MARTEN TRANSPORT, LTD. The following discussion and analysis of our financial condition and results of operations should be read together with the selected consolidated financial data and our consolidated condensed financial statements and the related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those included in our Form 10-K, Part I, Item 1A for the year endedDecember 31, 2021 . We do not assume, and specifically disclaim, any obligation to update any forward-looking statement contained in this report. Overview We have strategically transitioned from a refrigerated long-haul carrier to a multifaceted business offering a network of refrigerated and dry truck-based transportation capabilities across our five distinct business platforms - Truckload, Dedicated, Intermodal, Brokerage and MRTN deMexico . The primary source of our operating revenue is provided by our Truckload segment through a combination of regional short-haul and medium-to-long-haul full-load transportation services. We transport food and other consumer packaged goods that require a temperature-controlled or insulated environment, along with dry freight, acrossthe United States and into and out ofMexico andCanada . Our agreements with customers are typically for one year. Our Dedicated segment provides customized transportation solutions tailored to meet each individual customer's requirements, utilizing temperature-controlled trailers, dry vans and other specialized equipment withinthe United States . Our agreements with customers range from three to five years and are subject to annual rate reviews. Generally, we are paid by the mile for our Truckload and Dedicated services. We also derive Truckload and Dedicated revenue from fuel surcharges, loading and unloading activities, equipment detention and other accessorial services. The main factors that affect our Truckload and Dedicated revenue are the rate per mile we receive from our customers, the percentage of miles for which we are compensated, the number of miles we generate with our equipment and changes in fuel prices. We monitor our revenue production primarily through average Truckload and Dedicated revenue, net of fuel surcharges, per tractor per week. We also analyze our average Truckload and Dedicated revenue, net of fuel surcharges, per total mile, non-revenue miles percentage, the miles per tractor we generate, our fuel surcharge revenue, our accessorial revenue and our other sources of operating revenue. Our Intermodal segment transports our customers' freight withinthe United States utilizing our refrigerated containers and our temperature-controlled trailers, each on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers. The main factors that affect our Intermodal revenue are the rate per mile and other charges we receive from our customers. Our Brokerage segment develops contractual relationships with and arranges for third-party carriers to transport freight for our customers in temperature-controlled trailers and dry vans withinthe United States and into and out ofMexico throughMarten Transport Logistics, LLC , which was established in 2007 and operates pursuant to brokerage authority granted by the DOT. We retain the billing, collection and customer management responsibilities. The main factors that affect our Brokerage revenue are the rate per mile and other charges that we receive from our customers.
Operating results of our MRTN de
In addition to the factors discussed above, our operating revenue is also affected by, among other things,the United States economy, inventory levels, the level of truck and rail capacity in the transportation market, a contracting driver market, severe weather conditions and specific customer demand. -------------------------------------------------------------------------------- Our operating revenue increased$64.2 million , or 28.8%, in the first three months of 2022 from the first three months of 2021. Our operating revenue, net of fuel surcharges, increased$47.1 million , or 23.8%, compared with the first three months of 2021. Truckload segment revenue, net of fuel surcharges, increased 13.4% from the first three months of 2021 primarily due to an increase in our average revenue per tractor, despite a reduction in our average number of tractors. Dedicated segment revenue, net of fuel surcharges, increased 17.2% from the first three months of 2021 primarily due to an increase in our average revenue per tractor. Intermodal segment revenue, net of fuel surcharges, increased 31.7% from the first three months of 2021 primarily due to an increase in revenue per load. Brokerage segment revenue increased 65.3% primarily due to increases in both the number of loads and in revenue per load in the first three months of 2022. Fuel surcharge revenue increased to$42.0 million in the first three months of 2022 from$24.9 million in the first three months of 2021, primarily due to higher fuel costs. Our profitability is impacted by the variable costs of transporting freight for our customers, fixed costs, and expenses containing both fixed and variable components. The variable costs include fuel expense, driver-related expenses, such as wages, benefits, training, and recruitment, and independent contractor costs, which are recorded under purchased transportation. Expenses that have both fixed and variable components include maintenance and tire expense and our 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 relate to the acquisition and subsequent depreciation of long-term assets, such as revenue equipment and operating terminals. We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment, along with any increases in fleet size. Although certain factors affecting our expenses are beyond our control, we monitor them closely and attempt to anticipate changes in these factors in managing our business. For example, fuel prices have significantly fluctuated over the past several years. We manage our exposure to changes in fuel prices primarily through fuel surcharge programs with our customers, as well as through volume fuel purchasing arrangements with national fuel centers and bulk purchases of fuel at our terminals. To help further reduce fuel expense, we have installed and tightly manage the use of auxiliary power units in our tractors to provide climate control and electrical power for our drivers without idling the tractor engine, and also have improved the fuel usage in the temperature-control units on our trailers. For our Intermodal and Brokerage segments, our profitability is impacted by the percentage of revenue which is payable to the providers of the transportation services we arrange. This expense is included within purchased transportation in our consolidated condensed statements of operations. Our operating income improved 49.4% to$35.9 million in the first three months of 2022 from$24.0 million in the first three months of 2021. Our operating expenses as a percentage of operating revenue, or "operating ratio," improved to 87.5% in the first three months of 2022 from 89.2% in the first three months of 2021. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 85.4% in the first three months of 2022 from 87.9% in the first three months of 2021. Our net income improved 52.9% to$27.5 million , or$0.33 per diluted share, in the first three months of 2022 from$18.0 million , or$0.22 per diluted share, in the first three months of 2021. Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers. AtMarch 31, 2022 , we had$66.5 million of cash and cash equivalents,$648.8 million in stockholders' equity and no long-term debt outstanding. In the first three months of 2022, net cash flows provided by operating activities of$39.9 million were primarily used to repurchase and retire 1.3 million shares of our common stock for$25.0 million , to pay cash dividends of$5.0 million , and to construct and upgrade regional operating facilities in the amount of$2.5 million , resulting in a$9.5 million increase in cash and cash equivalents. We estimate that capital expenditures, net of proceeds from dispositions, will be approximately$153 million in the remainder of 2022. A quarterly cash dividend of$0.06 per share of common stock was paid in the first quarter of 2022 which totaled$5.0 million . We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future. -------------------------------------------------------------------------------- We continue to invest considerable time and capital resources to actively implement and promote long-term environmentally sustainable solutions that drive reductions in our fuel and electricity consumption and decrease our carbon footprint. These initiatives include (i) reducing idle time for our tractors by installing and tightly managing the use of auxiliary power units, which are powered by solar panels and provide climate control and electrical power for our drivers without idling the tractor engine, (ii) improving the energy efficiency of our newer, more aerodynamic and well-maintained tractor and trailer fleets by optimizing the equipment's specifications, weight and tractor speed, equipping our tractors with automatic transmissions, converting the refrigeration units in our refrigerated trailers to the new, more-efficient CARB refrigeration units along with increasing the insulation in the trailer walls and installing trailer skirts, and using ultra-fuel efficient and wide-based tires, and (iii) upgrading all of our facilities to indoor and outdoor LED lighting along with converting all of our facilities to solar power. Additionally, we are an active participant in theUnited States Environmental Protection Agency , orEPA ,SmartWay Transport Partnership , in which freight shippers, carriers, logistics companies and other voluntary stakeholders partner with theEPA to measure, benchmark and improve logistics operations to reduce their environmental footprint. This Management's Discussion and Analysis of Financial Condition and Results of Operations includes discussions of operating revenue, net of fuel surcharge revenue; Truckload, Dedicated and Intermodal revenue, net of fuel surcharge revenue; operating expenses as a percentage of operating revenue, each net of fuel surcharge revenue; and net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads). We provide these additional disclosures because management believes these measures provide a more consistent basis for comparing results of operations from period to period. These financial measures in this report have not been determined in accordance withU.S. generally accepted accounting principles (GAAP). Pursuant to Item 10(e) of Regulation S-K, we have included the amounts necessary to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures of operating revenue, operating expenses divided by operating revenue, and fuel and fuel taxes. Results of Operations
The following table sets forth for the periods indicated certain operating statistics regarding our revenue and operations:
Three Months
Ended March 31,
2022 2021
Truckload Segment:
Revenue (in thousands) $ 112,790 $ 94,915
Average revenue, net of fuel surcharges, per tractor
per week(1) $ 4,977 $ 4,057
Average tractors(1) 1,487 1,609
Average miles per trip 520 534
Total miles (in thousands) 35,372 38,283
Dedicated Segment:
Revenue (in thousands) $ 96,760 $ 78,237
Average revenue, net of fuel surcharges, per tractor
per week(1) $ 3,851 $ 3,214
Average tractors(1) 1,584 1,619
Average miles per trip 341 307
Total miles (in thousands) 32,753 31,999
Intermodal Segment:
Revenue (in thousands) $ 31,642 $ 22,004
Loads 8,294 7,982
Average tractors 162 134
Brokerage Segment:
Revenue (in thousands) $ 46,089 $ 27,890
Loads 19,684 14,575
(1) Includes tractors driven by both company-employed drivers and independent
contractors. Independent contractors provided 87 and 133 tractors as of March
31, 2022 and 2021, respectively.
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Comparison of Three Months Ended
The following table sets forth for the periods indicated our operating revenue,
operating income and operating ratio by segment, along with the change for each
component:
Dollar Percentage
Change Change
Three Months Three Months Three Months
Ended Ended Ended
March 31, March 31, March 31,
(Dollars in thousands) 2022 2021 2022 vs. 2021 2022 vs. 2021
Operating revenue:
Truckload revenue, net of fuel surcharge
revenue $ 95,170 $ 83,919 $ 11,251 13.4 %
Truckload fuel surcharge revenue 17,620 10,996 6,624 60.2
Total Truckload revenue 112,790 94,915 17,875 18.8
Dedicated revenue, net of fuel surcharge
revenue 78,421 66,902 11,519 17.2
Dedicated fuel surcharge revenue 18,339 11,335 7,004 61.8
Total Dedicated revenue 96,760 78,237 18,523 23.7
Intermodal revenue, net of fuel
surcharge revenue 25,605 19,446 6,159 31.7
Intermodal fuel surcharge revenue 6,037 2,558 3,479 136.0
Total Intermodal revenue 31,642 22,004 9,638 43.8
Brokerage revenue 46,089 27,890 18,199 65.3
Total operating revenue $ 287,281 $ 223,046 $ 64,235 28.8 %
Operating income:
Truckload $ 15,571 $ 11,415 $ 4,156 36.4 %
Dedicated 10,645 8,936 1,709 19.1
Intermodal 5,036 1,461 3,575 244.7
Brokerage 4,606 2,186 2,420 110.7
Total operating income $ 35,858 $ 23,998 $ 11,860 49.4 %
Operating ratio(1):
Truckload 86.2 % 88.0 %
Dedicated 89.0 88.6
Intermodal 84.1 93.4
Brokerage 90.0 92.2
Consolidated operating ratio 87.5 % 89.2 %
(1) Represents operating expenses as a percentage of operating revenue.
Our operating revenue increased $64.2 million , or 28.8%, to $287.3 million in
the 2022 period from $223.0 million in the 2021 period. Our operating revenue,
net of fuel surcharges, increased $47.1 million , or 23.8%, to $245.3 million in
the 2022 period from $198.2 million in the 2021 period. This increase in the
2022 period was due to an $18.2 million increase in Brokerage revenue, an $11.5
million increase in Dedicated revenue, net of fuel surcharges, an $11.3 million
increase in Truckload revenue, net of fuel surcharges, and a $6.2 million
increase in Intermodal revenue, net of fuel surcharges. Fuel surcharge revenue
increased by $17.1 million to $42.0 million in the 2022 period from $24.9
million in the 2021 period primarily due to higher fuel costs.
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Truckload segment revenue increased $17.9 million , or 18.8%, to $112.8 million
in the 2022 period from $94.9 million in the 2021 period. Truckload segment
revenue, net of fuel surcharges, increased $11.3 million , or 13.4%, to $95.2
million in the 2022 period from $83.9 million in the 2021 period. During the
2022 period, an increase in our average revenue per tractor was partially offset
by a reduction in our average number of tractors. The improvement in the
operating ratio in the 2022 period was primarily due to an increase in our
average revenue per tractor due to increased rates with our customers, along
with a decrease in depreciation expense and an increase in gain on disposition
of revenue equipment, partially offset by increases in both company driver
compensation expense and driver recruiting costs.
Dedicated segment revenue increased $18.5 million , or 23.7%, to $96.8 million in
the 2022 period from $78.2 million in the 2021 period. Dedicated segment
revenue, net of fuel surcharges, increased 17.2% primarily due to an increase in
our average revenue per tractor. The operating ratio was negatively impacted in
the 2022 period by increases in both company driver compensation expense and
driver recruiting costs, which were partially offset by an increase in our
average revenue per tractor due to increased rates with our customers.
Intermodal segment revenue increased $9.6 million , or 43.8%, to $31.6 million in
the 2022 period from $22.0 million in the 2021 period. Intermodal segment
revenue, net of fuel surcharges, increased 31.7% from the 2021 period primarily
due to an increase in revenue per load. The improvement in the operating ratio
in the 2022 period was primarily due to increased rates with our customers and a
decrease in the amounts payable to railroads as a percentage of our revenue.
Brokerage segment revenue increased $18.2 million , or 65.3%, to $46.1 million in
the 2022 period from $27.9 million in the 2021 period primarily due to increases
in both the number of loads and in revenue per load. The improvement in the
operating ratio in the 2022 period was primarily due to increased rates with our
customers.
The following table sets forth for the periods indicated the dollar and
percentage increase or decrease of the items in our unaudited consolidated
condensed statements of operations, and those items as a percentage of operating
revenue:
Dollar Percentage Percentage of
Change Change Operating Revenue
Three Months Three Months Three Months
Ended Ended Ended
March 31, March 31, March 31,
(Dollars in thousands) 2022 vs. 2021 2022 vs. 2021 2022 2021
Operating revenue $ 64,235 28.8 % 100.0 % 100.0 %
Operating expenses (income):
Salaries, wages and benefits 16,351 22.4 31.1 32.7
Purchased transportation 16,545 40.6 19.9 18.3
Fuel and fuel taxes 15,431 53.3 15.4 13.0
Supplies and maintenance 1,298 11.8 4.3 4.9
Depreciation 456 1.8 9.1 11.5
Operating taxes and licenses (72 ) (2.7 ) 0.9 1.2
Insurance and claims 1,258 11.0 4.4 5.1
Communications and utilities 182 8.7 0.8 0.9
Gain on disposition of revenue equipment (2,556 ) (128.8 ) (1.6 ) (0.9 )
Other 3,482 64.6 3.1 2.4
Total operating expenses 52,375 26.3 87.5 89.2
Operating income 11,860 49.4 12.5 10.8
Other 3 30.0 - -
Income before income taxes 11,857 49.4 12.5 10.8
Income taxes expense 2,330 38.8 2.9 2.7
Net income $ 9,527 52.9 % 9.6 % 8.1 %
-------------------------------------------------------------------------------- Salaries, wages and benefits consist of compensation for our employees, including both driver and non-driver employees, employees' health insurance, 401(k) plan contributions and other fringe benefits. These expenses vary depending upon the size of our Truckload, Dedicated and Intermodal tractor fleets, the ratio of company drivers to independent contractors, our efficiency, our experience with employees' health insurance claims, changes in health care premiums and other factors. Salaries, wages and benefits expense increased$16.4 million , or 22.4%, in the 2022 period from the 2021 period. This increase resulted primarily from additional company driver compensation expense of$11.8 million , a$1.5 million increase in employees' health insurance expense as a result of higher self-insured medical claims and a$1.5 million increase in bonus compensation expense for our non-driver employees. Purchased transportation consists of amounts payable to railroads and carriers for transportation services we arrange in connection with Brokerage and Intermodal operations and to independent contractor providers of revenue equipment. This category will vary depending upon the amount and rates, including fuel surcharges, we pay to third-party railroad and motor carriers, the ratio of company drivers versus independent contractors and the amount of fuel surcharges passed through to independent contractors. Purchased transportation expense increased$16.5 million in total, or 40.6%, in the 2022 period from the 2021 period. Amounts payable to carriers for transportation services we arranged in our Brokerage segment increased$15.2 million to$38.8 million in the 2022 period from$23.6 million in the 2021 period, primarily due to an increase in the cost per load within the tight freight market and growth in load volume. Amounts payable to railroads and drayage carriers for transportation services within our Intermodal segment increased$2.6 million to$15.2 million in the 2022 period from$12.6 million in the 2021 period. The portion of purchased transportation expense related to independent contractors within our Truckload and Dedicated segments, including fuel surcharges, decreased$1.3 million in the 2022 period. We expect our purchased transportation expense to increase as we grow our Intermodal and Brokerage segments. Fuel and fuel taxes increased by$15.4 million , or 53.3%, in the 2022 period from the 2021 period. Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) increased$236,000 , or 3.6%, to$6.9 million in the 2022 period from$6.6 million in the 2021 period. Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads increased to$4.5 million from$2.6 million in the 2021 period.The United States Department of Energy , orDOE , national average cost of fuel increased to$4.24 per gallon from$2.91 per gallon in the 2021 period. Despite this increase, our net fuel expense was 3.5% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, down from 3.9% in the 2021 period. We have worked diligently to control fuel usage and costs by improving our volume purchasing arrangements and optimizing our drivers' fuel purchases with national fuel centers, focusing on shorter lengths of haul, installing and tightly managing the use of auxiliary power units in our tractors to minimize engine idling and improving fuel usage in the temperature-control units on our trailers. Auxiliary power units, which we have installed in our company-owned tractors, provide climate control and electrical power for our drivers without idling the tractor engine. Supplies and maintenance consist of repairs, maintenance, tires, parts, oil and engine fluids, along with load-specific expenses including loading/unloading, tolls, pallets and trailer hostling. Our supplies and maintenance expense increased$1.3 million , or 11.8%, from the 2021 period primarily due to higher outside repair, tires and parts costs. Insurance and claims consist of the costs of insurance premiums and accruals we make for claims within our self-insured retention amounts, primarily for personal injury, property damage, physical damage to our equipment, cargo claims and workers' compensation claims. These expenses will vary primarily based upon the frequency and severity of our accident experience, our self-insured retention levels and the market for insurance. The$1.3 million , or 11.0%, increase in insurance and claims in the 2022 period was primarily due to increases in our self-insured auto liability, workers' compensation and cargo claim costs. Our significant self-insured retention exposes us to the possibility of significant fluctuations in claims expense between periods which could materially impact our financial results depending on the frequency, severity and timing of claims. Gain on disposition of revenue equipment was$4.5 million in the 2022 period, up from$2.0 million in the 2021 period primarily due to an increase in the average gain for our tractor and trailer sales, despite a decrease in the number of units sold. Future gains or losses on dispositions of revenue equipment will be impacted by the market for used revenue equipment, which is beyond our control.
The
-------------------------------------------------------------------------------- Our operating income improved 49.4% to$35.9 million in the 2022 period from$24.0 million in the 2021 period as a result of the foregoing factors. Our operating expenses as a percentage of operating revenue, or "operating ratio," improved to 87.5% in the 2022 period from 89.2% in the 2021 period. The operating ratio for our Truckload segment was 86.2% in the 2022 period and 88.0% in the 2021 period, for our Dedicated segment was 89.0% in the 2022 period and 88.6% in the 2021 period, for our Intermodal segment was 84.1% in the 2022 period and 93.4% in the 2021 period, and for our Brokerage segment was 90.0% in the 2022 period and 92.2% in the 2021 period. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 85.4% in the 2022 period from 87.9% in the 2021 period.
Our effective income tax rate decreased to 23.2% in the 2022 period from 25.0% in the 2021 period primarily due to decreases in per diem and other non-deductible expenses.
As a result of the factors described above, net income improved 52.9% to$27.5 million , or$0.33 per diluted share, in the 2022 period from$18.0 million , or$0.22 per diluted share, in the 2021 period.
Liquidity and Capital Resources
Our business requires substantial, ongoing capital investments, particularly for
new tractors and trailers. Our primary sources of liquidity are funds provided
by operations and our revolving credit facility. A portion of our tractor fleet
is provided by independent contractors who own and operate their own equipment.
We have no capital expenditure requirements relating to those drivers who own
their tractors or obtain financing through third parties.
The table below reflects our net cash flows provided by operating activities,
net cash flows provided by/used for investing activities and net cash flows used
for financing activities for the periods indicated.
Three Months
Ended March 31,
(In thousands) 2022 2021
Net cash flows provided by operating activities $ 39,940 $ 43,570
Net cash flows provided by/(used for) investing activities 409 (17,417 )
Net cash flows (used for) financing activities (30,817 ) (3,697 )
In August 2019 , our Board of Directors approved and we announced an increase
from current availability in our existing share repurchase program providing for
the repurchase of up to $34 million , or approximately 1.8 million shares, of our
common stock, which was increased by our Board of Directors to 2.7 million
shares in August 2020 to reflect the three-for-two stock split effected in the
form of a stock dividend on August 13, 2020 . The share repurchase program allows
purchases on the open market or through private transactions in accordance with
Rule 10b-18 of the Exchange Act. The timing and extent to which we repurchase
shares depends on market conditions and other corporate considerations. The
repurchase program does not have an expiration date.
We repurchased and retired 1.3 million shares of common stock for $25.0 million
in the first quarter of 2022. We did not repurchase any shares in 2021. As of
March 31, 2022 , future repurchases of up to $8.4 million , or approximately 1.3
million shares, were available in the share repurchase program.
On
In the first three months of 2022, net cash flows provided by operating activities of$39.9 million were primarily used to repurchase and retire 1.3 million shares of our common stock for$25.0 million , to pay cash dividends of$5.0 million , and to construct and upgrade regional operating facilities in the amount of$2.5 million , resulting in a$9.5 million increase in cash and cash equivalents. In the first three months of 2021, net cash flows provided by operating activities of$43.6 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of$16.3 million , to pay cash dividends of$3.3 million , and to upgrade regional operating facilities in the amount of$591,000 , resulting in a$22.5 million increase in cash and cash equivalents. -------------------------------------------------------------------------------- We estimate that capital expenditures, net of proceeds from dispositions, will be approximately$153 million in the remainder of 2022. This amount includes commitments to purchase$38.6 million of new revenue equipment and$5.8 million in building construction through the remainder of 2022. We also have commitments to purchase$23.1 million of new revenue equipment in 2023. Additionally, operating lease obligations total$583,000 through 2024. A quarterly cash dividend of$0.06 per share of common stock was paid in the first quarter of 2022 which totaled$5.0 million . A quarterly cash dividend of$0.04 per share of common stock was paid in the first quarter of 2021 which totaled$3.3 million . We currently expect to continue to pay quarterly cash dividends in the future. The payment of cash dividends in the future, and the amount of any such dividends, will depend upon our financial condition, results of operations, cash requirements, and certain corporate law requirements, as well as other factors deemed relevant by our Board of Directors. We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future. We maintain a credit agreement that provides for an unsecured committed credit facility with an aggregate principal amount of$30.0 million which matures inAugust 2023 . AtMarch 31, 2022 , there was no outstanding principal balance on the facility. As of that date, we had outstanding standby letters of credit to guarantee settlement of self-insurance claims of$18.5 million and remaining borrowing availability of$11.5 million . This facility bears interest at a variable rate based on the Term SOFR Rate or the lender's Prime Rate, in each case plus/minus applicable margins. Our credit facility prohibits us from paying, in any fiscal year, stock redemptions and dividends in excess of 25% of our net income from the prior fiscal year. Waivers allowing stock redemptions and dividends in excess of the 25% limitation in total amounts of up to$80 million in each of 2022 and 2021 were obtained from the lender inMarch 2022 andAugust 2021 , respectively. This facility also contains restrictive covenants which, among other matters, require us to maintain compliance with cash flow leverage and fixed charge coverage ratios. We were in compliance with all covenants atMarch 31, 2022 andDecember 31, 2021 . Other than our obligations for revenue equipment and building construction purchases and operating lease expenditures, along with our outstanding standby letters of credit to guarantee settlement of self-insurance claims, which are each mentioned above, we did not have any material off-balance sheet arrangements atMarch 31, 2022 . Seasonality Our tractor productivity generally decreases during the winter season because inclement weather impedes operations and some shippers reduce their shipments. At the same time, operating expenses generally increase, with harsh weather creating higher accident frequency, increased claims, lower fuel efficiency and more equipment repairs. Critical Accounting Estimates There have been no material changes in the critical accounting estimates disclosed by us under Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates contained in the Annual Report on Form 10-K for the year endedDecember 31, 2021 .
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