ArcBest Announces Third 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 Third Quarter 2018 Results

 

  • Third quarter 2018 revenue of $826.2 million, and net income of $40.8 million, or $1.52 per diluted share.  On a non-GAAP1 basis, third quarter 2018 net income was $38.6 million, or $1.44 per diluted share, a 151 percent improvement over third quarter 2017.
  • Third quarter Asset-Based revenue increase and operating income improvement associated with tonnage growth and greater pricing yields.
  • Asset-Light net revenue increase resulting in improved profitability.  

 

FORT SMITH, Arkansas, November 1, 2018 — ArcBest® (Nasdaq: ARCB), a leading logistics company with creative problem solvers who deliver integrated solutions, today reported third quarter 2018 revenue of $826.2 million compared to third quarter 2017 revenue of $744.3 million.  This represented another record level of quarterly consolidated revenue for ArcBest.  Third quarter 2018 operating income was $56.1 million compared to operating income of $26.7 million in the same quarter last year.  Net income was $40.8 million, or $1.52 per diluted share compared to third quarter 2017 net income of $14.8 million, or $0.56 per diluted share.  

Excluding certain items in both periods, as identified in the attached reconciliation tables, non-GAAP operating income was $54.2 million in third quarter 2018 compared to third quarter 2017 operating income of $27.3 million.  On a non-GAAP basis, net income was $38.6 million, or $1.44 per diluted share, in third quarter 2018 compared to third quarter 2017 net income of $15.4 million, or $0.58 per diluted share.     

“I am proud of our team for producing the third consecutive quarter of very positive results this year at ArcBest as we collaborate across the organization to provide customers the best solutions to their supply chain needs,” said Chairman, President and CEO Judy R. McReynolds. “Our sales, yield and operations teams – supported by significant technology investments we have made over the last several years – are doing an excellent job helping our customers navigate the industry capacity shortage while ensuring that ArcBest receives the appropriate value for our services. Significantly, our asset-based business reported its best third quarter operating ratio since 2006, and we experienced a strong net revenue improvement in our asset-light business.”

 

  

 

 

 

  1. U.S. Generally Accepted Accounting Principles
 

 

Asset-Based

Results of Operations

Third Quarter 2018 Versus Third Quarter 2017

  • Revenue of $585.3 million compared to $517.4 million, a per-day increase of 12.2 percent.
  • Tonnage per day increase of 1.6 percent.
  • Shipments per day decrease of 1.0 percent.
  • Total billed revenue per hundredweight increased 10.1 percent and was positively impacted by 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 $50.2 million and an operating ratio of 91.4 percent compared to third quarter 2017 operating income of $23.7 million and an operating ratio of 95.4 percent.   

 

Third quarter results in ArcBest’s Asset-Based business reflect continued strength in account pricing and the benefits of careful cost management in the midst of a steady freight environment. The strong improvement in both revenue per hundredweight and revenue per shipment versus the same period last year was driven by the benefits of pricing initiatives implemented throughout the year and an increase in fuel surcharge.  Increases in average shipment size and average length of haul were additional factors positively impacting revenue per shipment.  The rise in freight tonnage handled throughout the ABF Freight network reversed a trend seen in the first half of the year and contributed to improvement in several key productivity metrics, thus resulting in cost efficiencies and improved operating income.  Though the number of average daily Asset-Based shipments handled in the recent third quarter was slightly below the same period last year, the year-over-year change in this business metric has continually improved throughout each quarter of this year.                     

Asset-Light

Results of Operations

Third Quarter 2018 Versus Third Quarter 2017

  • Revenue of $255.9 million compared to $235.3 million, a per-day increase of 7.9 percent.
  • Operating income of $11.1 million compared to operating income of $8.8 million. On a non-GAAP basis, operating income of $9.1 million compared to $8.6 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $14.9 million compared to Adjusted EBITDA of $12.0 million.

 

Compared to last year’s third quarter, total revenue growth in the Asset-Light ArcBest segment was the result of increased revenue per shipment associated with higher market rates, somewhat offset by a reduction in total shipments handled.  Though net revenue margins continued to be under pressure related to limited availability of competitively priced equipment capacity, the rate of margin compression in the third quarter was less than in the first half of this year.  The resulting increase in total net revenue and in average net revenue per shipment contributed to improved operating income.  Versus the prior year period, the Asset-Light ArcBest segment also experienced significant growth in managed transportation services that positively impacted both revenue and net revenue, and was another factor contributing to higher operating income.  At FleetNet, a strong increase in events contributed to growth in both total revenue and net revenue which, combined with efficient cost management, resulted in improved profitability.

Closing Comments

“Tight capacity and a favorable business environment this year have provided a strong foundation for ArcBest to execute on cross-selling and other growth initiatives,” said McReynolds. “As unemployment reaches historic lows and other indicators we study look favorable, our outlook remains positive and we will monitor the environment closely for any changes. As we close out the year and look forward to 2019, we will continue our focus on growth, profitable account management, cost control and providing a best-in-class customer experience.”

Conference Call

ArcBest will host a conference call with company executives to discuss the 2018 third quarter results. The call will be on Friday, November 2nd at 9:30 a.m. EDT (8:30 a.m. CDT). Interested parties are invited to listen by calling (800) 670-1536. Following the call, a recorded playback will be available through the end of the day on December 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 21897168. The conference call and playback can also be accessed, through December 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, 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 September 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 

 

Nine Months Ended 

 

 

 

September 30

 

September 30

 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(Unaudited)

 

 

 

($ thousands, except share and per share data)

 

REVENUES

 

$

 826,158

 

$

 744,280

 

$

 2,319,509

 

$

 2,115,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 770,103

 

 

 717,538

 

 

 2,247,573

 

 

 2,073,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 56,055

 

 

 26,742

 

 

 71,936

 

 

 42,609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (COSTS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

 1,120

 

 

 346

 

 

 2,360

 

 

 905

 

Interest and other related financing costs

 

 

 (2,470)

 

 

 (1,706)

 

 

 (6,542)

 

 

 (4,410)

 

Other, net(2)

 

 

 (714)

 

 

 (1,314)

 

 

 (4,038)

 

 

 (3,548)

 

 

 

 

 (2,064)

 

 

 (2,674)

 

 

 (8,220)

 

 

 (7,053)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 53,991

 

 

 24,068

 

 

 63,716

 

 

 35,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX PROVISION

 

 

 13,215

 

 

 9,280

 

 

 11,753

 

 

 12,398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

 40,776

 

$

 14,788

 

$

 51,963

 

$

 23,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 1.58

 

$

 0.57

 

$

 2.02

 

$

 0.90

 

Diluted

 

$

 1.52

 

$

 0.56

 

$

 1.94

 

$

 0.87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 25,697,509

 

 

 25,671,535

 

 

 25,670,435

 

 

 25,699,306

 

Diluted

 

 

 26,795,659

 

 

 26,393,359

 

 

 26,708,259

 

 

 26,373,382

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.08

 

$

 0.08

 

$

 0.24

 

$

 0.24

 


  1. Includes a $37.9 million multiemployer pension fund withdrawal liability charge for the nine months ended September 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 nine months ended September 30, 2018 and 2017. The detail of the Company’s net periodic benefit costs will be presented in Note F to the consolidated financial statements included in Part I, Item I of the Company’s third quarter 2018 Quarterly Report on Form 10-Q.
  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

 

 

 

 

 

 

 

 

 

 

 

September 30

 

December 31

 

 

    

2018

    

2017

 

 

 

(Unaudited)

 

Note

 

 

 

($ thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 177,436

 

$

 120,772

 

Short-term investments

 

 

 75,879

 

 

 56,401

 

 Accounts receivable, less allowances (2018 - $7,475; 2017 - $7,657)

 

 

 323,212

 

 

 279,074

 

 Other accounts receivable, less allowances (2018 - $975; 2017 - $921)

 

 

 17,992

 

 

 19,491

 

Prepaid expenses

 

 

 21,291

 

 

 22,183

 

Prepaid and refundable income taxes

 

 

 6,726

 

 

 12,296

 

Other

 

 

 9,038

 

 

 12,132

 

TOTAL CURRENT ASSETS

 

 

 631,574

 

 

 522,349

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

Land and structures

 

 

 338,046

 

 

 344,224

 

Revenue equipment

 

 

 857,846

 

 

 793,523

 

Service, office, and other equipment

 

 

 192,241

 

 

 179,950

 

Software

 

 

 133,816

 

 

 129,589

 

Leasehold improvements

 

 

 9,177

 

 

 8,888

 

 

 

 

 1,531,126

 

 

 1,456,174

 

Less allowances for depreciation and amortization

 

 

 904,180

 

 

 865,010

 

 

 

 

 626,946

 

 

 591,164

 

 

 

 

 

 

 

 

 

GOODWILL

 

 

 108,320

 

 

 108,320

 

INTANGIBLE ASSETS, NET

 

 

 70,075

 

 

 73,469

 

DEFERRED INCOME TAXES

 

 

 5,967

 

 

 5,965

 

OTHER LONG-TERM ASSETS

 

 

 74,800

 

 

 64,374

 

 

 

$

 1,517,682

 

$

 1,365,641

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

 154,484

 

$

 129,099

 

Income taxes payable

 

 

 138

 

 

 324

 

Accrued expenses

 

 

 233,076

 

 

 210,484

 

Current portion of long-term debt

 

 

 54,556

 

 

 61,930

 

Current portion of pension and postretirement liabilities

 

 

 12,640

 

 

 753

 

TOTAL CURRENT LIABILITIES

 

 

 454,894

 

 

 402,590

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, less current portion

 

 

 235,970

 

 

 206,989

 

PENSION AND POSTRETIREMENT LIABILITIES, less current portion

 

 

 27,614

 

 

 39,827

 

OTHER LONG-TERM LIABILITIES

 

 

 40,372

 

 

 15,616

 

DEFERRED INCOME TAXES

 

 

 53,741

 

 

 49,157

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2018: 28,547,578 shares; 2017: 28,495,628 shares

 

 

 285

 

 

 285

 

Additional paid-in capital

 

 

 325,533

 

 

 319,436

 

Retained earnings

 

 

 488,158

 

 

 438,379

 

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

 

 

 (86,265)

 

 

 (86,064)

 

Accumulated other comprehensive loss

 

 

 (22,620)

 

 

 (20,574)

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 705,091

 

 

 651,462

 

 

 

$

 1,517,682

 

$

 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

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended 

 

 

 

September 30

 

 

    

2018

    

2017

 

 

 

Unaudited

 

 

 

($ thousands)

 

 OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

 51,963

 

$

 23,158

 

Adjustments to reconcile net income

 

 

 

 

 

 

 

to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 78,305

 

 

 73,417

 

Amortization of intangibles

 

 

 3,394

 

 

 3,404

 

Pension settlement expense

 

 

 1,603

 

 

 3,644

 

Share-based compensation expense

 

 

 6,185

 

 

 5,070

 

Provision for losses on accounts receivable

 

 

 1,937

 

 

 705

 

Deferred income tax provision

 

 

 3,697

 

 

 5,846

 

Gain on sale of property and equipment

 

 

 (188)

 

 

 (257)

 

Gain on sale of subsidiaries

 

 

 (1,945)

 

 

 (152)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

 (47,287)

 

 

 (35,590)

 

Prepaid expenses

 

 

 1,013

 

 

 (37)

 

Other assets

 

 

 (4,826)

 

 

 (5,932)

 

Income taxes

 

 

 5,675

 

 

 5,180

 

Multiemployer pension fund withdrawal liability(1)

 

 

 22,744

 

 

 —

 

Accounts payable, accrued expenses, and other liabilities

 

 

 51,309

 

 

 17,915

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

 173,579

 

 

 96,371

 

 

 

 

 

 

 

 

 

 INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net of financings

 

 

 (39,249)

 

 

 (44,377)

 

Proceeds from sale of property and equipment

 

 

 2,917

 

 

 3,585

 

Proceeds from sale of subsidiaries

 

 

 4,680

 

 

 1,970

 

Purchases of short-term investments

 

 

 (67,121)

 

 

 (50,274)

 

Proceeds from sale of short-term investments

 

 

 47,878

 

 

 49,980

 

Capitalization of internally developed software

 

 

 (7,411)

 

 

 (7,225)

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

 (58,306)

 

 

 (46,341)

 

 

 

 

 

 

 

 

 

 FINANCING ACTIVITIES

 

 

 

 

 

 

 

Borrowings under accounts receivable securitization program

 

 

 —

 

 

 10,000

 

Payments on long-term debt

 

 

 (49,967)

 

 

 (52,262)

 

Net change in book overdrafts

 

 

 (1,975)

 

 

 2,289

 

Deferred financing costs

 

 

 (202)

 

 

 (959)

 

Payment of common stock dividends

 

 

 (6,176)

 

 

 (6,207)

 

Purchases of treasury stock

 

 

 (201)

 

 

 (6,019)

 

Payments for tax withheld on share-based compensation

 

 

 (88)

 

 

 (3,080)

 

NET CASH USED IN FINANCING ACTIVITIES

 

 

 (58,609)

 

 

 (56,238)

 

 

 

 

 

 

 

 

 

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

 

 

 56,664

 

 

 (6,208)

 

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

 

$

 177,436

 

$

 109,034

 

 

 

 

 

 

 

 

 

 NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

Equipment financed

 

$

 71,575

 

$

 61,607

 

Accruals for equipment received

 

$

 438

 

$

 851

 


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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

Nine Months Ended 

 

 

 

September 30

 

 

September 30

 

 

    

2018

    

 

2017

    

 

2018

    

 

2017

 

 

 

Unaudited

 

 

 

($ thousands, except percentages)

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 585,290

 

 

 

 

$

 517,417

 

 

 

 

$

 1,626,644

 

 

 

 

$

 1,496,310

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 205,449

 

 

 

 

 

 195,749

 

 

 

 

 

 587,369

 

 

 

 

 

 524,554

 

 

 

FleetNet

 

 

 50,494

 

 

 

 

 

 39,568

 

 

 

 

 

 145,045

 

 

 

 

 

 116,307

 

 

 

Total Asset-Light

 

 

 255,943

 

 

 

 

 

 235,317

 

 

 

 

 

 732,414

 

 

 

 

 

 640,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (15,075)

 

 

 

 

 

 (8,454)

 

 

 

 

 

 (39,549)

 

 

 

 

 

 (21,435)

 

 

 

Total consolidated revenues

 

$

 826,158

 

 

 

 

$

 744,280

 

 

 

 

$

 2,319,509

 

 

 

 

$

 2,115,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages, and benefits

 

$

 292,082

 

 49.9

%

 

$

 287,270

 

 55.5

%

 

$

 848,611

 

 52.2

%

 

$

 853,554

 

 57.0

%

Fuel, supplies, and expenses

 

 

 64,133

 

 10.9

 

 

 

 57,395

 

 11.1

 

 

 

 191,366

 

 11.7

 

 

 

 174,326

 

 11.6

 

Operating taxes and licenses

 

 

 12,261

 

 2.1

 

 

 

 11,712

 

 2.3

 

 

 

 35,927

 

 2.2

 

 

 

 35,726

 

 2.4

 

Insurance

 

 

 9,448

 

 1.6

 

 

 

 8,348

 

 1.6

 

 

 

 24,055

 

 1.5

 

 

 

 23,068

 

 1.5

 

Communications and utilities

 

 

 4,308

 

 0.7

 

 

 

 4,575

 

 0.9

 

 

 

 12,964

 

 0.8

 

 

 

 13,260

 

 0.9

 

Depreciation and amortization

 

 

 22,200

 

 3.8

 

 

 

 20,543

 

 4.0

 

 

 

 64,492

 

 4.0

 

 

 

 61,777

 

 4.1

 

Rents and purchased transportation

 

 

 70,946

 

 12.1

 

 

 

 55,381

 

 10.7

 

 

 

 180,332

 

 11.1

 

 

 

 154,996

 

 10.4

 

Shared services(2)

 

 

 58,354

 

 10.0

 

 

 

 47,608

 

 9.2

 

 

 

 160,786

 

 9.9

 

 

 

 137,712

 

 9.2

 

Multiemployer pension fund withdrawal liability charge(3)

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 37,922

 

 2.3

 

 

 

 —

 

 —

 

Gain on sale of property and equipment

 

 

 (123)

 

 —

 

 

 

 (7)

 

 —

 

 

 

 (522)

 

 —

 

 

 

 (599)

 

 —

 

Other

 

 

 1,531

 

 0.3

 

 

 

 757

 

 0.1

 

 

 

 3,778

 

 0.2

 

 

 

 3,935

 

 0.3

 

Restructuring costs(4)

 

 

 —

 

 —

 

 

 

 95

 

 —

 

 

 

 —

 

 —

 

 

 

 268

 

 —

 

Total Asset-Based

 

 

 535,140

 

 91.4

%

 

 

 493,677

 

 95.4

%

 

 

 1,559,711

 

 95.9

%

 

 

 1,458,023

 

 97.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

 

 164,322

 

 80.0

%

 

 

 155,894

 

 79.6

%

 

 

 475,614

 

 81.0

%

 

 

 417,313

 

 79.6

%

Supplies and expenses

 

 

 3,522

 

 1.7

 

 

 

 3,853

 

 2.0

 

 

 

 10,290

 

 1.7

 

 

 

 11,265

 

 2.1

 

Depreciation and amortization(5)

 

 

 3,558

 

 1.7

 

 

 

 3,015

 

 1.5

 

 

 

 10,563

 

 1.8

 

 

 

 9,511

 

 1.8

 

Shared services(2)

 

 

 23,453

 

 11.4

 

 

 

 22,447

 

 11.5

 

 

 

 68,857

 

 11.7

 

 

 

 62,691

 

 11.9

 

Other

 

 

 2,546

 

 1.2

 

 

 

 2,854

 

 1.5

 

 

 

 6,973

 

 1.2

 

 

 

 8,192

 

 1.6

 

Restructuring costs(4)

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 152

 

 —

 

 

 

 875

 

 0.2

 

Gain on sale of subsidiaries(6)

 

 

 (1,945)

 

 (0.9)

 

 

 

 (152)

 

 (0.1)

 

 

 

 (1,945)

 

 (0.3)

 

 

 

 (152)

 

 —

 

 

 

 

 195,456

 

 95.1

%

 

 

 187,911

 

 96.0

%

 

 

 570,504

 

 97.1

%

 

 

 509,695

 

 97.2

%

FleetNet

 

 

 49,406

 

 97.8

%

 

 

 38,646

 

 97.7

%

 

 

 141,407

 

 97.5

%

 

 

 113,617

 

 97.7

%

Total Asset-Light

 

 

 244,862

 

 

 

 

 

 226,557

 

 

 

 

 

 711,911

 

 

 

 

 

 623,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(7)

 

 

 (9,899)

 

 

 

 

 

 (2,696)

 

 

 

 

 

 (24,049)

 

 

 

 

 

 (8,208)

 

 

 

Total consolidated operating expenses

 

$

 770,103

 

 93.2

%

 

$

 717,538

 

 96.4

%

 

$

 2,247,573

 

 96.9

%

 

$

 2,073,127

 

 98.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 50,150

 

 

 

 

$

 23,740

 

 

 

 

 

 66,933

 

 

 

 

 

 38,287

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 9,993

 

 

 

 

 

 7,838

 

 

 

 

 

 16,865

 

 

 

 

 

 14,859

 

 

 

FleetNet

 

 

 1,088

 

 

 

 

 

 922

 

 

 

 

 

 3,638

 

 

 

 

 

 2,690

 

 

 

Total Asset-Light

 

 

 11,081

 

 

 

 

 

 8,760

 

 

 

 

 

 20,503

 

 

 

 

 

 17,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(7)

 

 

 (5,176)

 

 

 

 

 

 (5,758)

 

 

 

 

 

 (15,500)

 

 

 

 

 

 (13,227)

 

 

 

Total consolidated operating income

 

$

 56,055

 

 

 

 

$

 26,742

 

 

 

 

$

 71,936

 

 

 

 

$

 42,609

 

 

 


  1. As previously discussed in the Financial Data and Operating Statistics to this press release, the components of net periodic benefit cost other than service cost are presented within Other Income (Costs) in the consolidated financial statements for all periods presented and, therefore, excluded from the presentation of operating segment data within this table.
  2. Shared services represent costs incurred to support all segments, including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, legal, and other company-wide services.
  3. ABF Freight, Inc. recorded a one-time charge in second quarter 2018 for the multiemployer pension plan withdrawal liability resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund.
  4. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  5. Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses.
  6. Gains recognized in the 2018 and 2017 periods relate to the sale of the ArcBest segment’s military moving businesses in December 2017 and 2016, respectively.
  7. “Other” corporate costs include restructuring charges of less than $0.1 million and $0.6 million for the three months ended September 30, 2018 and 2017, respectively, and $0.6 million and $1.6 million for the nine months ended September 30, 2018 and 2017, respectively. (See Segment Operating Income Reconciliations of GAAP to Non-GAAP Financial Measures table.) “Other” corporate costs also include certain unallocated shared service costs which are not attributable to any segment and 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 

 

Nine Months Ended 

 

 

September 30

 

 

September 30

 

 

    

2018

 

2017

    

  

2018

 

 

2017

 

 

 

(Unaudited)

 

 

 

($ thousands, except per share data)

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 56,055

 

$

 26,742

 

$

 71,936

 

$

 42,609

 

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

 

 

 —

 

 

 —

 

 

 37,922

 

 

 —

 

Restructuring charges, pre-tax(2)

 

 

 50

 

 

 737

 

 

 766

 

 

 2,731

 

Gain on sale of subsidiaries(3)

 

 

 (1,945)

 

 

 (152)

 

 

 (1,945)

 

 

 (152)

 

Non-GAAP amounts

 

$

 54,160

 

$

 27,327

 

$

 108,679

 

$

 45,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 40,776

 

$

 14,788

 

$

 51,963

 

$

 23,158

 

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

 

 

 —

 

 

 —

 

 

 28,161

 

 

 —

 

Restructuring charges, after-tax(2)

 

 

 37

 

 

 447

 

 

 566

 

 

 1,656

 

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

 

 

 (1,437)

 

 

 (92)

 

 

 (1,437)

 

 

 (92)

 

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

 

 

 1,325

 

 

 1,195

 

 

 4,146

 

 

 2,730

 

Life insurance proceeds and changes in cash surrender value

 

 

 (1,296)

 

 

 (956)

 

 

 (2,230)

 

 

 (1,943)

 

Deferred tax adjustment for 2017 Tax Reform Act(5)

 

 

 (825)

 

 

 —

 

 

 (3,466)

 

 

 —

 

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

 

 

 22

 

 

 —

 

 

 (47)

 

 

 —

 

Tax expense (benefit) from vested RSUs(6)

 

 

 (24)

 

 

 16

 

 

 (325)

 

 

 (1,229)

 

Alternative fuel tax credit(7)

 

 

 —

 

 

 —

 

 

 (1,203)

 

 

 —

 

Non-GAAP amounts

 

$

 38,578

 

$

 15,398

 

$

 76,128

 

$

 24,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 1.52

 

$

 0.56

 

$

 1.94

 

$

 0.87

 

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

 

 

 —

 

 

 —

 

 

 1.05

 

 

 —

 

Restructuring charges, after-tax(2)

 

 

 —

 

 

 0.02

 

 

 0.02

 

 

 0.06

 

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

 

 

 (0.05)

 

 

 —

 

 

 (0.05)

 

 

 —

 

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

 

 

 0.05

 

 

 0.05

 

 

 0.16

 

 

 0.10

 

Life insurance proceeds and changes in cash surrender value

 

 

 (0.05)

 

 

 (0.04)

 

 

 (0.08)

 

 

 (0.07)

 

Deferred tax adjustment for 2017 Tax Reform Act(5)

 

 

 (0.03)

 

 

 —

 

 

 (0.13)

 

 

 —

 

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

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

Tax benefit from vested RSUs(6)

 

 

 —

 

 

 —

 

 

 (0.01)

 

 

 (0.05)

 

Alternative fuel tax credit(7)

 

 

 —

 

 

 —

 

 

 (0.05)

 

 

 —

 

Non-GAAP amounts(8)

 

$

 1.44

 

$

 0.58

 

$

 2.85

 

$

 0.92

 


  1. ABF Freight, Inc. recorded a one-time charge in second quarter 2018 for the multiemployer pension plan withdrawal liability resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund.
  2. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  3. Gains recognized in the 2018 and 2017 periods relate to the sale of the ArcBest segment’s military moving businesses in December 2017 and 2016, respectively.
  4. Nonunion pension expense is presented as a non-GAAP adjustment with pension settlement expense, for all periods presented, because expenses related to the plan have been excluded from the financial information management uses to make operating decisions, as an amendment to terminate the nonunion defined benefit pension plan with a termination date of December 31, 2017 was executed in November 2017. 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 expected to occur in fourth quarter 2018 and first quarter 2019.
  5. 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.
  6. The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax benefit during the three and nine months ended September 30, 2018 and 2017.
  7. Represents the amount of the alternative fuel tax credit related to the year ended December 31, 2017 which was recorded in first quarter 2018 due to the February 2018 retroactive reinstatement.
  8. Non-GAAP EPS is calculated in total and may not foot due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ thousands, except percentages)

 

Three Months Ended September 30, 2018

 

 

 

 

 

Other

 

Income Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 56,055

 

$

 (2,064)

 

$

 53,991

 

$

 13,215

 

$

 40,776

 

 24.5

%  

Restructuring charges(2)

 

 

 50

 

 

 —

 

 

 50

 

 

 13

 

 

 37

 

 26.0

 

Gain on sale of subsidiaries(3)

 

 

 (1,945)

 

 

 —

 

 

 (1,945)

 

 

 (508)

 

 

 (1,437)

 

 (26.1)

 

Nonunion pension expense, including settlement(4)

 

 

 —

 

 

 1,785

 

 

 1,785

 

 

 460

 

 

 1,325

 

 25.8

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (1,296)

 

 

 (1,296)

 

 

 —

 

 

 (1,296)

 

 —

 

Deferred tax adjustment for 2017 Tax Reform Act(5)

 

 

 —

 

 

 —

 

 

 —

 

 

 825

 

 

 (825)

 

 —

 

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

 

 

 —

 

 

 —

 

 

 —

 

 

 (22)

 

 

 22

 

 —

 

Tax benefit from vested RSUs(6)

 

 

 —

 

 

 —

 

 

 —

 

 

 24

 

 

 (24)

 

 —

 

Non-GAAP amounts

 

$

 54,160

 

$

 (1,575)

 

$

 52,585

 

$

 14,007

 

$

 38,578

 

 26.6