ArcBest Announces Second Quarter 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 Second Quarter 2018 Results

  • Second quarter 2018 revenue of $793.4 million, and net income of $1.2 million, or $0.05 per diluted share, includes the impact of a multiemployer pension withdrawal liability charge.  On a non-GAAP1 basis, second quarter 2018 net income was $29.8 million, doubling to $1.12 per diluted share from second quarter 2017.

  • Solid second quarter Asset-Based revenue and operating income associated with yield management initiatives and cost control.
  • Asset-Light revenue growth in the midst of tight truckload capacity in the marketplace.

 

FORT SMITH, Arkansas, July 31, 2018 — ArcBest® (Nasdaq: ARCB), a leading logistics company with creative problem solvers who deliver integrated solutions, today reported second quarter 2018 revenue of $793.4 million compared to second quarter 2017 revenue of $720.4 million.  This represented a record level of quarterly consolidated revenue in ArcBest’s history.  Second quarter 2018 operating income, including the $37.9 million multiemployer pension charge described in the following paragraph, was $3.2 million compared to operating income of $25.8 million in the same quarter last year.  Net income was $1.2 million, or $0.05 per diluted share compared to second quarter 2017 net income of $15.8 million, or $0.60 per diluted share.  

Excluding certain items in both periods, as identified in the attached reconciliation tables, non-GAAP operating income was $41.4 million in second quarter 2018 compared to second quarter 2017 operating income of $26.1 million.  On a non-GAAP basis, net income was $29.8 million, or $1.12 per diluted share, in second quarter 2018 compared to second quarter 2017 net income of $14.8 million, or $0.56 per diluted share.  Adjustments in the second quarter 2018 period include a one-time, withdrawal liability charge of $37.9 million impacting operating income ($28.2 million, or $1.05 per diluted share after-tax) related to a previously announced agreement regarding the restructure of ABF Freight’s obligation with one multiemployer pension plan2.     

“We were pleased to report a very solid second quarter, once again recording growth in revenue and operating income, particularly in our Asset-Based business,” said Chairman, President and Chief Executive Judy R. McReynolds.  “While shipment levels were down amid slightly lower freight tonnage in our Asset-Based business, our pricing remained strong and we were pleased to see continued growth in revenue per hundredweight.  Our Asset-Light business also experienced strong revenue growth on higher pricing, with operating results impacted by higher purchased transportation costs reflecting tight capacity conditions.”

 

  1. U.S. Generally Accepted Accounting Principles
  2. As disclosed in Form 8-K filed July 11, 2018, ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “Fund”) will be restructured, which results in ABF Freight withdrawing as a participating employer in the Fund and the one-time withdrawal liability charge recorded in second quarter 2018.
 

Asset-Based

Results of Operations

Second Quarter 2018 Versus Second Quarter 2017

  • Revenue of $559.2 million compared to $514.5 million, a per-day increase of 7.8 percent.
  • Tonnage per day decrease of 0.9 percent.
  • Shipments per day decrease 6.1 percent.
  • Total billed revenue per hundredweight increased 9.4 percent and was positively impacted by Asset-Based pricing initiatives and higher fuel surcharges.  Excluding fuel surcharge, the percentage increase on ArcBest’s Asset-Based LTL freight was in the high-single digits.
  • Operating income of $3.4 million and an operating ratio of 99.4 percent, including the $37.9 million impact of a multiemployer pension withdrawal liability charge, compared to second quarter 2017 operating income of $22.9 million and an operating ratio of 95.6 percent.  On a non-GAAP basis, operating income of $41.3 million and an operating ratio of 92.6 percent compared to operating income of $22.9 million and an operating ratio of 95.6 percent. 

 

ArcBest’s Asset-Based business continued to benefit from a solid freight environment, the on-going benefits of yield management initiatives and cost controls throughout its freight handling network.  Strength in account pricing and higher fuel surcharges contributed to strong growth in both revenue per hundredweight and billed revenue per shipment.  Average shipment size increased reflecting positive changes in freight mix and shipment profile.  Though tonnage and shipment totals continued to be below prior year levels, trends in these business metrics improved in each month of the quarter.  Increases in larger transactional shipments, resulting from current market conditions, were another positive factor in the quarter.                     

Asset-Light

Results of Operations

Second Quarter 2018 Versus Second Quarter 2017

  • Revenue of $246.8 million compared to $212.4 million, a per-day increase of 15.3 percent.
  • Operating income of $4.7 million compared to operating income of $6.7 million. On a non-GAAP basis, operating income of $4.9 million compared to $6.7 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $8.7 million compared to Adjusted EBITDA of $10.2 million.

 

ArcBest’s second quarter revenue growth was driven by higher market rates resulting from continued tightness in available truckload capacity.  Total daily ArcBest shipments were below the prior year’s second quarter.  As experienced in recent periods, market conditions contributed to reductions in net revenue margins related to the challenges of adequately matching shipper rates with the costs of purchased transportation.  The decline in second quarter ArcBest operating income was the result of net revenue margin compression and the impact of the previously announced sale of the military moving business in December 2017.  Quarterly results were also affected by higher purchase accounting expense and investments in technology and personnel associated with managed transportation solutions and maintaining customer service.  Revenue and profitability growth at FleetNet were driven by increased event count combined with labor and cost control versus last year’s second quarter.

Closing Comments

“The general economic environment remained favorable in the second quarter, lending a strong foundation for us to continue executing on our various initiatives to enable an exceptional customer experience across all of our service offerings,” said McReynolds. “By offering integrated solutions and helping our customers source capacity through our owned assets and trusted carrier partners, we are providing them great value in this tight market. Our expertise across the entire supply chain has also enabled us to win more business in managed transportation as we solve the increasingly complex supply chain problems our customers encounter.”

Conference Call

ArcBest will host a conference call with company executives to discuss the 2018 second quarter results. The call will be on Wednesday, August 1st at 9:30 a.m. EDT (8:30 a.m. CDT). Interested parties are invited to listen by calling (888) 612-1052. Following the call, a recorded playback will be available through the end of the day on September 15, 2018. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21892256. The conference call and playback can also be accessed, through September 15, 2018, 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, we will respond to as many questions as possible in the time available.

 

About ArcBest

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

Forward-Looking Statements

Certain statements and information in this press release concerning results for the three months ended June 30, 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 

 

Six Months Ended 

 

 

 

June 30

 

June 30

 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(Unaudited)

 

 

 

($ thousands, except share and per share data)

 

REVENUES

 

$

 793,350

 

$

 720,368

 

$

 1,493,351

 

$

 1,371,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 790,194

 

 

 694,601

 

 

 1,477,470

 

 

 1,355,589

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME(2)

 

 

 3,156

 

 

 25,767

 

 

 15,881

 

 

 15,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (COSTS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

 714

 

 

 285

 

 

 1,240

 

 

 559

 

Interest and other related financing costs

 

 

 (2,013)

 

 

 (1,389)

 

 

 (4,072)

 

 

 (2,704)

 

Other, net(2)

 

 

 (1,123)

 

 

 (528)

 

 

 (3,324)

 

 

 (2,234)

 

 

 

 

 (2,422)

 

 

 (1,632)

 

 

 (6,156)

 

 

 (4,379)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 734

 

 

 24,135

 

 

 9,725

 

 

 11,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX PROVISION (BENEFIT)

 

 

 (499)

 

 

 8,358

 

 

 (1,462)

 

 

 3,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

 1,233

 

$

 15,777

 

$

 11,187

 

$

 8,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 0.05

 

$

 0.61

 

$

 0.43

 

$

 0.32

 

Diluted

 

$

 0.05

 

$

 0.60

 

$

 0.42

 

$

 0.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 25,670,325

 

 

 25,767,791

 

 

 25,656,674

 

 

 25,726,363

 

Diluted

 

 

 26,699,549

 

 

 26,291,641

 

 

 26,653,282

 

 

 26,378,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.08

 

$

 0.08

 

$

 0.16

 

$

 0.16

 


  1. Includes a $37.9 million multiemployer pension fund withdrawal liability charge for the three and six months ended June 30, 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 and six months ended June 30, 2018 and 2017.
  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

 

 

 

 

 

 

 

 

 

 

 

June 30

 

December 31

 

 

    

2018

    

2017

 

 

 

(Unaudited)

 

Note

 

 

 

($ thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 159,307

 

$

 120,772

 

Short-term investments

 

 

 68,013

 

 

 56,401

 

   Accounts receivable, less allowances (2018 - $8,057; 2017 - $7,657)

 

 

 309,112

 

 

 279,074

 

   Other accounts receivable, less allowances (2018 - $952; 2017 - $921)             

 

 

 19,548

 

 

 19,491

 

Prepaid expenses

 

 

 19,912

 

 

 22,183

 

Prepaid and refundable income taxes

 

 

 4,665

 

 

 12,296

 

Other

 

 

 9,509

 

 

 12,132

 

TOTAL CURRENT ASSETS

 

 

 590,066

 

 

 522,349

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

Land and structures

 

 

 338,902

 

 

 344,224

 

Revenue equipment

 

 

 818,674

 

 

 793,523

 

Service, office, and other equipment

 

 

 190,109

 

 

 179,950

 

Software

 

 

 131,139

 

 

 129,589

 

Leasehold improvements

 

 

 9,131

 

 

 8,888

 

 

 

 

 1,487,955

 

 

 1,456,174

 

Less allowances for depreciation and amortization

 

 

 896,738

 

 

 865,010

 

 

 

 

 591,217

 

 

 591,164

 

 

 

 

 

 

 

 

 

GOODWILL

 

 

 108,320

 

 

 108,320

 

INTANGIBLE ASSETS, NET

 

 

 71,206

 

 

 73,469

 

DEFERRED INCOME TAXES

 

 

 6,226

 

 

 5,965

 

OTHER LONG-TERM ASSETS

 

 

 65,261

 

 

 64,374

 

 

 

$

 1,432,296

 

$

 1,365,641

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

 176,034

 

$

 129,099

 

Income taxes payable

 

 

 511

 

 

 324

 

Accrued expenses

 

 

 221,880

 

 

 211,237

 

Current portion of long-term debt

 

 

 51,562

 

 

 61,930

 

TOTAL CURRENT LIABILITIES

 

 

 449,987

 

 

 402,590

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, less current portion

 

 

 198,070

 

 

 206,989

 

PENSION AND POSTRETIREMENT LIABILITIES

 

 

 36,169

 

 

 39,827

 

OTHER LONG-TERM LIABILITIES

 

 

 38,456

 

 

 15,616

 

DEFERRED INCOME TAXES

 

 

 41,099

 

 

 49,157

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2018: 28,541,578 shares; 2017: 28,495,628 shares

 

 

 285

 

 

 285

 

Additional paid-in capital

 

 

 322,895

 

 

 319,436

 

Retained earnings

 

 

 449,442

 

 

 438,379

 

   Treasury stock, at cost, 2018: 2,857,460 shares; 2017: 2,851,578 shares

 

 

 (86,265)

 

 

 (86,064)

 

Accumulated other comprehensive loss

 

 

 (17,842)

 

 

 (20,574)

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 668,515

 

 

 651,462

 

 

 

$

 1,432,296

 

$

 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

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended 

 

 

 

June 30

 

 

    

2018

    

2017

 

 

 

Unaudited

 

 

 

($ thousands)

 

 OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

 11,187

 

$

 8,370

 

Adjustments to reconcile net income

 

 

 

 

 

 

 

to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 51,409

 

 

 48,332

 

Amortization of intangibles

 

 

 2,264

 

 

 2,271

 

Pension settlement expense

 

 

 1,085

 

 

 2,701

 

Share-based compensation expense

 

 

 3,544

 

 

 3,599

 

Provision for losses on accounts receivable

 

 

 1,069

 

 

 1,053

 

Deferred income tax provision (benefit)

 

 

 (10,818)

 

 

 2,687

 

Gain on sale of property and equipment

 

 

 (166)

 

 

 (412)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

 (31,281)

 

 

 (21,091)

 

Prepaid expenses

 

 

 2,393

 

 

 (2,549)

 

Other assets

 

 

 2,018

 

 

 (3,100)

 

Income taxes

 

 

 8,024

 

 

 458

 

Multiemployer pension fund withdrawal liability(1)

 

 

 37,922

 

 

 —

 

Accounts payable, accrued expenses, and other liabilities

 

 

 40,914

 

 

 9,007

 

 NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

 119,564

 

 

 51,326

 

 

 

 

 

 

 

 

 

 INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net of financings

 

 

 (24,763)

 

 

 (27,123)

 

Proceeds from sale of property and equipment

 

 

 2,074

 

 

 2,751

 

Purchases of short-term investments

 

 

 (26,006)

 

 

 (6,223)

 

Proceeds from sale of short-term investments

 

 

 14,647

 

 

 9,065

 

Capitalization of internally developed software

 

 

 (5,997)

 

 

 (4,323)

 

 NET CASH USED IN INVESTING ACTIVITIES

 

 

 (40,045)

 

 

 (25,853)

 

 

 

 

 

 

 

 

 

 FINANCING ACTIVITIES

 

 

 

 

 

 

 

Borrowings under accounts receivable securitization program

 

 

 —

 

 

 10,000

 

Payments on long-term debt

 

 

 (33,694)

 

 

 (34,948)

 

Net change in book overdrafts

 

 

 (2,888)

 

 

 (2,478)

 

Deferred financing costs

 

 

 —

 

 

 (275)

 

Payment of common stock dividends

 

 

 (4,116)

 

 

 (4,144)

 

Purchases of treasury stock

 

 

 (201)

 

 

 (3,611)

 

Payments for tax withheld on share-based compensation

 

 

 (85)

 

 

 (2,690)

 

 NET CASH USED IN FINANCING ACTIVITIES

 

 

 (40,984)

 

 

 (38,146)

 

 

 

 

 

 

 

 

 

 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

 

 

 38,535

 

 

 (12,673)

 

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

 

$

 159,307

 

$

 102,569

 

 

 

 

 

 

 

 

 

 NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

Equipment financed

 

$

 14,407

 

$

 38,593

 

Accruals for equipment received

 

$

 8,649

 

$

 3,179

 


  1. As previously discussed in this press release, ABF Freight, Inc. recorded a one-time charge in June 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 

 

 

Six Months Ended 

 

 

 

June 30

 

 

June 30

 

 

    

2018

    

 

2017

    

 

2018

    

 

2017

 

 

 

Unaudited

 

 

 

($ thousands, except percentages)

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 559,239

 

 

 

 

$

 514,537

 

 

 

 

$

 1,041,354

 

 

 

 

$

 978,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 199,987

 

 

 

 

 

 175,929

 

 

 

 

 

 381,920

 

 

 

 

 

 328,805

 

 

 

FleetNet

 

 

 46,792

 

 

 

 

 

 36,501

 

 

 

 

 

 94,551

 

 

 

 

 

 76,739

 

 

 

Total Asset-Light

 

 

 246,779

 

 

 

 

 

 212,430

 

 

 

 

 

 476,471

 

 

 

 

 

 405,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (12,668)

 

 

 

 

 

 (6,599)

 

 

 

 

 

 (24,474)

 

 

 

 

 

 (12,981)

 

 

 

Total consolidated revenues

 

$

 793,350

 

 

 

 

$

 720,368

 

 

 

 

$

 1,493,351

 

 

 

 

$

 1,371,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages, and benefits

 

$

 286,750

 

 51.3

%

 

$

 286,904

 

 55.8

%

 

$

 556,529

 

 53.5

%

 

$

 566,284

 

 57.9

%

Fuel, supplies, and expenses

 

 

 65,040

 

 11.6

 

 

 

 58,541

 

 11.4

 

 

 

 127,233

 

 12.2

 

 

 

 116,931

 

 11.9

 

Operating taxes and licenses

 

 

 11,910

 

 2.1

 

 

 

 12,191

 

 2.4

 

 

 

 23,666

 

 2.3

 

 

 

 24,014

 

 2.5

 

Insurance

 

 

 7,979

 

 1.4

 

 

 

 7,602

 

 1.5

 

 

 

 14,607

 

 1.4

 

 

 

 14,720

 

 1.5

 

Communications and utilities

 

 

 4,135

 

 0.7

 

 

 

 4,168

 

 0.8

 

 

 

 8,656

 

 0.8

 

 

 

 8,685

 

 0.9

 

Depreciation and amortization

 

 

 21,362

 

 3.8

 

 

 

 20,716

 

 4.0

 

 

 

 42,292

 

 4.1

 

 

 

 41,234

 

 4.2

 

Rents and purchased transportation

 

 

 63,253

 

 11.3

 

 

 

 53,189

 

 10.3

 

 

 

 109,386

 

 10.5

 

 

 

 99,615

 

 10.2

 

Shared services(2)

 

 

 56,825

 

 10.2

 

 

 

 46,600

 

 9.1

 

 

 

 102,432

 

 9.8

 

 

 

 90,104

 

 9.2

 

Multiemployer pension fund withdrawal liability charge(3)

 

 

 37,922

 

 6.8

 

 

 

 —

 

 —

 

 

 

 37,922

 

 3.6

 

 

 

 —

 

 —

 

(Gain) loss on sale of property and equipment

 

 

 (266)

 

 —

 

 

 

 25

 

 —

 

 

 

 (399)

 

 —

 

 

 

 (592)

 

 (0.1)

 

Other

 

 

 948

 

 0.2

 

 

 

 1,673

 

 0.3

 

 

 

 2,247

 

 0.2

 

 

 

 3,178

 

 0.3

 

Restructuring costs(4)

 

 

 —

 

 —

 

 

 

 33

 

 —

 

 

 

 —

 

 —

 

 

 

 173

 

 —

 

Total Asset-Based

 

 

 555,858

 

 99.4

%

 

 

 491,642

 

 95.6

%

 

 

 1,024,571

 

 98.4

%

 

 

 964,346

 

 98.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

 

 162,920

 

 81.5

%

 

 

 139,432

 

 79.3

%

 

 

 311,292

 

 81.5

%

 

 

 261,419

 

 79.5

%

Supplies and expenses

 

 

 3,538

 

 1.7

 

 

 

 3,742

 

 2.1

 

 

 

 6,768

 

 1.8

 

 

 

 7,412

 

 2.3

 

Depreciation and amortization(5)

 

 

 3,597

 

 1.8

 

 

 

 3,230

 

 1.8

 

 

 

 7,005

 

 1.8

 

 

 

 6,496

 

 2.0

 

Shared services(2)

 

 

 23,536

 

 11.7

 

 

 

 20,658

 

 11.7

 

 

 

 45,404

 

 11.9

 

 

 

 40,244

 

 12.2

 

Other

 

 

 2,546

 

 1.3

 

 

 

 2,873

 

 1.7

 

 

 

 4,427

 

 1.2

 

 

 

 5,338

 

 1.6

 

Restructuring costs(4)

 

 

 143

 

 0.1

 

 

 

 65

 

 —

 

 

 

 152

 

 —

 

 

 

 875

 

 0.3

 

 

 

 

 196,280

 

 98.1

%

 

 

 170,000

 

 96.6

%

 

 

 375,048

 

 98.2

%

 

 

 321,784

 

 97.9

%

FleetNet

 

 

 45,763

 

 97.8

%

 

 

 35,754

 

 98.0

%

 

 

 92,001

 

 97.3

%

 

 

 74,971

 

 97.7

%

Total Asset-Light

 

 

 242,043

 

 

 

 

 

 205,754

 

 

 

 

 

 467,049

 

 

 

 

 

 396,755

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(6)

 

 

 (7,707)

 

 

 

 

 

 (2,795)

 

 

 

 

 

 (14,150)

 

 

 

 

 

 (5,512)

 

 

 

Total consolidated operating expenses

 

$

 790,194

 

 99.6

%

 

$

 694,601

 

 96.4

%

 

$

 1,477,470

 

 98.9

%

 

$

 1,355,589

 

 98.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 3,381

 

 

 

 

$

 22,895

 

 

 

 

 

 16,783

 

 

 

 

 

 14,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 3,707

 

 

 

 

 

 5,929

 

 

 

 

 

 6,872

 

 

 

 

 

 7,021

 

 

 

FleetNet

 

 

 1,029

 

 

 

 

 

 747

 

 

 

 

 

 2,550

 

 

 

 

 

 1,768

 

 

 

Total Asset-Light

 

 

 4,736

 

 

 

 

 

 6,676

 

 

 

 

 

 9,422

 

 

 

 

 

 8,789

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(6)

 

 

 (4,961)

 

 

 

 

 

 (3,804)

 

 

 

 

 

 (10,324)

 

 

 

 

 

 (7,469)

 

 

 

Total consolidated operating income

 

$

 3,156

 

 

 

 

$

 25,767

 

 

 

 

$

 15,881

 

 

 

 

$

 15,867

 

 

 


  1. In accordance with an amendment to ASC Topic 715, Compensation – Retirement Benefits, which the Company retrospectively adopted effective January 1, 2018, 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. The detail of the Company’s net periodic benefit costs are presented in Note F to the consolidated financial statements included in Part I, Item I of the Company’s second quarter 2018 Quarterly Report on Form 10-Q.
  2. The presentation of segment expenses allocated from shared services was modified during third quarter 2017 and reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. Previously, expenses allocated from company-wide functions were categorized in individual segment expense line items by type of expense. Allocated expense is now presented on a single “Shared services” line within the Company’s operating segment disclosures. There was no impact on each segment’s total expenses as a result of the reclassifications.
  3. As previously discussed in this press release, ABF Freight, Inc. recorded a one-time charge in June 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. “Other” corporate costs include restructuring charges of $0.2 million and $0.3 million for the three months ended June 30, 2018 and 2017, respectively, and $0.6 million and $0.9 million for the six months ended June 30, 2018 and 2017, respectively. (See Segment Operating Income Reconciliations of GAAP to Non-GAAP Financial Measures table.) Other corporate costs also include additional investments to provide an improved platform for revenue growth and for offering ArcBest services across multiple operating segments.

 

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 

 

Six Months Ended 

 

 

June 30

 

 

June 30

 

 

    

2018

 

2017

    

  

2018

 

 

2017

 

 

 

(Unaudited)

 

 

 

($ thousands, except per share data)

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 3,156

 

$

 25,767

 

$

 15,881

 

$

 15,867

 

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

 

 

 37,922

 

 

 —

 

 

 37,922

 

 

 —

 

Restructuring charges, pre-tax(2)

 

 

 340

 

 

 363

 

 

 716

 

 

 1,994

 

Non-GAAP amounts

 

$

 41,418

 

$

 26,130

 

$

 54,519

 

$

 17,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 1,233

 

$

 15,777

 

$

 11,187

 

$

 8,370

 

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

 

 

 28,161

 

 

 —

 

 

 28,161

 

 

 —

 

Restructuring charges, after-tax(2)

 

 

 252

 

 

 220

 

 

 529

 

 

 1,209

 

Deferred tax adjustment for 2017 Tax Reform Act(3)

 

 

 (50)

 

 

 —

 

 

 (2,641)

 

 

 —

 

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

 

 

 (9)

 

 

 —

 

 

 (69)

 

 

 —

 

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

 

 

 1,301

 

 

 364

 

 

 2,821

 

 

 1,535

 

Life insurance proceeds and changes in cash surrender value

 

 

 (819)

 

 

 (407)

 

 

 (934)

 

 

 (987)

 

Tax benefit from vested RSUs(5)

 

 

 (282)

 

 

 (1,170)

 

 

 (301)

 

 

 (1,245)

 

Alternative fuel tax credit(6)

 

 

 —

 

 

 —

 

 

 (1,203)

 

 

 —

 

Non-GAAP amounts

 

$

 29,787

 

$

 14,784

 

$

 37,550

 

$

 8,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 0.05

 

$

 0.60

 

$

 0.42

 

$

 0.32

 

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

 

 

 1.05

 

 

 —

 

 

 1.06

 

 

 —

 

Restructuring charges, after-tax(2)

 

 

 0.01

 

 

 0.01

 

 

 0.02

 

 

 0.05

 

Deferred tax adjustment for 2017 Tax Reform Act(3)

 

 

 —

 

 

 —

 

 

 (0.10)

 

 

 —

 

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

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

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

 

 

 0.05

 

 

 0.01

 

 

 0.11

 

 

 0.06

 

Life insurance proceeds and changes in cash surrender value

 

 

 (0.03)

 

 

 (0.02)

 

 

 (0.04)

 

 

 (0.04)

 

Tax benefit from vested RSUs(5)

 

 

 (0.01)

 

 

 (0.04)

 

 

 (0.01)

 

 

 (0.05)

 

Alternative fuel tax credit(6)

 

 

 —

 

 

 —

 

 

 (0.05)

 

 

 —

 

Non-GAAP amounts

 

$

 1.12

 

$

 0.56

 

$

 1.41

 

$

 0.34

 


  1. As previously discussed in this press release, ABF Freight, Inc. recorded a one-time charge in June 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. Impact on current or deferred income tax expense as a result of recognizing a reasonable estimate of the tax effects of the Tax Cuts and Jobs Act (“2017 Tax Reform Act”) that was signed into law on December 22, 2017.
  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. Plan participants will have an election window in which they can choose any form of payment allowed by the plan for immediate commencement of payment or defer payment until a later date with pension settlements related to the plan termination which may occur in 2018.
  5. The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax benefit during the three and six months ended June 30, 2018 and 2017.
  6. Represents the amount of the alternative fuel tax credit related to the year ended December 31, 2017 which was recorded in first quarter 2018 due to the February 2018 retroactive reinstatement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ thousands, except percentages)

 

Three Months Ended June 30, 2018

 

 

 

 

 

 

 

 

Income

 

Income

 

 

 

 

 

 

 

 

 

 

 

Other

 

Before

 

Tax

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Provision

 

Net

 

Effective Tax

 

 

Income

 

(Costs)

 

Taxes

 

(Benefit)

 

Income

 

(Benefit) Rate

Amounts on GAAP basis

 

$

 3,156

 

$

 (2,422)

 

$

 734

 

$

 (499)

 

$

 1,233

 

 (68.0)

%  

Multiemployer pension fund withdrawal liability charge(1)

 

 

 37,922

 

 

 —

 

 

 37,922

 

 

 9,761

 

 

 28,161

 

 25.7

 

Restructuring charges(2)

 

 

 340

 

 

 —

 

 

 340

 

 

 88

 

 

 252

 

 25.9

 

Deferred tax adjustment for 2017 Tax Reform Act(3)

 

 

 —

 

 

 —

 

 

 —

 

 

 50

 

 

 (50)

 

 —

 

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

 

 

 —

 

 

 —

 

 

 —

 

 

 9

 

 

 (9)

 

 —

 

Nonunion pension expense, including settlement(4)

 

 

 —

 

 

 1,752

 

 

 1,752

 

 

 451

 

 

 1,301

 

 25.7

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (819)

 

 

 (819)

 

 

 —

 

 

 (819)

 

 —

 

Tax benefit from vested RSUs(5)

 

 

 —

 

 

 —

 

 

 —

 

 

 282

 

 

 (282)

 

 —

 

Non-GAAP amounts

 

$

 41,418

 

$

 (1,489)

 

$

 39,929

 

$

 10,142

 

$

 29,787

 

 25.4

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2017

 

 

 

 

 

 

 

Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Tax

 

Net

 

Effective Tax

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

(Benefit) Rate

Amounts on GAAP basis

 

$

 25,767

 

$

 (1,632)

 

$

 24,135

 

$

 8,358

 

$

 15,777