ArcBest Announces Fourth Quarter 2016 And Full Year 2016 Results

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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

ArcBestSM Announces Fourth Quarter 2016 And Full Year 2016 Results

  • Fourth quarter 2016 revenue of $688.2 million, and net income of $1.6 million, or $0.06 per diluted share.  On a non-GAAP basis, fourth quarter 2016 net income of $7.6 million, or $0.29 per diluted share.
  • Improved fourth quarter asset-based and asset-light operating income, on a non-GAAP basis
  • Fourth quarter asset-light revenue represented 30 percent of consolidated revenue, positively impacted by increased demand for expedited services and a September 2016 acquisition.
  • ArcBest full year 2016 consolidated revenue of $2.7 billion.

FORT SMITH, Arkansas, February 8, 2017 — ArcBestSM (Nasdaq: ARCB) today reported fourth quarter 2016 net income of $1.6 million, or $0.06 per diluted share, compared to fourth quarter 2015 net income of $5.0 million, or $0.19 per diluted share.  ArcBest’s fourth quarter 2016 revenue was $688.2 million versus revenue of $648.1 million in the same period of 2015, an increase of 6.2 percent. 

Excluding certain items in both periods as identified in the attached reconciliation tables, ArcBest’s non-GAAP net income was $7.6 million, or $0.29 per diluted share, in fourth quarter 2016 compared to fourth quarter 2015 non-GAAP net income of $5.5 million, or $0.21 per diluted share.  Adjustments in the fourth quarter 2016 period included $10.3 million, or $0.24 per diluted share after-tax, related to a reorganization charge for impairment of software, contract and lease terminations and severance associated with ArcBest’s new corporate structure that was implemented beginning in 2017. 

“Throughout 2016, during an inconsistent operating environment in our industry, we saw a positive reception from customers about our commitment to provide full supply chain solutions they seek as we continued to grow our company,” said ArcBest Chairman, President and CEO Judy R. McReynolds. “We accelerated that commitment when we announced a new, enhanced market approach in November that enables us to provide a better customer experience by simplifying our organization and offering logistics solutions primarily under the ArcBest brand. With this new structure operational as of January 1, our ArcBest team is fully engaged and delivering integrated logistics solutions through an exceptional customer experience.”

Asset-Based

Results of Operations

Fourth Quarter 2016 Versus Fourth Quarter 2015

  • Revenue of $482.1 million compared to $461.0 million, a per-day increase of 5.4 percent.
  • Tonnage per day increase of 0.9 percent.
  • Shipments per day increase of 6.1 percent.
  • Total billed revenue per hundredweight increased by 3.6 percent and was impacted by changes in shipment profile.  Excluding fuel surcharge, the percentage increase on ArcBest’s asset-based traditional LTL freight was in the mid-single digits.
  • Operating income of $7.1 million and an operating ratio of 98.5 percent compared to $7.7 million and an operating ratio of 98.3 percent.  On a non-GAAP basis, operating income of $8.9 million and an operating ratio of 98.2 percent compared to $8.3 million and an operating ratio of 98.2 percent.

ArcBest’s asset-based services, offered through the ABF Freight brand, experienced higher average daily revenue resulting from increased revenue per hundredweight positively impacted by freight profile changes.  In the midst of a competitive but rational industry yield environment, ArcBest’s asset-based pricing remained disciplined.  In fourth quarter 2016, freight shipments grew at a faster rate than freight tonnage.  Thus, the average weight, and resulting revenue, of each shipment was below that of fourth quarter 2015.  The shipment growth contributed to increased freight handling labor and purchased transportation costs.  Asset-based expenses as a percent of revenue improved in the areas of equipment repositioning, equipment maintenance and cargo care while a continuing trend of higher nonunion healthcare costs unfavorably impacted operating results.

Asset-Light

Results of Operations

Fourth Quarter 2016 Versus Fourth Quarter 2015

  • Revenue of $211.2 million compared to $191.5 million.
  • Operating loss of $0.9 million compared to operating income of $3.4 million. On a non-GAAP basis, operating income of $7.5 million compared to $4.3 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $11.2 million compared to Adjusted EBITDA of $7.0 million.

Asset-light revenue grew due to continued strength in the demand for expedited services and additional revenue from previous asset-light acquisitions within the truckload and dedicated truckload markets.  The non-GAAP operating margin improvement reflects cost management initiatives, including the expense reductions associated with the corporate restructuring.  Though less impactful than in the previous quarter, changes in the ocean shipping market contributed to lower revenues and margins in ArcBest’s international business.  FleetNet’s fourth quarter profit margin improvements were a result of strict cost management and the positive effects of changes in customer accounts throughout the year.

Full Year 2016 Results

ArcBest’s revenue totaled $2.70 billion, a slight increase compared to $2.67 billion in 2015.  Net income was $18.7 million, or $0.71 per diluted share.  On a non-GAAP basis, ArcBest had 2016 net income of $24.4 million, or $0.93 per diluted share compared to net income of $47.9 million, or $1.78 per diluted share in 2015. 

During 2016, ArcBest increased shareholder returns through payment of an eight cent per share quarterly dividend and purchase of ArcBest shares valued at approximately $9.5 million.

Asset-Based

Results of Operations

Full Year 2016 Versus Full Year 2015

  • Revenue of $1.92 billion, equal to prior year. Asset-based revenue in 2016 was impacted by lower fuel surcharges.
  • Tonnage per day decrease of 1.8 percent.
  • Shipments per day increase of 2.3 percent. 
  • Total billed revenue per hundredweight increased 1.3 percent and was impacted by lower fuel surcharges in 2016.  Excluding fuel surcharge, the percentage increase on ArcBest’s asset-based traditional LTL freight was in the low-single digits.
  • Operating income of $33.6 million and an operating ratio of 98.2 percent compared to $62.4 million and an operating ratio of 96.7 percent.  On a non-GAAP basis, an operating ratio of 98.0 percent compared to an operating ratio of 96.6 percent.

Asset-Light

Results of Operations

Full Year 2016 Versus Full Year 2015

  • Revenue of $803.4 million compared to $765.4 million, an increase of 5.0 percent.
  • Operating income of $9.3 million compared to $23.7 million.  On a non-GAAP basis, operating income of $17.7 million compared to $24.8 million.
  • Adjusted EBITDA of $32.9 million compared to $38.2 million.
  • ArcBest acquired Logistics & Distribution Services in September 2016, enhancing its service offerings in dedicated truckload.

Capital Expenditures

In 2016, total net capital expenditures equaled $143 million, including approximately $91 million of revenue equipment for ArcBest’s asset-based operation.  Depreciation and amortization costs on property, plant and equipment were $99 million.

For 2017, total net capital expenditures are estimated to range from $145 million to $170 million. This includes revenue equipment purchases of $94 million primarily for ArcBest’s asset-based operation.  Expected real estate expenditures totaling approximately $32 million are for expansion opportunities and completion of previously disclosed call center facilities and office building, a portion of which replaces leased space.  The remainder of expected capital expenditures includes the costs of additional asset-based investments and technology enhancements across the enterprise.  ArcBest’s depreciation and amortization costs on property, plant and equipment in 2017 are estimated to be in a range of $105 million to $115 million.

Closing Comments

“Although 2016 was a challenging freight environment, we were pleased with our positive momentum, particularly in our expedited service offerings, as we closed the year,” said McReynolds. “That improvement, combined with expanded asset-light truckload service offerings, and the assets available through the broad ABF LTL network, means that we are positioned well with capacity sources when our customers ask for integrated logistics services to meet their needs.  ArcBest’s enhanced market approach, combined with the cost savings resulting from our improved organizational structure, has resulted in a more efficient process for delivering an excellent experience for our customers.  It’s an exciting time at ArcBest and our employees are energized around our new structure and the capabilities available to them.”

Conference Call

ArcBest Corporation will host a conference call with company executives to discuss the 2016 fourth quarter results. The call will be today, Wednesday, February 8, at 9:30 a.m. ET (8:30 a.m. CT). Interested parties are invited to listen by calling (800) 682-8539. Following the call, a recorded playback will be available through the end of the day on March 15, 2017. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21842016. The conference call and playback can also be accessed, through March 15, 2017, on ArcBest’s website at arcb.com.

About ArcBest

ArcBestSM (Nasdaq: ARCB) is a logistics company with creative problem solvers who have The Skill and the Will® to deliver integrated logistics solutions.  At ArcBest, 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.  For more information, visit arcb.com.

Forward-Looking Statements

Certain statements and information in this press release concerning results for the three and twelve months ended December 31, 2016 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 forward-looking 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; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; competitive initiatives and pricing pressures; governmental regulations; environmental laws and regulations, including emissions-control regulations; the cost, integration, and performance of any future acquisitions; relationships with employees, including unions, and our ability to attract and retain employees and/or independent owner operators; 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; 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; potential impairment of goodwill and intangible assets; availability and cost of reliable third-party services; litigation or claims asserted against us; self-insurance claims and insurance premium costs; 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; the loss of key employees or the inability to execute succession planning strategies; the impact of our brands and corporate reputation; the cost, timing, and performance of growth initiatives; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; and other financial, operational, and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission (“SEC”) public filings.

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.

NOTE

‡ - Previously, ArcBest announced its plan to implement a new corporate structure, effective January 1, 2017, that better serves customers by unifying its sales, pricing, customer service, marketing, and capacity sourcing functions. Based on the financial information that management used during fourth quarter 2016 to make operating decisions and allocate resources, it is reporting its operating segment results as follows: Asset-Based, which represents ABF Freight; ArcBest, a single asset-light logistics operation combining the previously reported operating segments of ABF Logistics, Panther, and ABF Moving; FleetNet; and Other and eliminations.  The ArcBest and FleetNet reportable segments, combined, represent Asset-Light operations.  Certain restatements have been made to the prior year’s operating segment data to conform to the current year presentation.  The 8-K filing associated with this earnings release includes an exhibit containing ArcBest’s 2015 and 2016 quarterly operating segment data that conforms to the current year presentation.

 

Financial Data and Operating Statistics

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

 

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Year Ended 

 

 

December 31

 

December 31

 

    

2016

    

2015

    

2016

    

2015

 

 

(Unaudited)

 

 

($ thousands, except share and per share data)

REVENUES

 

$

 688,214

 

$

 648,134

 

$

 2,700,219

 

$

 2,666,905

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 687,003

 

 

 640,822

 

 

 2,671,249

 

 

 2,591,409

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 1,211

 

 

 7,312

 

 

 28,970

 

 

 75,496

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (COSTS)

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

 345

 

 

 402

 

 

 1,523

 

 

 1,284

Interest and other related financing costs

 

 

 (1,376)

 

 

 (1,217)

 

 

 (5,150)

 

 

 (4,400)

Other, net

 

 

 916

 

 

 370

 

 

 2,944

 

 

 354

 

 

 

 (115)

 

 

 (445)

 

 

 (683)

 

 

 (2,762)

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 1,096

 

 

 6,867

 

 

 28,287

 

 

 72,734

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX PROVISION (BENEFIT)

 

 

 (488)

 

 

 1,878

 

 

 9,635

 

 

 27,880

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

 1,584

 

$

 4,989

 

$

 18,652

 

$

 44,854

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE(1)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 0.06

 

$

 0.19

 

$

 0.72

 

$

 1.71

Diluted

 

$

 0.06

 

$

 0.19

 

$

 0.71

 

$

 1.67

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 25,669,280

 

 

 25,936,709

 

 

 25,751,544

 

 

 26,013,716

Diluted

 

 

 26,272,487

 

 

 26,415,839

 

 

 26,256,570

 

 

 26,530,127

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.08

 

$

 0.08

 

$

 0.32

 

$

 0.26


  1. ArcBest uses the two-class method for calculating earnings per share. This method, as calculated below for diluted earnings per share, 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

 1,584

 

$

 4,989

 

$

 18,652

 

$

 44,854

 

 

 

 

 

 

 

 

 

 

 

 

 

EFFECT OF UNVESTED RESTRICTED STOCK AWARDS

 

 

 (10)

 

 

 (45)

 

 

 (137)

 

 

 (443)

 

 

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED NET INCOME FOR CALCULATING EARNINGS PER COMMON SHARE (1)

 

$

 1,574

 

$

 4,944

 

$

 18,515

 

$

 44,411

 

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

December 31

 

December 31

 

 

    

2016

    

2015

 

 

 

(Unaudited)

 

Note

 

 

 

($ thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 114,280

 

$

 164,973

 

Short-term investments

 

 

 56,838

 

 

 61,597

 

Restricted cash

 

 

 962

 

 

 1,384

 

   Accounts receivable, less allowances (2016 - $5,437; 2015 - $4,825)

 

 

 260,643

 

 

 236,097

 

   Other accounts receivable, less allowances (2016 - $849; 2015 - $1,029)

 

 

 13,334

 

 

 6,718

 

Prepaid expenses

 

 

 22,124

 

 

 20,801

 

Deferred income taxes

 

 

 39,599

 

 

 38,443

 

Prepaid and refundable income taxes

 

 

 9,909

 

 

 18,134

 

Other

 

 

 4,300

 

 

 3,936

 

TOTAL CURRENT ASSETS

 

 

 521,989

 

 

 552,083

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

Land and structures

 

 

 305,507

 

 

 273,839

 

Revenue equipment

 

 

 743,860

 

 

 699,844

 

Service, office, and other equipment

 

 

 154,119

 

 

 145,286

 

Software

 

 

 120,877

 

 

 127,010

 

Leasehold improvements

 

 

 27,337

 

 

 25,419

 

 

 

 

 1,351,700

 

 

 1,271,398

 

Less allowances for depreciation and amortization

 

 

 819,174

 

 

 788,351

 

 

 

 

 532,526

 

 

 483,047

 

 

 

 

 

 

 

 

 

GOODWILL

 

 

 108,875

 

 

 96,465

 

INTANGIBLE ASSETS, NET

 

 

 80,507

 

 

 76,787

 

OTHER LONG-TERM ASSETS

 

 

 66,095

 

 

 54,527

 

 

 

$

 1,309,992

 

$

 1,262,909

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

 133,301

 

$

 130,869

 

Income taxes payable

 

 

 —

 

 

 91

 

Accrued expenses

 

 

 190,024

 

 

 188,727

 

Current portion of long-term debt

 

 

 64,143

 

 

 44,910

 

TOTAL CURRENT LIABILITIES

 

 

 387,468

 

 

 364,597

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, less current portion

 

 

 179,530

 

 

 167,599

 

PENSION AND POSTRETIREMENT LIABILITIES

 

 

 35,848

 

 

 51,241

 

OTHER LONG-TERM LIABILITIES

 

 

 16,790

 

 

 12,689

 

DEFERRED INCOME TAXES

 

 

 91,459

 

 

 78,055

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2016: 28,174,424 shares; 2015: 27,938,319 shares

 

 

 282

 

 

 279

 

Additional paid-in capital

 

 

 314,916

 

 

 309,653

 

Retained earnings

 

 

 387,161

 

 

 376,827

 

   Treasury stock, at cost, 2016: 2,565,399 shares; 2015: 2,080,187 shares

 

 

 (80,045)

 

 

 (70,535)

 

Accumulated other comprehensive loss

 

 

 (23,417)

 

 

 (27,496)

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 598,897

 

 

 588,728

 

 

 

$

 1,309,992

 

$

 1,262,909

 

Note:  The balance sheet at December 31, 2015 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

 

 

 

 

 

 

 

 

 

 

Year Ended 

 

 

 

December 31

 

 

    

2016

    

2015

 

 

 

Unaudited

 

 

 

($ thousands)

 

 OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

 18,652

 

$

 44,854

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 98,814

 

 

 89,040

 

Amortization of intangibles

 

 

 4,239

 

 

 4,002

 

Impairment of long-lived assets

 

 

 6,244

 

 

 —

 

Pension settlement expense

 

 

 3,229

 

 

 3,202

 

Share-based compensation expense

 

 

 7,588

 

 

 8,029

 

Provision for losses on accounts receivable

 

 

 1,643

 

 

 998

 

Deferred income tax provision

 

 

 9,522

 

 

 16,435

 

Gain on sale of property and equipment

 

 

 (3,335)

 

 

 (2,225)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

 (25,570)

 

 

 4,242

 

Prepaid expenses

 

 

 (1,393)

 

 

 362

 

Other assets

 

 

 (4,355)

 

 

 1,090

 

Income taxes

 

 

 6,236

 

 

 (8,918)

 

Accounts payable, accrued expenses, and other liabilities

 

 

 (11,256)

 

 

 (15,092)

 

 NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

 110,258

 

 

 146,019

 

 

 

 

 

 

 

 

 

 INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net of financings

 

 

 (68,271)

 

 

 (78,425)

 

Proceeds from sale of property and equipment

 

 

 8,804

 

 

 6,639

 

Purchases of short-term investments

 

 

 (69,400)

 

 

 (61,363)

 

Proceeds from sale of short-term investments

 

 

 74,167

 

 

 45,831

 

Business acquisitions, net of cash acquired

 

 

 (24,780)

 

 

 (29,813)

 

Proceeds from sale of subsidiaries

 

 

 2,780

 

 

 —

 

Capitalization of internally developed software

 

 

 (10,472)

 

 

 (8,512)

 

 NET CASH USED IN INVESTING ACTIVITIES

 

 

 (87,172)

 

 

 (125,643)

 

 

 

 

 

 

 

 

 

 FINANCING ACTIVITIES

 

 

 

 

 

 

 

Borrowings under credit facilities

 

 

 —

 

 

 70,000

 

Borrowings under accounts receivable securitization program

 

 

 —

 

 

 35,000

 

Payments on long-term debt

 

 

 (52,202)

 

 

 (100,813)

 

Net change in book overdrafts

 

 

 (4,171)

 

 

 3,843

 

Net change in restricted cash

 

 

 422

 

 

 2

 

Deferred financing costs

 

 

 —

 

 

 (875)

 

Payment of common stock dividends

 

 

 (8,318)

 

 

 (6,837)

 

Purchases of treasury stock

 

 

 (9,510)

 

 

 (12,765)

 

 NET CASH USED IN FINANCING ACTIVITIES

 

 

 (73,779)

 

 

 (12,445)

 

 

 

 

 

 

 

 

 

 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

 (50,693)

 

 

 7,931

 

Cash and cash equivalents at beginning of period

 

 

 164,973

 

 

 157,042

 

 CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

 114,280

 

$

 164,973

 

 

 

 

 

 

 

 

 

 NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

Equipment financed

 

$

 83,366

 

$

 80,592

 

Accruals for equipment received

 

$

 397

 

$

 748

 

 

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

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, such as EBITDA and Adjusted EBITDA, 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. Accordingly, using these 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. Management uses EBITDA and Adjusted EBITDA as key measures of performance and for business planning. These measures are particularly meaningful for analysis of the Asset-Light businesses, because they exclude amortization of acquired intangibles and software, 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 Amended and Restated Credit Agreement. Other companies may calculate EBITDA differently; therefore, our calculation of EBITDA and Adjusted EBITDA 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 

 

Year Ended 

 

 

 

December 31

 

December 31

 

 

    

2016

 

2015

 

2016

 

2015

 

 

 

(Unaudited)

 

 

 

($ thousands, except percentages)

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

Operating Income ($) Operating Ratio (% of revenues)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 7,148

 

 98.5

%  

 

$

 7,725

 

 98.3

%  

 

$

 33,571

 

 98.2

%  

 

$

 62,436

 

 96.7

%  

 

Restructuring charges(1)

 

 

 1,173

 

 (0.2)

 

 

 

 —

 

 —

 

 

 

 1,173

 

 (0.1)

 

 

 

 —

 

 —

 

 

Pension settlement expense

 

 

 568

 

 (0.1)

 

 

 

 544

 

 (0.1)

 

 

 

 2,273

 

 (0.1)

 

 

 

 2,404

 

 (0.1)

 

 

Non-GAAP amounts

 

$

 8,889

 

 98.2

%  

 

$

 8,269

 

 98.2

%  

 

$

 37,017

 

 98.0

%  

 

$

 64,840

 

 96.6

%  

 

 

 

 

 

 

 

ArcBest

 

 

 

 

 

 

 

 

 

 

 

Operating Income ($) Operating Ratio (% of revenues)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 (1,586)

 

 100.9

%  

 

$

 3,564

 

 97.6

%  

 

$

 6,864

 

 98.9

%  

 

$

 20,792

 

 96.5

%  

 

Restructuring charges(1)

 

 

 8,038

 

 (4.6)

 

 

 

 —

 

 —

 

 

 

 8,038

 

 (1.2)

 

 

 

 —

 

 —

 

 

Pension settlement expense

 

 

 15

 

 —

 

 

 

 14

 

 —

 

 

 

 62

 

 —

 

 

 

 62

 

 —

 

 

Non-GAAP amounts

 

$

 6,467

 

 96.3

%  

 

$

 3,578

 

 97.6

%  

 

$

 14,964

 

 97.7

%  

 

$

 20,854

 

 96.5

%  

 

 

 

 

 

 

 

FleetNet

 

 

 

 

 

 

 

 

 

 

 

Operating Income ($) Operating Ratio (% of revenues)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 724

 

 98.1

%  

 

$

 (189)

 

 100.4

%  

 

$

 2,425

 

 98.5

%  

 

$

 2,954

 

 98.3

%  

 

Restructuring charges(1)

 

 

 245

 

 (0.7)

 

 

 

 —

 

 —

 

 

 

 245

 

 (0.2)

 

 

 

 —

 

 —

 

 

Third-party casualty expense at FleetNet(2)

 

 

 —

 

 —

 

 

 

 847

 

 (1.9)

 

 

 

 —

 

 —

 

 

 

 932

 

 (0.6)

 

 

Pension settlement expense

 

 

 15

 

 —

 

 

 

 15

 

 —

 

 

 

 60

 

 —

 

 

 

 65

 

 —

 

 

Non-GAAP amounts

 

$

 984

 

 97.4

%  

 

$

 673

 

 98.5

%  

 

$

 2,730

 

 98.3

%  

 

$

 3,951

 

 97.7

%  

 

 

 

 

 

 

 

Total Asset-Light

 

 

 

 

 

 

 

 

 

 

 

Operating Income ($) Operating Ratio (% of revenues)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 (862)

 

 100.4

%  

 

$

 3,375

 

 98.2

%  

 

$

 9,289

 

 98.8

%  

 

$

 23,746

 

 96.9

%  

 

Restructuring charges(1)

 

 

 8,283

 

 (3.9)

 

 

 

 —

 

 —

 

 

 

 8,283

 

 (1.0)

 

 

 

 —

 

 —

 

 

Third-party casualty expense at FleetNet(2)

 

 

 —

 

 —

 

 

 

 847

 

 (0.4)

 

 

 

 —

 

 —

 

 

 

 932

 

 (0.1)

 

 

Pension settlement expense

 

 

 30

 

 —

 

 

 

 29

 

 —

 

 

 

 122

 

 —

 

 

 

 127

 

 —

 

 

Non-GAAP amounts

 

$

 7,451

 

 96.5

%  

 

$

 4,251

 

 97.8

%  

 

$

 17,694

 

 97.8

%  

 

$

 24,805

 

 96.8

%  

 


  1. Restructuring charges relate to the realignment of the Company’s organizational structure announced on November 3, 2016.
  2. Unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.

 

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Year Ended 

 

 

December 31

 

 

December 31

 

 

    

2016

 

2015

    

  

2016

 

 

2015

 

 

 

(Unaudited)

 

 

($ thousands, except per share data)

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 1,211

 

$

 7,312

 

$

 28,970

 

$

 75,496

 

Restructuring charges, pre-tax(1)

 

 

 10,313

 

 

 —

 

 

 10,313

 

 

 —

 

Transaction costs, pre-tax(2)

 

 

 39

 

 

 1,379

 

 

 601

 

 

 1,408

 

Third-party casualty expense at FleetNet, pre-tax(3)

 

 

 —

 

 

 847

 

 

 —

 

 

 932

 

Pension settlement expense, pre-tax

 

 

 962

 

 

 724

 

 

 3,229

 

 

 3,202

 

Non-GAAP amounts

 

$

 12,525

 

$

 10,262

 

$

 43,113

 

$

 81,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 1,584

 

$

 4,989

 

$

 18,652

 

$

 44,854

 

Restructuring charges, after-tax(1)

 

 

 6,273

 

 

 —

 

 

 6,273

 

 

 —

 

Transaction costs, after-tax(2)

 

 

 24

 

 

 838

 

 

 365

 

 

 856

 

Third-party casualty expense at FleetNet, after-tax(3)

 

 

 —

 

 

 515

 

 

 —

 

 

 566

 

Pension settlement expense, after-tax

 

 

 588

 

 

 443

 

 

 1,973

 

 

 1,956

 

Life insurance proceeds and changes in cash surrender value

 

 

 (884)

 

 

 (401)

 

 

 (2,864)

 

 

 (316)

 

Tax credits(4)

 

 

 —

 

 

 (854)

 

 

 —

 

 

 —

 

Non-GAAP amounts

 

$

 7,585

 

$

 5,530

 

$

 24,399

 

$

 47,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 0.06

 

$

 0.19

 

$

 0.71

 

$

 1.67

 

Restructuring charges, after-tax(1)

 

 

 0.24

 

 

 —

 

 

 0.24

 

 

 —

 

Transaction costs, after-tax(2)

 

 

 —

 

 

 0.03

 

 

 0.01

 

 

 0.03

 

Third-party casualty expense at FleetNet, after-tax(3)

 

 

 —

 

 

 0.02

 

 

 —

 

 

 0.02

 

Pension settlement expense, after-tax

 

 

 0.02

 

 

 0.02

 

 

 0.08

 

 

 0.07

 

Life insurance proceeds and changes in cash surrender value

 

 

 (0.03)

 

 

 (0.02)

 

 

 (0.11)

 

 

 (0.01)

 

Tax credits(4)

 

 

 —

 

 

 (0.03)

 

 

 —

 

 

 —

 

Non-GAAP amounts

 

$

 0.29

 

$

 0.21

 

$

 0.93

 

$

 1.78

 


  1. Restructuring charges relate to the realignment of the Company’s organizational structure announced on November 3, 2016.
  2. Transaction costs for the three months and year ended December 31, 2016 are associated with the September 2, 2016 acquisition of Logistics & Distribution Services, LLC (“LDS”). Transaction costs for the three months ended December 31, 2015 are associated with the December 1, 2015 acquisition of Bear Transportation Services, L.P. (“Bear”), and transaction costs for the year ended December 31, 2015 are associated with Bear acquisition and the January 2, 2015 acquisition of Smart Lines Transportation Group, LLC (“Smart Lines”).
  3. Unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.
  4. Tax credits for the three months ended December 31, 2015 include the amount of the alternative fuel tax credit related to the first nine months of the year which was recorded in the fourth quarter due to the December 2015 reinstatement of the alternative fuel tax credit to January 1, 2015.

 

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ thousands, except percentages)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2016

 

 

 

 

 

 

Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Other

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

Income

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 1,211

 

$

 (115)

 

$

 1,096

 

$

 (488)

 

$

 1,584

 

 (44.5)

%  

Restructuring charges(1)

 

 

 10,313

 

 

 —

 

 

 10,313

 

 

 4,040

 

 

 6,273

 

 39.2

 

Transactions costs(2)

 

 

 39

 

 

 —

 

 

 39

 

 

 15

 

 

 24

 

 38.5

 

Pension settlement expense

 

 

 962

 

 

 —

 

 

 962

 

 

 374

 

 

 588

 

 38.9

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (884)

 

 

 (884)

 

 

 —

 

 

 (884)

 

 —

 

Non-GAAP amounts

 

$

 12,525

 

$

 (999)

 

$

 11,526

 

$

 3,941

 

$

 7,585

 

 34.2

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2015

 

 

 

 

 

 

Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Other

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

Income

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 7,312

 

$

 (445)

 

$

 6,867

 

$

 1,878

 

$

 4,989

 

 27.3

%  

Transactions costs(2)

 

 

 1,379

 

 

 —

 

 

 1,379

 

 

 541

 

 

 838

 

 39.2

 

Third-party casualty expense at FleetNet(3)

 

 

 847

 

 

 —

 

 

 847

 

 

 332

 

 

 515

 

 39.2

 

Pension settlement expense

 

 

 724

 

 

 —

 

 

 724

 

 

 281

 

 

 443

 

 38.8

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (401)

 

 

 (401)

 

 

 —

 

 

 (401)

 

 —

 

Tax credits(4)

 

 

 —

 

 

 —

 

 

 —

 

 

 854

 

 

 (854)

 

 —

 

Non-GAAP amounts

 

$

 10,262

 

$

 (846)

 

$

 9,416

 

$

 3,886

 

$

 5,530

 

 41.3

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2016

 

 

 

 

 

 

Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Other

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

Income

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 28,970

 

$

 (683)

 

$

 28,287

 

$

 9,635

 

$

 18,652

 

 34.1

%  

Restructuring charges(1)

 

 

 10,313

 

 

 —

 

 

 10,313

 

 

 4,040

 

 

 6,273

 

 39.2

 

Transactions costs(2)

 

 

 601

 

 

 —

 

 

 601

 

 

 236

 

 

 365

 

 39.3

 

Pension settlement expense

 

 

 3,229

 

 

 —

 

 

 3,229

 

 

 1,256

 

 

 1,973

 

 38.9

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (2,864)

 

 

 (2,864)

 

 

 —

 

 

 (2,864)

 

 —

 

Non-GAAP amounts

 

$

 43,113

 

$

 (3,547)

 

$

 39,566

 

$

 15,167

 

$

 24,399

 

 38.3

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2015

 

 

 

 

 

 

Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Other

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

Income

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 75,496

 

$

 (2,762)

 

$

 72,734

 

$

 27,880

 

$

 44,854

 

 38.3

%  

Transactions costs(2)

 

 

 1,408

 

 

 —

 

 

 1,408

 

 

 552

 

 

 856

 

 39.2

 

Third-party casualty expense at FleetNet(3)

 

 

 932

 

 

 —

 

 

 932

 

 

 366

 

 

 566

 

 39.3

 

Pension settlement expense

 

 

 3,202

 

 

 —

 

 

 3,202

 

 

 1,246

 

 

 1,956

 

 38.9

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (316)

 

 

 (316)

 

 

 —

 

 

 (316)

 

 —

 

Non-GAAP amounts

 

$

 81,038

 

$

 (3,078)

 

$

 77,960

 

$

 30,044

 

$

 47,916

 

 38.5

%  


  1. Restructuring charges relate to the realignment of the Company’s organizational structure announced on November 3, 2016.
  2. Transaction costs for the three months and year ended December 31, 2016 are associated with the September 2, 2016 acquisition of Logistics & Distribution Services, LLC (“LDS”). Transaction costs for the three months ended December 31, 2015 are associated with the  December 1, 2015 acquisition of Bear Transportation Services, L.P. (“Bear”), and transaction costs for the year ended December 31, 2015 are associated with Bear acquisition and the January 2, 2015 acquisition of Smart Lines Transportation Group, LLC (“Smart Lines”).
  3. Unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.
  4. Tax credits for the three months ended December 31, 2015 include the amount of the alternative fuel tax credit related to the first nine months of the year which was recorded in the fourth quarter due to the December 2015 reinstatement of the alternative fuel tax credit to January 1, 2015.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Year Ended 

 

 

December 31

 

 

December 31

 

 

    

2016

    

2015

    

2016

    

2015

 

 

 

(Unaudited)

 

 

($ thousands)

ArcBest Corporation - Consolidated

 

 

 

 

 

Net income

 

$

 1,584

 

$

 4,989

 

$

 18,652

 

$

 44,854

 

Interest and other related financing costs

 

 

 1,376

 

 

 1,217

 

 

 5,150

 

 

 4,400

 

Income tax provision

 

 

 (488)

 

 

 1,878

 

 

 9,635

 

 

 27,880

 

Depreciation and amortization

 

 

 26,361

 

 

 24,821

 

 

 103,053

 

 

 93,042

 

Amortization of share-based compensation

 

 

 1,437

 

 

 1,686

 

 

 7,588

 

 

 8,029

 

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

 

 

 2,140

 

 

 1,919

 

 

 8,173

 

 

 7,432

 

Restructuring charges(2)

 

 

 10,313

 

 

 —

 

 

 10,313

 

 

 —

 

Transaction costs(3)

 

 

 39

 

 

 1,379

 

 

 601

 

 

 1,408

 

Consolidated Adjusted EBITDA

 

$

 42,762

 

$

 37,889

 

$

 163,165

 

$

 187,045

 


  1. Consolidated pension settlement expense totaled $1.0 million (pre-tax) and $0.7 million (pre-tax) for the three months ended December 31, 2016 and 2015, respectively, and $3.2 million (pre-tax) for each of the years ended December 31, 2016 and 2015.
  2. Restructuring charges relate to the realignment of the Company’s organizational structure announced on November 3, 2016.
  3. Transaction costs for the three months and year ended December 31, 2016 are associated with the September 2, 2016 acquisition of LDS. Transaction costs for the three months ended December 31, 2015 are associated with the December 1, 2015 acquisition of Bear, and transaction costs for the year ended December 31, 2015 are associated with Bear acquisition and the January 2, 2015 acquisition of Smart Lines.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31

 

 

 

2016

 

2015(4)

 

 

    

 

    

Depreciation

    

    

 

    

    

 

    

 

    

Depreciation

    

    

 

 

 

 

Operating

 

and

 

Restructuring

 

Adjusted

 

Operating

 

and

 

Adjusted

 

 

 

Income

 

Amortization

 

Charges(5)

 

EBITDA

 

Income

 

Amortization

 

EBITDA

 

 

 

(Unaudited)

 

 

 

($ thousands)

 

Asset-Light

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest(6)

 

$

 (1,586)

 

$

 3,513

 

$

 8,038

 

$

 9,965

 

$

 3,564

 

$

 3,354

 

$

 6,918

 

FleetNet(7)

 

 

 724

 

 

 310

 

 

 245

 

 

 1,279

 

 

 (189)

 

 

 281

 

 

 92

 

Total Asset-Light

 

$

 (862)

 

$

 3,823

 

$

 8,283

 

$

 11,244

 

$

 3,375

 

$

 3,635

 

$

 7,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31

 

 

 

2016

 

2015(4)

 

 

    

 

    

Depreciation

    

    

 

    

    

 

    

 

    

Depreciation

    

    

 

 

 

 

Operating

 

and

 

Restructuring

 

Adjusted

 

Operating

 

and

 

Adjusted

 

 

 

Income

 

Amortization

 

Charges(5)

 

EBITDA

 

Income

 

Amortization

 

EBITDA

 

 

 

(Unaudited)

 

 

 

($ thousands)

 

Asset-Light

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest(6)

 

$

 6,864

 

$

 14,151

 

$

 8,038

 

$

 29,053

 

$

 20,792

 

$

 13,375

 

$

 34,167

 

FleetNet(7)

 

 

 2,425

 

 

 1,209

 

 

 245

 

 

 3,879

 

 

 2,954

 

 

 1,119

 

 

 4,073

 

Total Asset-Light

 

$

 9,289

 

$

 15,360

 

$

 8,283

 

$

 32,932

 

$

 23,746

 

$

 14,494

 

$

 38,240

 


  1. Certain restatements have been made to the prior year’s operating segment data to conform to the current year presentation, reflecting the realignment of the Company’s organizational structure as announced on November 3, 2016. Under the new structure, the segments previously reported as Premium Logistics (Panther), Transportation Management (ABF Logistics), and Household Goods Moving Services (ABF Moving) are consolidated as a single Asset-Light logistics operation under ArcBest.
  2. Restructuring charges relate to the realignment of the Company’s organizational structure.
  3. Depreciation and amortization consists primarily of amortization of intangibles and software associated with acquired businesses.
  4. For the three months and year ended December 31, 2015, FleetNet’s operating income was impacted by a $0.9 million unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.

 

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

Year Ended 

 

 

 

 

 

December 31

 

 

 

December 31

 

 

 

 

    

2016

    

 

    

2015(1)

    

 

    

2016

    

 

    

2015(1)

    

 

 

 

 

Unaudited

 

 

 

 

 

($ thousands, except percentages)

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 482,079

 

 

 

$

 461,016

 

 

 

$

 1,916,394

 

 

 

$

 1,916,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest(2)

 

 

 172,999

 

 

 

 

 146,186

 

 

 

 

 640,734

 

 

 

 

 590,436

 

 

 

FleetNet

 

 

 38,212

 

 

 

 

 45,267

 

 

 

 

 162,629

 

 

 

 

 174,952

 

 

 

Total Asset-Light

 

 

 211,211

 

 

 

 

 191,453

 

 

 

 

 803,363

 

 

 

 

 765,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (5,076)

 

 

 

 

 (4,335)

 

 

 

 

 (19,538)

 

 

 

 

 (15,062)

 

 

 

Total consolidated revenues

 

$

 688,214

 

 

 

$

 648,134

 

 

 

$

 2,700,219

 

 

 

$

 2,666,905

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages, and benefits

 

$

 301,027

 

62.4%

 

$

 288,973

 

62.7%

 

$

 1,212,411

 

63.3%

 

$

 1,172,489

 

61.2%

 

Fuel, supplies, and expenses

 

 

 71,886

 

14.9%

 

 

 70,966

 

15.4%

 

 

 282,627

 

14.7%

 

 

 307,345

 

16.0%

 

Operating taxes and licenses

 

 

 11,990

 

2.5%

 

 

 12,230

 

2.6%

 

 

 48,436

 

2.5%

 

 

 48,992

 

2.6%

 

Insurance

 

 

 6,722

 

1.4%

 

 

 8,507

 

1.8%

 

 

 29,335

 

1.5%

 

 

 28,847

 

1.5%

 

Communications and utilities

 

 

 4,820

 

1.0%

 

 

 4,570

 

1.0%

 

 

 18,079

 

0.9%

 

 

 16,129

 

0.8%

 

Depreciation and amortization

 

 

 21,514

 

4.5%

 

 

 20,238

 

4.4%

 

 

 83,570

 

4.4%

 

 

 74,765

 

3.9%

 

Rents and purchased transportation

 

 

 53,310

 

11.1%

 

 

 45,929

 

10.0%

 

 

 199,156

 

10.4%

 

 

 197,073

 

10.3%

 

Gain on sale of property and equipment

 

 

 (529)

 

(0.1%)

 

 

 (332)

 

(0.1%)

 

 

 (2,979)

 

(0.2%)

 

 

 (1,735)

 

(0.1%)

 

Pension settlement expense(3)

 

 

 569

 

0.1%

 

 

 544

 

0.1%

 

 

 2,274

 

0.1%

 

 

 2,404

 

0.1%

 

Other

 

 

 2,449

 

0.5%

 

 

 1,666

 

0.4%

 

 

 8,741

 

0.5%

 

 

 7,833

 

0.4%

 

Restructuring costs(5)

 

 

 1,173

 

0.2%

 

 

 —

 

0.0%

 

 

 1,173

 

0.1%

 

 

 —

 

0.0%

 

Total Asset-Based

 

 

 474,931

 

98.5%

 

 

 453,291

 

98.3%

 

 

 1,882,823

 

98.2%

 

 

 1,854,142

 

96.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

 

 135,629

 

78.4%

 

 

 113,572

 

77.7%

 

 

 501,853

 

78.3%

 

 

 460,238

 

77.9%

 

Salaries, wages, and benefits

 

 

 16,826

 

9.7%

 

 

 17,039

 

11.7%

 

 

 70,857

 

11.1%

 

 

 62,438

 

10.6%

 

Supplies and expenses

 

 

 5,010

 

2.9%

 

 

 4,586

 

3.1%

 

 

 19,279

 

3.0%

 

 

 15,500

 

2.6%

 

Depreciation and amortization(4)

 

 

 3,513

 

2.0%

 

 

 3,354

 

2.3%

 

 

 14,151

 

2.2%

 

 

 13,375

 

2.3%

 

Other(3)

 

 

 5,569

 

3.2%

 

 

 4,071

 

2.8%

 

 

 19,692

 

3.1%

 

 

 18,093

 

3.1%

 

Restructuring costs(5)

 

 

 8,038

 

4.7%

 

 

 —

 

0.0%

 

 

 8,038

 

1.2%

 

 

 —

 

0.0%

 

 

 

 

 174,585

 

100.9%

 

 

 142,622

 

97.6%

 

 

 633,870

 

98.9%

 

 

 569,644

 

96.5%

 

FleetNet

 

 

 37,488

 

98.1%

 

 

 45,456

 

100.4%

 

 

 160,204

 

98.5%

 

 

 171,998

 

98.3%

 

Total Asset-Light

 

 

 212,073

 

 

 

 

 188,078

 

 

 

 

 794,074

 

 

 

 

 741,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(3)

 

 

 (1)

 

 

 

 

 (547)

 

 

 

 

 (5,648)

 

 

 

 

 (4,375)

 

 

 

Total consolidated operating expenses and costs

 

$

 687,003

 

 

 

$

 640,822

 

 

 

$

 2,671,249

 

 

 

$

 2,591,409

 

 

 


  1. Certain restatements have been made to the prior year’s operating segment data to conform to the current year presentation, reflecting the realignment of the Company’s organizational structure as previously discussed in the Asset-Light Adjusted EBITDA table.
  2. The 2016 periods include the operations of LDS since the September 2, 2016 acquisition date and the operations of Bear, which was acquired in December 2015.
  3. Pension settlement expense totaled $1.0 million (pre-tax) and $0.7 million (pre-tax) on a consolidated basis for the three months ended December 31, 2016 and 2015, respectively, and $3.2 million (pre-tax) for each of the years ended December 31, 2016 and 2015. For the three months ended December 31, 2016 and 2015, pre-tax pension settlement expense of $0.6 million and $0.5 million, respectively, was reported by the Asset-Based segment; $0.4 million and  $0.2 million, respectively, was reported in Other and eliminations; and less than $0.1 million was reported by the Asset-Light segments. For the year ended December 31, 2016 and 2015, pre-tax pension settlement expense of $2.3 million and $2.4 million, respectively, was reported by the Asset-Based segment; $0.8 million and $0.7 million, respectively, was reported in Other and eliminations; and $0.1 million was reported by the Asset-Light segments.
  4. Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with the acquisition of Panther.
  5. Includes a $5.6 million charge for the impairment of software (see restructuring charges in the reconciliation of GAAP operating income to non-GAAP operating income in the ArcBest Corporation – Consolidated table previously presented).

 

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS – Continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Year Ended 

 

 

 

December 31

 

December 31

 

 

    

2016

    

2015(1)

    

2016

    

2015(1)

 

 

 

(Unaudited)

 

 

 

($ thousands)

 

OPERATING INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based(2)

 

$

 7,148

 

$

 7,725

 

$

 33,571

 

$

 62,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest(3)

 

 

 (1,586)

 

 

 3,564

 

 

 6,864

 

 

 20,792

 

FleetNet

 

 

 724

 

 

 (189)

 

 

 2,425

 

 

 2,954

 

Total Asset-Light

 

 

 (862)

 

 

 3,375

 

 

 9,289

 

 

 23,746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(4)

 

 

 (5,075)

 

 

 (3,788)

 

 

 (13,890)

 

 

 (10,686)

 

Total consolidated operating income

 

$

 1,211

 

$

 7,312

 

$

 28,970

 

$

 75,496

 


  1. Certain restatements have been made to the prior year’s operating segment data to conform to the current year presentation, reflecting the realignment of the Company’s organizational structure as previously discussed in the Asset-Light Adjusted EBITDA table.
  2. Asset-Based segment operating income for all periods presented was impacted by pension settlement expense. (See reconciliation of GAAP operating income to non-GAAP operating income in the Asset-Based table previously presented.)
  3. The 2016 periods include the operations of LDS since the September 2, 2016 acquisition date and the operations of Bear, which was acquired in December 2015.
  4. “Other” corporate costs include $0.9 million of restructuring charges for the three months and year ended December 31, 2016, and transaction costs of $0.6 million for the year ended December 31, 2016.  Other corporate costs include $1.4 million of transaction costs for the three months and year ended December 31, 2015.  See reconciliation of GAAP operating income to non-GAAP operating income in the ArcBest Corporation – Consolidated table previously presented.  Other corporate costs also include additional investments in enterprise solutions to provide an improved platform for revenue growth and for offering ArcBest services across multiple operating segments.

 

ARCBEST CORPORATION

OPERATING STATISTICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Year Ended 

 

 

 

December 31

 

December 31

 

 

    

2016

    

2015

    

% Change

    

2016

    

2015

    

% Change

 

 

 

(Unaudited)

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Workdays

 

 

 61.0

 

 

 61.5

 

 

 

 

 252.5

 

 

 251.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Billed Revenue(5) CWT

 

$

 30.06

 

$

 29.02

 

3.6%

 

$

 29.35

 

$

 28.96

 

1.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Billed Revenue(5) / Shipment

 

$

 362.31

 

$

 367.69

 

(1.5%)

 

$

 365.68

 

$

 376.05

 

(2.8%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipments

 

 

 1,311,846

 

 

 1,246,876

 

5.2%

 

 

 5,237,827

 

 

 5,098,322

 

2.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipments / Day

 

 

 21,506

 

 

 20,274

 

6.1%

 

 

 20,744

 

 

 20,272

 

2.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tonnage (Tons)

 

 

 790,535

 

 

 789,960

 

0.1%

 

 

 3,263,025

 

 

 3,309,573

 

(1.4%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons / Day

 

 

 12,960

 

 

 12,845

 

0.9%

 

 

 12,923

 

 

 13,159

 

(1.8%)

 


  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. Billed revenue has been adjusted to exclude intercompany revenue that is not related to freight transportation services.

ARCBEST CORPORATION

OPERATING STATISTICS – Continued

 

 

 

 

 

 

 

 

 

Year Over Year % Change

 

 

Three Months Ended 

 

Year Ended 

 

    

December 31, 2016

 

December 31, 2016

 

 

(Unaudited)

ArcBest

 

 

 

 

 

 

 

 

 

 

 

 

 

Expedite(1)

 

 

 

 

 

 

Revenue / Shipment

 

 

8.9%

 

 

(5.6%)

 

 

 

 

 

 

 

Shipments / Day

 

 

4.8%

 

 

4.0%

 

 

 

 

 

 

 

Truckload and Truckload - Dedicated(2)

 

 

 

 

 

 

Revenue / Shipment

 

 

(8.4%)

 

 

(18.9%)

 

 

 

 

 

 

 

Shipments / Day

 

 

84.2%

 

 

97.2%


  1. Expedite primarily represents the expedited operations which were previously reported in the Premium Logistics (Panther) segment.
  2. Truckload represents the brokerage operations and the Truckload – Dedicated represents the dedicated operations of LDS, both of which were previously reported in the Transportation Management (ABF Logistics) segment. Comparisons are impacted by the September 2016 acquisition of LDS and the December 2015 acquisition of Bear.

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