At ArcBest, we are monitoring the evolving situation with the coronavirus (COVID-19) and its potential impact on our customers’ supply chains. Read More.

ArcBest Announces First Quarter 2019 Results

View as PDF

Investor Relations Contact: David Humphrey
Title: Vice President – Investor Relations
Phone: 479-785-6200 
Email: dhumphrey@arcb.com

Media Contact: Kathy Fieweger
Phone: 479-719-4358
Email: kfieweger@arcb.com

ArcBest® Announces First Quarter 2019 Results

 

  • First quarter 2019 revenue of $711.8 million, and net income of $4.9 million, or $0.18 per diluted share.  On a non-GAAP1 basis, first quarter 2019 net income was $4.6 million, or $0.17 per diluted share.
  • Solid pricing contributed to growth in Asset-Based revenue and improved operating income.
  • Lower Asset-Light revenue and operating income related to reduced demand amid changing market conditions and investments in the business.

 

FORT SMITH, Arkansas, May 2, 2019 — ArcBest® (Nasdaq: ARCB), a leading logistics company with creative problem solvers who deliver integrated solutions, today reported first quarter 2019 revenue of $711.8 million compared to first quarter 2018 revenue of $700.0 million.  First quarter 2019 operating income was $8.6 million compared to operating income of $12.7 million last year.  Net income was $4.9 million, or $0.18 per diluted share compared to first quarter 2018 net income of $10.0 million, or $0.37 per diluted share.

Excluding certain items in both periods, as identified in the attached reconciliation tables, non-GAAP net income was $4.6 million, or $0.17 per diluted share, in first quarter 2019 compared to first quarter 2018 net income of $7.8 million, or $0.29 per diluted share.

“Business conditions, while still relatively strong, moderated in the first quarter from the levels seen last year particularly with regard to capacity and weather,” said Chairman, President and CEO Judy R. McReynolds. “We were pleased to see positive results in a historically slow quarter, as our yield management initiatives on the asset-based side remained productive and net revenue margins in our ArcBest Asset-Light business improved, offset by reduced demand for expedited services resulting from a more balanced truckload capacity environment.”

 

 

Asset-Based

Results of Operations

First Quarter 2019 Versus First Quarter 2018

  • Revenue of $506.1 million compared to $482.1 million, a per-day increase of 5.8 percent.
  • Tonnage per day decrease of 3.1 percent, with a low-single digit percentage increase in LTL-rated freight.
  • Shipments per day increase of 3.1 percent.  Total weight per shipment decreased 6.0 percent and the decrease in the average LTL-rated shipment was approximately 2 percent.
  • Total billed revenue per hundredweight increased 8.0 percent and was positively impacted by Asset-Based pricing initiatives and lower average weight per shipment.  Excluding fuel surcharge, the percentage increase on ArcBest’s Asset-Based LTL freight was in the high-single digits.
  • Operating income of $13.6 million and an operating ratio of 97.3 percent compared to operating income of $13.4 million and an operating ratio of 97.2 percent.

 

 

  1. U.S. Generally Accepted Accounting Principles
 

 

During the first quarter, ArcBest’s Asset-Based operating income benefited from continued pricing initiatives.  First quarter total tonnage per day declined as an increase in LTL-rated freight tonnage was more than offset by decreases in truckload-rated spot shipments moving in the asset-based network.  Versus the prior year’s first quarter, revenue and costs were impacted by weather events that reduced business levels and unfavorably impacted freight handling and delivery productivity, as well as the efficiency of the over-the-road transportation operationThe negative impact of severe weather on Asset-Based first quarter operating income was approximately $million higher than in the prior year first quarter.

Throughout the quarter, emphasis on maintaining customer service, including adding headcount in a tight labor market in preparation for the expected seasonal increase in customer shipping levels contributed to higher first quarter costs in ArcBest’s asset-based network.  In the upcoming months, these investments in labor and operational resources will be evaluated relative to on-going business levels in consideration of maintaining the service levels offered to ArcBest customers.  In line with our previously disclosed expectations, the Asset-Based business incurred approximately $1.7 million of first quarter costs related to increased investment in testing and development of technology initiatives.

Asset-Light2

Results of Operations

First Quarter 2019 Versus First Quarter 2018

  • Revenue of $226.5 million compared to $229.7 million.
  • Operating income of $3.2 million compared to operating income of $4.7 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $6.7 million compared to Adjusted EBITDA of $8.4 million.

 

Reduced revenue in the Asset-Light ArcBest segment, compared to last year’s record first quarter, was the result of fewer shipments and a lower average revenue per shipment.  This year’s more balanced truckload environment relative to last year’s tighter market impacted account pricing and resulted in lower total net revenue in the ArcBest segment.  In particular, the effects of weaker demand and lower pricing for expedite services offset solid net revenue gains associated with truckload brokerage yield improvement and demand for our managed transportation solutions. Elevated costs in the Asset-Light ArcBest segment, that were the result of long-term strategic spending needed to build ArcBest’s owner-operator and contract carrier capacity, resulted in a reduction in first quarter operating income of approximately $1 million versus last year.  At FleetNet, an increase in total events contributed to revenue growth while operating income was comparable with the prior year due to lower net revenue per event.

New FASB Lease Accounting Standard (ASC 842)

ArcBest adopted the new ASC 842 lease accounting standard in the first quarter of 2019, which resulted in the recognition of “Operating right-of-use assets” of $69 million and “Operating lease liabilities” of $72 million, a portion of which is in current liabilities, as of March 31, 2019. There was no impact on ArcBest’s consolidated statements of operations or cash flows.

Closing Comments

“We are encouraged that customers recognize the value of the services we provide and streamlined access to help them solve their complex logistics challenges,” McReynolds said. “Our managed transportation solutions in particular are being well-received as customers increasingly recognize our unique ability to analyze their supply chain needs and provide them with meaningful insights and optimal transportation choices.”

 

 

 

  1. The ArcBest and FleetNet reportable segments, combined, represent Asset-Light operations.

Conference Call

ArcBest will host a conference call with company executives to discuss the 2019 first quarter results. The call will be on Friday, May 3rd at 9:30 a.m. EDT (8:30 a.m. CDT). Interested parties are invited to listen by calling (800) 926‑7431. Following the call, a recorded playback will be available through the end of the day on June 15, 2019. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21920420. The conference call and playback can also be accessed, through June 15, 2019, on ArcBest’s website at arcb.com.

 

Call participants can submit questions this afternoon prior to the conference call by emailing them to ir@arcb.com.  On the call, responses will be provided to as many questions as possible in the time available.

 

About ArcBest

ArcBest® (Nasdaq: ARCB) is a leading logistics company with creative problem solvers who deliver integrated solutions.  We'll find a way to deliver knowledge, expertise and a can-do attitude with every shipment and supply chain solution, household move or vehicle repair.  At ArcBest, we’re More Than LogisticsSM.  For more information, visit arcb.com.

Forward-Looking Statements

Certain statements and information in this press release concerning results for the three months ended March 31, 2019 may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “intend,” “may,” “plan,” “predict,” “project,” “scheduled,” “should,” “would,” and similar expressions and the negatives of such terms are intended to identify forward-looking statements. These statements are based on management’s beliefs, assumptions, and expectations based on currently available information, are not guarantees of future performance, and involve certain risks and uncertainties (some of which are beyond our control). Although we believe that the expectations reflected in these forward-looking statements are reasonable as and when made, we cannot provide assurance that our expectations will prove to be correct. Actual outcomes and results could materially differ from what is expressed, implied, or forecasted in these statements due to a number of factors, including, but not limited to: a failure of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data breach, and/or cybersecurity incidents; untimely or ineffective development and implementation of new or enhanced technology; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; relationships with employees, including unions, and our ability to attract and retain employees; unfavorable terms of, or the inability to reach agreement on, future collective bargaining agreements or a workforce stoppage by our employees covered under ABF Freight’s collective bargaining agreement; the cost, timing, and performance of growth initiatives; general economic conditions and related shifts in market demand that impact the performance and needs of industries we serve and/or limit our customers’ access to adequate financial resources; availability and cost of reliable third-party services; governmental regulations; environmental laws and regulations, including emissions-control regulations; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; litigation or claims asserted against us; maintaining our intellectual property rights, brand, and corporate reputation; the loss of key employees or the inability to execute succession planning strategies; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; self-insurance claims and insurance premium costs; the cost, integration, and performance of any recent or future acquisitions; availability of fuel, the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates, and the inability to collect fuel surcharges; increased prices for and decreased availability of new revenue equipment, decreases in value of used revenue equipment, and higher costs of equipment-related operating expenses such as maintenance and fuel and related taxes; potential impairment of goodwill and intangible assets; greater than anticipated funding requirements for our nonunion defined benefit pension plan; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; antiterrorism and safety measures; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest’s public filings with the Securities and Exchange Commission (“SEC”).

 

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

Financial Data and Operating Statistics

The following tables show financial data and operating statistics on ArcBest® and its reportable segments.

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31

 

 

    

2019

    

2018

    

 

 

(Unaudited)

 

 

 

($ thousands, except share and per share data)

 

REVENUES

 

$

 711,839

 

$

 700,001

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 703,248

 

 

 687,276

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 8,591

 

 

 12,725

 

 

 

 

 

 

 

 

 

OTHER INCOME (COSTS)

 

 

 

 

 

 

 

Interest and dividend income

 

 

 1,478

 

 

 526

 

Interest and other related financing costs

 

 

 (2,882)

 

 

 (2,059)

 

Other, net(1)

 

 

 (591)

 

 

 (2,201)

 

 

 

 

 (1,995)

 

 

 (3,734)

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 6,596

 

 

 8,991

 

 

 

 

 

 

 

 

 

INCOME TAX PROVISION (BENEFIT)

 

 

 1,708

 

 

 (963)

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

 4,888

 

$

 9,954

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE(2)

 

 

 

 

 

 

 

Basic

 

$

 0.19

 

$

 0.39

 

Diluted

 

$

 0.18

 

$

 0.37

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

Basic

 

 

 25,570,415

 

 

 25,642,871

 

Diluted

 

 

 26,512,349

 

 

 26,596,376

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.08

 

$

 0.08

 


  1. Includes nonunion pension expense, including settlement, of $1.7 million and $2.0 million for the three months ended March 31, 2019 and 2018, respectively. Pension settlements related to termination of the nonunion defined benefit pension plan began in fourth quarter 2018 and are expected to be complete in second quarter 2019.
  2. ArcBest uses the two-class method for calculating earnings per share. This method requires an allocation of dividends paid and a portion of undistributed net income (but not losses) to unvested restricted stock for calculating per share amounts.

 

 

 

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

March 31

 

December 31

 

 

    

2019

    

2018

 

 

 

(Unaudited)

 

Note

 

 

 

($ thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 138,399

 

$

 190,186

 

Short-term investments

 

 

 116,225

 

 

 106,806

 

Accounts receivable, less allowances (2019 - $6,655; 2018 - $7,380)

 

 

 294,853

 

 

 297,051

 

Other accounts receivable, less allowances (2019 - $456; 2018 - $806)

 

 

 16,925

 

 

 19,146

 

Prepaid expenses

 

 

 31,064

 

 

 25,304

 

Prepaid and refundable income taxes

 

 

 4,610

 

 

 1,726

 

Other

 

 

 4,466

 

 

 9,007

 

TOTAL CURRENT ASSETS

 

 

 606,542

 

 

 649,226

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

Land and structures

 

 

 340,764

 

 

 339,640

 

Revenue equipment

 

 

 856,370

 

 

 858,251

 

Service, office, and other equipment

 

 

 206,959

 

 

 199,230

 

Software

 

 

 142,062

 

 

 138,517

 

Leasehold improvements

 

 

 9,766

 

 

 9,365

 

 

 

 

 1,555,921

 

 

 1,545,003

 

Less allowances for depreciation and amortization

 

 

 932,945

 

 

 913,815

 

 

 

 

 622,976

 

 

 631,188

 

 

 

 

 

 

 

 

 

GOODWILL

 

 

 108,320

 

 

 108,320

 

INTANGIBLE ASSETS, NET

 

 

 67,820

 

 

 68,949

 

OPERATING RIGHT-OF-USE ASSETS

 

 

 68,737

 

 

 —

 

DEFERRED INCOME TAXES

 

 

 6,905

 

 

 7,468

 

OTHER LONG-TERM ASSETS

 

 

 78,357

 

 

 74,080

 

 

 

$

 1,559,657

 

$

 1,539,231

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

 145,590

 

$

 143,785

 

Income taxes payable

 

 

 241

 

 

 1,688

 

Accrued expenses

 

 

 211,533

 

 

 243,111

 

Current portion of long-term debt

 

 

 48,809

 

 

 54,075

 

Current portion of operating lease liabilities

 

 

 17,678

 

 

 —

 

Current portion of pension and postretirement liabilities

 

 

 7,984

 

 

 8,659

 

TOTAL CURRENT LIABILITIES

 

 

 431,835

 

 

 451,318

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, less current portion

 

 

 227,649

 

 

 237,600

 

OPERATING LEASE LIABILITIES, less current portion

 

 

 54,444

 

 

 —

 

PENSION AND POSTRETIREMENT LIABILITIES, less current portion

 

 

 31,695

 

 

 31,504

 

OTHER LONG-TERM LIABILITIES

 

 

 36,406

 

 

 44,686

 

DEFERRED INCOME TAXES

 

 

 55,873

 

 

 56,441

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2019: 28,685,313 shares; 2018: 28,684,779 shares

 

 

 287

 

 

 287

 

Additional paid-in capital

 

 

 327,762

 

 

 325,712

 

Retained earnings

 

 

 504,225

 

 

 501,389

 

   Treasury stock, at cost, 2019: 3,172,019 shares; 2018: 3,097,634 shares

 

 

 (98,131)

 

 

 (95,468)

 

Accumulated other comprehensive loss

 

 

 (12,388)

 

 

 (14,238)

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 721,755

 

 

 717,682

 

 

 

$

 1,559,657

 

$

 1,539,231

 

 

Note:  The balance sheet at December 31, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

 

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31

 

 

    

2019

    

2018

 

 

 

Unaudited

 

 

 

($ thousands)

 

 OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

 4,888

 

$

 9,954

 

Adjustments to reconcile net income

 

 

 

 

 

 

 

to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 25,409

 

 

 25,352

 

Amortization of intangibles

 

 

 1,128

 

 

 1,134

 

Pension settlement expense

 

 

 1,356

 

 

 654

 

Share-based compensation expense

 

 

 2,058

 

 

 1,870

 

Provision for losses on accounts receivable

 

 

 112

 

 

 445

 

Deferred income tax benefit

 

 

 (584)

 

 

 (2,749)

 

Gain on sale of property and equipment

 

 

 (43)

 

 

 (221)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

 3,931

 

 

 (10,260)

 

Prepaid expenses

 

 

 (5,760)

 

 

 (2,587)

 

Other assets

 

 

 4,589

 

 

 2,732

 

Income taxes

 

 

 (4,313)

 

 

 1,938

 

Multiemployer pension fund withdrawal liability

 

 

 (143)

 

 

 —

 

Accounts payable, accrued expenses, and other liabilities

 

 

 (35,999)

 

 

 3,513

 

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

 

 (3,371)

 

 

 31,775

 

 

 

 

 

 

 

 

 

 INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net of financings

 

 

 (15,543)

 

 

 (7,177)

 

Proceeds from sale of property and equipment

 

 

 1,039

 

 

 1,050

 

Purchases of short-term investments

 

 

 (13,790)

 

 

 (4,410)

 

Proceeds from sale of short-term investments

 

 

 4,998

 

 

 6,245

 

Capitalization of internally developed software

 

 

 (2,656)

 

 

 (2,164)

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

 (25,952)

 

 

 (6,456)

 

 

 

 

 

 

 

 

 

 FINANCING ACTIVITIES

 

 

 

 

 

 

 

Payments on long-term debt

 

 

 (15,217)

 

 

 (16,558)

 

Net change in book overdrafts

 

 

 (2,524)

 

 

 (2,572)

 

Payment of common stock dividends

 

 

 (2,052)

 

 

 (2,058)

 

Purchases of treasury stock

 

 

 (2,663)

 

 

 (201)

 

Payments for tax withheld on share-based compensation

 

 

 (8)

 

 

 (50)

 

NET CASH USED IN FINANCING ACTIVITIES

 

 

 (22,464)

 

 

 (21,439)

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

 (51,787)

 

 

 3,880

 

Cash and cash equivalents at beginning of period

 

 

 190,186

 

 

 120,772

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

 138,399

 

$

 124,652

 

 

 

 

 

 

 

 

 

 NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

Equipment financed

 

$

 —

 

$

 121

 

Accruals for equipment received

 

$

 2,878

 

$

 883

 

Lease liabilities arising from obtaining right-of-use assets

 

$

 18,144

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31

 

 

    

2019

    

 

2018

    

 

 

Unaudited

 

 

 

($ thousands, except percentages)

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 506,079

 

 

 

 

$

 482,115

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 173,204

 

 

 

 

 

 181,933

 

 

 

FleetNet

 

 

 53,259

 

 

 

 

 

 47,759

 

 

 

Total Asset-Light

 

 

 226,463

 

 

 

 

 

 229,692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (20,703)

 

 

 

 

 

 (11,806)

 

 

 

Total consolidated revenues

 

$

 711,839

 

 

 

 

$

 700,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages, and benefits

 

$

 280,276

 

 55.4

%

 

$

 269,779

 

 56.0

%

Fuel, supplies, and expenses

 

 

 64,727

 

 12.8

 

 

 

 62,193

 

 12.9

 

Operating taxes and licenses

 

 

 12,398

 

 2.4

 

 

 

 11,756

 

 2.4

 

Insurance

 

 

 7,991

 

 1.6

 

 

 

 6,628

 

 1.4

 

Communications and utilities

 

 

 4,620

 

 0.9

 

 

 

 4,521

 

 0.9

 

Depreciation and amortization

 

 

 20,980

 

 4.1

 

 

 

 20,930

 

 4.3

 

Rents and purchased transportation

 

 

 49,912

 

 9.9

 

 

 

 46,133

 

 9.6

 

Shared services(1)

 

 

 50,712

 

 10.0

 

 

 

 45,607

 

 9.4

 

Gain on sale of property and equipment

 

 

 (34)

 

 —

 

 

 

 (133)

 

 —

 

Other

 

 

 882

 

 0.2

 

 

 

 1,299

 

 0.3

 

Total Asset-Based

 

 

 492,464

 

 97.3

%

 

 

 468,713

 

 97.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

 

 140,105

 

 80.9

%

 

 

 148,372

 

 81.6

%

Supplies and expenses

 

 

 2,774

 

 1.6

 

 

 

 3,230

 

 1.8

 

Depreciation and amortization(2)

 

 

 3,151

 

 1.8

 

 

 

 3,408

 

 1.9

 

Shared services(1)

 

 

 23,031

 

 13.3

 

 

 

 21,868

 

 12.0

 

Other

 

 

 2,413

 

 1.4

 

 

 

 1,881

 

 1.0

 

Restructuring costs(3)

 

 

 —

 

 —

 

 

 

 9

 

 —

 

 

 

 

 171,474

 

 99.0

%

 

 

 178,768

 

 98.3

%

FleetNet

 

 

 51,771

 

 97.2

%

 

 

 46,238

 

 96.8

%

Total Asset-Light

 

 

 223,245

 

 

 

 

 

 225,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(4)

 

 

 (12,461)

 

 

 

 

 

 (6,443)

 

 

 

Total consolidated operating expenses

 

$

 703,248

 

 98.8

%

 

$

 687,276

 

 98.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 13,615

 

 

 

 

$

 13,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 1,730

 

 

 

 

 

 3,165

 

 

 

FleetNet

 

 

 1,488

 

 

 

 

 

 1,521

 

 

 

Total Asset-Light

 

 

 3,218

 

 

 

 

 

 4,686

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(4)

 

 

 (8,242)

 

 

 

 

 

 (5,363)

 

 

 

Total consolidated operating income

 

$

 8,591

 

 

 

 

$

 12,725

 

 

 


  1. Shared services represent costs incurred to support all segments, including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, legal, and other company-wide services.
  2. Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses.
  3. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  4. “Other and eliminations” includes corporate costs for certain unallocated shared service costs which are not attributable to any segment, additional investments to offer comprehensive transportation and logistics services across multiple operating segments, and other investments in ArcBest technology and innovations.

 

Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures and ratios utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management's opinion, do not reflect our core operating performance. Other companies may calculate non-GAAP measures differently; therefore, our calculation may not be comparable to similarly titled measures of other companies. Certain information discussed in the scheduled conference call could be considered non-GAAP measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. These financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as determined under GAAP.

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31

 

 

    

2019

 

2018

    

 

 

(Unaudited)

 

 

 

($ thousands, except per share data)

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 8,591

 

$

 12,725

 

Restructuring charges, pre-tax(1)

 

 

 —

 

 

 376

 

Non-GAAP amounts

 

$

 8,591

 

$

 13,101

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 4,888

 

$

 9,954

 

Restructuring charges, after-tax(1)

 

 

 —

 

 

 277

 

Nonunion pension expense, including settlement, after-tax(2)

 

 

 1,287

 

 

 1,520

 

Life insurance proceeds and changes in cash surrender value

 

 

 (1,614)

 

 

 (114)

 

Tax benefit from vested RSUs

 

 

 (2)

 

 

 (20)

 

Deferred tax adjustment for 2017 Tax Reform Act(3)

 

 

 —

 

 

 (2,591)

 

Impact of 2017 Tax Reform Act on current tax expense(3)

 

 

 —

 

 

 (59)

 

Alternative fuel tax credit(4)

 

 

 —

 

 

 (1,203)

 

Non-GAAP amounts

 

$

 4,559

 

$

 7,764

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 0.18

 

$

 0.37

 

Restructuring charges, after-tax(1)

 

 

 —

 

 

 0.01

 

Nonunion pension expense, including settlement, after-tax(2)

 

 

 0.05

 

 

 0.06

 

Life insurance proceeds and changes in cash surrender value

 

 

 (0.06)

 

 

 —

 

Tax benefit from vested RSUs

 

 

 —

 

 

 —

 

Deferred tax adjustment for 2017 Tax Reform Act(3)

 

 

 —

 

 

 (0.10)

 

Impact of 2017 Tax Reform Act on current tax expense(3)

 

 

 —

 

 

 —

 

Alternative fuel tax credit(4)

 

 

 —

 

 

 (0.05)

 

Non-GAAP amounts

 

$

 0.17

 

$

 0.29

 


  1. Restructuring charges for the three months ended March 31, 2018, which relate to the realignment of the Company’s organizational structure as announced on November 3, 2016, were primarily recognized within “Other and eliminations.”
  2. Nonunion pension expense is presented as a non-GAAP adjustment with pension settlement expense, because expenses related to the plan have been excluded from the financial information management uses to make operating decisions, as the nonunion defined benefit pension plan was amended to terminate the plan with a termination date of December 31, 2017. Pension settlements related to the plan termination began in fourth quarter 2018 and are expected to be complete in second quarter 2019.
  3. Impact on current or deferred income tax expense as a result of recognizing the tax effects of the Tax Cuts and Jobs Act (“2017 Tax Reform Act”) that was signed into law on December 22, 2017.
  4. Represents the amount of the alternative fuel tax credit related to the year ended December 31, 2017 which was recorded in first quarter 2018 due to the February 2018 retroactive reinstatement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ thousands, except percentages)

 

Three Months Ended March 31, 2019

 

 

 

 

 

Other

 

Income Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 8,591

 

$

 (1,995)

 

$

 6,596

 

$

 1,708

 

$

 4,888

 

 25.9

%  

Nonunion pension expense, including settlement(1)

 

 

 —

 

 

 1,733

 

 

 1,733

 

 

 446

 

 

 1,287

 

 25.7

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (1,614)

 

 

 (1,614)

 

 

 —

 

 

 (1,614)

 

 —

 

Tax benefit from vested RSUs

 

 

 —

 

 

 —

 

 

 —

 

 

 2

 

 

 (2)

 

 —

 

Non-GAAP amounts

 

$

 8,591

 

$

 (1,876)

 

$

 6,715

 

$

 2,156

 

$

 4,559

 

 32.1

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2018

 

 

 

 

Other

 

Income Before

 

Income Tax

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Provision

 

Net

 

Effective Tax

 

 

Income

 

(Costs)

 

Taxes

 

(Benefit)

 

Income

 

(Benefit) Rate

Amounts on GAAP basis

 

$

 12,725

 

$

 (3,734)

 

$

 8,991

 

$

 (963)

 

$

 9,954

 

 (10.7)

%  

Nonunion pension expense, including settlement(1)

 

 

 —

 

 

 2,046

 

 

 2,046

 

 

 526

 

 

 1,520

 

 25.7

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (114)

 

 

 (114)

 

 

 —

 

 

 (114)

 

 —

 

Tax benefit from vested RSUs

 

 

 —

 

 

 —

 

 

 —

 

 

 20

 

 

 (20)

 

 —

 

Deferred tax adjustment for 2017 Tax Reform Act(2)

 

 

 —

 

 

 —

 

 

 —

 

 

 2,591

 

 

 (2,591)

 

 —

 

Impact of 2017 Tax Reform Act on current tax expense(2)

 

 

 —

 

 

 —

 

 

 —

 

 

 59

 

 

 (59)

 

 —

 

Restructuring charges(3)

 

 

 376

 

 

 —

 

 

 376

 

 

 99

 

 

 277

 

 26.3

 

Alternative fuel tax credit(4)

 

 

 —

 

 

 —

 

 

 —

 

 

 1,203

 

 

 (1,203)

 

 —

 

Non-GAAP amounts

 

$

 13,101

 

$

 (1,802)

 

$

 11,299

 

$

 3,535

 

$

 7,764

 

 31.3

%  


  1. Nonunion pension expense is presented as a non-GAAP adjustment with pension settlement expense, because expenses related to the plan have been excluded from the financial information management uses to make operating decisions, as the nonunion defined benefit pension plan was amended to terminate the plan with a termination date of December 31, 2017. Pension settlements related to the plan termination began in fourth quarter 2018 and are expected to be complete in second quarter 2019.
  2. Impact on current or deferred income tax expense as a result of recognizing the tax effects of the Tax Cuts and Jobs Act (“2017 Tax Reform Act”) that was signed into law on December 22, 2017.
  3. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  4. Represents the amount of the alternative fuel tax credit related to the year ended December 31, 2017 which was recorded in first quarter 2018 due to the February 2018 retroactive reinstatement.

 

 

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA)

Management uses Adjusted EBITDA as a key measure of performance and for business planning. The measure is particularly meaningful for analysis of operating performance, because it excludes amortization of acquired intangibles and software of the Asset-Light businesses, which are significant expenses resulting from strategic decisions rather than core daily operations. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our credit agreement.

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31

 

 

    

2019

    

2018

    

 

 

(Unaudited)

 

ArcBest Corporation - Consolidated Adjusted EBITDA

 

($ thousands)

 

 

 

 

Net Income

 

$

 4,888

 

$

 9,954

 

Interest and other related financing costs

 

 

 2,882

 

 

 2,059

 

Income tax provision (benefit)

 

 

 1,708

 

 

 (963)

 

Depreciation and amortization

 

 

 26,537

 

 

 26,486

 

Amortization of share-based compensation

 

 

 2,058

 

 

 1,870

 

Amortization of net actuarial losses of benefit plans and pension settlement expense(1)

 

 

 1,754

 

 

 1,528

 

Restructuring charges(2)

 

 

 —

 

 

 376

 

Consolidated Adjusted EBITDA

 

$

 39,827

 

$

 41,310

 


  1. Includes pre-tax settlement expense related to the nonunion pension plan of $1.4 million and $0.7 million for the three months ended March 31, 2019 and 2018, respectively. Pension settlements related to the plan termination began in fourth quarter 2018 and are expected to be complete in second quarter 2019.
  2. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31

 

 

    

2019

 

2018

 

Asset-Light Adjusted EBITDA

 

(Unaudited)

 

 

 

($ thousands, except percentages)

 

 

 

 

 

ArcBest

 

 

 

 

 

 

 

Operating Income

 

$

 1,730

 

$

 3,165

 

Depreciation and amortization(3)

 

 

 3,151

 

 

 3,408

 

Restructuring charges(4)

 

 

 —

 

 

 9

 

Adjusted EBITDA

 

$

 4,881

 

$

 6,582

 

 

 

 

 

FleetNet

 

 

 

Operating Income

 

$

 1,488

 

$

 1,521

 

Depreciation and amortization

 

 

 317

 

 

 279

 

Adjusted EBITDA

 

$

 1,805

 

$

 1,800

 

 

 

 

 

Total Asset-Light

 

 

 

 

 

 

 

Operating Income

 

$

 3,218

 

$

 4,686

 

Depreciation and amortization(3)

 

 

 3,468

 

 

 3,687

 

Restructuring charges(4)

 

 

 —

 

 

 9

 

Adjusted EBITDA

 

$

 6,686

 

$

 8,382

 


  1. Depreciation and amortization consists primarily of amortization of intangibles and software associated with acquired businesses.
  2. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.

 

Non-GAAP Net Revenue

Management uses net revenue, defined as revenues less purchased transportation costs, as a key performance measure of our ArcBest segment which primarily sources transportation services from third-party providers. Non-GAAP net revenue margin for the ArcBest segment is calculated as net revenue divided by revenues.

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31

 

 

    

2019

    

2018

    

% Change

    

 

 

(Unaudited)

 

ArcBest Segment

 

($ thousands)

 

 

 

 

Revenues

 

$

 173,204

 

$

 181,933

 

(4.8%)

 

Less purchased transportation

 

 

 140,105

 

 

 148,372

 

(5.6%)

 

Non-GAAP net revenue

 

$

 33,099

 

$

 33,561

 

(1.4%)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net revenue margin

 

 

19.1%

 

 

18.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31

 

 

    

2019

    

2018

    

% Change

    

 

 

(Unaudited)

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Workdays

 

 

 63.0

 

 

 63.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Billed Revenue(1) / CWT

 

$

 34.66

 

$

 32.10

 

8.0%

 

 

 

 

 

 

 

 

 

 

 

Billed Revenue(1) / Shipment

 

$

 418.23

 

$

 412.14

 

1.5%

 

 

 

 

 

 

 

 

 

 

 

Shipments

 

 

 1,210,787

 

 

 1,183,256

 

2.3%

 

 

 

 

 

 

 

 

 

 

 

Shipments / Day

 

 

 19,219

 

 

 18,634

 

3.1%

 

 

 

 

 

 

 

 

 

 

 

Tonnage (Tons)

 

 

 730,409

 

 

 759,556

 

(3.8%)

 

 

 

 

 

 

 

 

 

 

 

Tons / Day

 

 

 11,594

 

 

 11,962

 

(3.1%)

 

 

 

 

 

 

 

 

 

 

 

Average Length of Haul (Miles)

 

 

 1,023

 

 

 1,035

 

(1.2%)

 

 

 

 

 

 

 

 

 

 

 


  1. Revenue for undelivered freight is deferred for financial statement purposes in accordance with the Asset-Based segment revenue recognition policy. Billed revenue used for calculating revenue per hundredweight measurements has not been adjusted for the portion of revenue deferred for financial statement purposes.
     
     

 

 

 

 

 

 

 

Year Over Year % Change

 

 

 

Three Months Ended 

 

 

    

March 31, 2019

 

 

 

(Unaudited)

 

ArcBest(2)

 

 

 

 

 

 

 

 

 

Revenue / Shipment

 

 

(6.6%)

 

 

 

 

 

 

Shipments / Day

 

 

(1.0%)

 


2. Statistical data related to managed transportation services transactions are not included in the presentation of operating statistics for the ArcBest segment.
 
 
###