a negotiated base rate per gallon of fuel; however, these revenues may not fully protect us from all fuel price increases. Our fuel surcharges to customers may not fully recover all fuel increases due to engine idle time, out of route miles and ~~non revenue~~non-revenue generating miles that are not generally billable to the customer, as well as to the extent the surcharge paid by the customer is insufficient. The main factors that affect fuel surcharge revenue are the price of diesel fuel and the number of revenue miles we generate. Although our surcharge programs vary by customer, we generally attempt to negotiate an additional penny per mile charge for every five cent increase in the U.S. Department of Energy’s (the “DOE”) national average diesel fuel index over an agreed baseline price. Our fuel surcharges are billed on a lagging basis, meaning we typically bill customers in the current week based on a previous week’s applicable index. Therefore, in times of increasing fuel prices, we do not recover as much as we are currently paying for fuel. In periods of declining prices, the opposite is true. Based on the current status of our empty miles percentage and the fuel efficiency of our tractors, we believe that our fuel surcharge recovery is effective.

The main factors that affect our operating revenue in our Truckload segment are the average revenue per mile we receive from our customers, the percentage of miles for which we are compensated and the number of shipments and miles we generate. Our primary measures of revenue generation for our Truckload segment are average revenue per loaded mile and average revenue per tractor per period, in each case excluding fuel surcharge revenue and revenue and miles from services in Mexico.

In our Truckload segment, our most significant operating expenses vary with miles traveled and include (i) fuel, (ii) driver related expenses, such as wages, benefits, training and recruitment and (iii) costs associated with independent

Page 22

contractors (which are primarily included in the “Purchased transportation” line item). Expenses that have both fixed and variable components include maintenance and tire expense and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency and other factors. Our main fixed costs include vehicle rent and depreciation of long term assets, such as revenue equipment and service center facilities, the compensation of ~~non driver~~non-driver personnel and other general and administrative expenses.

Our Truckload segment requires substantial capital expenditures for purchase of new revenue equipment. We use a combination of operating leases and secured financing to acquire tractors and trailers, which we refer to as revenue equipment. When we finance revenue equipment acquisitions with operating leases, we ~~do not~~ record an operating lease right of use asset orand an operating lease liability on our consolidated balance sheet, and the lease payments in respect of such equipment are reflected in our consolidated statement of comprehensive income ~~(loss)~~ in the line item “Vehicle rents.” When we finance revenue equipment acquisitions with secured financing, the asset and liability are recorded on our consolidated balance sheet, and we record expense under “Depreciation and amortization” and “Interest expense.” Typically, the aggregate monthly payments are similar under operating lease financing and secured financing. We use a mix of ~~capital~~finance leases and operating leases with individual decisions being based on competitive bids, tax projections and contractual restrictions. We expect our vehicle rents, depreciation and amortization, interest expense and amount of on balance sheet versus off balance sheet financing will be impacted by changes in the percentage of our revenue equipment acquired through operating leases versus equipment owned or acquired through capital leases. Because of the inverse relationship between vehicle rents and depreciation and amortization, we review both line items together.

~~Page 21~~

Approximately ~~22.1%~~28.9% of our total tractor fleet was operated by independent contractors at June 30, ~~2018.~~2019. Independent contractors provide a tractor and a driver and are responsible for all of the costs of operating their equipment and drivers, including interest and depreciation, vehicle rents, driver compensation, fuel and other expenses, in exchange for a fixed payment per mile or percentage of revenue per invoice plus a fuel surcharge pass through. Payments to independent contractors are recorded in the “Purchased transportation” line item. When independent contractors increase as a percentage of our total tractor fleet, our “Purchased transportation” line item typically will increase, with offsetting reductions in employee driver wages and related expenses, net of fuel (assuming all other factors remain equal). The reverse is true when the percentage of our total fleet operated by company drivers increases.

Brokerage Segment

In our Brokerage segment, we retain the customer relationship, including billing and collection, and we outsource the transportation of the loads to third‑party carriers. For this segment, we rely on brokerage employees to procure third‑party carriers, as well as information systems to match loads and carriers.

Our Brokerage segment revenue is mainly affected by the rates we obtain from customers, the freight volumes we ship through our third‑party carriers and our ability to secure third‑party carriers to transport customer freight. We generally do not have contracted long‑term rates for the cost of third‑party carriers, and we cannot assure that our results of operations will not be adversely impacted in the future if our ability to obtain third‑party carriers changes or the rates of such providers increase.

The most significant expense of our Brokerage segment, which is primarily variable, is the cost of purchased transportation that we pay to third‑party carriers, and is included in the “Purchased transportation” line item. This expense generally varies depending upon truckload capacity, availability of third‑party carriers, rates charged to customers and current freight demand and customer shipping needs. Other operating expenses are generally fixed and primarily include the compensation and benefits of non‑driver personnel (which are recorded in the “Salaries, wages and benefits” line item) and depreciation and amortization expense.

The key performance indicator in our Brokerage segment is gross margin percentage (which is calculated as ~~brokerage~~Brokerage revenue less purchased transportation expense expressed as a percentage of total operating revenue). Gross margin percentage can be impacted by the rates charged to customers and the costs of securing third‑party carriers.

Our Brokerage segment does not require significant capital expenditures and is not asset intensive like our Truckload segment.

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Use of Non‑GAAP Financial Information

In addition to our net income ~~and operating ratio~~ determined in accordance with GAAP, we evaluate operating performance using certain non-GAAP measures, including Adjusted Operating ~~Ratio and Adjusted Operating~~ Income. We define Adjusted Operating Ratio as operating expenses, net of fuel surcharge revenue, IPO related costs and gain or loss on fuel purchase arrangements, expressed as a percentage of revenue before fuel surcharge revenue. We define Adjusted Operating Income as revenue less operating ~~income,~~expenses, net of fuel surcharge revenue, IPO related costs and gain or loss on fuel purchase arrangements. We believe the use of Adjusted Operating Income and Adjusted Operating Ratio allows us to more effectively compare periods, while excluding the potentially volatile effect of changes in fuel prices (including with respect to our fuel purchase arrangements in prior years). We focus on our Adjusted Operating Income and Adjusted Operating Ratio as indicators of our performance from period to period.Mexico transition costs. We believe our presentation of Adjusted Operating Income ~~and Adjusted Operating Ratio are~~is useful because ~~they provide~~it provides investors and securities analysts the same information that we use internally to assess our core operating performance.

Management believes the use of non-GAAP measures assists investors and securities analysts in understanding the ongoing operating performance of our business by allowing more effective comparison between periods. Further, management uses non-GAAP Adjusted Operating Income on a supplemental basis to remove items that may not be an indicator of performance from period-to period.

The non-GAAP information provided is used by our management and may not be comparable to similar measures disclosed by other companies, because of differing methods used by other companies in calculating Adjusted Operating ~~Income and Adjusted Operating Ratio.~~Income. The non-GAAP measures used herein have limitations as analytical tools and ~~you~~should not be considered measures of income generated by our business or discretionary cash available to use to invest in the growth of our business. You should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Management compensates for these limitations by relying primarily on GAAP results and using non-GAAP financial measures on a supplemental basis.

~~Page 22~~

The table below compares our GAAP operating income to our ~~non-GAAP Adjusted Operating Income and our GAAP operating ratio to our~~ non‑GAAP Adjusted Operating ~~Ratio.~~Income.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(Dollars in thousands)				(Dollars in thousands)
Consolidated GAAP Presentation
Total operating revenue	$	413,862	$	449,758	$	829,225	$	875,466
Total operating expenses		405,075		429,740		807,800		840,594
Operating Income	$	8,787	$	20,018	$	21,425	$	34,872

Consolidated Non-GAAP Presentation
Total operating revenue	$	413,862	$	449,758	$	829,225	$	875,466
Fuel surcharge		(42,678)		(46,950)		(82,729)		(89,800)
Revenue, before fuel surcharge		371,184		402,808		746,496		785,666
Total operating expenses		405,075		429,740		807,800		840,594
Adjusted for:
Fuel Surcharge		(42,678)		(46,950)		(82,729)		(89,800)
Mexico transition costs		(1,200)		—		(4,600)		—
Gain on sale of subsidiary		670		—		670		—
IPO related costs		—		(6,437)		—		(6,437)
Adjusted total operating expenses		361,867		376,353		721,141		744,357
Adjusted Operating Income	$	9,317	$	26,455	$	25,355	$	41,309

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Consolidated GAAP Presentation (dollars in thousands)
Total operating revenue $ 449,758 $ 370,350 $ 875,466 $ 734,026
Total operating expenses 429,740 367,661 840,594 729,409
   Operating Income $ 20,018 $ 2,689 $ 34,872 $ 4,617
   Operating ratio 95.5 % 99.3 % 96.0 % 99.4 %

Truckload GAAP Presentation
Total Truckload operating revenue $ 391,397 $ 332,982 $ 762,564 $ 658,876
Total Truckload operating expenses 372,807 329,687 731,471 653,880
   Truckload Operating Income $ 18,590 $ 3,295 $ 31,093 $ 4,996
Truckload operating ratio 95.3 % 99.0 % 95.9 % 99.2 %

Consolidated Non-GAAP Presentation
Total operating revenue $ 449,758 $ 370,350 $ 875,466 $ 734,026
Fuel Surcharge (46,950 ) (31,887 ) (89,800 ) (63,721 )
  Revenue, before fuel surcharge 402,808 338,463 785,666 670,305
Total operating expenses 429,740 367,661 840,594 729,409
Adjusted for:
  Fuel Surcharge (46,950 ) (31,887 ) (89,800 ) (63,721 )
  IPO related costs (6,437 ) – (6,437 ) –
  Fuel purchase arrangements – (2,361 ) – (2,361 )
       Adjusted total operating expenses 376,353 333,413 744,357 663,327
       Adjusted Operating Income $ 26,455 $ 5,050 $ 41,309 $ 6,978
Adjusted Operating Ratio 93.4 % 98.5 % 94.7 % 99.0 %

Truckload Non-GAAP Presentation
Total Truckload operating revenue $ 391,397 $ 332,982 $ 762,564 $ 658,876
Fuel Surcharge (46,950 ) (31,887 ) (89,800 ) (63,721 )
  Truckload revenue, before fuel surcharge 344,447 301,095 672,764 595,155
Total operating expenses 372,807 329,687 731,471 653,880
Adjusted for:
  Fuel Surcharge (46,950 ) (31,887 ) (89,800 ) (63,721 )
  IPO related costs (6,437 ) – (6,437 ) –
  Fuel purchase arrangements – (2,361 ) – (2,361 )
       Adjusted total Truckload operating expenses 319,420 295,439 635,234 587,798
       Adjusted Truckload Operating Income $ 25,027 $ 5,656 $ 37,530 $ 7,357
Truckload Adjusted Operating Ratio 92.7 % 98.1 % 94.4 % 98.8 %

Results of Operations

Revenue

We generate revenue from two primary sources: transporting freight for our customers (including related fuel surcharge revenue) and arranging for the transportation of customer freight by third‑party carriers. We have two reportable segments: our Truckload segment and our Brokerage segment. Truckload revenue, before fuel surcharge and truckload fuel surcharge are primarily generated through trucking services provided by our two Truckload service offerings (OTR and dedicated contract). Brokerage revenue is primarily generated through brokering freight to third‑party carriers.

Page 24

~~Page 23~~

Our total operating revenue is affected by certain factors that relate to, among other things, the general level of economic activity in the United States, customer inventory levels, specific customer demand, the level of capacity in the truckload and brokerage industry, the success of our marketing and sales efforts and the availability of drivers, independent contractors and third‑party carriers.

A summary of our revenue generated by type for the three and six months ended June 30, ~~2018~~2019 and ~~2017~~2018 is as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(dollars in thousands)				(dollars in thousands)
Revenue before fuel surcharge	$	371,184	$	402,808	$	746,496	$	785,666
Fuel surcharge		42,678		46,950		82,729		89,800
Total operating revenue	$	413,862	$	449,758	$	829,225	$	875,466

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Revenue before fuel surcharge $ 402,808 $ 338,463 $ 785,666 $ 670,305
Fuel surcharge 46,950 31,887 89,800 63,721
Total operating revenue $ 449,758 $ 370,350 $ 875,466 $ 734,026

For the quarter ended June 30, ~~2018,~~2019, our total operating revenue ~~increased~~decreased by ~~$79.4~~$35.9 million, or ~~21.4%~~8.0%, compared to the same quarter in ~~2017,~~2018, and our revenue, before fuel surcharge ~~increased~~decreased by ~~$64.3~~$31.6 million, or ~~19.0%~~7.9%. Our Mexico operations accounted for $0 of our total operating revenue for the three months ended June 30, 2019, compared to $13.5 million compared to the same quarter in 2018. The primary factors driving the ~~increases~~decreases in total operating revenue and revenue, before fuel surcharge, excluding our Mexico operations, were ~~improved~~decreased volumes and pricing ~~in each of our segments and increased volumes~~ in our Brokerage segment, decreased fuel surcharge revenues and decreased miles per tractor in our Truckload segment offset slightly by improved pricing in our Truckload segment combined with increased ~~fuel surcharge~~miscellaneous revenues.

For the ~~six-month period~~six months ended June 30, ~~2018,~~2019, our total operating revenue ~~increased~~decreased by ~~$141.4~~$46.2 million, or ~~19.3%~~5.3%, compared to the same period in ~~2017,~~2018, and our revenue, before fuel surcharge ~~increased~~decreased by ~~$115.4~~$39.2 million, or ~~17.2%~~5.0%. Our Mexico operations accounted for $2.4 million of our total operating revenue for the six months ended June 30, 2019, compared to $26.4 million in the same period in 2018. The primary factors driving the ~~increases~~decreases in total operating revenue and revenue, before fuel surcharge, excluding our Mexico operations, were ~~improved~~decreased volumes and pricing ~~in each of our segments and increased volumes~~ in our Brokerage segment, decreased fuel surcharge revenues and decreased miles per tractor in our Truckload segment offset slightly by improved pricing in our Truckload segment combined with increased ~~fuel surcharge~~miscellaneous revenues. WeWhile we are not seeing the same opportunities in the spot market in 2019 compared to 2018, we expect contract rates to continue to increase sequentially during the remainder of ~~2018~~2019 and to outpace cost inflation, absent changes in the macroeconomic environment.

A summary of our revenue generated by segment for the three and six months ended June 30, ~~2018~~2019 and ~~2017~~2018 is as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(dollars in thousands)				(dollars in thousands)
Truckload revenue, before fuel surcharge	$	331,727	$	344,447	$	660,795	$	672,764
Fuel surcharge		42,678		46,950		82,729		89,800
Total Truckload revenue		374,405		391,397		743,524		762,564
Brokerage revenue		39,457		58,361		85,701		112,902
Total operating revenue	$	413,862	$	449,758	$	829,225	$	875,466

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Truckload revenue, before fuel surcharge $ 344,447 $ 301,095 $ 672,764 $ 595,155
Fuel surcharge 46,950 31,887 89,800 63,721
Total Truckload revenue 391,397 332,982 762,564 658,876
Brokerage revenue 58,361 37,368 112,902 75,150
Total operating revenue $ 449,758 $ 370,350 $ 875,466 $ 734,026

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~~Page 24~~

The following is a summary of our key Truckload segment performance indicators, before fuel surcharge and excluding miles from services in Mexico, for the three and six months ended June 30, 2019 and 2018. Average tractors, average company‑owned tractors and average independent contractor tractors exclude tractors in Mexico.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Over the road
Average revenue per tractor per week	$	3,625	$	3,957	$	3,621	$	3,890
Average revenue per mile	$	1.956	$	2.023	$	1.970	$	1.997
Average revenue miles per tractor per week		1,853		1,956		1,838		1,952
Average tractors		3,611		3,578		3,614		3,605
Dedicated
Average revenue per tractor per week	$	4,018	$	3,647	$	3,990	$	3,598
Average revenue per mile	$	2.355	$	2.234	$	2.346	$	2.209
Average revenue miles per tractor per week		1,706		1,632		1,700		1,629
Average tractors		2,674		2,721		2,666		2,672
Consolidated
Average revenue per tractor per week	$	3,792	$	3,823	$	3,777	$	3,771
Average revenue per mile	$	2.118	$	2.105	$	2.123	$	2.078
Average revenue miles per tractor per week		1,791		1,816		1,779		1,814
Average tractors		6,285		6,299		6,280		6,277

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Over the road
  Average revenue per tractor per week $ 3,957 $ 3,302 $ 3,890 $ 3,306
  Average revenue per mile $ 2.023 $ 1.785 $ 1.997 $ 1.774
  Average revenue miles per tractor per week 1,956 1,849 1,952 1,863
  Average tractors 3,578 3,837 3,605 3,835
Dedicated
  Average revenue per tractor per week $ 3,647 $ 3,735 $ 3,598 $ 3,649
  Average revenue per mile $ 2.234 $ 2.064 $ 2.209 $ 2.076
  Average revenue miles per tractor per week 1,632 1,810 1,629 1,757
  Average tractors 2,721 2,353 2,672 2,369
Consolidated
  Average revenue per tractor per week $ 3,823 $ 3,467 $ 3,771 $ 3,437
  Average revenue per mile $ 2.105 $ 1.890 $ 2.078 $ 1.885
  Average revenue miles per tractor per week 1,816 1,834 1,814 1,823
  Average tractors 6,299 6,190 6,277 6,204

For the quarter ended June 30, ~~2018,~~2019, our Truckload revenue, before fuel surcharge ~~increased~~decreased by ~~$43.4~~$12.7 million, or ~~14.4%~~3.7%, compared to the same quarter in ~~2017.~~2018. Our Mexico operations accounted for $0 of our Truckload revenue for the three months ended June 30, 2019, compared to $13.5 million in the same quarter in 2018. The primary factors driving the ~~increase~~changes in Truckload revenue, excluding Mexico operations, were an ~~11.4%~~increase of $3.9 million in miscellaneous revenue, a 0.6% increase in revenue per loaded mile partially offset by 1.4% decrease in average revenue miles per tractor and a slight decrease in the average number of tractors. During the quarter ended June 30, 2019, our OTR rates decreased 3.3% due primarily to ~~increased~~spot market rates declining more than 30% offset by an increase in our contract rates ~~and increased pricing in the spot market~~of 8.0% compared to the same quarter in 2017, combined with a slight increase in average available tractors, due to a stronger freight environment and our continued focus on executing our operating initiatives. We experienced a 9.8% decrease in our revenue miles per tractor per week in our dedicated division2018. Our Dedicated rates increased 5.4% during the quarter ~~due~~ended June 30, 2019 as compared to ~~certain accounts’ shipping patterns that performed differently than expected. We negotiated rate increases on these accounts that we expect will improve our average revenue per loaded mile~~the same period in ~~our dedicated division by approximately 3.5% sequentially.~~2018. Fuel surcharge revenue ~~increased~~decreased by ~~$15.1~~$4.3 million, or ~~47.2%~~9.1%, to ~~$47.0~~$42.7 million, compared with ~~$31.9~~$47.0 million in the same quarter in ~~2017.~~2018. The Department of Energy (“DOE”) national weekly average fuel price per gallon averaged approximately ~~$0.64~~$0.066 per gallon ~~higher in~~lower for the quarter ended June 30, ~~2018~~2019 compared to the same quarter in ~~2017.~~2018. The ~~increase~~decrease in fuel surcharge revenue primarily relates to ~~the increased~~decreased fuel prices combined with a ~~slight increase~~1.6% decrease in revenue miles compared to the same quarter in ~~2017.~~

2018.

For the six months ended June 30, ~~2018,~~2019, our Truckload revenue, before fuel surcharge ~~increased~~decreased by ~~$77.6~~$12.0 million, or ~~13.0%~~1.8%, compared to ~~2017.~~the same period in 2018. Our Mexico operations accounted for $2.4 million of our Truckload revenue for the six months ended June 30, 2019, compared to $26.4 million in the same period in 2018. The primary factors driving the ~~increase~~changes in Truckload revenue, excluding Mexico operations, were an increase of $12.4 million in miscellaneous revenue, a ~~10.2%~~2.2% increase in revenue per loaded mile ~~combined with a slight increase~~due to increased contract rates, partially offset by 1.9% decrease in average available tractors, due to a stronger freight environment and our operating improvements. During mid‑2017, the freight market began improving from its 2016 and early 2017 state and strengthened throughout the remainder of the year and through the first half of 2018.revenue miles per tractor. Fuel surcharge revenue ~~increased~~decreased by ~~$26.1~~$7.1 million, or 7.9%, to $82.7 million, compared with $89.8 million in the ~~six months ended June 30, 2018, or 40.9%, to $89.8 million, compared with $63.7 million~~same period in ~~2017.~~2018. The DOE national weekly average fuel price per gallon averaged approximately ~~$0.54~~$0.030 per gallon ~~higher in~~lower for the six months ended June 30, ~~2018~~2019 compared ~~with~~to the same period in ~~2017.~~2018. The ~~increase~~decrease in fuel surcharge revenue primarily relates to ~~the increased~~decreased fuel prices combined with ~~an approximately 1.0% increase~~a 2.2% decrease in revenue miles compared ~~with 2017.~~

to the same period in 2018.

The key performance indicator of our Brokerage segment is gross margin percentage ~~(brokerage~~(Brokerage revenue less purchased transportation expense expressed as a percentage of total operating revenue). Gross margin percentage can be

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impacted by the rates charged to customers and the costs of securing third‑party carriers. The following table lists the gross margin percentage for our Brokerage segment for the three and six months ended June 30, ~~2018~~2019 and ~~2017.~~2018.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Gross margin percentage	16.1	%	12.2	%	16.9	%	13.1	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Gross margin percentage 12.2% 10.9% 13.1% 12.3%

For the quarter ended June 30, ~~2018,~~2019, our Brokerage revenue ~~increased~~decreased by ~~$21.0~~$18.9 million, or ~~56.2%~~32.4%, compared to the same quarter in ~~2017.~~2018. The primary factors driving the ~~increase~~decrease in Brokerage revenue were a ~~21.4% increase~~29.5% decrease in load count combined with a ~~28.6% increase~~4.1% decrease in average revenue per load. ~~Average revenue per load improved due~~We experienced an increase in our gross margin to ~~stronger pricing and higher fuel prices.~~

~~Page 25~~

16.1% in the second quarter of 2019 compared to 12.2% in the same quarter of 2018 as a result of sourcing third party capacity more efficiently.

For the six months ended June 30, ~~2018,~~2019, our Brokerage revenue ~~increased~~decreased by ~~$37.8~~$27.2 million, or ~~50.2%.~~24.1%, compared to the same period in 2018. The primary factors driving the ~~increase~~decrease in Brokerage revenue were a ~~19.4% increase~~22.0% decrease in load count combined with a ~~25.7% increase~~2.7% decrease in average revenue per load. ~~Average revenue per load improved due~~We experienced an increase in our gross margin to 16.9% in the six months ended June 30, 2019, compared to 13.1% in the same period of the prior year as a ~~stronger freight market and higher fuel prices.~~

result of sourcing third party capacity more efficiently.

Operating Expenses

For comparison purposes in the discussion below, we use total operating revenue and revenue, before fuel surcharge when discussing changes as a percentage of revenue. As it relates to the comparison of expenses to revenue, before fuel surcharge, we believe that removing fuel surcharge revenue, which is sometimes a volatile source of revenue affords a more consistent basis for comparing the results of operations from period‑to‑period.

Individual expense line items as a percentage of total operating revenue also are affected by fluctuations in the percentage of our revenue generated by independent contractor and brokerage loads. Expense line items relating to fuel costs for the three and six months ended June 30, 2017 are also affected by the fuel purchase arrangements that were in place through December 31, 2017. We have determined that our fuel surcharge program adequately protects us from risks relating to fluctuating fuel prices, and accordingly, we terminated all fuel purchase arrangements as of December 31, 2017, and do not expect to enter into fuel purchase arrangements in the near term.

Salaries, Wages and Benefits

Salaries, wages and benefits consist primarily of compensation for all employees. Salaries, wages and benefits are primarily affected by the total number of miles driven by company drivers, the rate per mile we pay our company drivers, employee benefits such as health care and workers’ compensation, and to a lesser extent by the number of, and compensation and benefits paid to, non‑driver employees.

The following is a summary of our salaries, wages and benefits for the three and six months ended June 30, ~~2018~~2019 and ~~2017:~~2018:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(dollars in thousands)						(dollars in thousands)
Salaries, wages and benefits	$	130,521		$	139,701		$	255,084		$	272,625
% of total operating revenue		31.5	%		31.1	%		30.8	%		31.1	%
% of revenue, before fuel surcharge		35.2	%		34.7	%		34.2	%		34.7	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Salaries, wages and benefits $ 139,701 $ 135,214 $ 272,625 $ 265,465
% of total operating revenue 31.1 % 36.5 % 31.1 % 36.2 %
% of revenue, before fuel surcharge 34.7 % 39.9 % 34.7 % 39.6 %

For the quarter ended June 30, ~~2018,~~2019, salaries, wages and benefits ~~increased $4.5~~decreased $9.2 million, or ~~3.3%~~6.6%, compared with the same quarter in ~~2017. This increase~~2018. These decreases in absolute dollar terms ~~was~~were due primarily to $6.4 million of lower compensation expense related to the payout of our ~~SARS~~stock appreciation rights and ~~offering~~IPO bonuses ~~totaling $6.4~~during the second quarter of 2018 combined with $2.9 million ~~partially~~in decreased wages associated with the exit of our Mexico operations. Our driver wages remained essentially constant primarily due to increases in driver pay offset by ~~$3.2 million of lower driver wages as our~~a decrease in company driver miles ~~decreased 10.4% as~~of 8.7% compared to the same quarter in ~~2017.~~2018, and independent contractor miles comprising a greater percentage of our miles. Our OTR driver pay on a per mile basis increased as a result of higher ~~utilization and~~ incentive-based pay as compared to the same quarter in ~~2017.~~

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2018. Our office wages decreased primarily due to the divesture of our Mexico business. During the three months ended June 30, ~~2018,~~2019, our ~~group health and~~ workers’ compensation expense ~~decreased~~and group health claims expense increased approximately ~~3.0%~~8.5%, due to increased group health claims expense offset by positive trends in our ~~group health~~workers’ compensation claims as compared to the same quarter in ~~2017.~~

2018.

For the six months ended June 30, ~~2018,~~2019, salaries, wages and benefits ~~increased $7.2~~decreased $17.5 million, or ~~2.7%~~6.4%, compared with the same period in ~~2017. This increase~~2018. Our Mexican operations accounted for $0.5 million in salaries, wages and benefits in the six months ended June 30, 2019, compared to $5.6 million in the same period in 2018. These decreases in absolute dollar terms ~~was~~were due primarily to $6.4 million of lower compensation expense related to the payout of our ~~SARS~~stock appreciation rights and ~~offering~~IPO bonuses ~~totaling $6.4 million, partially offset by $2.0 million~~during the second quarter of ~~lower~~2018. In addition, our driver wages decreased $3.7 million as our company driver miles decreased ~~7.6%~~10.7% as compared to the same ~~period~~quarter in ~~2017.~~2018, due primarily to independent contractor miles comprising a greater percentage of our miles. Our OTR driver pay on a per mile basis increased as a result of higher ~~utilization and~~ incentive-based pay as compared to the same period in ~~2017.~~2018. Our office wages decreased primarily due to the divesture of our Mexico business. During the six months ended June 30, 2019, our workers’ compensation expense and group health claims expense decreased approximately 7.0%, due to positive trends in our workers’ compensation claims offset by increased group health claims expense as compared to the same period in 2018. In the near term, we believe salaries, wages and benefits will increase as a result of a tight driver market, wage inflation and higher healthcare costs. As a percentage of revenue, we expect salaries, wages and benefits will fluctuate based on our ability to generate offsetting increases in average revenue per total mile and the percentage of revenue generated by independent contractors and brokerage operations, for which payments are reflected in the “Purchased transportation” line item.

~~Page 26~~

Fuel and Fuel Taxes

Fuel and fuel taxes consist primarily of diesel fuel expense and fuel taxes for our company‑owned and leased tractors. The primary factors affecting our fuel and fuel taxes expense are the cost of diesel fuel, the miles per gallon we realize with our equipment and the number of miles driven by company drivers. Additionally, for the three and six months ended June 30, 2017, our fuel expense included approximately $2.4 million, respectively, in net losses under fuel purchase arrangements. These arrangements were terminated as of December 31, 2017. We believe our fuel surcharge program adequately protects us from risks relating to fluctuating fuel prices. We do not expect to enter into fuel purchase arrangements in the near term.

We believe that the most effective protection against net fuel cost increases in the near term is to maintain an effective fuel surcharge program and to operate a fuel‑efficient fleet by incorporating fuel efficiency measures, such as auxiliary heating units, installation of aerodynamic devices on tractors and trailers and low‑rolling resistance tires on our tractors, engine idle limitations and computer‑optimized fuel‑efficient routing of our fleet.

The following is a summary of our fuel and fuel taxes for the three and six months ended June 30, ~~2018~~2019 and ~~2017:~~2018:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(dollars in thousands)						(dollars in thousands)
Fuel and fuel taxes	$	47,374		$	57,704		$	94,278		$	116,093
% of total operating revenue		11.4	%		12.8	%		11.4	%		13.3	%
% of revenue, before fuel surcharge		12.8	%		14.3	%		12.6	%		14.8	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Fuel and fuel taxes $ 57,704 $ 51,712 $ 116,093 $ 102,180
% of total operating revenue 12.8 % 14.0 % 13.3 % 13.9 %
% of revenue, before fuel surcharge 14.3 % 15.3 % 14.8 % 15.2 %

For the quarter ended June 30, ~~2018,~~2019, fuel and fuel taxes ~~increased $6.0~~decreased $10.3 million, or ~~11.6%~~17.9%, compared with the same quarter in ~~2017.~~2018. The ~~increase~~decrease in fuel and fuel taxes was primarily the result of an 8.7% decrease in company driver miles, a $2.6 million decrease due to the divesture of our Mexico business, and a 2.4% increase in ~~diesel fuel prices~~our average miles per gallon compared ~~with~~to the same quarter in ~~2017, partially offset by decreased company driver miles.~~2018. The average DOE fuel price per gallon ~~increased 25.0%~~decreased 2.1% to ~~$3.19~~$3.12 per gallon in the quarter ended June 30, ~~2018,~~2019, compared to the same quarter in ~~2017, which increased the percentage of our fuel surcharge revenue passed through to independent contractors.~~

2018.

For the six months ended June 30, ~~2018,~~2019, fuel and fuel taxes ~~increased $13.9~~decreased $21.8 million, or ~~13.6%~~18.8%, compared with the same period in ~~2017.~~2018. The ~~increase~~decrease in fuel and fuel taxes was primarily the result of ana 10.7% decrease in company driver miles, a $5.1 million decrease due to the divesture of our Mexico business, and a 2.7% increase in ~~diesel fuel prices~~our average miles per gallon compared ~~with~~to the same period in ~~2017, partially offset by decreased company driver miles.~~2018. The average DOE fuel price per gallon ~~increased 21.2%~~decreased 1.0% to ~~$3.10~~$3.07 per gallon in the six months ended June 30, ~~2018~~2019, compared ~~with~~to the same period in ~~2017.~~2018.

Page 28

~~Page 27~~

To measure the effectiveness of our fuel surcharge program, we calculate “net fuel expense” by subtracting fuel surcharge revenue (other than the fuel surcharge revenue we reimburse to independent contractors, which is included in purchased transportation) ~~and gain or loss on fuel purchase arrangements~~ from our fuel expense. Our net fuel expense as a percentage of revenue, before fuel surcharge, is affected by the cost of diesel fuel net of surcharge collection, the percentage of miles driven by company tractors and our percentage of non‑revenue generating miles, for which we do not receive fuel surcharge revenues. Net fuel expense as a percentage of revenue, before fuel surcharge, is shown below:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(dollars in thousands)						(dollars in thousands)
Fuel surcharge revenue	$	42,678		$	46,950		$	82,729		$	89,800

Less: fuel surcharge revenue reimbursed to independent contractors		12,233			10,514			22,713			18,470
Company fuel surcharge revenue		30,445			36,436			60,016			71,330
Total fuel and fuel taxes	$	47,374		$	57,704		$	94,278		$	116,093
Less: company fuel surcharge revenue		30,445			36,436			60,016			71,330
Net fuel expense	$	16,929		$	21,268		$	34,262		$	44,763
% of total operating revenue		4.1	%		4.7	%		4.1	%		5.1	%
% of revenue, before fuel surcharge		4.6	%		5.3	%		4.6	%		5.7	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Fuel surcharge revenue $ 46,950 $ 31,887 $ 89,800 $ 63,721
Less: fuel surcharge revenue reimbursed to independent contractors 10,514 4,255 18,470 8,642
Company fuel surcharge revenue 36,436 27,632 71,330 55,079
Total fuel and fuel taxes $ 57,704 $ 51,712 $ 116,093 $ 102,180
Less: company fuel surcharge revenue 36,436 27,632 71,330 55,079
Less: fuel purchase arrangements - 2,361 - 2,361
Net fuel expense $ 21,268 $ 21,719 $ 44,763 $ 44,740
% of total operating revenue 4.7 % 5.9 % 5.1 % 6.1 %
% of revenue, before fuel surcharge 5.3 % 6.4 % 5.7 % 6.7 %

For the quarter ended June 30, ~~2018,~~2019, net fuel expense decreased ~~$0.5~~$4.3 million, or ~~2.1%~~20.4%, compared with the same quarter in ~~2017.~~2018. During the quarter ended June 30, ~~2018,~~2019, the decrease in net fuel expenses was primarily the result of a $2.6 million decrease due to the divesture of our Mexico business, 2.4% increase in average miles per gallon, and a decrease in the fuel surcharge per mile paid to independent contractors. Independent contractors accounted for ~~21.3%~~27.6% of the average tractors available compared to ~~11.3%~~21.3% in the same quarter of ~~2017.~~

2018.

For the six months ended June 30, ~~2018,~~2019, net fuel expense ~~remained essentially constant~~decreased $10.5 million, or 23.5%, compared with the same period in ~~2017. The average DOE fuel price per gallon increased 21.2% to $3.10 per gallon in~~2018. During the six months ended June 30, ~~2018~~2019, the decrease in net fuel expenses was primarily the result of a $5.1 million decrease due to the divesture of our Mexico business, 2.7% increase in average miles per gallon, and a decrease in the fuel surcharge per mile paid to independent contractors. Independent contractors accounted for 26.5% of the average tractors available compared ~~with~~to 19.5% in the same period ~~in 2017 and was largely offset by increases in fuel surcharge revenues.~~of 2018. In the near term, our net fuel expense is expected to fluctuate as a percentage of total operating revenue and revenue, before fuel surcharge, based on factors such as diesel fuel prices, the percentage recovered from fuel surcharge programs, the percentage of uncompensated miles, the percentage of revenue generated by independent contractors, the percentage of revenue generated by team‑driven tractors (which tend to generate higher miles and lower revenue per mile, thus proportionately more fuel cost as a percentage of revenue) ~~and the success of fuel efficiency initiatives.~~

Vehicle Rents and Depreciation and Amortization

Vehicle rents consist primarily of payments for tractors and trailers financed with operating leases. The primary factors affecting this expense item include the size and age of our tractor and trailer fleets, the cost of new equipment and the relative percentage of owned versus leased equipment.

Depreciation and amortization consists primarily of depreciation for owned tractors and trailers. The primary factors affecting these expense items include the size and age of our tractor and trailer fleets, the cost of new equipment and the relative percentage of owned equipment and equipment acquired through debt or ~~capital~~finance leases versus equipment leased through operating leases. We use a mix of ~~capital~~finance leases and operating leases to finance our revenue equipment with individual decisions being based on competitive bids and tax projections. Gains or losses realized on the sale of owned revenue equipment are included in depreciation and amortization for reporting purposes.

Vehicle rents and depreciation and amortization are closely related because both line items fluctuate depending on the relative percentage of owned equipment and equipment acquired through ~~capital~~finance leases versus equipment leased

Page 29

through operating leases. Vehicle rents increase with greater amounts of equipment acquired through operating leases, while depreciation and amortization increases with greater amounts of owned equipment and equipment acquired through ~~capital~~finance leases. Because of the inverse relationship between vehicle rents and depreciation and amortization, we review both line items together.

~~Page 28~~

The following is a summary of our vehicle rents and depreciation and amortization for the three and six months ended June 30, ~~2018~~2019 and ~~2017:~~2018:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(dollars in thousands)						(dollars in thousands)
Vehicle Rents	$	18,579		$	19,393		$	37,555		$	39,415
Depreciation and amortization, net of (gains) losses on sale of property		24,752			24,149			47,814			48,855
Vehicle Rents and Depreciation and amortization of property and equipment	$	43,331		$	43,542		$	85,369		$	88,270
% of total operating revenue		10.5	%		9.7	%		10.3	%		10.1	%
% of revenue, before fuel surcharge		11.7	%		10.8	%		11.4	%		11.2	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Vehicle Rents $ 19,393 $ 14,773 $ 39,415 $ 40,168
Depreciation and amortization, net of (gains) losses on sale of property 24,149 26,510 48,855 45,758
Vehicle Rents and Depreciation and amortization of property and equipment $ 43,542 $ 41,283 $ 88,270 $ 85,926
% of total operating revenue 9.7 % 11.1 % 10.1 % 11.7 %
% of revenue, before fuel surcharge 10.8 % 12.2 % 11.2 % 12.8 %

For the quarter ended June 30, ~~2018,~~2019, vehicle rents ~~increased $4.6~~decreased $0.8 million, or ~~31.3%~~4.2%, compared to the same quarter in ~~2017.~~2018. The ~~increase~~decrease in vehicle rents was primarily due to ~~an increase~~a decrease in the ~~number~~short term trailer rentals and the divesture of ~~tractors~~our Mexico business as compared to the same quarter in 2018. Depreciation and ~~trailers financed under operating leases, combined with~~amortization, net of (gains) losses on sale of property and equipment increased $0.6 million, or 2.5%, compared to the ~~increased costs~~same quarter in 2018.

For the six months ended June 30, 2019, vehicle rents decreased $1.9 million, or 4.7%, compared to the same period in 2018. The decrease in vehicle rents was primarily due to a decrease in the short term trailer rentals and the divesture of ~~new tractors and trailers.~~our Mexico business as compared to the same period in 2018. Depreciation and amortization, net of (gains) losses on sale of property and equipment decreased ~~$2.4~~$1.0 million, or ~~8.9%~~2.1%, compared to the same ~~quarter in 2017. The decrease was primarily due to a decrease in average tractors and trailers owned.~~

~~For the six months ended June 30, 2018, vehicle rents decreased $0.8 million, or 1.9%, compared with the same~~ period in 2017. The decrease in vehicle rents was primarily due to fewer tractors financed under operating leases offset by an increase in the number of trailers financed under operating leases and the higher cost of new trailers. Depreciation and amortization, net of (gains) losses on sale of property, increased $3.1 million, or 6.8%, compared with the same period in 2017. This increase was primarily due to an increase in average tractors owned offset by a decrease in average trailers owned.2018. Over the balance of ~~2018,~~2019, we currently plan to replace owned tractors with new owned tractors as they reach approximately 475,000 miles, and a portion of our leased tractors with owned equipment when their respective lease terminates. As a result of our 2019 replacement cycle, which is above normalized levels due to a large purchase of more fuel efficient tractors approximately four years ago, we expect the average age of our company tractor fleet will ~~keep a consistent average fleet age and the mix~~reduce from 28 months as of ~~leased versus owned tractors approximately the same~~December 31, 2018 to less than 24 months as ~~2017.~~we exit 2019. Our mix of owned and leased equipment may vary over time due to tax, financing and flexibility, among other factors. ~~We do not expect to have gains on sale of equipment during the balance of 2018.~~

Purchased Transportation

Purchased transportation consists of the payments we make to independent contractors, including fuel surcharge reimbursements paid to independent contractors, in our Truckload segment, and payments to third‑party carriers in our Brokerage segment.

The following is a summary of our purchased transportation for the three and six months ended June 30, ~~2018~~2019 and ~~2017:~~2018:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(dollars in thousands)						(dollars in thousands)
Purchased transportation	$	112,579		$	118,681		$	226,584		$	220,457
% of total operating revenue		27.2	%		26.4	%		27.3	%		25.2	%
% of revenue, before fuel surcharge		30.3	%		29.5	%		30.4	%		28.1	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Purchased transportation $ 118,681 $ 68,828 $ 220,457 $ 137,853
% of total operating revenue 26.4 % 18.6 % 25.2 % 18.8 %
% of revenue, before fuel surcharge 29.5 % 20.3 % 28.1 % 20.6 %

For the quarter ended June 30, ~~2018,~~2019, purchased transportation ~~increased $49.9~~decreased $6.1 million, or ~~72.4%~~5.1%, compared to the same quarter in ~~2017.~~2018. The decrease in purchased transportation was primarily due to an $18.9 million decrease in

Page 30

Brokerage revenue partially offset by a 29.3% increase in average independent contractors and a $1.7 million increase in fuel surcharge reimbursement to independent contractors as compared to the same quarter in 2018.

For the six months ended June 30, 2019, purchased transportation increased $6.1 million, or 2.8%, compared to the same period in 2018. The increase in purchased transportation was primarily due to ~~the $21.0 million~~a 36.3% increase in ~~Brokerage revenue,~~average independent contractors and a ~~$6.3~~$4.2 million increase in fuel surcharge reimbursement to independent contractors, ~~and~~partially offset by a ~~92.0% increase in average independent contractors compared to the same quarter in 2017.~~

~~For the six months ended June 30, 2018, purchased transportation increased $82.6~~$27.2 million ~~or 59.9%, compared with the same period in 2017. The increase in purchased transportation was primarily due to the $37.8 million increase~~decrease in Brokerage revenue ~~and $9.8 million in additional fuel surcharge reimbursement to independent contractors combined with a 66.8% increase in average independent contractors~~as compared to the same period in ~~2017.~~

~~Page 29~~

2018.

Because we reimburse independent contractors for fuel surcharges we receive, we subtract fuel surcharge revenue reimbursed to them from our purchased transportation. The result, referred to as purchased transportation, net of fuel surcharge reimbursements, is evaluated as a percentage of total operating revenue and as a percentage of revenue, before fuel surcharge, as shown below:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(dollars in thousands)						(dollars in thousands)
Purchased transportation	$	112,579		$	118,681		$	226,584		$	220,457
Less: fuel surcharge revenue reimbursed to independent contractors		12,233			10,514			22,713			18,470
Purchased transportation, net of fuel surcharge reimbursement	$	100,346		$	108,167		$	203,871		$	201,987

% of total operating revenue		24.2	%		24.1	%		24.6	%		23.1	%
% of revenue, before fuel surcharge		27.0	%		26.9	%		27.3	%		25.7	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Purchased transportation $ 118,681 $ 68,828 $ 220,457 $ 137,853
Less: fuel surcharge revenue reimbursed to independent contractors 10,514 4,255 18,470 8,642
Purchased transportation, net of fuel surcharge reimbursement $ 108,167 $ 64,573 $ 201,987 $ 129,211

% of total operating revenue 24.1 % 17.4 % 23.1 % 17.6 %
% of revenue, before fuel surcharge 26.9 % 19.1 % 25.7 % 19.3 %

For the quarter ended June 30, ~~2018,~~2019, purchased transportation, net of fuel surcharge reimbursement, ~~increased $43.6~~decreased $7.8 million, or ~~67.5%~~7.2%, compared to the same quarter in ~~2017.~~2018. This ~~increase~~decrease was primarily due to ~~the $21.0~~an $18.9 million ~~increase~~decrease in Brokerage revenue ~~combined with~~partially offset by a ~~92.0%~~29.3% increase in average independent contractors compared to the same quarter in ~~2017.~~

2018.

For the six months ended June 30, ~~2018,~~2019, purchased transportation, net of fuel surcharge reimbursement, increased ~~$72.8~~$1.9 million, or ~~56.3%~~0.9%, compared with the same period in 2017. The increase in purchased transportation was primarily due to the $37.8 million increase in Brokerage revenue combined with a 66.8% increase in average independent contractors compared to the same period in ~~2017.~~2018. This increase was primarily due to the 36.3% increase in average independent contractors, partially offset by the $27.2 million decrease in Brokerage revenue compared to the period in 2018. This expense category will fluctuate with the number and percentage of loads hauled by independent contractors and third‑party carriers, as well as the amount of fuel surcharge revenue passed through to independent contractors. If industry‑wide trucking capacity continues to tighten in relation to freight demand, ~~especially in light of the electronic logging device (“ELD”) mandate that is expected to reduce capacity,~~ we may need to increase the amounts we pay to third‑party carriers and independent contractors, which could increase this expense category on an absolute basis and as a percentage of total operating revenue and revenue, before fuel surcharge, absent an offsetting increase in revenue. ~~We continue to actively attempt to expand our Brokerage segment and recruit independent contractors.~~ Our recent success in growing our lease-purchase program and independent contractor drivers have contributed to increased purchased transportation expense. If we are successful in continuing these efforts, we would expect this line item to increase as a percentage of total operating revenue and revenue, before fuel surcharge.

Operating Expenses and Supplies

Operating expenses and supplies consist primarily of ordinary vehicle repairs and maintenance costs, driver on‑the‑road expenses, tolls and advertising expenses related to driver recruiting. Operating expenses and supplies are primarily affected by the age of our company‑owned and leased fleet of tractors and trailers, the number of miles driven in a period and driver turnover.

Page 31

~~Page 30~~

The following is a summary of our operating expenses and supplies for the three and six months ended June 30, ~~2018~~2019 and ~~2017:~~2018:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(dollars in thousands)						(dollars in thousands)
Operating expenses and supplies	$	29,968		$	29,073		$	57,913		$	58,864
% of total operating revenue		7.2	%		6.5	%		7.0	%		6.7	%
% of revenue, before fuel surcharge		8.1	%		7.2	%		7.8	%		7.5	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Operating expenses and supplies $ 29,073 $ 33,167 $ 58,864 $ 64,539
% of total operating revenue 6.5 % 9.0 % 6.7 % 8.8 %
% of revenue, before fuel surcharge 7.2 % 9.8 % 7.5 % 9.6 %

For the quarter ended June 30, ~~2018,~~2019, operating expenses and supplies ~~decreased $4.1~~increased $0.9 million, or ~~12.3%~~3.1%, compared to the same quarter in ~~2017.~~2018. The increase was primarily due to increased driver recruiting and hiring costs partially offset by $1.7 million decreased operating expenses and supplies related to the divesture of our Mexico business.

For the six months ended June 30, 2019, operating expenses and supplies decreased $1.0 million, or 1.6%, compared to the same period in 2018. The decrease was primarily due to decreased ~~trailer maintenance expense as the average age has declined by 11 months from the average age at June 30, 2017, combined with a reduction in~~ tractor maintenance expense as a result of increased independent contractors ~~compared~~and $3.0 million decreased operating expenses and supplies related to the ~~same quarter in 2017.~~divesture of our Mexico business partially offset by increased driver hiring and recruiting costs. Independent contractors are responsible for the maintenance of their tractor and now account for ~~21.3%~~26.5% of the total average tractors compared to ~~11.3%~~19.5% in the prior year ~~quarter.~~

For the six months ended June 30, 2018, operating expenses and supplies decreased by $5.7 million, or 8.8%, compared with the same period in 2017. This decrease was attributable primarily to decreased trailer maintenance expense as the average age has declined by 10 months from the average age at June 30, 2017, combined with a reduction in tractor maintenance expense as a result of increased independent contractors compared to the same period in 2017. Independent contractors accounted for 19.5% of the total average tractors compared to 11.8% in the prior year period. During the six months ended June 30, 2018, our company tractor maintenance cost per mile remained constant despite the average tractor fleet age increasing five months compared to the same period in 2017. Generally, as equipment ages, the maintenance costs increase on a per‑mile basis. However, our preventive maintenance initiatives have contributed to a meaningful improvement in our cost of operating expenses and supplies on a cost per company mile basis.

Insurance Premiums and Claims

Insurance premiums and claims consists primarily of retained amounts for liability (personal injury and property damage), physical damage and cargo damage, as well as insurance premiums. The primary factors affecting our insurance premiums and claims are the frequency and severity of accidents, trends in the development factors used in our actuarial accruals and developments in large, prior year claims. The number of accidents tends to increase with the miles we travel. With our significant retained amounts, insurance claims expense may fluctuate significantly and impact the cost of insurance premiums and claims from period‑to‑period, and any increase in frequency or severity of claims or adverse loss development of prior period claims would adversely affect our financial condition and results of operations.

We renewed our liability insurance policies on September 1, 2018 and reduced our deductible to $3.0 million per occurrence.

The following is a summary of our insurance premiums and claims expense for the three and six months ended June ~~2018~~30, 2019 and ~~2017:~~2018:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(dollars in thousands)						(dollars in thousands)
Insurance premiums and claims	$	19,266		$	19,165		$	43,619		$	39,335
% of total operating revenue		4.7	%		4.3	%		5.3	%		4.5	%
% of revenue, before fuel surcharge		5.2	%		4.8	%		5.8	%		5.0	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Insurance premiums and claims $ 19,165 $ 17,582 $ 39,335 $ 35,024
% of total operating revenue 4.3 % 4.7 % 4.5 % 4.8 %
% of revenue, before fuel surcharge 4.8 % 5.2 % 5.0 % 5.2 %

For the quarter ended June 30, ~~2018,~~2019, insurance premiums and claims ~~increased $1.6 million, or 9.0%,~~remained essentially constant compared to the same quarter in ~~2017.~~2018.

For the six months ended June 30, 2019, insurance premiums and claims increased $4.3 million, or 10.9%, compared to the same period in 2018. Insurance premiums and claims increased primarily due to ~~an increase in liability claims frequency and severity combined with~~ increased physical damage ~~frequency~~and liability claims primarily as a result of adverse weather in the first quarter of 2019 as compared to the same ~~quarter in 2017.~~

~~Page 31~~

Table of ~~2017. The increase in operating taxes and licenses for the quarter and six months ended June 30, 2018 was primarily due to a permit fee refund recorded in the second quarter of 2017.~~Contents

~~For the six months ended June 30, 2018, insurance premiums and claims increased by $4.3 million, or 12.3%, compared with the same~~ period in ~~2017. The increase in~~2018. We do not expect our insurance and claims ~~was primarily due~~experience in the first six months of 2019 to ~~increased frequency and severity of liability claims combined with increased frequency of physical damage claims compared to the prior year period.~~be ongoing. During the fourth quarter of 2017, we began installing event recorders on our tractors, and we ~~have~~had installed event recorders in substantially all of our tractors in our fleet as of ~~June 30,~~the second quarter of 2018. We believe event recorders will give us the ability to better train our drivers with respect to safe driving behavior, which in turn may help reduce insurance costs over time. We expect to begin seeing measurable results from the event recorder installation in the second half of 2019.

~~Operating Taxes and Licenses~~

Page 32

For the quarter ended June 30, 2018, operating taxes and licenses increased $0.4 million, or 13.3%, compared to the same quarter in 2017. For the six months ended June 30, 2018, operating taxes and licenses increased by $0.4 million, or 6.9%, compared with the same period

~~Communications and Utilities~~

For the quarter ended June 30, 2018, communications and utilities increased $0.5 million, or 24.2%, compared to the same quarter in 2017. Communications and utilities increased as we began installing event recorders in the fourth quarter of 2017 and have installed event recorders in substantially all of our tractors in our fleet as of June 30, 2018. For the six months ended June 30, 2018, communications and utilities increased by $1.0 million, or 24.7%, compared with the same period ended in 2017. This line item has historically fluctuated slightly due to changes in revenue equipment tracking, information technology and communications costs.

General and Other Operating Expenses

General and other operating expenses consist primarily of driver recruiting costs, legal and professional services fees, general and administrative expenses and other costs.

The following is a summary of our general and other operating expenses for the ~~three and six months ended June 30, 2018 and 2017:~~periods indicated:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(dollars in thousands)						(dollars in thousands)
General and other operating expenses	$	17,115		$	15,940		$	34,594		$	33,149
% of total operating revenue		4.1	%		3.5	%		4.2	%		3.8	%
% of revenue, before fuel surcharge		4.6	%		4.0	%		4.6	%		4.2	%

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
General and other operating expenses $ 15,940 $ 14,825 $ 33,149 $ 28,037
% of total operating revenue 3.5 % 4.0 % 3.8 % 3.8 %
% of revenue, before fuel surcharge 4.0 % 4.4 % 4.2 % 4.2 %

For the quarter ended June 30, ~~2018,~~2019, general and other operating expenses increased ~~$1.1~~$1.2 million, or ~~7.5%~~7.4%, compared to the same quarter in ~~2017.~~2018. General and other ~~operating~~ expenses increased primarily due to higher driver hiring costs combined with increased professional and ~~other~~ administrative ~~expenses.~~

costs partially offset by $1.3 million in lower expenses related to the divesture of our Mexico business.

For the six months ended June 30, ~~2018,~~2019, general and other operating expenses increased ~~$5.1~~$1.4 million, or ~~18.2%~~4.4%, compared ~~with~~to the same period in ~~2017,~~2018. General and other expenses increased primarily due to ~~approximately $2.6 million related to our IPO,~~higher driver hiring costs combined with increased professional and administrative ~~expenses and higher driver hiring related costs. Excluding the impact of IPO-related expenses, we expect general and other operating expenses to increase~~costs partially offset by $2.3 million in ~~the future due in part to higher driver recruiting costs~~lower expenses related to the ~~tightening driver market.~~

divesture of our Mexico business.

Interest

Interest expense consists of cash interest, amortization of original issuance discount and deferred financing fees and purchase commitment interest related to our obligation to acquire the remaining equity interest in Xpress Internacional.

~~Page 32~~

In January 2019, we sold our interest in Xpress Internacional and were relieved of this obligation.

The following is a summary of our interest expense for the three and six months ended June 30, ~~2018~~2019 and ~~2017:~~2018:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(dollars in thousands)				(dollars in thousands)
Interest expense, excluding non-cash items	$	5,142	$	11,563	$	10,586	$	23,398
Original issue discount and deferred financing amortization		154		516		313		1,387
Purchase commitment interest		—		219		—		171
Interest expense, net	$	5,296	$	12,298	$	10,899	$	24,956

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Interest expense, excluding non-cash items 11,563 12,440 23,398 22,334
Original issue discount and deferred financing amortization 516 732 1,387 1,456
Purchase commitment interest 219 (266 ) 171 (366 )
Interest expense, net $ 12,298 $ 12,906 $ 24,956 $ 23,424

For the quarter ended June 30, ~~2018,~~2019, interest expense decreased ~~$0.9~~$7.0 million, primarily due to decreased equipment and revolver borrowings combined with lower interest rates related to our term loan compared to the same quarter in ~~2017. We had 64.9% of~~2018.

For the six months ended June 30, 2019, interest expense decreased $14.1 million, primarily due to decreased equipment and revolver borrowings combined with lower interest rates related to our ~~tractors financed with equipment installment notes in the second quarter of 2018,~~term loan compared to ~~71.8% during~~ the ~~second quarter of 2017.~~same period in 2018. Based on the repayment of our prior credit arrangements in connection with the IPO, ~~of our prior term loan facility, the 2007 term note and the borrowings outstanding under our prior revolving credit facility,~~ along with the entry into our existing Credit Facility, we expect our interest expense will ~~be reduced by $30.0~~approximate $22.0 million ~~on an annual basis.~~in 2019.

For the six months ended June 30, 2018, interest expense increased $1.1 million compared to the same period in 2017, primarily due to the conversion of approximately 2,700 tractors from operating leases to secured financing in March 2017.

Page 33

~~Equity in (Income)Loss of Affiliated Companies~~

We hold non‑controlling investments in the following entities, which are accounted for using the equity method of accounting and are reflected as a component of other long‑term assets in our consolidated balance sheets: (i) Xpress Global Systems, in which we received preferred and common equity interests representing 10% of the outstanding equity interests of Xpress Global Systems Acquisition, the purchaser of our Xpress Global Systems business in our April 2015 disposition of substantially all of our equity in that business; (ii) Parker Global Enterprises, into which we contributed substantially all of the assets and liabilities of Arnold Tranportation Services, Inc. and its affiliates, and in which we hold a 45% investment; (iii) Dylka Distribuciones Logisti K, S.A. DE C.V, and XPS Logisti-K Systems, S.A. P.I. de C.V., providers of intra‑Mexico transportation services and brokerage and brokerage services, respectively, which are controlled by certain members of the management team of Xpress Internacional; and (iv) DriverTech, the provider of our in‑cab communication units.

We record our share of the net income or loss of our equity method investees in “Equity in loss of affiliated companies.” The amount of losses recorded reduces the carrying amount of our non‑controlling investments. Once our portion of net losses in a non‑controlling investment exceeds its carrying amount, we carry our equity method investment as zero until such time as the investee’s cumulative income exceeds cumulative losses.

~~Income Taxes~~

~~The following is a summary of our income tax benefit for the three and six months ended June 30, 2018 and 2017:~~

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(dollars in thousands)
Income (loss) before Income Taxes $ (156 ) $ (10,658 ) $ 1,819 $ (18,999 )
Income tax benefit (1,191 ) (2,261 ) (598 ) (6,195 )
Effective tax rate 763.5 % 21.2 % -32.9 % 32.6 %

For the three and six months ended June 30, 2018, our effective tax rate is not a meaningful percentage as a result of interest expense associated with our legacy capital structure and one-time costs related to the offering. We anticipate the 2018 effective tax rate to be between 27% and 29%.

~~Page 33~~

Liquidity and Capital Resources

Overview

Our business requires substantial amounts of cash to cover operating expenses as well as to fund capital expenditures, working capital changes, principal and interest payments on our obligations, lease payments, letters of credit to support insurance requirements and tax payments when we generate taxable income. Recently, we have financed our capital requirements with borrowings under our Credit Facility, cash flows from operating activities, direct equipment financing, operating leases and proceeds from equipment sales.

We make substantial net capital expenditures to maintain a modern company tractor fleet, refresh our trailer fleet and strategically expand our fleet. Over the balance of 2018, we plan to replace tractors under operating leases that expire with newly leased tractors and, in the case of owned tractors, replace such owned tractors with new owned tractors as they reach approximately 475,000 miles and we expect the mix of owned versus leased tractors will approximate the same as 2017. Our mix of owned and leased equipment may vary over time due to tax, financing and flexibility, among other factors.

We believe we can fund our expected cash needs, including debt repayment, in the short‑term with projected cash flows from operating activities, borrowings under our Credit Facility and direct debt and lease financing we believe to be available for at least the next 12 months. Over the long‑term, we expect that we will continue to have significant capital requirements, which may require us to seek additional borrowings, lease financing or equity capital. We have obtained a significant portion of our revenue equipment under operating leases, which are not reflected as net capital ~~expenditures or as debt on our balance sheet. See “—Off Balance Sheet Arrangements.”~~expenditures. The availability of financing and equity capital will depend upon our financial condition and results of operations as well as prevailing market conditions.

At June 30, ~~2018,~~2019, we had approximately ~~$37.6~~$31.7 million of outstanding letters of credit, $0$0.8 million in outstanding borrowings and ~~$112.4~~$117.5 million of availability under our $150.0 million revolving credit facility. At December 31, 2017, we had approximately $34.5 million of outstanding letters of credit, $29.3 million in outstanding borrowings, a borrowing base of $155.0 million and $91.2 million of availability under our then existing $155.0 million revolving credit facility.

~~Page 34~~

Sources of Liquidity

Credit Facility

In June 2018, we entered into a new credit facility (the “Credit Facility”) that contains a $150.0 million revolving component (the “Revolving Facility”) and a $200.0 million term loan component (the “Term Facility”). The Credit Facility contains an accordion feature that, so long as no event of default exists, allows us to request an increase in the borrowing amounts under the Revolving Facility or the Term Facility by a combined maximum amount of $75.0 million. Borrowings under the Credit Facility are classified as either “base rate loans” or “Eurodollar rate loans.” Base rate loans accrue interest at a base rate equal to the agent’s prime rate plus an applicable margin that iswas set at 1.25% through September 30, 2018 and adjusted quarterly thereafter between 0.75% and 1.50% based on our consolidated net leverage ratio. Eurodollar rate loans will accrue interest at London Interbank Offered Rate, or a comparable or successor rate approved by the administrative agent, plus an applicable margin that iswas set at 2.25% through September 30, 2018 and adjusted quarterly thereafter between 1.75% and 2.50% based on our consolidated net leverage ratio. The Credit Facility requires payment of a commitment fee on the unused portion of the Revolving Facility commitment of between 0.25% and 0.35% based on our consolidated net leverage ratio. In addition, the Revolving Facility includes, within its $150.0 million revolving credit facility, a letter of credit sub facility in an aggregate amount of $75.0 million and a swingline sub facility in an aggregate amount of $15.0 million. The Term Facility has scheduled quarterly principal payments between 1.25% and 2.50% of the original face amount of the Term Facility plus any additional amount borrowed pursuant to the accordion feature of the Term ~~Facility, with the first such payment to occur on the last day of our fiscal quarter ending September 30, 2018.~~Facility. The Credit Facility will mature on June 18, 2023.

Page 34

At June 30, ~~2018,~~2019, the Revolving Facility had issued collateralized letters of credit in the face amount of ~~$37.6~~$31.7 million, with $0$0.8 borrowings outstanding and ~~$112.4~~$117.5 million available to ~~borrow.~~

borrow and the Term Facility had $190.0 million outstanding.

~~Secured Notes Payable~~

We have outstanding mortgage notes payable on three of our real property locations, including our two headquarters properties in Chattanooga, Tennessee and our facility in Springfield, Ohio. At June 30, 2018, the aggregate outstanding principal balance of these mortgages was $19.5 million, with interest at rates ranging from 5.25% to 6.99% and maturity dates through September 2031.

~~Equipment Installment Notes~~

We routinely finance the purchase of equipment, and at June 30, 2018, we had notes payable with a weighted average interest rate of approximately 4.5% per annum and an aggregate outstanding principal balance of $147.1 million, which were secured by the equipment purchased with the proceeds of such notes payable.

~~Page 35~~

~~Miscellaneous Notes~~

At June 30, 2018, we had outstanding other principal indebtedness of $2.1 million. This other indebtedness is evidenced by various promissory notes bearing interest at rates ranging from 3.5% to 7.0% and maturing at various dates through August 2021.

~~Capital Lease Obligations~~

We lease certain revenue and other operating equipment under capital lease obligations. At June 30, 2018, we had capital lease obligations with an aggregate outstanding principal balance of $23.6 million secured by the equipment and maturity dates through April 2024.

Cash Flows

Our summary statements of cash flows for the three and six months ended June 30, ~~2018~~2019 and ~~2017~~2018 are set forth in the table below:


	Six Months Ended
	June 30,
	2019		2018
	(dollars in thousands)
Net cash provided by operating activities	$	57,573	$	19,099
Net cash used in investing actitivies	$	(90,355)	$	(48,009)
Net cash provided by financing activities	$	14,666	$	26,186

Six Months Ended
June 30,
2018 2017
(dollars in thousands)
Net cash provided by operating activities $ 19,099 $ 6,817
Net cash used in investing actitivies $ (48,009 ) $ (214,947 )
Net cash provided by financing activities $ 26,186 $ 209,040

Operating Activities

For the six months ended June 30, ~~2018,~~2019, we generated cash flows from operating activities of ~~$19.1~~$57.6 million, an increase of ~~$12.3~~$38.5 million compared to the same period in ~~2017.~~2018. The increase was due primarily to a ~~$32.3~~$32.0 million ~~increase~~decrease in our operating assets and liabilities and a $7.5 million interest paid in kind decrease offset by a decrease of $1.0 million in net income adjusted for noncash items, offset by an $11.5 million increase in our operating assets and liabilities combined with $8.6 million of paid in kind interest. The increase in net income adjusted for noncash items was primarily attributable to a 10.2% increase in revenue per loaded mile, increased volumes and overall improved operating performance in the six months ended June 30, 2018 as compared to the same period in 2017, partially offset by increased operating expenses and general and other corporate expenses.items. Our operating assets and liabilities ~~increased $11.5~~decreased $32.0 million during the six months ended June 30, ~~2018~~2019 as compared to the same period in ~~2017,~~2018, due in part to ~~an increase in~~increased accounts receivable ~~related to increased operating revenue,~~collections, and decreased payments for accounts payable and other accrued liabilities partially offset by an increase in accrued wages and ~~benefits due~~benefit payments related to ~~the~~ timing of payments.

Investing Activities

For the six months ended June 30, ~~2018,~~2019, net cash flows used in investing activities were ~~$48.0~~$90.4 million, ~~a decrease~~an increase of ~~$166.9~~$42.3 million compared to the same period in ~~2017.~~2018. This ~~decrease~~increase is primarily the result of ~~decreased~~increased equipment purchases as compared to the same period in ~~2017. During~~2018, combined with the ~~first quarter~~cash disposed in conjunction with the sale of ~~2017, we converted approximately 2,700 tractors operating leases to secured financing.~~our Mexico subsidiary. We expect our net capital expenditures for ~~2018~~calendar year 2019 will approximate ~~$170.0~~$110.0 million to ~~$190.0~~$130.0 million to execute our equipment replacement strategy and will be financed with cash from operations, borrowings on our line of credit and secured ~~debt. This is primarily the result of the mix of this year’s equipment replacements which will be 100% purchased with no planned off balance sheet~~debt financing.

Financing Activities

For the six months ended June 30, ~~2018,~~2019, net cash flows ~~generated~~provided by financing activities were ~~$26.2~~$14.7 million, a decrease of ~~$182.9~~$11.5 million compared to the same period in ~~2017.~~2018. The decrease is primarily due to ~~decreased revenue equipment borrowings~~the purchase of the remaining 10% of Total Transportation for $8.7 million as compared to the same ~~quarter~~period in ~~2017.~~2018. During ~~the first quarter~~June of ~~2017, we converted approximately 2,700 tractors operating leases to secured financing. During June~~ 2018, we completed our IPO and received approximately $247.1 million in cash net of expenses. The proceeds from the IPO were primarily used to pay down existing debt resulting in a net decrease of ~~approximately~~ $236.2 ~~million.~~

~~Page 36~~

~~Operating Leases~~

In addition to the net cash capital expenditures discussed above, we also acquired revenue equipment with operating leases. In the second quarter of 2018, we terminated tractor and trailer operating leases with originating values of $1.2 million and $0.4 million, respectively. In the second quarter of 2017, we acquired tractors through operating leases with gross values of $3.3 million, which were offset by operating lease terminations with originating values of $1.8 million for tractors. We acquired trailers through operating leases in the second quarter of 2017 with gross values of $2.9 million, which were offset by operating lease terminations with originating values of $1.0 million for trailers.

Working Capital

As of June 30, ~~2018,~~2019, we had a working capital ~~surplus~~deficit of ~~$15.8~~$39.0 million, representing a ~~$26.4~~$54.7 million ~~increase~~decrease in our working capital from June 30, ~~2017, primarily resulting from~~2018. Our current liabilities increased ~~customer receivables partially offset~~ by ~~increased accounts payable and accrued wages and benefits.~~$58.2 million as a result of the adoption of the new lease standard. When we analyze our working capital, we typically exclude balloon payments in the current maturities

Page 35

of long-term debt as these payments are typically either funded with the proceeds from equipment sales or addressed by extending the maturity of such payments. We believe this facilitates a more meaningful analysis of our changes in working capital from period-to-period. Excluding balloon payments included in current maturities of long-term debt and the current portion of our operating lease liability as of June 30, ~~2018,~~2019, we had a working capital surplus of ~~$66.6~~$58.1 million, compared with a working capital ~~deficit~~surplus of ~~$6.5~~$66.6 million at June 30, ~~2017.~~

2018. Excluding only the balloon payments included in current maturities of debt, we had a working capital deficit of $0.1 million at June 30, 2019.

Working capital deficits are common to many trucking companies that operate by financing revenue equipment purchases through borrowing, or ~~capitalized leases.~~lease arrangements. When we finance revenue equipment through borrowing or ~~capitalized~~lease arrangements, the principal amortization or, in the case of operating leases, the ~~principal amortization~~present value of the lease payments scheduled for the next twelve months, is categorized as a current liability, although the revenue equipment isand operating lease right of use assets are classified as a long-term ~~asset.~~assets. Consequently, each ~~purchase~~acquisition of revenue equipment financed with borrowing, or ~~capitalized leases~~lease arrangements decreases working capital. We believe a working capital deficit has little impact on our liquidity. Based on our expected financial condition, net capital expenditures, results of operations, related net cash flows, installment notes, and other sources of financing, we believe our working capital and sources of liquidity will be adequate to meet our current and projected needs and we do not expect to experience material liquidity constraints in the foreseeable future.

~~Contractual Obligations~~

~~The table below summarizes our contractual obligations as of June 30, 2018:~~

Payments Due by Period
Less than 1 year 1-3 years 3-5 years More than 5 years Total
(dollars in thousands)
Long-term debt obligations (1) $ 117,058 $ 97,934 $ 188,657 $ 17,411 $ 421,060
Capital lease obligations (2) 9,093 10,545 4,957 1,010 25,605
Operating lease obligations (3) 73,969 86,225 43,128 20,055 223,377
Purchase obligations (4) 193,820 6,104 - - 199,924
Other obligations (5) 1,149 3,224 - 4,373
Total contractual obligations (6) $ 395,089 $ 204,032 $ 236,742 $ 38,476 $ 874,339

~~(1)~~	~~Including interest obligations on long-term debt, excluding fees. The table assumes long-term debt is held to maturity and does not reflect events subsequent to June 30, 2018.~~
~~(2)~~	~~Including interest obligations on capital lease obligations.~~
~~(3)~~	We lease certain revenue and service equipment and office and service center facilities under long‑term, non‑cancelable operating lease agreements expiring at various dates through October 2027. Revenue equipment lease terms are generally three to five years for tractors and five to eight years for trailers. The lease terms and any subsequent extensions generally represent the estimated usage period of the equipment, which is generally substantially less than the economic lives. Certain revenue equipment leases provide for guarantees by us of a portion of the specified residual value at the end of the lease term. The maximum potential amount of future payments (undiscounted) under these guarantees is approximately $28.3 million at June 30, 2018. The residual value of a portion of the related leased revenue equipment is covered by repurchase or trade agreements between us and the equipment manufacturer.
~~(4)~~	We had commitments outstanding at June 30, 2018 to acquire revenue equipment and event recorders. The revenue equipment commitments are cancelable, subject to certain adjustments in the underlying obligations and benefits. These purchase commitments are expected to be financed by operating leases, long‑term debt, proceeds from sales of existing equipment and cash flows from operating activities.
~~(5)~~	Represents a commitment to purchase remaining 5% interest in Xpress Internacional in 2020, based on projected earnings calculation and to fund the remaining purchase price of a small truckload carrier we acquired in 2017.
~~(6)~~	~~Excludes deferred taxes and long or short‑term portion of self‑insurance claims accruals.~~

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~~Off-Balance Sheet~~

Operating Lease Arrangements

We leased approximately ~~2,158~~1,767 tractors and ~~5,966~~7,323 trailers under operating leases at June 30, ~~2018.~~2019. Operating leases have been an important source of financing for our revenue equipment. ~~Tractors and trailers held under operating leases are not carried on our consolidated balance sheets, and lease~~Lease payments in respect of such equipment are reflected in our unaudited condensed consolidated statements of ~~operations~~comprehensive income in the line item “Vehicle rents.” Our revenue equipment rental expense including short term rentals was ~~$18.2~~$18.6 million in the second quarter of ~~2018,~~2019, compared with ~~$13.6~~$19.4 million in the second quarter of ~~2017. The total amount of remaining payments under operating leases as of June 30, 2018 was approximately $223.4 million, of which $212.3 million was related to revenue equipment.~~2018. The lease terms generally represent the estimated usage period of the equipment, which is generally substantially less than the economic lives. Certain revenue equipment leases provide for guarantees by us of a portion of the specified residual value at the end of the lease term. The maximum potential amount of future payments (undiscounted) under these guarantees is approximately ~~$28.3~~$62.6 million as of June 30, ~~2018.~~2019. The residual value of a portion of the related leased tractor equipment is covered by repurchase or trade agreements between us and equipment manufacturers. We expect the fair market value of the equipment at the end of the lease term will be approximately equal to the residual value.

Seasonality

In the trucking industry, revenue has historically decreased as customers reduce shipments following the winter holiday season and as inclement weather impedes operations. At the same time, operating expenses have generally increased, with fuel efficiency declining because of engine idling and weather, causing more physical damage equipment repairs and insurance claims and costs. For the reasons stated, first quarter results historically have been lower than results in each of the other three quarters of the year. Over the past several years, we have seen increases in demand at varying times, including surges between Thanksgiving and the year‑end holiday season.

Contractual Obligations

During the six months ended June 30, 2019, there were no material changes in our commitments or contractual obligations.

Critical Accounting Policies

We have reviewed our critical accounting policies and considered whether any new critical accounting estimates or other significant changes to our accounting policies require any additional disclosures. We adopted ASC 842, Leases, on January 1, 2019. See Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements included under Part 1, Item 1 of this report. There have been no other significant changes to ~~these~~our accounting policies since the disclosures made in our ~~Prospectus.~~Annual Report on Form 10‑K for the year ended December 31, 2018.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risks have not changed materially from the market risks reported in our ~~Prospectus~~

Annual Report on Form 10‑K for the year ended December 31, 2018.

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in ~~Rule 13a-15(e)~~Rules 13a‑15(e) and ~~15d-15(e)~~15d‑15(e) under the Exchange Act) as of June 30, ~~2018.~~2019. This evaluation is performed to determine if our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Due to the material weaknesses described below and the Company’s evaluation, the CEO and CFO have concluded that our disclosure controls and procedures were not effective as of June 30, ~~2018.~~

2019.

~~Page 38~~

Material Weaknesses

in Internal Control over Financial Reporting as of December 31, 2018

As described in our ~~Prospectus,~~Annual Report on Form 10‑K for the year ended December 31, 2018, during the course of preparing for our IPO, we identified material weaknesses in our internal control over financial ~~reporting.~~reporting, some of which continue to exist as of June 30, 2019. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. We did not maintain effective internal control over financial reporting related to the control activities component of Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, the COSO framework. The control activities material weakness contributed to the following additional material weaknesses: (i) ineffective design of information technology general computer controls with respect to program development, change management, computer operations, and user ~~access, as well as inappropriate segregation of duties with respect to creating and posting journal entries;~~access; (ii) ineffective design of controls over income tax accounting; and (iii) insufficient evidential matter to support design of our controls. ~~While these~~These deficiencies did not result in a material misstatement to ~~the~~our annual or interim consolidated financial ~~statements included in the Prospectus, the income tax material weakness described above did result in a revision to the 2016 financial~~ statements. ~~There~~However, there is a risk that these deficiencies could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or ~~detected~~detected.

Remediation of a Component of a Previously Disclosed Material Weakness

.The material weakness related to the ineffective design of information technology general controls with respect to program management, change management computer operations and user access also included a component related to inappropriate segregation of duties with respect to creating and posting journal entries.

We have remediated the component of the material weakness related to segregation of duties over creating and posting journal entries by designing, implementing, and testing controls to ensure that journal entries posted into the general ledger are reviewed by a separate individual, thus resulting in proper segregation of duties.

Changes in Internal Control Over Financial Reporting

We are currently in the process of remediating the above material weaknesses and have taken numerous steps to enhance our internal control environment and address the underlying causes of the material weaknesses. These efforts include designing and implementing the appropriate ITinformation technology general ~~computer~~ controls ~~including ensuring proper segregation of duties with respect to creating and posting journal entries,~~ and controls over income tax accounting. In addition, we are enhancing our process to retain evidential matter that supports the design and implementation of our controls. We are committed to maintaining a strong internal control environment, and we expect to continue our efforts to ensure the material weaknesses described above are remediated. While we intend to complete our

Page 37

remediation process as quickly as possible, we cannot estimate a time when the remediation will be complete. Other than the implementation of these additional controls there were no changes in our internal control over financial reporting that occurred during the ~~period covered by this report~~quarter ended June 30, 2019 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management, including our CEO and CFO, recognize that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

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PART II OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

We are involved in various other litigation and claims primarily arising in the normal course of business, which include claims for personal injury or property damage incurred in the transportation of freight. Our insurance program for liability, physical damage and cargo damage involves varying risk retention levels. Claims in excess of these risk retention levels are covered by insurance in amounts that management considers to be adequate. Based on its knowledge of the facts and, in certain cases, advice of outside counsel, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a materially adverse effect on us. Information relating to legal proceedings is included in Note 7 to our unaudited condensed consolidated financial statements, and is incorporated herein by reference.

ITEM 1A.RISK FACTORS

~~There have been no material changes from~~

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. Our Annual Report on Form 10‑K for the ~~risk factors disclosed~~year ended December 31, 2018, in the ~~Prospectus.~~

section entitled "Item 1A. Risk Factors," describes some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Use~~

During the quarter ended June 30, 2019, we did not engage in unregistered sales of ~~Proceeds~~

~~On June 13, 2018, the Registration Statement~~securities or any other transactions required to be reported under this Item 2 of Part II on Form ~~S-1 (Registration No. 333-224711) for~~10‑Q.

The payment of cash dividends is currently limited by our ~~IPO was declared effective by~~financing arrangements, including certain covenants under the Commission. The offering commenced on June 14, 2018 and did not terminate until the sale of all of the shares offered. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC acted as co-lead managing underwriters for the IPO.

We registered an aggregate of 20,764,400 shares of our Class A common stock (including 1,388,000 shares offered for sale by certain of our stockholders named in our Prospectus and 2,708,400 shares registered to cover the underwriters’ option to purchase additional shares, which were also offered for sale by certain of our stockholders). On June 18, 2018, we closed our IPO, in which we sold 16,668,000 shares of our Class A common stock and the selling stockholders sold 4,046,400 shares of our Class A common stock. The shares sold and issued in the IPO included the full exercise of the underwriters’ option to purchase additional shares from the selling stockholders. The shares were sold at a public offering price of $16.00 for an aggregate gross offering price of approximately $332.2 million. We received net proceeds of approximately $250.0 million, after deducting underwriting discounts and commissions of approximately $16.7 million, but before deducting offering expenses. At the time of the offering we had approximately $4.8 million in unpaid offering expenses. Thus, we received net proceeds of approximately $245.2 million, after deducting underwriting discounts and commissions and offering expenses. We used approximately $237.7 million of the net proceeds to repay (i) our then-existing term loan facility, including breakage fees, (ii) a portion of the borrowings outstanding under our then-existing revolving credit facility and (iii) a 2007 term note and (b) approximately $7.5 million of the net proceeds for the purchase of the Tunnel Hill, Georgia, real estate we historically have leased from Q&F Realty, a related party. Except for the purchase of the Tunnel Hill, Georgia real estate from Q&F Realty, a related party, none of the expenses were paid to, and none of the net proceeds were used to, make payments to our directors, officers or persons owning 10% or more of our common stock, or to their associates or our affiliates. There has been no material change in the planned use of proceeds from our IPO as described in our Prospectus.

Credit Facility.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.OTHER INFORMATION

Not applicable.

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~~Page 40~~

ITEM 6.

~~ITEM 6.~~	~~EXHIBITS~~
Exhibit Number	Description
~~Exhibit~~ ~~Number~~ 3.1	~~Description~~
~~3.1~~	Second Amended and Restated Articles of Incorporation of U.S. Xpress Enterprises, Inc., dated and effective as of June 8, 2018 (incorporated by reference to Exhibit 3.1 filed with the Company’s Registration Statement on Form ~~S-1/~~S‑1/A (File No. ~~333-224711)~~333‑224711) filed on June 11, 2018).
3.2	Second Amended and Restated Bylaws of U.S. Xpress Enterprises, Inc., dated and effective as of ~~June 8, 2018~~May 24, 2019 (incorporated by reference to Exhibit 3.2 filed with the Company’s ~~Registration Statement~~Current Report on Form ~~S-1/A (File No. 333-224711)~~8-K filed on ~~June 11, 2018).~~
~~10.1~~*	First Amendment to the New Mountain Lake Holdings, LLC Restricted Membership Units Plan, dated as of June 8, 2018 (incorporated by reference to Exhibit 10.36 filed with the Company’s Registration Statement on Form S-1/A (File No. 333-224711) filed on June 11, 2018).
~~10.2~~*	U.S. Xpress Enterprises, Inc. 2018 Omnibus Incentive Plan, dated as of June 8, 2018 (incorporated by reference to Exhibit 4.5 filed with the Company’s Registration Statement on Form S-8 (File No. 333-225701) filed on June 18, 2018).
~~10.3~~*	U.S. Xpress Enterprises, Inc. Employee Stock Purchase Plan, dated as of June 8, 2018 (incorporated by reference to Exhibit 4.6 filed with the Company’s Registration Statement on Form S-8 (File No. 333-225701) filed on June 18, 2018).
~~10.4~~*	Form of Restricted Stock Award Notice for use under the U.S. Xpress Enterprises, Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 filed with the Company’s Registration Statement on Form S-1 (File No. 333-224711) filed on May ~~7, 2018)~~31, 2019).
~~10.5~~* 10.1	~~Form of Stock Option Award Notice for use under the U.S. Xpress Enterprises, Inc. 2018 Omnibus Incentive Plan (incorporated by reference~~ Amendment to ~~Exhibit 10.3 filed with the Company’s Registration Statement on Form S-1 (File No. 333-224711) filed on May 7, 2018).~~
~~10.6~~*	Form of Restricted Stock Unit Award Notice for Directors for use under the U.S. Xpress Enterprises, Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.4 filed with the Company’s Registration Statement on Form S-1 (File No. 333-224711) filed on May 7, 2018).
~~10.7~~*	Amended and Restated Employment Agreement between U.S. Xpress Enterprises, Inc. and Eric Fuller, dated April 30, 2018 (incorporated by reference to Exhibit 10.7 filed with the Company’s Registration Statement on Form S-1 (File No. 333-224711) filed on May 7, 2018).
~~10.8~~*	Amended and Restated Employment Agreement between U.S. Xpress Enterprises, Inc. and Eric Peterson, dated April 30, 2018 (incorporated by reference to Exhibit 10.8 filed with the Company’s Registration Statement on Form S-1 (File No. 333-224711) filed on May 7, 2018).
~~10.9~~*	Amended and Restated Employment Agreement between U.S. Xpress Enterprises, Inc. and Max Fuller, dated April 30, 2018 (incorporated by reference to Exhibit 10.9 filed with the Company’s Registration Statement on Form S-1 (File No. 333-224711) filed on May 7, 2018).
~~10.10~~*	Amended and Restated Employment Agreement between U.S. Xpress Enterprises, Inc. and Lisa Quinn Pate, dated April 30, 2018 (incorporated by reference to Exhibit 10.10 filed with the Company’s Registration Statement on Form S-1/A (File No. 333-224711) filed on May 23, 2018).
~~10.11~~*	Amended and Restated Employment and Noncompetition Agreement between U.S. Xpress Enterprises, Inc. and John White, dated April 30, 2018 (incorporated by reference to Exhibit 10.11 filed with the Company’s Registration Statement on Form S-1 (File No. 333-224711) filed on May 7, 2018).
~~10.12~~*	Amended and Restated Employment and Noncompetition Agreement between U.S. Xpress Enterprises, Inc. and Leigh Anne Battersby, dated April 30, 2018 (incorporated by reference to Exhibit 10.12 filed with the Company’s Registration Statement on Form S-1 (File No. 333-224711) filed on May 7, 2018).
~~10.13~~#	Credit Agreement, dated June 18, 2018, by and among the Company, the Guarantors party thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., as joint lead arrangers and joint bookrunners, and Bank of America, N.A., as Administrative Agent, Swingline Lender, and L/C Issuer.
~~10.14~~#	Stockholders’ Agreement, dated ~~June 13, 2018,~~May 24, 2019, by and among the Company, Lisa M. Pate, Anna Marie Quinn 2012 Irrevocable Trust FBO Lisa M. Pate, Quinn Family Partners, L.P., Patrick Quinn Non-GST Marital Trust, Patrick Quinn GST Marital Trust, Patrick Quinn GST Tennessee Gap Trust, Patrick Brian Quinn, Anna Marie Quinn 2012 Irrevocable Trust FBO Patrick Brian Quinn, Anna Marie Quinn 2012 Irrevocable Trust FBO Renee A. Daly, Renee A. Daly, Max L. Fuller, Fuller Family Enterprises, LLC, William E. Fuller, Max L. Fuller 2008 Irrevocable Trust FBO William E. Fuller, Max Fuller Family Limited Partnership, Max L. Fuller 2008 Irrevocable Trust FBO Stephen C. Fuller, and Max L. Fuller 2008 Irrevocable Trust FBO Christopher M. ~~Fuller.~~Fuller (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8K filed on May 31, 2019).
~~10.15~~# 31.1#	Registration Rights Agreement, dated June 13, 2018, by and among the Company, Lisa M. Pate, Anna Marie Quinn 2012 Irrevocable Trust FBO Lisa M. Pate, Quinn Family Partners, L.P., Patrick Quinn Non-GST Marital Trust, Patrick Quinn GST Marital Trust, Patrick Quinn GST Tennessee Gap Trust, Patrick Brian Quinn, Anna Marie Quinn 2012 Irrevocable Trust FBO Patrick Brian Quinn, Anna Marie Quinn 2012 Irrevocable Trust FBO Renee A. Daly, Max L. Fuller, Fuller Family Enterprises, LLC, William E. Fuller, Max L. Fuller 2008 Irrevocable Trust FBO William E. Fuller, Max Fuller Family Limited Partnership, Max L. Fuller 2008 Irrevocable Trust FBO Stephen C. Fuller, and Max L. Fuller 2008 Irrevocable Trust FBO Christopher M. Fuller.
~~31.1~~#	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 Eric Fuller, the ~~Company's~~Company’s Principal Executive Officer
~~31.2~~# 31.2#	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 Eric Peterson, the ~~Company's~~Company’s Principal Financial Officer
~~32.1~~## 32.1##	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Eric Fuller, the ~~Company's~~Company’s Chief Executive Officer
~~32.2~~## 32.2##	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Eric Peterson, the ~~Company's~~Company’s Chief Financial Officer
~~101.INS~~ 101.INS#	XBRL Instance Document
~~101.SCH~~ 101.SCH#	XBRL Taxonomy Extension Schema Document
~~101.CAL~~ 101.CAL#	XBRL Taxonomy Extension Calculation Linkbase Document
~~101.DEF~~ 101.DEF#	XBRL Taxonomy Extension Definition Linkbase Document
~~101.LAB~~ 101.LAB#	XBRL Taxonomy Extension Labels Linkbase Document
~~101.PRE~~ 101.PRE#	XBRL Taxonomy Extension Presentation Linkbase Document

* Management contract or compensatory plan or arrangement.

# Filed herewith.

## Furnished herewith.

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