ArcBest Announces Third 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

FORT SMITH, Arkansas, October 31, 2019 — ArcBest® (Nasdaq: ARCB), a leading logistics company with creative problem solvers who deliver innovative solutions, today reported third quarter 2019 revenue of $787.6 million compared to third quarter 2018 revenue of $826.2 million.  Third quarter 2019 operating income was $31.2 million compared to operating income of $56.1 million in third quarter last year.  Third quarter net income was $16.3 million, or $0.62 per diluted share compared to third quarter 2018 net income of $40.8 million, or $1.52 per diluted share.

Excluding certain items in both periods, as identified in the attached reconciliation tables, including final nonunion pension charges of $6.0 million, or $0.23 per diluted share, eliminating any further nonunion pension expense, non‑GAAP net income was $27.0 million, or $1.02 per diluted share, in third quarter 2019 compared to third quarter 2018 net income of $40.0 million, or $1.49 per diluted share

“While below last year’s record-setting levels, the third quarter represented one of the best performances achieved for that period in recent history as we continued to see rational pricing amid softer demand compared with last year,” said Chairman, President & CEO Judy R. McReynolds. “Revenue for expedite and truckload brokerage services declined as available capacity increased, which has been the case throughout the year, while our managed transportation solutions revenue continued to grow as a result of our team’s ability to provide valued expertise.”

 

Asset-Based

Results of Operations

Third Quarter 2019 Versus Third Quarter 2018

  • Revenue of $565.6 million compared to $585.3 million, a per-day decrease of 4.1 percent.
  • Tonnage per day decrease of 4.6 percent, with a ten percent decrease in LTL‑rated freight offset by a double digit percentage increase in truckload‑rated freight.
  • Shipments per day decrease of 3.9 percent. 
  • Total weight per shipment decreased 0.7 percent with a decrease in the average LTL‑rated weight per shipment of approximately 6 percent.
  • Total billed revenue per hundredweight increased 1.5 percentExcluding fuel surcharge, the percentage increase on LTL‑rated freight was in the high‑single digits.
  • Operating income of $31.7 million and an operating ratio of 94.4 percent compared to operating income of $50.2 million and an operating ratio of 91.4 percent.  On a non-GAAP basis, operating income of        $38.5 million and an operating ratio of 93.2 percent compared to operating income of $51.2 million and an operating ratio of 91.2 percent.

 

 

  1. U.S. Generally Accepted Accounting Principles

Reduced customer demand during a more moderate economic period resulted in fewer third quarter shipments and lower total freight tonnage in the Asset‑Based operating segment compared to the same period last year.  The lower business levels experienced during the third quarter reflect a reduction in LTL‑rated tonnage partially offset by an increase in TL‑rated, spot shipments.  This Asset‑Based business mix, combined with a decrease in the size of the average LTL‑rated shipment, contributed to a reduction in total third quarter Asset‑Based revenue.  Yield management initiatives continue to generate positive results.  The improvement in third quarter total revenue per hundredweight included additional, solid increases in average LTL pricing above a strong pricing period in 2018.

Lower freight levels adversely impacted productivity in city pickup, dock handling and final shipment delivery contributing to cost increases in these operational areas.  Despite a reduction in fuel expense, increased repair and parts costs contributed to higher third quarter equipment maintenance costs.  Third quarter linehaul costs were below the prior year due to improved utilization of owned equipment combined with reductions in the use of rail and other outside carrier resources.

Asset-Light2

Results of Operations

Third Quarter 2019 Versus Third Quarter 2018

  • Revenue of $253.7 million compared to $255.9 million.
  • Operating income of $3.6 million compared to operating income of $11.1 million.  On a non-GAAP basis, operating income of $3.7 million compared to operating income of $9.1 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $6.6 million compared to Adjusted EBITDA of $14.9 million.

A reduction in both total shipments and average revenue per shipment associated with lower market demand resulted in a third quarter revenue decline in the Asset-Light ArcBest segment compared to last year.  As seen throughout this year relative to 2018, expedite and truckload brokerage services were the primary reasons for the overall reduction in revenue.  Current market conditions have impacted customer pricing and freight mix.  This, combined with purchased transportation costs that were comparable to those experienced in last year’s higher revenue environment, put pressure on third quarter margins and reduced Asset-Light operating income.  Managed transportation services were a significant positive contributor to Asset-Light results as the recent trend of solid demand for these value-added logistics services continued.  Household goods shipments handled within the Asset‑Light business increased and were another positive contributor to this segment’s revenue and profitability totals.  At FleetNet, total event growth resulted in improved third quarter operating income.

Closing Comments

“Results for the first nine months remained solid though below last year’s record-setting pace, as our customers’ need for complex supply chain solutions aligns well with the broad array of services and expertise we provide,” said McReynolds. “We expect the trends that began in the first quarter, including more available capacity and softer market demand, to remain prevalent for the rest of the year. We will work to reduce costs where prudent while still investing in innovative technology that enables a best-in-class customer experience and offers the optimum benefit and improved efficiency to ArcBest.”

 

 

 

 

 

 

 

  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 third quarter results. The call will be on Friday, November 1st at 9:30 a.m. EDT (8:30 a.m. CDT). Interested parties are invited to listen by calling (800) 931‑4071. Following the call, a recorded playback will be available through the end of the day on        December 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 21930608. The conference call and playback can also be accessed, through December 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 September 30, 2019 may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “intend,” “may,” “plan,” “predict,” “project,” “scheduled,” “should,” “would,” and similar expressions and the negatives of such terms are intended to identify forward-looking statements. These statements are based on management’s beliefs, assumptions, and expectations based on currently available information, are not guarantees of future performance, and involve certain risks and uncertainties (some of which are beyond our control). Although we believe that the expectations reflected in these forward-looking statements are reasonable as and when made, we cannot provide assurance that our expectations will prove to be correct. Actual outcomes and results could materially differ from what is expressed, implied, or forecasted in these statements due to a number of factors, including, but not limited to: a failure of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data breach, and/or cybersecurity incidents; untimely or ineffective development and implementation of new or enhanced technology or processes, including the pilot test program at ABF Freight; failure to realize potential benefits associated with new or enhanced technology or processes, including the pilot test program at ABF Freight, and any write-offs associated therewith; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; relationships with employees, including unions, and our ability to attract and retain employees; unfavorable terms of, or the inability to reach agreement on, future collective bargaining agreements or a workforce stoppage by our employees covered under ABF Freight’s collective bargaining agreement; the cost, timing, and performance of growth initiatives; general economic conditions and related shifts in market demand that impact the performance and needs of industries we serve and/or limit our customers’ access to adequate financial resources; availability and cost of reliable third-party services; governmental regulations; environmental laws and regulations, including emissions-control regulations; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; litigation or claims asserted against us; maintaining our intellectual property rights, brand, and corporate reputation; the loss of key employees or the inability to execute succession planning strategies; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; self-insurance claims and insurance premium costs; the cost, integration, and performance of any recent or future acquisitions; availability of fuel, the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates, and the inability to collect fuel surcharges; increased prices for and decreased availability of new revenue equipment, decreases in value of used revenue equipment, and higher costs of equipment-related operating expenses such as maintenance and fuel and related taxes; potential impairment of goodwill and intangible assets; greater than anticipated funding requirements for our nonunion defined benefit pension plan; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; antiterrorism and safety measures; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest’s public filings with the Securities and Exchange Commission (“SEC”).

 

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

 

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

Financial Data and Operating Statistics

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

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Nine Months Ended 

 

 

 

September 30

 

September 30

 

 

    

2019

    

2018

    

2019

    

2018

 

 

 

(Unaudited)

 

 

 

($ thousands, except share and per share data)

 

REVENUES

 

$

 787,563

 

$

 826,158

 

$

 2,270,892

 

$

 2,319,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES(1)

 

 

 756,355

 

 

 770,103

 

 

 2,195,893

 

 

 2,247,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 31,208

 

 

 56,055

 

 

 74,999

 

 

 71,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (COSTS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

 1,768

 

 

 1,120

 

 

 4,862

 

 

 2,360

 

Interest and other related financing costs

 

 

 (2,900)

 

 

 (2,470)

 

 

 (8,593)

 

 

 (6,542)

 

Other, net

 

 

 (6,734)

 

 

 (714)

 

 

 (7,770)

 

 

 (4,038)

 

 

 

 

 (7,866)

 

 

 (2,064)

 

 

 (11,501)

 

 

 (8,220)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 23,342

 

 

 53,991

 

 

 63,498

 

 

 63,716

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX PROVISION

 

 

 7,072

 

 

 13,215

 

 

 17,964

 

 

 11,753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

 16,270

 

$

 40,776

 

$

 45,534

 

$

 51,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 0.64

 

$

 1.58

 

$

 1.78

 

$

 2.02

 

Diluted

 

$

 0.62

 

$

 1.52

 

$

 1.72

 

$

 1.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 25,527,982

 

 

 25,697,509

 

 

 25,550,365

 

 

 25,670,435

 

Diluted

 

 

 26,416,595

 

 

 26,795,659

 

 

 26,461,668

 

 

 26,708,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.08

 

$

 0.08

 

$

 0.24

 

$

 0.24

 


  1. Includes a one-time charge of $37.9 million for the nine months ended September 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

 

 

 

 

 

 

 

 

 

 

 

September 30

 

December 31

 

 

    

2019

    

2018

 

 

 

(Unaudited)

 

Note

 

 

 

($ thousands, except share data)

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 183,838

 

$

 190,186

 

Short-term investments

 

 

 124,257

 

 

 106,806

 

Accounts receivable, less allowances (2019 - $5,548; 2018 - $7,380)

 

 

 292,935

 

 

 297,051

 

Other accounts receivable, less allowances (2019 - $469; 2018 - $806)

 

 

 18,122

 

 

 19,146

 

Prepaid expenses

 

 

 25,365

 

 

 25,304

 

Prepaid and refundable income taxes

 

 

 8,186

 

 

 1,726

 

Other

 

 

 5,285

 

 

 9,007

 

TOTAL CURRENT ASSETS

 

 

 657,988

 

 

 649,226

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

Land and structures

 

 

 339,298

 

 

 339,640

 

Revenue equipment

 

 

 902,289

 

 

 858,251

 

Service, office, and other equipment

 

 

 229,691

 

 

 199,230

 

Software

 

 

 146,789

 

 

 138,517

 

Leasehold improvements

 

 

 10,212

 

 

 9,365

 

 

 

 

 1,628,279

 

 

 1,545,003

 

Less allowances for depreciation and amortization

 

 

 948,205

 

 

 913,815

 

 

 

 

 680,074

 

 

 631,188

 

 

 

 

 

 

 

 

 

GOODWILL

 

 

 108,320

 

 

 108,320

 

INTANGIBLE ASSETS, NET

 

 

 65,583

 

 

 68,949

 

OPERATING RIGHT-OF-USE ASSETS

 

 

 67,404

 

 

 —

 

DEFERRED INCOME TAXES

 

 

 6,128

 

 

 7,468

 

OTHER LONG-TERM ASSETS

 

 

 85,135

 

 

 74,080

 

 

 

$

 1,670,632

 

$

 1,539,231

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

 160,054

 

$

 143,785

 

Income taxes payable

 

 

 198

 

 

 1,688

 

Accrued expenses

 

 

 234,863

 

 

 243,111

 

Current portion of long-term debt

 

 

 50,197

 

 

 54,075

 

Current portion of operating lease liabilities

 

 

 18,492

 

 

 —

 

Current portion of pension and postretirement liabilities

 

 

 1,921

 

 

 8,659

 

TOTAL CURRENT LIABILITIES

 

 

 465,725

 

 

 451,318

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT, less current portion

 

 

 248,223

 

 

 237,600

 

OPERATING LEASE LIABILITIES, less current portion

 

 

 52,782

 

 

 —

 

PENSION AND POSTRETIREMENT LIABILITIES, less current portion

 

 

 32,059

 

 

 31,504

 

OTHER LONG-TERM LIABILITIES

 

 

 38,151

 

 

 44,686

 

DEFERRED INCOME TAXES

 

 

 70,066

 

 

 56,441

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2019: 28,801,025 shares; 2018: 28,684,779 shares

 

 

 288

 

 

 287

 

Additional paid-in capital

 

 

 331,773

 

 

 325,712

 

Retained earnings

 

 

 540,778

 

 

 501,389

 

   Treasury stock, at cost, 2019: 3,299,669 shares; 2018: 3,097,634 shares

 

 

 (101,583)

 

 

 (95,468)

 

Accumulated other comprehensive loss

 

 

 (7,630)

 

 

 (14,238)

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

 763,626

 

 

 717,682

 

 

 

$

 1,670,632

 

$

 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

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended 

 

 

 

September 30

 

 

    

2019

    

2018

 

 

 

Unaudited

 

 

 

($ thousands)

 

 OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

 45,534

 

$

 51,963

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 79,967

 

 

 78,305

 

Amortization of intangibles

 

 

 3,365

 

 

 3,394

 

Pension settlement expense, including termination expense

 

 

 8,135

 

 

 1,603

 

Share-based compensation expense

 

 

 7,268

 

 

 6,185

 

Provision for losses on accounts receivable

 

 

 832

 

 

 1,937

 

Change in deferred income taxes

 

 

 14,099

 

 

 3,697

 

Gain on sale of property and equipment

 

 

 (1,384)

 

 

 (188)

 

Gain on sale of subsidiaries

 

 

 —

 

 

 (1,945)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables

 

 

 4,216

 

 

 (47,287)

 

Prepaid expenses

 

 

 (265)

 

 

 1,013

 

Other assets

 

 

 (4,236)

 

 

 (4,826)

 

Income taxes

 

 

 (7,883)

 

 

 5,675

 

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

 

 

 526

 

 

 —

 

Multiemployer pension fund withdrawal liability(1)

 

 

 (435)

 

 

 22,744

 

Accounts payable, accrued expenses, and other liabilities

 

 

 (11,726)

 

 

 51,309

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

 138,013

 

 

 173,579

 

 

 

 

 

 

 

 

 

 INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net of financings

 

 

 (69,773)

 

 

 (39,249)

 

Proceeds from sale of property and equipment

 

 

 4,748

 

 

 2,917

 

Proceeds from sale of subsidiaries

 

 

 —

 

 

 4,680

 

Purchases of short-term investments

 

 

 (105,747)

 

 

 (67,121)

 

Proceeds from sale of short-term investments

 

 

 88,730

 

 

 47,878

 

Capitalization of internally developed software

 

 

 (8,500)

 

 

 (7,411)

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

 (90,542)

 

 

 (58,306)

 

 

 

 

 

 

 

 

 

 FINANCING ACTIVITIES

 

 

 

 

 

 

 

Payments on long-term debt

 

 

 (43,773)

 

 

 (49,967)

 

Proceeds from notes payable

 

 

 9,552

 

 

 —

 

Net change in book overdrafts

 

 

 (5,570)

 

 

 (1,975)

 

Deferred financing costs

 

 

 (562)

 

 

 (202)

 

Payment of common stock dividends

 

 

 (6,145)

 

 

 (6,176)

 

Purchases of treasury stock

 

 

 (6,115)

 

 

 (201)

 

Payments for tax withheld on share-based compensation

 

 

 (1,206)

 

 

 (88)

 

NET CASH USED IN FINANCING ACTIVITIES

 

 

 (53,819)

 

 

 (58,609)

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

 (6,348)

 

 

 56,664

 

Cash and cash equivalents at beginning of period

 

 

 190,186

 

 

 120,772

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

 183,838

 

$

 177,436

 

 

 

 

 

 

 

 

 

 NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

Equipment financed

 

$

 40,966

 

$

 71,575

 

Accruals for equipment received

 

$

 18,949

 

$

 438

 

Lease liabilities arising from obtaining right-of-use assets

 

$

 26,810

 

$

 —

 

 


  1. The nine months ended September 30, 2018 includes a one-time charge related to the multiemployer pension plan withdrawal liability.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

Nine Months Ended 

 

 

 

September 30

 

 

September 30

 

 

    

2019

    

 

2018

    

 

2019

    

 

2018

 

 

 

Unaudited

 

 

 

($ thousands, except percentages)

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 565,621

 

 

 

 

$

 585,290

 

 

 

 

$

 1,631,348

 

 

 

 

$

 1,626,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 199,758

 

 

 

 

 

 205,449

 

 

 

 

 

 554,135

 

 

 

 

 

 587,369

 

 

 

FleetNet

 

 

 53,976

 

 

 

 

 

 50,494

 

 

 

 

 

 158,957

 

 

 

 

 

 145,045

 

 

 

Total Asset-Light

 

 

 253,734

 

 

 

 

 

 255,943

 

 

 

 

 

 713,092

 

 

 

 

 

 732,414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (31,792)

 

 

 

 

 

 (15,075)

 

 

 

 

 

 (73,548)

 

 

 

 

 

 (39,549)

 

 

 

Total consolidated revenues

 

$

 787,563

 

 

 

 

$

 826,158

 

 

 

 

$

 2,270,892

 

 

 

 

$

 2,319,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages, and benefits

 

$

 296,503

 

 52.4

%

 

$

 292,082

 

 49.9

%

 

$

 873,795

 

 53.6

%

 

$

 848,611

 

 52.2

%

Fuel, supplies, and expenses(1)

 

 

 65,738

 

 11.6

 

 

 

 63,936

 

 10.9

 

 

 

 195,502

 

 12.0

 

 

 

 191,163

 

 11.7

 

Operating taxes and licenses

 

 

 12,865

 

 2.3

 

 

 

 12,261

 

 2.1

 

 

 

 37,477

 

 2.3

 

 

 

 35,927

 

 2.2

 

Insurance

 

 

 7,646

 

 1.4

 

 

 

 9,448

 

 1.6

 

 

 

 23,235

 

 1.4

 

 

 

 24,055

 

 1.5

 

Communications and utilities

 

 

 5,064

 

 0.9

 

 

 

 4,308

 

 0.7

 

 

 

 14,181

 

 0.9

 

 

 

 12,964

 

 0.8

 

Depreciation and amortization

 

 

 23,776

 

 4.2

 

 

 

 22,200

 

 3.8

 

 

 

 66,370

 

 4.0

 

 

 

 64,492

 

 4.0

 

Rents and purchased transportation

 

 

 61,102

 

 10.8

 

 

 

 70,946

 

 12.1

 

 

 

 167,234

 

 10.2

 

 

 

 180,332

 

 11.1

 

Shared services(1)

 

 

 56,031

 

 9.9

 

 

 

 57,472

 

 9.8

 

 

 

 161,664

 

 9.9

 

 

 

 158,042

 

 9.7

 

Multiemployer pension fund withdrawal liability charge(2)

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 37,922

 

 2.3

 

Gain on sale of property and equipment

 

 

 (82)

 

 —

 

 

 

 (123)

 

 —

 

 

 

 (1,703)

 

 (0.1)

 

 

 

 (522)

 

 —

 

Innovative technology costs(1)(3)

 

 

 4,664

 

 0.8

 

 

 

 1,080

 

 0.2

 

 

 

 9,200

 

 0.6

 

 

 

 2,947

 

 0.2

 

Other(1)

 

 

 592

 

 0.1

 

 

 

 1,530

 

 0.3

 

 

 

 2,878

 

 0.2

 

 

 

 3,778

 

 0.2

 

Total Asset-Based

 

 

 533,899

 

 94.4

%

 

 

 535,140

 

 91.4

%

 

 

 1,549,833

 

 95.0

%

 

 

 1,559,711

 

 95.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

 

 164,521

 

 82.4

%

 

 

 164,322

 

 80.0

%

 

 

 452,178

 

 81.6

%

 

 

 475,614

 

 81.0

%

Supplies and expenses

 

 

 2,780

 

 1.4

 

 

 

 3,522

 

 1.7

 

 

 

 8,412

 

 1.5

 

 

 

 10,290

 

 1.7

 

Depreciation and amortization(4)

 

 

 2,607

 

 1.3

 

 

 

 3,558

 

 1.7

 

 

 

 8,813

 

 1.6

 

 

 

 10,563

 

 1.8

 

Shared services

 

 

 25,032

 

 12.5

 

 

 

 23,453

 

 11.4

 

 

 

 71,204

 

 12.9

 

 

 

 68,857

 

 11.7

 

Other

 

 

 2,366

 

 1.2

 

 

 

 2,546

 

 1.2

 

 

 

 7,224

 

 1.3

 

 

 

 6,973

 

 1.2

 

Restructuring costs

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 —

 

 —

 

 

 

 152

 

 —

 

Gain on sale of subsidiaries(5)

 

 

 —

 

 —

 

 

 

 (1,945)

 

 (0.9)

 

 

 

 —

 

 —

 

 

 

 (1,945)

 

 (0.3)

 

 

 

 

 197,306

 

 98.8

%

 

 

 195,456

 

 95.1

%

 

 

 547,831

 

 98.9

%

 

 

 570,504

 

 97.1

%

FleetNet

 

 

 52,805

 

 97.8

%

 

 

 49,406

 

 97.8

%

 

 

 155,272

 

 97.7

%

 

 

 141,407

 

 97.5

%

Total Asset-Light

 

 

 250,111

 

 

 

 

 

 244,862

 

 

 

 

 

 703,103

 

 

 

 

 

 711,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations

 

 

 (27,655)

 

 

 

 

 

 (9,899)

 

 

 

 

 

 (57,043)

 

 

 

 

 

 (24,049)

 

 

 

Total consolidated operating expenses

 

$

 756,355

 

 96.0

%

 

$

 770,103

 

 93.2

%

 

$

 2,195,893

 

 96.7

%

 

$

 2,247,573

 

 96.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-Based

 

$

 31,722

 

 

 

 

$

 50,150

 

 

 

 

$

 81,515

 

 

 

 

$

 66,933

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ArcBest

 

 

 2,452

 

 

 

 

 

 9,993

 

 

 

 

 

 6,304

 

 

 

 

 

 16,865

 

 

 

FleetNet

 

 

 1,171

 

 

 

 

 

 1,088

 

 

 

 

 

 3,685

 

 

 

 

 

 3,638

 

 

 

Total Asset-Light

 

 

 3,623

 

 

 

 

 

 11,081

 

 

 

 

 

 9,989

 

 

 

 

 

 20,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and eliminations(6)

 

 

 (4,137)

 

 

 

 

 

 (5,176)

 

 

 

 

 

 (16,505)

 

 

 

 

 

 (15,500)

 

 

 

Total consolidated operating income

 

$

 31,208

 

 

 

 

$

 56,055

 

 

 

 

$

 74,999

 

 

 

 

$

 71,936

 

 

 


  1. In third quarter 2019, the presentation of Asset-Based segment expenses was modified to present innovative technology costs as a separate operating expense line item. Previously, innovative technology costs incurred directly by the segment or allocated through shared services were categorized in individual segment expense line items. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on the segment’s total expenses as a result of the reclassifications.
  2. The nine months ended September 30, 2018 includes a one-time charge for the multiemployer pension plan withdrawal liability.
  3. Represents costs associated with the previously announced freight handling pilot test program at ABF Freight.
  4. Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses.
  5. Gain recognized in the 2018 periods relates to the sale of the ArcBest segment’s military moving businesses in December 2017.
  6. “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 

 

Nine Months Ended 

 

 

September 30

 

 

September 30

 

 

    

2019

 

2018

    

  

2019

 

 

2018

 

 

 

(Unaudited)

 

 

 

($ thousands, except per share data)

 

ArcBest Corporation - Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 31,208

 

$

 56,055

 

$

 74,999

 

$

 71,936

 

Innovative technology costs, pre-tax(1)

 

 

 4,727

 

 

 1,753

 

 

 11,104

 

 

 4,060

 

ELD conversion costs, pre-tax(2)

 

 

 1,796

 

 

 —

 

 

 2,358

 

 

 —

 

Nonunion pension termination costs, pre-tax(3)

 

 

 350

 

 

 —

 

 

 350

 

 

 —

 

Multiemployer pension fund withdrawal liability charge, pre-tax(4)

 

 

 —

 

 

 —

 

 

 —

 

 

 37,922

 

Restructuring charges, pre-tax(5)

 

 

 —

 

 

 50

 

 

 —

 

 

 766

 

Gain on sale of subsidiaries, pre-tax(6)

 

 

 —

 

 

 (1,945)

 

 

 —

 

 

 (1,945)

 

Non-GAAP amounts

 

$

 38,081

 

$

 55,913

 

$

 88,811

 

$

 112,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 16,270

 

$

 40,776

 

$

 45,534

 

$

 51,963

 

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

 

 

 3,614

 

 

 1,304

 

 

 8,462

 

 

 3,017

 

ELD conversion costs, after-tax(2)

 

 

 1,333

 

 

 —

 

 

 1,751

 

 

 —

 

Nonunion pension termination costs, after-tax(3)

 

 

 260

 

 

 —

 

 

 260

 

 

 —

 

Multiemployer pension fund withdrawal liability charge, after-tax(4)

 

 

 —

 

 

 —

 

 

 —

 

 

 28,161

 

Restructuring charges, after-tax(5)

 

 

 —

 

 

 37

 

 

 —

 

 

 566

 

Gain on sale of subsidiaries, after-tax(6)

 

 

 —

 

 

 (1,437)

 

 

 —

 

 

 (1,437)

 

Nonunion pension expense, including settlement and termination expense, after-tax(7)

 

 

 6,011

 

 

 1,325

 

 

 7,675

 

 

 4,146

 

Life insurance proceeds and changes in cash surrender value

 

 

 (557)

 

 

 (1,296)

 

 

 (2,713)

 

 

 (2,230)

 

Tax expense (benefit) from vested RSUs(8)

 

 

 56

 

 

 (24)

 

 

 464

 

 

 (325)

 

Deferred tax adjustment for 2017 Tax Reform Act(9)

 

 

 —

 

 

 (825)

 

 

 —

 

 

 (3,466)

 

Impact of 2017 Tax Reform Act on current tax expense(9)

 

 

 —

 

 

 22

 

 

 —

 

 

 (47)

 

Alternative fuel tax credit(10)

 

 

 —

 

 

 —

 

 

 —

 

 

 (1,203)

 

Non-GAAP amounts

 

$

 26,987

 

$

 39,882

 

$

 61,433

 

$

 79,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts on GAAP basis

 

$

 0.62

 

$

 1.52

 

$

 1.72

 

$

 1.94

 

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

 

 

 0.14

 

 

 0.05

 

 

 0.32

 

 

 0.11

 

ELD conversion costs, after-tax(2)

 

 

 0.05

 

 

 —

 

 

 0.07

 

 

 —

 

Nonunion pension termination costs, after-tax(3)

 

 

 0.01

 

 

 —

 

 

 0.01

 

 

 —

 

Multiemployer pension fund withdrawal liability charge, after-tax(4)

 

 

 —

 

 

 —

 

 

 —

 

 

 1.05

 

Restructuring charges, after-tax(5)

 

 

 —

 

 

 —

 

 

 —

 

 

 0.02

 

Gain on sale of subsidiaries, after-tax(6)

 

 

 —

 

 

 (0.05)

 

 

 —

 

 

 (0.05)

 

Nonunion pension expense, including settlement and termination expense, after-tax(7)

 

 

 0.23

 

 

 0.05

 

 

 0.29

 

 

 0.16

 

Life insurance proceeds and changes in cash surrender value

 

 

 (0.02)

 

 

 (0.05)

 

 

 (0.10)

 

 

 (0.08)

 

Tax expense (benefit) from vested RSUs(8)

 

 

 —

 

 

 —

 

 

 0.02

 

 

 (0.01)

 

Deferred tax adjustment for 2017 Tax Reform Act(9)

 

 

 —

 

 

 (0.03)

 

 

 —

 

 

 (0.13)

 

Impact of 2017 Tax Reform Act on current tax expense(9)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

Alternative fuel tax credit(10)

 

 

 —

 

 

 —

 

 

 —

 

 

 (0.05)

 

Non-GAAP amounts(11)

 

$

 1.02

 

$

 1.49

 

$

 2.32

 

$

 2.96

 


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

 

 

Notes to Non-GAAP Financial Tables

 

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

 

  1. Represents costs associated with the previously announced freight handling pilot test program at ABF Freight.
  2. The three and nine months ended September 30, 2019 include impairment charges related to equipment replacement and other one-time costs incurred to comply with the electronic logging device (“ELD”) mandate which will be effective in December 2019.
  3. The three and nine months ended September 30, 2019 include a one-time consulting fee associated with the termination of the nonunion defined benefit pension plan.
  4. The nine months ended September 30, 2018 includes a one-time charge for the multiemployer pension plan withdrawal liability.
  5. Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.
  6. Gain recognized in the 2018 periods relates to the sale of the ArcBest segment’s military moving businesses in December 2017.
  7. Nonunion pension expense is presented as a non-GAAP adjustment with pension settlement expense, because expenses related to the plan have been excluded from the financial information management uses to make operating decisions, as the nonunion defined benefit pension plan was amended to terminate the plan with a termination date of December 31, 2017. Pension settlements related to benefit distributions for the plan termination began in fourth quarter 2018 and were completed in third quarter 2019. The three and nine months ended September 30, 2019 include a noncash pension termination expense related to an amount which was stranded in accumulated other comprehensive income until the pension benefit obligation was settled upon plan termination.
  8. The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax expense (benefit) during the three and nine months ended September 30, 2019 and 2018.
  9. 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.
  10. 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.
  11. 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, 2019

 

 

 

 

 

Other

 

Income Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 31,208

 

$

 (7,866)

 

$

 23,342

 

$

 7,072

 

$

 16,270

 

 30.3

%  

Innovative technology costs(1)

 

 

 4,727

 

 

 139

 

 

 4,866

 

 

 1,252

 

 

 3,614

 

 25.7

 

ELD conversion costs(2)

 

 

 1,796

 

 

 —

 

 

 1,796

 

 

 463

 

 

 1,333

 

 25.8

 

Nonunion pension termination costs(3)

 

 

 350

 

 

 —

 

 

 350

 

 

 90

 

 

 260

 

 25.7

 

Nonunion pension expense, including settlement and termination expense(7)

 

 

 —

 

 

 6,718

 

 

 6,718

 

 

 707

 

 

 6,011

 

 10.5

 

Life insurance proceeds and changes in cash surrender value

 

 

 —

 

 

 (557)

 

 

 (557)

 

 

 —

 

 

 (557)

 

 —

 

Tax expense from vested RSUs(8)

 

 

 —

 

 

 —

 

 

 —

 

 

 (56)

 

 

 56

 

 —

 

Non-GAAP amounts

 

$

 38,081

 

$

 (1,566)

 

$

 36,515

 

$

 9,528

 

$

 26,987

 

 26.1

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

Income Before

 

Income

 

 

 

 

 

 

 

 

Operating

 

Income

 

Income

 

Tax

 

Net

 

Effective

 

 

Income

 

(Costs)

 

Taxes

 

Provision

 

Income

 

Tax Rate

Amounts on GAAP basis

 

$

 74,999

 

$

 (11,501)

 

$

 63,498

 

$

 17,964

 

$

 45,534

 

 28.3

%  

Innovative technology costs(1)

 

 

 11,104

 

 

 291

 

 

 11,395

 

 

 2,933

 

 

 8,462

 

 25.7

 

ELD conversion costs(2)