ArcBest® Announces Fourth Quarter 2020 And Full Year 2020 Results

FORT SMITH, Ark., Feb. 2, 2021 /PRNewswire/ -- ArcBest^® (Nasdaq: ARCB), a leader in supply chain logistics, today reported fourth quarter 2020 revenue of $816.4 million compared to fourth quarter 2019 revenue of $717.4 million.  ArcBest's fourth quarter 2020 operating income was $30.3 million compared to an operating loss of $11.2 million the previous year, and net income of $23.9 million, or $0.89 per diluted share compared to a fourth quarter 2019 net loss of $5.5 million, or $0.22 per diluted share.  The 2019 fourth quarter results included a noncash impairment charge of $26.5 million (pre-tax), or $19.8 million (after-tax) and $0.75 per diluted share.

Excluding certain items in both periods as identified in the attached reconciliation tables, non-GAAP operating income was $37.5 million in fourth quarter 2020 compared to fourth quarter 2019 operating income of $20.2 million.  On a non-GAAP basis, net income was $26.0 million, or $0.97 per diluted share in fourth quarter 2020 compared to fourth quarter 2019 net income of $14.8 million, or $0.56 per diluted share.

"Year-over-year fourth quarter revenue growth of nearly 14 percent and non-GAAP operating income growth of nearly 86 percent reflects improvements in the demand for our integrated capacity solutions in this environment, and effective cost management," said ArcBest chairman, president and CEO, Judy R. McReynolds.

ArcBest's full year 2020 revenue totaled $2.9 billion compared to $3.0 billion in 2019.  Net income was $71.1 million, or $2.69 per diluted share, compared to net income of $40.0 million, or $1.51 per diluted share in 2019.  On a non-GAAP basis, ArcBest's 2020 net income was $85.4 million, or $3.23 per diluted share, compared to net income of $76.3 million, or $2.88 per diluted share, in 2019. 

ABF Freight will pay a profit-sharing bonus to union-represented employees.  As provided for in the 2018 collective bargaining agreement, the bonus is the result of achieving a 95.3 percent ABF Freight operating ratio in 2020.  "I'm proud of our ABF Freight team and I'm very pleased we are able to pay this bonus," said McReynolds.

Fourth Quarter Results of Operations Comparisons

Asset-Based

Fourth Quarter 2020 Versus Fourth Quarter 2019

• Revenue of $554.4 million compared to $513.3 million, a per-day increase of 8.0 percent.
• Total tonnage per day increase of 7.8 percent, with a double-digit percentage increase in LTL-rated tonnage partially offset by a double-digit percentage decrease in TL-rated spot shipment tonnage moving in the Asset-Based network.
• Total shipments per day increase of 2.8 percent. Total weight per shipment increase of 4.9 percent and an increase of 9.5 percent in LTL-rated weight per shipment positively impacted by fourth quarter freight mix changes.
• Total billed revenue per hundredweight increased 0.4 percent and was negatively impacted by lower fuel surcharges and freight mix changes versus prior year. Revenue per hundredweight on traditional published LTL-rated business, excluding fuel surcharge and transactional LTL-rated shipments, improved by a percentage in the low-single digits.
• Operating income of $27.9 million compared to operating income of $20.5 million. On a non-GAAP basis, operating income of $34.9 million compared to operating income of $25.4 million.

Fourth quarter revenue growth in ArcBest's Asset-Based business was the result of improving trends in customer shipping patterns, including strength in the housing market, that contributed to shipment and tonnage growth versus the prior year period.  Continuing strategies to fill available empty capacity in the Asset-Based network, which contributed to the increase in the average size of shipments, resulted in improved average shipment revenue and greater profitability.  Shipment handling and freight movement metrics were also positive during the quarter and reflect the benefits of enhanced optimization and labor management tools previously implemented.  The marketplace pricing environment remains positive and rational in support of ArcBest's efforts to secure needed price increases. 

Asset-Light^‡

Fourth Quarter 2020 Versus Fourth Quarter 2019

• Revenue of $301.2 million compared to $237.0 million, a per-day increase of 27.1 percent.
• Operating income of $5.5 million compared to an operating loss of $25.4 million that was impacted by a noncash impairment charge in fourth quarter 2019. On a non-GAAP basis, operating income of $5.5 million compared to operating income of $1.1 million.
• Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") of $8.3 million compared to Adjusted EBITDA of $4.0 million.

Fourth quarter revenue in the Asset-Light ArcBest segment increased significantly compared to the prior year period as improving customer demand, combined with higher market-driven rate levels, resulted in business growth and improved profitability.  Limited availability of logistics equipment and carrier resources in the marketplace positively impacted the demand for most all of the asset-light services offered by ArcBest.  As seen throughout the year, growth in the offering of managed transportation solutions positively contributed to fourth quarter revenue growth.  The tradeoffs of managing rising purchased transportation costs relative to the price increases secured from customers continues to pressure margins.  However, labor and other cost efficiencies, in part reflect the benefit of technologies, resulted in an increase in fourth quarter operating income.

At FleetNet, despite an increase in total revenue associated with improved revenue per event, a decline in total events contributed to lower operating income compared to the prior year period.

Full Year Results of Operations Comparisons

Asset-Based

Full Year 2020 Versus Full Year 2019

• Revenue of $2.09 billion, compared to $2.14 billion, an average daily decrease of 3.0 percent.
• Tonnage per day decrease of 0.4 percent.
• Shipments per day decrease of 4.1 percent.
• Total billed revenue per hundredweight decrease of 2.4 percent impacted by lower fuel surcharges and freight mix changes versus prior year. Revenue per hundredweight on traditional published LTL-rated business, excluding fuel surcharge and transactional LTL-rated shipments, improved by a percentage in the mid-single digits.
• Operating income of $98.9 million compared to $102.1 million. On a non-GAAP basis, operating income of $121.3 million compared to $118.8 million.
• Profit-sharing bonus to union-represented ABF Freight employees of $5.0 million, consistent with 2019.

Asset-Light^‡

Full Year 2020 Versus Full Year 2019

• Revenue of $984.2 million compared to $950.1 million, an average daily increase of 3.0 percent.
• Operating income of $13.0 million compared to an operating loss of $15.4 million that was impacted by a noncash impairment charge in fourth quarter 2019. On a non-GAAP basis, operating income of $13.0 million compared to operating income of $11.2 million.
• Adjusted EBITDA of $24.4 million compared to $23.8 million.

Capital Expenditures

In 2020, total net capital expenditures, including equipment financed, equaled $92 million.  Net capital expenditures in 2020 included $63 million of revenue equipment, the majority of which was for ArcBest's Asset-Based operation.  Because of reductions announced in early second quarter 2020 associated with the effects of the global pandemic and shifts in the timing of some expenditures into 2021, net capital expenditures for 2020 were approximately 35 percent below the annual average during the previous three years.  Depreciation and amortization costs on property, plant and equipment were $114 million in 2020.

Quarterly Dividends and Share Repurchase Program

During 2020, ArcBest increased shareholder returns through payment of an eight cent per share quarterly dividend and purchase of ArcBest shares valued at approximately $6.6 million.  These actions to enhance shareholder returns are expected to continue in 2021.  As recently announced, ArcBest restored the authorized amount of its share repurchase program for future purchases of ArcBest common stock to $50 million.         

Closing Comments

"The impact of the COVID-19 pandemic was unpredictable, and 2020 was a very challenging year for our customers and our employees," McReynolds said. "Our execution during this unprecedented period is worth noting. As an essential business, our logistics solutions are aiding our customers and our society as we all navigate an uncertain event. I'm very proud of the way our employees are responding to customers' needs for changes and continuing to strengthen our relationships while being flexible and adaptive." 

NOTE

Conference Call

ArcBest will host a conference call with company executives to discuss the 2020 fourth quarter and full year 2020 results.  The call will be today, Tuesday, February 2, at 9:30 a.m. ET (8:30 a.m. CT). Interested parties are invited to listen by calling (800) 747-0365. Following the call, a recorded playback will be available through the end of the day on March 15, 2021. To listen to the playback, dial (800) 633–8284 or (402) 977–9140 (for international callers). The conference call ID for the playback is 21989590. The conference call and playback can also be accessed, through March 15, 2021, on ArcBest's website at arcb.com.

About ArcBest

ArcBest^® (Nasdaq: ARCB) is a leading logistics company with creative problem solvers who deliver innovative solutions for our customers' supply chain needs.  We'll find a way to deliver knowledge, expertise and a can-do attitude with every shipment and supply chain solution, household move or vehicle repair.  At ArcBest, we're More Than Logistics^®. For more information, visit arcb.com.

The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995:  Certain statements and information in this press release concerning results for the three and twelve months ended December 31, 2020 may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Terms such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "foresee," "intend," "may," "plan," "predict," "project," "scheduled," "should," "would," and similar expressions and the negatives of such terms are intended to identify forward-looking statements. These statements are based on management's beliefs, assumptions, and expectations based on currently available information, are not guarantees of future performance, and involve certain risks and uncertainties (some of which are beyond our control). Although we believe that the expectations reflected in these forward-looking statements are reasonable as and when made, we cannot provide assurance that our expectations will prove to be correct. Actual outcomes and results could materially differ from what is expressed, implied, or forecasted in these statements due to a number of factors, including, but not limited to: a failure of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data breach, and/or cybersecurity incidents; the ability to maintain third-party information technology systems or licenses; widespread outbreak of an illness or any other communicable disease and the effects of pandemics, including the COVID-19 pandemic, or any other public health crisis; regulatory measures that may be implemented in response to widespread illness, including the COVID-19 pandemic; ineffectiveness of our business continuity plans to meet our operational needs in the event of adverse external events or conditions; untimely or ineffective development and implementation of, or failure to realize potential benefits associated with, new or enhanced technology or processes, including the pilot test program at ABF Freight, and any write-offs associated therewith; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; general economic conditions and related shifts in market demand, including the impact of and uncertainties related to the COVID-19 pandemic, that impact the performance and needs of industries we serve and/or limit our customers' access to adequate financial resources; the ability to manage our cost structure, and the timing and performance of growth initiatives; relationships with employees, including unions, and our ability to attract, retain, and develop employees; unfavorable terms of, or the inability to reach agreement on, future collective bargaining agreements or a workforce stoppage by our employees covered under ABF Freight's collective bargaining agreement; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; availability and cost of reliable third-party services; availability of fuel, the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates, and the inability to collect fuel surcharges; governmental regulations; environmental laws and regulations, including emissions-control regulations; union employee wages and benefits, including changes in required contributions to multiemployer plans; litigation or claims asserted against us; the loss of key employees or the inability to execute succession planning strategies; maintaining our intellectual property rights, brand, and corporate reputation; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; self-insurance claims and insurance premium costs; increased prices for and decreased availability of new revenue equipment, decreases in value of used revenue equipment, and higher costs of equipment-related operating expenses such as maintenance, fuel, and related taxes; potential impairment of goodwill and intangible assets; the cost, integration, and performance of any recent or future acquisitions; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; acts of terrorism or war, or the impact of antiterrorism and safety measures; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest's public filings with the Securities and Exchange Commission ("SEC").

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

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

Investor Relations Contact: David Humphrey
Title: Vice President – Investor Relations
Phone: 479-785-6200
Email: [email protected]

Financial Data and Operating Statistics

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

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 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.

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, 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.

SOURCE ArcBest

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