ArcBest Announces Second Quarter 2019 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 2019 Results

 

  • Second quarter 2019 revenue of $771.5 million, and net income of $24.4 million, or $0.92 per diluted share.  On a non-GAAP1 basis, second quarter 2019 net income was $24.6 million, or $0.93 per diluted share.
  • Asset-Based yield improvement in the midst of lower shipment and tonnage levels
  • Asset-Light revenue and operating income impacted by lower market demand during a period that included resource investments for the future

FORT SMITH, Arkansas, July 30, 2019 — ArcBest® (Nasdaq: ARCB), a leading logistics company with creative problem solvers who deliver integrated solutions, today reported second quarter 2019 revenue of $771.5 million compared to second quarter 2018 revenue of $793.4 million.  Second quarter 2019 operating income was $35.2 million compared to operating income of $3.2 million in second quarter last year.  Second quarter net income was $24.4 million, or $0.92 per diluted share compared to second quarter 2018 net income of $1.2 million, or $0.05 per diluted share.

Excluding certain items in both periods, as identified in the attached reconciliation tables, non-GAAP net income was $24.6 million, or $0.93 per diluted share, in second quarter 2019 compared to second quarter 2018 net income of $29.8 million, or $1.12 per diluted share.  Adjustments in the second quarter 2018 period included a one-time after-tax charge of $28.2 million, or $1.05 per diluted share, related to the restructure of ABF Freight’s obligation with one multiemployer pension plan.

“Once again we saw that business conditions, while still relatively healthy, moderated in the second quarter from last year’s record-setting levels but on an overall historical basis the quarter was solid with a rational underlying pricing environment,” said Chairman, President and CEO Judy R. McReynolds. “Revenue improved month to month for our asset-based business while our asset-light business continued to see softer expedited services conditions on increased available truckload capacity.”

 

Asset-Based

Results of Operations

Second Quarter 2019 Versus Second Quarter 2018

  • Revenue of $559.6 million compared to $559.2 million, a per-day increase of 0.9 percent.
  • Tonnage per day decrease of 3.4 percent, with a mid-single digit percentage decrease in LTL-rated freight.
  • Shipments per day decrease of 1.2 percent.  Total weight per shipment decreased 2.2 percent and the decrease in the average LTL-rated weight per shipment was approximately 4 percent.
  • Total billed revenue per hundredweight increased 4.1 percent, positively impacted by lower average weight per shipment.  Excluding fuel surcharge, the percentage increase on LTL-rated freight was in the high-single digits.
  • Operating income of $36.2 million and an operating ratio of 93.5 percent compared to operating income of $3.4 million and an operating ratio of 99.4 percent.  On a non-GAAP basis, operating income of $36.2 million and an operating ratio of 93.5 percent compared to operating income of $41.3 million and an operating ratio of 92.6 percent.  Operating income adjustments in the second quarter 2018 period included a one-time charge of $37.9 million related to the previously mentioned restructure of ABF Freight’s obligation with one multiemployer pension plan.

 

  1. U.S. Generally Accepted Accounting Principles

Continued improvement in yield management and customer pricing initiatives, despite fewer shipments and lower freight tonnage, resulted in a slight increase in second quarter, daily revenue versus last year.  The reduction in second quarter total tonnage per day reflected lower LTL-rated freight tonnage partially offset by increases in truckload-rated spot shipments moving in the asset-based network.  Though below last year’s second quarter, total average Asset-Based weight per shipment trends improved throughout the quarter, partially due to the growth in truckload-rated spot shipments. 

Increased costs associated with city pickup, dock handling and final shipment delivery impacted second quarter profitability as labor and other operational resources were somewhat elevated relative to decreasing LTL freight levels throughout the quarter.  An emphasis on customer service continues to be a focal point.  Linehaul costs were below prior year due, primarily, to reductions in the use of rail and outside carrier resources.

Asset-Light2

Results of Operations

Second Quarter 2019 Versus Second Quarter 2018

  • Revenue of $232.9 million compared to $246.8 million.
  • Operating income of $3.1 million compared to operating income of $4.7 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $6.5 million compared to Adjusted EBITDA of $8.7 million.

Compared to last year’s second quarter, fewer shipments and lower average shipment revenue contributed to reduced total Asset-Light ArcBest segment revenue.  This year’s more available truckload capacity, compared to the tighter market last year, continued to be a factor impacting customer pricing and the ArcBest segment’s results.  Because of lower revenue per shipment related to changing market conditions versus the prior year, expedite and truckload brokerage were the main contributors to the reduction in total ArcBest segment revenue. Increased revenue and shipment levels in managed transportation services were consistent with the growth trend of that business in recent quarters.  Total second quarter ArcBest operating expenses improved versus 2018.  At FleetNet, event growth and cost controls contributed to the quarter’s operating income.

Closing Comments

“The first six months of 2019 saw moderated activity from the record-setting pace experienced in 2018,” McReynolds said. “Our team has executed well in this environment, providing innovative full supply chain solutions and trusted advice to customers for all of their logistics challenges, with managed transportation solutions increasingly in demand. Our outlook for the second half sees a continuation of the current trends and we will monitor for any changes to that view, particularly as it relates to federal tariff policies and developments in the manufacturing and industrial sectors of the economy.”

 

 

 

 

 

 

 

 

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

Conference Call

ArcBest will host a conference call with company executives to discuss the 2019 second quarter results. The call will be on Wednesday, July 31st at 9:30 a.m. EDT (8:30 a.m. CDT). Interested parties are invited to listen by calling (800) 897‑3679. Following the call, a recorded playback will be available through the end of the day on September 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 21926462. The conference call and playback can also be accessed, through September 15, 2019, on ArcBest’s website at arcb.com.

 

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

 

About ArcBest

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

Forward-Looking Statements

Certain statements and information in this press release concerning results for the three months ended June 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; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; relationships with employees, including unions, and our ability to attract and retain employees; unfavorable terms of, or the inability to reach agreement on, future collective bargaining agreements or a workforce stoppage by our employees covered under ABF Freight’s collective bargaining agreement; the cost, timing, and performance of growth initiatives; general economic conditions and related shifts in market demand that impact the performance and needs of industries we serve and/or limit our customers’ access to adequate financial resources; availability and cost of reliable third-party services; governmental regulations; environmental laws and regulations, including emissions-control regulations; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; litigation or claims asserted against us; maintaining our intellectual property rights, brand, and corporate reputation; the loss of key employees or the inability to execute succession planning strategies; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; self-insurance claims and insurance premium costs; the cost, integration, and performance of any recent or future acquisitions; availability of fuel, the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates, and the inability to collect fuel surcharges; increased prices for and decreased availability of new revenue equipment, decreases in value of used revenue equipment, and higher costs of equipment-related operating expenses such as maintenance and fuel and related taxes; potential impairment of goodwill and intangible assets; greater than anticipated funding requirements for our nonunion defined benefit pension plan; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; antiterrorism and safety measures; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest’s public filings with the Securities and Exchange Commission (“SEC”).

 

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

 

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

Financial Data and Operating Statistics

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

 ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Six Months Ended 

 

 

 

June 30

 

June 30

 

 

    

2019

    

2018

    

2019

    

2018

 

 

 

(Unaudited)

 

 

 

($ thousands, except share and per share data)

 

REVENUES

 

$

 771,490

 

$

 793,350

 

$

 1,483,329

 

$

 1,493,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES(1)

 

 

 736,290

 

 

 790,194

 

 

 1,439,538

 

 

 1,477,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 35,200

 

 

 3,156

 

 

 43,791

 

 

 15,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (COSTS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

 1,616

 

 

 714

 

 

 3,094

 

 

 1,240

 

Interest and other related financing costs

 

 

 (2,811)

 

 

 (2,013)

 

 

 (5,693)

 

 

 (4,072)

 

Other, net

 

 

 (445)

 

 

 (1,123)

 

 

 (1,036)

 

 

 (3,324)

 

 

 

 

 (1,640)

 

 

 (2,422)

 

 

 (3,635)

 

 

 (6,156)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 33,560

 

 

 734

 

 

 40,156

 

 

 9,725

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX PROVISION (BENEFIT)

 

 

 9,184

 

 

 (499)

 

 

 10,892

 

 

 (1,462)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

 24,376

 

$

 1,233

 

$

 29,264

 

$

 11,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 0.95

 

$

 0.05

 

$

 1.14

 

$

 0.43

 

Diluted

 

$

 0.92

 

$

 0.05

 

$

 1.10

 

$

 0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 25,554,286

 

 

 25,670,325

 

 

 25,562,306

 

 

 25,656,674

 

Diluted

 

 

 26,431,592

 

 

 26,699,549

 

 

 26,483,011

 

 

 26,653,282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.08

 

$

 0.08

 

$

 0.16

 

$

 0.16

 


  1. Includes a one-time charge of $37.9 million for the three and six months ended June 30, 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. 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

 

 

    

2019

    

2018

 

 

 

(Unaudited)

 

Note

 

 

 

($ thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 181,731

 

$

 190,186

 

Short-term investments

 

 

 117,657

 

 

 106,806

 

Accounts receivable, less allowances (2019 - $6,238; 2018 - $7,380)

 

 

 296,090

 

 

 297,051

 

Other accounts receivable, less allowances (2019 - $463; 2018 - $806)

 

 

 17,207

 

 

 19,146

 

Prepaid expenses

 

 

 28,546

 

 

 25,304

 

Prepaid and refundable income taxes

 

 

 5,237

 

 

 1,726

 

Other

 

 

 4,982

 

 

 9,007

 

TOTAL CURRENT ASSETS

 

 

 651,450

 

 

 649,226

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

Land and structures

 

 

 339,255

 

 

 339,640

 

Revenue equipment

 

 

 888,588

 

 

 858,251

 

Service, office, and other equipment

 

 

 218,131

 

 

 199,230

 

Software

 

 

 143,181

 

 

 138,517

 

Leasehold improvements

 

 

 10,058

 

 

 9,365

 

 

 

 

 1,599,213

 

 

 1,545,003

 

Less allowances for depreciation and amortization

 

 

 947,264

 

 

 913,815

 

 

 

 

 651,949

 

 

 631,188

 

 

 

 

 

 

 

 

 

GOODWILL

 

 

 108,320

 

 

 108,320

 

INTANGIBLE ASSETS, NET

 

 

 66,700

 

 

 68,949

 

OPERATING RIGHT-OF-USE ASSETS

 

 

 68,810

 

 

 —

 

DEFERRED INCOME TAXES

 

 

 6,296

 

 

 7,468

 

OTHER LONG-TERM ASSETS

 

 

 80,402

 

 

 74,080

 

 

 

$

 1,633,927

 

$

 1,539,231

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

 166,829

 

$

 143,785

 

Income taxes payable

 

 

 1,942

 

 

 1,688

 

Accrued expenses

 

 

 228,994

 

 

 243,111

 

Current portion of long-term debt

 

 

 47,205

 

 

 54,075

 

Current portion of operating lease liabilities

 

 

 18,273

 

 

 —

 

Current portion of pension and postretirement liabilities

 

 

 8,231

 

 

 8,659

 

TOTAL CURRENT LIABILITIES

 

 

 471,474

 

 

 451,318

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, less current portion

 

 

 235,001

 

 

 237,600

 

OPERATING LEASE LIABILITIES, less current portion

 

 

 54,040

 

 

 —

 

PENSION AND POSTRETIREMENT LIABILITIES, less current portion

 

 

 31,874

 

 

 31,504

 

OTHER LONG-TERM LIABILITIES

 

 

 37,268

 

 

 44,686

 

DEFERRED INCOME TAXES

 

 

 61,111

 

 

 56,441

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2019: 28,786,473 shares; 2018: 28,684,779 shares

 

 

 288

 

 

 287

 

Additional paid-in capital

 

 

 329,388

 

 

 325,712

 

Retained earnings

 

 

 526,551

 

 

 501,389

 

   Treasury stock, at cost, 2019: 3,266,169 shares; 2018: 3,097,634 shares

 

 

 (100,639)

 

 

 (95,468)

 

Accumulated other comprehensive loss

 

 

 (12,429)

 

 

 (14,238)

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 743,159

 

 

 717,682

 

 

 

$

 1,633,927

 

$

 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

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended 

 

 

 

June 30

 

 

    

2019

    

2018

 

 

 

Unaudited

 

 

 

($ thousands)

 

 OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

 29,264

 

$

 11,187

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 51,722

 

 

 51,409

 

Amortization of intangibles

 

 

 2,249

 

 

 2,264

 

Pension settlement expense

 

 

 1,634

 

 

 1,085

 

Share-based compensation expense

 

 

 4,859

 

 

 3,544

 

Provision for losses on accounts receivable

 

 

 621

 

 

 1,069

 

Change in deferred income taxes

 

 

 5,124

 

 

 (10,818)

 

Gain on sale of property and equipment

 

 

 (1,469)

 

 

 (166)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

 1,781

 

 

 (31,281)

 

Prepaid expenses

 

 

 (3,323)

 

 

 2,393

 

Other assets

 

 

 (2,798)

 

 

 2,018

 

Income taxes

 

 

 (3,042)

 

 

 8,024

 

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

 

 

 159

 

 

 —

 

Multiemployer pension fund withdrawal liability(1)

 

 

 (289)

 

 

 37,922

 

Accounts payable, accrued expenses, and other liabilities

 

 

 (6,021)

 

 

 40,914

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

 80,471

 

 

 119,564

 

 

 

 

 

 

 

 

 

 INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net of financings

 

 

 (41,909)

 

 

 (24,763)

 

Proceeds from sale of property and equipment

 

 

 3,798

 

 

 2,074

 

Purchases of short-term investments

 

 

 (43,327)

 

 

 (26,006)

 

Proceeds from sale of short-term investments

 

 

 33,332

 

 

 14,647

 

Capitalization of internally developed software

 

 

 (5,535)

 

 

 (5,997)

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

 (53,641)

 

 

 (40,045)

 

 

 

 

 

 

 

 

 

 FINANCING ACTIVITIES

 

 

 

 

 

 

 

Payments on long-term debt

 

 

 (29,984)

 

 

 (33,694)

 

Proceeds from notes payable

 

 

 9,552

 

 

 —

 

Net change in book overdrafts

 

 

 (4,398)

 

 

 (2,888)

 

Payment of common stock dividends

 

 

 (4,102)

 

 

 (4,116)

 

Purchases of treasury stock

 

 

 (5,171)

 

 

 (201)

 

Payments for tax withheld on share-based compensation

 

 

 (1,182)

 

 

 (85)

 

NET CASH USED IN FINANCING ACTIVITIES

 

 

 (35,285)

 

 

 (40,984)

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

 (8,455)

 

 

 38,535

 

Cash and cash equivalents at beginning of period

 

 

 190,186

 

 

 120,772

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

 181,731

 

$

 159,307

 

 

 

 

 

 

 

 

 

 NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

Equipment financed

 

$

 10,964

 

$

 14,407

 

Accruals for equipment received

 

$

 19,402

 

$

 8,649

 

Lease liabilities arising from obtaining right-of-use assets

 

$

 23,049

 

$

 —

 

 

 

 

 

 

 

 

 


  1. The six months ended June 30, 2018 includes a one-time charge related to the multiemployer pension plan withdrawal liability previously discussed in this press release.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

Six Months Ended 

 

 

 

June 30

 

 

June 30

 

 

    

2019

    

 

2018

    

 

2019

    

 

2018

 

 

 

Unaudited

 

 

 

($ thousands, except percentages)

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 559,648

 

 

 

 

$

 559,239

 

 

 

 

$

 1,065,727

 

 

 

 

$

 1,041,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 181,173

 

 

 

 

 

 199,987

 

 

 

 

 

 354,377

 

 

 

 

 

 381,920

 

 

 

FleetNet

 

 

 51,722

 

 

 

 

 

 46,792

 

 

 

 

 

 104,981

 

 

 

 

 

 94,551

 

 

 

Total Asset-Light

 

 

 232,895

 

 

 

 

 

 246,779

 

 

 

 

 

 459,358

 

 

 

 

 

 476,471

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (21,053)

 

 

 

 

 

 (12,668)

 

 

 

 

 

 (41,756)

 

 

 

 

 

 (24,474)

 

 

 

Total consolidated revenues

 

$

 771,490

 

 

 

 

$

 793,350

 

 

 

 

$

 1,483,329

 

 

 

 

$

 1,493,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages, and benefits

 

$

 297,016

 

 53.1

%

 

$

 286,750

 

 51.3

%

 

$

 577,292

 

 54.2

%

 

$

 556,529

 

 53.5

%

Fuel, supplies, and expenses

 

 

 66,853

 

 11.9

 

 

 

 65,040

 

 11.6

 

 

 

 131,580

 

 12.3

 

 

 

 127,233

 

 12.2

 

Operating taxes and licenses

 

 

 12,214

 

 2.2

 

 

 

 11,910

 

 2.1

 

 

 

 24,612

 

 2.3

 

 

 

 23,666

 

 2.3

 

Insurance

 

 

 7,598

 

 1.4

 

 

 

 7,979

 

 1.4

 

 

 

 15,589

 

 1.5

 

 

 

 14,607

 

 1.4

 

Communications and utilities

 

 

 4,529

 

 0.8

 

 

 

 4,135

 

 0.7

 

 

 

 9,149

 

 0.9

 

 

 

 8,656

 

 0.8

 

Depreciation and amortization

 

 

 21,743

 

 3.9

 

 

 

 21,362

 

 3.8

 

 

 

 42,723

 

 4.0

 

 

 

 42,292

 

 4.1

 

Rents and purchased transportation

 

 

 57,687

 

 10.3

 

 

 

 63,253

 

 11.3

 

 

 

 107,599

 

 10.1

 

 

 

 109,386

 

 10.5

 

Shared services(1)

 

 

 56,013

 

 10.0

 

 

 

 56,825

 

 10.2

 

 

 

 106,725

 

 10.0

 

 

 

 102,432

 

 9.8

 

Multiemployer pension fund withdrawal liability charge(2)

 

 

 —

 

 —

 

 

 

 37,922

 

 6.8

 

 

 

 —

 

 —

 

 

 

 37,922

 

 3.6

 

Gain on sale of property and equipment

 

 

 (1,587)

 

 (0.3)

 

 

 

 (266)

 

 —

 

 

 

 (1,621)

 

 (0.2)

 

 

 

 (399)

 

 —

 

Other

 

 

 1,404

 

 0.2

 

 

 

 948

 

 0.2

 

 

 

 2,286

 

 0.2

 

 

 

 2,247

 

 0.2

 

Total Asset-Based

 

 

 523,470

 

 93.5

%

 

 

 555,858

 

 99.4

%

 

 

 1,015,934

 

 95.3

%

 

 

 1,024,571

 

 98.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

 

 147,552

 

 81.4

%

 

 

 162,920

 

 81.5

%

 

 

 287,657

 

 81.2

%

 

 

 311,292

 

 81.5

%

Supplies and expenses

 

 

 2,858

 

 1.6

 

 

 

 3,538

 

 1.7

 

 

 

 5,632

 

 1.6

 

 

 

 6,768

 

 1.8

 

Depreciation and amortization(3)

 

 

 3,055

 

 1.7

 

 

 

 3,597

 

 1.8

 

 

 

 6,206

 

 1.7

 

 

 

 7,005

 

 1.8

 

Shared services(1)

 

 

 23,141

 

 12.8

 

 

 

 23,536

 

 11.7

 

 

 

 46,172

 

 13.0

 

 

 

 45,404

 

 11.9

 

Other

 

 

 2,445

 

 1.3

 

 

 

 2,546

 

 1.3

 

 

 

 4,858

 

 1.4

 

 

 

 4,427

 

 1.2

 

Restructuring costs(4)

 

 

 —

 

 —

 

 

 

 143

 

 0.1

 

 

 

 —

 

 —

 

 

 

 152

 

 —

 

 

 

 

 179,051

 

 98.8

%

 

 

 196,280

 

 98.1

%

 

 

 350,525

 

 98.9

%

 

 

 375,048

 

 98.2

%

FleetNet

 

 

 50,696

 

 98.0

%

 

 

 45,763

 

 97.8

%

 

 

 102,467

 

 97.6

%

 

 

 92,001

 

 97.3

%

Total Asset-Light

 

 

 229,747

 

 

 

 

 

 242,043

 

 

 

 

 

 452,992

 

 

 

 

 

 467,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (16,927)

 

 

 

 

 

 (7,707)

 

 

 

 

 

 (29,388)

 

 

 

 

 

 (14,150)

 

 

 

Total consolidated operating expenses

 

$

 736,290

 

 95.4

%

 

$

 790,194

 

 99.6

%

 

$

 1,439,538

 

 97.0

%

 

$

 1,477,470

 

 98.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 36,178

 

 

 

 

$

 3,381

 

 

 

 

$

 49,793

 

 

 

 

$

 16,783

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 2,122

 

 

 

 

 

 3,707

 

 

 

 

 

 3,852

 

 

 

 

 

 6,872

 

 

 

FleetNet

 

 

 1,026

 

 

 

 

 

 1,029

 

 

 

 

 

 2,514

 

 

 

 

 

 2,550

 

 

 

Total Asset-Light

 

 

 3,148

 

 

 

 

 

 4,736

 

 

 

 

 

 6,366

 

 

 

 

 

 9,422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(5)

 

 

 (4,126)

 

 

 

 

 

 (4,961)

 

 

 

 

 

 (12,368)

 

 

 

 

 

 (10,324)

 

 

 

Total consolidated operating income

 

$

 35,200

 

 

 

 

$

 3,156

 

 

 

 

$

 43,791

 

 

 

 

$

 15,881

 

 

 


  1. Shared services represent costs incurred to support all segments, including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, and other company-wide services.
  2. The three and six months ended June 30, 2018 include a one-time charge for the multiemployer pension plan withdrawal liability previously discussed in this press release.
  3. Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses.
  4. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  5. “Other and eliminations” includes corporate costs for certain unallocated shared service costs which are not attributable to any segment, additional investments to offer comprehensive transportation and logistics services across multiple operating segments, and other investments in ArcBest technology and innovations.

 

Non-GAAP Financial Measures

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Six Months Ended 

 

 

June 30

 

 

June 30

 

 

    

2019

 

2018

    

  

2019

 

 

2018

 

 

 

(Unaudited)

 

 

 

($ thousands, except per share data)

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 35,200

 

$

 3,156

 

$

 43,791

 

$

 15,881

 

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

 

 

 —

 

 

 37,922

 

 

 —

 

 

 37,922

 

Restructuring charges, pre-tax(2)

 

 

 —

 

 

 340

 

 

 —

 

 

 716

 

Non-GAAP amounts

 

$

 35,200

 

$

 41,418

 

$

 43,791

 

$

 54,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 24,376

 

$

 1,233

 

$

 29,264

 

$

 11,187

 

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

 

 

 —

 

 

 28,161

 

 

 —

 

 

 28,161

 

Restructuring charges, after-tax(2)

 

 

 —

 

 

 252

 

 

 —

 

 

 529

 

Nonunion pension expense, including settlement, after-tax(3)

 

 

 377

 

 

 1,301

 

 

 1,664

 

 

 2,821

 

Life insurance proceeds and changes in cash surrender value

 

 

 (542)

 

 

 (819)

 

 

 (2,156)

 

 

 (934)

 

Tax benefit from vested RSUs(4)

 

 

 410

 

 

 (282)

 

 

 408

 

 

 (301)

 

Deferred tax adjustment for 2017 Tax Reform Act(5)

 

 

 —

 

 

 (50)

 

 

 —

 

 

 (2,641)

 

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

 

 

 —

 

 

 (9)

 

 

 —

 

 

 (69)

 

Alternative fuel tax credit(6)

 

 

 —

 

 

 —

 

 

 —

 

 

 (1,203)

 

Non-GAAP amounts

 

$

 24,621

 

$

 29,787

 

$

 29,180

 

$

 37,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 0.92

 

$

 0.05

 

$

 1.10

 

$

 0.42

 

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

 

 

 —

 

 

 1.05

 

 

 —

 

 

 1.06

 

Restructuring charges, after-tax(2)

 

 

 —

 

 

 0.01

 

 

 —

 

 

 0.02

 

Nonunion pension expense, including settlement, after-tax(3)

 

 

 0.01

 

 

 0.05

 

 

 0.06

 

 

 0.11

 

Life insurance proceeds and changes in cash surrender value

 

 

 (0.02)

 

 

 (0.03)

 

 

 (0.08)

 

 

 (0.04)

 

Tax benefit from vested RSUs(4)

 

 

 0.02

 

 

 (0.01)

 

 

 0.02

 

 

 (0.01)

 

Deferred tax adjustment for 2017 Tax Reform Act(5)

 

 

 —

 

 

 —

 

 

 —

 

 

 (0.10)

 

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

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

Alternative fuel tax credit(6)

 

 

 —

 

 

 —

 

 

 —

 

 

 (0.05)

 

Non-GAAP amounts

 

$

 0.93

 

$

 1.12

 

$

 1.10

 

$

 1.41

 


  1. The three and six months ended June 30, 2018 include a one-time charge for the multiemployer pension plan withdrawal liability previously discussed in this press release.
  2. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  3. Nonunion pension expense is presented as a non-GAAP adjustment with pension settlement expense, because expenses related to the plan have been excluded from the financial information management uses to make operating decisions, as the nonunion defined benefit pension plan was amended to terminate the plan with a termination date of December 31, 2017. Pension settlements related to the plan termination began in fourth quarter 2018 and are expected to be complete in 2019.
  4. 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, 2019 and 2018.
  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. 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, 2019

 

 

 

 

 

Other

 

Income Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 35,200

 

$

 (1,640)

 

$

 33,560

 

$

 9,184

 

$

 24,376

 

 27.4

%  

Nonunion pension expense, including settlement(1)

 

 

 —

 

 

 507

 

 

 507

 

 

 130

 

 

 377

 

 25.6

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (542)

 

 

 (542)

 

 

 —

 

 

 (542)

 

 —

 

Tax benefit from vested RSUs(2)

 

 

 —

 

 

 —

 

 

 —

 

 

 (410)

 

 

 410

 

 —

 

Non-GAAP amounts

 

$

 35,200

 

$

 (1,675)

 

$

 33,525

 

$

 8,904

 

$

 24,621

 

 26.6

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

Income Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 43,791

 

$

 (3,635)

 

$

 40,156

 

$

 10,892

 

$

 29,264

 

 27.1

%  

Nonunion pension expense, including settlement(1)

 

 

 —

 

 

 2,241

 

 

 2,241

 

 

 577

 

 

 1,664

 

 25.7

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (2,156)

 

 

 (2,156)

 

 

 —

 

 

 (2,156)

 

 —

 

Tax benefit from vested RSUs(2)

 

 

 —

 

 

 —