ArcBest® Announces First Quarter 2019 Results

1.     U.S. Generally Accepted Accounting Principles

2.     The ArcBest and FleetNet reportable segments, combined, represent Asset-Light operations.

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

2018

(Unaudited)

($ thousands, except share and per share data)

REVENUES

$

711,839

$

700,001

OPERATING EXPENSES

703,248

687,276

OPERATING INCOME

8,591

12,725

OTHER INCOME (COSTS)

Interest and dividend income

1,478

526

Interest and other related financing costs

(2,882)

(2,059)

Other, net(1)

(591)

(2,201)

(1,995)

(3,734)

INCOME BEFORE INCOME TAXES

6,596

8,991

INCOME TAX PROVISION (BENEFIT)

1,708

(963)

NET INCOME

$

4,888

$

9,954

EARNINGS PER COMMON SHARE(2)

Basic

$

0.19

$

0.39

Diluted

$

0.18

$

0.37

AVERAGE COMMON SHARES OUTSTANDING

Basic

25,570,415

25,642,871

Diluted

26,512,349

26,596,376

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.08

$

0.08

_____________________________

1)

Includes nonunion pension expense, including settlement, of $1.7 million and $2.0 million for the three months ended March 31, 2019 and 2018, respectively. Pension settlements related to termination of the nonunion defined benefit pension plan began in fourth quarter 2018 and are expected to be complete in second quarter 2019.

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

March 31

December 31

2019

2018

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

138,399

$

190,186

Short-term investments

116,225

106,806

Accounts receivable, less allowances (2019 - $6,655; 2018 - $7,380)

294,853

297,051

Other accounts receivable, less allowances (2019 - $456; 2018 - $806)

16,925

19,146

Prepaid expenses

31,064

25,304

Prepaid and refundable income taxes

4,610

1,726

Other

4,466

9,007

   TOTAL CURRENT ASSETS

606,542

649,226

PROPERTY, PLANT AND EQUIPMENT

Land and structures

340,764

339,640

Revenue equipment

856,370

858,251

Service, office, and other equipment

206,959

199,230

Software

142,062

138,517

Leasehold improvements

9,766

9,365

1,555,921

1,545,003

Less allowances for depreciation and amortization

932,945

913,815

622,976

631,188

GOODWILL

108,320

108,320

INTANGIBLE ASSETS, NET

67,820

68,949

OPERATING RIGHT-OF-USE ASSETS

68,737

—

DEFERRED INCOME TAXES

6,905

7,468

OTHER LONG-TERM ASSETS

78,357

74,080

$

1,559,657

$

1,539,231

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

145,590

$

143,785

Income taxes payable

241

1,688

Accrued expenses

211,533

243,111

Current portion of long-term debt

48,809

54,075

Current portion of operating lease liabilities

17,678

—

Current portion of pension and postretirement liabilities

7,984

8,659

   TOTAL CURRENT LIABILITIES

431,835

451,318

LONG-TERM DEBT, less current portion

227,649

237,600

OPERATING LEASE LIABILITIES, less current portion

54,444

—

PENSION AND POSTRETIREMENT LIABILITIES, less current portion

31,695

31,504

OTHER LONG-TERM LIABILITIES

36,406

44,686

DEFERRED INCOME TAXES

55,873

56,441

STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2019: 28,685,313 shares; 2018: 28,684,779 shares

287

287

Additional paid-in capital

327,762

325,712

Retained earnings

504,225

501,389

   Treasury stock, at cost, 2019: 3,172,019 shares; 2018: 3,097,634 shares

(98,131)

(95,468)

Accumulated other comprehensive loss

(12,388)

(14,238)

   TOTAL STOCKHOLDERS' EQUITY

721,755

717,682

$

1,559,657

$

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

Three Months Ended 

March 31

2019

2018

Unaudited

($ thousands)

 OPERATING ACTIVITIES

Net income

$

4,888

$

9,954

Adjustments to reconcile net income

to net cash provided by (used in) operating activities:

Depreciation and amortization

25,409

25,352

Amortization of intangibles

1,128

1,134

Pension settlement expense

1,356

654

Share-based compensation expense

2,058

1,870

Provision for losses on accounts receivable

112

445

Deferred income tax benefit

(584)

(2,749)

Gain on sale of property and equipment

(43)

(221)

Changes in operating assets and liabilities:

Receivables

3,931

(10,260)

Prepaid expenses

(5,760)

(2,587)

Other assets

4,589

2,732

Income taxes

(4,313)

1,938

Multiemployer pension fund withdrawal liability

(143)

—

Accounts payable, accrued expenses, and other liabilities

(35,999)

3,513

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(3,371)

31,775

 INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of financings

(15,543)

(7,177)

Proceeds from sale of property and equipment

1,039

1,050

Purchases of short-term investments

(13,790)

(4,410)

Proceeds from sale of short-term investments

4,998

6,245

Capitalization of internally developed software

(2,656)

(2,164)

NET CASH USED IN INVESTING ACTIVITIES

(25,952)

(6,456)

 FINANCING ACTIVITIES

Payments on long-term debt

(15,217)

(16,558)

Net change in book overdrafts

(2,524)

(2,572)

Payment of common stock dividends

(2,052)

(2,058)

Purchases of treasury stock

(2,663)

(201)

Payments for tax withheld on share-based compensation

(8)

(50)

NET CASH USED IN FINANCING ACTIVITIES

(22,464)

(21,439)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(51,787)

3,880

Cash and cash equivalents at beginning of period

190,186

120,772

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

138,399

$

124,652

 NONCASH INVESTING ACTIVITIES

Equipment financed

$

—

$

121

Accruals for equipment received

$

2,878

$

883

Lease liabilities arising from obtaining right-of-use assets

$

18,144

$

—

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

Three Months Ended 

March 31

2019

2018

Unaudited

($ thousands, except percentages)

REVENUES

Asset-Based

$

506,079

$

482,115

ArcBest

173,204

181,933

FleetNet

53,259

47,759

Total Asset-Light

226,463

229,692

Other and eliminations

(20,703)

(11,806)

Total consolidated revenues

$

711,839

$

700,001

OPERATING EXPENSES

Asset-Based

Salaries, wages, and benefits

$

280,276

55.4

%

$

269,779

56.0

%

Fuel, supplies, and expenses

64,727

12.8

62,193

12.9

Operating taxes and licenses

12,398

2.4

11,756

2.4

Insurance

7,991

1.6

6,628

1.4

Communications and utilities

4,620

0.9

4,521

0.9

Depreciation and amortization

20,980

4.1

20,930

4.3

Rents and purchased transportation

49,912

9.9

46,133

9.6

Shared services(1)

50,712

10.0

45,607

9.4

Gain on sale of property and equipment

(34)

—

(133)

—

Other

882

0.2

1,299

0.3

Total Asset-Based

492,464

97.3

%

468,713

97.2

%

ArcBest

Purchased transportation

140,105

80.9

%

148,372

81.6

%

Supplies and expenses

2,774

1.6

3,230

1.8

Depreciation and amortization(2)

3,151

1.8

3,408

1.9

Shared services(1)

23,031

13.3

21,868

12.0

Other

2,413

1.4

1,881

1.0

Restructuring costs(3)

—

—

9

—

171,474

99.0

%

178,768

98.3

%

FleetNet

51,771

97.2

%

46,238

96.8

%

Total Asset-Light

223,245

225,006

Other and eliminations(4)

(12,461)

(6,443)

Total consolidated operating expenses

$

703,248

98.8

%

$

687,276

98.2

%

OPERATING INCOME

Asset-Based

$

13,615

$

13,402

ArcBest

1,730

3,165

FleetNet

1,488

1,521

Total Asset-Light

3,218

4,686

Other and eliminations(4)

(8,242)

(5,363)

Total consolidated operating income

$

8,591

$

12,725

_____________________________

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, legal, and other company-wide services.

2) 

Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses.

3) 

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

4)

"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.

Three Months Ended 

March 31

2019

2018

(Unaudited)

($ thousands, except per share data)

ArcBest Corporation - Consolidated

Operating Income

Amounts on GAAP basis

$

8,591

$

12,725

Restructuring charges, pre-tax(1)

—

376

Non-GAAP amounts

$

8,591

$

13,101

Net Income

Amounts on GAAP basis

$

4,888

$

9,954

Restructuring charges, after-tax(1)

—

277

Nonunion pension expense, including settlement, after-tax(2)

1,287

1,520

Life insurance proceeds and changes in cash surrender value

(1,614)

(114)

Tax benefit from vested RSUs

(2)

(20)

Deferred tax adjustment for 2017 Tax Reform Act(3)

—

(2,591)

Impact of 2017 Tax Reform Act on current tax expense(3)

—

(59)

Alternative fuel tax credit(4)

—

(1,203)

Non-GAAP amounts

$

4,559

$

7,764

Diluted Earnings Per Share

Amounts on GAAP basis

$

0.18

$

0.37

Restructuring charges, after-tax(1)

—

0.01

Nonunion pension expense, including settlement, after-tax(2)

0.05

0.06

Life insurance proceeds and changes in cash surrender value

(0.06)

—

Tax benefit from vested RSUs

—

—

Deferred tax adjustment for 2017 Tax Reform Act(3)

—

(0.10)

Impact of 2017 Tax Reform Act on current tax expense(3)

—

—

Alternative fuel tax credit(4)

—

(0.05)

Non-GAAP amounts

$

0.17

$

0.29

_____________________________

1)

Restructuring charges for the three months ended March 31, 2018, which relate to the realignment of the Company's organizational structure as announced on November 3, 2016, were primarily recognized within "Other and eliminations."

2) 

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 second quarter 2019.

3) 

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.

4) 

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.

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

Effective Tax Rate Reconciliation

ArcBest Corporation - Consolidated

(Unaudited)

($ thousands, except percentages)

Three Months Ended March 31, 2019

Operating

Income

Other

Income

(Costs)

Income Before

Income

Taxes

Income

Tax

Provision

Net

Income

Effective

Tax Rate

Amounts on GAAP basis

$

8,591

$

(1,995)

$

6,596

$

1,708

$

4,888

25.9

%

Nonunion pension expense, including settlement(1)

—

1,733

1,733

446

1,287

25.7

Life insurance proceeds and changes in cash surrender value

—

(1,614)

(1,614)

—

(1,614)

—

Tax benefit from vested RSUs

—

—

—

2

(2)

—

Non-GAAP amounts

$

8,591

$

(1,876)

$

6,715

$

2,156

$

4,559

32.1

%

Three Months Ended March 31, 2018

Operating

Income

Other

Income

(Costs)

Income Before

Income

Taxes

Income Tax

Provision

(Benefit)

Net

Income

Effective Tax

(Benefit) Rate

Amounts on GAAP basis

$

12,725

$

(3,734)

$

8,991

$

(963)

$

9,954

(10.7)

%

Nonunion pension expense, including settlement(1)

—

2,046

2,046

526

1,520

25.7

Life insurance proceeds and changes in cash surrender value

—

(114)

(114)

—

(114)

—

Tax benefit from vested RSUs

—

—

—

20

(20)

—

Deferred tax adjustment for 2017 Tax Reform Act(2)

—

—

—

2,591

(2,591)

—

Impact of 2017 Tax Reform Act on current tax expense(2)

—

—

—

59

(59)

—

Restructuring charges(3)

376

—

376

99

277

26.3

Alternative fuel tax credit(4)

—

—

—

1,203

(1,203)

—

Non-GAAP amounts

$

13,101

$

(1,802)

$

11,299

$

3,535

$

7,764

31.3

%

_____________________________

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 second quarter 2019.

2)

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.

3)

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

4)

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 

March 31

2019

2018

(Unaudited)

ArcBest Corporation - Consolidated Adjusted EBITDA

($ thousands)

Net Income

$

4,888

$

9,954

Interest and other related financing costs

2,882

2,059

Income tax provision (benefit)

1,708

(963)

Depreciation and amortization

26,537

26,486

Amortization of share-based compensation

2,058

1,870

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

1,754

1,528

Restructuring charges(2)

—

376

Consolidated Adjusted EBITDA

$

39,827

$

41,310

_____________________________

1)

Includes pre-tax settlement expense related to the nonunion pension plan of $1.4 million and $0.7 million for the three months ended March 31, 2019 and 2018, respectively. Pension settlements related to the plan termination began in fourth quarter 2018 and are expected to be complete in second quarter 2019.

2)

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

Three Months Ended 

March 31

2019

2018

Asset-Light Adjusted EBITDA

(Unaudited)

($ thousands, except percentages)

ArcBest

Operating Income

$

1,730

$

3,165

Depreciation and amortization(3)

3,151

3,408

Restructuring charges(4)

—

9

Adjusted EBITDA

$

4,881

$

6,582

FleetNet

Operating Income

$

1,488

$

1,521

Depreciation and amortization

317

279

Adjusted EBITDA

$

1,805

$

1,800

Total Asset-Light

Operating Income

$

3,218

$

4,686

Depreciation and amortization(3)

3,468

3,687

Restructuring charges(4)

—

9

Adjusted EBITDA

$

6,686

$

8,382

_____________________________

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.

Three Months Ended 

March 31

2019

2018

% Change

(Unaudited)

ArcBest Segment

($ thousands)

Revenues

$

173,204

$

181,933

Less purchased transportation

140,105

148,372

Non-GAAP net revenue

$

33,099

$

33,561

(1.4%)

Non-GAAP net revenue margin

19.1%

18.4%

ARCBEST CORPORATION

OPERATING STATISTICS

Three Months Ended 

March 31

2019

2018

% Change

(Unaudited)

Asset-Based

Workdays

63.0

63.5

Billed Revenue(1) / CWT

$

34.66

$

32.10

8.0%

Billed Revenue(1) / Shipment

$

418.23

$

412.14

1.5%

Shipments

1,210,787

1,183,256

2.3%

Shipments / Day

19,219

18,634

3.1%

Tonnage (Tons)

730,409

759,556

(3.8%)

Tons / Day

11,594

11,962

(3.1%)

Average Length of Haul (Miles)

1,023

1,035

(1.2%)

_____________________________

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 

March 31, 2019

(Unaudited)

ArcBest(2)

Revenue / Shipment

(6.6%)

Shipments / Day

(1.0%)

_____________________________

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]