|
Investor Relations Contact: David Humphrey
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Title: Vice President – Investor Relations
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Phone: 479-785-6200
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Email: dhumphrey@arcb.com
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ArcBest® Announces Third Quarter 2020 Results
• Third quarter 2020 revenue of $795.0 million, and net income of $29.4 million, or $1.11 per diluted share. On a non GAAP1 basis, third quarter 2020 net income was $32.4 million, or $1.22 per diluted share.
• Improving business trends contribute to increased Asset-Based and Asset-Light profitability
FORT SMITH, Arkansas, November 3, 2020 — ArcBest® (Nasdaq: ARCB), a leader in supply chain logistics, today reported third quarter 2020 revenue of $795.0 million compared to third quarter 2019 revenue of $787.6 million. Third quarter 2020 operating income was $39.8 million compared to operating income of $31.2 million in the same period last year. Net income was $29.4 million, or $1.11 per diluted share, compared to third quarter 2019 net income of $16.3 million, or $0.62 per diluted share.
Excluding certain items in both periods as identified in the attached reconciliation tables, non-GAAP operating income was $45.8 million in third quarter 2020 compared to third quarter 2019 non-GAAP operating income of $38.1 million. On a non-GAAP basis, net income was $32.4 million, or $1.22 per diluted share, in third quarter 2020 compared to third quarter 2019 net income of $27.0 million, or $1.02 per diluted share.
At September 30, 2020, ArcBest’s consolidated cash and short-term investments, less debt, were $59 million net cash compared to the $41 million net cash position at June 30, 2020, reflecting an $18 million improvement during the third quarter.
“I am incredibly proud of our employees and how they have performed on behalf of customers as we navigate through the pandemic together,” said Judy R. McReynolds, chairman, president and CEO of ArcBest. “Throughout the third quarter and into October the ArcBest team, enabled by technology and assured capacity options, is providing much-needed flexibility to customer supply chains while also improving operational efficiency. Our company was built on strong customer relationships and it is our goal to ensure those customers are positioned well to succeed.”
Third Quarter Results of Operations Comparisons
Asset-Based
Third Quarter 2020 Versus Third Quarter 2019
- Revenue of $561.9 million compared to $565.6 million, a per-day decrease of 1.4 percent.
- Total tonnage per day increase of 1.2 percent, with a mid-single-digit percentage increase in LTL-rated tonnage and a double-digit percentage decrease in TL-rated spot shipment tonnage moving in the Asset-Based network.
- Total shipments per day decrease of 3.0 percent. Total weight per shipment increase of 4.4 percent and an increase of 7.4 percent in LTL-rated weight per shipment impacted by third quarter freight mix changes.
- Total billed revenue per hundredweight decreased 1.8 percent and was negatively impacted by freight mix changes and lower fuel surcharges versus prior year. Excluding fuel surcharge, LTL-rated freight experienced a percentage decrease in the low-single digits.
- Operating income of $36.6 million and an operating ratio of 93.5 percent compared to the prior year quarter operating income of $31.7 million and an operating ratio of 94.4 percent. On a non-GAAP basis, operating income of $42.8 million and an operating ratio of 92.4 percent compared to the prior year quarter operating income of $38.5 million and an operating ratio of 93.2 percent.
ArcBest’s Asset-Based business reflects the positive impact of an improving marketplace and sequential growth in shipments and tonnage compared to the second quarter. As business levels improved, labor and freight handling resources were added to handle the additional freight in order to sufficiently serve our customers’ needs. Operational costs were managed relative to growing freight levels. The resulting improvement in operational efficiencies, reduction in empty miles and cost decreases contributed to improved profitability. Throughout the quarter, customer shipments were strategically matched with available network capacity, resulting in improved resource utilization and better operational metrics. In a continuing rational industry pricing environment, freight mix changes and reduced fuel surcharges contributed to lower third quarter revenue per hundredweight. However, profitable growth resulted from optimal freight selection and enhanced matching of revenue and costs.
Asset-Light2
Third Quarter 2020 Versus Third Quarter 2019
- Revenue of $267.8 million compared to $253.7 million, a per-day increase of 4.7 percent.
- Operating income of $5.8 million compared to operating income of $3.6 million.
- Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $8.6 million compared to Adjusted EBITDA of $6.6 million.
Third quarter revenue in the Asset-Light ArcBest segment increased compared to the prior year period reflecting better customer business levels associated with an improving economic environment. Significant revenue growth in managed transportation services was the biggest contributor to improved Asset-Light revenue totals while increases in international and ground expedite business were additional positive factors. Increased customer shipping levels combined with limited equipment availability in the logistics marketplace positively impacted demand for ground expedite services. Growth in these premium service asset-light offerings was a meaningful factor in the quarter’s improved profitability. Revenue associated with the truckload brokerage business positively contributed to third quarter totals, but increased mileage rates paid for equipment capacity related to current marketplace conditions contributed to higher purchased transportation expense as a percentage of total revenue. However, cost management and reduced expenses in other areas of the asset-light business resulted in greater operating profit during the quarter.
At FleetNet, a decrease in total events contributed to lower total revenue and reduced operating income compared to the prior year period.
Closing Comments
“Tremendous opportunity exists for us to sustain the momentum of the third quarter and continue to profitably grow our company,” said McReynolds. “As an innovative and integrated logistics company, I am excited about what the future holds and am confident in the strength and abilities of our workforce and leadership to seize the growth opportunity ahead of us.”
NOTES
- U.S. Generally Accepted Accounting Principles
- 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 third quarter results. The call will be today, Tuesday, November 3, at 9:30 a.m. ET (8:30 a.m. CT). Interested parties are invited to listen by calling (800) 268-2160. Following the call, a recorded playback will be available through the end of the day on December 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 21970321. The conference call and playback can also be accessed, through December 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 September 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.
ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
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|
|
|
September 30
|
|
September 30
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
(Unaudited)
|
|
|
|
|
($ thousands, except share and per share data)
|
|
|
REVENUES
|
|
$
|
794,980
|
|
$
|
787,563
|
|
$
|
2,123,749
|
|
$
|
2,270,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
755,198
|
|
|
756,355
|
|
|
2,055,723
|
|
|
2,195,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
|
39,782
|
|
|
31,208
|
|
|
68,026
|
|
|
74,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (COSTS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income
|
|
|
756
|
|
|
1,768
|
|
|
3,122
|
|
|
4,862
|
|
|
Interest and other related financing costs
|
|
|
(2,860)
|
|
|
(2,900)
|
|
|
(9,185)
|
|
|
(8,593)
|
|
|
Other, net
|
|
|
1,500
|
|
|
(6,734)
|
|
|
334
|
|
|
(7,770)
|
|
|
|
|
|
(604)
|
|
|
(7,866)
|
|
|
(5,729)
|
|
|
(11,501)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES
|
|
|
39,178
|
|
|
23,342
|
|
|
62,297
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|
|
63,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX PROVISION
|
|
|
9,774
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|
|
7,072
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|
|
15,111
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|
|
17,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
29,404
|
|
$
|
16,270
|
|
$
|
47,186
|
|
$
|
45,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON SHARE(1)
|
|
|
|
|
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Basic
|
|
$
|
1.15
|
|
$
|
0.64
|
|
$
|
1.86
|
|
$
|
1.78
|
|
|
Diluted
|
|
$
|
1.11
|
|
$
|
0.62
|
|
$
|
1.79
|
|
$
|
1.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
25,470,094
|
|
|
25,527,982
|
|
|
25,403,786
|
|
|
25,550,365
|
|
|
Diluted
|
|
|
26,592,457
|
|
|
26,416,595
|
|
|
26,289,946
|
|
|
26,461,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
|
$
|
0.08
|
|
$
|
0.08
|
|
$
|
0.24
|
|
$
|
0.24
|
|
- 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
|
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
December 31
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
(Unaudited)
|
|
Note
|
|
|
|
|
($ thousands, except share data)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
267,645
|
|
$
|
201,909
|
|
|
Short-term investments
|
|
|
83,411
|
|
|
116,579
|
|
|
Accounts receivable, less allowances (2020 - $7,343; 2019 - $5,448)
|
|
|
323,760
|
|
|
282,579
|
|
|
Other accounts receivable, less allowances (2020 - $665; 2019 - $476)
|
|
|
14,464
|
|
|
18,774
|
|
|
Prepaid expenses
|
|
|
29,562
|
|
|
30,377
|
|
|
Prepaid and refundable income taxes
|
|
|
6,163
|
|
|
9,439
|
|
|
Other
|
|
|
5,235
|
|
|
4,745
|
|
|
TOTAL CURRENT ASSETS
|
|
|
730,240
|
|
|
664,402
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
Land and structures
|
|
|
346,322
|
|
|
342,122
|
|
|
Revenue equipment
|
|
|
912,924
|
|
|
896,020
|
|
|
Service, office, and other equipment
|
|
|
233,689
|
|
|
233,354
|
|
|
Software
|
|
|
158,454
|
|
|
151,068
|
|
|
Leasehold improvements
|
|
|
14,064
|
|
|
10,383
|
|
|
|
|
|
1,665,453
|
|
|
1,632,947
|
|
|
Less allowances for depreciation and amortization
|
|
|
987,396
|
|
|
949,355
|
|
|
|
|
|
678,057
|
|
|
683,592
|
|
|
|
|
|
|
|
|
|
|
|
GOODWILL
|
|
|
88,320
|
|
|
88,320
|
|
|
INTANGIBLE ASSETS, NET
|
|
|
56,016
|
|
|
58,832
|
|
|
OPERATING RIGHT-OF-USE ASSETS
|
|
|
112,568
|
|
|
68,470
|
|
|
DEFERRED INCOME TAXES
|
|
|
6,975
|
|
|
7,725
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|
|
OTHER LONG-TERM ASSETS
|
|
|
74,055
|
|
|
79,866
|
|
|
|
|
$
|
1,746,231
|
|
$
|
1,651,207
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
162,021
|
|
$
|
134,374
|
|
|
Income taxes payable
|
|
|
5
|
|
|
12
|
|
|
Accrued expenses
|
|
|
249,172
|
|
|
232,321
|
|
|
Current portion of long-term debt
|
|
|
65,887
|
|
|
57,305
|
|
|
Current portion of operating lease liabilities
|
|
|
20,431
|
|
|
20,265
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
497,516
|
|
|
444,277
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT, less current portion
|
|
|
226,037
|
|
|
266,214
|
|
|
OPERATING LEASE LIABILITIES, less current portion
|
|
|
96,549
|
|
|
52,277
|
|
|
POSTRETIREMENT LIABILITIES, less current portion
|
|
|
20,486
|
|
|
20,294
|
|
|
OTHER LONG-TERM LIABILITIES
|
|
|
35,377
|
|
|
38,892
|
|
|
DEFERRED INCOME TAXES
|
|
|
67,627
|
|
|
66,210
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2020: 29,039,994 shares; 2019: 28,810,902 shares
|
|
|
290
|
|
|
288
|
|
|
Additional paid-in capital
|
|
|
339,908
|
|
|
333,943
|
|
|
Retained earnings
|
|
|
574,053
|
|
|
533,187
|
|
|
Treasury stock, at cost, 2020: 3,632,099 shares; 2019: 3,404,639 shares
|
|
|
(110,245)
|
|
|
(104,578)
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
(1,367)
|
|
|
203
|
|
|
TOTAL STOCKHOLDERS’ EQUITY
|
|
|
802,639
|
|
|
763,043
|
|
|
|
|
$
|
1,746,231
|
|
$
|
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
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
Unaudited
|
|
|
|
|
($ thousands)
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
47,186
|
|
$
|
45,534
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
85,189
|
|
|
79,967
|
|
|
Amortization of intangibles
|
|
|
2,942
|
|
|
3,365
|
|
|
Pension settlement expense, including termination expense
|
|
|
89
|
|
|
8,135
|
|
|
Share-based compensation expense
|
|
|
7,956
|
|
|
7,268
|
|
|
Provision for losses on accounts receivable
|
|
|
2,170
|
|
|
832
|
|
|
Change in deferred income taxes
|
|
|
2,831
|
|
|
14,099
|
|
|
Gain on sale of property and equipment and lease termination
|
|
|
(3,280)
|
|
|
(1,384)
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(38,905)
|
|
|
4,216
|
|
|
Prepaid expenses
|
|
|
809
|
|
|
(265)
|
|
|
Other assets
|
|
|
3,918
|
|
|
(4,236)
|
|
|
Income taxes
|
|
|
3,065
|
|
|
(7,883)
|
|
|
Operating right-of-use assets and lease liabilities, net
|
|
|
234
|
|
|
526
|
|
|
Accounts payable, accrued expenses, and other liabilities
|
|
|
37,062
|
|
|
(12,161)
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
|
151,266
|
|
|
138,013
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment, net of financings
|
|
|
(20,146)
|
|
|
(69,773)
|
|
|
Proceeds from sale of property and equipment
|
|
|
8,943
|
|
|
4,748
|
|
|
Purchases of short-term investments
|
|
|
(159,253)
|
|
|
(105,747)
|
|
|
Proceeds from sale of short-term investments
|
|
|
192,563
|
|
|
88,730
|
|
|
Capitalization of internally developed software
|
|
|
(9,568)
|
|
|
(8,500)
|
|
|
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
12,539
|
|
|
(90,542)
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
(309,640)
|
|
|
(43,773)
|
|
|
Net change in book overdrafts
|
|
|
349
|
|
|
(5,570)
|
|
|
Deferred financing costs
|
|
|
—
|
|
|
(562)
|
|
|
Payment of common stock dividends
|
|
|
(6,122)
|
|
|
(6,145)
|
|
|
Purchases of treasury stock
|
|
|
(5,667)
|
|
|
(6,115)
|
|
|
Payments for tax withheld on share-based compensation
|
|
|
(1,989)
|
|
|
(1,206)
|
|
|
NET CASH USED IN FINANCING ACTIVITIES
|
|
|
(98,069)
|
|
|
(53,819)
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
65,736
|
|
|
(6,348)
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
201,909
|
|
|
190,186
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
267,645
|
|
$
|
183,838
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Equipment financed
|
|
$
|
53,045
|
|
$
|
40,966
|
|
|
Accruals for equipment received
|
|
$
|
2,146
|
|
$
|
18,949
|
|
|
Lease liabilities arising from obtaining right-of-use assets
|
|
$
|
60,535
|
|
$
|
26,810
|
|