ArcBest® Announces Second Quarter 2019 Results
- Second quarter 2019 revenue of $771.5 million, and net income of $24.4 million, or $0.92 per diluted share. On a non-GAAP[1] basis, second quarter 2019 net income was $24.6 million, or $0.93 per diluted share.
- Asset-Based yield improvement in the midst of lower shipment and tonnage levels
- Asset-Light revenue and operating income impacted by lower market demand during a period that included resource investments for the future
FORT SMITH, Ark., July 30, 2019 /PRNewswire/ -- ArcBest® (Nasdaq: ARCB), a leading logistics company with creative problem solvers who deliver integrated solutions, today reported second quarter 2019 revenue of $771.5 million compared to second quarter 2018 revenue of $793.4 million. Second quarter 2019 operating income was $35.2 million compared to operating income of $3.2 million in second quarter last year. Second quarter net income was $24.4 million, or $0.92 per diluted share compared to second quarter 2018 net income of $1.2 million, or $0.05 per diluted share.
Excluding certain items in both periods, as identified in the attached reconciliation tables, non-GAAP net income was $24.6 million, or $0.93 per diluted share, in second quarter 2019 compared to second quarter 2018 net income of $29.8 million, or $1.12 per diluted share. Adjustments in the second quarter 2018 period included a one-time after-tax charge of $28.2 million, or $1.05 per diluted share, related to the restructure of ABF Freight's obligation with one multiemployer pension plan.
"Once again we saw that business conditions, while still relatively healthy, moderated in the second quarter from last year's record-setting levels but on an overall historical basis the quarter was solid with a rational underlying pricing environment," said Chairman, President and CEO Judy R. McReynolds. "Revenue improved month to month for our asset-based business while our asset-light business continued to see softer expedited services conditions on increased available truckload capacity."
Asset-Based
Results of Operations
Second Quarter 2019 Versus Second Quarter 2018
- Revenue of $559.6 million compared to $559.2 million, a per-day increase of 0.9 percent.
- Tonnage per day decrease of 3.4 percent, with a mid-single digit percentage decrease in LTL-rated freight.
- Shipments per day decrease of 1.2 percent. Total weight per shipment decreased 2.2 percent and the decrease in the average LTL-rated weight per shipment was approximately 4 percent.
- Total billed revenue per hundredweight increased 4.1 percent, positively impacted by lower average weight per shipment. Excluding fuel surcharge, the percentage increase on LTL-rated freight was in the high-single digits.
- Operating income of $36.2 million and an operating ratio of 93.5 percent compared to operating income of $3.4 million and an operating ratio of 99.4 percent. On a non-GAAP basis, operating income of $36.2 million and an operating ratio of 93.5 percent compared to operating income of $41.3 million and an operating ratio of 92.6 percent. Operating income adjustments in the second quarter 2018 period included a one-time charge of $37.9 million related to the previously mentioned restructure of ABF Freight's obligation with one multiemployer pension plan.
1. |
U.S. Generally Accepted Accounting Principles |
Continued improvement in yield management and customer pricing initiatives, despite fewer shipments and lower freight tonnage, resulted in a slight increase in second quarter, daily revenue versus last year. The reduction in second quarter total tonnage per day reflected lower LTL-rated freight tonnage partially offset by increases in truckload-rated spot shipments moving in the asset-based network. Though below last year's second quarter, total average Asset-Based weight per shipment trends improved throughout the quarter, partially due to the growth in truckload-rated spot shipments.
Increased costs associated with city pickup, dock handling and final shipment delivery impacted second quarter profitability as labor and other operational resources were somewhat elevated relative to decreasing LTL freight levels throughout the quarter. An emphasis on customer service continues to be a focal point. Linehaul costs were below prior year due, primarily, to reductions in the use of rail and outside carrier resources.
Asset-Light2
Results of Operations
Second Quarter 2019 Versus Second Quarter 2018
- Revenue of $232.9 million compared to $246.8 million.
- Operating income of $3.1 million compared to operating income of $4.7 million.
- Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") of $6.5 million compared to Adjusted EBITDA of $8.7 million.
Compared to last year's second quarter, fewer shipments and lower average shipment revenue contributed to reduced total Asset-Light ArcBest segment revenue. This year's more available truckload capacity, compared to the tighter market last year, continued to be a factor impacting customer pricing and the ArcBest segment's results. Because of lower revenue per shipment related to changing market conditions versus the prior year, expedite and truckload brokerage were the main contributors to the reduction in total ArcBest segment revenue. Increased revenue and shipment levels in managed transportation services were consistent with the growth trend of that business in recent quarters. Total second quarter ArcBest operating expenses improved versus 2018. At FleetNet, event growth and cost controls contributed to the quarter's operating income.
Closing Comments
"The first six months of 2019 saw moderated activity from the record-setting pace experienced in 2018," McReynolds said. "Our team has executed well in this environment, providing innovative full supply chain solutions and trusted advice to customers for all of their logistics challenges, with managed transportation solutions increasingly in demand. Our outlook for the second half sees a continuation of the current trends and we will monitor for any changes to that view, particularly as it relates to federal tariff policies and developments in the manufacturing and industrial sectors of the economy."
2. |
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 second quarter results. The call will be on Wednesday, July 31st at 9:30 a.m. EDT (8:30 a.m. CDT). Interested parties are invited to listen by calling (800) 897‑3679. Following the call, a recorded playback will be available through the end of the day on September 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 21926462. The conference call and playback can also be accessed, through September 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 [email protected]. 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 June 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; 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 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 |
Six Months Ended |
||||||||||
June 30 |
June 30 |
||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||
(Unaudited) |
|||||||||||
($ thousands, except share and per share data) |
|||||||||||
REVENUES |
$ |
771,490 |
$ |
793,350 |
$ |
1,483,329 |
$ |
1,493,351 |
|||
OPERATING EXPENSES(1) |
736,290 |
790,194 |
1,439,538 |
1,477,470 |
|||||||
OPERATING INCOME |
35,200 |
3,156 |
43,791 |
15,881 |
|||||||
OTHER INCOME (COSTS) |
|||||||||||
Interest and dividend income |
1,616 |
714 |
3,094 |
1,240 |
|||||||
Interest and other related financing costs |
(2,811) |
(2,013) |
(5,693) |
(4,072) |
|||||||
Other, net |
(445) |
(1,123) |
(1,036) |
(3,324) |
|||||||
(1,640) |
(2,422) |
(3,635) |
(6,156) |
||||||||
INCOME BEFORE INCOME TAXES |
33,560 |
734 |
40,156 |
9,725 |
|||||||
INCOME TAX PROVISION (BENEFIT) |
9,184 |
(499) |
10,892 |
(1,462) |
|||||||
NET INCOME |
$ |
24,376 |
$ |
1,233 |
$ |
29,264 |
$ |
11,187 |
|||
EARNINGS PER COMMON SHARE(2) |
|||||||||||
Basic |
$ |
0.95 |
$ |
0.05 |
$ |
1.14 |
$ |
0.43 |
|||
Diluted |
$ |
0.92 |
$ |
0.05 |
$ |
1.10 |
$ |
0.42 |
|||
AVERAGE COMMON SHARES OUTSTANDING |
|||||||||||
Basic |
25,554,286 |
25,670,325 |
25,562,306 |
25,656,674 |
|||||||
Diluted |
26,431,592 |
26,699,549 |
26,483,011 |
26,653,282 |
|||||||
CASH DIVIDENDS DECLARED PER COMMON SHARE |
$ |
0.08 |
$ |
0.08 |
$ |
0.16 |
$ |
0.16 |
|||
____________________________ |
|
1) |
Includes a one-time charge of $37.9 million for the three and six months ended June 30, 2018 for the multiemployer pension fund withdrawal liability resulting from the transition agreement ABF Freight, Inc. entered into with the New England Teamsters and Trucking Industry Pension Fund. |
2) |
ArcBest uses the two-class method for calculating earnings per share. This method requires an allocation of dividends paid and a portion of undistributed net income (but not losses) to unvested restricted stock for calculating per share amounts. |
ARCBEST CORPORATION |
|||||
CONSOLIDATED BALANCE SHEETS |
|||||
June 30 |
December 31 |
||||
2019 |
2018 |
||||
(Unaudited) |
Note |
||||
($ thousands, except share data) |
|||||
ASSETS |
|||||
CURRENT ASSETS |
|||||
Cash and cash equivalents |
$ |
181,731 |
$ |
190,186 |
|
Short-term investments |
117,657 |
106,806 |
|||
Accounts receivable, less allowances (2019 - $6,238; 2018 - $7,380) |
296,090 |
297,051 |
|||
Other accounts receivable, less allowances (2019 - $463; 2018 - $806) |
17,207 |
19,146 |
|||
Prepaid expenses |
28,546 |
25,304 |
|||
Prepaid and refundable income taxes |
5,237 |
1,726 |
|||
Other |
4,982 |
9,007 |
|||
TOTAL CURRENT ASSETS |
651,450 |
649,226 |
|||
PROPERTY, PLANT AND EQUIPMENT |
|||||
Land and structures |
339,255 |
339,640 |
|||
Revenue equipment |
888,588 |
858,251 |
|||
Service, office, and other equipment |
218,131 |
199,230 |
|||
Software |
143,181 |
138,517 |
|||
Leasehold improvements |
10,058 |
9,365 |
|||
1,599,213 |
1,545,003 |
||||
Less allowances for depreciation and amortization |
947,264 |
913,815 |
|||
651,949 |
631,188 |
||||
GOODWILL |
108,320 |
108,320 |
|||
INTANGIBLE ASSETS, NET |
66,700 |
68,949 |
|||
OPERATING RIGHT-OF-USE ASSETS |
68,810 |
— |
|||
DEFERRED INCOME TAXES |
6,296 |
7,468 |
|||
OTHER LONG-TERM ASSETS |
80,402 |
74,080 |
|||
$ |
1,633,927 |
$ |
1,539,231 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
CURRENT LIABILITIES |
|||||
Accounts payable |
$ |
166,829 |
$ |
143,785 |
|
Income taxes payable |
1,942 |
1,688 |
|||
Accrued expenses |
228,994 |
243,111 |
|||
Current portion of long-term debt |
47,205 |
54,075 |
|||
Current portion of operating lease liabilities |
18,273 |
— |
|||
Current portion of pension and postretirement liabilities |
8,231 |
8,659 |
|||
TOTAL CURRENT LIABILITIES |
471,474 |
451,318 |
|||
LONG-TERM DEBT, less current portion |
235,001 |
237,600 |
|||
OPERATING LEASE LIABILITIES, less current portion |
54,040 |
— |
|||
PENSION AND POSTRETIREMENT LIABILITIES, less current portion |
31,874 |
31,504 |
|||
OTHER LONG-TERM LIABILITIES |
37,268 |
44,686 |
|||
DEFERRED INCOME TAXES |
61,111 |
56,441 |
|||
STOCKHOLDERS' EQUITY |
|||||
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2019: 28,786,473 shares; 2018: 28,684,779 shares |
288 |
287 |
|||
Additional paid-in capital |
329,388 |
325,712 |
|||
Retained earnings |
526,551 |
501,389 |
|||
Treasury stock, at cost, 2019: 3,266,169 shares; 2018: 3,097,634 shares |
(100,639) |
(95,468) |
|||
Accumulated other comprehensive loss |
(12,429) |
(14,238) |
|||
TOTAL STOCKHOLDERS' EQUITY |
743,159 |
717,682 |
|||
$ |
1,633,927 |
$ |
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 |
|||||
Six Months Ended |
|||||
June 30 |
|||||
2019 |
2018 |
||||
Unaudited |
|||||
($ thousands) |
|||||
OPERATING ACTIVITIES |
|||||
Net income |
$ |
29,264 |
$ |
11,187 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||
Depreciation and amortization |
51,722 |
51,409 |
|||
Amortization of intangibles |
2,249 |
2,264 |
|||
Pension settlement expense |
1,634 |
1,085 |
|||
Share-based compensation expense |
4,859 |
3,544 |
|||
Provision for losses on accounts receivable |
621 |
1,069 |
|||
Change in deferred income taxes |
5,124 |
(10,818) |
|||
Gain on sale of property and equipment |
(1,469) |
(166) |
|||
Changes in operating assets and liabilities: |
|||||
Receivables |
1,781 |
(31,281) |
|||
Prepaid expenses |
(3,323) |
2,393 |
|||
Other assets |
(2,798) |
2,018 |
|||
Income taxes |
(3,042) |
8,024 |
|||
Operating right-of-use assets and lease liabilities, net |
159 |
— |
|||
Multiemployer pension fund withdrawal liability(1) |
(289) |
37,922 |
|||
Accounts payable, accrued expenses, and other liabilities |
(6,021) |
40,914 |
|||
NET CASH PROVIDED BY OPERATING ACTIVITIES |
80,471 |
119,564 |
|||
INVESTING ACTIVITIES |
|||||
Purchases of property, plant and equipment, net of financings |
(41,909) |
(24,763) |
|||
Proceeds from sale of property and equipment |
3,798 |
2,074 |
|||
Purchases of short-term investments |
(43,327) |
(26,006) |
|||
Proceeds from sale of short-term investments |
33,332 |
14,647 |
|||
Capitalization of internally developed software |
(5,535) |
(5,997) |
|||
NET CASH USED IN INVESTING ACTIVITIES |
(53,641) |
(40,045) |
|||
FINANCING ACTIVITIES |
|||||
Payments on long-term debt |
(29,984) |
(33,694) |
|||
Proceeds from notes payable |
9,552 |
— |
|||
Net change in book overdrafts |
(4,398) |
(2,888) |
|||
Payment of common stock dividends |
(4,102) |
(4,116) |
|||
Purchases of treasury stock |
(5,171) |
(201) |
|||
Payments for tax withheld on share-based compensation |
(1,182) |
(85) |
|||
NET CASH USED IN FINANCING ACTIVITIES |
(35,285) |
(40,984) |
|||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(8,455) |
38,535 |
|||
Cash and cash equivalents at beginning of period |
190,186 |
120,772 |
|||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
181,731 |
$ |
159,307 |
|
NONCASH INVESTING ACTIVITIES |
|||||
Equipment financed |
$ |
10,964 |
$ |
14,407 |
|
Accruals for equipment received |
$ |
19,402 |
$ |
8,649 |
|
Lease liabilities arising from obtaining right-of-use assets |
$ |
23,049 |
$ |
— |
|
____________________________ |
|
1) |
The six months ended June 30, 2018 includes a one-time charge related to the multiemployer pension plan withdrawal liability previously discussed in this press release. |
ARCBEST CORPORATION |
|||||||||||||||||||||||
FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS |
|||||||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||||||
June 30 |
June 30 |
||||||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||||||||||
Unaudited |
|||||||||||||||||||||||
($ thousands, except percentages) |
|||||||||||||||||||||||
REVENUES |
|||||||||||||||||||||||
Asset-Based |
$ |
559,648 |
$ |
559,239 |
$ |
1,065,727 |
$ |
1,041,354 |
|||||||||||||||
ArcBest |
181,173 |
199,987 |
354,377 |
381,920 |
|||||||||||||||||||
FleetNet |
51,722 |
46,792 |
104,981 |
94,551 |
|||||||||||||||||||
Total Asset-Light |
232,895 |
246,779 |
459,358 |
476,471 |
|||||||||||||||||||
Other and eliminations |
(21,053) |
(12,668) |
(41,756) |
(24,474) |
|||||||||||||||||||
Total consolidated revenues |
$ |
771,490 |
$ |
793,350 |
$ |
1,483,329 |
$ |
1,493,351 |
|||||||||||||||
OPERATING EXPENSES |
|||||||||||||||||||||||
Asset-Based |
|||||||||||||||||||||||
Salaries, wages, and benefits |
$ |
297,016 |
53.1 |
% |
$ |
286,750 |
51.3 |
% |
$ |
577,292 |
54.2 |
% |
$ |
556,529 |
53.5 |
% |
|||||||
Fuel, supplies, and expenses |
66,853 |
11.9 |
65,040 |
11.6 |
131,580 |
12.3 |
127,233 |
12.2 |
|||||||||||||||
Operating taxes and licenses |
12,214 |
2.2 |
11,910 |
2.1 |
24,612 |
2.3 |
23,666 |
2.3 |
|||||||||||||||
Insurance |
7,598 |
1.4 |
7,979 |
1.4 |
15,589 |
1.5 |
14,607 |
1.4 |
|||||||||||||||
Communications and utilities |
4,529 |
0.8 |
4,135 |
0.7 |
9,149 |
0.9 |
8,656 |
0.8 |
|||||||||||||||
Depreciation and amortization |
21,743 |
3.9 |
21,362 |
3.8 |
42,723 |
4.0 |
42,292 |
4.1 |
|||||||||||||||
Rents and purchased transportation |
57,687 |
10.3 |
63,253 |
11.3 |
107,599 |
10.1 |
109,386 |
10.5 |
|||||||||||||||
Shared services(1) |
56,013 |
10.0 |
56,825 |
10.2 |
106,725 |
10.0 |
102,432 |
9.8 |
|||||||||||||||
Multiemployer pension fund withdrawal liability charge(2) |
— |
— |
37,922 |
6.8 |
— |
— |
37,922 |
3.6 |
|||||||||||||||
Gain on sale of property and equipment |
(1,587) |
(0.3) |
(266) |
— |
(1,621) |
(0.2) |
(399) |
— |
|||||||||||||||
Other |
1,404 |
0.2 |
948 |
0.2 |
2,286 |
0.2 |
2,247 |
0.2 |
|||||||||||||||
Total Asset-Based |
523,470 |
93.5 |
% |
555,858 |
99.4 |
% |
1,015,934 |
95.3 |
% |
1,024,571 |
98.4 |
% |
|||||||||||
ArcBest |
|||||||||||||||||||||||
Purchased transportation |
147,552 |
81.4 |
% |
162,920 |
81.5 |
% |
287,657 |
81.2 |
% |
311,292 |
81.5 |
% |
|||||||||||
Supplies and expenses |
2,858 |
1.6 |
3,538 |
1.7 |
5,632 |
1.6 |
6,768 |
1.8 |
|||||||||||||||
Depreciation and amortization(3) |
3,055 |
1.7 |
3,597 |
1.8 |
6,206 |
1.7 |
7,005 |
1.8 |
|||||||||||||||
Shared services(1) |
23,141 |
12.8 |
23,536 |
11.7 |
46,172 |
13.0 |
45,404 |
11.9 |
|||||||||||||||
Other |
2,445 |
1.3 |
2,546 |
1.3 |
4,858 |
1.4 |
4,427 |
1.2 |
|||||||||||||||
Restructuring costs(4) |
— |
— |
143 |
0.1 |
— |
— |
152 |
— |
|||||||||||||||
179,051 |
98.8 |
% |
196,280 |
98.1 |
% |
350,525 |
98.9 |
% |
375,048 |
98.2 |
% |
||||||||||||
FleetNet |
50,696 |
98.0 |
% |
45,763 |
97.8 |
% |
102,467 |
97.6 |
% |
92,001 |
97.3 |
% |
|||||||||||
Total Asset-Light |
229,747 |
242,043 |
452,992 |
467,049 |
|||||||||||||||||||
Other and eliminations |
(16,927) |
(7,707) |
(29,388) |
(14,150) |
|||||||||||||||||||
Total consolidated operating expenses |
$ |
736,290 |
95.4 |
% |
$ |
790,194 |
99.6 |
% |
$ |
1,439,538 |
97.0 |
% |
$ |
1,477,470 |
98.9 |
% |
|||||||
OPERATING INCOME |
|||||||||||||||||||||||
Asset-Based |
$ |
36,178 |
$ |
3,381 |
$ |
49,793 |
$ |
16,783 |
|||||||||||||||
ArcBest |
2,122 |
3,707 |
3,852 |
6,872 |
|||||||||||||||||||
FleetNet |
1,026 |
1,029 |
2,514 |
2,550 |
|||||||||||||||||||
Total Asset-Light |
3,148 |
4,736 |
6,366 |
9,422 |
|||||||||||||||||||
Other and eliminations(5) |
(4,126) |
(4,961) |
(12,368) |
(10,324) |
|||||||||||||||||||
Total consolidated operating income |
$ |
35,200 |
$ |
3,156 |
$ |
43,791 |
$ |
15,881 |
|||||||||||||||
____________________________ |
|
1) |
Shared services represent costs incurred to support all segments, including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, and other company-wide services. |
2) |
The three and six months ended June 30, 2018 include a one-time charge for the multiemployer pension plan withdrawal liability previously discussed in this press release. |
3) |
Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses. |
4) |
Restructuring charges relate to the realignment of the Company's organizational structure as announced on November 3, 2016. |
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. |
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.
Three Months Ended |
Six Months Ended |
||||||||||
June 30 |
June 30 |
||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||
(Unaudited) |
|||||||||||
($ thousands, except per share data) |
|||||||||||
ArcBest Corporation - Consolidated |
|||||||||||
Operating Income |
|||||||||||
Amounts on GAAP basis |
$ |
35,200 |
$ |
3,156 |
$ |
43,791 |
$ |
15,881 |
|||
Multiemployer pension fund withdrawal liability charge, pre-tax(1) |
— |
37,922 |
— |
37,922 |
|||||||
Restructuring charges, pre-tax(2) |
— |
340 |
— |
716 |
|||||||
Non-GAAP amounts |
$ |
35,200 |
$ |
41,418 |
$ |
43,791 |
$ |
54,519 |
|||
Net Income |
|||||||||||
Amounts on GAAP basis |
$ |
24,376 |
$ |
1,233 |
$ |
29,264 |
$ |
11,187 |
|||
Multiemployer pension fund withdrawal liability charge, after-tax(1) |
— |
28,161 |
— |
28,161 |
|||||||
Restructuring charges, after-tax(2) |
— |
252 |
— |
529 |
|||||||
Nonunion pension expense, including settlement, after-tax(3) |
377 |
1,301 |
1,664 |
2,821 |
|||||||
Life insurance proceeds and changes in cash surrender value |
(542) |
(819) |
(2,156) |
(934) |
|||||||
Tax benefit from vested RSUs(4) |
410 |
(282) |
408 |
(301) |
|||||||
Deferred tax adjustment for 2017 Tax Reform Act(5) |
— |
(50) |
— |
(2,641) |
|||||||
Impact of 2017 Tax Reform Act on current tax expense(5) |
— |
(9) |
— |
(69) |
|||||||
Alternative fuel tax credit(6) |
— |
— |
— |
(1,203) |
|||||||
Non-GAAP amounts |
$ |
24,621 |
$ |
29,787 |
$ |
29,180 |
$ |
37,550 |
|||
Diluted Earnings Per Share |
|||||||||||
Amounts on GAAP basis |
$ |
0.92 |
$ |
0.05 |
$ |
1.10 |
$ |
0.42 |
|||
Multiemployer pension fund withdrawal liability charge, after-tax(1) |
— |
1.05 |
— |
1.06 |
|||||||
Restructuring charges, after-tax(2) |
— |
0.01 |
— |
0.02 |
|||||||
Nonunion pension expense, including settlement, after-tax(3) |
0.01 |
0.05 |
0.06 |
0.11 |
|||||||
Life insurance proceeds and changes in cash surrender value |
(0.02) |
(0.03) |
(0.08) |
(0.04) |
|||||||
Tax benefit from vested RSUs(4) |
0.02 |
(0.01) |
0.02 |
(0.01) |
|||||||
Deferred tax adjustment for 2017 Tax Reform Act(5) |
— |
— |
— |
(0.10) |
|||||||
Impact of 2017 Tax Reform Act on current tax expense(5) |
— |
— |
— |
— |
|||||||
Alternative fuel tax credit(6) |
— |
— |
— |
(0.05) |
|||||||
Non-GAAP amounts |
$ |
0.93 |
$ |
1.12 |
$ |
1.10 |
$ |
1.41 |
|||
____________________________ |
|
1) |
The three and six months ended June 30, 2018 include a one-time charge for the multiemployer pension plan withdrawal liability previously discussed in this press release. |
2) |
Restructuring charges relate to the realignment of the Company's organizational structure as announced on November 3, 2016. |
3) |
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 the plan termination began in fourth quarter 2018 and are expected to be complete in 2019. |
4) |
The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax benefit during the three and six months ended June 30, 2019 and 2018. |
5) |
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. |
6) |
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. |
Effective Tax Rate Reconciliation |
|||||||||||||||||
ArcBest Corporation - Consolidated |
|||||||||||||||||
(Unaudited) |
|||||||||||||||||
($ thousands, except percentages) |
Three Months Ended June 30, 2019 |
||||||||||||||||
Other |
Income Before |
Income |
|||||||||||||||
Operating |
Income |
Income |
Tax |
Net |
Effective |
||||||||||||
Income |
(Costs) |
Taxes |
Provision |
Income |
Tax Rate |
||||||||||||
Amounts on GAAP basis |
$ |
35,200 |
$ |
(1,640) |
$ |
33,560 |
$ |
9,184 |
$ |
24,376 |
27.4 |
% |
|||||
Nonunion pension expense, including settlement(1) |
— |
507 |
507 |
130 |
377 |
25.6 |
|||||||||||
Life insurance proceeds and changes in cash surrender value |
— |
(542) |
(542) |
— |
(542) |
— |
|||||||||||
Tax benefit from vested RSUs(2) |
— |
— |
— |
(410) |
410 |
— |
|||||||||||
Non-GAAP amounts |
$ |
35,200 |
$ |
(1,675) |
$ |
33,525 |
$ |
8,904 |
$ |
24,621 |
26.6 |
% |
|||||
Six Months Ended June 30, 2019 |
|||||||||||||||||
Other |
Income Before |
Income |
|||||||||||||||
Operating |
Income |
Income |
Tax |
Net |
Effective |
||||||||||||
Income |
(Costs) |
Taxes |
Provision |
Income |
Tax Rate |
||||||||||||
Amounts on GAAP basis |
$ |
43,791 |
$ |
(3,635) |
$ |
40,156 |
$ |
10,892 |
$ |
29,264 |
27.1 |
% |
|||||
Nonunion pension expense, including settlement(1) |
— |
2,241 |
2,241 |
577 |
1,664 |
25.7 |
|||||||||||
Life insurance proceeds and changes in cash surrender value |
— |
(2,156) |
(2,156) |
— |
(2,156) |
— |
|||||||||||
Tax benefit from vested RSUs(2) |
— |
— |
— |
(408) |
408 |
— |
|||||||||||
Non-GAAP amounts |
$ |
43,791 |
$ |
(3,550) |
$ |
40,241 |
$ |
11,061 |
$ |
29,180 |
27.5 |
% |
|||||
Three Months Ended June 30, 2018 |
|||||||||||||||||
Other |
Income Before |
Income Tax |
|||||||||||||||
Operating |
Income |
Income |
Provision |
Net |
Effective Tax |
||||||||||||
Income |
(Costs) |
Taxes |
(Benefit) |
Income |
(Benefit) Rate |
||||||||||||
Amounts on GAAP basis |
$ |
3,156 |
$ |
(2,422) |
$ |
734 |
$ |
(499) |
$ |
1,233 |
(68.0) |
% |
|||||
Multiemployer pension fund withdrawal liability charge(3) |
37,922 |
— |
37,922 |
9,761 |
28,161 |
25.7 |
|||||||||||
Restructuring charges(4) |
340 |
— |
340 |
88 |
252 |
25.9 |
|||||||||||
Nonunion pension expense, including settlement(1) |
— |
1,752 |
1,752 |
451 |
1,301 |
25.7 |
|||||||||||
Life insurance proceeds and changes in cash surrender value |
— |
(819) |
(819) |
— |
(819) |
— |
|||||||||||
Tax benefit from vested RSUs(2) |
— |
— |
— |
282 |
(282) |
— |
|||||||||||
Deferred tax adjustment for 2017 Tax Reform Act(5) |
— |
— |
— |
50 |
(50) |
— |
|||||||||||
Impact of 2017 Tax Reform Act on current tax expense(5) |
— |
— |
— |
9 |
(9) |
— |
|||||||||||
Non-GAAP amounts |
$ |
41,418 |
$ |
(1,489) |
$ |
39,929 |
$ |
10,142 |
$ |
29,787 |
25.4 |
% |
|||||
Six Months Ended June 30, 2018 |
|||||||||||||||||
Other |
Income Before |
Income Tax |
|||||||||||||||
Operating |
Income |
Income |
Provision |
Net |
Effective |
||||||||||||
Income |
(Costs) |
Taxes |
(Benefit) |
Income |
Tax Rate |
||||||||||||
Amounts on GAAP basis |
$ |
15,881 |
$ |
(6,156) |
$ |
9,725 |
$ |
(1,462) |
$ |
11,187 |
(15.0) |
% |
|||||
Multiemployer pension fund withdrawal liability charge(3) |
37,922 |
— |
37,922 |
9,761 |
28,161 |
25.7 |
|||||||||||
Restructuring charges(4) |
716 |
— |
716 |
187 |
529 |
26.1 |
|||||||||||
Nonunion pension expense, including settlement(1) |
— |
3,798 |
3,798 |
977 |
2,821 |
25.7 |
|||||||||||
Life insurance proceeds and changes in cash surrender value |
— |
(934) |
(934) |
— |
(934) |
— |
|||||||||||
Tax benefit from vested RSUs(2) |
— |
— |
— |
301 |
(301) |
— |
|||||||||||
Deferred tax adjustment for 2017 Tax Reform Act(5) |
— |
— |
— |
2,641 |
(2,641) |
— |
|||||||||||
Impact of 2017 Tax Reform Act on current tax expense(5) |
— |
— |
— |
69 |
(69) |
— |
|||||||||||
Alternative fuel tax credit(6) |
— |
— |
— |
1,203 |
(1,203) |
— |
|||||||||||
Non-GAAP amounts |
$ |
54,519 |
$ |
(3,292) |
$ |
51,227 |
$ |
13,677 |
$ |
37,550 |
26.7 |
% |
|||||
____________________________ |
|
1) |
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 the plan termination began in fourth quarter 2018 and are expected to be complete in 2019. |
2) |
The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax benefit during the three and six months ended June 30, 2019 and 2018. |
3) |
The three and six months ended June 30, 2018 include a one-time charge for the multiemployer pension plan withdrawal liability previously discussed in this press release. |
4) |
Restructuring charges relate to the realignment of the Company's organizational structure as announced on November 3, 2016. |
5) |
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. |
6) |
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. |
Three Months Ended |
Six Months Ended |
||||||||||||||||||||||
June 30 |
June 30 |
||||||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||||||||||
Segment Operating Income Reconciliations |
(Unaudited) |
||||||||||||||||||||||
($ thousands, except percentages) |
|||||||||||||||||||||||
Asset-Based Segment |
|||||||||||||||||||||||
Operating Income ($) and Operating Ratio (% of revenues) |
|||||||||||||||||||||||
Amounts on GAAP basis |
$ |
36,178 |
93.5 |
% |
$ |
3,381 |
99.4 |
% |
$ |
49,793 |
95.3 |
% |
$ |
16,783 |
98.4 |
% |
|||||||
Multiemployer pension fund withdrawal liability charge, pre-tax(1) |
— |
— |
37,922 |
(6.8) |
— |
— |
37,922 |
(3.6) |
|||||||||||||||
Non-GAAP amounts |
$ |
36,178 |
93.5 |
% |
$ |
41,303 |
92.6 |
% |
$ |
49,793 |
95.3 |
% |
$ |
54,705 |
94.8 |
% |
|||||||
Asset-Light |
|||||||||||||||||||||||
ArcBest Segment |
|||||||||||||||||||||||
Operating Income ($) and Operating Ratio (% of revenues) |
|||||||||||||||||||||||
Amounts on GAAP basis |
$ |
2,122 |
98.8 |
% |
$ |
3,707 |
98.1 |
% |
$ |
3,852 |
98.9 |
% |
$ |
6,872 |
98.2 |
% |
|||||||
Restructuring charges, pre-tax(2) |
— |
— |
143 |
(0.1) |
— |
— |
152 |
— |
|||||||||||||||
Non-GAAP amounts |
$ |
2,122 |
98.8 |
% |
$ |
3,850 |
98.0 |
% |
$ |
3,852 |
98.9 |
% |
$ |
7,024 |
98.2 |
% |
|||||||
FleetNet Segment |
|||||||||||||||||||||||
Operating Income ($) and Operating Ratio (% of revenues) |
|||||||||||||||||||||||
Amounts on GAAP basis |
$ |
1,026 |
98.0 |
% |
$ |
1,029 |
97.8 |
% |
$ |
2,514 |
97.6 |
% |
$ |
2,550 |
97.3 |
% |
|||||||
Restructuring charges, pre-tax(2) |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||
Non-GAAP amounts |
$ |
1,026 |
98.0 |
% |
$ |
1,029 |
97.8 |
% |
$ |
2,514 |
97.6 |
% |
$ |
2,550 |
97.3 |
% |
|||||||
Total Asset-Light |
|||||||||||||||||||||||
Operating Income ($) and Operating Ratio (% of revenues) |
|||||||||||||||||||||||
Amounts on GAAP basis |
$ |
3,148 |
98.6 |
% |
$ |
4,736 |
98.1 |
% |
$ |
6,366 |
98.6 |
% |
$ |
9,422 |
98.0 |
% |
|||||||
Restructuring charges, pre-tax(2) |
— |
— |
143 |
(0.1) |
— |
— |
152 |
— |
|||||||||||||||
Non-GAAP amounts |
$ |
3,148 |
98.6 |
% |
$ |
4,879 |
98.0 |
% |
$ |
6,366 |
98.6 |
% |
$ |
9,574 |
98.0 |
% |
|||||||
Other and Eliminations |
|||||||||||||||||||||||
Operating Loss ($) |
|||||||||||||||||||||||
Amounts on GAAP basis |
$ |
(4,126) |
$ |
(4,961) |
$ |
(12,368) |
$ |
(10,324) |
|||||||||||||||
Restructuring charges, pre-tax(2) |
— |
197 |
— |
564 |
|||||||||||||||||||
Non-GAAP amounts |
$ |
(4,126) |
$ |
(4,764) |
$ |
(12,368) |
$ |
(9,760) |
|||||||||||||||
____________________________ |
|
1) |
The three and six months ended June 30, 2018 include a one-time charge for the multiemployer pension plan withdrawal liability previously discussed in this press release. |
2) |
Restructuring charges relate to the realignment of the Company's organizational structure as announced on November 3, 2016. |
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.
Three Months Ended |
Six Months Ended |
|||||||||||
June 30 |
June 30 |
|||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||
(Unaudited) |
||||||||||||
ArcBest Corporation - Consolidated Adjusted EBITDA |
($ thousands) |
|||||||||||
Net Income |
$ |
24,376 |
$ |
1,233 |
$ |
29,264 |
$ |
11,187 |
||||
Interest and other related financing costs |
2,811 |
2,013 |
5,693 |
4,072 |
||||||||
Income tax provision (benefit) |
9,184 |
(499) |
10,892 |
(1,462) |
||||||||
Depreciation and amortization |
27,434 |
27,187 |
53,971 |
53,673 |
||||||||
Amortization of share-based compensation |
2,801 |
1,674 |
4,859 |
3,544 |
||||||||
Amortization of net actuarial losses of benefit plans and pension settlement expense |
586 |
1,119 |
2,340 |
2,647 |
||||||||
Multiemployer pension fund withdrawal liability charge(1) |
— |
37,922 |
— |
37,922 |
||||||||
Restructuring charges(2) |
— |
340 |
— |
716 |
||||||||
Consolidated Adjusted EBITDA |
$ |
67,192 |
$ |
70,989 |
$ |
107,019 |
$ |
112,299 |
||||
____________________________ |
|
1) |
The three and six months ended June 30, 2018 include a one-time charge for the multiemployer pension plan withdrawal liability previously discussed in this press release. |
2) |
Restructuring charges relate to the realignment of the Company's organizational structure as announced on November 3, 2016. |
Three Months Ended |
Six Months Ended |
||||||||||
June 30 |
June 30 |
||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||
Asset-Light Adjusted EBITDA |
(Unaudited) |
||||||||||
($ thousands, except percentages) |
|||||||||||
ArcBest |
|||||||||||
Operating Income |
$ |
2,122 |
$ |
3,707 |
$ |
3,852 |
$ |
6,872 |
|||
Depreciation and amortization(3) |
3,055 |
3,597 |
6,206 |
7,005 |
|||||||
Restructuring charges(4) |
— |
143 |
— |
152 |
|||||||
Adjusted EBITDA |
$ |
5,177 |
$ |
7,447 |
$ |
10,058 |
$ |
14,029 |
|||
FleetNet |
|||||||||||
Operating Income |
$ |
1,026 |
$ |
1,029 |
$ |
2,514 |
$ |
2,550 |
|||
Depreciation and amortization |
333 |
264 |
650 |
543 |
|||||||
Adjusted EBITDA |
$ |
1,359 |
$ |
1,293 |
$ |
3,164 |
$ |
3,093 |
|||
Total Asset-Light |
|||||||||||
Operating Income |
$ |
3,148 |
$ |
4,736 |
$ |
6,366 |
$ |
9,422 |
|||
Depreciation and amortization(3) |
3,388 |
3,861 |
6,856 |
7,548 |
|||||||
Restructuring charges(4) |
— |
143 |
— |
152 |
|||||||
Adjusted EBITDA |
$ |
6,536 |
$ |
8,740 |
$ |
13,222 |
$ |
17,122 |
|||
____________________________ |
|
3) |
Depreciation and amortization consists primarily of amortization of intangibles and software associated with acquired businesses. |
4) |
Restructuring charges relate to the realignment of the Company's organizational structure as announced on November 3, 2016. |
ARCBEST CORPORATION |
|||||||||||||||
OPERATING STATISTICS |
|||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
June 30 |
June 30 |
||||||||||||||
2019 |
2018 |
% Change |
2019 |
2018 |
% Change |
||||||||||
(Unaudited) |
|||||||||||||||
Asset-Based |
|||||||||||||||
Workdays |
63.5 |
64.0 |
126.5 |
127.5 |
|||||||||||
Billed Revenue(1) / CWT |
$ |
35.11 |
$ |
33.73 |
4.1% |
$ |
34.90 |
$ |
32.96 |
5.9% |
|||||
Billed Revenue(1) / Shipment |
$ |
443.94 |
$ |
436.52 |
1.7% |
$ |
431.40 |
$ |
424.89 |
1.5% |
|||||
Shipments |
1,272,317 |
1,297,399 |
(1.9%) |
2,483,104 |
2,480,655 |
0.1% |
|||||||||
Shipments / Day |
20,036 |
20,272 |
(1.2%) |
19,629 |
19,456 |
0.9% |
|||||||||
Tonnage (Tons) |
804,487 |
839,583 |
(4.2%) |
1,534,897 |
1,599,139 |
(4.0%) |
|||||||||
Tons / Day |
12,669 |
13,118 |
(3.4%) |
12,134 |
12,542 |
(3.3%) |
|||||||||
Pounds / Shipment |
1,265 |
1,294 |
(2.2%) |
1,236 |
1,289 |
(4.1%) |
|||||||||
Average Length of Haul (Miles) |
1,040 |
1,048 |
(0.8%) |
1,032 |
1,042 |
(1.0%) |
|||||||||
____________________________ |
|
1) |
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. |
Year Over Year % Change |
||||
Three Months Ended |
Six Months Ended |
|||
June 30, 2019 |
June 30, 2019 |
|||
(Unaudited) |
||||
ArcBest(2) |
||||
Revenue / Shipment |
(9.8%) |
(8.3%) |
||
Shipments / Day |
(1.6%) |
(1.3%) |
||
____________________________ |
|
2) |
Statistical data related to managed transportation services transactions are not included in the presentation of operating statistics for the ArcBest segment. |
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
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