ArcBest® Announces First Quarter 2022 Results

Investor Relations Contact: David Humphrey

Media Contact: Autumnn Mahar

Title: Vice President – Investor Relations

Title: Senior Manager, PR and Social

Phone: 479-785-6200 

Phone: 479-494-8221

Email: [email protected] 

Email: [email protected]

ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended 

March 31

2022

2021

(Unaudited)

($ thousands, except share and per share data)

REVENUES

$

1,335,074

$

829,213

OPERATING EXPENSES

1,240,146

797,022

OPERATING INCOME

94,928

32,191

OTHER INCOME (COSTS)

Interest and dividend income

106

392

Interest and other related financing costs

(1,939)

(2,428)

Other, net

(826)

1,192

(2,659)

(844)

INCOME BEFORE INCOME TAXES

92,269

31,347

INCOME TAX PROVISION

22,700

7,986

NET INCOME

$

69,569

$

23,361

EARNINGS PER COMMON SHARE

Basic

$

2.82

$

0.92

Diluted

$

2.68

$

0.87

AVERAGE COMMON SHARES OUTSTANDING

Basic

24,710,685

25,454,921

Diluted

25,911,200

26,930,402

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.08

$

0.08

ARCBEST CORPORATION
CONSOLIDATED BALANCE SHEETS

March 31

December 31

2022

2021

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

64,108

$

76,620

Short-term investments

37,024

48,339

Accounts receivable, less allowances (2022 - $15,737; 2021 - $13,226)

676,200

582,344

Other accounts receivable, less allowances (2022 - $697; 2021 - $690)

22,109

13,094

Prepaid expenses

42,688

40,104

Prepaid and refundable income taxes

9,010

9,654

Other

9,440

5,898

TOTAL CURRENT ASSETS

860,579

776,053

PROPERTY, PLANT AND EQUIPMENT

Land and structures

352,420

350,694

Revenue equipment

981,317

980,283

Service, office, and other equipment

259,201

251,085

Software

180,641

175,989

Leasehold improvements

17,226

16,931

1,790,805

1,774,982

Less allowances for depreciation and amortization

1,098,431

1,079,061

692,374

695,921

GOODWILL

299,008

300,337

INTANGIBLE ASSETS, NET

123,363

126,580

OPERATING RIGHT-OF-USE ASSETS

125,988

106,686

DEFERRED INCOME TAXES

5,324

5,470

OTHER LONG-TERM ASSETS

103,063

101,629

TOTAL ASSETS

$

2,209,699

$

2,112,676

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

340,966

$

311,401

Income taxes payable

8,364

12,087

Accrued expenses

276,888

305,851

Current portion of long-term debt

89,766

50,615

Current portion of operating lease liabilities

24,127

22,740

TOTAL CURRENT LIABILITIES

740,111

702,694

LONG-TERM DEBT, less current portion

168,912

174,917

OPERATING LEASE LIABILITIES, less current portion

106,463

88,835

POSTRETIREMENT LIABILITIES, less current portion

16,710

16,733

OTHER LONG-TERM LIABILITIES

130,471

135,537

DEFERRED INCOME TAXES

63,860

64,893

STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares;

      issued 2022: 29,384,711 shares; 2021: 29,359,957 shares

294

294

Additional paid-in capital

344,429

318,033

Retained earnings

868,905

801,314

   Treasury stock, at cost, 2022: 4,900,512 shares; 2021: 4,492,514 shares

(235,779)

(194,273)

Accumulated other comprehensive income

5,323

3,699

TOTAL STOCKHOLDERS' EQUITY

983,172

929,067

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,209,699

$

2,112,676

Note: The balance sheet at December 31, 2021 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

Three Months Ended 

March 31

2022

2021

Unaudited

($ thousands)

 OPERATING ACTIVITIES

Net income

$

69,569

$

23,361

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

Depreciation and amortization

31,591

29,387

Amortization of intangibles

3,232

967

Share-based compensation expense

2,763

2,354

Provision for losses on accounts receivable

1,628

(96)

Change in deferred income taxes

(1,417)

(4,998)

Gain on sale of property and equipment and lease termination

(3,002)

(8,635)

Changes in operating assets and liabilities:

Receivables

(103,677)

(22,568)

Prepaid expenses

(2,858)

(2,582)

Other assets

(2,781)

(164)

Income taxes

(3,017)

6,376

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

14

567

Accounts payable, accrued expenses, and other liabilities

(3,298)

(1,435)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(11,253)

22,534

 INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of financings

(19,471)

(9,588)

Proceeds from sale of property and equipment

5,334

10,079

Purchases of short-term investments

(12,339)

(18,130)

Proceeds from sale of short-term investments

23,590

24,418

Capitalization of internally developed software

(4,510)

(5,705)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

(7,396)

1,074

 FINANCING ACTIVITIES

Borrowings under credit facilities

58,000

—

Payments on long-term debt

(32,967)

(17,387)

Net change in book overdrafts

955

(5,434)

Payment of common stock dividends

(1,978)

(2,037)

Purchases of treasury stock

(16,506)

(1,001)

Payments for tax withheld on share-based compensation

(1,367)

(161)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

6,137

(26,020)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(12,512)

(2,412)

Cash and cash equivalents at beginning of period

76,620

303,954

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

64,108

$

301,542

 NONCASH INVESTING ACTIVITIES

Equipment financed

$

8,113

$

—

Accruals for equipment received

$

712

$

233

Lease liabilities arising from obtaining right-of-use assets

$

25,473

$

1,959

ARCBEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

Three Months Ended 

March 31

2022

2021

Unaudited

($ thousands, except percentages)

REVENUES

Asset-Based

$

705,311

$

556,292

ArcBest⁽¹⁾

595,284

252,336

FleetNet

78,378

59,163

Total Asset-Light

673,662

311,499

Other and eliminations

(43,899)

(38,578)

Total consolidated revenues

$

1,335,074

$

829,213

OPERATING EXPENSES

Asset-Based

Salaries, wages, and benefits

$

313,497

44.5

%

$

285,694

51.4

%

Fuel, supplies, and expenses

84,831

12.0

60,841

10.9

Operating taxes and licenses

12,493

1.8

12,248

2.2

Insurance

10,431

1.5

8,939

1.6

Communications and utilities

4,687

0.7

4,970

0.9

Depreciation and amortization

24,305

3.4

23,484

4.2

Rents and purchased transportation

102,985

14.6

75,588

13.6

Shared services

67,150

9.5

55,866

10.1

Gain on sale of property and equipment⁽²⁾

(2,695)

(0.4)

(8,695)

(1.6)

Innovative technology costs⁽³⁾

6,960

1.0

6,868

1.2

Other

633

0.1

434

0.1

Total Asset-Based

625,277

88.7

%

526,237

94.6

%

ArcBest⁽¹⁾

Purchased transportation

$

508,380

85.4

%

$

210,995

83.6

%

Supplies and expenses

3,266

0.6

2,568

1.0

Depreciation and amortization⁽⁴⁾

5,180

0.9

2,386

1.0

Shared services

50,197

8.4

26,072

10.3

Other

7,145

1.2

2,050

0.8

574,168

96.5

%

244,071

96.7

%

FleetNet

76,661

97.8

%

58,140

98.3

%

Total Asset-Light

650,829

302,211

Other and eliminations⁽⁵⁾

(35,960)

(31,426)

Total consolidated operating expenses

$

1,240,146

92.9

%

$

797,022

96.1

%

OPERATING INCOME

Asset-Based

$

80,034

$

30,055

ArcBest⁽¹⁾

21,116

8,265

FleetNet

1,717

1,023

Total Asset-Light

22,833

9,288

Other and eliminations⁽⁵⁾

(7,939)

(7,152)

Total consolidated operating income

$

94,928

$

32,191

¹⁾ 

The 2022 period includes the operations of MoLo, which was acquired on November 1, 2021.

²⁾ 

The 2021 period includes an $8.6 million gain on the sale of an unutilized service center property.

³⁾ 

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

⁴⁾ 

Depreciation and amortization includes amortization of intangibles associated with acquired businesses.

⁵⁾ 

"Other and eliminations" includes corporate costs for certain unallocated shared service costs which are not attributable to any segment, additional investments to offer comprehensive transportation and logistics services across multiple operating segments, and other investments in ArcBest technology and innovations, including innovative technology costs.

ARCBEST CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Non-GAAP Financial Measures

We report our financial results in accordance with U.S. 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 

March 31

2022

2021

ArcBest Corporation - Consolidated

(Unaudited)

($ thousands, except per share data)

Operating Income

Amounts on GAAP basis

$

94,928

$

32,191

Innovative technology costs, pre-tax⁽¹⁾

9,686

7,667

Purchase accounting amortization⁽²⁾

3,213

937

Change in fair value of contingent consideration⁽³⁾

810

—

Non-GAAP amounts

$

108,637

$

40,795

Net Income

Amounts on GAAP basis

$

69,569

$

23,361

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

7,289

5,824

Purchase accounting amortization⁽²⁾

2,396

702

Change in fair value of contingent consideration⁽³⁾

604

—

Life insurance proceeds and changes in cash surrender value

793

(1,266)

Tax benefit from vested RSUs⁽⁴⁾

(870)

(135)

Non-GAAP amounts

$

79,781

$

28,486

Diluted Earnings Per Share

Amounts on GAAP basis

$

2.68

$

0.87

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

0.28

0.22

Purchase accounting amortization⁽²⁾

0.09

0.03

Change in fair value of contingent consideration⁽³⁾

0.02

—

Life insurance proceeds and changes in cash surrender value

0.03

(0.05)

Tax benefit from vested RSUs⁽⁴⁾

(0.03)

(0.01)

Non-GAAP amounts⁽⁵⁾

$

3.08

$

1.06

¹⁾ 

Represents costs associated with the freight handling pilot test program at ABF Freight and initiatives to optimize our performance through technological innovation, including costs related to our investment in human-centered remote operation software.

²⁾ 

Represents the amortization of acquired intangible assets related to the November 1, 2021 acquisition of MoLo and previously acquired businesses in the ArcBest segment.

³⁾ 

Represents change in fair value of the contingent consideration recorded for the MoLo acquisition. The liability for contingent consideration is remeasured at each quarterly reporting date, and any change in fair value as a result of the recurring assessments is recognized in operating income. As previously disclosed, contingent consideration for the MoLo acquisition will be paid based on achievement of certain targets of adjusted earnings before interest, taxes, depreciation, and amortization, as adjusted for certain items pursuant to the merger agreement, for years 2023 through 2025.

⁴⁾ 

The Company recognizes the tax impact for the vesting of share-based compensation resulting in excess tax expense (benefit).

⁵⁾ 

Non-GAAP EPS is calculated in total and may not foot due to rounding.

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

Three Months Ended 

March 31

2022

2021

Segment Operating Income Reconciliations

(Unaudited)

($ thousands, except percentages)

Asset-Based Segment

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

Amounts on GAAP basis

$

80,034

88.7

%

$

30,055

94.6

%

Innovative technology costs, pre-tax⁽¹⁾

6,960

(1.0)

6,868

(1.2)

Non-GAAP amounts

$

86,994

87.7

%

$

36,923

93.4

%

Asset-Light

ArcBest Segment

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

Amounts on GAAP basis

$

21,116

96.5

%

$

8,265

96.7

%

Purchase accounting amortization⁽²⁾

3,213

(0.5)

937

(0.4)

Change in fair value of contingent consideration⁽³⁾

810

(0.1)

—

—

Non-GAAP amounts

$

25,139

95.9

%

$

9,202

96.3

%

FleetNet Segment

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

Amounts on GAAP basis

$

1,717

97.8

%

$

1,023

98.3

%

Total Asset-Light

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

Amounts on GAAP basis

$

22,833

96.6

%

$

9,288

97.0

%

Purchase accounting amortization⁽²⁾

3,213

(0.5)

937

(0.3)

Change in fair value of contingent consideration⁽³⁾

810

(0.1)

—

—

Non-GAAP amounts

$

26,856

96.0

%

$

10,225

96.7

%

Other and Eliminations

Operating Loss ($)

Amounts on GAAP basis

$

(7,939)

$

(7,152)

Innovative technology costs, pre-tax⁽⁴⁾

2,726

799

Non-GAAP amounts

$

(5,213)

$

(6,353)

¹⁾  

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

²⁾  

Represents the amortization of acquired intangible assets related to the November 1, 2021 acquisition of MoLo and previously acquired businesses in the ArcBest segment.

³⁾  

Represents change in fair value of the contingent consideration recorded for the MoLo acquisition, as previously described in the footnotes to the ArcBest Corporation – Consolidated non-GAAP table.

⁴⁾  

Represents costs associated with initiative to optimize our performance through technological innovation, including costs related to our investment in human-centered remote operation software, and costs related to the freight handling pilot test program at ABF Freight.

ARCBEST CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

Effective Tax Rate Reconciliation

ArcBest Corporation - Consolidated

(Unaudited)

($ thousands, except percentages)

Three Months Ended March 31, 2022

Other

Income

Income

Operating

Income

Before Income

Tax

Net

Income

(Costs)

Taxes

Provision

Income

Tax Rate⁽⁵⁾

Amounts on GAAP basis

$

94,928

$

(2,659)

$

92,269

$

22,700

$

69,569

24.6

%

Innovative technology costs⁽¹⁾

9,686

129

9,815

2,526

7,289

25.7

Purchase accounting amortization⁽²⁾

3,213

—

3,213

817

2,396

25.4

Change in fair value of contingent consideration⁽³⁾

810

—

810

206

604

25.4

Life insurance proceeds and changes in cash surrender value

—

793

793

—

793

—

Tax benefit from vested RSUs⁽⁴⁾

—

—

—

870

(870)

—

Non-GAAP amounts

$

108,637

$

(1,737)

$

106,900

$

27,119

$

79,781

25.4

%

Three Months Ended March 31, 2021

Other

Income

Income

Operating

Income

Before Income

Tax

Net

Income

(Costs)

Taxes

Provision

Income

Tax Rate⁽⁵⁾

Amounts on GAAP basis

$

32,191

$

(844)

$

31,347

$

7,986

$

23,361

25.5

%

Innovative technology costs⁽¹⁾

7,667

174

7,841

2,017

5,824

25.7

Purchase accounting amortization⁽²⁾

937

—

937

235

702

25.1

Life insurance proceeds and changes in cash surrender value

—

(1,266)

(1,266)

—

(1,266)

—

Tax benefit from vested RSUs⁽⁴⁾

—

—

—

135

(135)

—

Non-GAAP amounts

$

40,795

$

(1,936)

$

38,859

$

10,373

$

28,486

26.7

%

¹⁾ 

Represents costs associated with the freight handling pilot test program at ABF Freight and initiatives to optimize our performance through technological innovation, including costs related to our investment in human-centered remote operation software.

²⁾ 

Represents the amortization of acquired intangible assets related to the November 1, 2021 acquisition of MoLo and previously acquired businesses in the ArcBest segment.

³⁾ 

Represents change in fair value of the contingent consideration recorded for the MoLo acquisition, as previously described in the footnotes to the ArcBest Corporation – Consolidated non-GAAP table.

⁴⁾ 

The Company recognizes the tax impact for the vesting of share-based compensation resulting in excess tax expense (benefit).

⁵⁾ 

Tax rate for total "Amounts on GAAP basis" represents the effective tax rate. The tax effects of non-GAAP adjustments are calculated based on the statutory rate applicable to each item based on tax jurisdiction, unless the nature of the item requires the tax effect to be estimated by applying a specific tax treatment.

ARCBEST CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA)
Management uses Adjusted EBITDA as a key measure of performance and for business planning. The measure is particularly meaningful for analysis of operating performance because it excludes amortization of acquired intangibles and software of the Asset-Light businesses and changes in the fair value of contingent consideration, which are significant expenses resulting from strategic decisions rather than core daily operations. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our credit agreement. The calculation of Consolidated Adjusted EBITDA as presented below begins with net income, which is the most directly comparable GAAP measure. The calculation of Asset-Light Adjusted EBITDA as presented below begins with operating income, as other income (costs), income taxes, and net income are reported at the consolidated level and not included in the operating segment financial information evaluated by management to make operating decisions.

Three Months Ended 

March 31

2022

2021

(Unaudited)

ArcBest Corporation - Consolidated Adjusted EBITDA

($ thousands)

Net Income

$

69,569

$

23,361

Interest and other related financing costs

1,939

2,428

Income tax provision

22,700

7,986

Depreciation and amortization⁽¹⁾

34,823

30,354

Amortization of share-based compensation

2,763

2,354

Change in fair value of contingent consideration⁽²⁾

810

—

Consolidated Adjusted EBITDA

$

132,604

$

66,483

¹⁾ 

Includes amortization of intangibles associated with acquired businesses.

²⁾ 

Represents change in fair value of the contingent consideration recorded for the MoLo acquisition, as previously described in the footnotes to the ArcBest Corporation – Consolidated non-GAAP table.

Three Months Ended 

March 31

2022

2021

Asset-Light Adjusted EBITDA

(Unaudited)

($ thousands)

ArcBest

Operating Income

$

21,116

$

8,265

Depreciation and amortization⁽³⁾

5,180