ArcBest efficiently provided integrated
logistics solutions to customers in a changing market
- Asset-Based operating ratio of 89.9 percent. On a non-GAAP
basis, Asset-Based operating ratio of 88.8 percent, an improvement
of 400 basis points versus second quarter 2023.
- Year-to-date, returned $85.5 million of capital to shareholders
through common stock share repurchases and dividends
ArcBest® (Nasdaq: ARCB), a leader in supply chain logistics,
today reported third quarter 2023 revenue from continuing
operations of $1.1 billion, compared to $1.3 billion in the third
quarter of 2022. ArcBest’s third quarter 2023 operating income from
continuing operations was $45.1 million, compared to $115.3 million
in the third quarter of 2022, and net income from continuing
operations was $34.9 million, or $1.42 per diluted share, compared
to $88.6 million, or $3.49 per diluted share, in the prior-year
period. ArcBest’s third quarter 2023 results were impacted by $30.2
million of noncash lease impairment charges with no comparable
charges in the prior-year period.
Excluding certain items in both periods as identified in the
attached reconciliation tables, third quarter 2023 non‑GAAP
operating income from continuing operations was $74.7 million,
compared to $130.6 million in the prior‑year period. On a non-GAAP
basis, net income from continuing operations was $56.7 million, or
$2.31 per diluted share, compared to $96.1 million, or $3.79 per
diluted share, in third quarter 2022.
“At ArcBest, our ability to see the world through customers’
eyes has positioned our company as the partner of choice for
integrated logistics solutions for 100 years,” said Judy R.
McReynolds, ArcBest chairman, president and CEO. “Our success is
underpinned by the ability to efficiently solve logistics
challenges and help customers navigate market disruptions, rapidly
changing economic conditions, and increased supply chain
complexity.”
Third Quarter Results of Operations
Comparisons
Asset-Based
Third Quarter
2023 Versus Third
Quarter 2022
- Revenue of $741.2 million compared to $791.5 million, a per-day
decrease of 4.1 percent.
- Total tonnage per day decreased 6.3 percent; LTL-rated weight
per shipment decreased 6.4 percent.
- Total shipments per day increased 1.5 percent.
- Total billed revenue per hundredweight increased 1.9 percent.
Revenue per hundredweight on LTL-rated business, excluding fuel
surcharge, increased by a percentage in the mid-single digits.
- Operating income of $74.8 million and an operating ratio of
89.9 percent compared to operating income of $109.3 million and an
operating ratio of 86.2 percent. On a non-GAAP basis, operating
income of $82.8 million and an operating ratio of 88.8 percent
compared to operating income of $116.6 million and an operating
ratio of 85.3 percent.
Compared to the prior-year period, third quarter revenue in
ArcBest’s Asset-Based business declined due to a weaker logistics
industry backdrop, including continued manufacturing sector
contraction. However, this impact was somewhat offset by increased
revenue from new shipments added as a result of recent market
disruption associated with the third quarter bankruptcy of a major
LTL competitor. Core, LTL-rated average daily shipments, tonnage
and revenue increased more than 20% compared to second quarter 2023
due to this additional new profitable business. As new core
shipments were added during the quarter, overall Asset-Based
network capacity was re-allocated to serve this increase in
business by reducing shipments sourced from the transactional LTL
pricing program. Average shipment size decreased during the quarter
as larger average sized transactional shipments were replaced by
lower average sized core shipments.
Asset-Based yields were positively impacted by the change in
shipment mix moving through the ABF network and the improved
pricing strength as a result of the reduction in LTL industry
carrier capacity. On a sequential basis, compared to the second
quarter, total revenue per hundredweight increased by over 16
percent while year-over-year total revenue per hundredweight
increased approximately 2 percent compared to a strong
year-over-year increase during last year’s third quarter. The
overall pricing environment continues to be rational and has been
strengthened by the recent market changes.
Higher employee wage and benefit costs associated with the
implementation of ABF Freight’s new labor agreement added
approximately 350 operating ratio basis points in the third
quarter, relative to the second quarter. Despite those increased
operating expenses, improved yields and initiatives enacted to
reduce costs in other operational areas of the Asset-Based network,
combined with effective handling of the changing profile of
shipments, resulted in sequential improvement in the non-GAAP
Asset-Based operating ratio of 400 basis points compared to the
second quarter.
Asset-Light‡
Third Quarter 2023 Versus Third Quarter
2022
- Revenue of $419.3 million compared to $515.2 million, a per-day
decrease of 16.7 percent.
- Operating loss of $3.7 million compared to operating income of
$15.4 million. On a non‑GAAP basis, operating loss of $3.9 million
compared to operating income of $18.9 million.
- Adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”) of negative $2.0 million compared
to positive $20.5 million, as detailed in the attached non-GAAP
reconciliation tables.
Third quarter Asset-Light results, compared to the prior-year
period, reflect lower revenue per shipment and reduced margins
associated with business mix changes and the soft rate environment.
Our truckload solution experienced significant margin compression
as decreases in customer pricing exceeded the reduced cost of
purchased transportation. Asset-Light average daily shipments
increased during the recent quarter despite a period of weak
demand. Market disruption in LTL carrier capacity resulted in the
need for some shippers to find alternative sources for moving goods
within our managed transportation solution. Efforts to more
effectively match costs with business levels continue, which
lowered operating expenses.
Share Repurchase Program and Common
Stock Dividends
In September 2023, ArcBest entered into a 10b5-1 plan allowing
for share repurchases during the current closed trading window
under ArcBest’s share repurchase program. ArcBest has settled
repurchases of 798,818 shares of common stock for an aggregate cost
of $76.8 million, year-to-date through Thursday, October 26, 2023,
including under the current 10b5-1 plan and the previously
disclosed 10b5-1 plan, which extended from March 16, 2023 through
May 2, 2023. With these purchases, $48.2 million remains available
under the current repurchase authorization for future common stock
purchases.
ArcBest common stock dividends paid this year through September
30, 2023 equaled $8.7 million.
NOTE ‡ - Asset-Light represents the reportable segment
previously named ArcBest. Asset-Light financial results previously
included the ArcBest segment and FleetNet, which was sold on
February 28, 2023.
Conference Call
ArcBest will host a conference call with company executives to
discuss the third quarter 2023 results. The call will be today,
Friday, October 27 at 9:00 a.m. EDT (8:00 a.m. CDT). Interested
parties are invited to listen by calling (800) 916-9049 or by
joining the webcast which can be found on ArcBest’s website at
arcb.com. Slides to accompany this call are included in Exhibit
99.3 of the Form 8-K filed on October 27, 2023, will be posted and
available to download on the company’s website prior to the
scheduled conference time, and will be included in the webcast.
Following the call, a recorded playback will be available through
the end of the day on December 15, 2023. To listen to the playback,
dial (800) 633-8284 or (402) 977-9140 (for international callers).
The conference call ID for the playback is 22028126. The conference
call and playback can also be accessed, through December 15, 2023,
on ArcBest’s website at arcb.com.
About ArcBest
ArcBest® (Nasdaq: ARCB) is a multibillion-dollar integrated
logistics company that helps keep the global supply chain moving.
Founded in 1923 and now with over 15,000 employees across over 250
campuses and service centers, the company is a logistics powerhouse
fueled by the simple notion of finding a way to get the job done.
Through innovative thinking, agility and trust, ArcBest leverages
its full suite of shipping and logistics solutions to meet
customers’ critical needs, each and every day. 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,
2023, may constitute “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, among others, statements regarding (i) our expectations
about our intrinsic value or our prospects for growth and value
creation and (ii) our financial outlook, position, strategies,
goals, and expectations. 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: the effects of a
widespread outbreak of an illness or disease, including the
COVID-19 pandemic, or any other public health crisis, as well as
regulatory measures implemented in response to such events;
external events which may adversely affect us or the third parties
who provide services for us, for which our business continuity
plans may not adequately prepare us, including, but not limited to,
acts of war or terrorism, or military conflicts; data privacy
breaches, cybersecurity incidents, and/or failures of our
information systems, including disruptions or failures of services
essential to our operations or upon which our information
technology platforms rely; interruption or failure of third-party
software or information technology systems or licenses; untimely or
ineffective development and implementation of, or failure to
realize the potential benefits associated with, new or enhanced
technology or processes, including the Vaux freight handling pilot
test program at ABF Freight and our customer pilot offering of
Vaux, including human-centered remote operation software; the loss
or reduction of business from large customers; the timing and
performance of growth initiatives and the ability to manage our
cost structure; the cost, integration, and performance of any
recent or future acquisitions, including the acquisition of MoLo
Solutions, LLC, and the inability to realize the anticipated
benefits of the acquisition within the expected time period or at
all; maintaining our corporate reputation and intellectual property
rights; nationwide or global disruption in the supply chain
resulting in increased volatility in freight volumes; competitive
initiatives and pricing pressures; 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;
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;
relationships with employees, including unions, and our ability to
attract, retain, and upskill 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; union employee wages
and benefits, including changes in required contributions to
multiemployer plans; availability and cost of reliable third-party
services; our ability to secure independent owner operators and/or
operational or regulatory issues related to our use of their
services; litigation or claims asserted against us; governmental
regulations; environmental laws and regulations, including
emissions-control regulations; default on covenants of financing
arrangements and the availability and terms of future financing
arrangements; our ability to generate sufficient cash from
operations to support significant ongoing capital expenditure
requirements and other business initiatives; self-insurance claims
and insurance premium costs; potential impairment of goodwill and
intangible assets; general economic conditions and related shifts
in market demand that impact the performance and needs of
industries we serve and/or limit our customers’ access to adequate
financial resources; increasing costs due to inflation and rising
interest rates; seasonal fluctuations, adverse weather conditions,
natural disasters, and climate change; and other financial,
operational, and legal risks and uncertainties detailed from time
to time in ArcBest Corporation’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 those expressed in
these forward-looking statements, 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
September 30
September 30
2023
2022
2023
2022
(Unaudited)
($ thousands, except share and
per share data)
REVENUES
$
1,128,350
$
1,275,730
$
3,337,908
$
3,865,513
OPERATING EXPENSES
1,083,259
1,160,394
3,229,542
3,521,196
OPERATING INCOME
45,091
115,336
108,366
344,317
OTHER INCOME (COSTS)
Interest and dividend income
3,946
1,127
10,604
1,579
Interest and other related financing
costs
(2,236
)
(1,755
)
(6,768
)
(5,558
)
Other, net
89
(189
)
6,907
(3,822
)
1,799
(817
)
10,743
(7,801
)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
46,890
114,519
119,109
336,516
INCOME TAX PROVISION
11,963
25,906
25,735
78,353
NET INCOME FROM CONTINUING
OPERATIONS
34,927
88,613
93,374
258,163
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS, NET OF TAX(1)
(10
)
229
53,269
2,709
NET INCOME
$
34,917
$
88,842
$
146,643
$
260,872
BASIC EARNINGS PER COMMON
SHARE(2)
Continuing operations
$
1.46
$
3.60
$
3.87
$
10.48
Discontinued operations(1)
—
0.01
2.21
0.11
$
1.45
$
3.61
$
6.08
$
10.59
DILUTED EARNINGS PER COMMON
SHARE(2)
Continuing operations
$
1.42
$
3.49
$
3.77
$
10.07
Discontinued operations(1)
—
0.01
2.15
0.11
$
1.42
$
3.50
$
5.92
$
10.18
AVERAGE COMMON SHARES
OUTSTANDING
Basic
24,004,255
24,605,228
24,119,449
24,640,706
Diluted
24,525,258
25,372,755
24,756,993
25,626,225
1)
Discontinued operations represents the
FleetNet segment, which sold on February 28, 2023. The nine months
ended September 30, 2023 includes the net gain on sale of FleetNet
of $52.3 million after-tax, or $2.17 basic earnings per share and
$2.11 diluted earnings per share.
2)
Earnings per common share is calculated in
total and may not equal the sum of earnings per common share from
continuing operations and discontinued operations due to
rounding.
ARCBEST CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30
December 31
2023
2022
(Unaudited)
($ thousands, except share
data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
251,503
$
158,264
Short-term investments
89,326
167,662
Accounts receivable, less allowances (2023
- $10,825; 2022 - $13,892)
469,490
517,494
Other accounts receivable, less allowances
(2023 - $730; 2022 - $713)
10,984
11,016
Prepaid expenses
30,957
39,484
Prepaid and refundable income taxes
26,534
19,239
Current assets of discontinued
operations
—
64,736
Other
11,342
11,888
TOTAL CURRENT ASSETS
890,136
989,783
PROPERTY, PLANT AND EQUIPMENT
Land and structures
430,263
401,840
Revenue equipment
1,094,183
1,038,832
Service, office, and other equipment
313,062
298,234
Software
169,434
167,164
Leasehold improvements
26,062
23,466
2,033,004
1,929,536
Less allowances for depreciation and
amortization
1,170,914
1,129,366
862,090
800,170
GOODWILL
304,753
304,753
INTANGIBLE ASSETS, NET
104,288
113,733
OPERATING RIGHT-OF-USE ASSETS
164,082
166,515
DEFERRED INCOME TAXES
7,618
6,342
LONG-TERM ASSETS OF DISCONTINUED
OPERATIONS
—
11,097
OTHER LONG-TERM ASSETS
104,479
101,893
TOTAL ASSETS
$
2,437,446
$
2,494,286
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable
$
245,899
$
269,854
Income taxes payable
1,390
16,017
Accrued expenses
322,809
338,457
Current portion of long-term debt
66,862
66,252
Current portion of operating lease
liabilities
31,414
26,225
Current liabilities of discontinued
operations
—
51,665
TOTAL CURRENT LIABILITIES
668,374
768,470
LONG-TERM DEBT, less current
portion
176,296
198,371
OPERATING LEASE LIABILITIES, less
current portion
171,755
147,828
POSTRETIREMENT LIABILITIES, less
current portion
12,167
12,196
LONG-TERM LIABILITIES OF DISCONTINUED
OPERATIONS
—
781
CONTINGENT CONSIDERATION
99,200
112,000
OTHER LONG-TERM LIABILITIES
38,552
42,745
DEFERRED INCOME TAXES
50,369
60,494
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value, authorized
70,000,000 shares; issued 2023: 30,017,658 shares; 2022: 29,758,716
shares
300
298
Additional paid-in capital
338,368
339,582
Retained earnings
1,226,640
1,088,693
Treasury stock, at cost, 2023: 6,217,885
shares; 2022: 5,529,383 shares
(350,161
)
(284,275
)
Accumulated other comprehensive income
5,586
7,103
TOTAL STOCKHOLDERS’ EQUITY
1,220,733
1,151,401
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
2,437,446
$
2,494,286
ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Nine Months Ended
September 30
2023
2022
(Unaudited)
($ thousands)
OPERATING ACTIVITIES
Net income
$
146,643
$
260,872
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
98,711
95,169
Amortization of intangibles
9,631
9,691
Share-based compensation expense
8,590
9,816
Provision for losses on accounts
receivable
2,621
5,065
Change in deferred income taxes
(10,880
)
3,745
(Gain) loss on sale of property and
equipment
1,134
(9,759
)
Gain on sale of subsidiary
—
(402
)
Pre-tax gain on sale of discontinued
operations
(70,201
)
—
Lease impairment charges
30,162
—
Change in fair value of contingent
consideration
(12,800
)
810
Change in fair value of equity
investment
(3,739
)
—
Changes in operating assets and
liabilities:
Receivables
43,478
(54,889
)
Prepaid expenses
8,640
7,550
Other assets
2,393
287
Income taxes
(22,051
)
(11,068
)
Operating right-of-use assets and lease
liabilities, net
3,286
1,579
Accounts payable, accrued expenses, and
other liabilities
(40,863
)
31,983
NET CASH PROVIDED BY OPERATING
ACTIVITIES
194,755
350,449
INVESTING ACTIVITIES
Purchases of property, plant and
equipment, net of financings
(129,779
)
(76,068
)
Proceeds from sale of property and
equipment
5,972
13,938
Proceeds from sale of discontinued
operations
100,949
—
Business acquisition, net of cash
acquired(1)
—
2,279
Proceeds from sale of subsidiary
—
475
Purchases of short-term investments
(80,353
)
(145,254
)
Proceeds from sale of short-term
investments
160,570
48,161
Capitalization of internally developed
software
(9,424
)
(13,922
)
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES
47,935
(170,391
)
FINANCING ACTIVITIES
Borrowings under credit facilities
—
58,000
Proceeds from notes payable
—
12,113
Payments on long-term debt
(52,489
)
(99,567
)
Net change in book overdrafts
(12,489
)
2,102
Deferred financing costs
57
(53
)
Payment of common stock dividends
(8,696
)
(7,892
)
Purchases of treasury stock
(65,886
)
(50,117
)
Payments for tax withheld on share-based
compensation
(10,056
)
(15,733
)
NET CASH USED IN FINANCING
ACTIVITIES
(149,559
)
(101,147
)
NET INCREASE IN CASH AND CASH
EQUIVALENTS
93,131
78,911
Cash and cash equivalents of continuing
operations at beginning of period
158,264
76,568
Cash and cash equivalents of discontinued
operations at beginning of period
108
52
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
251,503
$
155,531
NONCASH INVESTING ACTIVITIES
Equipment financed
$
31,024
$
57,241
Accruals for equipment received
$
5,743
$
5,587
Lease liabilities arising from obtaining
right-of-use assets
$
49,033
$
78,324
1)
Represents cash received from escrow for
post-closing adjustments related to the acquisition of MoLo.
Note: The statements of cash flows for the
nine months ended September 30, 2023 and 2022 include cash flows
from continuing operations and cash flows from discontinued
operations of FleetNet America®, which was sold on February 28,
2023.
ARCBEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT
DATA AND OPERATING RATIOS
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
(Unaudited)
($ thousands, except
percentages)
REVENUES FROM CONTINUING
OPERATIONS
Asset-Based
$
741,186
$
791,531
$
2,161,018
$
2,299,464
Asset-Light(1)
419,312
515,235
1,267,220
1,660,174
Other and eliminations
(32,148
)
(31,036
)
(90,330
)
(94,125
)
Total consolidated revenues from
continuing operations
$
1,128,350
$
1,275,730
$
3,337,908
$
3,865,513
OPERATING EXPENSES FROM CONTINUING
OPERATIONS
Asset-Based
Salaries, wages, and benefits
$
357,582
48.2
%
$
332,359
42.0
%
$
1,037,725
48.0
%
$
973,924
42.4
%
Fuel, supplies, and expenses
91,493
12.4
97,279
12.3
276,678
12.8
281,406
12.2
Operating taxes and licenses
13,865
1.9
13,089
1.6
41,938
1.9
38,405
1.7
Insurance
13,654
1.8
13,180
1.7
39,816
1.8
35,808
1.5
Communications and utilities
4,729
0.6
4,794
0.6
14,586
0.7
14,129
0.6
Depreciation and amortization
26,537
3.6
24,117
3.0
76,721
3.6
72,885
3.2
Rents and purchased transportation
79,233
10.7
123,714
15.6
271,899
12.6
348,249
15.1
Shared services
70,699
9.5
72,286
9.1
209,780
9.7
215,020
9.4
(Gain) loss on sale of property and
equipment and lease impairment charges(2)
540
0.1
(5,910
)
(0.7
)
905
—
(9,975
)
(0.4
)
Innovative technology costs(3)
7,300
1.0
6,068
0.8
21,711
1.0
20,982
0.9
Other
731
0.1
1,243
0.2
3,640
0.2
2,629
0.1
Total Asset-Based
666,363
89.9
%
682,219
86.2
%
1,995,399
92.3
%
1,993,462
86.7
%
Asset-Light(1)
Purchased transportation
$
365,217
87.1
%
$
425,567
82.6
%
$
1,078,482
85.1
%
$
1,382,107
83.3
%
Supplies and expenses
2,773
0.7
4,378
0.9
10,193
0.8
11,907
0.7
Depreciation and amortization(4)
5,097
1.2
5,072
1.0
15,250
1.2
15,720
0.9
Shared services
47,411
11.3
56,371
10.9
147,825
11.7
164,554
9.9
Contingent consideration(5)
(17,840
)
(4.3
)
—
—
(12,800
)
(1.0
)
810
—
Lease impairment charges(6)
14,407
3.4
—
—
14,407
1.1
—
—
Gain on sale of subsidiary(7)
—
—
—
—
—
—
(402
)
—
Other
5,951
1.5
8,463
1.6
18,478
1.5
21,499
1.3
Total Asset-Light
423,016
100.9
%
499,851
97.0
%
1,271,835
100.4
%
1,596,195
96.1
%
Other and eliminations(8)
(6,120
)
(21,676
)
(37,692
)
(68,461
)
Total consolidated operating expenses from
continuing operations
$
1,083,259
96.0
%
$
1,160,394
91.0
%
$
3,229,542
96.8
%
$
3,521,196
91.1
%
OPERATING INCOME (LOSS) FROM CONTINUING
OPERATIONS
Asset-Based
$
74,823
$
109,312
$
165,619
$
306,002
Asset-Light(1)
(3,704
)
15,384
(4,615
)
63,979
Other and eliminations(8)
(26,028
)
(9,360
)
(52,638
)
(25,664
)
Total consolidated operating income from
continuing operations
$
45,091
$
115,336
$
108,366
$
344,317
1)
Asset-Light represents the reportable
segment previously named ArcBest. Asset-Light financial results
previously included the ArcBest segment and FleetNet, which was
sold on February 28, 2023.
2)
The three and nine months ended September
30, 2023 include $0.7 million of noncash lease-related impairment
charges for a service center. The three and nine months ended
September 30, 2022 include a $4.3 million noncash gain on a
like-kind property exchange of a service center.
3)
Represents costs associated with the Vaux
freight handling pilot test program at ABF Freight. The decision
was made to pause the pilot during third quarter 2023, as
previously announced.
4)
Depreciation and amortization includes
amortization of intangibles associated with acquired
businesses.
5)
Represents the change in fair value of the
contingent earnout consideration recorded for the MoLo acquisition.
The liability for contingent consideration is remeasured at each
quarterly reporting date, and any change in fair value as a result
of the recurring assessments is recognized in operating income
(loss). The contingent consideration for the MoLo acquisition will
be paid based on achievement of certain targets of adjusted
earnings before interest, taxes, depreciation, and amortization, as
adjusted for certain items pursuant to the merger agreement, for
years 2023 through 2025.
6)
Represents noncash lease-related
impairment charges for certain office spaces that were made
available for sublease.
7)
Gain relates to the contingent amount
recognized in second quarter 2022 when the funds from the May 2021
sale of the labor services portion of the Asset-Light segment’s
moving business were released from escrow.
8)
“Other and eliminations” includes $15.1
million of noncash lease-related impairment charges for a Vaux
pilot facility, 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.
ARCBEST CORPORATION RECONCILIATIONS OF GAAP TO
NON-GAAP FINANCIAL MEASURES
Non-GAAP Financial Measures
We report our financial results in accordance with U.S.
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. Accordingly,
non-GAAP results are presented on a continuing operations basis,
excluding the discontinued operations of FleetNet, which was sold
on February 28, 2023. 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
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
ArcBest Corporation -
Consolidated
(Unaudited)
($ thousands, except per share
data)
Operating Income from Continuing
Operations
Amounts on GAAP basis
$
45,091
$
115,336
$
108,366
$
344,317
Innovative technology costs,
pre-tax(1)
14,059
10,056
41,358
30,083
Purchase accounting amortization,
pre-tax(2)
3,192
3,213
9,576
9,640
Change in fair value of contingent
consideration, pre-tax(3)
(17,840
)
—
(12,800
)
810
Lease impairment charges, pre-tax(4)
30,162
—
30,162
—
Gain on sale of subsidiary, pre-tax(5)
—
—
—
(402
)
Nonunion vacation policy enhancement,
pre-tax(6)
—
1,990
—
1,990
Non-GAAP amounts
$
74,664
$
130,595
$
176,662
$
386,438
Net Income from Continuing
Operations
Amounts on GAAP basis
$
34,927
$
88,613
$
93,374
$
258,163
Innovative technology costs, after-tax
(includes related financing costs)(1)
10,630
7,608
31,316
22,686
Purchase accounting amortization,
after-tax(2)
2,398
2,396
7,194
7,189
Change in fair value of contingent
consideration, after-tax(3)
(13,404
)
—
(9,617
)
604
Lease impairment charges, after-tax(4)
22,571
—
22,571
—
Gain on sale of subsidiary,
after-tax(5)
—
—
—
(317
)
Nonunion vacation policy enhancement,
after-tax(6)
—
1,479
—
1,479
Change in fair value of equity investment,
after-tax(7)
—
—
(2,786
)
—
Life insurance proceeds and changes in
cash surrender value
(212
)
176
(2,794
)
3,679
Tax benefit from vested RSUs(8)
(188
)
(2,381
)
(5,103
)
(8,310
)
Tax credits(9)
—
(1,831
)
—
(1,190
)
Non-GAAP amounts
$
56,722
$
96,060
$
134,155
$
283,983
Diluted Earnings Per Share from
Continuing Operations
Amounts on GAAP basis
$
1.42
$
3.49
$
3.77
$
10.07
Innovative technology costs, after-tax
(includes related financing costs)(1)
0.43
0.30
1.26
0.89
Purchase accounting amortization,
after-tax(2)
0.10
0.09
0.29
0.28
Change in fair value of contingent
consideration, after-tax(3)
(0.55
)
—
(0.39
)
0.02
Lease impairment charges, after-tax(4)
0.92
—
0.91
—
Gain on sale of subsidiary,
after-tax(5)
—
—
—
(0.01
)
Nonunion vacation policy enhancement,
after-tax(6)
—
0.06
—
0.06
Change in fair value of equity investment,
after-tax(7)
—
—
(0.11
)
—
Life insurance proceeds and changes in
cash surrender value
(0.01
)
0.01
(0.11
)
0.14
Tax benefit from vested RSUs(8)
(0.01
)
(0.09
)
(0.21
)
(0.32
)
Tax credits(9)
—
(0.07
)
—
(0.05
)
Non-GAAP amounts(10)
$
2.31
$
3.79
$
5.42
$
11.08
See “Notes to Non-GAAP Financial Tables”
for footnotes to this ArcBest Corporation – Consolidated Non-GAAP
table.
ARCBEST CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES – Continued
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
Segment Operating Income (Loss)
Reconciliations
(Unaudited)
($ thousands, except
percentages)
Asset-Based Segment
Operating Income ($) and Operating
Ratio (% of revenues)
Amounts on GAAP basis
$
74,823
89.9
%
$
109,312
86.2
%
$
165,619
92.3
%
$
306,002
86.7
%
Innovative technology costs,
pre-tax(11)
7,300
(1.0
)
6,068
(0.8
)
21,711
(1.0
)
20,982
(0.9
)
Lease impairment charges, pre-tax(4)
684
(0.1
)
—
—
684
—
—
—
Nonunion vacation policy enhancement,
pre-tax(6)
—
—
1,245
(0.2
)
—
—
1,245
(0.1
)
Non-GAAP amounts(10)
$
82,807
88.8
%
$
116,625
85.3
%
$
188,014
91.3
%
$
328,229
85.7
%
Asset-Light Segment(12)
Operating Income (Loss) ($) and
Operating Ratio (% of revenues)
Amounts on GAAP basis
$
(3,704
)
100.9
%
$
15,384
97.0
%
$
(4,615
)
100.4
%
$
63,979
96.1
%
Purchase accounting amortization,
pre-tax(2)
3,192
(0.8
)
3,213
(0.6
)
9,576
(0.8
)
9,640
(0.6
)
Change in fair value of contingent
consideration, pre-tax(3)
(17,840
)
4.3
—
—
(12,800
)
1.0
810
—
Lease impairment charges, pre-tax(4)
14,407
(3.4
)
—
—
14,407
(1.1
)
—
—
Gain on sale of subsidiary, pre-tax(5)
—
—
—
—
—
—
(402
)
—
Nonunion vacation policy enhancement,
pre-tax(6)
—
—
318
(0.1
)
—
—
318
—
Non-GAAP amounts(10)
$
(3,945
)
100.9
%
$
18,915
96.3
%
$
6,568
99.5
%
$
74,345
95.5
%
Other and Eliminations
Operating Income (Loss) ($)
Amounts on GAAP basis
$
(26,028
)
$
(9,360
)
$
(52,638
)
$
(25,664
)
Innovative technology costs,
pre-tax(1)
6,759
3,988
19,647
9,101
Lease impairment charges, pre-tax(4)
15,071
—
15,071
—
Nonunion vacation policy enhancement,
pre-tax(6)
—
427
—
427
Non-GAAP amounts(10)
$
(4,198
)
$
(4,945
)
$
(17,920
)
$
(16,136
)
Note: See “Notes to Non-GAAP Financial
Tables” for footnotes to this Segment Operating Income (Loss)
Reconciliations non-GAAP table.
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 September
30, 2023
Other
Income
Income
CONTINUING OPERATIONS
Operating
Income
Before Income
Tax
Net
Income
(Costs)
Taxes
Provision
Income
Tax Rate(13)
Amounts on GAAP basis
$
45,091
$
1,799
$
46,890
$
11,963
$
34,927
25.5
%
Innovative technology costs(1)
14,059
226
14,285
3,655
10,630
25.6
Purchase accounting amortization(2)
3,192
—
3,192
794
2,398
24.9
Change in fair value of contingent
consideration(3)
(17,840
)
—
(17,840
)
(4,436
)
(13,404
)
(24.9
)
Lease impairment charges(4)
30,162
—
30,162
7,591
22,571
25.2
Life insurance proceeds and changes in
cash surrender value
—
(212
)
(212
)
—
(212
)
—
Tax benefit from vested RSUs(8)
—
—
—
188
(188
)
—
Non-GAAP amounts
$
74,664
$
1,813
$
76,477
$
19,755
$
56,722
25.8
%
Nine Months Ended September
30, 2023
Other
Income
Income
Operating
Income
Before Income
Tax
Net
Income
(Costs)
Taxes
Provision
Income
Tax Rate(13)
Amounts on GAAP basis
$
108,366
$
10,743
$
119,109
$
25,735
$
93,374
21.6
%
Innovative technology costs(1)
41,358
726
42,084
10,768
31,316
25.6
Purchase accounting amortization(2)
9,576
—
9,576
2,382
7,194
24.9
Change in fair value of contingent
consideration(3)
(12,800
)
—
(12,800
)
(3,183
)
(9,617
)
(24.9
)
Lease impairment charges(4)
30,162
—
30,162
7,591
22,571
25.2
Change in fair value of equity
investment(7)
—
(3,739
)
(3,739
)
(953
)
(2,786
)
(25.5
)
Life insurance proceeds and changes in
cash surrender value
—
(2,794
)
(2,794
)
—
(2,794
)
—
Tax benefit from vested RSUs(8)
—
—
—
5,103
(5,103
)
—
Non-GAAP amounts
$
176,662
$
4,936
$
181,598
$
47,443
$
134,155
26.1
%
Three Months Ended September
30, 2022
Other
Income
Income
CONTINUING OPERATIONS
Operating
Income
Before Income
Tax
Net
Income
(Costs)
Taxes
Provision
Income
Tax Rate(13)
Amounts on GAAP basis
$
115,336
$
(817
)
$
114,519
$
25,906
$
88,613
22.6
%
Innovative technology costs(1)
10,056
189
10,245
2,637
7,608
25.7
Purchase accounting amortization(2)
3,213
—
3,213
817
2,396
25.4
Nonunion vacation policy
enhancement(6)
1,990
—
1,990
511
1,479
25.7
Life insurance proceeds and changes in
cash surrender value
—
176
176
—
176
—
Tax benefit from vested RSUs(8)
—
—
—
2,381
(2,381
)
—
Tax credits(9)
—
—
—
1,831
(1,831
)
—
Non-GAAP amounts
$
130,595
$
(452
)
$
130,143
$
34,083
$
96,060
26.2
%
Nine Months Ended September
30, 2022
Other
Income
Income
Operating
Income
Before Income
Tax
Net
Income
(Costs)
Taxes
Provision
Income
Tax Rate(13)
Amounts on GAAP basis
$
344,317
$
(7,801
)
$
336,516
$
78,353
$
258,163
23.3
%
Innovative technology costs(1)
30,083
466
30,549
7,863
22,686
25.7
Purchase accounting amortization(2)
9,640
—
9,640
2,451
7,189
25.4
Change in fair value of contingent
consideration(3)
810
—
810
206
604
25.4
Gain on sale of subsidiary(5)
(402
)
—
(402
)
(85
)
(317
)
(21.1
)
Nonunion vacation policy
enhancement(6)
1,990
—
1,990
511
1,479
25.7
Life insurance proceeds and changes in
cash surrender value
—
3,679
3,679
—
3,679
—
Tax benefit from vested RSUs(8)
—
—
—
8,310
(8,310
)
—
Tax credits(9)
—
—
—
1,190
(1,190
)
—
Non-GAAP amounts
$
386,438
$
(3,656
)
$
382,782
$
98,799
$
283,983
25.8
%
Note: See “Notes to Non-GAAP Financial
Tables” for footnotes to this Effective Tax Rate Reconciliation
non-GAAP table.
ARCBEST CORPORATION RECONCILIATIONS OF GAAP TO
NON-GAAP FINANCIAL MEASURES – Continued
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 segment, changes in the fair value of contingent
consideration and equity investment, and lease impairment charges,
which are significant expenses or gains 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. The calculation of Consolidated Adjusted
EBITDA as presented below begins with net income from continuing
operations, which is the most directly comparable GAAP measure. The
calculation of Asset-Light Adjusted EBITDA as presented below
begins with operating income (loss), as other income (costs),
income taxes, and net income from continuing operations are
reported at the consolidated level and not included in the
operating segment financial information evaluated by management to
make operating decisions.
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
(Unaudited)
($ thousands)
ArcBest Corporation - Consolidated
Adjusted EBITDA from Continuing Operations
Net Income from Continuing
Operations
$
34,927
$
88,613
$
93,374
$
258,163
Interest and other related financing
costs
2,236
1,755
6,768
5,558
Income tax provision
11,963
25,906
25,735
78,353
Depreciation and amortization(14)
37,141
34,229
107,962
103,509
Amortization of share-based
compensation
3,005
3,091
8,537
9,591
Change in fair value of contingent
consideration(3)
(17,840
)
—
(12,800
)
810
Lease impairment charges(4)
30,162
—
30,162
—
Change in fair value of equity
investment(7)
—
—
(3,739
)
—
Gain on sale of subsidiary(5)
—
—
—
(402
)
Consolidated Adjusted EBITDA from
Continuing Operations
$
101,594
$
153,594
$
255,999
$
455,582
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
(Unaudited)
($ thousands)
Asset-Light Adjusted EBITDA(12)
Operating Income (Loss)
$
(3,704
)
$
15,384
$
(4,615
)
$
63,979
Depreciation and amortization(14)
5,097
5,072
15,250
15,720
Change in fair value of contingent
consideration(3)
(17,840
)
—
(12,800
)
810
Lease impairment charges(4)
14,407
—
14,407
—
Gain on sale of subsidiary(5)
—
—
—
(402
)
Asset-Light Adjusted EBITDA
$
(2,040
)
$
20,456
$
12,242
$
80,107
Note: See “Notes to Non-GAAP Financial
Tables” for footnotes to this Asset-Light Adjusted EBITDA non-GAAP
table.
ARCBEST CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES – Continued
Notes to Non-GAAP Financial
Tables
The following footnotes apply to the
non-GAAP financial tables presented in this press release.
1)
Represents costs associated with the Vaux
freight handling pilot test program at ABF Freight, costs related
to our customer pilot offering of Vaux, including human-centered
remote operation software, and initiatives to optimize our
performance through technological innovation.
2)
Represents the amortization of acquired
intangible assets in the Asset-Light segment.
3)
Represents change in fair value of the
contingent earnout consideration recorded for the MoLo acquisition,
as previously described in the footnotes to the Financial Statement
Operating Segment Data and Operating Ratios table.
4)
Represents noncash lease-related
impairment charges for a Vaux pilot facility, a service center and
office spaces that were made available for sublease.
5)
Gain relates to the contingent amount
recognized in second quarter 2022 when the funds from the May 2021
sale of the labor services portion of the Asset-Light segment’s
moving business were released from escrow.
6)
Represents a one-time, noncash charge for
enhancements to our nonunion vacation policy which were effective
third quarter 2022.
7)
Represents increase in fair value of our
investment in Phantom Auto, the leading provider of human-centered
remote operation software, based on observable price changes during
second quarter 2023.
8)
Represents recognition of the tax impact
for the vesting of share-based compensation.
9)
Represents the amounts recorded in third
quarter 2022 related to prior periods due to the August 2022
retroactive reinstatement of the alternative fuel tax credit. The
amount for the nine months ended September 30, 2022 relates to the
tax credit for the year ended December 31, 2021. The amount for the
three months ended September 30, 2022 relates to the tax credit for
2021 and the six months ended June 30, 2022.
10)
Non-GAAP amounts are calculated in total
and may not equal the sum of the GAAP amounts and the non-GAAP
adjustments due to rounding.
11)
Represents costs associated with the Vaux
freight handling pilot test program at ABF Freight. The decision
was made to pause the pilot during third quarter 2023, as
previously announced.
12)
Asset-Light represents the reportable
segment previously named ArcBest. Asset-Light financial results
previously included the ArcBest segment and FleetNet, which was
sold on February 28, 2023.
13)
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.
14)
Includes amortization of intangibles
associated with acquired businesses.
ARCBEST CORPORATION
OPERATING STATISTICS
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
% Change
2023
2022
% Change
(Unaudited)
Asset-Based
Workdays
62.5
64.0
190.0
191.0
Billed Revenue(1) / CWT
$
47.28
$
46.42
1.9
%
$
43.17
$
45.32
(4.7
%)
Billed Revenue(1) / Shipment
$
574.95
$
611.70
(6.0
%)
$
549.53
$
608.03
(9.6
%)
Shipments
1,273,335
1,284,991
(0.9
%)
3,938,157
3,789,074
3.9
%
Shipments / Day
20,373
20,078
1.5
%
20,727
19,838
4.5
%
Tonnage (Tons)
774,291
846,613
(8.5
%)
2,506,495
2,541,710
(1.4
%)
Tons / Day
12,389
13,228
(6.3
%)
13,192
13,307
(0.9
%)
Pounds / Shipment
1,216
1,318
(7.7
%)
1,273
1,342
(5.1
%)
Average Length of Haul (Miles)
1,065
1,100
(3.2
%)
1,096
1,092
0.4
%
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
Nine Months Ended
September 30, 2023
September 30, 2023
(Unaudited)
Asset-Light(2)(3)
Revenue / Shipment
(22.8%)
(28.0%)
Shipments / Day
3.7%
2.7%
2)
Asset-Light represents the reportable
segment previously named ArcBest.
3)
Statistical data related to managed
transportation solutions transactions is not included in the
presentation of operating statistics for the Asset-Light segment
for the periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231027630348/en/
Investor Relations Contact: David Humphrey Title: Vice President
– Investor Relations Phone: 479-785-6200 Email: dhumphrey@arcb.com
Media Contact: Autumnn Mahar Title: Director External
Communications and Public Relations Phone: 479-494-8221 Email:
amahar@arcb.com
ArcBest (NASDAQ:ARCB)
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