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ArcBest Announces Second Quarter 2020 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 Second Quarter 2020 Results

  • Second quarter 2020 revenue of $627.4 million, and net income of $15.9 million, or $0.61 per diluted share.  On a non‑GAAP1 basis, second quarter 2020 net income was $17.6 million, or $0.67 per diluted share.
  • COVID-19 pandemic significantly impacted second quarter business levels and financial results
  • Asset-Based and Asset-Light cost management partially offset the effects of revenue and business declines

FORT SMITH, Arkansas, July 29, 2020 — ArcBest® (Nasdaq: ARCB), a leader in supply chain logistics, today reported second quarter 2020 revenue of $627.4 million compared to second quarter 2019 revenue of $771.5 million.  Second quarter 2020 operating income was $20.4 million compared to operating income of $35.2 million in the same period last year.  Net income was $15.9 million, or $0.61 per diluted share, compared to second quarter 2019 net income of $24.4 million, or $0.92 per diluted share.

Excluding certain items in both periods as identified in the attached reconciliation tables, non-GAAP operating income was $25.1 million in second quarter 2020 compared to second quarter 2019 non-GAAP operating income of $38.8 million.  On a non-GAAP basis, net income was $17.6 million, or $0.67 per diluted share, in second quarter 2020 compared to second quarter 2019 net income of $27.4 million, or $1.04 per diluted share.

At June 30, 2020, ArcBest’s consolidated cash and short-term investments, less debt, were $41 million net cash compared to the $3 million net debt position at March 31, 2020, reflecting a $44 million improvement during the second quarter.

“The successes of the second quarter are rooted in the strength of our employees and the culture that we have cultivated here that unites all of us behind a set of shared values that drive excellence” said Judy R. McReynolds, Chairman, President and CEO of ArcBest. “I am incredibly proud of our employees, especially our front-line teams, who continue to work hard and serve our customers in the face of a global pandemic that continues to affect so many aspects of the economy.”

Second Quarter Results of Operations Comparisons

Asset-Based

Second Quarter 2020 Versus Second Quarter 2019

  • Revenue of $460.1 million compared to $559.6 million, a per-day decrease of 17.8 percent.
  • Total tonnage per day decrease of 13.8 percent, with a double-digit percentage decrease in both LTL-rated tonnage and TL-rated spot shipment tonnage moving in the Asset-Based network.
  • Total shipments per day decrease of 13.3 percent.  Total weight per shipment decrease of 0.6 percent and an increase of 0.9 percent in LTL-rated weight per shipment impacted by transactional, LTL-rated shipments added during the second quarter.
  • Total billed revenue per hundredweight decreased 4.0 percent and was negatively impacted by lower fuel surcharges versus prior year.  Excluding fuel surcharge, LTL-rated freight experienced a percentage increase in the low-single digits.
  • Operating income of $21.0 million and an operating ratio of 95.4 percent compared to the prior year quarter operating income of $36.2 million and an operating ratio of 93.5 percent.  On a non-GAAP basis, operating income of $25.8 million and an operating ratio of 94.4 percent compared to the prior year quarter operating income of $38.9 million and an operating ratio of 93.0 percent.

In response to significantly lower shipment and tonnage levels related to the pandemic’s impact on customer shipping patterns, Asset-Based system labor and other resources were managed down in order to match business levels.  Second quarter business decreases were somewhat mitigated by the continued addition of spot, truckload-rated shipments and transactional LTL-rated shipments throughout the Asset-Based network.  Combined with the cost reductions in place, the handling of these additional transactional shipments contributed to improved operational efficiencies, fewer empty miles and lower costs.  Total second quarter revenue per hundredweight decreased due to freight mix changes related to the addition of these transactional shipments.  However, total yield on LTL-rated shipments, excluding changes in fuel surcharge, was positive versus the prior year.  Pricing on ABF Freight’s traditional published and contractual business improved as the transportation marketplace’s rational pricing environment continued. 

Asset-Light3

Second Quarter 2020 Versus Second Quarter 2019

  • Revenue of $197.9 million compared to $232.9 million, a per-day decrease of 15.0 percent.
  • Operating income of $2.1 million compared to operating income of $3.1 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $4.9 million compared to Adjusted EBITDA of $6.5 million.

Second quarter revenue in the Asset-Light ArcBest segment decreased compared to the prior year period primarily due to lower demand in both the expedite and truckload brokerage businesses related to the pandemic.    Reduced demand for expedited services was related to customer closures in the auto sector for the majority of the quarter and meaningful reductions in business levels for many manufacturing customers.  Revenue reductions in truckload brokerage were the result of fewer total shipments combined with lower average revenue per shipment.  The second quarter was highlighted by significant revenue growth in managed transportation services, consistent with the positive trend seen for the past several quarters in this portion of ArcBest’s Asset-Light business.  Purchased transportation expense in the second quarter, as a percent of revenue, increased 120 basis points compared to the prior year period reflecting changes in business mix and the market effects of reductions in revenue per shipment that exceeded comparable decreases in purchased transportation expense.  In the second quarter of 2020, operating results for the Asset-Light ArcBest segment benefitted from the corporate cost reduction initiatives previously announced in early April.

At FleetNet, a decrease in total events, primarily associated with fewer roadside repairs due to the pandemic, contributed to lower total revenue and reduced operating income compared to the prior year period.

July 2020 Update On Previously Announced Cost Actions

As previously announced, in anticipation of lower business levels and the potential for cash flow disruption, ArcBest implemented actions in late March and early April to mitigate the operating and financial impact of the COVID-19 pandemic.  ArcBest drew down $180 million of its Senior Secured Revolving Credit Facility and borrowed $45 million under its Accounts Receivable Securitization Program.  As described earlier, ArcBest’s net cash position improved $44 million since March 31, 2020, and customer account payment trends have stabilized.  Because of these factors, we are currently reviewing options for paying back the incremental borrowings during third quarter 2020.

Due to the uncertainties at the time, ArcBest implemented cost reductions beginning in April 2020 that included a 15% decrease in the salaries of all nonunion employees; suspension of the employer match of ArcBest’s nonunion 401(k) Plan; a 15% decrease in the fees paid to ArcBest’s board members and the board committee chairpersons as well as other cost reductions.  When compared to second quarter 2019, these compensation-related reductions resulted in savings of approximately $15 million in second quarter 2020.  These cost reductions, along with utilizing real-time, technology-enabling data to align operational costs with business levels, contributed to the positive second quarter financial results.

Since the lowest monthly consolidated revenue levels of the year, which were reported in April, ArcBest has experienced improved financial trends that include sequential business improvement2, increased cash levels and improved EBITDA.   Year-over-year consolidated revenue has improved from a decline of 20% in April to a month-to-date July decline of 3%.  The sequential improvement in revenue for each month of the quarter resulted in a greater portion of the second quarter profitability being earned in June.  As a result of this positive momentum in our business, some cost reductions will be restored beginning in the third quarter of 2020.  These include the restoration of nonunion salaries; the 401(k) company match; and the board fees.  On a sequential basis, compared to second quarter 2020, ArcBest anticipates that the third quarter 2020 expense associated with these cost restorations will be in an approximate range of $10 million to $15 million.  Though some operational resources are being added back as business improves, they will continue to be carefully managed to available business.  “As an essential business, our employees have worked on the front lines in sacrifice, both personally and financially, to serve our customers and our nation,” said McReynolds.  “We value our employees and appreciate their efforts, and are pleased to now be able to restore full wage levels.”  

 

Closing Comments

“I am pleased with what we have been able to accomplish over the last three months considering the dynamic nature of circumstances surrounding the COVID-19 pandemic,” said McReynolds. “Our entire team, from our best-in-class drivers and dock workers in the field to our office personnel working from home around the country, has executed very well in this environment and their fortitude, when mixed with prudent business decisions, has proven to be a winning combination for success during these times. We are working to carry this momentum forward as the second half of the year unfolds and will, as always, monitor trends and make adjustments where necessary. As a full-service logistics company, ArcBest is playing a vital role in getting our nation up and running again, and we plan to lead the way by continuing to deliver quality integrated solutions for all of our customers supply chain needs.”

 

NOTES

  1. U.S. Generally Accepted Accounting Principles
  2. Discussions of July 2020 business results and certain projections for 2020 are included in Exhibit 99.2 to ArcBest’s second quarter 2020 earnings release filed with the SEC in our Current Report on Form 8‑K.
  3. 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 2020 second quarter results. The call will be today, Wednesday, July 29, at 9:00 a.m. ET (8:00 a.m. CT). Interested parties are invited to listen by calling (800) 681-2231. Following the call, a recorded playback will be available through the end of the day on September 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 21965466. The conference call and playback can also be accessed, through September 15, 2020, on ArcBest’s website at arcb.com.

About ArcBest

ArcBest® (Nasdaq: ARCB) is a leading logistics company with creative problem solvers who deliver innovative solutions for our customers’ supply chain needs.  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 Logistics®. For more information, visit arcb.com.

 

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995:  Certain statements and information in this press release concerning results for the three months ended June 30, 2020 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; the ability to maintain third-party information technology systems or licenses; widespread outbreak of an illness or any other communicable disease and the effects of pandemics, including the COVID-19 pandemic, or any other public health crisis; regulatory measures that may be implemented in response to widespread illness, including the COVID-19 pandemic; ineffectiveness of our business continuity plans to meet our operational needs in the event of adverse external events or conditions; untimely or ineffective development and implementation of, or 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; general economic conditions and related shifts in market demand, including the impact of and uncertainties related to the COVID-19 pandemic, that impact the performance and needs of industries we serve and/or limit our customers’ access to adequate financial resources; the ability to manage our cost structure, and the timing and performance of growth initiatives; relationships with employees, including unions, and our ability to attract, retain, and develop 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; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; availability and cost of reliable third-party services; 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; governmental regulations; environmental laws and regulations, including emissions-control regulations; union 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; maintaining our intellectual property rights, brand, and corporate reputation; 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; 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, fuel, and related taxes; potential impairment of goodwill and intangible assets; the cost, integration, and performance of any recent or future acquisitions; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; acts of terrorism or war, or the impact of 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 

 

Six Months Ended 

 

 

 

June 30

 

June 30

 

 

    

2020

    

2019

    

2020

    

2019

 

 

 

(Unaudited)

 

 

 

($ thousands, except share and per share data)

 

REVENUES

 

$

 627,370

 

$

 771,490

 

$

 1,328,769

 

$

 1,483,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 606,945

 

 

 736,290

 

 

 1,300,525

 

 

 1,439,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 20,425

 

 

 35,200

 

 

 28,244

 

 

 43,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (COSTS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

 991

 

 

 1,616

 

 

 2,366

 

 

 3,094

 

Interest and other related financing costs

 

 

 (3,378)

 

 

 (2,811)

 

 

 (6,325)

 

 

 (5,693)

 

Other, net

 

 

 2,696

 

 

 (445)

 

 

 (1,166)

 

 

 (1,036)

 

 

 

 

 309

 

 

 (1,640)

 

 

 (5,125)

 

 

 (3,635)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 20,734

 

 

 33,560

 

 

 23,119

 

 

 40,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX PROVISION

 

 

 4,854

 

 

 9,184

 

 

 5,337

 

 

 10,892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

 15,880

 

$

 24,376

 

$

 17,782

 

$

 29,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 0.62

 

$

 0.95

 

$

 0.70

 

$

 1.14

 

Diluted

 

$

 0.61

 

$

 0.92

 

$

 0.68

 

$

 1.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 25,463,559

 

 

 25,554,286

 

 

 25,468,624

 

 

 25,562,306

 

Diluted

 

 

 26,217,957

 

 

 26,431,592

 

 

 26,252,486

 

 

 26,483,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.08

 

$

 0.08

 

$

 0.16

 

$

 0.16

 


  1. 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

 

 

    

2020

    

2019

 

 

 

(Unaudited)

 

Note

 

 

 

($ thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 406,290

 

$

 201,909

 

Short-term investments

 

 

 167,719

 

 

 116,579

 

Accounts receivable, less allowances (2020 - $7,130; 2019 - $5,448)

 

 

 273,135

 

 

 282,579

 

Other accounts receivable, less allowances (2020 - $661; 2019 - $476)

 

 

 16,812

 

 

 18,774

 

Prepaid expenses

 

 

 28,928

 

 

 30,377

 

Prepaid and refundable income taxes

 

 

 4,236

 

 

 9,439

 

Other

 

 

 4,923

 

 

 4,745

 

TOTAL CURRENT ASSETS

 

 

 902,043

 

 

 664,402

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

Land and structures

 

 

 344,951

 

 

 342,122

 

Revenue equipment

 

 

 891,029

 

 

 896,020

 

Service, office, and other equipment

 

 

 232,058

 

 

 233,354

 

Software

 

 

 155,411

 

 

 151,068

 

Leasehold improvements

 

 

 11,821

 

 

 10,383

 

 

 

 

 1,635,270

 

 

 1,632,947

 

Less allowances for depreciation and amortization

 

 

 974,464

 

 

 949,355

 

 

 

 

 660,806

 

 

 683,592

 

 

 

 

 

 

 

 

 

GOODWILL

 

 

 88,320

 

 

 88,320

 

INTANGIBLE ASSETS, NET

 

 

 56,915

 

 

 58,832

 

OPERATING RIGHT-OF-USE ASSETS

 

 

 81,069

 

 

 68,470

 

DEFERRED INCOME TAXES

 

 

 7,507

 

 

 7,725

 

OTHER LONG-TERM ASSETS

 

 

 74,100

 

 

 79,866

 

 

 

$

 1,870,760

 

$

 1,651,207

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

 140,632

 

$

 134,374

 

Income taxes payable

 

 

 3,181

 

 

 12

 

Accrued expenses

 

 

 217,020

 

 

 232,321

 

Current portion of long-term debt

 

 

 59,050

 

 

 57,305

 

Current portion of operating lease liabilities

 

 

 19,769

 

 

 20,265

 

TOTAL CURRENT LIABILITIES

 

 

 439,652

 

 

 444,277

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, less current portion

 

 

 473,850

 

 

 266,214

 

OPERATING LEASE LIABILITIES, less current portion

 

 

 65,249

 

 

 52,277

 

POSTRETIREMENT LIABILITIES, less current portion

 

 

 20,448

 

 

 20,294

 

OTHER LONG-TERM LIABILITIES

 

 

 36,077

 

 

 38,892

 

DEFERRED INCOME TAXES

 

 

 60,393

 

 

 66,210

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, authorized 70,000,000 shares;
      issued 2020: 28,958,258 shares; 2019: 28,810,902 shares

 

 

 290

 

 

 288

 

Additional paid-in capital

 

 

 337,942

 

 

 333,943

 

Retained earnings

 

 

 546,689

 

 

 533,187

 

   Treasury stock, at cost, 2020: 3,554,639 shares; 2019: 3,404,639 shares

 

 

 (107,740)

 

 

 (104,578)

 

Accumulated other comprehensive income (loss)

 

 

 (2,090)

 

 

 203

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 775,091

 

 

 763,043

 

 

 

$

 1,870,760

 

$

 1,651,207

 

 

Note:  The balance sheet at December 31, 2019 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

 

 

    

2020

    

2019

 

 

 

Unaudited

 

 

 

($ thousands)

 

 OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

 17,782

 

$

 29,264

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 56,140

 

 

 51,722

 

Amortization of intangibles

 

 

 1,959

 

 

 2,249

 

Pension settlement expense

 

 

 89

 

 

 1,634

 

Share-based compensation expense

 

 

 5,071

 

 

 4,859

 

Provision for losses on accounts receivable

 

 

 999

 

 

 621

 

Change in deferred income taxes

 

 

 (5,170)

 

 

 5,124

 

Gain on sale of property and equipment and lease termination

 

 

 (3,581)

 

 

 (1,469)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

 9,626

 

 

 1,781

 

Prepaid expenses

 

 

 1,444

 

 

 (3,323)

 

Other assets

 

 

 4,358

 

 

 (2,798)

 

Income taxes

 

 

 8,413

 

 

 (3,042)

 

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

 

 

 (230)

 

 

 159

 

Accounts payable, accrued expenses, and other liabilities

 

 

 (14,833)

 

 

 (6,310)

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

 82,067

 

 

 80,471

 

 

 

 

 

 

 

 

 

 INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net of financings

 

 

 (16,209)

 

 

 (41,909)

 

Proceeds from sale of property and equipment

 

 

 7,670

 

 

 3,798

 

Purchases of short-term investments

 

 

 (97,493)

 

 

 (43,327)

 

Proceeds from sale of short-term investments

 

 

 46,725

 

 

 33,332

 

Capitalization of internally developed software

 

 

 (6,495)

 

 

 (5,535)

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

 (65,802)

 

 

 (53,641)

 

 

 

 

 

 

 

 

 

 FINANCING ACTIVITIES

 

 

 

 

 

 

 

Borrowings under credit facilities

 

 

 180,000

 

 

 —

 

Borrowings under accounts receivable securitization program

 

 

 45,000

 

 

 —

 

Proceeds from notes payable

 

 

 —

 

 

 9,552

 

Payments on long-term debt

 

 

 (29,185)

 

 

 (29,984)

 

Net change in book overdrafts

 

 

 615

 

 

 (4,398)

 

Payment of common stock dividends

 

 

 (4,082)

 

 

 (4,102)

 

Purchases of treasury stock

 

 

 (3,162)

 

 

 (5,171)

 

Payments for tax withheld on share-based compensation

 

 

 (1,070)

 

 

 (1,182)

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

 

 188,116

 

 

 (35,285)

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

 204,381

 

 

 (8,455)

 

Cash and cash equivalents at beginning of period

 

 

 201,909

 

 

 190,186

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

 406,290

 

$

 181,731

 

 

 

 

 

 

 

 

 

 NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

Equipment financed

 

$

 13,566

 

$

 10,964

 

Accruals for equipment received

 

$

 857

 

$

 19,402

 

Lease liabilities arising from obtaining right-of-use assets

 

$

 23,727

 

$

 23,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

Six Months Ended 

 

 

 

June 30

 

 

June 30

 

 

    

2020

    

 

2019

    

 

2020

    

 

2019

 

 

 

Unaudited

 

 

 

($ thousands, except percentages)

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 460,070

 

 

 

 

$

 559,648

 

 

 

 

$

 975,783

 

 

 

 

$

 1,065,727

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 151,467

 

 

 

 

 

 181,173

 

 

 

 

 

 316,242

 

 

 

 

 

 354,377

 

 

 

FleetNet

 

 

 46,440

 

 

 

 

 

 51,722

 

 

 

 

 

 98,879

 

 

 

 

 

 104,981

 

 

 

Total Asset-Light

 

 

 197,907

 

 

 

 

 

 232,895

 

 

 

 

 

 415,121

 

 

 

 

 

 459,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (30,607)

 

 

 

 

 

 (21,053)

 

 

 

 

 

 (62,135)

 

 

 

 

 

 (41,756)

 

 

 

Total consolidated revenues

 

$

 627,370

 

 

 

 

$

 771,490

 

 

 

 

$

 1,328,769

 

 

 

 

$

 1,483,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages, and benefits

 

$

 248,995

 

 54.1

%

 

$

 297,016

 

 53.1

%

 

$

 532,833

 

 54.6

%

 

$

 577,292

 

 54.2

%

Fuel, supplies, and expenses(1)

 

 

 45,675

 

 9.9

 

 

 

 65,791

 

 11.7

 

 

 

 106,900

 

 11.0

 

 

 

 129,764

 

 12.2

 

Operating taxes and licenses

 

 

 11,629

 

 2.5

 

 

 

 12,214

 

 2.2

 

 

 

 24,423

 

 2.5

 

 

 

 24,612

 

 2.3

 

Insurance

 

 

 8,247

 

 1.8

 

 

 

 7,598

 

 1.4

 

 

 

 16,071

 

 1.6

 

 

 

 15,589

 

 1.5

 

Communications and utilities(1)

 

 

 4,342

 

 1.0

 

 

 

 4,500

 

 0.8

 

 

 

 9,053

 

 0.9

 

 

 

 9,117

 

 0.8

 

Depreciation and amortization(1)

 

 

 23,327

 

 5.1

 

 

 

 21,633

 

 3.9

 

 

 

 46,597

 

 4.8

 

 

 

 42,594

 

 4.0

 

Rents and purchased transportation(1)

 

 

 46,152

 

 10.0

 

 

 

 56,826

 

 10.1

 

 

 

 101,922

 

 10.4

 

 

 

 106,132

 

 10.0

 

Shared services(1)

 

 

 45,605

 

 9.9

 

 

 

 55,338

 

 9.9

 

 

 

 94,490

 

 9.7

 

 

 

 105,633

 

 9.9

 

Gain on sale of property and equipment

 

 

 (1,175)

 

 (0.2)

 

 

 

 (1,587)

 

 (0.3)

 

 

 

 (3,339)

 

 (0.3)

 

 

 

 (1,621)

 

 (0.2)

 

Innovative technology costs(1)(2)

 

 

 4,789

 

 1.0

 

 

 

 2,735

 

 0.5

 

 

 

 9,322

 

 1.0

 

 

 

 4,536

 

 0.4

 

Other(1)

 

 

 1,448

 

 0.3

 

 

 

 1,406

 

 0.2

 

 

 

 3,235

 

 0.3

 

 

 

 2,286

 

 0.2

 

Total Asset-Based

 

 

 439,034

 

 95.4

%

 

 

 523,470

 

 93.5

%

 

 

 941,507

 

 96.5

%

 

 

 1,015,934

 

 95.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

 

 125,090

 

 82.6

%

 

 

 147,552

 

 81.4

%

 

 

 262,272

 

 82.9

%

 

 

 287,657

 

 81.2

%

Supplies and expenses

 

 

 1,989

 

 1.3

 

 

 

 2,858

 

 1.6

 

 

 

 4,269

 

 1.3

 

 

 

 5,632

 

 1.6

 

Depreciation and amortization(3)

 

 

 2,449

 

 1.6

 

 

 

 3,055

 

 1.7

 

 

 

 4,919

 

 1.6

 

 

 

 6,206

 

 1.7

 

Shared services

 

 

 18,840

 

 12.4

 

 

 

 23,141

 

 12.8

 

 

 

 40,567

 

 12.8

 

 

 

 46,172

 

 13.0

 

Other

 

 

 1,796

 

 1.2

 

 

 

 2,445

 

 1.3

 

 

 

 4,321

 

 1.4

 

 

 

 4,858

 

 1.4

 

 

 

 

 150,164

 

 99.1

%

 

 

 179,051

 

 98.8

%

 

 

 316,348

 

 100.0

%

 

 

 350,525

 

 98.9

%

FleetNet

 

 

 45,658

 

 98.3

%

 

 

 50,696

 

 98.0

%

 

 

 97,057

 

 98.2

%

 

 

 102,467

 

 97.6

%

Total Asset-Light

 

 

 195,822

 

 

 

 

 

 229,747

 

 

 

 

 

 413,405

 

 

 

 

 

 452,992

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (27,911)

 

 

 

 

 

 (16,927)

 

 

 

 

 

 (54,387)

 

 

 

 

 

 (29,388)

 

 

 

Total consolidated operating expenses

 

$

 606,945

 

 96.7

%

 

$

 736,290

 

 95.4

%

 

$

 1,300,525

 

 97.9

%

 

$

 1,439,538

 

 97.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 21,036

 

 

 

 

$

 36,178

 

 

 

 

$

 34,276

 

 

 

 

$

 49,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 1,303

 

 

 

 

 

 2,122

 

 

 

 

 

 (106)

 

 

 

 

 

 3,852

 

 

 

FleetNet

 

 

 782

 

 

 

 

 

 1,026

 

 

 

 

 

 1,822

 

 

 

 

 

 2,514

 

 

 

Total Asset-Light

 

 

 2,085

 

 

 

 

 

 3,148

 

 

 

 

 

 1,716

 

 

 

 

 

 6,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(4)

 

 

 (2,696)

 

 

 

 

 

 (4,126)

 

 

 

 

 

 (7,748)

 

 

 

 

 

 (12,368)

 

 

 

Total consolidated operating income

 

$

 20,425

 

 

 

 

$

 35,200

 

 

 

 

$

 28,244

 

 

 

 

$

 43,791

 

 

 


  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. Represents costs associated with the freight handling pilot test program at ABF Freight.
  3. Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses.
  4. “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 

 

Six Months Ended 

 

 

June 30

 

 

June 30

 

 

    

2020

 

2019

    

  

2020

 

 

2019

 

ArcBest Corporation - Consolidated

 

(Unaudited)

 

 

 

($ thousands, except per share data)

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 20,425

 

$

 35,200

 

$

 28,244

 

$

 43,791

 

Innovative technology costs, pre-tax(1)

 

 

 4,699

 

 

 3,619

 

 

 9,299

 

 

 6,377

 

Non-GAAP amounts

 

$

 25,124

 

$

 38,819

 

$

 37,543

 

$

 50,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 15,880

 

$

 24,376

 

$

 17,782

 

$

 29,264

 

Innovative technology costs, after-tax (includes related financing costs)(1)

 

 

 3,637

 

 

 2,753

 

 

 7,207

 

 

 4,848

 

Nonunion pension expense, including settlement, after-tax(2)

 

 

 —

 

 

 377

 

 

 66

 

 

 1,664

 

Life insurance proceeds and changes in cash surrender value

 

 

 (2,560)

 

 

 (542)

 

 

 1,245

 

 

 (2,156)

 

Tax expense from vested RSUs(3)

 

 

 659

 

 

 410

 

 

 679

 

 

 408

 

Non-GAAP amounts

 

$

 17,616

 

$

 27,374

 

$

 26,979

 

$

 34,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 0.61

 

$

 0.92

 

$

 0.68

 

$

 1.10

 

Innovative technology costs, after-tax (includes related financing costs)(1)

 

 

 0.14

 

 

 0.10

 

 

 0.27

 

 

 0.18

 

Nonunion pension expense, including settlement, after-tax(2)

 

 

 —

 

 

 0.01

 

 

 —

 

 

 0.06

 

Life insurance proceeds and changes in cash surrender value

 

 

 (0.10)

 

 

 (0.02)

 

 

 0.05

 

 

 (0.08)

 

Tax expense from vested RSUs(3)

 

 

 0.03

 

 

 0.02

 

 

 0.03

 

 

 0.02

 

Non-GAAP amounts(4)

 

$

 0.67

 

$

 1.04

 

$

 1.03

 

$

 1.28

 


  1. Represents costs associated with the freight handling pilot test program at ABF Freight.
  2. For the six months ended June 30, 2020, represents pension settlement expense related to the Company’s supplemental benefit plan. For the three and six months ended June 30, 2019, nonunion defined benefit pension expense is presented as a non-GAAP adjustment with pension settlement expense, because expenses related to the plan were excluded from the financial information management used 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.
  3. The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax expense during the three and six months ended June 30, 2020 and 2019.
  4. Non-GAAP EPS is calculated in total and may not foot due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Six Months Ended 

 

 

 

June 30

 

June 30

 

 

    

2020

 

2019

 

2020

 

2019

 

Segment Operating Income Reconciliations

 

(Unaudited)

 

 

 

($ thousands, except percentages)

 

Asset-Based Segment

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 21,036

 

 95.4

%  

 

$

 36,178

 

 93.5

%  

 

$

 34,276

 

 96.5

%  

 

$

 49,793

 

 95.3

%  

 

Innovative technology costs, pre-tax(1)

 

 

 4,789

 

 (1.0)

 

 

 

 2,735

 

 (0.5)

 

 

 

 9,322

 

 (1.0)

 

 

 

 4,536

 

 (0.4)

 

 

Non-GAAP amounts

 

$

 25,825

 

 94.4

%  

 

$

 38,913

 

 93.0

%  

 

$

 43,598

 

 95.5

%  

 

$

 54,329

 

 94.9

%  

 

 

 

 

 

 

 

Other and Eliminations

 

 

 

 

 

Operating Loss ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 (2,696)

 

 

 

 

$

 (4,126)

 

 

 

 

$

 (7,748)

 

 

 

 

$

 (12,368)

 

 

 

 

Innovative technology costs, pre-tax(1)

 

 

 (90)

 

 

 

 

 

 884

 

 

 

 

 

 (23)

 

 

 

 

 

 1,841

 

 

 

 

Non-GAAP amounts

 

$

 (2,786)

 

 

 

 

$

 (3,242)

 

 

 

 

$

 (7,771)

 

 

 

 

$

 (10,527)

 

 

 

 


  1. Represents costs associated with the freight handling pilot test program at ABF Freight.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ thousands, except percentages)

 

Three Months Ended June 30, 2020

 

 

 

 

 

Other

 

Income

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Before Income

 

Tax

 

Net

 

 

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate(4)

Amounts on GAAP basis

 

$

 20,425

 

$

 309

 

$

 20,734

 

$

 4,854

 

$

 15,880

 

 23.4

%  

Innovative technology costs(1)

 

 

 4,699

 

 

 199

 

 

 4,898

 

 

 1,261

 

 

 3,637

 

 25.7

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (2,560)

 

 

 (2,560)

 

 

 —

 

 

 (2,560)

 

 —

 

Tax expense from vested RSUs(3)

 

 

 —

 

 

 —

 

 

 —

 

 

 (659)

 

 

 659

 

 —

 

Non-GAAP amounts

 

$

 25,124

 

$

 (2,052)

 

$

 23,072

 

$

 5,456

 

$

 17,616

 

 23.6

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2020

 

 

 

 

Other

 

Income Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Tax

 

Net

 

 

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate(4)

Amounts on GAAP basis

 

$

 28,244

 

$

 (5,125)

 

$

 23,119

 

$

 5,337

 

$

 17,782

 

 23.1

%  

Innovative technology costs(1)

 

 

 9,299

 

 

 406

 

 

 9,705

 

 

 2,498

 

 

 7,207

 

 25.7

 

Nonunion pension expense, including settlement(2)

 

 

 —

 

 

 89

 

 

 89

 

 

 23

 

 

 66

 

 25.8

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 1,245

 

 

 1,245

 

 

 —

 

 

 1,245

 

 —

 

Tax expense from vested RSUs(3)

 

 

 —

 

 

 —

 

 

 —

 

 

 (679)

 

 

 679

 

 —

 

Non-GAAP amounts

 

$

 37,543

 

$

 (3,385)

 

$

 34,158

 

$

 7,179

 

$

 26,979

 

 21.0

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2019

 

 

 

 

Other

 

Income

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Before Income

 

Tax

 

Net

 

 

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate(4)

Amounts on GAAP basis

 

$

 35,200

 

$

 (1,640)

 

$

 33,560

 

$

 9,184

 

$

 24,376

 

 27.4

%  

Innovative technology costs(1)

 

 

 3,619

 

 

 —

 

 

 3,619

 

 

 866

 

 

 2,753

 

 23.9

 

Nonunion pension expense, including settlement(2)

 

 

 —

 

 

 507

 

 

 507

 

 

 130

 

 

 377

 

 25.6

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (542)

 

 

 (542)

 

 

 —

 

 

 (542)

 

 —

 

Tax expense from vested RSUs(3)

 

 

 —

 

 

 —

 

 

 —

 

 

 (410)

 

 

 410

 

 —

 

Non-GAAP amounts

 

$

 38,819

 

$

 (1,675)

 

$

 37,144

 

$

 9,770

 

$

 27,374

 

 26.3

%