YELLOW CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)


This Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "MD&A", contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. See the introductory section immediately prior to "Part I" and Risk Factors
in "Item 1A" of this report regarding these statements.

Overview

This management report includes the following sections:

Our business: a brief description of our business and a discussion of how we evaluate our operating results

Consolidated results of operations: an analysis of our consolidated results of operations for the years ended December 31, 20212020 and 2019

Certain Non-GAAP Financial Measures: an analysis of our results using certain
non-GAAP financial measures, for the years ended December 31, 2021, 2020 and
2019

Financial Condition, Liquidity and Capital Resources: a discussion of our major
sources and uses of cash as well as an analysis of our cash flows and certain
contractual obligations and commercial commitments



Our business

Yellow Corporation is a holding company that, through its operating
subsidiaries, offers our customers a wide range of transportation services. The
Company has one of the largest, most comprehensive LTL networks in North America
with local, regional, national and international capabilities. Through its team
of experienced service professionals, the Company offers industry-leading
expertise in LTL shipments and flexible supply chain solutions, ensuring
customers can ship industrial, commercial and retail goods with confidence.

We measure our business performance using several metrics, but primarily (but not limited to) operating revenue, operating profit (loss), and operating ratio. We also use certain non-GAAP financial measures as secondary measures to assess our operating performance.

Operating Revenue: Our operating revenue has two primary components: volume
(commonly evaluated using tonnage, tonnage per day, number of shipments,
shipments per day or weight per shipment) and yield or price (commonly evaluated
using picked up revenue, revenue per hundredweight or revenue per shipment).
Yield includes fuel surcharge revenue, which is common in the trucking industry
and represents an amount charged to customers that adjusts with changing fuel
prices. We base our fuel surcharges on the U.S. Department of Energy fuel index
and adjust them weekly. Rapid material changes in the index or our cost of fuel
can positively or negatively impact our revenue and operating income as a result
of changes in our fuel surcharge. We believe that fuel surcharge is an accepted
and important component of the overall pricing of our services to our customers.
Without an industry accepted fuel surcharge program, our base pricing for our
transportation services would require changes. We believe the distinction
between base rates and fuel surcharge has blurred over time, and it is
impractical to clearly separate all the different factors that influence the
price that our customers are willing to pay. In general, under our present fuel
surcharge program, we believe rising fuel costs are beneficial to us and falling
fuel costs are detrimental to us in the short term, the effects of which are
mitigated over time.
•
Operating Income (Loss): Operating income (loss) is operating revenue less
operating expenses.
•
Operating Ratio: Operating ratio is a common operating performance measure used
in the trucking industry. It is calculated as (i) 100 percent (ii) minus the
result of dividing operating income by operating revenue or (iii) plus the
result of dividing operating loss by operating revenue, and is expressed as a
percentage.
•
Non-GAAP Financial Measures: We use EBITDA and Adjusted EBITDA, which are
non-GAAP financial measures, to assess the following:
o
EBITDA: a non-GAAP measure that reflects our earnings before interest, taxes,
depreciation, and amortization expense. EBITDA is used for internal management
purposes as a financial measure that reflects our core operating performance.

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o
Adjusted EBITDA: a non-GAAP measure that reflects EBITDA, and further adjusts
for letter of credit fees, equity-based compensation expense, net gains or
losses on property disposals, restructuring charges, transaction costs related
to issuances of debt, non-recurring consulting fees, non-cash impairment charges
and the gains or losses from permitted dispositions, discontinued operations,
and certain non-cash expenses, charges and losses (provided that if any of such
non-cash expenses, charges or losses represents an accrual or reserve for
potential cash items in any future period, the cash payment in respect thereof
in such future period will be subtracted from Adjusted EBITDA in such future
period to the extent paid). All references to "Adjusted EBITDA" throughout this
section and the rest of this report refer to "Adjusted EBITDA" calculated under
our UST Credit Agreements and the Term Loan Agreement, as amended,
(collectively, the TL Agreements) (defined therein as "Consolidated EBITDA")
unless otherwise specified. Consolidated EBITDA is also a defined term in our
ABL Facility and the definition there aligns with the prior definition of
Consolidated EBITDA under the Prior Term Loan Agreement (defined in the Notes to
Consolidated Financial Statements). Adjusted EBITDA is used for internal
management purposes as a financial measure that reflects our core operating
performance, to measure compliance with financial covenants in our TL Agreements
and to determine certain management and employee bonus compensation.

We believe our presentation of EBITDA and Adjusted EBITDA is useful to investors
and other users as these measures represent key supplemental information our
management uses to compare and evaluate our core underlying business results,
particularly in light of our leverage position and the capital-intensive nature
of our business. Further, EBITDA is a measure that is commonly used by other
companies in our industry and provides a comparison for investors to evaluate
the performance of the companies in the industry. Additionally, Adjusted EBITDA
helps investors to understand how the company is tracking against our financial
covenants in our TL Agreements as this measure is calculated as defined in our
TL Agreements and serves as a driving component of our key financial covenants.

Our non-GAAP financial measures include the following limitations:

o
EBITDA does not reflect the interest expense or the cash requirements necessary
to service interest or fund principal payments on our outstanding debt;
o
Adjusted EBITDA does not reflect the interest expense or the cash requirements
necessary to service interest or fund principal payments on our outstanding
debt, letter of credit fees, restructuring charges, transaction costs related to
the issuance of debt, non-cash expenses, charges or losses, or nonrecurring
consulting fees, among other items;
o
Although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will generally need to be replaced in the future and
EBITDA and Adjusted EBITDA do not reflect any cash requirements for such
replacements;
o
Equity-based compensation is an element of our long-term incentive compensation
package, although Adjusted EBITDA excludes employee equity-based compensation
expense when presenting our ongoing operating performance for a particular
period; and
o
Other companies in our industry may calculate Adjusted EBITDA differently than
we do, potentially limiting its usefulness as a comparative measure.

Because of these limitations, our non-GAAP measures should not be considered a
substitute for performance measures calculated in accordance with GAAP. We
compensate for these limitations by relying primarily on our GAAP results and
use our non-GAAP measures as secondary measures.

Overview of business strategy

Our strategy is focused on our multi-year enterprise transformation to optimize
and structurally improve our network that includes more than 300 strategically
located terminals throughout North America. The transformation is expected to
increase asset utilization, expand service offerings, leverage operational
flexibilities gained with our 2019 labor agreement, consolidate disparate
company systems onto a single platform and rationalize the more than 300
physical locations in the network while maintaining geographic coverage. The
result will be to operate as one Yellow company, one Yellow network, under one
Yellow brand that provides great super-regional service.


As of the date of this filing, we have migrated all of our LTL companies to a
common technology platform. The next steps in our transformation are the
integration of our four disparate linehaul networks into a single national
network. The combination of our four individual linehaul networks currently tied
to our legacy national and regional carrier brands will result in greater
density as freight moves throughout our network from origin to destination
terminals. Also, the local terminal pickup and delivery

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optimization efforts will eliminate the overlapping coverage and customer
interactions that currently exist between our legacy national and regional
carrier brands. Overall, when completed, this operational transformation will
result in enhanced customer service, cost savings opportunities from reduced
miles and productivity gains, and will create additional capacity without adding
incremental physical infrastructure.

Capital investment remains a top priority for us. Our UST Credit Agreements have
enabled us to significantly increase the amount of capital we are able to invest
in revenue equipment to improve the age of our fleet as there is an immediate
return in improved fuel miles per gallon and expected reduced vehicle
maintenance expense. To properly execute on our transformation plan, we are
committed to continued investing in technology in order to enhance the customer
experience and improve our operational flexibility.

Consolidated operating results

2021 Compared to 2020

The table below presents summary consolidated financial information and amounts as a percentage of operating revenue for the years ended the 31st of December:

                                                                                        Percent Change
                                             2021                     2020              2021 vs. 2020
(in millions)                            $          %             $          %                %
Operating Revenue                    $ 5,121.8      100.0     $ 4,513.7      100.0                 13.5 %
Operating Expenses:
Salaries, wages and employee
benefits                               2,921.7       57.0       2,770.1       61.4                  5.5 %
Fuel, operating expenses and
supplies                                 858.1       16.8         719.1       15.9                 19.3 %
Purchased transportation                 800.2       15.6         638.8       14.2                 25.3 %
Depreciation and amortization            143.6        2.8         134.9        3.0                  6.4 %
Other operating expenses                 293.9        5.7         239.6        5.3                 22.7 %
(Gains) Losses on property
disposals, net                             0.7        0.0         (45.3 )     (1.0 )                NM*
Total operating expenses               5,018.2       98.0       4,457.2       98.7                 12.6 %
Operating Income                         103.6        2.0          56.5        1.3                 83.4 %
Nonoperating Expenses:
Nonoperating expenses, net               209.6        4.1         129.6        2.9                 61.7 %
Loss before income taxes                (106.0 )     (2.1 )       (73.1 )     (1.6 )               45.0 %
Income tax expense (benefit)               3.1        0.1         (19.6 )     (0.4 )                NM*
Net Loss                             $  (109.1 )     (2.1 )   $   (53.5 )     (1.2 )              103.9 %


(*) not meaningful



The industry is currently in a tight capacity environment with fewer drivers
available to meet shipping demands, which has led to price increases charged to
customers and an increase in the cost of purchased transportation. During 2021,
especially during the second half, the Company executed a yield strategy to
achieve appropriate pricing per shipment for freight that optimized our network
capacity. The execution of this strategy led to increased revenue per shipment
and decreased shipment counts. The Company's yield growth, including fuel
surcharge, produced a consolidated operating revenue increase of $608.1 million
compared to 2020 with an internal focus of retaining the optimal freight mix
relative to human capital availability throughout 2021. Partially offsetting the
positive yield growth, the Company experienced shipping volume decreases
compared to 2020. Further, the results of operations in 2020 were impacted by
the outbreak of COVID-19 as shipping volumes decreased from typical levels and
negatively impacted the pricing environment at certain times and in certain
markets.



The Company's results reflect these yield growth driven revenue increases
partially offset by increased purchased transportation expenses, fuel expense
and variable expenses including salaries, wages and benefits. Further material
changes are provided below.



Salaries, wages and employee benefits. Salaries, wages and employee benefits
increased $151.6 million primarily due to contractual wage rate increases and to
a lesser extent salary and overtime wage increases. Additionally, there was an
increase of $30.9 million in short-term incentive compensation predominantly for
exceeding targeted financial results in 2021 and an increase of $29.0 million in
employee benefits that corresponded with medical plan spending and other benefit
cost trends.



Fuel, operating expenses and supplies. Fuel, operating expenses and supplies
increased $139.0 million, primarily due to a $78.1 million increase in fuel
expense, which was a result of higher fuel prices partially offset by fewer
miles driven. Additional increases included a $14.6 million increase in software
expenses and other operating expenses, a $12.6 million increase for

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rebranding and other advertising expenses, a $10.5 million increase for travel
and entertainment in other employee expenses and a $10.1 million increase in
professional services. The majority of these increases were impacted by cost
control measures which decreased variable expenses during 2020.

Purchased transportation. Purchased transportation increased $161.4 million
primarily due to significant rate increases as noted above. These increases were
noted in most of our modes of purchased transportation and include a $50.6
million increase in rail purchased transportation expense, a $50.5 million
increase in over-the-road purchased transportation expense and a $49.3 million
increase in third-party costs due to the growth in customer-specific logistics
solutions. These increases were partially offset by a decrease in vehicle
rentals.

Other operating expenses. Other operating expenses increased $54.3 million
mainly due to a $38.8 million increase in civil liability claims primarily due to unfavorable prior year claims development and a $13.4 million increase in freight claims costs.

Gains on property disposals, net. Net losses on disposals of property were $0.7
million during 2021 as compared to net gains of $45.3 million in 2020 which were
primarily related to the sale of real properties.

Nonoperating expense, net. Included in the overall increase of $80.0 million is
an increase in non-union pension settlement charges and an increase in interest
expenses. Non-union pension settlement charges increased $61.1 million,
primarily due to a partial pension annuitization during December 2021 that
resulted in a non-cash settlement charge of approximately $54.9 million.
Interest expense increased $14.8 million, primarily due to a $24.1 million
increase in interest and associated amortization related to the UST Loans
entered into during July 2020 which was partially offset by a $15.9 million
decrease in Term Loan interest.



Income tax. The Company's effective tax rate for the years ended December 31,
2021 and 2020 was (2.9)% and 26.8%, respectively. The primary driver of our 2021
effective tax rate differing from the domestic federal statutory tax rate was
the change in valuation allowance established for our domestic net deferred tax
asset balance as of December 31, 2021. The 2021 effective tax rate was not
impacted by the exception to intraperiod tax allocation in a similar manner as
the 2020 effective tax rate due to the Company's adoption of the change to the
relevant accounting standard on January 1, 2021, as further discussed in Note 2
to the consolidated financial statements included in Part II, Item 8 of this
Annual Report on Form 10-K. As of December 31, 2021 and 2020, the Company had a
full valuation allowance against our domestic net deferred tax assets.





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The table below summarizes the key revenue metrics for the years ended December
31:

                                                                                Percent
                                                 2021           2020           Change(a)
Workdays                                           252.0           253.0

Operating Ratio                                     98.0            98.7             0.7pp

LTL picked up revenue (in millions)           $  4,615.2     $   4,100.1              12.6 %
LTL tonnage (in thousands)                         9,520           9,845              (3.3 )%
LTL tonnage per workday (in thousands)             37.78           38.91              (2.9 )%
LTL shipments (in thousands)                      16,707          16,982              (1.6 )%
LTL shipments per workday (in thousands)           66.30           67.12              (1.2 )%
LTL picked up revenue per hundred weight      $    24.24     $     20.82              16.4 %
LTL picked up revenue per hundred weight
(excluding fuel surcharge)                    $    21.12     $     18.78              12.5 %
LTL picked up revenue per shipment            $      276     $       241              14.4 %
LTL picked up revenue per shipment
(excluding fuel surcharge)                    $      241     $       218              10.5 %
LTL weight per shipment (in pounds)                1,140           1,159    

(1.7)%

Total revenue collected (in millions)(b) $5,077.7 $4,487.7

           13.1 %
Total tonnage (in thousands)                      12,427          12,589              (1.3 )%
Total tonnage per workday (in thousands)           49.31           49.76              (0.9 )%
Total shipments (in thousands)                    17,178          17,446              (1.5 )%
Total shipments per workday (in thousands)         68.17           68.96              (1.1 )%
Total picked up revenue per hundred weight    $    20.43     $     17.82              14.6 %
Total picked up revenue per hundred weight
(excluding fuel surcharge)                    $    17.88     $     16.13              10.9 %
Total picked up revenue per shipment          $      296     $       257              14.9 %
Total picked up revenue per shipment
(excluding fuel surcharge)                    $      259     $       233              11.2 %
Total weight per shipment (in pounds)              1,447           1,443               0.3 %




(a)
Percent change based on unrounded figures and not the rounded figures presented.
(b)
Does not equal financial statement revenue due to revenue recognition
adjustments between accounting periods and the impact of other revenue.



(in millions)                                             2021             

2020

(b) Reconciliation of operating revenue to total
picked up revenue:
Operating revenue                                     $    5,121.8     $    

4,513.7

Change in revenue deferral and other                         (44.1 )          (26.0 )
Total picked up revenue                               $    5,077.7     $    4,487.7




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2020 vs. 2019

The table below presents summary consolidated financial information and amounts as a percentage of operating revenue for the years ended the 31st of December:

                                                                                        Percent Change
                                             2020                     2019              2020 vs. 2019
(in millions)                            $          %             $          %                %
Operating Revenue                    $ 4,513.7      100.0     $ 4,871.2      100.0                 (7.3 )%
Operating Expenses:
Salaries, wages and employee
benefits                               2,770.1       61.4       2,963.7       60.8                 (6.5 )%
Fuel, operating expenses and
supplies                                 719.1       15.9         889.0       18.3                (19.1 )%
Purchased transportation                 638.8       14.2         614.2       12.6                  4.0 %
Depreciation and amortization            134.9        3.0         152.4        3.1                (11.5 )%
Other operating expenses                 239.6        5.3         241.2        5.0                 (0.7 )%
(Gains) Losses on property
disposals, net                           (45.3 )     (1.0 )       (13.7 )     (0.3 )                NM*
Impairment charges                           -          -           8.2        0.2                  NM*
Total operating expenses               4,457.2       98.7       4,855.0       99.7                 (8.2 )%
Operating Income                          56.5        1.3          16.2        0.3                  NM*
Nonoperating Expenses:
Nonoperating expenses, net               129.6        2.9         124.5        2.6                  4.1 %
Loss before income taxes                 (73.1 )     (1.6 )      (108.3 )     (2.2 )              (32.5 )%
Income tax expense (benefit)             (19.6 )     (0.4 )        (4.3 )     (0.1 )                NM*
Net Loss                             $   (53.5 )     (1.2 )   $  (104.0 )     (2.1 )              (48.6 )%




(*) not meaningful

Results of operations during 2020 were impacted by the outbreak of COVID-19 as
shipping volumes decreased from typical levels mainly during the second quarter,
especially in certain markets that have seen greater case levels of COVID-19.
Downward pressure on diesel fuel prices reduced the amount of fuel surcharge
revenues, which are typically priced into our services. Partially offsetting
these decreases, during the second half of 2020 reduced shipping capacity
relative to overall shipment demand created a favorable pricing environment
across the industry. As such, our consolidated operating revenue decreased
$357.5 million, during 2020 when compared to 2019.

Due to the trends in shipping volumes and shortages for certain labor resources,
the Company maintained a lower headcount than historical levels to match
shipment volume trends during the year. Lower headcount levels were also
impacted by an imbalance in the available pool of qualified drivers versus
overall shipment demand, which is an industry trend. In addition, the Company's
2020 results reflect decreases from 2019 in variable expenses, including fuel
and maintenance, among others. Offsetting these variable expense decreases the
Company paid higher contractual wage and benefit rates for union employees.
Total operating expenses decreased $397.8 million, for the year ended December
31, 2020 compared to 2019, primarily as a result of decreases in variable
expenses. Further material changes are provided below.



Fuel, operating expenses and supplies. Fuel, operating expenses and supplies
decreased $169.9 million, primarily due to a $100.3 million decrease in fuel
expense, which was a result of lower fuel prices and fewer miles driven.
Additional decreases resulted from cost reduction efforts, including a $21.0
million reduction in professional services, a $17.3 million decrease in other
operating expenses, and a $16.4 million decrease in other employee expenses, and
an $11.0 million decrease in vehicle maintenance.

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Purchased transportation. Purchased transportation increased $24.6 million,
primarily due to a $19.9 million increase in over-the-road purchased
transportation due to increased rates which have been impacted by driver
shortages, and a $16.9 million increase in third-party costs due to growth in
customer-specific logistics solutions partially offset by a $6.0 million
decrease from reduced usage of local purchased transportation and a $6.4 million
decrease in long-term vehicle rentals.

Gains on property disposals, net. Net gains on disposals of property were $45.3
million during 2020 as compared to $13.7 million in 2019. The gains in 2020 and
2019 were primarily related to the sale of real properties.

Impairment charges. During 2019, we recorded an $8.2 million impairment charge
in the first quarter that reflected the write-down of an intangible asset as a
result of rebranding strategies, leading to discontinued use of that tradename.

Nonoperating expense, net. Included in the overall increase of approximately
4.1% is an increase in interest expenses that is partially offset by the
reduction related to a 2019 debt extinguishment. Interest expense increased
$24.7 million, primarily due to a $11.7 million increase in interest and
associated amortization related to the UST Loans entered into during July 2020
and a $10.3 million increase in Term Loan interest due to higher rates and
amortization. In 2019, the Company incurred $11.2 million of nonoperating
expense related to the extinguishment of debt with no such charge in 2020.

Income tax. The Company's effective tax rate for the years ended December 31,
2020 and 2019 was 26.8% and 4.0%, respectively. Significant items impacting the
2020 rate included a benefit recognized due to application of the exception to
the rules regarding intraperiod tax allocation, a benefit from the reversal of
liability for an uncertain tax position resulting from statute expiration, and a
change in the valuation allowance established for the net deferred tax asset
balance at December 31, 2020. Significant items impacting the 2019 rate included
a provision for net state and foreign taxes, certain permanent items, and a
change in the valuation allowance established for the net deferred tax asset
balance at December 31, 2019. As of December 31, 2020 and 2019, the Company had
a full valuation allowance against our domestic net deferred tax assets.



The table below summarizes the key revenue metrics for the years ended December
31:



                                                                                      Percent
                                                    2020          2019              Change(a)
Workdays                                              253.0         251.5

Operating Ratio                                        98.7          99.7              1.0 pp

LTL picked up revenue (in millions)              $  4,100.1     $ 4,457.2                (8.0 )%
LTL tonnage (in thousands)                            9,845        10,314                (4.5 )%
LTL tonnage per workday (in thousands)                38.91         41.01                (5.1 )%
LTL shipments (in thousands)                         16,982        18,246                (6.9 )%
LTL shipments per workday (in thousands)              67.12         72.55                (7.5 )%

LTL increased revenue per hundredweight $20.82 $21.61

              (3.6 )%
LTL picked up revenue per hundred weight
(excluding fuel surcharge)                       $    18.78     $   19.05                (1.4 )%
LTL picked up revenue per shipment               $      241     $     244                (1.2 )%
LTL picked up revenue per shipment (excluding
fuel surcharge)                                  $      218     $     215                 1.1 %
LTL weight per shipment (in pounds)                   1,159         1,131                 2.6 %

Total revenue collected (in millions)(b) $4,487.7 $4,831.3

              (7.1 )%
Total tonnage (in thousands)                         12,589        12,946                (2.8 )%
Total tonnage per workday (in thousands)              49.76         51.47                (3.3 )%
Total shipments (in thousands)                       17,446        18,653                (6.5 )%
Total shipments per workday (in thousands)            68.96         74.17                (7.0 )%

Total revenue picked up per hundred weight $17.82 $18.66

              (4.5 )%
Total picked up revenue per hundred weight
(excluding fuel surcharge)                       $    16.13     $   16.50                (2.3 )%
Total picked up revenue per shipment             $      257     $     259                (0.7 )%
Total picked up revenue per shipment
(excluding fuel surcharge)                       $      233     $     229                 1.6 %
Total weight per shipment (in pounds)                 1,443         1,388                 4.0 %




(a)
Percent change based on unrounded figures and not the rounded figures presented.
(b)
Does not equal financial statement revenue due to revenue recognition
adjustments between accounting periods and the impact of other revenue.



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(in millions)                                             2020             

2019

(b) Reconciliation of operating revenue to total
picked up revenue:
Operating revenue                                     $    4,513.7     $    

4,871.2

Change in revenue deferral and other                         (26.0 )          (39.9 )
Total picked up revenue                               $    4,487.7     $    4,831.3

Certain Non-GAAP Financial Measures

As previously discussed in the "Our Business" section, we use certain non-GAAP
financial measures to assess performance including EBITDA and Adjusted EBITDA.
We believe our presentation of EBITDA and Adjusted EBITDA is useful to investors
and other users as these measures represent key supplemental information our
management uses to compare and evaluate our core underlying business results,
particularly in light of our leverage position and the capital-intensive nature
of our business. These secondary measures should be considered in addition to
the results prepared in accordance with GAAP, but should not be considered a
substitute for, or superior to, our GAAP financial measures.

Adjusted EBITDA

The reconciliation of net loss to EBITDA and EBITDA to Adjusted EBITDA for the
years ended December 31:



(in millions)                                      2021           2020           2019
Reconciliation of net income (loss) to
Adjusted EBITDA:
Net loss                                        $   (109.1 )   $    (53.5 )   $   (104.0 )
Interest expense, net                                150.4          135.6          109.9
Income tax expense (benefit)                           3.1          (19.6 )         (4.3 )
Depreciation and amortization                        143.6          134.9   

152.4

EBITDA                                               188.0          197.4   

154.0

Adjustments for TL Agreements:
(Gains) losses on property disposals, net              0.7          (45.3 )        (13.7 )
Non-cash reserve changes (a)                          11.6            2.9           16.1
Impairment charges                                       -              -            8.2
Letter of credit expense                               8.5            7.3            6.5
Permitted dispositions and other                       0.8            0.3           (0.9 )
Equity-based compensation expense                      4.4            4.7   

6.3

Loss on extinguishment of debt                           -              -   

11.2

Non-union pension settlement charges                  64.7            3.6   

1.8

Other, net                                             3.0            3.5   

2.9

Expense amounts subject to 10% threshold (b):
COVID-19                                                 -            3.9              -
Other, net                                            24.3           17.3   

18.2

Adjusted EBITDA prior to 10% threshold               306.0          195.6   

210.6

Adjustments pursuant to TTM calculation (b)              -           (3.7 )            -
Adjusted EBITDA                                 $    306.0     $    191.9     $    210.6




(a)
Non-cash reserve changes reflect the net non-cash reserve charge for union and
nonunion vacation (which includes the impact in 2019 of the New NMFA for the one
week of restored vacation), with such non-cash reserve adjustment to be reduced
by cash charges in a future period when paid.
(b)
Pursuant to the TL Agreements, Adjusted EBITDA limits certain adjustments in
aggregate to 10% of the trailing-twelve-month ("TTM") consolidated Adjusted
EBITDA, prior to the inclusion of amounts subject to the 10% threshold, for each
period ending. Such adjustments include, but are not limited to, restructuring
charges, integration costs, severance, and non-recurring charges. The limitation
calculation is updated quarterly based on TTM Adjusted EBITDA, and any necessary
adjustment resulting from this limitation, if applicable, will be presented
here. The sum of the quarters may not necessarily equal TTM Adjusted EBITDA due
to the expiration of adjustments from prior periods.



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Financial position, liquidity and capital resources

The following sections provide aggregated information regarding our financial
condition, liquidity and capital resources. As of December 31, 2021 and 2020 our
total debt was $1,554.5 million and $1,225.4 million, respectively.

Liquidity

Our primary sources of liquidity are cash and cash equivalents, borrowings available under our ABL facility and any prospective net cash flow from operations. From December 31, 2021 and 2020, our cash and cash equivalents were
$310.7 million and $439.3 millionrespectively.

As of December 31, 2021, our Availability under our ABL Facility was $93.1
million, and our Managed Accessibility was $48.1 million. Availability is
derived by reducing the amount that may be advanced against eligible receivables
plus eligible borrowing base cash by certain reserves imposed by the ABL Agent
and our $356.9 million of outstanding letters of credit. Our Managed
Accessibility represents the maximum amount we would access on the ABL Facility
and is adjusted for eligible receivables plus eligible borrowing base cash
measured as of December 31, 2021. If eligible receivables fall below the
threshold management uses to measure availability, which is 10% of the borrowing
line, the credit agreement governing the ABL Facility permits adjustments from
eligible borrowing base cash to restricted cash prior to the compliance
measurement date, which for the year-end 2021 is as of January 15, 2022. Cash
and cash equivalents and Managed Accessibility totaled $358.8 million at
December 31, 2021.

As of December 31, 2020, our Availability under our ABL Facility was $43.7
million, and our Managed Accessibility was $4.0 million. As of January 15, 2021,
we had less than 10% of the borrowing line in eligible receivables and moved
$3.1 million of cash into restricted cash, as permitted under the ABL Facility,
which effectively put our cash and cash equivalents and Managed Accessibility to
$440.2 million as of December 31, 2020.

The table below summarizes cash and cash equivalents and Managed Accessibility
at December 31:



(in millions)                                               2021             2020
Cash and cash equivalents                               $      310.7     $      439.3

Less: amounts placed in restricted cash after year-end

                                                        -             (3.1 )
Managed Accessibility                                           48.1        

4.0

Total cash and cash equivalents and Managed
Accessibility                                           $      358.8     $      440.2




Outside of funding normal operations, our principal uses of cash include making
contributions to our various multi-employer pension funds, and meeting our other
cash obligations, including, but not limited to, paying principal and interest
on our funded debt, payments on equipment leases and investments in capital
expenditures.

Covenants



Under the UST Loans and Credit Agreement, beginning at December 31, 2021, the
Company has a quarterly requirement to maintain a trailing-twelve-month ("TTM")
Adjusted EBITDA of $100.0 million. This requirement increases beginning March
31, 2022 to a TTM Adjusted EBITDA of $150.0 million and increases at June 30,
2022, and thereafter through the maturity of these agreements, to a TTM Adjusted
EBITDA of $200.0 million. Management expects, based on actual and forecasted
operating results, the Company will meet this covenant requirement for the
period it became effective and the next twelve months.

Cash flow



The Company's cash flow activities are summarized in the table below, for the
years ended December 31:




(in millions)                                           2021        2020         2019

Net cash provided by (used in) operating activities $10.2 $122.5

    $   21.5
Net cash provided by (used in) investing activities     (494.0 )     (84.5 )     (117.3 )
Net cash provided by (used in) financing activities      320.6       330.8        (22.6 )




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Operating Cash Flow

The decrease in cash provided by operating activities for the year ended
December 31, 2021 compared to the year ended December 31, 2020 was primarily
attributable to an $118.3 million increase in accounts receivable during 2021.
This growth is consistent with the positive yield growth as discussed in our
Consolidated Results of Operations, and also reflects the timing of our
collections. Additionally, operating cash flows decreased due to $42.8 million
in payments of certain deferred employer payroll taxes, which was offset by a
net increase in cash flows from various other working capital changes included
in other operating liabilities.

Cash flow from operations increased by $101.0 million to $122.5 million for the
year ended December 31, 2020 compared to $21.5 million for the year ended
December 31, 2019. The increase in cash flow is primarily related to deferrals
of various payments recorded as other operating liabilities. Under the CARES
Act, we deferred payment of certain employer payroll taxes incurred in 2020 that
resulted in $85.6 million of liabilities as of December 31, 2020, with 50% due
December 31, 2021 and 50% due December 31, 2022. For the year ended 2020 the
Company incurred $42.4 million of interest expenses that were paid-in-kind.
Lastly, our operating cash flows from a reduction in lease payments was $20.1
million driven by a decrease in the number of operating lease agreements for
revenue equipment and changes in payment timing.

Investing cash flow

The increase of $409.5 million of cash used in investing activities for the year
ended December 31, 2021 compared to the year ended December 31, 2020 was largely
driven by outflows on revenue equipment acquisitions and by lower cash proceeds
from the sale of real property. Cash used by investing cash flows are expected
to decrease significantly, more consistent with historical levels in 2022 as the
UST Credit Agreements funding has been fully utilized.

Cash used in investing activities was $84.5 million in 2020 compared to $117.3
million in 2019, largely driven by cash proceeds from the sale of real property
as well as a reduction to cash outflows of revenue equipment acquisitions.

Financing cash

Net cash used in financing activities for 2021 was $320.6 millionwhich consists primarily of amounts drawn on our UST credit agreements.

Net cash used in financing activities for 2020 was $330.8 million, which
consists primarily of amounts drawn on our UST Credit Agreements. Net cash used
in financing activities for 2019 was $22.6 million, which consists primarily of
$579.0 million in repayments of our long-term debt, offset by the issuance of
$570.0 million of long-term debt for the Term Loan.

Capital expenditure

Our capital expenditures focus primarily on the replacement of revenue
equipment, investments in information technology and improvements to land and
structures. Our business is capital intensive with significant investments in
tractors, trailers, refurbished engines, information technology and service
center facilities. We determine the amount and timing of capital expenditures
based on numerous factors, including availability and attractiveness of
financing, anticipated liquidity levels, anticipated financial returns and other
factors.

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The table below summarizes our actual net capital expenditures (net of disposal proceeds) by type of investment for the years ended the 31st of December:



(in millions)                                    2021           2020        

2019

Acquisition of property and equipment
Revenue equipment                             $    412.1     $     86.8     $     88.6
Land and structures                                 22.5            8.6     

13.2

Technology equipment and software                   55.6           33.6           36.0
Other                                                7.4           11.6            5.4
Total capital expenditures                         497.6          140.6          143.2
Proceeds from disposal of property and
equipment
Land and structures                                 (1.1 )        (52.6 )        (22.9 )
Revenue equipment, technology equipment and
software and other                                  (2.5 )         (3.5 )         (3.0 )
Total proceeds                                      (3.6 )        (56.1 )        (25.9 )
Total net capital expenditures                $    494.0     $     84.5     $    117.3




Our capital expenditures for revenue equipment were used primarily to fund the
purchase of tractors, trailers and containers and to refurbish engines for our
revenue equipment fleet. We also acquire our equipment through operating leases
which will vary based on current and anticipated liquidity and lease financing
options. For the year ended December 31, 2021, we focused on capital
expenditures, as detailed above, and not entering new operating leases. As of
December 31, 2021, our operating lease obligations through 2031 totaled $245.6
million. We expect annual capital expenditures in 2022 to be in the range of
$325 million to $400 million.

Contractual obligations and other commercial commitments

The following sections provide certain aggregate information regarding our contractual obligations and business commitments as of December 31, 2021 emphasizing obligations and commitments that are not disclosed elsewhere in this report.

Cash contractual obligations

Material contractual obligations arising in the normal course of business
primarily consist of long-term debt and interest payments, operating leases,
pension deferral principal and interest payments, workers' compensation and
third-party liability claim obligations and deferred payroll taxes. The
following table reflects our material cash outflows that we are contractually
obligated to make related to long-term debt, including interest, and operating
leases as of December 31, 2021:

                                                            Payments Due by Period
                                                     Less than         1-3          3-5          After
(in millions)                           Total         1 year          years        years        5 years
ABL Facility(a)                       $    18.1     $       6.7     $    11.4     $      -     $       -
Term Loan(b)                              744.4            54.1         690.3            -             -
UST Loans(c)                              804.1            23.1         781.0            -             -
Lease financing obligations(d)            308.6            44.8          88.8         81.5          93.5
Pension deferral obligations(e)            71.9            71.9             -            -             -
Operating leases(f)                       245.6            94.4          84.0         27.0          40.2
Total                                 $ 2,192.7     $     295.0     $ 1,655.5     $  108.5     $   133.7


(a)
The ABL Facility includes future payments for the letter of credit and unused
line fees and are not included on the Company's consolidated balance sheets.
(b)
The Term Loan includes principal and interest payments but excludes unamortized
discounts.
(c)
The UST Loans includes principal and interest payments, including paid-in-kind
interest.
(d)
The lease financing obligations consist primarily of interest payments.
(e)
Pension deferral obligations includes principal and interest payments on the
Second A&R CDA.
(f)
Operating leases represent future payments under contractual lease arrangements
primarily for revenue equipment and land and structures.

We expect cash contributions, if required at all, for our non-union sponsored
pension plans to be nominal in 2022 and in years thereafter. Additional details
on self-insurance accruals for claims and deferred payroll taxes are also
available in Note 2 and Note 3, respectively, to the consolidated financial
statements included in Part II, Item 8 of this Annual Report on Form 10-K.

                                       31

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Other business commitments

The following table reflects other potential business commitments or cash outflows that may result from a contingent event, such as a need to borrow funds in the short term due to insufficient cash.


                                                       Amount of Commitment Expiration Per Period
                                                        Less than            1-3            3-5            After
(in millions)                            Total            1 year            years          years          5 years
ABL Facility availability(a)          $      93.1       $        -       $      93.1     $        -     $         -
Letters of credit(b)                        356.9                -             356.9              -               -
Surety bonds(c)                             102.1             98.1               4.0              -               -

Total commercial commitments $552.1 $98.1 $

$454.0 – $ –

(a)

Availability under the ABL Facility is derived by reducing the amount that may
be advanced against eligible receivables plus eligible borrowing base cash by
certain reserves imposed by the ABL Agent and our outstanding letters of credit.
(b)
Letters of credit outstanding are generally required as collateral to support
self-insurance programs and do not represent additional liabilities as the
underlying self-insurance accruals are already included in our consolidated
balance sheets.
(c)
Surety bonds are generally required for workers' compensation to support
self-insurance programs, which include certain bonds that do not have an
expiration date but are redeemable on demand, and do not represent additional
liabilities as the underlying self-insurance accruals are already included in
our consolidated balance sheets.

We have no off-balance sheet arrangements except for other contractual obligations relating to letters of credit and surety bonds, which are reflected in the tables above, as well as service agreements in the normal course of business and capital purchases.

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Critical accounting policies

Preparation of our consolidated financial statements requires accounting
policies that involve significant estimates and judgments regarding the amounts
included in the consolidated financial statements and disclosed in the
accompanying notes to the consolidated financial statements. We continually
review the appropriateness of our accounting policies and the accuracy of our
estimates including discussion with the Audit & Ethics Committee of our Board of
Directors that may make recommendations to management regarding these policies.
Even with a thorough process, estimates must be adjusted based on changing
circumstances and new information. Actual results could differ from those
estimates. Management has identified the policies, further described in the
notes to the consolidated financial statements included in Item 8 of this
report, described below as requiring significant judgment and having a potential
material impact to our consolidated financial statements.

Self-insurance for complaints

We are self-insured up to certain limits for workers' compensation and
third-party liability claims. We measure the liabilities associated with
workers' compensation and third-party liability claims primarily through
actuarial methods performed by an independent third-party. Actuarial methods
include estimates for the undiscounted liability for claims reported, for claims
incurred but not reported and for certain future administrative costs. These
estimates are based on historical loss development factors and judgments about
the present and expected levels of costs per claim and the time required to
settle claims. The effect of future inflation for costs is considered in the
actuarial analysis. Actual claims may vary from these estimates due to a number
of factors, including but not limited to, accident frequency and severity,
claims management, changes in healthcare costs, legal and judicial developments,
and overall economic conditions. We discount the actuarial calculations of
claims liabilities for each calendar year to present value based on the average
U.S. Treasury rate, during the calendar year of occurrence, for maturities that
match the initial expected payout of the liabilities. As of December 31, 2021
and 2020, we had $354.5 million and $323.3 million accrued for outstanding
claims, respectively. Additional details on self-insurance accruals for claims
are also available in Note 2 to the consolidated financial statements included
in Part II, Item 8 of this Annual Report on Form 10-K.

Non-union pension plans

The Company sponsors defined benefit pension plans for certain employees not
covered by collective bargaining agreements. The qualified plans cover
approximately 5,000 participants including those currently receiving benefits
and those who have left the Company with deferred benefits. On January 1, 2004,
the existing qualified benefit plans were closed to new participants. Effective
July 1, 2008, we froze the defined benefit pension plans for all participating
employees not covered by collective bargaining agreements. Given the frozen
status of the plans, the key estimates in determining pension cost are discount
rate and return on plan assets, each of which are discussed below. Additional
information on these pension plans is included in Note 4 to the consolidated
financial statements included in Part II, Item 8 of this Annual Report on Form
10-K.

Discount Rate

The discount rate refers to the interest rate used to discount the estimated
future benefit payments to their present value, also referred to as the benefit
obligation. The discount rate allows us to estimate what it would cost to settle
the pension obligations as of the measurement date, December 31, and impacts the
following year's annual pension expense. We determine the discount rate by
selecting a portfolio of high quality non-callable bonds with interest payments
and maturities generally consistent with our expected benefit payments.

Changes in the discount rate can impact our overall net pension position on the
balance sheet, however, hedge assets in our asset portfolio work to partially
mitigate this impact with changes in asset returns. A 100-basis-point decrease
in our discount rate would increase our net pension position on the consolidated
balance sheet by approximately $75.5 million. That same change would decrease
our net pension expense by approximately $2.7 million, driven by the return on
assets. The discount rate can fluctuate considerably over periods depending on
overall economic conditions that impact long-term corporate bond yields. At
December 31, 2021 and 2020, we used a discount rate to determine benefit
obligations of 3.08% and 2.81%, respectively.

Return on plan assets

The assumption for expected return on plan assets represents a long-term
assumption of our portfolio performance that can impact our annual pension
expense. With $767.4 million of plan assets at December 31, 2021 for the
Company's funded pension plans, a 100-basis-point decrease in the assumption for
expected rate of return on assets would increase the net annual pension expense
by approximately $6.8 million and would have no effect on the net pension
position reflected on the consolidated balance sheet at December 31, 2021.

In determining the expected rate of return on assets, we consider our historical experience with the plans’ investment portfolio, historical market data and long-term historical relationships as well as a review of other objective indices, including the current market

                                       33

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factors such as inflation and interest rates. Due to the historically
underfunded nature of these plans we previously managed our investment portfolio
to hedge risks, but primarily focused on risk seeking assets that would provide
an opportunity to close the net funded deficit, thus the Company selected an
expected rate of return on assets of 7.0% effective for the 2020 valuations.
Based on the improved funded status in comparison to historic levels, which
impacts the risk profile of the asset portfolio and various market factors, we
selected an expected rate of return on assets of 5.0% effective for the 2021
valuation. We have reviewed our expected long-term rate of return based upon
several factors, including those detailed above,

Measurement of plan assets

At December 31, 2021, our plan assets included $343.3 million of investments
that are measured at net asset value ("NAV") per share (or its equivalent) using
the practical expedient in accordance with the fair value measurement and $26.6
million of Level 3 investments. Level 3 market values are based on inputs that
are supported by little or no market activity and are significant to the fair
value of the investment. These investments are subject to estimation to
determine fair value which is used to determine components of our annual pension
expense and the net pension position reflected on the consolidated balance
sheet.

Revenue recognition and revenue reserves

The Company's revenues are primarily derived from the transportation services we
provide through the delivery of goods over the duration of a shipment. Upon
receipt of the bill of lading, the contract existence criteria is met as
evidenced by a legally enforceable agreement between two parties where
collectability is probable, thus creating the distinct performance obligation.
The Company has elected to expense initial direct costs as incurred because the
average shipment cycle is less than one week. The Company recognizes revenue and
substantially all the purchased transportation expenses on a gross basis because
we direct the use of the transportation service provided and remain responsible
for the complete and proper shipment.

Inherent within our revenue recognition practices are estimates for revenue
associated with shipments in transit and billing adjustments, which are included
in our consolidated balance sheets as a reduction to accounts receivable.
Additional details on revenue recognition and revenue related reserves are also
available in Note 2 to the consolidated financial statements included in Part
II, Item 8 of this Annual Report on Form 10-K.

For shipments in transit, we record revenue based on the percentage of service
completed as of the period end and recognize delivery costs as incurred. The
percentage of service completed for each shipment is based on how far along in
the shipment cycle each shipment is in relation to standard transit days. The
total revenue earned is accumulated for all shipments in transit at a particular
period end and recorded as operating revenue. The magnitude of the impacts of in
transit adjustment estimates to the consolidated financial statements are
limited due to the short duration, generally less than one week, of the average
shipment cycle.

The Company has reviewed our revenue-related reserves and determined that rerate
reserves are a critical accounting policy. Given the nature of our
transportation services, adjustments may arise which creates variability when
establishing the transaction price used to recognize revenue. We have a high
volume of performance obligations with similar characteristics, therefore we
primarily use historical trends to arrive at estimated reserves. Rerate
reserves, which are common for LTL carriers, are established during a process to
capture incorrect ratings that require adjustment and could be identified based
on many factors, including weight and commodity verifications. Although the
majority of rerating occurs in the same month as the original rating, a portion
occurs during subsequent periods.

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