ArcBest Corporation Announces Second Quarter 2015 Results

Investor Relations Contact: David Humphrey

Media Contact: Kathy Fieweger

Title: Vice President – Investor Relations

Title: Chief Marketing Officer

Phone: 479-785-6200

Phone: 479-719-4358

Email: [email protected]

Email: [email protected]

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

June 30

Six Months Ended

June 30

2015

2014

2015

2014

(Unaudited)

($ thousands, except share and per share data)

REVENUES

$

696,115

$

658,646

$

1,309,391

$

1,236,550

OPERATING EXPENSES

662,649

631,694

1,274,645

1,218,300

OPERATING INCOME

33,466

26,952

34,746

18,250

OTHER INCOME (COSTS)

Interest and dividend income

271

194

505

384

Interest and other related financing costs

(1,025)

(725)

(2,027)

(1,533)

Other, net

197

950

597

1,315

(557)

419

(925)

166

INCOME BEFORE INCOME TAXES

32,909

27,371

33,821

18,416

INCOME TAX PROVISION

12,942

10,163

13,109

6,401

NET INCOME

$

19,967

$

17,208

$

20,712

$

12,015

EARNINGS PER COMMON SHARE(1)

Basic

$

0.76

$

0.63

$

0.79

$

0.44

Diluted

$

0.74

$

0.63

$

0.77

$

0.44

AVERAGE COMMON SHARES OUTSTANDING

Basic

26,021,874

26,005,105

26,036,375

25,941,370

Diluted

26,593,451

26,005,105

26,592,615

25,942,046

CASH DIVIDENDS DECLARED   PER COMMON SHARE

$

0.06

$

0.03

$

0.12

$

0.06

(1)  ArcBest uses the two-class method for calculating earnings per share. This method, as calculated below, requires an allocation of dividends paid and a portion of undistributed net income to unvested restricted stock for calculating per share amounts.

NET INCOME

$

19,967

$

17,208

$

20,712

$

12,015

EFFECT OF UNVESTED RESTRICTED   STOCK AWARDS

(203)

(848)

(227)

(602)

ADJUSTED NET INCOME FOR CALCULATING  EARNINGS PER COMMON SHARE

$

19,764

$

16,360

$

20,485

$

11,413

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

June 30

2015

December 31

2014

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

192,016

$

157,042

Short-term investments

53,836

45,909

Restricted cash

1,387

1,386

Accounts receivable, less allowances (2015 – $5,983; 2014 – $5,731)

245,039

228,056

Other accounts receivable, less allowances (2015 – $962; 2014 – $1,701)

7,083

6,582

Prepaid expenses

19,219

20,906

Deferred income taxes

35,661

40,220

Prepaid and refundable income taxes

2,592

9,920

Other

5,072

4,968

        TOTAL CURRENT ASSETS

561,905

514,989

PROPERTY, PLANT AND EQUIPMENT

Land and structures

267,046

251,836

Revenue equipment

655,013

633,455

Service, office, and other equipment

137,296

136,145

Software

120,256

116,112

Leasehold improvements

24,649

24,377

1,204,260

1,161,925

Less allowances for depreciation and amortization

779,813

752,075

424,447

409,850

GOODWILL

81,258

77,078

INTANGIBLE ASSETS, net

71,270

72,809

OTHER ASSETS

53,168

52,896

$

1,192,048

$

1,127,622

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

147,781

$

120,325

Income taxes payable

4,869

527

Accrued expenses

187,821

194,674

Current portion of long-term debt

24,024

25,256

TOTAL CURRENT LIABILITIES

364,495

340,782

LONG-TERM DEBT, less current portion

136,821

102,474

PENSION AND POSTRETIREMENT LIABILITIES

39,620

42,418

OTHER LIABILITIES

12,295

16,667

DEFERRED INCOME TAXES

59,613

64,398

STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2015: 27,784,760 shares; 2014: 27,722,010 shares

278

277

Additional paid-in capital

307,268

303,045

Retained earnings

356,360

338,810

Treasury stock, at cost, 2015: 1,841,165 shares; 2014: 1,677,932 shares

(63,752)

(57,770)

Accumulated other comprehensive loss

(20,950)

(23,479)

TOTAL STOCKHOLDERS' EQUITY

579,204

560,883

$

1,192,048

$

1,127,622

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

June 30

2015

2014

(Unaudited)

($ thousands)

OPERATING ACTIVITIES

Net income

$

20,712

$

12,015

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

Depreciation and amortization

42,630

39,540

Amortization of intangibles

2,218

2,137

Pension settlement expense

1,716

4,600

Share-based compensation expense

4,233

3,668

Provision for losses on accounts receivable

627

1,032

Deferred income tax benefit

(2,559)

(2,358)

Gain on sale of property and equipment

(1,049)

(249)

Changes in operating assets and liabilities:

Receivables

(16,560)

(34,888)

Prepaid expenses

1,691

1,383

Other assets

385

(1,482)

Income taxes

12,306

2,226

Accounts payable, accrued expenses, and other liabilities

8,316

30,019

NET CASH PROVIDED BY OPERATING ACTIVITIES

74,666

57,643

INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of financings

(34,205)

(15,570)

Proceeds from sale of property and equipment

2,690

1,241

Purchases of short-term investments

(10,780)

(2,967)

Proceeds from sale of short-term investments

2,967

2,940

Business acquisition, net of cash acquired

(5,219)

(2,663)

Capitalization of internally developed software

(4,099)

(3,859)

NET CASH USED IN INVESTING ACTIVITIES

(48,646)

(20,878)

FINANCING ACTIVITIES

Borrowings under credit facilities

70,000

–

Borrowings under accounts receivable securitization program

35,000

–

Payments on long-term debt

(84,555)

(16,528)

Net change in book overdrafts

(1,522)

3,602

Net change in restricted cash

(1)

517

Deferred financing costs

(824)

(61)

Payment of common stock dividends

(3,162)

(1,635)

Purchases of treasury stock

(5,982)

–

Proceeds from the exercise of stock options

–

1,136

8,954

(12,969)

NET INCREASE IN CASH AND CASH EQUIVALENTS             

34,974

23,796

Cash and cash equivalents at beginning of period

157,042

105,354

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

192,016

$

129,150

NONCASH INVESTING ACTIVITIES

Accruals for equipment received

$

8,972

$

6,869

Equipment financed

$

12,670

$

22,842

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended

Six Months Ended

June 30

June 30

2015

2014

2015

2014

(Unaudited)

($ thousands, except percentages)

FREIGHT TRANSPORTATION (ABF FREIGHT)

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

­

Amounts on a GAAP basis

$

28,092

94.4%

$

22,835

95.4%

$

28,135

97.0%

$

10,653

98.8%

Pension settlement expense

448

(0.1)%

708

(0.1)%

1,288

(0.1)%

3,598

(0.4)%

Non-GAAP amounts

$

28,540

94.3%

$

23,543

95.3%

$

29,423

96.9%

$

14,251

98.4%

Three Months Ended

Six Months Ended

June 30

June 30

2015

2014

2015

2014

(Unaudited)

($ thousands, except per share data)

ARCBEST CORPORATION – CONSOLIDATED

Operating Income

Amounts on a GAAP basis

$

33,466

$

26,952

$

34,746

$

18,250

Pension settlement expense, pre-tax

597

909

1,716

4,600

Non-GAAP amounts

$

34,063

$

27,861

$

36,462

$

22,850

Net Income

Amounts on a GAAP basis

$

19,967

$

17,208

$

20,712

$

12,015

Pension settlement expense, after-tax

364

556

1,048

2,811

Non-GAAP amounts

$

20,331

$

17,764

$

21,760

$

14,826

Diluted Earnings Per Shares

Amounts on a GAAP basis

$

0.74

$

0.63

$

0.77

$

0.44

Pension settlement expense, after-tax

0.01

0.02

0.04

0.11

Non-GAAP amounts

$

0.75

$

0.65

$

0.81

$

0.55

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended

June 30

Six Months Ended

June 30

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

2015

2014

2015

2014

(Unaudited)

($ thousands)

ARCBEST CORPORATION – CONSOLIDATED

Net income

$

19,967

$

17,208

$

20,712

$

12,015

Interest and other related financing costs

1,025

725

2,027

1,533

Income tax provision

12,942

10,163

13,109

6,401

Depreciation and amortization

22,617

21,225

44,848

41,677

Amortization of share-based compensation

2,586

2,100

4,233

3,668

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

1,665

1,625

3,858

5,893

$

60,802

$

53,046

$

88,787

$

71,187

(1) Consolidated pension settlement expense totaled $0.6 million (pre-tax) and $0.9 million (pre-tax) for the three months ended June 30, 2015 and 2014, respectively, and $1.7 million (pre-tax) and $4.6 million (pre-tax) for the six months ended June 30, 2015 and 2014, respectively.

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

Three Months EndedJune 302015

Three Months EndedJune 302014

(Unaudited)

($ thousands)

ASSET-LIGHT LOGISTICS

Operating

Income

Depreciation

and Amortization

EBITDA

Operating Income

Depreciation

and Amortization

EBITDA

Premium Logistics (Panther)(2)

$

4,838

$

2,939

$

7,777

$

4,358

$

2,838

$

7,196

Emergency & Preventative Maintenance (FleetNet)

1,017

276

1,293

700

237

937

Transportation Management (ABF Logistics)

1,808

246

2,054

854

252

1,106

Household Goods Moving Services (ABF Moving)

1,997

338

2,335

623

346

969

Total asset-light logistics

$

9,660

$

3,799

$

13,459

$

6,535

$

3,673

$

10,208

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

Six Months EndedJune 302015

Six Months EndedJune 302014

(Unaudited)

($ thousands)

ASSET-LIGHT LOGISTICS

Operating

Income

Depreciation and Amortization

EBITDA

Operating Income

Depreciation

and Amortization

EBITDA

Premium Logistics (Panther)(2)

$

6,033

$

5,863

$

11,896

$

7,722

$

5,574

$

13,296

Emergency & Preventative Maintenance (FleetNet)

2,187

559

2,746

2,101

411

2,512

Transportation Management (ABF Logistics)

2,583

530

3,113

1,389

469

1,858

Household Goods Moving Services (ABF Moving)

1,634

688

2,322

(218)

695

477

Total asset-light logistics

$

12,437

$

7,640

$

20,077

$

10,994

$

7,149

$

18,143

(2) Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software associated with the June 15, 2012 acquisition of Panther.

Non-GAAP Financial Measures. ArcBest Corporation ("ArcBest") reports its 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 financial statement users meaningful comparisons between current and prior period results, as well as important information regarding performance trends. 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, ArcBest's reported results. Management believes EBITDA and Adjusted EBITDA to be relevant and useful information as EBITDA is a standard measure commonly reported and widely used by analysts, investors and others to measure financial performance and ability to service debt obligations. However, these financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as defined by GAAP. Other companies may calculate EBITDA differently, and therefore, ArcBest's EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

Three Months EndedJune 30

Six Months EndedJune 30

2015

2014

2015

2014

(Unaudited)

($ thousands, except percentages)

REVENUES

Freight Transportation (ABF Freight)

$

504,371

$

492,857

$

945,578

$

921,728

Premium Logistics (Panther)

80,271

81,425

155,563

153,651

Emergency & Preventative Maintenance (FleetNet)

42,015

38,307

84,504

80,006

Transportation Management (ABF Logistics)

50,419

35,493

97,791

65,210

Household Goods Moving Services (ABF Moving)

32,225

22,855

50,793

37,605

Total asset-light logistics

204,930

178,080

388,651

336,472

Other and eliminations

(13,186)

(12,291)

(24,838)

(21,650)

Total consolidated revenues

$

696,115

$

658,646

$

1,309,391

$

1,236,550

OPERATING EXPENSES

Freight Transportation (ABF Freight)

Salaries, wages, and benefits

$

301,639

59.8%

$

279,372

56.7%

$

580,010

61.3%

$

540,527

58.6%

Fuel, supplies, and expenses

79,647

15.8

93,277

18.9

158,673

16.8

184,067

20.0

Operating taxes and licenses

12,322

2.4

11,770

2.4

24,318

2.6

23,263

2.5

Insurance

6,267

1.2

5,966

1.2

12,052

1.3

11,361

1.2

Communications and utilities

3,766

0.8

3,731

0.8

7,751

0.8

7,973

0.9

Depreciation and amortization

18,286

3.6

16,841

3.4

35,686

3.8

33,178

3.6

Rents and purchased transportation

52,380

10.4

55,549

11.3

94,224

10.0

102,969

11.2

Gain on sale of property and equipment

(594)

(0.1)

(40)

–

(838)

(0.1)

(243)

–

Pension settlement expense(1)

448

0.1

708

0.1

1,288

0.1

3,598

0.4

Other

2,118

0.4

2,848

0.6

4,279

0.4

4,382

0.4

476,279

94.4%

470,022

95.4%

917,443

97.0%

911,075

98.8%

Premium Logistics (Panther)

Purchased transportation

$

58,510

72.9%

60,185

73.9%

114,554

73.6%

114,759

74.7%

Depreciation and amortization(2)

2,939

3.7

2,838

3.5

5,863

3.8

5,574

3.6

Salaries, benefits, insurance, and other

13,984

17.4

14,044

17.2

29,113

18.7

25,596

16.7

75,433

94.0%

77,067

94.6%

149,530

96.1%

145,929

95.0%

Emergency & Preventative Maintenance (FleetNet)

$

40,998

37,607

82,317

77,905

Transportation Management (ABF Logistics)

48,611

34,639

95,208

63,821

Household Goods Moving Services (ABF Moving)

30,228

22,232

49,159

37,823

Total asset-light logistics(1)

195,270

171,545

376,214

325,478

Other and eliminations(1)

(8,900)

(9,873)

(19,012)

(18,253)

Total consolidated operating expenses(1)

$

662,649

$

631,694

$

1,274,645

$

1,218,300

(1) Pension settlement expense totaled $0.6 million (pre-tax) and $0.9 million (pre-tax) on a consolidated basis for the three months ended June 30, 2015 and 2014, respectively, and $1.7 million (pre-tax) and $4.6 million (pre-tax) for the six months ended June 30, 2015 and 2014, respectively. For the three months ended June 30, 2015 and 2014, pre-tax pension settlement expense of $0.4 million and $0.7 million, respectively, was reported by ABF Freight; $0.1 million and $0.2 million, respectively, was reported in Other and eliminations; and less than $0.1 million was reported by the asset-light logistics segments. For the six months ended June 30, 2015 and 2014, pre-tax pension settlement expense of $1.3 million and $3.6 million, respectively, was reported by ABF Freight; $0.3 million and $0.9 million, respectively, was reported in Other and eliminations; and $0.1 million was reported by the asset-light logistics segments.

(2) Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software associated with the June 15, 2012 acquisition of Panther.

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS – Continued

Three Months EndedJune 30

Six Months EndedJune 30

2015

2014

2015

2014

(Unaudited)

($ thousands)

OPERATING INCOME

Freight Transportation (ABF Freight)(1)

$

28,092

$

22,835

$

28,135

$

10,653

Premium Logistics (Panther)

4,838

4,358

6,033

7,722

Emergency & Preventative Maintenance (FleetNet)

1,017

700

2,187

2,101

Transportation Management (ABF Logistics)

1,808

854

2,583

1,389

Household Goods Moving Services (ABF Moving)

1,997

623

1,634

(218)

Total asset-light logistics

9,660

6,535

12,437

10,994

Other and eliminations(2)

(4,286)

(2,418)

(5,826)

(3,397)

Total consolidated operating income

$

33,466

$

26,952

$

34,746

$

18,250

ARCBEST CORPORATION

OPERATING STATISTICS

Three Months Ended

Six Months Ended

June 30

June 30

2015

2014

% Change

2015

2014

% Change

(Unaudited)

Freight Transportation (ABF Freight)

Workdays

63.5

63.5

126.0

126.5

Billed Revenue(1) / CWT        

$

29.04

$

28.91

0.4%

$

28.57

$

28.01

2.0%

Billed Revenue(1) / Shipment           

$

385.16

$

393.11

(2.0)%

$

379.18

$

387.78

(2.2)%

Shipments                               

1,318,566

1,261,670

4.5%

2,507,363

2,395,002

4.7%

Shipments / Day

20,765

19,869

4.5%

19,900

18,933

5.1%

Tonnage (Tons)                      

874,330

857,892

1.9%

1,663,661

1,657,703

0.4%

Tons / Day

13,769

13,510

1.9%

13,204

13,104

0.8%

(1) Revenue for undelivered freight is deferred for financial statement purposes in accordance with ABF Freight's revenue recognition policy. Billed revenue used for calculating revenue per hundredweight measurements has not been adjusted for the portion of revenue deferred for financial statement purposes. Billed revenue has been adjusted to exclude intercompany revenue that is not related to freight transportation services.