ArcBest® Announces Second Quarter 2019 Results
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-Light(2)
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 ir@arcb.com. On the call, responses will be provided to as many questions as possible in the time available.
About ArcBest
ArcBest(®) (Nasdaq: ARCB) is a leading logistics company with creative problem solvers who deliver integrated solutions. We'll find a way to deliver knowledge, expertise and a can-do attitude with every shipment and supply chain solution, household move or vehicle repair. At ArcBest, we're More Than Logistics(SM). 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
53.1 51.3 54.2
% %
Salaries, wages, and benefits $
297,016 % $
286,750 $
577,292 % $
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
93.5 99.4 95.3
% %
Total Asset-Based 523,470 % 555,858 1,015,934 % 1,024,571 98.4
ArcBest
81.4 81.5 81.2
% %
Purchased transportation 147,552 % 162,920 287,657 % 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
98.8 98.1 98.9
% %
179,051 % 196,280 350,525 % 375,048 98.2
98.0 97.8 97.6
% %
FleetNet 50,696 % 45,763 102,467 % 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)
95.4 99.6 97.0
% %
Total consolidated operating expenses $
736,290 % $
790,194 $
1,439,538 % $
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)
93.5 99.4 95.3
% %
Amounts on GAAP basis $
36,178 % $
3,381 $
49,793 % $
16,783 98.4
Multiemployer pension fund withdrawal liability charge, pre-tax(1) 37,922 (6.8) 37,922 (3.6)
93.5 92.6 95.3
% %
Non-GAAP amounts $
36,178 % $
41,303 $
49,793 % $
54,705 94.8
---
Asset-Light
ArcBest Segment
Operating Income ($) and Operating Ratio (% of revenues)
98.8 98.1 98.9
% %
Amounts on GAAP basis $
2,122 % $
3,707 $
3,852 % $
6,872 98.2
Restructuring charges, pre-tax(2) 143 (0.1) 152
98.8 98.0 98.9
% %
Non-GAAP amounts $
2,122 % $
3,850 $
3,852 % $
7,024 98.2
---
FleetNet Segment
Operating Income ($) and Operating Ratio (% of revenues)
98.0 97.8 97.6
% %
Amounts on GAAP basis $
1,026 % $
1,029 $
2,514 % $
2,550 97.3
Restructuring charges, pre-tax(2)
98.0 97.8 97.6
% %
Non-GAAP amounts $
1,026 % $
1,029 $
2,514 % $
2,550 97.3
---
Total Asset-Light
Operating Income ($) and Operating Ratio (% of revenues)
98.6 98.1 98.6
% %
Amounts on GAAP basis $
3,148 % $
4,736 $
6,366 % $
9,422 98.0
Restructuring charges, pre-tax(2) 143 (0.1) 152
98.6 98.0 98.6
% %
Non-GAAP amounts $
3,148 % $
4,879 $
6,366 % $
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: kfieweger@arcb.com
Email: dhumphrey@arcb.com
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SOURCE ArcBest
