ArcBest Announces Fourth Quarter 2016 And Full Year 2016 Results

- Fourth quarter 2016 revenue of $688.2 million, and net income of $1.6 million, or $0.06 per diluted share. On a non-GAAP basis, fourth quarter 2016 net income of $7.6 million, or $0.29 per diluted share.

- Improved fourth quarter asset-based and asset-light operating income, on a non-GAAP basis

- Fourth quarter asset-light revenue represented 30 percent of consolidated revenue, positively impacted by increased demand for expedited services and a September 2016 acquisition.

- ArcBest full year 2016 consolidated revenue of $2.7 billion.

News provided by

ArcBest Corporation

Feb 08, 2017, 05:00 ET

FORT SMITH, Ark., Feb. 8, 2017 /PRNewswire/ -- ArcBestSM (Nasdaq: ARCB) today reported fourth quarter 2016 net income of $1.6 million, or $0.06 per diluted share, compared to fourth quarter 2015 net income of $5.0 million, or $0.19 per diluted share.  ArcBest's fourth quarter 2016 revenue was $688.2 million versus revenue of $648.1 million in the same period of 2015, an increase of 6.2 percent. 

Excluding certain items in both periods as identified in the attached reconciliation tables, ArcBest's non-GAAP net income was $7.6 million, or $0.29 per diluted share, in fourth quarter 2016 compared to fourth quarter 2015 non-GAAP net income of $5.5 million, or $0.21 per diluted share.  Adjustments in the fourth quarter 2016 period included $10.3 million, or $0.24 per diluted share after-tax, related to a reorganization charge for impairment of software, contract and lease terminations and severance associated with ArcBest's new corporate structure that was implemented beginning in 2017. 

"Throughout 2016, during an inconsistent operating environment in our industry, we saw a positive reception from customers about our commitment to provide full supply chain solutions they seek as we continued to grow our company," said ArcBest Chairman, President and CEO Judy R. McReynolds. "We accelerated that commitment when we announced a new, enhanced market approach in November that enables us to provide a better customer experience by simplifying our organization and offering logistics solutions primarily under the ArcBest brand. With this new structure operational as of January 1, our ArcBest team is fully engaged and delivering integrated logistics solutions through an exceptional customer experience."

Asset-Based‡

Results of Operations

Fourth Quarter 2016 Versus Fourth Quarter 2015

  • Revenue of $482.1 million compared to $461.0 million, a per-day increase of 5.4 percent.
  • Tonnage per day increase of 0.9 percent.
  • Shipments per day increase of 6.1 percent.
  • Total billed revenue per hundredweight increased by 3.6 percent and was impacted by changes in shipment profile.  Excluding fuel surcharge, the percentage increase on ArcBest's asset-based traditional LTL freight was in the mid-single digits.
  • Operating income of $7.1 million and an operating ratio of 98.5 percent compared to $7.7 million and an operating ratio of 98.3 percent.  On a non-GAAP basis, operating income of $8.9 million and an operating ratio of 98.2 percent compared to $8.3 million and an operating ratio of 98.2 percent.

ArcBest's asset-based services, offered through the ABF Freight brand, experienced higher average daily revenue resulting from increased revenue per hundredweight positively impacted by freight profile changes.  In the midst of a competitive but rational industry yield environment, ArcBest's asset-based pricing remained disciplined.  In fourth quarter 2016, freight shipments grew at a faster rate than freight tonnage.  Thus, the average weight, and resulting revenue, of each shipment was below that of fourth quarter 2015.  The shipment growth contributed to increased freight handling labor and purchased transportation costs.  Asset-based expenses as a percent of revenue improved in the areas of equipment repositioning, equipment maintenance and cargo care while a continuing trend of higher nonunion healthcare costs unfavorably impacted operating results.

Asset-Light‡

Results of Operations

Fourth Quarter 2016 Versus Fourth Quarter 2015

  • Revenue of $211.2 million compared to $191.5 million.
  • Operating loss of $0.9 million compared to operating income of $3.4 million. On a non-GAAP basis, operating income of $7.5 million compared to $4.3 million.
  • Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") of $11.2 million compared to Adjusted EBITDA of $7.0 million.

Asset-light revenue grew due to continued strength in the demand for expedited services and additional revenue from previous asset-light acquisitions within the truckload and dedicated truckload markets.  The non-GAAP operating margin improvement reflects cost management initiatives, including the expense reductions associated with the corporate restructuring.  Though less impactful than in the previous quarter, changes in the ocean shipping market contributed to lower revenues and margins in ArcBest's international business.  FleetNet's fourth quarter profit margin improvements were a result of strict cost management and the positive effects of changes in customer accounts throughout the year.

Full Year 2016 Results

ArcBest's revenue totaled $2.70 billion, a slight increase compared to $2.67 billion in 2015.  Net income was $18.7 million, or $0.71 per diluted share.  On a non-GAAP basis, ArcBest had 2016 net income of $24.4 million, or $0.93 per diluted share compared to net income of $47.9 million, or $1.78 per diluted share in 2015. 

During 2016, ArcBest increased shareholder returns through payment of an eight cent per share quarterly dividend and purchase of ArcBest shares valued at approximately $9.5 million.

Asset-Based‡

Results of Operations

Full Year 2016 Versus Full Year 2015

  • Revenue of $1.92 billion, equal to prior year. Asset-based revenue in 2016 was impacted by lower fuel surcharges.
  • Tonnage per day decrease of 1.8 percent.
  • Shipments per day increase of 2.3 percent. 
  • Total billed revenue per hundredweight increased 1.3 percent and was impacted by lower fuel surcharges in 2016.  Excluding fuel surcharge, the percentage increase on ArcBest's asset-based traditional LTL freight was in the low-single digits.
  • Operating income of $33.6 million and an operating ratio of 98.2 percent compared to $62.4 million and an operating ratio of 96.7 percent.  On a non-GAAP basis, an operating ratio of 98.0 percent compared to an operating ratio of 96.6 percent.

Asset-Light‡

Results of Operations

Full Year 2016 Versus Full Year 2015

  • Revenue of $803.4 million compared to $765.4 million, an increase of 5.0 percent.
  • Operating income of $9.3 million compared to $23.7 million.  On a non-GAAP basis, operating income of $17.7 million compared to $24.8 million.
  • Adjusted EBITDA of $32.9 million compared to $38.2 million.
  • ArcBest acquired Logistics & Distribution Services in September 2016, enhancing its service offerings in dedicated truckload.

Capital Expenditures

In 2016, total net capital expenditures equaled $143 million, including approximately $91 million of revenue equipment for ArcBest's asset-based operation.  Depreciation and amortization costs on property, plant and equipment were $99 million.

For 2017, total net capital expenditures are estimated to range from $145 million to $170 million. This includes revenue equipment purchases of $94 million primarily for ArcBest's asset-based operation.  Expected real estate expenditures totaling approximately $32 million are for expansion opportunities and completion of previously disclosed call center facilities and office building, a portion of which replaces leased space.  The remainder of expected capital expenditures includes the costs of additional asset-based investments and technology enhancements across the enterprise.  ArcBest's depreciation and amortization costs on property, plant and equipment in 2017 are estimated to be in a range of $105 million to $115 million.

Closing Comments

"Although 2016 was a challenging freight environment, we were pleased with our positive momentum, particularly in our expedited service offerings, as we closed the year," said McReynolds. "That improvement, combined with expanded asset-light truckload service offerings, and the assets available through the broad ABF LTL network, means that we are positioned well with capacity sources when our customers ask for integrated logistics services to meet their needs.  ArcBest's enhanced market approach, combined with the cost savings resulting from our improved organizational structure, has resulted in a more efficient process for delivering an excellent experience for our customers.  It's an exciting time at ArcBest and our employees are energized around our new structure and the capabilities available to them."

Conference Call

ArcBest Corporation will host a conference call with company executives to discuss the 2016 fourth quarter results. The call will be today, Wednesday, February 8, at 9:30 a.m. ET (8:30 a.m. CT). Interested parties are invited to listen by calling (800) 682-8539. Following the call, a recorded playback will be available through the end of the day on March 15, 2017. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21842016. The conference call and playback can also be accessed, through March 15, 2017, on ArcBest's website at arcb.com.

About ArcBest

ArcBestSM (Nasdaq: ARCB) is a logistics company with creative problem solvers who have The Skill and the Will® to deliver integrated logistics solutions.  At ArcBest, 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.  For more information, visit arcb.com.

Forward-Looking Statements

Certain statements and information in this press release concerning results for the three and twelve months ended December 31, 2016 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 forward-looking 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; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; competitive initiatives and pricing pressures; governmental regulations; environmental laws and regulations, including emissions-control regulations; the cost, integration, and performance of any future acquisitions; relationships with employees, including unions, and our ability to attract and retain employees and/or independent owner operators; 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; 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; potential impairment of goodwill and intangible assets; availability and cost of reliable third-party services; litigation or claims asserted against us; 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; the loss of key employees or the inability to execute succession planning strategies; the impact of our brands and corporate reputation; the cost, timing, and performance of growth initiatives; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; and other financial, operational, and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission ("SEC") public filings.

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

‡ - Previously, ArcBest announced its plan to implement a new corporate structure, effective January 1, 2017, that better serves customers by unifying its sales, pricing, customer service, marketing, and capacity sourcing functions. Based on the financial information that management used during fourth quarter 2016 to make operating decisions and allocate resources, it is reporting its operating segment results as follows: Asset-Based, which represents ABF Freight; ArcBest, a single asset-light logistics operation combining the previously reported operating segments of ABF Logistics, Panther, and ABF Moving; FleetNet; and Other and eliminations.  The ArcBest and FleetNet reportable segments, combined, represent Asset-Light operations.  Certain restatements have been made to the prior year's operating segment data to conform to the current year presentation.  The 8-K filing associated with this earnings release includes an exhibit containing ArcBest's 2015 and 2016 quarterly operating segment data that conforms to the current year presentation.

Financial Data and Operating Statistics

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

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS















Three Months Ended 

Year Ended 


December 31

December 31


2016

2015

2016

2015


(Unaudited)


($ thousands, except share and per share data)

REVENUES

$

688,214

$

648,134

$

2,700,219

$

2,666,905













OPERATING EXPENSES

687,003

640,822

2,671,249

2,591,409













OPERATING INCOME

1,211

7,312

28,970

75,496













OTHER INCOME (COSTS)











Interest and dividend income

345

402

1,523

1,284

Interest and other related financing costs

(1,376)

(1,217)

(5,150)

(4,400)

Other, net

916

370

2,944

354



(115)

(445)

(683)

(2,762)













INCOME BEFORE INCOME TAXES

1,096

6,867

28,287

72,734













INCOME TAX PROVISION (BENEFIT)

(488)

1,878

9,635

27,880













NET INCOME

$

1,584

$

4,989

$

18,652

$

44,854













EARNINGS PER COMMON SHARE(1)











Basic

$

0.06

$

0.19

$

0.72

$

1.71

Diluted

$

0.06

$

0.19

$

0.71

$

1.67













AVERAGE COMMON SHARES OUTSTANDING











Basic

25,669,280

25,936,709

25,751,544

26,013,716

Diluted

26,272,487

26,415,839

26,256,570

26,530,127













CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.08

$

0.08

$

0.32

$

0.26




(1) ArcBest uses the two-class method for calculating earnings per share. This method, as calculated below for diluted earnings per share, 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.













NET INCOME

$

1,584

$

4,989

$

18,652

$

44,854













EFFECT OF UNVESTED RESTRICTED STOCK AWARDS

(10)

(45)

(137)

(443)













ADJUSTED NET INCOME FOR CALCULATING EARNINGS PER COMMON SHARE (1)

$

1,574

$

4,944

$

18,515

$

44,411

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS










December 31

December 31


2016

2015


(Unaudited)

Note


($ thousands, except share data)

ASSETS






CURRENT ASSETS






Cash and cash equivalents

$

114,280

$

164,973

Short-term investments

56,838

61,597

Restricted cash

962

1,384

   Accounts receivable, less allowances (2016 - $5,437; 2015 - $4,825)

260,643

236,097

   Other accounts receivable, less allowances (2016 - $849; 2015 - $1,029)

13,334

6,718

Prepaid expenses

22,124

20,801

Deferred income taxes

39,599

38,443

Prepaid and refundable income taxes

9,909

18,134

Other

4,300

3,936

TOTAL CURRENT ASSETS

521,989

552,083








PROPERTY, PLANT AND EQUIPMENT






Land and structures

305,507

273,839

Revenue equipment

743,860

699,844

Service, office, and other equipment

154,119

145,286

Software

120,877

127,010

Leasehold improvements

27,337

25,419



1,351,700

1,271,398

Less allowances for depreciation and amortization

819,174

788,351



532,526

483,047








GOODWILL

108,875

96,465

INTANGIBLE ASSETS, NET

80,507

76,787

OTHER LONG-TERM ASSETS

66,095

54,527


$

1,309,992

$

1,262,909








LIABILITIES AND STOCKHOLDERS' EQUITY














CURRENT LIABILITIES






Accounts payable

$

133,301

$

130,869

Income taxes payable

—

91

Accrued expenses

190,024

188,727

Current portion of long-term debt

64,143

44,910

TOTAL CURRENT LIABILITIES

387,468

364,597








LONG-TERM DEBT, less current portion

179,530

167,599

PENSION AND POSTRETIREMENT LIABILITIES

35,848

51,241

OTHER LONG-TERM LIABILITIES

16,790

12,689

DEFERRED INCOME TAXES

91,459

78,055








STOCKHOLDERS' EQUITY






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

issued 2016: 28,174,424 shares; 2015: 27,938,319 shares

282

279

Additional paid-in capital

314,916

309,653

Retained earnings

387,161

376,827

   Treasury stock, at cost, 2016: 2,565,399 shares; 2015: 2,080,187 shares

(80,045)

(70,535)

Accumulated other comprehensive loss

(23,417)

(27,496)

TOTAL STOCKHOLDERS' EQUITY

598,897

588,728


$

1,309,992

$

1,262,909

Note:  The balance sheet at December 31, 2015 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










Year Ended 


December 31


2016

2015


Unaudited


($ thousands)

 OPERATING ACTIVITIES






Net income

$

18,652

$

44,854

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






Depreciation and amortization

98,814

89,040

Amortization of intangibles

4,239

4,002

Impairment of long-lived assets

6,244

—

Pension settlement expense

3,229

3,202

Share-based compensation expense

7,588

8,029

Provision for losses on accounts receivable

1,643

998

Deferred income tax provision

9,522

16,435

Gain on sale of property and equipment

(3,335)

(2,225)

Changes in operating assets and liabilities:






Receivables

(25,570)

4,242

Prepaid expenses

(1,393)

362

Other assets

(4,355)

1,090

Income taxes

6,236

(8,918)

Accounts payable, accrued expenses, and other liabilities

(11,256)

(15,092)

 NET CASH PROVIDED BY OPERATING ACTIVITIES

110,258

146,019








 INVESTING ACTIVITIES






Purchases of property, plant and equipment, net of financings

(68,271)

(78,425)

Proceeds from sale of property and equipment

8,804

6,639

Purchases of short-term investments

(69,400)

(61,363)

Proceeds from sale of short-term investments

74,167

45,831

Business acquisitions, net of cash acquired

(24,780)

(29,813)

Proceeds from sale of subsidiaries

2,780

—

Capitalization of internally developed software

(10,472)

(8,512)

 NET CASH USED IN INVESTING ACTIVITIES

(87,172)

(125,643)








 FINANCING ACTIVITIES






Borrowings under credit facilities

—

70,000

Borrowings under accounts receivable securitization program

—

35,000

Payments on long-term debt

(52,202)

(100,813)

Net change in book overdrafts

(4,171)

3,843

Net change in restricted cash

422

2

Deferred financing costs

—

(875)

Payment of common stock dividends

(8,318)

(6,837)

Purchases of treasury stock

(9,510)

(12,765)

 NET CASH USED IN FINANCING ACTIVITIES

(73,779)

(12,445)








 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(50,693)

7,931

Cash and cash equivalents at beginning of period

164,973

157,042

 CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

114,280

$

164,973








 NONCASH INVESTING ACTIVITIES






Equipment financed

$

83,366

$

80,592

Accruals for equipment received

$

397

$

748

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

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, such as EBITDA and Adjusted EBITDA, 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. Accordingly, using these 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. Management uses EBITDA and Adjusted EBITDA as key measures of performance and for business planning. These measures are particularly meaningful for analysis of the Asset-Light businesses, because they exclude amortization of acquired intangibles and software, 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 Amended and Restated Credit Agreement. Other companies may calculate EBITDA differently; therefore, our calculation of EBITDA and Adjusted EBITDA 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 

Year Ended 


December 31

December 31


2016

2015

2016

2015


(Unaudited)


($ thousands, except percentages)

Asset-Based












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














Amounts on GAAP basis

$

7,148

98.5

%

$

7,725

98.3

%

$

33,571

98.2

%

$

62,436

96.7

%

Restructuring charges(1)

1,173

(0.2)


—

—


1,173

(0.1)


—

—

Pension settlement expense

568

(0.1)


544

(0.1)


2,273

(0.1)


2,404

(0.1)

Non-GAAP amounts

$

8,889

98.2

%

$

8,269

98.2

%

$

37,017

98.0

%

$

64,840

96.6

%






ArcBest










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














Amounts on GAAP basis

$

(1,586)

100.9

%

$

3,564

97.6

%

$

6,864

98.9

%

$

20,792

96.5

%

Restructuring charges(1)

8,038

(4.6)


—

—


8,038

(1.2)


—

—

Pension settlement expense

15

—


14

—


62

—


62

—

Non-GAAP amounts

$

6,467

96.3

%

$

3,578

97.6

%

$

14,964

97.7

%

$

20,854

96.5

%






FleetNet










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














Amounts on GAAP basis

$

724

98.1

%

$

(189)

100.4

%

$

2,425

98.5

%

$

2,954

98.3

%

Restructuring charges(1)

245

(0.7)


—

—


245

(0.2)


—

—

Third-party casualty expense at FleetNet(2)

—

—


847

(1.9)


—

—


932

(0.6)

Pension settlement expense

15

—


15

—


60

—


65

—

Non-GAAP amounts

$

984

97.4

%

$

673

98.5

%

$

2,730

98.3

%

$

3,951

97.7

%






Total Asset-Light










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














Amounts on GAAP basis

$

(862)

100.4

%

$

3,375

98.2

%

$

9,289

98.8

%

$

23,746

96.9

%

Restructuring charges(1)

8,283

(3.9)


—

—


8,283

(1.0)


—

—

Third-party casualty expense at FleetNet(2)

—

—


847

(0.4)


—

—


932

(0.1)

Pension settlement expense

30

—


29

—


122

—


127

—

Non-GAAP amounts

$

7,451

96.5

%

$

4,251

97.8

%

$

17,694

97.8

%

$

24,805

96.8

%


1)

Restructuring charges relate to the realignment of the Company's organizational structure announced on November 3, 2016.

2) 

Unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued
















Three Months Ended 

Year Ended 


December 31

December 31


2016

2015

2016

2015


(Unaudited)


($ thousands, except per share data)

ArcBest Corporation - Consolidated


























Operating Income












Amounts on GAAP basis

$

1,211

$

7,312

$

28,970

$

75,496

Restructuring charges, pre-tax(1)

10,313

—

10,313

—

Transaction costs, pre-tax(2)

39

1,379

601

1,408

Third-party casualty expense at FleetNet, pre-tax(3)

—

847

—

932

Pension settlement expense, pre-tax

962

724

3,229

3,202

Non-GAAP amounts

$

12,525

$

10,262

$

43,113

$

81,038














Net Income












Amounts on GAAP basis

$

1,584

$

4,989

$

18,652

$

44,854

Restructuring charges, after-tax(1)

6,273

—

6,273

—

Transaction costs, after-tax(2)

24

838

365

856

Third-party casualty expense at FleetNet, after-tax(3)

—

515

—

566

Pension settlement expense, after-tax

588

443

1,973

1,956

Life insurance proceeds and changes in cash surrender value

(884)

(401)

(2,864)

(316)

Tax credits(4)

—

(854)

—

—

Non-GAAP amounts

$

7,585

$

5,530

$

24,399

$

47,916














Diluted Earnings Per Share












Amounts on GAAP basis

$

0.06

$

0.19

$

0.71

$

1.67

Restructuring charges, after-tax(1)

0.24

—

0.24

—

Transaction costs, after-tax(2)

—

0.03

0.01

0.03

Third-party casualty expense at FleetNet, after-tax(3)

—

0.02

—

0.02

Pension settlement expense, after-tax

0.02

0.02

0.08

0.07

Life insurance proceeds and changes in cash surrender value

(0.03)

(0.02)

(0.11)

(0.01)

Tax credits(4)

—

(0.03)

—

—

Non-GAAP amounts

$

0.29

$

0.21

$

0.93

$

1.78














1)

Restructuring charges relate to the realignment of the Company's organizational structure announced on November 3, 2016.

2) 

Transaction costs for the three months and year ended December 31, 2016 are associated with the September 2, 2016 acquisition of Logistics & Distribution Services, LLC ("LDS"). Transaction costs for the three months ended December 31, 2015 are associated with the December 1, 2015 acquisition of Bear Transportation Services, L.P. ("Bear"), and transaction costs for the year ended December 31, 2015 are associated with Bear acquisition and the January 2, 2015 acquisition of Smart Lines Transportation Group, LLC ("Smart Lines").

3) 

Unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.

4)

Tax credits for the three months ended December 31, 2015 include the amount of the alternative fuel tax credit related to the first nine months of the year which was recorded in the fourth quarter due to the December 2015 reinstatement of the alternative fuel tax credit to January 1, 2015.

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued



















Effective Tax Rate Reconciliation










(Unaudited)










($ thousands, except percentages)
































Three Months Ended December 31, 2016






Income















Before

Income







Operating

Other

Income

Tax

Net

Effective


Income

Income

Taxes

Provision

Income

Tax Rate

Amounts on GAAP basis

$

1,211

$

(115)

$

1,096

$

(488)

$

1,584

(44.5)

%

Restructuring charges(1)

10,313

—

10,313

4,040

6,273

39.2

Transactions costs(2)

39

—

39

15

24

38.5

Pension settlement expense

962

—

962

374

588

38.9

Life insurance proceeds and changes in cash surrender value

—

(884)

(884)

—

(884)

—

Non-GAAP amounts

$

12,525

$

(999)

$

11,526

$

3,941

$

7,585

34.2

%





















Three Months Ended December 31, 2015






Income














Before

Income







Operating

Other

Income

Tax

Net

Effective


Income

Income

Taxes

Provision

Income

Tax Rate

Amounts on GAAP basis

$

7,312

$

(445)

$

6,867

$

1,878

$

4,989

27.3

%

Transactions costs(2)

1,379

—

1,379

541

838

39.2

Third-party casualty expense at FleetNet(3)

847

—

847

332

515

39.2

Pension settlement expense

724

—

724

281

443

38.8

Life insurance proceeds and changes in cash surrender value

—

(401)

(401)

—

(401)

—

Tax credits(4)

—

—

—

854

(854)

—

Non-GAAP amounts

$

10,262

$

(846)

$

9,416

$

3,886

$

5,530

41.3

%





















Year Ended December 31, 2016






Income















Before

Income







Operating

Other

Income

Tax

Net

Effective


Income

Income

Taxes

Provision

Income

Tax Rate

Amounts on GAAP basis

$

28,970

$

(683)

$

28,287

$

9,635

$

18,652

34.1

%

Restructuring charges(1)

10,313

—

10,313

4,040

6,273

39.2

Transactions costs(2)

601

—

601

236

365

39.3

Pension settlement expense

3,229

—

3,229

1,256

1,973

38.9

Life insurance proceeds and changes in cash surrender value

—

(2,864)

(2,864)

—

(2,864)

—

Non-GAAP amounts

$

43,113

$

(3,547)

$

39,566

$

15,167

$

24,399

38.3

%





















Year Ended December 31, 2015






Income













Before

Income







Operating

Other

Income

Tax

Net

Effective


Income

Income

Taxes

Provision

Income

Tax Rate

Amounts on GAAP basis

$

75,496

$

(2,762)

$

72,734

$

27,880

$

44,854

38.3

%

Transactions costs(2)

1,408

—

1,408

552

856

39.2

Third-party casualty expense at FleetNet(3)

932

—

932

366

566

39.3

Pension settlement expense

3,202

—

3,202

1,246

1,956

38.9

Life insurance proceeds and changes in cash surrender value

—

(316)

(316)

—

(316)

—

Non-GAAP amounts

$

81,038

$

(3,078)

$

77,960

$

30,044

$

47,916

38.5

%


1) 

Restructuring charges relate to the realignment of the Company's organizational structure announced on November 3, 2016.

2) 

Transaction costs for the three months and year ended December 31, 2016 are associated with the September 2, 2016 acquisition of Logistics & Distribution Services, LLC ("LDS"). Transaction costs for the three months ended December 31, 2015 are associated with the  December 1, 2015 acquisition of Bear Transportation Services, L.P. ("Bear"), and transaction costs for the year ended December 31, 2015 are associated with Bear acquisition and the January 2, 2015 acquisition of Smart Lines Transportation Group, LLC ("Smart Lines").

3) 

Unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.

4) 

Tax credits for the three months ended December 31, 2015 include the amount of the alternative fuel tax credit related to the first nine months of the year which was recorded in the fourth quarter due to the December 2015 reinstatement of the alternative fuel tax credit to January 1, 2015.

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA)















Three Months Ended 

Year Ended 


December 31

December 31


2016

2015

2016

2015


(Unaudited)


($ thousands)

ArcBest Corporation - Consolidated




Net income

$

1,584

$

4,989

$

18,652

$

44,854

Interest and other related financing costs

1,376

1,217

5,150

4,400

Income tax provision

(488)

1,878

9,635

27,880

Depreciation and amortization

26,361

24,821

103,053

93,042

Amortization of share-based compensation

1,437

1,686

7,588

8,029

Amortization of net actuarial losses of benefit plans and pension settlement expense(1)

2,140

1,919

8,173

7,432

Restructuring charges(2)

10,313

—

10,313

—

Transaction costs(3)

39

1,379

601

1,408

Consolidated Adjusted EBITDA

$

42,762

$

37,889

$

163,165

$

187,045


1)

Consolidated pension settlement expense totaled $1.0 million (pre-tax) and $0.7 million (pre-tax) for the three months ended December 31, 2016 and 2015, respectively, and $3.2 million (pre-tax) for each of the years ended December 31, 2016 and 2015.

2) 

Restructuring charges relate to the realignment of the Company's organizational structure announced on November 3, 2016.

3) 

Transaction costs for the three months and year ended December 31, 2016 are associated with the September 2, 2016 acquisition of LDS. Transaction costs for the three months ended December 31, 2015 are associated with the December 1, 2015 acquisition of Bear, and transaction costs for the year ended December 31, 2015 are associated with Bear acquisition and the January 2, 2015 acquisition of Smart Lines.























Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA)

























Three Months Ended December 31


2016

2015(4)




Depreciation








Depreciation





Operating

and

Restructuring

Adjusted

Operating

and

Adjusted


Income

Amortization

Charges(5)

EBITDA

Income

Amortization

EBITDA


(Unaudited)


($ thousands)

Asset-Light














































ArcBest(6)

$

(1,586)

$

3,513

$

8,038

$

9,965

$

3,564

$

3,354

$

6,918

FleetNet(7)

724

310

245

1,279

(189)

281

92

Total Asset-Light


$

(862)

$

3,823

$

8,283

$

11,244

$

3,375

$

3,635

$

7,010

























Year Ended December 31


2016

2015(4)




Depreciation








Depreciation





Operating

and

Restructuring

Adjusted

Operating

and

Adjusted


Income

Amortization

Charges(5)

EBITDA

Income

Amortization

EBITDA


(Unaudited)


($ thousands)

Asset-Light












































ArcBest(6)

$

6,864

$

14,151

$

8,038

$

29,053

$

20,792

$

13,375

$

34,167

FleetNet(7)

2,425

1,209

245

3,879

2,954

1,119

4,073

Total Asset-Light

$

9,289

$

15,360

$

8,283

$

32,932

$

23,746

$

14,494

$

38,240


4) 

Certain restatements have been made to the prior year's operating segment data to conform to the current year presentation, reflecting the realignment of the Company's organizational structure as announced on November 3, 2016. Under the new structure, the segments previously reported as Premium Logistics (Panther), Transportation Management (ABF Logistics), and Household Goods Moving Services (ABF Moving) are consolidated as a single Asset-Light logistics operation under ArcBest.

5) 

Restructuring charges relate to the realignment of the Company's organizational structure.

6) 

Depreciation and amortization consists primarily of amortization of intangibles and software associated with acquired businesses.

7)

For the three months and year ended December 31, 2015, FleetNet's operating income was impacted by a $0.9 million unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS
























Three Months Ended 


Year Ended 




December 31


December 31




2016


2015(1)


2016


2015(1)




Unaudited




($ thousands, except percentages)


REVENUES




















Asset-Based

$

482,079


$

461,016


$

1,916,394


$

1,916,579
























ArcBest(2)

172,999



146,186



640,734



590,436


FleetNet

38,212



45,267



162,629



174,952


Total Asset-Light



211,211



191,453



803,363



765,388
























Other and eliminations

(5,076)



(4,335)



(19,538)



(15,062)


Total consolidated revenues

$

688,214


$

648,134


$

2,700,219


$

2,666,905
























OPERATING EXPENSES




















Asset-Based




















Salaries, wages, and benefits

$

301,027

62.4%

$

288,973

62.7%

$

1,212,411

63.3%

$

1,172,489

61.2%

Fuel, supplies, and expenses

71,886

14.9%

70,966

15.4%

282,627

14.7%

307,345

16.0%

Operating taxes and licenses

11,990

2.5%

12,230

2.6%

48,436

2.5%

48,992

2.6%

Insurance

6,722

1.4%

8,507

1.8%

29,335

1.5%

28,847

1.5%

Communications and utilities

4,820

1.0%

4,570

1.0%

18,079

0.9%

16,129

0.8%

Depreciation and amortization

21,514

4.5%

20,238

4.4%

83,570

4.4%

74,765

3.9%

Rents and purchased transportation

53,310

11.1%

45,929

10.0%

199,156

10.4%

197,073

10.3%

Gain on sale of property and equipment

(529)

(0.1%)

(332)

(0.1%)

(2,979)

(0.2%)

(1,735)

(0.1%)

Pension settlement expense(3)

569

0.1%

544

0.1%

2,274

0.1%

2,404

0.1%

Other

2,449

0.5%

1,666

0.4%

8,741

0.5%

7,833

0.4%

Restructuring costs(5)

1,173

0.2%

—

0.0%

1,173

0.1%

—

0.0%

Total Asset-Based

474,931

98.5%

453,291

98.3%

1,882,823

98.2%

1,854,142

96.7%






















ArcBest(2)




















Purchased transportation

135,629

78.4%

113,572

77.7%

501,853

78.3%

460,238

77.9%

Salaries, wages, and benefits

16,826

9.7%

17,039

11.7%

70,857

11.1%

62,438

10.6%

Supplies and expenses

5,010

2.9%

4,586

3.1%

19,279

3.0%

15,500

2.6%

Depreciation and amortization(4)

3,513

2.0%

3,354

2.3%

14,151

2.2%

13,375

2.3%

Other(3)

5,569

3.2%

4,071

2.8%

19,692

3.1%

18,093

3.1%

Restructuring costs(5)

8,038

4.7%

—

0.0%

8,038

1.2%

—

0.0%



174,585

100.9%

142,622

97.6%

633,870

98.9%

569,644

96.5%

FleetNet

37,488

98.1%

45,456

100.4%

160,204

98.5%

171,998

98.3%

Total Asset-Light

212,073



188,078



794,074



741,642
























Other and eliminations(3)

(1)



(547)



(5,648)



(4,375)


Total consolidated operating expenses and costs

$

687,003


$

640,822


$

2,671,249


$

2,591,409




1) 

Certain restatements have been made to the prior year's operating segment data to conform to the current year presentation, reflecting the realignment of the Company's organizational structure as previously discussed in the Asset-Light Adjusted EBITDA table.

2) 

The 2016 periods include the operations of LDS since the September 2, 2016 acquisition date and the operations of Bear, which was acquired in December 2015.

3) 

Pension settlement expense totaled $1.0 million (pre-tax) and $0.7 million (pre-tax) on a consolidated basis for the three months ended December 31, 2016 and 2015, respectively, and $3.2 million (pre-tax) for each of the years ended December 31, 2016 and 2015. For the three months ended December 31, 2016 and 2015, pre-tax pension settlement expense of $0.6 million and $0.5 million, respectively, was reported by the Asset-Based segment; $0.4 million and  $0.2 million, respectively, was reported in Other and eliminations; and less than $0.1 million was reported by the Asset-Light segments. For the year ended December 31, 2016 and 2015, pre-tax pension settlement expense of $2.3 million and $2.4 million, respectively, was reported by the Asset-Based segment; $0.8 million and $0.7 million, respectively, was reported in Other and eliminations; and $0.1 million was reported by the Asset-Light segments.

4) 

Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with the acquisition of Panther.

5) 

Includes a $5.6 million charge for the impairment of software (see restructuring charges in the reconciliation of GAAP operating income to non-GAAP operating income in the ArcBest Corporation – Consolidated table previously presented).

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS – Continued
















Three Months Ended 

Year Ended 


December 31

December 31


2016

2015(1)

2016

2015(1)


(Unaudited)


($ thousands)

OPERATING INCOME












Asset-Based(2)

$

7,148

$

7,725

$

33,571

$

62,436














ArcBest(3)

(1,586)

3,564

6,864

20,792

FleetNet

724

(189)

2,425

2,954

Total Asset-Light

(862)

3,375

9,289

23,746














Other and eliminations(4)

(5,075)

(3,788)

(13,890)

(10,686)

Total consolidated operating income

$

1,211

$

7,312

$

28,970

$

75,496


1) 

Certain restatements have been made to the prior year's operating segment data to conform to the current year presentation, reflecting the realignment of the Company's organizational structure as previously discussed in the Asset-Light Adjusted EBITDA table.

2) 

Asset-Based segment operating income for all periods presented was impacted by pension settlement expense. (See reconciliation of GAAP operating income to non-GAAP operating income in the Asset-Based table previously presented.)

3) 

The 2016 periods include the operations of LDS since the September 2, 2016 acquisition date and the operations of Bear, which was acquired in December 2015.

4) 

"Other" corporate costs include $0.9 million of restructuring charges for the three months and year ended December 31, 2016, and transaction costs of $0.6 million for the year ended December 31, 2016.  Other corporate costs include $1.4 million of transaction costs for the three months and year ended December 31, 2015.  See reconciliation of GAAP operating income to non-GAAP operating income in the ArcBest Corporation – Consolidated table previously presented.  Other corporate costs also include additional investments in enterprise solutions to provide an improved platform for revenue growth and for offering ArcBest services across multiple operating segments.

ARCBEST CORPORATION

OPERATING STATISTICS




















Three Months Ended 

Year Ended 


December 31

December 31


2016

2015

% Change

2016

2015

% Change


(Unaudited)

Asset-Based


































Workdays

61.0

61.5



252.5

251.5




















Billed Revenue(5) CWT

$

30.06

$

29.02

3.6%

$

29.35

$

28.96

1.3%


















Billed Revenue(5) / Shipment

$

362.31

$

367.69

(1.5%)

$

365.68

$

376.05

(2.8%)


















Shipments

1,311,846

1,246,876

5.2%

5,237,827

5,098,322

2.7%


















Shipments / Day

21,506

20,274

6.1%

20,744

20,272

2.3%


















Tonnage (Tons)

790,535

789,960

0.1%

3,263,025

3,309,573

(1.4%)


















Tons / Day

12,960

12,845

0.9%

12,923

13,159

(1.8%)


5) 

Revenue for undelivered freight is deferred for financial statement purposes in accordance with the Asset-Based segment revenue recognition policy. Billed revenue used for calculating revenue per hundredweight measurements has not been adjusted for the portion of revenue deferred for financial statement purposes. Billed revenue has been adjusted to exclude intercompany revenue that is not related to freight transportation services.

ARCBEST CORPORATION

OPERATING STATISTICS – Continued









Year Over Year % Change


Three Months Ended 

Year Ended 


December 31, 2016

December 31, 2016


(Unaudited)

ArcBest












Expedite(1)





Revenue / Shipment

8.9%

(5.6%)







Shipments / Day

4.8%

4.0%







Truckload and Truckload - Dedicated(2)





Revenue / Shipment

(8.4%)

(18.9%)







Shipments / Day

84.2%

97.2%


1) 

Expedite primarily represents the expedited operations which were previously reported in the Premium Logistics (Panther) segment.

2) 

Truckload represents the brokerage operations and the Truckload – Dedicated represents the dedicated operations of LDS, both of which were previously reported in the Transportation Management (ABF Logistics) segment. Comparisons are impacted by the September 2016 acquisition of LDS and the December 2015 acquisition of Bear.


Investor Relations Contact: David Humphrey

Media Contact: Kathy Fieweger

Title: Vice President – Investor Relations

Phone: 479-719-4358

Phone: 479-785-6200 

Email: [email protected]

Email: [email protected]


SOURCE ArcBest Corporation

Related Links

http://www.arcb.com

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