ArcBest Announces Fourth Quarter 2019 And Full Year 2019 Results

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Investor Relations Contact: David Humphrey

Title: Vice President – Investor Relations

Phone: 479-785-6200

Email: dhumphrey@arcb.com

ArcBest® Announces Fourth Quarter 2019 And Full Year 2019 Results

  • Fourth quarter 2019 revenue of $717.4 million, and a net loss of $5.5 million, or $0.22 per diluted share.  On a non-GAAP1 basis, fourth quarter 2019 net income was $14.8 million, or $0.56 per diluted share.
  • Asset-Based profitability continues to benefit from yield initiatives and focused account management
  • Profit-sharing bonus to union-represented ABF Freight employees of $5.1 million for 2019
  • Asset-light results impacted by weaker demand

 FORT SMITH, Arkansas, January 30, 2020 — ArcBest® (Nasdaq: ARCB), a leading logistics company with creative problem solvers who deliver innovative solutions, today reported fourth quarter 2019 revenue of $717.4 million compared to fourth quarter 2018 revenue of $774.3 million.  ArcBest had a fourth quarter 2019 operating loss of $11.2 million compared to operating income of $37.2 million last year, and a net loss of $5.5 million, or $0.22 per diluted share compared to fourth quarter 2018 net income of $15.3 million, or $0.57 per diluted share.  Fourth quarter 2019 results include a previously announced noncash impairment charge of $26.5 million (pre-tax), or $19.8 million (after-tax) and $0.75 per diluted share.

Excluding certain items in both periods as identified in the attached reconciliation tables, non-GAAP operating income was $20.2 million in fourth quarter 2019 compared to fourth quarter 2018 operating income of $39.9 million.  On a non-GAAP basis, net income was $14.8 million, or $0.56 per diluted share, in fourth quarter 2019 compared to fourth quarter 2018 net income of $28.3 million, or $1.06 per diluted share.

“Overall, 2019 represented a solidly profitable year for ArcBest filled with ongoing innovation and customer-centric initiatives,” said Chairman, President and CEO Judy R. McReynolds. “While conditions were not as favorable as those seen in 2018, our team succeeded in providing customers with valued expertise, a better experience and the full suite of logistics services they require. As a result of our expansion and investments in recent years, our cross-sold accounts have become larger in size and are growing faster than single-service accounts. Importantly, they also have higher rates of retention, which is a more stable foundation for future growth.”

 ArcBest’s full year 2019 revenue totaled $3.0 billion compared to $3.1 billion in 2018.  Net income was $40.0 million, or $1.51 per diluted share, compared to net income of $67.3 million, or $2.51 per diluted share in 2018.  On a non-GAAP basis, ArcBest had 2019 net income of $76.3 million, or $2.88 per diluted share compared to net income of $107.4 million, or $4.02 per diluted share in 2018. 

McReynolds noted that returning the asset-based business to historic margins has been a stated long-term goal. Payment of a profit-sharing bonus to union-represented employees as provided for in the 2018 collective bargaining agreement by achieving a 95.2 percent ABF Freight operating ratio in 2019 represented a significant milestone. “We thank our ABF employees for their hard work and are proud to distribute this profit-sharing bonus to them,” McReynolds said.

 

  1. U.S. Generally Accepted Accounting Principles

Fourth Quarter Results of Operations Comparisons

Asset-Based

Fourth Quarter 2019 Versus Fourth Quarter 2018

  • Revenue of $513.3 million compared to $548.9 million, a per-day decrease of 6.5 percent.
  • Total tonnage per day decrease of 8.1 percent, with a double-digit percentage decrease in LTL-rated tonnage partially offset by a double-digit percentage increase in TL-rated spot shipment tonnage moving in the Asset-Based network.
  • Total shipments per day decrease of 7.3 percent.  Total weight per shipment decrease of 0.8 percent and a decrease of 6.3 percent in LTL-rated weight per shipment.
  • Total billed revenue per hundredweight increased 2.1 percent and was negatively impacted by lower fuel surcharges versus prior year.  Excluding fuel surcharge, the percentage increase on LTL-rated freight was in the high-single digits.
  • Operating income of $20.5 million and an operating ratio of 96.0 percent compared to operating income of $36.9 million and an operating ratio of 93.3 percent.  On a non-GAAP basis, operating income of $25.4 million and an operating ratio of 95.0 percent compared to operating income of $37.8 million and an operating ratio of 93.1 percent.   

Fourth quarter tonnage and shipment totals in the Asset-Based business were below the same period last year due to weaker customer demand and smaller average sized LTL shipments associated with a tempered economic operating environment.   These factors, along with reduced fuel surcharge revenue, and associated reductions in fuel-related expenses, contributed to lower fourth quarter revenue.  Reductions in total Asset-Based business levels resulting from fewer LTL-rated shipments were somewhat mitigated by an increase in TL‑rated, spot shipments moving through the ABF Freight network.  Efforts to secure adequate Asset-Based yields during the quarter were successful, especially on LTL-rated shipments, amidst a positive pricing marketplace.  ABF Freight continues to have success in achieving pricing levels that match the superior customer service it offers. 

Fourth quarter Asset-Based linehaul costs improved as a result of the combined impact of lower empty equipment costs and efficient management of outside capacity resources including rail, purchased transportation and cartage.  Lower business levels contributed to reduced efficiency in providing dock, city pickup and delivery services, thus impacting operating costs per shipment. During this year’s fourth quarter, Asset-Based results also benefitted from asset sales.   

Asset-Light

Fourth Quarter 2019 Versus Fourth Quarter 2018

  • Revenue of $237.0 million compared to $243.8 million, a per-day decrease of 2.8 percent.
  • An operating loss of $25.4 million due to a noncash impairment charge compared to operating income of $7.5 million. On a non-GAAP basis, operating income of $1.1 million compared to operating income of $7.8 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $4.0 million compared to Adjusted EBITDA of $11.3 million.

Reduced fourth quarter revenue in the Asset-Light ArcBest segment versus the prior year reflects a market-driven reduction in total average revenue per shipment, primarily in the expedite and truckload brokerage businesses.  Though purchased transportation costs are below the prior year, the rate of decrease in these carrier capacity costs did not match that of the quarter’s decline in revenue.  This year’s more available truckload capacity, compared to the tighter spot market last year, was a factor impacting demand for expedite services and operating margins. Strong demand for ArcBest’s managed transportation solutions continues to be a positive contributor to Asset-Light financial results.  At FleetNet, an increase in total events resulted in improved operating income over the prior year period.

Full Year Results of Operations Comparisons

Asset-Based

Full Year 2019 Versus Full Year 2018

  • Revenue of $2.1 billion, compared to $2.2 billion in 2018, an average daily decrease of 1.2 percent.
  • Tonnage per day decrease of 4.8 percent.
  • Shipments per day decrease of 2.4 percent.
  • Total billed revenue per hundredweight increased 3.7 percent.  Excluding fuel surcharge, the percentage increase on LTL-rated freight was in the high-single digits.
  • Operating income of $102.1 million compared to $103.9 million in 2018.  On a non-GAAP basis, operating income of $118.8 million compared to $145.6 million in 2018.
  • Profit-sharing bonus to union-represented ABF Freight employees of $5.1 million for 2019

Asset-Light

Full Year 2019 Versus Full Year 2018

  • Revenue of $950.1 million compared to $976.2 million in 2018, an average daily decrease of 2.5 percent.
  • An operating loss of $15.4 million compared to operating income of $28.0 million. On a non-GAAP basis, operating income of $11.2 million compared to operating income of $26.5 million.
  • Adjusted EBITDA of $23.8 million compared to $43.4 million in 2018.

Capital Expenditures

In 2019, total net capital expenditures, including equipment financed, equaled $147 million which was below previous expectations reflecting shifts in the timing of some expenditures into 2020 and higher sale proceeds.  2019 net capital expenditures included $86 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 $108 million.

For 2020, total net capital expenditures are estimated to range from $135 million to $145 million. This includes revenue equipment purchases of approximately $82 million primarily for ArcBest’s Asset-Based operation.  ArcBest’s depreciation and amortization costs on property, plant and equipment in 2020 are estimated to range from $110 million to $115 million.

Quarterly Dividends and Share Repurchase Program

During 2019, ArcBest increased shareholder returns through payment of an eight cent per share quarterly dividend and purchase of ArcBest shares valued at approximately $9.1 million, and these are expected to continue at comparable levels in 2020.

Closing Comments

“For the last 10 years, our strategy has evolved purposefully by expanding our logistics offerings and opening up new avenues for growth to address our rapidly changing industry,” said McReynolds. “Ease of doing business through multiple channels has become a customer requirement. We are confident that the solutions we have in place, and continue to develop and enhance, provide value in any environment, but especially this environment, as evidenced by the growth seen in our managed transportation and Retail+ solutions.  As we look ahead, we are accelerating our efforts to deepen and broaden our customer relationships and to increase the effectiveness of our efforts to improve supply chain efficiencies.

 

NOTE

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

 

Conference Call

ArcBest will host a conference call with company executives to discuss the 2019 fourth quarter and full year results. The call will be on Friday, January 31st at 9:30 a.m. EST (8:30 a.m. CST). Interested parties are invited to listen by calling (800) 756‑3565. Following the call, a recorded playback will be available through the end of the day on March 15, 2020. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21950554. The conference call and playback can also be accessed, through March 15, 2020, 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 innovative solutions.  We'll find a way to deliver knowledge, expertise and a can-do attitude with every shipment and supply chain solution, household move or vehicle repair.  At ArcBest, we’re More Than LogisticsSM.  For more information, visit arcb.com.

 

Forward-Looking Statements

Certain statements and information in this press release concerning results for the three months ended September 30, 2019 may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “intend,” “may,” “plan,” “predict,” “project,” “scheduled,” “should,” “would,” and similar expressions and the negatives of such terms are intended to identify forward-looking statements. These statements are based on management’s beliefs, assumptions, and expectations based on currently available information, are not guarantees of future performance, and involve certain risks and uncertainties (some of which are beyond our control). Although we believe that the expectations reflected in these forward-looking statements are reasonable as and when made, we cannot provide assurance that our expectations will prove to be correct. Actual outcomes and results could materially differ from what is expressed, implied, or forecasted in these statements due to a number of factors, including, but not limited to: a failure of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data breach, and/or cybersecurity incidents; untimely or ineffective development and implementation of new or enhanced technology or processes, including the pilot test program at ABF Freight; failure to realize potential benefits associated with new or enhanced technology or processes, including the pilot test program at ABF Freight, and any write-offs associated therewith; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; relationships with employees, including unions, and our ability to attract and retain employees; unfavorable terms of, or the inability to reach agreement on, future collective bargaining agreements or a workforce stoppage by our employees covered under ABF Freight’s collective bargaining agreement; the cost, timing, and performance of growth initiatives; general economic conditions and related shifts in market demand that impact the performance and needs of industries we serve and/or limit our customers’ access to adequate financial resources; availability and cost of reliable third-party services; governmental regulations; environmental laws and regulations, including emissions-control regulations; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; litigation or claims asserted against us; maintaining our intellectual property rights, brand, and corporate reputation; the loss of key employees or the inability to execute succession planning strategies; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; self-insurance claims and insurance premium costs; the cost, integration, and performance of any recent or future acquisitions; availability of fuel, the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates, and the inability to collect fuel surcharges; increased prices for and decreased availability of new revenue equipment, decreases in value of used revenue equipment, and higher costs of equipment-related operating expenses such as maintenance and fuel and related taxes; potential impairment of goodwill and intangible assets; greater than anticipated funding requirements for our nonunion defined benefit pension plan; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; antiterrorism and safety measures; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest’s public filings with the Securities and Exchange Commission (“SEC”).

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

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

Financial Data and Operating Statistics

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

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Year Ended 

 

 

 

December 31

 

December 31

 

 

    

2019

    

2018

    

2019

    

2018

 

 

 

(Unaudited)

 

 

 

($ thousands, except share and per share data)

 

REVENUES

 

$

 717,418

 

$

 774,279

 

$

 2,988,310

 

$

 3,093,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES(1)(2)

 

 

 728,647

 

 

 737,117

 

 

 2,924,540

 

 

 2,984,690

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS)

 

 

 (11,229)

 

 

 37,162

 

 

 63,770

 

 

 109,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (COSTS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

 1,591

 

 

 1,554

 

 

 6,453

 

 

 3,914

 

Interest and other related financing costs

 

 

 (2,874)

 

 

 (2,926)

 

 

 (11,467)

 

 

 (9,468)

 

Other, net

 

 

 485

 

 

 (15,120)

 

 

 (7,285)

 

 

 (19,158)

 

 

 

 

 (798)

 

 

 (16,492)

 

 

 (12,299)

 

 

 (24,712)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

 (12,027)

 

 

 20,670

 

 

 51,471

 

 

 84,386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX PROVISION (BENEFIT)

 

 

 (6,478)

 

 

 5,371

 

 

 11,486

 

 

 17,124

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

 (5,549)

 

$

 15,299

 

$

 39,985

 

$

 67,262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 (0.22)

 

$

 0.59

 

$

 1.56

 

$

 2.61

 

Diluted

 

$

 (0.22)

 

$

 0.57

 

$

 1.51

 

$

 2.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 25,490,393

 

 

 25,707,335

 

 

 25,535,529

 

 

 25,679,736

 

Diluted

 

 

 25,490,393

 

 

 26,682,262

 

 

 26,450,055

 

 

 26,698,831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.08

 

$

 0.08

 

$

 0.32

 

$

 0.32

 


  1. Includes a one-time charge of $37.9 million for the year ended December 31, 2018 for the multiemployer pension fund withdrawal liability resulting from the transition agreement ABF Freight, Inc. entered into with the New England Teamsters and Trucking Industry Pension Fund.
  2. For the three months and year ended December 31, 2019, includes a noncash impairment charge related to a portion of the goodwill, customer relationship intangible assets, and revenue equipment associated with the acquisition of truckload brokerage and truckload dedicated businesses within the ArcBest segment.
  3. 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

 

 

    

2019

    

2018

 

 

 

(Unaudited)

 

Note

 

 

 

($ thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 201,909

 

$

 190,186

 

Short-term investments

 

 

 116,579

 

 

 106,806

 

Accounts receivable, less allowances (2019 - $5,448; 2018 - $7,380)

 

 

 282,579

 

 

 297,051

 

Other accounts receivable, less allowances (2019 - $476; 2018 - $806)

 

 

 18,774

 

 

 19,146

 

Prepaid expenses

 

 

 30,377

 

 

 25,304

 

Prepaid and refundable income taxes

 

 

 9,439

 

 

 1,726

 

Other

 

 

 4,745

 

 

 9,007

 

TOTAL CURRENT ASSETS

 

 

 664,402

 

 

 649,226

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

Land and structures

 

 

 342,122

 

 

 339,640

 

Revenue equipment

 

 

 896,020

 

 

 858,251

 

Service, office, and other equipment

 

 

 233,354

 

 

 199,230

 

Software

 

 

 151,068

 

 

 138,517

 

Leasehold improvements

 

 

 10,383

 

 

 9,365

 

 

 

 

 1,632,947

 

 

 1,545,003

 

Less allowances for depreciation and amortization

 

 

 949,355

 

 

 913,815

 

 

 

 

 683,592

 

 

 631,188

 

 

 

 

 

 

 

 

 

GOODWILL

 

 

 88,320

 

 

 108,320

 

INTANGIBLE ASSETS, NET

 

 

 58,832

 

 

 68,949

 

OPERATING RIGHT-OF-USE ASSETS

 

 

 68,470

 

 

 —

 

DEFERRED INCOME TAXES

 

 

 7,725

 

 

 7,468

 

OTHER LONG-TERM ASSETS

 

 

 79,866

 

 

 74,080

 

 

 

$

 1,651,207

 

$

 1,539,231

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

 134,374

 

$

 143,785

 

Income taxes payable

 

 

 12

 

 

 1,688

 

Accrued expenses

 

 

 228,749

 

 

 243,111

 

Current portion of long-term debt

 

 

 57,305

 

 

 54,075

 

Current portion of operating lease liabilities

 

 

 20,265

 

 

 —

 

Current portion of pension and postretirement liabilities

 

 

 3,572

 

 

 8,659

 

TOTAL CURRENT LIABILITIES

 

 

 444,277

 

 

 451,318

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, less current portion

 

 

 266,214

 

 

 237,600

 

OPERATING LEASE LIABILITIES, less current portion

 

 

 52,277

 

 

 —

 

PENSION AND POSTRETIREMENT LIABILITIES, less current portion

 

 

 20,294

 

 

 31,504

 

OTHER LONG-TERM LIABILITIES

 

 

 38,892

 

 

 44,686

 

DEFERRED INCOME TAXES

 

 

 66,210

 

 

 56,441

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2019: 28,810,902 shares; 2018: 28,684,779 shares

 

 

 288

 

 

 287

 

Additional paid-in capital

 

 

 333,943

 

 

 325,712

 

Retained earnings

 

 

 533,187

 

 

 501,389

 

   Treasury stock, at cost, 2019: 3,404,639 shares; 2018: 3,097,634 shares

 

 

 (104,578)

 

 

 (95,468)

 

Accumulated other comprehensive income (loss)

 

 

 203

 

 

 (14,238)

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 763,043

 

 

 717,682

 

 

 

$

 1,651,207

 

$

 1,539,231

 

 

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

 

 

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

Year Ended 

 

 

 

December 31

 

 

    

2019

    

2018

 

 

 

Unaudited

 

 

 

($ thousands)

 

 OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

 39,985

 

$

 67,262

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 108,099

 

 

 104,114

 

Amortization of intangibles

 

 

 4,367

 

 

 4,521

 

Pension settlement expense, including termination expense

 

 

 8,505

 

 

 12,925

 

Share-based compensation expense

 

 

 9,523

 

 

 8,413

 

Provision for losses on accounts receivable

 

 

 1,223

 

 

 2,336

 

Change in deferred income taxes

 

 

 5,411

 

 

 1,872

 

Asset impairment(1)

 

 

 26,514

 

 

 —

 

Gain on sale of property and equipment

 

 

 (5,247)

 

 

 (59)

 

Gain on sale of subsidiaries

 

 

 —

 

 

 (1,945)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

 13,720

 

 

 (23,554)

 

Prepaid expenses

 

 

 (4,756)

 

 

 (2,988)

 

Other assets

 

 

 (1,365)

 

 

 (4,341)

 

Income taxes

 

 

 (8,720)

 

 

 12,169

 

Operating right-of-use assets and lease liabilities, net

 

 

 728

 

 

 —

 

Multiemployer pension fund withdrawal liability(2)

 

 

 (584)

 

 

 22,602

 

Accounts payable, accrued expenses, and other liabilities

 

 

 (27,039)

 

 

 52,020

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

 170,364

 

 

 255,347

 

 

 

 

 

 

 

 

 

 INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net of financings

 

 

 (90,955)

 

 

 (43,992)

 

Proceeds from sale of property and equipment

 

 

 13,490

 

 

 4,256

 

Proceeds from sale of subsidiaries

 

 

 —

 

 

 4,680

 

Purchases of short-term investments

 

 

 (129,709)

 

 

 (108,495)

 

Proceeds from sale of short-term investments

 

 

 120,409

 

 

 58,698

 

Capitalization of internally developed software

 

 

 (11,476)

 

 

 (10,097)

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

 (98,241)

 

 

 (94,950)

 

 

 

 

 

 

 

 

 

 FINANCING ACTIVITIES

 

 

 

 

 

 

 

Payments on long-term debt

 

 

 (58,938)

 

 

 (71,260)

 

Proceeds from notes payable

 

 

 20,410

 

 

 —

 

Net change in book overdrafts

 

 

 (2,722)

 

 

 262

 

Deferred financing costs

 

 

 (562)

 

 

 (202)

 

Payment of common stock dividends

 

 

 (8,187)

 

 

 (8,244)

 

Purchases of treasury stock

 

 

 (9,110)

 

 

 (9,404)

 

Payments for tax withheld on share-based compensation

 

 

 (1,291)

 

 

 (2,135)

 

NET CASH USED IN FINANCING ACTIVITIES

 

 

 (60,400)

 

 

 (90,983)

 

 

 

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

 11,723

 

 

 69,414

 

Cash and cash equivalents at beginning of period

 

 

 190,186

 

 

 120,772

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

 201,909

 

$

 190,186

 

 

 

 

 

 

 

 

 

 NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

Equipment and other financings

 

$

 70,372

 

$

 94,016

 

Accruals for equipment received

 

$

 234

 

$

 2,807

 

Lease liabilities arising from obtaining right-of-use assets

 

$

 32,761

 

$

 —

 

 


  1. Noncash impairment charge recognized in the year ended December 31, 2019 relates to a portion of the goodwill, customer relationship intangible assets, and revenue equipment associated with the acquisition of truckload brokerage and truckload dedicated businesses within the ArcBest segment.
  2. The year ended December 31, 2018 includes a one-time charge related to the multiemployer pension plan withdrawal liability.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

Year Ended 

 

 

 

December 31

 

 

December 31

 

 

    

2019

    

 

2018

    

 

2019

    

 

2018

 

 

 

Unaudited

 

 

 

($ thousands, except percentages)

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 513,331

 

 

 

 

$

 548,941

 

 

 

 

$

 2,144,679

 

 

 

 

$

 2,175,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 184,257

 

 

 

 

 

 193,754

 

 

 

 

 

 738,392

 

 

 

 

 

 781,123

 

 

 

FleetNet

 

 

 52,781

 

 

 

 

 

 50,081

 

 

 

 

 

 211,738

 

 

 

 

 

 195,126

 

 

 

Total Asset-Light

 

 

 237,038

 

 

 

 

 

 243,835

 

 

 

 

 

 950,130

 

 

 

 

 

 976,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (32,951)

 

 

 

 

 

 (18,497)

 

 

 

 

 

 (106,499)

 

 

 

 

 

 (58,046)

 

 

 

Total consolidated revenues

 

$

 717,418

 

 

 

 

$

 774,279

 

 

 

 

$

 2,988,310

 

 

 

 

$

 3,093,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages, and benefits

 

$

 274,966

 

 53.6

%

 

$

 279,419

 

 50.9

%

 

$

 1,148,761

 

 53.6

%

 

$

 1,128,030

 

 51.8

%

Fuel, supplies, and expenses(1)

 

 

 61,631

 

 12.0

 

 

 

 64,492

 

 11.8

 

 

 

 257,133

 

 12.0

 

 

 

 255,655

 

 11.8

 

Operating taxes and licenses

 

 

 12,732

 

 2.5

 

 

 

 12,865

 

 2.4

 

 

 

 50,209

 

 2.3

 

 

 

 48,792

 

 2.2

 

Insurance

 

 

 9,281

 

 1.8

 

 

 

 8,832

 

 1.6

 

 

 

 32,516

 

 1.5

 

 

 

 32,887

 

 1.5

 

Communications and utilities

 

 

 4,433

 

 0.9

 

 

 

 4,019

 

 0.7

 

 

 

 18,614

 

 0.9

 

 

 

 16,983

 

 0.8

 

Depreciation and amortization(1)

 

 

 23,428

 

 4.5

 

 

 

 21,459

 

 3.9

 

 

 

 89,798

 

 4.2

 

 

 

 85,951

 

 4.0

 

Rents and purchased transportation(1)

 

 

 54,245

 

 10.6

 

 

 

 61,915

 

 11.3

 

 

 

 221,479

 

 10.3

 

 

 

 242,247

 

 11.1

 

Shared services(1)

 

 

 51,109

 

 9.9

 

 

 

 57,261

 

 10.4

 

 

 

 212,773

 

 9.9

 

 

 

 215,302

 

 9.9

 

Multiemployer pension fund withdrawal liability charge(2)

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 37,922

 

 1.7

 

Gain on sale of property and equipment

 

 

 (4,189)

 

 (0.8)

 

 

 

 112

 

 —

 

 

 

 (5,892)

 

 (0.3)

 

 

 

 (410)

 

 —

 

Innovative technology costs(1)(3)

 

 

 4,539

 

 0.9

 

 

 

 862

 

 0.2

 

 

 

 13,739

 

 0.6

 

 

 

 3,810

 

 0.2

 

Other

 

 

 610

 

 0.1

 

 

 

 776

 

 0.1

 

 

 

 3,488

 

 0.2

 

 

 

 4,554

 

 0.2

 

Total Asset-Based

 

 

 492,785

 

 96.0

%

 

 

 512,012

 

 93.3

%

 

 

 2,042,618

 

 95.2

%

 

 

 2,071,723

 

 95.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

 

 153,935

 

 83.5

%

 

 

 155,887

 

 80.4

%

 

 

 606,113

 

 82.1

%

 

 

 631,501

 

 80.8

%

Supplies and expenses

 

 

 2,377

 

 1.3

 

 

 

 3,039

 

 1.6

 

 

 

 10,789

 

 1.5

 

 

 

 13,329

 

 1.7

 

Depreciation and amortization(4)

 

 

 2,531

 

 1.4

 

 

 

 3,187

 

 1.6

 

 

 

 11,344

 

 1.5

 

 

 

 13,750

 

 1.8

 

Shared services

 

 

 22,757

 

 12.4

 

 

 

 22,409

 

 11.6

 

 

 

 93,961

 

 12.7

 

 

 

 91,266

 

 11.7

 

Other

 

 

 2,636

 

 1.4

 

 

 

 2,170

 

 1.1

 

 

 

 9,860

 

 1.3

 

 

 

 9,143

 

 1.2

 

Asset impairment(5)

 

 

 26,514

 

 14.4

 

 

 

 —

 

 —

 

 

 

 26,514

 

 3.6

 

 

 

 —

 

 —

 

Restructuring costs

 

 

 —

 

 —

 

 

 

 339

 

 0.2

 

 

 

 —

 

 —

 

 

 

 491

 

 0.1

 

Gain on sale of subsidiaries(6)

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 (1,945)

 

 (0.3)

 

 

 

 

 210,750

 

 114.4

%

 

 

 187,031

 

 96.5

%

 

 

 758,581

 

 102.7

%

 

 

 757,535

 

 97.0

%

FleetNet

 

 

 51,660

 

 97.9

%

 

 

 49,334

 

 98.5

%

 

 

 206,932

 

 97.7

%

 

 

 190,741

 

 97.8

%

Total Asset-Light

 

 

 262,410

 

 

 

 

 

 236,365

 

 

 

 

 

 965,513

 

 

 

 

 

 948,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (26,548)

 

 

 

 

 

 (11,260)

 

 

 

 

 

 (83,591)

 

 

 

 

 

 (35,309)

 

 

 

Total consolidated operating expenses

 

$

 728,647

 

 101.6

%

 

$

 737,117

 

 95.2

%

 

$

 2,924,540

 

 97.9

%

 

$

 2,984,690

 

 96.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 20,546

 

 

 

 

$

 36,929

 

 

 

 

$

 102,061

 

 

 

 

$

 103,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 (26,493)

 

 

 

 

 

 6,723

 

 

 

 

 

 (20,189)

 

 

 

 

 

 23,588

 

 

 

FleetNet

 

 

 1,121

 

 

 

 

 

 747

 

 

 

 

 

 4,806

 

 

 

 

 

 4,385

 

 

 

Total Asset-Light

 

 

 (25,372)

 

 

 

 

 

 7,470

 

 

 

 

 

 (15,383)

 

 

 

 

 

 27,973

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(7)

 

 

 (6,403)

 

 

 

 

 

 (7,237)

 

 

 

 

 

 (22,908)

 

 

 

 

 

 (22,737)

 

 

 

Total consolidated operating income (loss)

 

$

 (11,229)

 

 

 

 

$

 37,162

 

 

 

 

$

 63,770

 

 

 

 

$

 109,098

 

 

 


  1. Beginning in third quarter 2019, the presentation of Asset-Based segment expenses was modified to present innovative technology costs as a separate operating expense line item. Previously, innovative technology costs incurred directly by the segment or allocated through shared services were categorized in individual segment expense line items. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on the segment’s total expenses as a result of the reclassifications.
  2. The year ended December 31, 2018 includes a one-time charge for the multiemployer pension plan withdrawal liability.
  3. Represents costs associated with the previously announced freight handling pilot test program at ABF Freight.
  4. Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses.
  5. Noncash impairment charge recognized in fourth quarter 2019 relates to a portion of the goodwill, customer relationship intangible assets, and revenue equipment associated with the acquisition of truckload brokerage and truckload dedicated businesses within the ArcBest segment.
  6. Gain recognized in 2018 relates to the sale of the ArcBest segment’s military moving businesses in December 2017.
  7. “Other and eliminations” includes corporate costs for certain unallocated shared service costs which are not attributable to any segment, additional investments to offer comprehensive transportation and logistics services across multiple operating segments, and other investments in ArcBest technology and innovations, including innovative technology costs.

 

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

 

 

    

2019

 

2018

    

  

2019

 

 

2018

 

ArcBest Corporation - Consolidated

 

(Unaudited)

 

 

 

($ thousands, except per share data)

 

Operating Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 (11,229)

 

$

 37,162

 

$

 63,770

 

$

 109,098

 

Asset impairment, pre-tax(1)

 

 

 26,514

 

 

 —

 

 

 26,514

 

 

 —

 

Innovative technology costs, pre-tax(2)

 

 

 4,553

 

 

 1,800

 

 

 15,657

 

 

 5,860

 

ELD conversion costs, pre-tax(3)

 

 

 329

 

 

 —

 

 

 2,687

 

 

 —

 

Nonunion pension termination costs, pre-tax(4)

 

 

 —

 

 

 —

 

 

 350

 

 

 —

 

Multiemployer pension fund withdrawal liability charge, pre-tax(5)

 

 

 —

 

 

 —

 

 

 —

 

 

 37,922

 

Restructuring charges, pre-tax(6)

 

 

 —

 

 

 889

 

 

 —

 

 

 1,655

 

Gain on sale of subsidiaries, pre-tax(7)

 

 

 —

 

 

 —

 

 

 —

 

 

 (1,945)

 

Non-GAAP amounts

 

$

 20,167

 

$

 39,851

 

$

 108,978

 

$

 152,590

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 (5,549)

 

$

 15,299

 

$

 39,985

 

$

 67,262

 

Asset impairment, after-tax(1)

 

 

 19,836

 

 

 —

 

 

 19,836

 

 

 —

 

Innovative technology costs, after-tax (includes related financing costs)(2)

 

 

 3,501

 

 

 1,385

 

 

 11,963

 

 

 4,401

 

ELD conversion costs, after-tax(3)

 

 

 245

 

 

 —

 

 

 1,996

 

 

 —

 

Nonunion pension termination costs, after-tax(4)

 

 

 —

 

 

 —

 

 

 260

 

 

 —

 

Multiemployer pension fund withdrawal liability charge, after-tax(5)

 

 

 —

 

 

 —

 

 

 —

 

 

 28,161

 

Restructuring charges, after-tax(6)

 

 

 —

 

 

 657

 

 

 —

 

 

 1,223

 

Gain on sale of subsidiaries, after-tax(7)

 

 

 —

 

 

 —

 

 

 —

 

 

 (1,437)

 

Nonunion pension expense, including settlement and termination expense, after-tax(8)

 

 

 297

 

 

 9,366

 

 

 7,972

 

 

 13,512

 

Life insurance proceeds and changes in cash surrender value

 

 

 (979)

 

 

 2,253

 

 

 (3,692)

 

 

 23

 

Tax expense (benefit) from vested RSUs(9)

 

 

 17

 

 

 (386)

 

 

 481

 

 

 (711)

 

Impact of 2017 Tax Reform Act(10)

 

 

 —

 

 

 (311)

 

 

 —

 

 

 (3,824)

 

Tax credits(11)

 

 

 (2,526)

 

 

 —

 

 

 (2,526)

 

 

 (1,203)

 

Non-GAAP amounts

 

$

 14,842

 

$

 28,263

 

$

 76,275

 

$

 107,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share(12)

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 (0.22)

 

$

 0.57

 

$

 1.51

 

$

 2.51

 

Asset impairment, after-tax(1)

 

 

 0.75

 

 

 —

 

 

 0.75

 

 

 —

 

Innovative technology costs, after-tax (includes related financing costs)(2)

 

 

 0.13

 

 

 0.05

 

 

 0.45

 

 

 0.16

 

ELD conversion costs, after-tax(3)

 

 

 0.01

 

 

 —

 

 

 0.08

 

 

 —

 

Nonunion pension termination costs, after-tax(4)

 

 

 —

 

 

 —

 

 

 0.01

 

 

 —

 

Multiemployer pension fund withdrawal liability charge, after-tax(5)

 

 

 —

 

 

 —

 

 

 —

 

 

 1.05

 

Restructuring charges, after-tax(6)

 

 

 —

 

 

 0.02

 

 

 —

 

 

 0.05

 

Gain on sale of subsidiaries, after-tax(7)

 

 

 —

 

 

 —

 

 

 —

 

 

 (0.05)

 

Nonunion pension expense, including settlement and termination expense, after-tax(8)

 

 

 0.01

 

 

 0.35

 

 

 0.30

 

 

 0.51

 

Life insurance proceeds and changes in cash surrender value

 

 

 (0.04)

 

 

 0.08

 

 

 (0.14)

 

 

 —

 

Tax expense (benefit) from vested RSUs(9)

 

 

 —

 

 

 (0.01)

 

 

 0.02

 

 

 (0.03)

 

Impact of 2017 Tax Reform Act(10)

 

 

 —

 

 

 (0.01)

 

 

 —

 

 

 (0.14)

 

Tax credits(11)

 

 

 (0.10)

 

 

 —

 

 

 (0.10)

 

 

 (0.05)

 

Non-GAAP amounts(13)

 

$

 0.56

 

$

 1.06

 

$

 2.88

 

$

 4.02

 


Note: See “Notes to Non-GAAP Financial Tables” for the footnotes to this ArcBest Corporation – Consolidated non-GAAP table.

 

 

Notes to Non-GAAP Financial Tables

 

The following footnotes apply to the non-GAAP financial tables presented in this press release.

 

  1. Noncash impairment charge recognized in fourth quarter 2019 relates to a portion of the goodwill, customer relationship intangible assets, and revenue equipment associated with the acquisition of truckload brokerage and truckload dedicated businesses within the ArcBest segment.
  2. Represents costs associated with the previously announced freight handling pilot test program at ABF Freight.
  3. The three months and year ended December 31, 2019 include impairment charges related to equipment replacement and other one-time costs incurred to comply with the electronic logging device (“ELD”) mandate which was effective December 2019.
  4. The year ended December 31, 2019 includes a one-time consulting fee associated with the termination of the nonunion defined benefit pension plan.
  5. The year ended December 31, 2018 includes a one-time charge for the multiemployer pension plan withdrawal liability.
  6. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  7. Gain recognized in 2018 relates to the sale of the ArcBest segment’s military moving businesses in December 2017.
  8. Nonunion pension expense is presented as a non-GAAP adjustment with pension settlement expense, because expenses related to the plan have been excluded from the financial information management uses to make operating decisions, as the nonunion defined benefit pension plan was amended to terminate the plan with a termination date of December 31, 2017. Pension settlements related to benefit distributions for the plan termination began in fourth quarter 2018 and were completed in third quarter 2019. The year ended December 31, 2019 also includes a noncash pension termination expense related to an amount which was stranded in accumulated other comprehensive income until the pension benefit obligation was settled upon plan termination. The three months and year ended December 31, 2019 include pension settlement expense of $0.3 million after-tax, or $0.01 per diluted share, related to the Company’s supplemental benefit plan.
  9. The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax expense (benefit) during the three months and year ended December 31, 2019 and 2018.
  10. 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.
  11. The three months and year ended December 31, 2019 include a $1.4 million research and development tax credit recognized in the tax provision during fourth quarter 2019 which primarily relates to years prior to 2019, and include a $1.2 million alternative fuel tax credit related to the year ended December 31, 2018 which was recorded in fourth quarter 2019 due to the December 2019 retroactive reinstatement. The non-GAAP adjustment for the year ended December 31, 2018 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.
  12. ArcBest uses the two-class method for calculating earnings per share, which 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. For fourth quarter 2019, ArcBest reported a net loss on a GAAP basis and reported net income on a non-GAAP basis. The average common shares outstanding used to calculate non-GAAP diluted earnings per share for fourth quarter 2019 were adjusted to include unvested restricted stock awards in the calculation of non-GAAP diluted earnings per share under the two-class method as follows:

 

 

 

 

 

 

 

    

Three Months Ended December 31, 2019

    

Average Common Shares Outstanding

 

 

 

 

Diluted shares on GAAP basis

 

 

 25,490,393

 

Effect of unvested restricted stock awards

 

 

 931,908

 

Non-GAAP diluted shares

 

 

 26,422,301

 

 

  1. Non-GAAP EPS is calculated in total and may not foot due to rounding.
  2. Tax rate for total “Amounts on GAAP basis” represents the effective tax rate. The tax effects of non-GAAP adjustments are calculated based on the statutory rate applicable to each item based on tax jurisdiction, unless the nature of the item requires the tax effect to be estimated by applying a specific tax treatment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Year Ended 

 

 

 

December 31

 

December 31

 

 

    

2019

 

2018

 

2019

 

2018

 

Segment Operating Income Reconciliations

 

(Unaudited)

 

 

 

($ thousands, except percentages)

 

Asset-Based Segment

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 20,546

 

 96.0

%  

 

$

 36,929

 

 93.3

%  

 

$

 102,061

 

 95.2

%  

 

$

 103,862

 

 95.2

%  

 

Innovative technology costs, pre-tax(2)

 

 

 4,539

 

 (0.9)

 

 

 

 862

 

 (0.2)

 

 

 

 13,739

 

 (0.6)

 

 

 

 3,810

 

 (0.2)

 

 

ELD conversion costs, pre-tax(3)

 

 

 329

 

 (0.1)

 

 

 

 —

 

 —

 

 

 

 2,687

 

 (0.1)

 

 

 

 —

 

 —

 

 

Nonunion pension termination costs, pre-tax(4)

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 295

 

 —

 

 

 

 —

 

 —

 

 

Multiemployer pension fund withdrawal liability charge, pre-tax(5)

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 37,922

 

 (1.7)

 

 

Non-GAAP amounts(12)

 

$

 25,414

 

 95.0

%  

 

$

 37,791

 

 93.1

%  

 

$

 118,782

 

 94.5

%  

 

$

 145,594

 

 93.3

%