ArcBest Corporation® Announces First Quarter 2016 Results

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]                                                      

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

March 31

2016

2015

(Unaudited)

($ thousands, except share and per share data)

REVENUES

$

621,455

$

613,276

OPERATING EXPENSES

630,720

611,996

OPERATING INCOME (LOSS)

(9,265)

1,280

OTHER INCOME (COSTS)

Interest and dividend income

401

234

Interest and other related financing costs

(1,247)

(1,002)

Other, net

366

400

(480)

(368)

INCOME (LOSS) BEFORE INCOME TAXES

(9,745)

912

INCOME TAX PROVISION (BENEFIT)

(3,642)

167

NET INCOME (LOSS)

$

(6,103)

$

745

EARNINGS (LOSS) PER COMMON SHARE(1)

Basic

$

(0.24)

$

0.03

Diluted

$

(0.24)

$

0.03

AVERAGE COMMON SHARES OUTSTANDING

Basic

25,822,522

26,051,038

Diluted

25,822,522

26,588,518

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.08

$

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 (but not losses) to unvested restricted stock for calculating per share amounts.

NET INCOME (LOSS)

$

(6,103)

$

745

EFFECT OF UNVESTED RESTRICTED STOCK AWARDS

(18)

(19)

ADJUSTED NET INCOME (LOSS) FOR CALCULATING EARNINGS PER COMMON SHARE

$

(6,121)

$

726

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

March 31

2016

December 31

2015

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

134,788

$

164,973

Short-term investments

69,608

61,597

Restricted cash

1,385

1,384

Accounts receivable, less allowances (2016 – $4,399; 2015 – $4,825)

226,796

236,097

Other accounts receivable, less allowances (2016 – $1,085; 2015 – $1,029)

6,854

6,718

Prepaid expenses

24,725

20,801

Deferred income taxes

36,510

38,443

Prepaid and refundable income taxes

28,082

18,134

Other

5,012

3,936

TOTAL CURRENT ASSETS

533,760

552,083

PROPERTY, PLANT AND EQUIPMENT

Land and structures

280,510

273,839

Revenue equipment

700,078

699,844

Service, office, and other equipment

148,675

145,286

Software

130,318

127,010

Leasehold improvements

25,645

25,419

1,285,226

1,271,398

Less allowances for depreciation and amortization

802,620

788,351

482,606

483,047

GOODWILL

96,577

96,465

INTANGIBLE ASSETS, NET

76,300

76,787

OTHER ASSETS

55,988

54,527

$

1,245,231

$

1,262,909

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

139,607

$

130,869

Income taxes payable

–

91

Accrued expenses

176,918

188,727

Current portion of long-term debt

45,905

44,910

TOTAL CURRENT LIABILITIES

362,430

364,597

LONG-TERM DEBT, less current portion

157,485

167,599

PENSION AND POSTRETIREMENT LIABILITIES

56,603

51,241

OTHER LIABILITIES

12,206

12,689

DEFERRED INCOME TAXES

79,256

78,055

STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2016: 27,950,867 shares; 2015: 27,938,319 shares

280

279

Additional paid-in-capital

311,199

309,653

Retained earnings

368,636

376,827

Treasury stock, at cost, 2016: 2,214,146 shares; 2015: 2,080,187 shares

(73,137)

(70,535)

Accumulated other comprehensive loss

(29,727)

(27,496)

TOTAL STOCKHOLDERS' EQUITY

577,251

588,728

$

1,245,231

$

1,262,909

Note: The balance sheet at December 31, 2015 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

2016

2015

(Unaudited)

($ thousands)

OPERATING ACTIVITIES

Net income (loss)

$

(6,103)

$

745

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

24,164

21,084

Amortization of intangibles

987

1,148

Pension settlement expense

900

1,119

Share-based compensation expense

1,709

1,647

Provision for losses on accounts receivable

82

312

Deferred income tax provision

5,212

1,507

Gain on sale of property and equipment

(311)

(310)

Changes in operating assets and liabilities:

Receivables

9,569

(902)

Prepaid expenses

(3,998)

(1,689)

Other assets

(2,954)

456

Income taxes

(10,211)

(2,426)

Accounts payable, accrued expenses, and other liabilities

(6,884)

(11,759)

NET CASH PROVIDED BY OPERATING ACTIVITIES

12,162

10,932

INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of financings

(13,357)

(16,546)

Proceeds from sales of property and equipment

2,435

977

Purchases of short-term investments

(15,745)

–

Proceeds from sale of short-term investments

7,840

–

Business acquisitions, net of cash acquired

–

(5,170)

Capitalization of internally developed software

(2,668)

(2,087)

NET CASH USED IN INVESTING ACTIVITIES

(21,495)

(22,826)

FINANCING ACTIVITIES

Borrowings under credit facilities

–

70,000

Borrowings under accounts receivable securitization program

–

35,000

Payments on long-term debt

(11,066)

(77,254)

Net change in book overdrafts

(5,095)

(2,005)

Net change in restricted cash

(1)

–

Deferred financing costs

–

(824)

Payment of common stock dividends

(2,088)

(1,584)

Purchase of treasury stock

(2,602)

(2,459)

(20,852)

20,874

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   

(30,185)

8,980

Cash and cash equivalents at beginning of period

164,973

157,042

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

134,788

$

166,022

NONCASH INVESTING ACTIVITIES

Accruals for equipment received

$

8,486

$

163

Equipment financed

$

1,947

$

–

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months EndedMarch 31

2016

2015

(Unaudited)

($ thousands, except percentages)

Freight Transportation (ABF Freight)

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

Amounts on a GAAP basis

$

(8,999)

102.1%

$

43

100.0%

Pension settlement expense

677

(0.2)

840

(0.2)

Non-GAAP amounts

$

(8,322)

101.9%

$

883

99.8%

Three Months Ended

March 31

2016

2015

(Unaudited)

($ thousands, except per share data)

ArcBest Corporation – Consolidated

Operating Income (Loss)

Amounts on a GAAP basis

$

(9,265)

$

1,280

Pension settlement expense

900

1,119

Non-GAAP amounts

$

(8,365)

$

2,399

Net Income (Loss)

Amounts on a GAAP basis

$

(6,103)

$

745

Life insurance proceeds and changes in cash surrender value

(355)

(404)

Pension settlement expense, after-tax

550

684

Non-GAAP amounts

$

(5,908)

$

1,025

Diluted Earnings (Loss) Per Share

Amounts on a GAAP basis

$

(0.24)

$

0.03

Life insurance proceeds and changes in cash surrender value

(0.01)

(0.02)

Pension settlement expense, after-tax

0.02

0.03

Non-GAAP amounts

$

(0.23)

$

0.04

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

Three Months Ended

March 31

2016

2015

(Unaudited)

($ thousands)

Adjusted Earnings Before Interest, Taxes, Depreciation,

   and Amortization (Adjusted EBITDA)

ArcBest Corporation – Consolidated

Net income (loss)

$

(6,103)

$

745

Interest and other related financing costs

1,247

1,002

Income tax provision (benefit)

(3,642)

167

Depreciation and amortization

25,151

22,232

Amortization of share-based compensation

1,709

1,647

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

2,069

2,193

Adjusted EBITDA

$

20,431

$

27,986

(1) Consolidated pension settlement expense totaled $0.9 million (pre-tax) and $1.1 million (pre-tax) for the three months ended March 31, 2016 and 2015, respectively.

Three Months Ended March 31 2016

Three Months Ended March 31 2015

Operating

Income

(Loss)

Depreciation and Amortization

EBITDA

Operating Income

(Loss)

Depreciation and Amortization

EBITDA

(Unaudited)

($ thousands)

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

Asset-Light Logistics

Premium Logistics (Panther)(2)

$

256

$

2,837

$

3,093

$

1,195

$

2,924

$

4,119

Transportation Management (ABF Logistics)

666

424

1,090

775

284

1,059

Emergency & Preventative Maintenance (FleetNet)

984

287

1,271

1,170

283

1,453

Household Goods Moving Services (ABF Moving)

(749)

203

(546)

(363)

350

(13)

Total asset-light logistics

$

1,157

$

3,751

$

4,908

$

2,777

$

3,841

$

6,618

(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. We report our financial results in accordance with generally accepted accounting principles ("GAAP"). However, management believes that certain non-GAAP performance measures and ratios, such as EBITDA and Adjusted EBITDA, utilized for internal analysis provides 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. Accordingly, using these 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.  Furthermore, management uses EBITDA and Adjusted EBITDA as a key measure of performance and for business planning. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our Amended and Restated Credit Agreement. Other companies may calculate EBITDA differently; and therefore, our calculation of EBITDA and Adjusted EBITDA 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 defined by GAAP.

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

Three Months EndedMarch 31

2016

2015

(Unaudited)

($ thousands)

REVENUES

Freight Transportation (ABF Freight)

$

439,508

$

441,207

Premium Logistics (Panther)

66,078

75,292

Transportation Management (ABF Logistics)

66,947

47,372

Emergency & Preventative Maintenance (FleetNet)

43,564

42,489

Household Goods Moving Services (ABF Moving)

18,144

18,568

Total asset-light logistics

194,733

183,721

Other and eliminations

(12,786)

(11,652)

$

621,455

$

613,276

OPERATING EXPENSES

Freight Transportation (ABF Freight)

Salaries, wages, and benefits

$

296,607

67.5%

$

278,371

63.1%

Fuel, supplies, and expenses

66,689

15.2

79,026

17.9

Operating taxes and licenses

11,980

2.7

11,996

2.7

Insurance

6,466

1.5

5,785

1.3

Communications and utilities

4,372

1.0

3,985

0.9

Depreciation and amortization

20,392

4.6

17,400

3.9

Rents and purchased transportation

39,696

9.0

41,844

9.5

Gain on sale of property and equipment

(172)

–

(244)

–

Pension settlement expense(1)

677

0.2

840

0.2

Other

1,800

0.4

2,161

0.5

448,507

102.1%

441,164

100.0%

Premium Logistics (Panther)

Purchased transportation

$

48,851

73.9%

$

56,044

74.4%

Depreciation and amortization(2)

2,837

4.3

2,924

3.9

Salaries, benefits, insurance, and other

14,134

21.4

15,129

20.1

65,822

99.6%

74,097

98.4%

Transportation Management (ABF Logistics)

66,281

46,597

Emergency & Preventative Maintenance (FleetNet)

42,580

41,319

Household Goods Moving Services (ABF Moving)

18,893

18,931

Total asset-light logistics(1)

193,576

180,944

Other expenses and eliminations(1)

(11,363)

(10,112)

Total consolidated operating expenses and costs(1)

$

630,720

$

611,996

(1)

Pension settlement expense totaled $0.9 million (pre-tax) and $1.1 million (pre-tax) on a consolidated basis for the three months ended March 31, 2016 and 2015, respectively.  For the three months ended March 31, 2016 and 2015, pre-tax pension settlement expense of $0.7 and $0.8 million, respectively, was reported by ABF Freight, $0.2 million was reported in Other and eliminations, and less than $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 EndedMarch 31

2016

2015

(Unaudited)

($ thousands)

OPERATING INCOME (LOSS)

Freight Transportation (ABF Freight)(1)

$

(8,999)

$

43

Premium Logistics (Panther)

256

1,195

Transportation Management (ABF Logistics)

666

775

Emergency & Preventative Maintenance (FleetNet)

984

1,170

Household Goods Moving Services (ABF Moving)

(749)

(363)

Total asset-light logistics

1,157

2,777

Other loss and eliminations

(1,423)

(1,540)

$

$

1,280

(1)

ABF Freight's operating income for all periods presented was impacted by pension settlement expense. (See reconciliation of GAAP operating income to non-GAAP operating income in the Freight Transportation table previously presented.)

ARCBEST CORPORATION

OPERATING STATISTICS

Three Months Ended

March 31

2016

2015

% Change

(Unaudited)

Freight Transportation (ABF Freight)

Workdays

63.5

62.5

Billed Revenue(1) / CWT        

$

27.72

$

28.06

(1.2)%

Billed Revenue(1) / Shipment

$

356.25

$

372.56

(4.4)%

Shipments                               

1,236,323

1,188,797

4.0%

Shipments / Day

19,470

19,021

2.4%

Tonnage (tons)                       

794,472

789,331

0.7%

Tons / Day

12,511

12,619

(0.9)%

(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.