ArcBest Announces Fourth Quarter 2018 And Full Year 2018 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

ArcBest® Announces Fourth Quarter 2018 And Full Year 2018 Results

 

  • Fourth quarter 2018 revenue of $774.3 million, and net income of $15.3 million, or $0.57 per diluted share.  On a non-GAAP1 basis, fourth quarter 2018 net income was $26.9 million, or $1.01 per diluted share.
  • Higher fourth quarter Asset-Based revenue and an 88 percent increase in Asset-Based operating income versus last year.
  • For the first time, annual ArcBest consolidated revenue exceeded $3 billion; highest non-GAAP annual EPS in history.
  • Five-year ABF labor agreement and successful pricing actions among additional 2018 highlights.

 

FORT SMITH, Arkansas, January 30, 2019 — ArcBest® (Nasdaq: ARCB), a leading logistics company with creative problem solvers who deliver integrated solutions, today reported fourth quarter 2018 revenue of $774.3 million compared to fourth quarter 2017 revenue of $710.7 million.  Fourth quarter 2018 operating income was $37.2 million compared to operating income of $18.7 million last year.  Net income of $15.3 million, or $0.57 per diluted share compared to fourth quarter 2017 net income of $36.6 million, or $1.37 per diluted share.

Excluding certain items in both periods as identified in the attached reconciliation tables, non-GAAP operating income was $38.1 million in fourth quarter 2018 compared to fourth quarter 2017 operating income of $19.0 million.  On a non-GAAP basis, net income was $26.9 million, or $1.01 per diluted share, in fourth quarter 2018 compared to fourth quarter 2017 net income of $11.2 million, or $0.42 per diluted share.

“Strong fourth quarter results capped a year of significant achievements and financial performance at ArcBest including revenue topping $3 billion and the highest non-GAAP earnings per share in our history,” said Chairman, President & CEO Judy McReynolds.  “A thriving U.S. economy provided an excellent backdrop for us to proactively solve more of our customers’ supply chain needs through comprehensive logistics solutions. Careful account management and pricing initiatives to ensure we are compensated for the value we provide resulted in solid revenue growth and better account profitability in our Asset-Based business, and our Asset-Light business posted solid improvements in operating income.”

 

McReynolds stated that efforts to return to historic margins in the Asset-Based business gained momentum despite a tight labor market, even as U.S. unemployment reached record lows and driver shortages were the norm across the industry. “One of the major achievements of the year, a new five-year collective bargaining agreement with the International Brotherhood of Teamsters, provides us stability, low cost inflation and a strong foundation upon which to continue innovating on behalf of customers, and we are excited about the substantial growth opportunities that remain available to us across the organization,” McReynolds said.

 

 

 

 

 

 

 

  1. U.S. Generally Accepted Accounting Principles
 

 

Asset-Based

Results of Operations

Fourth Quarter 2018 Versus Fourth Quarter 2017

  • Revenue of $548.9 million compared to $497.0 million, a per-day increase of 10.4 percent.
  • Tonnage per day increase of 2.8 percent, with a high-single digit percentage increase in LTL-rated freight.
  • Shipments per day increase of 4.2 percent.  Though total average weight per shipment declined, the average LTL-rated weight per shipment increased.
  • Total billed revenue per hundredweight increased 7.9 percent and was positively impacted by higher fuel surcharges.  Excluding fuel surcharge, the percentage increase on LTL-rated freight was in the mid-single digits.
  • Operating income of $36.9 million and an operating ratio of 93.3 percent compared to operating income of $19.6 million and an operating ratio of 96.1 percent.   

 

During the fourth quarter, ArcBest’s Asset-Based business continued to benefit from the positive effects of improved pricing combined with prudent management of costs.  Increases in revenue per hundredweight and average revenue per shipment continued to highlight the benefits of yield management initiatives implemented throughout the year.  Higher fuel surcharges also positively impacted quarterly revenue totals.  For the first time in 2018, both shipments and freight tonnage moving through the Asset-Based network increased versus the prior period.  This improved business trend contributed to freight handling efficiencies and higher operating income.   Average length of haul was below the previous fourth quarter due to changes in freight mix.                     

Asset-Light

Results of Operations

Fourth Quarter 2018 Versus Fourth Quarter 2017

  • Revenue of $243.8 million compared to $222.2 million, a per-day increase of 9.7 percent.
  • Operating income of $7.5 million compared to operating income of $5.5 million. On a non-GAAP basis, operating income of $7.8 million compared to $5.5 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $11.3 million compared to Adjusted EBITDA of $9.3 million.

 

In the Asset-Light ArcBest segment, an increase in average revenue per shipment and significant growth in the offering of managed logistics solutions contributed to higher fourth quarter revenue.  Despite a reduction in shipment levels, improved operating income resulted from cost control combined with higher net revenue associated with yield management of truckload brokerage shipments and continued success in offering managed transportation solutions to ArcBest customers.  At FleetNet, while total events increased, operating income was flat versus the prior year quarter reflecting the impact of changes in customer mix on margin per event.

Full Year 2018 Results

ArcBest’s revenue totaled $3.1 billion, the first time in history that consolidated revenue exceeded the $3 billion level, compared to $2.8 billion in 2017.  Net income was $67.3 million, or $2.51 per diluted share, compared to net income of $59.7 million, or $2.25 per diluted share in 2017.  On a non-GAAP basis, ArcBest had 2018 net income of $103.0 million, or $3.86 per diluted share compared to net income of $35.5 million, or $1.34 per diluted share in 2017. 

During 2018, ArcBest increased shareholder returns through payment of an eight cent per share quarterly dividend and purchase of ArcBest shares valued at approximately $9.4 million.

Asset-Based

Results of Operations

Full Year 2018 Versus Full Year 2017

  • Revenue of $2.2 billion, compared to $2.0 billion in 2017, an average daily increase of 8.9 percent.
  • Tonnage per day was flat with 2017.
  • Shipments per day decrease of 3.2 percent related to pricing initiatives that began in late 2017.
  • Total billed revenue per hundredweight increased 9.2 percent and was impacted by pricing initiatives and higher fuel surcharges in 2018.  Excluding fuel surcharge, the percentage increase on LTL-rated freight was in the mid-single digits.
  • Operating income of $103.9 million and an operating ratio of 95.2 percent compared to $57.9 million and an operating ratio of 97.1 percent in 2017.  On a non-GAAP basis, operating income of $141.8 million and an operating ratio of 93.5 percent compared to operating income of $58.2 million and an operating ratio of 97.1 percent in 2017.

Asset-Light

Results of Operations

Full Year 2018 Versus Full Year 2017

  • Revenue of $976.2 million compared to $863.0 million in 2017, an average daily increase of 12.9 percent.
  • Operating income of $28.0 million compared to $23.0 million in 2017.  On a non-GAAP basis, operating income of $26.5 million compared to $23.7 million in 2017.
  • Adjusted EBITDA of $43.4 million compared to $38.1 million in 2017.

Capital Expenditures

In 2018, total net capital expenditures, including equipment financed, equaled $134 million which was below previous expectations.  This included $90 million of revenue equipment, the majority of which was for ArcBest’s Asset-Based operation.  Depreciation and amortization costs on property, plant and equipment were $104 million.

For 2019, total net capital expenditures are estimated to range from $170 million to $180 million. This includes revenue equipment purchases of approximately $90 million primarily for ArcBest’s Asset-Based operation.  The increase in the 2019 capital expenditure estimate is primarily associated with real estate projects, dock equipment, including forklifts, and technology investments.  ArcBest’s depreciation and amortization costs on property, plant and equipment in 2019 are estimated to range from $110 million to $115 million.

Closing Comments

“We entered 2018 anticipating a strong operating environment and for the most part, economic activity exceeded our expectations,” McReynolds said. “Tighter capacity persisted throughout the year, leading customers to turn to ArcBest for the assured capacity we have available through our own assets, owner operators and contract carriers. Our strategy to meet all types of supply chain needs through a combination of offerings helped us significantly grow revenue and profitability.”

McReynolds added that many initiatives to improve operations and offer a best-in-class customer experience are continuing and accelerating in 2019 and will benefit the company in all environments.

“Investing in technology, people and processes to best meet our customer needs in a changing marketplace remains a top priority,” McReynolds said. “As trusted supply chain experts, we have seen more and more customers turn to us for managed transportation solutions, an encouraging development that reinforces the strategic decisions we have made to enhance our approach to the market as a fully integrated logistics company.”

 

Conference Call

ArcBest will host a conference call with company executives to discuss the 2018 fourth quarter and full year results. The call will be on Thursday, January 31st at 10:30 a.m. ET (9:30 a.m. CT). Interested parties are invited to listen by calling (877) 256-8248. Following the call, a recorded playback will be available through the end of the day on March 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 21913746. The conference call and playback can also be accessed, through March 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 and twelve months ended December 31, 2018 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; 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 loss or reduction of business from large customers; the cost, timing, and performance of growth initiatives; competitive initiatives and pricing pressures; 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; greater than expected funding requirements for our nonunion defined benefit pension plan; availability and cost of reliable third-party services; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; governmental regulations; environmental laws and regulations, including emissions-control regulations; the cost, integration, and performance of any recent or future acquisitions; not achieving some or all of the expected financial and operating benefits of our corporate restructuring or incurring additional costs or operational inefficiencies as a result of the restructuring; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; litigation or claims asserted against us; 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; 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; maintaining our intellectual property rights, brand, and corporate reputation; 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.

NOTE

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

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 

 

Year Ended 

 

 

 

December 31

 

December 31

 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(Unaudited)

 

 

 

($ thousands, except share and per share data)

 

REVENUES

 

$

 774,279

 

$

 710,721

 

$

 3,093,788

 

$

 2,826,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES (includes one-time charge)(1)(2)

 

 

 737,117

 

 

 691,982

 

 

 2,984,690

 

 

 2,765,109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 37,162

 

 

 18,739

 

 

 109,098

 

 

 61,348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (COSTS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

 1,554

 

 

 388

 

 

 3,914

 

 

 1,293

 

Interest and other related financing costs

 

 

 (2,926)

 

 

 (1,932)

 

 

 (9,468)

 

 

 (6,342)

 

Other, net(2)(3)

 

 

 (15,120)

 

 

 (1,175)

 

 

 (19,158)

 

 

 (4,723)

 

 

 

 

 (16,492)

 

 

 (2,719)

 

 

 (24,712)

 

 

 (9,772)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 20,670

 

 

 16,020

 

 

 84,386

 

 

 51,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX PROVISION (BENEFIT)

 

 

 5,371

 

 

 (20,548)

 

 

 17,124

 

 

 (8,150)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

 15,299

 

$

 36,568

 

$

 67,262

 

$

 59,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 0.59

 

$

 1.42

 

$

 2.61

 

$

 2.32

 

Diluted

 

$

 0.57

 

$

 1.37

 

$

 2.51

 

$

 2.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 25,707,335

 

 

 25,637,568

 

 

 25,679,736

 

 

 25,683,745

 

Diluted

 

 

 26,682,262

 

 

 26,540,716

 

 

 26,698,831

 

 

 26,424,389

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.08

 

$

 0.08

 

$

 0.32

 

$

 0.32

 


  1. Includes a $37.9 million multiemployer pension fund withdrawal liability charge for the year ended December 31, 2018.
  2. Effective January 1, 2018, the Company retrospectively adopted an amendment to ASC Topic 715, Compensation – Retirement Benefits, which requires changes to the financial statement presentation of certain components of net periodic benefit cost related to pension and other postretirement benefits accounted for under ASC Topic 715. As a result of adopting this amendment, the service cost component of net periodic benefit cost continues to be included in Operating Expenses, but the other components of net periodic benefit cost, including pension settlement expense, are presented in Other Income (Costs) for the three months and year ended December 31, 2018 and 2017. The detail of the Company’s net periodic benefit costs will be presented in Note I to the consolidated financial statements included in Part II, Item 8 of the Company’s 2018 Annual Report on Form 10-K.
  3. Includes nonunion pension expense, including settlement, of $12.6 million and $18.2 million for the three months and year ended December 31, 2018, respectively, and $1.6 million and $6.1 million for the three months and year ended December 31, 2017, 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 first quarter 2019.
  4. 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

 

 

 

 

 

 

 

 

 

 

 

December 31

 

December 31

 

 

    

2018

    

2017

 

 

 

(Unaudited)

 

Note

 

 

 

($ thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 190,186

 

$

 120,772

 

Short-term investments

 

 

 106,806

 

 

 56,401

 

Accounts receivable, less allowances (2018 - $7,380; 2017 - $7,657)

 

 

 297,051

 

 

 279,074

 

Other accounts receivable, less allowances (2018 - $806; 2017 - $921)

 

 

 19,146

 

 

 19,491

 

Prepaid expenses

 

 

 25,304

 

 

 22,183

 

Prepaid and refundable income taxes

 

 

 1,726

 

 

 12,296

 

Other

 

 

 9,007

 

 

 12,132

 

TOTAL CURRENT ASSETS

 

 

 649,226

 

 

 522,349

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

Land and structures

 

 

 339,640

 

 

 344,224

 

Revenue equipment

 

 

 858,251

 

 

 793,523

 

Service, office, and other equipment

 

 

 199,230

 

 

 179,950

 

Software

 

 

 138,517

 

 

 129,589

 

Leasehold improvements

 

 

 9,365

 

 

 8,888

 

 

 

 

 1,545,003

 

 

 1,456,174

 

Less allowances for depreciation and amortization

 

 

 913,815

 

 

 865,010

 

 

 

 

 631,188

 

 

 591,164

 

 

 

 

 

 

 

 

 

GOODWILL

 

 

 108,320

 

 

 108,320

 

INTANGIBLE ASSETS, NET

 

 

 68,949

 

 

 73,469

 

DEFERRED INCOME TAXES

 

 

 7,468

 

 

 5,965

 

OTHER LONG-TERM ASSETS

 

 

 74,080

 

 

 64,374

 

 

 

$

 1,539,231

 

$

 1,365,641

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

 143,785

 

$

 129,099

 

Income taxes payable

 

 

 1,688

 

 

 324

 

Accrued expenses

 

 

 243,111

 

 

 210,484

 

Current portion of long-term debt

 

 

 54,075

 

 

 61,930

 

Current portion of pension and postretirement liabilities

 

 

 8,659

 

 

 753

 

TOTAL CURRENT LIABILITIES

 

 

 451,318

 

 

 402,590

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, less current portion

 

 

 237,600

 

 

 206,989

 

PENSION AND POSTRETIREMENT LIABILITIES, less current portion

 

 

 31,504

 

 

 39,827

 

OTHER LONG-TERM LIABILITIES

 

 

 44,686

 

 

 15,616

 

DEFERRED INCOME TAXES

 

 

 56,441

 

 

 49,157

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2018: 28,684,779 shares; 2017: 28,495,628 shares

 

 

 287

 

 

 285

 

Additional paid-in capital

 

 

 325,712

 

 

 319,436

 

Retained earnings

 

 

 501,389

 

 

 438,379

 

   Treasury stock, at cost, 2018: 3,097,634 shares; 2017: 2,851,578 shares

 

 

 (95,468)

 

 

 (86,064)

 

Accumulated other comprehensive loss

 

 

 (14,238)

 

 

 (20,574)

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 717,682

 

 

 651,462

 

 

 

$

 1,539,231

 

$

 1,365,641

 

 

Note:  The balance sheet at December 31, 2017 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

 

 

    

2018

    

2017

 

 

 

Unaudited

 

 

 

 

 

 

($ thousands)

 

 OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

 67,262

 

$

 59,726

 

Adjustments to reconcile net income

 

 

 

 

 

 

 

to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 104,114

 

 

 98,530

 

Amortization of intangibles

 

 

 4,521

 

 

 4,538

 

Pension settlement expense

 

 

 12,925

 

 

 4,156

 

Share-based compensation expense

 

 

 8,413

 

 

 6,958

 

Provision for losses on accounts receivable

 

 

 2,336

 

 

 4,081

 

Deferred income tax provision (benefit)

 

 

 1,872

 

 

 (10,213)

 

Gain on sale of property and equipment

 

 

 (59)

 

 

 (75)

 

Gain on sale of subsidiaries

 

 

 (1,945)

 

 

 (152)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

 (23,554)

 

 

 (19,588)

 

Prepaid expenses

 

 

 (2,988)

 

 

 (64)

 

Other assets

 

 

 (4,341)

 

 

 (4,231)

 

Income taxes

 

 

 12,169

 

 

 (2,144)

 

Multiemployer pension fund withdrawal liability(1)

 

 

 22,602

 

 

 —

 

Accounts payable, accrued expenses, and other liabilities

 

 

 52,020

 

 

 10,393

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

 255,347

 

 

 151,915

 

 

 

 

 

 

 

 

 

 INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net of financings

 

 

 (43,992)

 

 

 (65,781)

 

Proceeds from sale of property and equipment

 

 

 4,256

 

 

 4,279

 

Proceeds from sale of subsidiaries

 

 

 4,680

 

 

 2,490

 

Purchases of short-term investments

 

 

 (108,495)

 

 

 (73,459)

 

Proceeds from sale of short-term investments

 

 

 58,698

 

 

 73,842

 

Capitalization of internally developed software

 

 

 (10,097)

 

 

 (9,840)

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

 (94,950)

 

 

 (68,469)

 

 

 

 

 

 

 

 

 

 FINANCING ACTIVITIES

 

 

 

 

 

 

 

Borrowings under accounts receivable securitization program

 

 

 —

 

 

 10,000

 

Payments on long-term debt

 

 

 (71,260)

 

 

 (68,924)

 

Net change in book overdrafts

 

 

 262

 

 

 (502)

 

Deferred financing costs

 

 

 (202)

 

 

 (937)

 

Payment of common stock dividends

 

 

 (8,244)

 

 

 (8,264)

 

Purchases of treasury stock

 

 

 (9,404)

 

 

 (6,019)

 

Payments for tax withheld on share-based compensation

 

 

 (2,135)

 

 

 (3,270)

 

NET CASH USED IN FINANCING ACTIVITIES

 

 

 (90,983)

 

 

 (77,916)

 

 

 

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

 

 

 69,414

 

 

 5,530

 

Cash and cash equivalents and restricted cash at beginning of period

 

 

 120,772

 

 

 115,242

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

 

$

 190,186

 

$

 120,772

 

 

 

 

 

 

 

 

 

 NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

Equipment financed

 

$

 94,016

 

$

 84,170

 

Accruals for equipment received

 

$

 2,807

 

$

 1,734

 


  1. ABF Freight, Inc. recorded a one-time charge in second quarter 2018 for the multiemployer pension plan withdrawal liability resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

Year Ended 

 

 

 

December 31

 

 

December 31

 

 

    

2018

    

 

2017

    

 

2018

    

 

2017

 

 

 

Unaudited

 

 

 

($ thousands, except percentages)

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 548,941

 

 

 

 

$

 497,004

 

 

 

 

$

 2,175,585

 

 

 

 

$

 1,993,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 193,754

 

 

 

 

 

 182,144

 

 

 

 

 

 781,123

 

 

 

 

 

 706,698

 

 

 

FleetNet

 

 

 50,081

 

 

 

 

 

 40,034

 

 

 

 

 

 195,126

 

 

 

 

 

 156,341

 

 

 

Total Asset-Light

 

 

 243,835

 

 

 

 

 

 222,178

 

 

 

 

 

 976,249

 

 

 

 

 

 863,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (18,497)

 

 

 

 

 

 (8,461)

 

 

 

 

 

 (58,046)

 

 

 

 

 

 (29,896)

 

 

 

Total consolidated revenues

 

$

 774,279

 

 

 

 

$

 710,721

 

 

 

 

$

 3,093,788

 

 

 

 

$

 2,826,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages, and benefits

 

$

 279,419

 

 50.9

%

 

$

 271,577

 

 54.6

%

 

$

 1,128,030

 

 51.9

%

 

$

 1,125,131

 

 56.5

%

Fuel, supplies, and expenses

 

 

 65,106

 

 11.9

 

 

 

 59,680

 

 12.0

 

 

 

 256,472

 

 11.8

 

 

 

 234,006

 

 11.7

 

Operating taxes and licenses

 

 

 12,865

 

 2.4

 

 

 

 12,041

 

 2.4

 

 

 

 48,792

 

 2.2

 

 

 

 47,767

 

 2.4

 

Insurance

 

 

 8,832

 

 1.6

 

 

 

 7,693

 

 1.6

 

 

 

 32,887

 

 1.5

 

 

 

 30,761

 

 1.5

 

Communications and utilities

 

 

 4,019

 

 0.7

 

 

 

 4,113

 

 0.8

 

 

 

 16,983

 

 0.8

 

 

 

 17,373

 

 0.9

 

Depreciation and amortization

 

 

 21,459

 

 3.9

 

 

 

 20,730

 

 4.2

 

 

 

 85,951

 

 4.0

 

 

 

 82,507

 

 4.1

 

Rents and purchased transportation

 

 

 61,920

 

 11.3

 

 

 

 51,461

 

 10.4

 

 

 

 242,252

 

 11.1

 

 

 

 206,457

 

 10.4

 

Shared services(2)

 

 

 57,504

 

 10.5

 

 

 

 47,545

 

 9.6

 

 

 

 218,290

 

 10.0

 

 

 

 185,257

 

 9.3

 

Multiemployer pension fund withdrawal liability charge(3)

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 37,922

 

 1.7

 

 

 

 —

 

 —

 

(Gain) loss on sale of property and equipment

 

 

 112

 

 —

 

 

 

 (96)

 

 —

 

 

 

 (410)

 

 —

 

 

 

 (695)

 

 —

 

Other

 

 

 776

 

 0.1

 

 

 

 2,590

 

 0.5

 

 

 

 4,554

 

 0.2

 

 

 

 6,525

 

 0.3

 

Restructuring costs(4)

 

 

 —

 

 —

 

 

 

 76

 

 —

 

 

 

 —

 

 —

 

 

 

 344

 

 —

 

Total Asset-Based

 

 

 512,012

 

 93.3

%

 

 

 477,410

 

 96.1

%

 

 

 2,071,723

 

 95.2

%

 

 

 1,935,433

 

 97.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

 

 155,887

 

 80.4

%

 

 

 146,184

 

 80.2

%

 

 

 631,501

 

 80.8

%

 

 

 563,497

 

 79.7

%

Supplies and expenses

 

 

 3,039

 

 1.6

 

 

 

 3,822

 

 2.1

 

 

 

 13,329

 

 1.7

 

 

 

 15,087

 

 2.1

 

Depreciation and amortization(5)

 

 

 3,187

 

 1.6

 

 

 

 3,579

 

 2.0

 

 

 

 13,750

 

 1.8

 

 

 

 13,090

 

 1.9

 

Shared services(2)

 

 

 22,409

 

 11.6

 

 

 

 20,969

 

 11.5

 

 

 

 91,266

 

 11.7

 

 

 

 83,660

 

 11.8

 

Other

 

 

 2,170

 

 1.1

 

 

 

 2,924

 

 1.6

 

 

 

 9,143

 

 1.2

 

 

 

 11,116

 

 1.6

 

Restructuring costs(4)

 

 

 339

 

 0.2

 

 

 

 —

 

 —

 

 

 

 491

 

 0.1

 

 

 

 875

 

 0.1

 

Gain on sale of subsidiaries(6)

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 (1,945)

 

 (0.3)

 

 

 

 (152)

 

 —

 

 

 

 

 187,031

 

 96.5

%

 

 

 177,478

 

 97.4

%

 

 

 757,535

 

 97.0

%

 

 

 687,173

 

 97.2

%

FleetNet

 

 

 49,334

 

 98.5

%

 

 

 39,247

 

 98.0

%

 

 

 190,741

 

 97.8

%

 

 

 152,864

 

 97.8

%

Total Asset-Light

 

 

 236,365

 

 

 

 

 

 216,725

 

 

 

 

 

 948,276

 

 

 

 

 

 840,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(7)

 

 

 (11,260)

 

 

 

 

 

 (2,153)

 

 

 

 

 

 (35,309)

 

 

 

 

 

 (10,361)

 

 

 

Total consolidated operating expenses

 

$

 737,117

 

 95.2

%

 

$

 691,982

 

 97.4

%

 

$

 2,984,690

 

 96.5

%

 

$

 2,765,109

 

 97.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 36,929

 

 

 

 

$

 19,594

 

 

 

 

$

 103,862

 

 

 

 

$

 57,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 6,723

 

 

 

 

 

 4,666

 

 

 

 

 

 23,588

 

 

 

 

 

 19,525

 

 

 

FleetNet

 

 

 747

 

 

 

 

 

 787

 

 

 

 

 

 4,385

 

 

 

 

 

 3,477

 

 

 

Total Asset-Light

 

 

 7,470

 

 

 

 

 

 5,453

 

 

 

 

 

 27,973

 

 

 

 

 

 23,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(7)

 

 

 (7,237)

 

 

 

 

 

 (6,308)

 

 

 

 

 

 (22,737)

 

 

 

 

 

 (19,535)

 

 

 

Total consolidated operating income

 

$

 37,162

 

 

 

 

$

 18,739

 

 

 

 

$

 109,098

 

 

 

 

$

 61,348

 

 

 


  1. As previously discussed in the Financial Data and Operating Statistics to this press release, the components of net periodic benefit cost other than service cost are presented within Other Income (Costs) in the consolidated financial statements for all periods presented and, therefore, excluded from the presentation of operating segment data within this table.
  2. 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.
  3. ABF Freight, Inc. recorded a one-time charge in second quarter 2018 for the multiemployer pension plan withdrawal liability resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund.
  4. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  5. Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses.
  6. Gains recognized for the year ended December 31, 2018 and 2017 relate to the sale of the ArcBest segment’s military moving businesses in December 2017 and 2016, respectively.
  7. “Other” corporate costs include restructuring charges of $0.6 million and $0.2 million for the three months ended December 31, 2018 and 2017, respectively, and $1.2 million and $1.8 million for the year ended December 31, 2018 and 2017, respectively. (See Segment Operating Income Reconciliations of GAAP to Non-GAAP Financial Measures table.) “Other and eliminations” also 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 

 

Year Ended 

 

 

December 31

 

 

December 31

 

 

    

2018

 

2017

    

  

2018

 

 

2017

 

 

 

(Unaudited)

 

 

 

($ thousands, except per share data)

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 37,162

 

$

 18,739

 

$

 109,098

 

$

 61,348

 

Multiemployer pension fund withdrawal liability charge, pre-tax(1)

 

 

 —

 

 

 —

 

 

 37,922

 

 

 —

 

Restructuring charges, pre-tax(2)

 

 

 889

 

 

 232

 

 

 1,655

 

 

 2,963

 

Gain on sale of subsidiaries(3)

 

 

 —

 

 

 —

 

 

 (1,945)

 

 

 (152)

 

Non-GAAP amounts

 

$

 38,051

 

$

 18,971

 

$

 146,730

 

$

 64,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 15,299

 

$

 36,568

 

$

 67,262

 

$

 59,726

 

Multiemployer pension fund withdrawal liability charge, after-tax(1)

 

 

 —

 

 

 —

 

 

 28,161

 

 

 —

 

Restructuring charges, after-tax(2)

 

 

 657

 

 

 142

 

 

 1,223

 

 

 1,810

 

Gain on sale of subsidiaries, after-tax(3)

 

 

 —

 

 

 —

 

 

 (1,437)

 

 

 (92)

 

Nonunion pension expense, including settlement, after-tax(4)

 

 

 9,366

 

 

 991

 

 

 13,512

 

 

 3,721

 

Life insurance proceeds and changes in cash surrender value

 

 

 2,253

 

 

 (699)

 

 

 23

 

 

 (2,642)

 

Deferred tax adjustment for 2017 Tax Reform Act(5)

 

 

 (306)

 

 

 (24,542)

 

 

 (3,772)

 

 

 (24,542)

 

Impact of 2017 Tax Reform Act on current tax expense(5)

 

 

 (5)

 

 

 (1,288)

 

 

 (52)

 

 

 (1,288)

 

Tax expense (benefit) from vested RSUs(6)

 

 

 (386)

 

 

 14

 

 

 (711)

 

 

 (1,215)

 

Alternative fuel tax credit(7)

 

 

 —

 

 

 —

 

 

 (1,203)

 

 

 —

 

Non-GAAP amounts

 

$

 26,878

 

$

 11,186

 

$

 103,006

 

$

 35,478

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 0.57

 

$

 1.37

 

$

 2.51

 

$

 2.25

 

Multiemployer pension fund withdrawal liability charge, after-tax(1)

 

 

 —

 

 

 —

 

 

 1.05

 

 

 —

 

Restructuring charges, after-tax(2)

 

 

 0.02

 

 

 0.01

 

 

 0.05

 

 

 0.07

 

Gain on sale of subsidiaries, after-tax(3)

 

 

 —

 

 

 —

 

 

 (0.05)

 

 

 —

 

Nonunion pension expense, including settlement, after-tax(4)

 

 

 0.35

 

 

 0.04

 

 

 0.51

 

 

 0.14

 

Life insurance proceeds and changes in cash surrender value

 

 

 0.08

 

 

 (0.03)

 

 

 —

 

 

 (0.10)

 

Deferred tax adjustment for 2017 Tax Reform Act(5)

 

 

 (0.01)

 

 

 (0.92)

 

 

 (0.14)

 

 

 (0.93)

 

Impact of 2017 Tax Reform Act on current tax expense(5)

 

 

 —

 

 

 (0.05)

 

 

 —

 

 

 (0.05)

 

Tax benefit from vested RSUs(6)

 

 

 (0.01)

 

 

 —

 

 

 (0.03)

 

 

 (0.05)

 

Alternative fuel tax credit(7)

 

 

 —

 

 

 —

 

 

 (0.05)

 

 

 —

 

Non-GAAP amounts(8)

 

$

 1.01

 

$

 0.42

 

$

 3.86

 

$

 1.34

 


  1. ABF Freight, Inc. recorded a one-time charge in second quarter 2018 for the multiemployer pension plan withdrawal liability resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund.
  2. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  3. Gains recognized for the year ended December 31, 2018 and 2017 relate to the sale of the ArcBest segment’s military moving businesses in December 2017 and 2016, respectively.
  4. Nonunion pension expense is presented as a non-GAAP adjustment with pension settlement expense, for all periods presented, because expenses related to the plan have been excluded from the financial information management uses to make operating decisions, as an amendment to terminate the nonunion defined benefit pension plan with a termination date of December 31, 2017 was executed in November 2017. Pension settlements related to the plan termination began in fourth quarter 2018 and are expected to be complete in first quarter 2019.
  5. 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.
  6. The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax benefit during the three months and year ended December 31, 2018 and 2017.
  7. 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.
  8. Non-GAAP EPS is calculated in total and may not foot due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ thousands, except percentages)

 

Three Months Ended December 31, 2018

 

 

 

 

 

Other

 

Income Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 37,162

 

$

 (16,492)

 

$

 20,670

 

$

 5,371

 

$

 15,299

 

 26.0

%  

Restructuring charges(1)

 

 

 889

 

 

 —

 

 

 889

 

 

 232

 

 

 657

 

 26.1

 

Nonunion pension expense, including settlement(2)

 

 

 —

 

 

 12,612

 

 

 12,612

 

 

 3,246

 

 

 9,366

 

 25.7

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 2,253

 

 

 2,253

 

 

 —

 

 

 2,253

 

 —

 

Deferred tax adjustment for 2017 Tax Reform Act(3)

 

 

 —

 

 

 —

 

 

 —

 

 

 306

 

 

 (306)

 

 —

 

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

 

 

 —

 

 

 —

 

 

 —

 

 

 5

 

 

 (5)

 

 —

 

Tax benefit from vested RSUs(4)

 

 

 —

 

 

 —