ArcBest® Announces Second Quarter 2020 Results
ArcBest (Nasdaq: ARCB) reported second quarter 2020 revenue of $627.4 million, down from $771.5 million in Q2 2019. Operating income decreased to $20.4 million from $35.2 million, while net income was $15.9 million, or $0.61 per diluted share, compared to $24.4 million, or $0.92 per diluted share in the previous year. The company improved its net cash position to $41 million from $3 million net debt in March 2020. Despite challenges posed by the pandemic, positive trends in customer payments and sequential revenue growth in June were noted, with plans to restore costs in Q3 2020.
- Improved cash position to $41 million net cash from $3 million net debt.
- Sequential revenue improvement month by month with a notable decrease in the year-over-year decline from 20% in April to 3% in July.
- Cost reductions saved approximately $15 million in Q2 2020, allowing for planned restorations of employee compensation in Q3.
- Revenue decreased by 18.6% from $771.5 million in Q2 2019 to $627.4 million in Q2 2020.
- Operating income fell to $20.4 million from $35.2 million year-over-year.
- Net income decreased by 34.5% compared to the previous year, reflecting pandemic-related challenges.
FORT SMITH, Ark., July 29, 2020 /PRNewswire/ -- ArcBest® (Nasdaq: ARCB), a leader in supply chain logistics, today reported second quarter 2020 revenue of
Excluding certain items in both periods as identified in the attached reconciliation tables, non-GAAP operating income was
At June 30, 2020, ArcBest's consolidated cash and short-term investments, less debt, were
"The successes of the second quarter are rooted in the strength of our employees and the culture that we have cultivated here that unites all of us behind a set of shared values that drive excellence," said Judy R. McReynolds, Chairman, President and CEO of ArcBest. "I am incredibly proud of our employees, especially our front-line teams, who continue to work hard and serve our customers in the face of a global pandemic that continues to affect so many aspects of the economy."
Second Quarter Results of Operations Comparisons
Asset-Based
Second Quarter 2020 Versus Second Quarter 2019
- Revenue of
$460.1 million compared to$559.6 million , a per-day decrease of 17.8 percent. - Total tonnage per day decrease of 13.8 percent, with a double-digit percentage decrease in both LTL-rated tonnage and TL-rated spot shipment tonnage moving in the Asset-Based network.
- Total shipments per day decrease of 13.3 percent. Total weight per shipment decrease of 0.6 percent and an increase of 0.9 percent in LTL-rated weight per shipment impacted by transactional, LTL-rated shipments added during the second quarter.
- Total billed revenue per hundredweight decreased 4.0 percent and was negatively impacted by lower fuel surcharges versus prior year. Excluding fuel surcharge, LTL-rated freight experienced a percentage increase in the low-single digits.
- Operating income of
$21.0 million and an operating ratio of 95.4 percent compared to the prior year quarter operating income of$36.2 million and an operating ratio of 93.5 percent. On a non-GAAP basis, operating income of$25.8 million and an operating ratio of 94.4 percent compared to the prior year quarter operating income of$38.9 million and an operating ratio of 93.0 percent.
In response to significantly lower shipment and tonnage levels related to the pandemic's impact on customer shipping patterns, Asset-Based system labor and other resources were managed down in order to match business levels. Second quarter business decreases were somewhat mitigated by the continued addition of spot, truckload-rated shipments and transactional LTL-rated shipments throughout the Asset-Based network. Combined with the cost reductions in place, the handling of these additional transactional shipments contributed to improved operational efficiencies, fewer empty miles and lower costs. Total second quarter revenue per hundredweight decreased due to freight mix changes related to the addition of these transactional shipments. However, total yield on LTL-rated shipments, excluding changes in fuel surcharge, was positive versus the prior year. Pricing on ABF Freight's traditional published and contractual business improved as the transportation marketplace's rational pricing environment continued.
Asset-Light3
Second Quarter 2020 Versus Second Quarter 2019
- Revenue of
$197.9 million compared to$232.9 million , a per-day decrease of 15.0 percent. - Operating income of
$2.1 million compared to operating income of$3.1 million . - Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") of
$4.9 million compared to Adjusted EBITDA of$6.5 million .
Second quarter revenue in the Asset-Light ArcBest segment decreased compared to the prior year period primarily due to lower demand in both the expedite and truckload brokerage businesses related to the pandemic. Reduced demand for expedited services was related to customer closures in the auto sector for the majority of the quarter and meaningful reductions in business levels for many manufacturing customers. Revenue reductions in truckload brokerage were the result of fewer total shipments combined with lower average revenue per shipment. The second quarter was highlighted by significant revenue growth in managed transportation services, consistent with the positive trend seen for the past several quarters in this portion of ArcBest's Asset-Light business. Purchased transportation expense in the second quarter, as a percent of revenue, increased 120 basis points compared to the prior year period reflecting changes in business mix and the market effects of reductions in revenue per shipment that exceeded comparable decreases in purchased transportation expense. In the second quarter of 2020, operating results for the Asset-Light ArcBest segment benefitted from the corporate cost reduction initiatives previously announced in early April.
At FleetNet, a decrease in total events, primarily associated with fewer roadside repairs due to the pandemic, contributed to lower total revenue and reduced operating income compared to the prior year period.
July 2020 Update On Previously Announced Cost Actions
As previously announced, in anticipation of lower business levels and the potential for cash flow disruption, ArcBest implemented actions in late March and early April to mitigate the operating and financial impact of the COVID-19 pandemic. ArcBest drew down
Due to the uncertainties at the time, ArcBest implemented cost reductions beginning in April 2020 that included a
Since the lowest monthly consolidated revenue levels of the year, which were reported in April, ArcBest has experienced improved financial trends that include sequential business improvement2, increased cash levels and improved EBITDA. Year-over-year consolidated revenue has improved from a decline of
Closing Comments
"I am pleased with what we have been able to accomplish over the last three months considering the dynamic nature of circumstances surrounding the COVID-19 pandemic," said McReynolds. "Our entire team, from our best-in-class drivers and dock workers in the field to our office personnel working from home around the country, has executed very well in this environment and their fortitude, when mixed with prudent business decisions, has proven to be a winning combination for success during these times. We are working to carry this momentum forward as the second half of the year unfolds and will, as always, monitor trends and make adjustments where necessary. As a full-service logistics company, ArcBest is playing a vital role in getting our nation up and running again, and we plan to lead the way by continuing to deliver quality integrated solutions for all of our customers' supply chain needs."
NOTES | |
1. | U.S. Generally Accepted Accounting Principles |
2. | Discussions of July 2020 business results and certain projections for 2020 are included in Exhibit 99.2 to ArcBest's second quarter 2020 earnings release filed with the SEC in our Current Report on Form 8–K. |
3. | 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 2020 second quarter results. The call will be today, Wednesday, July 29, at 9:00 a.m. ET (8:00 a.m. CT). Interested parties are invited to listen by calling (800) 681-2231. Following the call, a recorded playback will be available through the end of the day on September 15, 2020. To listen to the playback, dial (800) 633–8284 or (402) 977–9140 (for international callers). The conference call ID for the playback is 21965466. The conference call and playback can also be accessed, through September 15, 2020, on ArcBest's website at arcb.com.
About ArcBest
ArcBest® (Nasdaq: ARCB) is a leading logistics company with creative problem solvers who deliver innovative solutions for our customers' supply chain needs. 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®. For more information, visit arcb.com.
The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: Certain statements and information in this press release concerning results for the three months ended June 30, 2020 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; the ability to maintain third-party information technology systems or licenses; widespread outbreak of an illness or any other communicable disease and the effects of pandemics, including the COVID-19 pandemic, or any other public health crisis; regulatory measures that may be implemented in response to widespread illness, including the COVID-19 pandemic; ineffectiveness of our business continuity plans to meet our operational needs in the event of adverse external events or conditions; untimely or ineffective development and implementation of, or failure to realize potential benefits associated with, new or enhanced technology or processes, including the pilot test program at ABF Freight, and any write-offs associated therewith; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; general economic conditions and related shifts in market demand, including the impact of and uncertainties related to the COVID-19 pandemic, that impact the performance and needs of industries we serve and/or limit our customers' access to adequate financial resources; the ability to manage our cost structure, and the timing and performance of growth initiatives; relationships with employees, including unions, and our ability to attract, retain, and develop 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; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; availability and cost of reliable third-party services; 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; governmental regulations; environmental laws and regulations, including emissions-control regulations; union employee wages and benefits, including changes in required contributions to multiemployer plans; litigation or claims asserted against us; the loss of key employees or the inability to execute succession planning strategies; maintaining our intellectual property rights, brand, and corporate reputation; 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; 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, fuel, and related taxes; potential impairment of goodwill and intangible assets; the cost, integration, and performance of any recent or future acquisitions; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; acts of terrorism or war, or the impact of 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 the 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.
Investor Relations Contact: David Humphrey
Title: Vice President – Investor Relations
Phone: 479-785-6200
Email: dhumphrey@arcb.com
ARCBEST CORPORATION | |||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30 | June 30 | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||
(Unaudited) | |||||||||||||
($ thousands, except share and per share data) | |||||||||||||
REVENUES | $ | 627,370 | $ | 771,490 | $ | 1,328,769 | $ | 1,483,329 | |||||
OPERATING EXPENSES | 606,945 | 736,290 | 1,300,525 | 1,439,538 | |||||||||
OPERATING INCOME | 20,425 | 35,200 | 28,244 | 43,791 | |||||||||
OTHER INCOME (COSTS) | |||||||||||||
Interest and dividend income | 991 | 1,616 | 2,366 | 3,094 | |||||||||
Interest and other related financing costs | (3,378) | (2,811) | (6,325) | (5,693) | |||||||||
Other, net | 2,696 | (445) | (1,166) | (1,036) | |||||||||
309 | (1,640) | (5,125) | (3,635) | ||||||||||
INCOME BEFORE INCOME TAXES | 20,734 | 33,560 | 23,119 | 40,156 | |||||||||
INCOME TAX PROVISION | 4,854 | 9,184 | 5,337 | 10,892 | |||||||||
NET INCOME | $ | 15,880 | $ | 24,376 | $ | 17,782 | $ | 29,264 | |||||
EARNINGS PER COMMON SHARE(1) | |||||||||||||
Basic | $ | 0.62 | $ | 0.95 | $ | 0.70 | $ | 1.14 | |||||
Diluted | $ | 0.61 | $ | 0.92 | $ | 0.68 | $ | 1.10 | |||||
AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||
Basic | 25,463,559 | 25,554,286 | 25,468,624 | 25,562,306 | |||||||||
Diluted | 26,217,957 | 26,431,592 | 26,252,486 | 26,483,011 | |||||||||
CASH DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.08 | $ | 0.08 | $ | 0.16 | $ | 0.16 | |||||
1) | 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 | |||||
2020 | 2019 | |||||
(Unaudited) | Note | |||||
($ thousands, except share data) | ||||||
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash and cash equivalents | $ | 406,290 | $ | 201,909 | ||
Short-term investments | 167,719 | 116,579 | ||||
Accounts receivable, less allowances (2020 - | 273,135 | 282,579 | ||||
Other accounts receivable, less allowances (2020 - | 16,812 | 18,774 | ||||
Prepaid expenses | 28,928 | 30,377 | ||||
Prepaid and refundable income taxes | 4,236 | 9,439 | ||||
Other | 4,923 | 4,745 | ||||
TOTAL CURRENT ASSETS | 902,043 | 664,402 | ||||
PROPERTY, PLANT AND EQUIPMENT | ||||||
Land and structures | 344,951 | 342,122 | ||||
Revenue equipment | 891,029 | 896,020 | ||||
Service, office, and other equipment | 232,058 | 233,354 | ||||
Software | 155,411 | 151,068 | ||||
Leasehold improvements | 11,821 | 10,383 | ||||
1,635,270 | 1,632,947 | |||||
Less allowances for depreciation and amortization | 974,464 | 949,355 | ||||
660,806 | 683,592 | |||||
GOODWILL | 88,320 | 88,320 | ||||
INTANGIBLE ASSETS, NET | 56,915 | 58,832 | ||||
OPERATING RIGHT-OF-USE ASSETS | 81,069 | 68,470 | ||||
DEFERRED INCOME TAXES | 7,507 | 7,725 | ||||
OTHER LONG-TERM ASSETS | 74,100 | 79,866 | ||||
$ | 1,870,760 | $ | 1,651,207 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
CURRENT LIABILITIES | ||||||
Accounts payable | $ | 140,632 | $ | 134,374 | ||
Income taxes payable | 3,181 | 12 | ||||
Accrued expenses | 217,020 | 232,321 | ||||
Current portion of long-term debt | 59,050 | 57,305 | ||||
Current portion of operating lease liabilities | 19,769 | 20,265 | ||||
TOTAL CURRENT LIABILITIES | 439,652 | 444,277 | ||||
LONG-TERM DEBT, less current portion | 473,850 | 266,214 | ||||
OPERATING LEASE LIABILITIES, less current portion | 65,249 | 52,277 | ||||
POSTRETIREMENT LIABILITIES, less current portion | 20,448 | 20,294 | ||||
OTHER LONG-TERM LIABILITIES | 36,077 | 38,892 | ||||
DEFERRED INCOME TAXES | 60,393 | 66,210 | ||||
STOCKHOLDERS' EQUITY | ||||||
Common stock, | 290 | 288 | ||||
Additional paid-in capital | 337,942 | 333,943 | ||||
Retained earnings | 546,689 | 533,187 | ||||
Treasury stock, at cost, 2020: 3,554,639 shares; 2019: 3,404,639 shares | (107,740) | (104,578) | ||||
Accumulated other comprehensive income (loss) | (2,090) | 203 | ||||
TOTAL STOCKHOLDERS' EQUITY | 775,091 | 763,043 | ||||
$ | 1,870,760 | $ | 1,651,207 | |||
Note: | The balance sheet at December 31, 2019 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 | ||||||
2020 | 2019 | |||||
Unaudited | ||||||
($ thousands) | ||||||
OPERATING ACTIVITIES | ||||||
Net income | $ | 17,782 | $ | 29,264 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 56,140 | 51,722 | ||||
Amortization of intangibles | 1,959 | 2,249 | ||||
Pension settlement expense | 89 | 1,634 | ||||
Share-based compensation expense | 5,071 | 4,859 | ||||
Provision for losses on accounts receivable | 999 | 621 | ||||
Change in deferred income taxes | (5,170) | 5,124 | ||||
Gain on sale of property and equipment and lease termination | (3,581) | (1,469) | ||||
Changes in operating assets and liabilities: | ||||||
Receivables | 9,626 | 1,781 | ||||
Prepaid expenses | 1,444 | (3,323) | ||||
Other assets | 4,358 | (2,798) | ||||
Income taxes | 8,413 | (3,042) | ||||
Operating right-of-use assets and lease liabilities, net | (230) | 159 | ||||
Accounts payable, accrued expenses, and other liabilities | (14,833) | (6,310) | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 82,067 | 80,471 | ||||
INVESTING ACTIVITIES | ||||||
Purchases of property, plant and equipment, net of financings | (16,209) | (41,909) | ||||
Proceeds from sale of property and equipment | 7,670 | 3,798 | ||||
Purchases of short-term investments | (97,493) | (43,327) | ||||
Proceeds from sale of short-term investments | 46,725 | 33,332 | ||||
Capitalization of internally developed software | (6,495) | (5,535) | ||||
NET CASH USED IN INVESTING ACTIVITIES | (65,802) | (53,641) | ||||
FINANCING ACTIVITIES | ||||||
Borrowings under credit facilities | 180,000 | — | ||||
Borrowings under accounts receivable securitization program | 45,000 | — | ||||
Proceeds from notes payable | — | 9,552 | ||||
Payments on long-term debt | (29,185) | (29,984) | ||||
Net change in book overdrafts | 615 | (4,398) | ||||
Payment of common stock dividends | (4,082) | (4,102) | ||||
Purchases of treasury stock | (3,162) | (5,171) | ||||
Payments for tax withheld on share-based compensation | (1,070) | (1,182) | ||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 188,116 | (35,285) | ||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 204,381 | (8,455) | ||||
Cash and cash equivalents at beginning of period | 201,909 | 190,186 | ||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 406,290 | $ | 181,731 | ||
NONCASH INVESTING ACTIVITIES | ||||||
Equipment financed | $ | 13,566 | $ | 10,964 | ||
Accruals for equipment received | $ | 857 | $ | 19,402 | ||
Lease liabilities arising from obtaining right-of-use assets | $ | 23,727 | $ | 23,049 | ||
ARCBEST CORPORATION | ||||||||||||||||||||||||
FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS | ||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30 | June 30 | |||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||
($ thousands, except percentages) | ||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||
Asset-Based | $ | 460,070 | $ | 559,648 | $ | 975,783 | $ | 1,065,727 | ||||||||||||||||
ArcBest | 151,467 | 181,173 | 316,242 | 354,377 | ||||||||||||||||||||
FleetNet | 46,440 | 51,722 | 98,879 | 104,981 | ||||||||||||||||||||
Total Asset-Light | 197,907 | 232,895 | 415,121 | 459,358 | ||||||||||||||||||||
Other and eliminations | (30,607) | (21,053) | (62,135) | (41,756) | ||||||||||||||||||||
Total consolidated revenues | $ | 627,370 | $ | 771,490 | $ | 1,328,769 | $ | 1,483,329 | ||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||
Asset-Based | ||||||||||||||||||||||||
Salaries, wages, and benefits | $ | 248,995 | 54.1 | % | $ | 297,016 | 53.1 | % | $ | 532,833 | 54.6 | % | $ | 577,292 | 54.2 | % | ||||||||
Fuel, supplies, and expenses(1) | 45,675 | 9.9 | 65,791 | 11.7 | 106,900 | 11.0 | 129,764 | 12.2 | ||||||||||||||||
Operating taxes and licenses | 11,629 | 2.5 | 12,214 | 2.2 | 24,423 | 2.5 | 24,612 | 2.3 | ||||||||||||||||
Insurance | 8,247 | 1.8 | 7,598 | 1.4 | 16,071 | 1.6 | 15,589 | 1.5 | ||||||||||||||||
Communications and utilities(1) | 4,342 | 1.0 | 4,500 | 0.8 | 9,053 | 0.9 | 9,117 | 0.8 | ||||||||||||||||
Depreciation and amortization(1) | 23,327 | 5.1 | 21,633 | 3.9 | 46,597 | 4.8 | 42,594 | 4.0 | ||||||||||||||||
Rents and purchased transportation(1) | 46,152 | 10.0 | 56,826 | 10.1 | 101,922 | 10.4 | 106,132 | 10.0 | ||||||||||||||||
Shared services(1) | 45,605 | 9.9 | 55,338 | 9.9 | 94,490 | 9.7 | 105,633 | 9.9 | ||||||||||||||||
Gain on sale of property and equipment | (1,175) | (0.2) | (1,587) | (0.3) | (3,339) | (0.3) | (1,621) | (0.2) | ||||||||||||||||
Innovative technology costs(1)(2) | 4,789 | 1.0 | 2,735 | 0.5 | 9,322 | 1.0 | 4,536 | 0.4 | ||||||||||||||||
Other(1) | 1,448 | 0.3 | 1,406 | 0.2 | 3,235 | 0.3 | 2,286 | 0.2 | ||||||||||||||||
Total Asset-Based | 439,034 | 95.4 | % | 523,470 | 93.5 | % | 941,507 | 96.5 | % | 1,015,934 | 95.3 | % | ||||||||||||
ArcBest | ||||||||||||||||||||||||
Purchased transportation | 125,090 | 82.6 | % | 147,552 | 81.4 | % | 262,272 | 82.9 | % | 287,657 | 81.2 | % | ||||||||||||
Supplies and expenses | 1,989 | 1.3 | 2,858 | 1.6 | 4,269 | 1.3 | 5,632 | 1.6 | ||||||||||||||||
Depreciation and amortization(3) | 2,449 | 1.6 | 3,055 | 1.7 | 4,919 | 1.6 | 6,206 | 1.7 | ||||||||||||||||
Shared services | 18,840 | 12.4 | 23,141 | 12.8 | 40,567 | 12.8 | 46,172 | 13.0 | ||||||||||||||||
Other | 1,796 | 1.2 | 2,445 | 1.3 | 4,321 | 1.4 | 4,858 | 1.4 | ||||||||||||||||
150,164 | 99.1 | % | 179,051 | 98.8 | % | 316,348 | 100.0 | % | 350,525 | 98.9 | % | |||||||||||||
FleetNet | 45,658 | 98.3 | % | 50,696 | 98.0 | % | 97,057 | 98.2 | % | 102,467 | 97.6 | % | ||||||||||||
Total Asset-Light | 195,822 | 229,747 | 413,405 | 452,992 | ||||||||||||||||||||
Other and eliminations | (27,911) | (16,927) | (54,387) | (29,388) | ||||||||||||||||||||
Total consolidated operating expenses | $ | 606,945 | 96.7 | % | $ | 736,290 | 95.4 | % | $ | 1,300,525 | 97.9 | % | $ | 1,439,538 | 97.0 | % | ||||||||
OPERATING INCOME (LOSS) | ||||||||||||||||||||||||
Asset-Based | $ | 21,036 | $ | 36,178 | $ | 34,276 | $ | 49,793 | ||||||||||||||||
ArcBest | 1,303 | 2,122 | (106) | 3,852 | ||||||||||||||||||||
FleetNet | 782 | 1,026 | 1,822 | 2,514 | ||||||||||||||||||||
Total Asset-Light | 2,085 | 3,148 | 1,716 | 6,366 | ||||||||||||||||||||
Other and eliminations(4) | (2,696) | (4,126) | (7,748) | (12,368) | ||||||||||||||||||||
Total consolidated operating income | $ | 20,425 | $ | 35,200 | $ | 28,244 | $ | 43,791 | ||||||||||||||||
1) | Beginning in third quarter 2019, the presentation of Asset-Based segment expenses was modified to present innovative technology costs as a separate operating expense line item. Previously, innovative technology costs incurred directly by the segment or allocated through shared services were categorized in individual segment expense line items. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on the segment's total expenses as a result of the reclassifications. | |||
2) | Represents costs associated with the freight handling pilot test program at ABF Freight. | |||
3) | Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses. | |||
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, including innovative technology costs. | |||
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 | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
ArcBest Corporation - Consolidated | (Unaudited) | |||||||||||
($ thousands, except per share data) | ||||||||||||
Operating Income | ||||||||||||
Amounts on GAAP basis | $ | 20,425 | $ | 35,200 | $ | 28,244 | $ | 43,791 | ||||
Innovative technology costs, pre-tax(1) | 4,699 | 3,619 | 9,299 | 6,377 | ||||||||
Non-GAAP amounts | $ | 25,124 | $ | 38,819 | $ | 37,543 | $ | 50,168 | ||||
Net Income | ||||||||||||
Amounts on GAAP basis | $ | 15,880 | $ | 24,376 | $ | 17,782 | $ | 29,264 | ||||
Innovative technology costs, after-tax (includes related financing costs)(1) | 3,637 | 2,753 | 7,207 | 4,848 | ||||||||
Nonunion pension expense, including settlement, after-tax(2) | — | 377 | 66 | 1,664 | ||||||||
Life insurance proceeds and changes in cash surrender value | (2,560) | (542) | 1,245 | (2,156) | ||||||||
Tax expense from vested RSUs(3) | 659 | 410 | 679 | 408 | ||||||||
Non-GAAP amounts | $ | 17,616 | $ | 27,374 | $ | 26,979 | $ | 34,028 | ||||
Diluted Earnings Per Share | ||||||||||||
Amounts on GAAP basis | $ | 0.61 | $ | 0.92 | $ | 0.68 | $ | 1.10 | ||||
Innovative technology costs, after-tax (includes related financing costs)(1) | 0.14 | 0.10 | 0.27 | 0.18 | ||||||||
Nonunion pension expense, including settlement, after-tax(2) | — | 0.01 | — | 0.06 | ||||||||
Life insurance proceeds and changes in cash surrender value | (0.10) | (0.02) | 0.05 | (0.08) | ||||||||
Tax expense from vested RSUs(3) | 0.03 | 0.02 | 0.03 | 0.02 | ||||||||
Non-GAAP amounts(4) | $ | 0.67 | $ | 1.04 | $ | 1.03 | $ | 1.28 | ||||
1) | Represents costs associated with the freight handling pilot test program at ABF Freight. | |||
2) | For the six months ended June 30, 2020, represents pension settlement expense related to the Company's supplemental benefit plan. For the three and six months ended June 30, 2019, nonunion defined benefit pension expense is presented as a non-GAAP adjustment with pension settlement expense, because expenses related to the plan were excluded from the financial information management used 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 benefit distributions for the plan termination began in fourth quarter 2018 and were completed in third quarter 2019. | |||
3) | The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax expense during the three and six months ended June 30, 2020 and 2019. | |||
4) | Non-GAAP EPS is calculated in total and may not foot due to rounding. | |||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30 | June 30 | |||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||
Segment Operating Income Reconciliations | (Unaudited) | |||||||||||||||||||||||
($ thousands, except percentages) | ||||||||||||||||||||||||
Asset-Based Segment | ||||||||||||||||||||||||
Operating Income ($) and Operating Ratio (% of revenues) | ||||||||||||||||||||||||
Amounts on GAAP basis | $ | 21,036 | 95.4 | % | $ | 36,178 | 93.5 | % | $ | 34,276 | 96.5 | % | $ | 49,793 | 95.3 | % | ||||||||
Innovative technology costs, pre-tax(1) | 4,789 | (1.0) | 2,735 | (0.5) | 9,322 | (1.0) | 4,536 | (0.4) | ||||||||||||||||
Non-GAAP amounts | $ | 25,825 | 94.4 | % | $ | 38,913 | 93.0 | % | $ | 43,598 | 95.5 | % | $ | 54,329 | 94.9 | % | ||||||||
Other and Eliminations | ||||||||||||||||||||||||
Operating Loss ($) | ||||||||||||||||||||||||
Amounts on GAAP basis | $ | (2,696) | $ | (4,126) | $ | (7,748) | $ | (12,368) | ||||||||||||||||
Innovative technology costs, pre-tax(1) | (90) | 884 | (23) | 1,841 | ||||||||||||||||||||
Non-GAAP amounts | $ | (2,786) | $ | (3,242) | $ | (7,771) | $ | (10,527) | ||||||||||||||||
1) | Represents costs associated with the freight handling pilot test program at ABF Freight. | |||
Effective Tax Rate Reconciliation | ||||||||||||||||||
ArcBest Corporation - Consolidated | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
($ thousands, except percentages) | Three Months Ended June 30, 2020 | |||||||||||||||||
Other | Income | Income | ||||||||||||||||
Operating | Income | Before Income | Tax | Net | ||||||||||||||
Income | (Costs) | Taxes | Provision | Income | Tax Rate(4) | |||||||||||||
Amounts on GAAP basis | $ | 20,425 | $ | 309 | $ | 20,734 | $ | 4,854 | $ | 15,880 | 23.4 | % | ||||||
Innovative technology costs(1) | 4,699 | 199 | 4,898 | 1,261 | 3,637 | 25.7 | ||||||||||||
Life insurance proceeds and changes in cash surrender value | — | (2,560) | (2,560) | — | (2,560) | — | ||||||||||||
Tax expense from vested RSUs(3) | — | — | — | (659) | 659 | — | ||||||||||||
Non-GAAP amounts | $ | 25,124 | $ | (2,052) | $ | 23,072 | $ | 5,456 | $ | 17,616 | 23.6 | % | ||||||
Six Months Ended June 30, 2020 | ||||||||||||||||||
Other | Income Before | Income | ||||||||||||||||
Operating | Income | Income | Tax | Net | ||||||||||||||
Income | (Costs) | Taxes | Provision | Income | Tax Rate(4) | |||||||||||||
Amounts on GAAP basis | $ | 28,244 | $ | (5,125) | $ | 23,119 | $ | 5,337 | $ | 17,782 | 23.1 | % | ||||||
Innovative technology costs(1) | 9,299 | 406 | 9,705 | 2,498 | 7,207 | 25.7 | ||||||||||||
Nonunion pension expense, including settlement(2) | — | 89 | 89 | 23 | 66 | 25.8 | ||||||||||||
Life insurance proceeds and changes in cash surrender value | — | 1,245 | 1,245 | — | 1,245 | — | ||||||||||||
Tax expense from vested RSUs(3) | — | — | — | (679) | 679 | — | ||||||||||||
Non-GAAP amounts | $ | 37,543 | $ | (3,385) | $ | 34,158 | $ | 7,179 | $ | 26,979 | 21.0 | % | ||||||
Three Months Ended June 30, 2019 | ||||||||||||||||||
Other | Income | Income | ||||||||||||||||
Operating | Income | Before Income | Tax | Net | ||||||||||||||
Income | (Costs) | Taxes | Provision | Income | Tax Rate(4) | |||||||||||||
Amounts on GAAP basis | $ | 35,200 | $ | (1,640) | $ | 33,560 | $ | 9,184 | $ | 24,376 | 27.4 | % | ||||||
Innovative technology costs(1) | 3,619 | — | 3,619 | 866 | 2,753 | 23.9 | ||||||||||||
Nonunion pension expense, including settlement(2) | — | 507 | 507 | 130 | 377 | 25.6 | ||||||||||||
Life insurance proceeds and changes in cash surrender value | — | (542) | (542) | — | (542) | — | ||||||||||||
Tax expense from vested RSUs(3) | — | — | — | (410) | 410 | — | ||||||||||||
Non-GAAP amounts | $ | 38,819 | $ | (1,675) | $ | 37,144 | $ | 9,770 | $ | 27,374 | 26.3 | % | ||||||
Six Months Ended June 30, 2019 | ||||||||||||||||||
Other | Income Before | Income | ||||||||||||||||
Operating | Income | Income | Tax | Net | ||||||||||||||
Income | (Costs) | Taxes | Provision | Income | Tax Rate(4) | |||||||||||||
Amounts on GAAP basis | $ | 43,791 | $ | (3,635) | $ | 40,156 | $ | 10,892 | $ | 29,264 | 27.1 | % | ||||||
Innovative technology costs(2) | 6,377 | — | 6,377 | 1,529 | 4,848 | 24.0 | ||||||||||||
Nonunion pension expense, including settlement(2) | — | 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 expense from vested RSUs(3) | — | — | — | (408) | 408 | — | ||||||||||||
Non-GAAP amounts | $ | 50,168 | $ | (3,550) | $ | 46,618 | $ | 12,590 | $ | 34,028 | 27.0 | % | ||||||
1) | Represents costs associated with the freight handling pilot test program at ABF Freight. | |||
2) | For the six months ended June 30, 2020, represents pension settlement expense related to the Company's supplemental benefit plan. For the three and six months ended June 30, 2019, nonunion defined benefit pension expense is presented as a non-GAAP adjustment with pension settlement expense, because expenses related to the plan were excluded from the financial information management used 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 benefit distributions for the plan termination began in fourth quarter 2018 and were completed in third quarter 2019. | |||
3) | The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax expense during the three and six months ended June 30, 2020 and 2019. | |||
4) | Tax rate for total "Amounts on GAAP basis" represents the effective tax rate. The tax effects of non-GAAP adjustments are calculated based on the statutory rate applicable to each item based on tax jurisdiction, unless the nature of the item requires the tax effect to be estimated by applying a specific tax treatment. | |||
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 | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||
(Unaudited) | |||||||||||||
ArcBest Corporation - Consolidated Adjusted EBITDA | ($ thousands) | ||||||||||||
Net Income | $ | 15,880 | $ | 24,376 | $ | 17,782 | $ | 29,264 | |||||
Interest and other related financing costs | 3,378 | 2,811 | 6,325 | 5,693 | |||||||||
Income tax provision | 4,854 | 9,184 | 5,337 | 10,892 | |||||||||
Depreciation and amortization | 29,086 | 27,434 | 58,099 | 53,971 | |||||||||
Amortization of share-based compensation | 2,890 | 2,801 | 5,071 | 4,859 | |||||||||
Amortization of net actuarial (gains) losses of benefit plans and pension settlement expense(1) | (148) | 586 | (204) | 2,340 | |||||||||
Consolidated Adjusted EBITDA | $ | 55,940 | $ | 67,192 | $ | 92,410 | $ | 107,019 | |||||
1) | The six months ended June 30, 2020 includes pre-tax pension settlement expense of | |||
Three Months Ended | Six Months Ended | |||||||||||
June 30 | June 30 | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Asset-Light Adjusted EBITDA | (Unaudited) | |||||||||||
($ thousands) | ||||||||||||
ArcBest | ||||||||||||
Operating Income (Loss) | $ | 1,303 | $ | 2,122 | $ | (106) | $ | 3,852 | ||||
Depreciation and amortization(2) | 2,449 | 3,055 | 4,919 | 6,206 | ||||||||
Adjusted EBITDA | $ | 3,752 | $ | 5,177 | $ | 4,813 | $ | 10,058 | ||||
FleetNet | ||||||||||||
Operating Income | $ | 782 | $ | 1,026 | $ | 1,822 | $ | 2,514 | ||||
Depreciation and amortization | 402 | 333 | 793 | 650 | ||||||||
Adjusted EBITDA | $ | 1,184 | $ | 1,359 | $ | 2,615 | $ | 3,164 | ||||
Total Asset-Light | ||||||||||||
Operating Income | $ | 2,085 | $ | 3,148 | $ | 1,716 | $ | 6,366 | ||||
Depreciation and amortization(2) | 2,851 | 3,388 | 5,712 | 6,856 | ||||||||
Adjusted EBITDA | $ | 4,936 | $ | 6,536 | $ | 7,428 | $ | 13,222 | ||||
2) | Depreciation and amortization consists primarily of amortization of intangibles and software associated with acquired businesses. | |||
ARCBEST CORPORATION | ||||||||||||||||
OPERATING STATISTICS | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||
(Unaudited) | ||||||||||||||||
Asset-Based | ||||||||||||||||
Workdays | 63.5 | 63.5 | 127.5 | 126.5 | ||||||||||||
Billed Revenue(1) / CWT | $ | 33.69 | $ | 35.11 | ( | $ | 33.41 | $ | 34.90 | ( | ||||||
Billed Revenue(1) / Shipment | $ | 423.39 | $ | 443.94 | ( | $ | 425.73 | $ | 431.40 | ( | ||||||
Shipments | 1,103,106 | 1,272,317 | ( | 2,306,522 | 2,483,104 | ( | ||||||||||
Shipments / Day | 17,372 | 20,036 | ( | 18,090 | 19,629 | ( | ||||||||||
Tonnage (Tons) | 693,192 | 804,487 | ( | 1,469,660 | 1,534,897 | ( | ||||||||||
Tons / Day | 10,916 | 12,669 | ( | 11,527 | 12,134 | ( | ||||||||||
Pounds / Shipment | 1,257 | 1,265 | ( | 1,274 | 1,236 | |||||||||||
Average Length of Haul (Miles) | 1,084 | 1,040 | 1,062 | 1,032 | ||||||||||||
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, 2020 | June 30, 2020 | |||||
(Unaudited) | ||||||
ArcBest(2) | ||||||
Revenue / Shipment | ( | ( | ||||
Shipments / Day | ( | ( | ||||
2) | Statistical data related to managed transportation solutions transactions are not included in the presentation of operating statistics for the ArcBest segment. | |||
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SOURCE ArcBest
FAQ
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