Arcbest Corp 8-K, filed Aug 2, 2021
Arcbest Corp (ARCB)
About this 8-K
Arcbest Corp filed this 8-K on August 2, 2021.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
June 30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM
CURRENT REPORT
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ITEM 2.02 – RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 2, 2021, ArcBest® (Nasdaq: ARCB) (the “Company”) issued a press release announcing its unaudited second quarter 2021 results. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference. Additional supplemental and other information to be used in connection with the scheduled conference call to discuss the second quarter results is furnished as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.
The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP financial measures and ratios and other information utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing the Company’s core operating performance and provide 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 ArcBest’s performance because it removes the impact of items from operating results that, in management’s opinion, do not reflect ArcBest’s core operating performance.
The press release in Exhibit 99.1 and the supplemental and other information in Exhibit 99.2 include certain non-GAAP information. Certain information discussed in the scheduled conference call could also be considered non-GAAP measures. Reconciliations of the non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included in Exhibit 99.1 herein, including reconciliations of GAAP earnings and earnings per share to non-GAAP financial measures, reconciliations of GAAP to non-GAAP effective tax rates, and calculations of adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”).
Management believes EBITDA and Adjusted EBITDA to be relevant and useful information as EBITDA is a standard measure commonly reported and widely used by analysts, investors and others to measure financial performance and ability to service debt obligations. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in ArcBest’s credit agreement. Other companies may calculate EBITDA and Adjusted EBITDA differently; therefore, ArcBest’s calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, ArcBest’s 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.
ITEM 9.01 – FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. | | Description of Exhibit |
| | |
99.1 | | |
99.2 | | |
104 | | Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | ARCBEST CORPORATION |
| | | |
| | | (Registrant) |
| | | |
Date: | August 2, 2021 | | /s/ Michael R. Johns |
| Michael R. Johns | ||
| Vice President – General Counsel | ||
| and Corporate Secretary | ||
Exhibit 99.1
Investor Relations Contact: David Humphrey | |
Title: Vice President – Investor Relations | |
Phone: 479-785-6200 | |
Email: dhumphrey@arcb.com | |
ArcBest® Announces Second Quarter 2021 Results
| ● | Second quarter 2021 revenue of $949.0 million, and net income of $61.0 million, or $2.27 per diluted share. On a non-GAAP1 basis, second quarter 2021 net income of $53.1 million, or $1.97 per diluted share. |
| ● | Highest quarterly revenue and operating income in ArcBest’s history. |
FORT SMITH, Arkansas, August 2, 2021 — ArcBest® (Nasdaq: ARCB), a leader in supply chain logistics, today reported second quarter 2021 revenue of $949.0 million compared to second quarter 2020 revenue of $627.4 million. ArcBest’s second quarter 2021 operating income was $74.3 million and net income was $61.0 million, or $2.27 per diluted share compared to second quarter 2020 operating income of $20.4 million and net income of $15.9 million, or $0.61 per diluted share.
Excluding certain items in both periods as identified in the attached reconciliation tables, non-GAAP operating income was $74.8 million in second quarter 2021 compared to second quarter 2020 operating income of $25.1 million. On a non-GAAP basis, net income was $53.1 million, or $1.97 per diluted share in second quarter 2021 compared to second quarter 2020 net income of $17.6 million, or $0.67 per diluted share.
“We’re very pleased to report record results for the second consecutive quarter,” said Judy R. McReynolds, ArcBest chairman, president and CEO. “Our strong results for the first half of 2021 reflect our tireless execution in a period of extremely tight capacity and high demand. We put the customer at the center of everything we do, and we’re seeing our approach pay off as we work alongside shippers and capacity providers to solve their complex challenges.”
| 1. | U.S. Generally Accepted Accounting Principles |
1
Second Quarter Results of Operations Comparisons
Asset-Based
Second Quarter 2021 Versus Second Quarter 2020
| ● | Revenue of $652.8 million compared to $460.1 million, a per-day increase of 41.9 percent. |
| ● | Total tonnage per day increase of 22.7 percent, with double-digit percentage increases in both LTL-rated tonnage and TL-rated spot shipment tonnage moving in the Asset-Based network. |
| ● | Total shipments per day increase of 13.5 percent including a 13.7 percent increase in LTL-rated shipments per day and an increase of 10.8 percent in LTL-rated weight per shipment. |
| ● | Total billed revenue per hundredweight increased 15.4 percent and was positively impacted by higher fuel surcharges. Revenue per hundredweight on LTL-rated business, excluding fuel surcharge, improved by a percentage in the mid-single digits. |
| ● | Operating income of $63.9 million and an operating ratio of 90.2 percent compared to the prior year quarter operating income of $21.0 million and an operating ratio of 95.4 percent. On a non-GAAP basis, operating income of $71.4 million and an operating ratio of 89.0 percent compared to the prior year quarter operating income of $25.8 million and an operating ratio of 94.4 percent. |
ArcBest’s Asset-Based business continued to benefit from increasing customer demand and a solid pricing environment that contributed to record-setting revenue and profits. This quarter’s results compared favorably to the second quarter of 2020 which was significantly impacted by the COVID-19 pandemic. Considering the strength of business from core customers, along with unseasonable demand for household goods moving services which was earlier in the year than normal, Asset-Based shipment mix was managed for customer service levels, while optimizing revenue. In response to the need for increased use of local and linehaul purchased transportation to supplement the Asset-Based network and meet customers’ needs, second quarter hiring initiatives were successful and should produce future benefits.
Second Quarter 2021 Versus Second Quarter 2020
| ● | Revenue of $330.3 million compared to $197.9 million, a per-day increase of 66.9 percent. |
| ● | Operating income of $16.3 million compared to the prior year quarter operating income of $2.1 million. Operating income includes a $6.9 million gain on the sale of the labor services portion of the Asset-Light moving business. Non-GAAP operating income, as detailed in the attached reconciliation tables, excludes the gain on the sale of the moving services subsidiary and totaled $9.3 million in second quarter 2021. |
| ● | Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $19.0 million compared to the prior year quarter Adjusted EBITDA of $4.9 million, as detailed in the attached reconciliation tables. |
Solid customer demand and higher market rates resulting from continued tightness in available truckload capacity translated into strong second quarter revenue growth in the ArcBest segment. The increased need for expedite service and managed logistics solutions, along with new account growth, contributed to higher shipment levels and profitability. The operating income improvement reflects higher revenue, partially offset by investments in technology and personnel associated with shipment growth. ArcBest continued to benefit from strong relationships with carrier partners to meet customers’ needs in a tight market.
An increase in revenue per event combined with an increase in total events contributed to total revenue and profitability growth for FleetNet.
Closing Comments
“We are experiencing a strong start to 2021 and I’m proud of the work our leaders and employees are doing on behalf of our customers as their businesses normalize,” McReynolds said. “Providing assured capacity is a shared mindset of employees across our organization.”
NOTE
‡ - The ArcBest and FleetNet reportable segments, combined, represent Asset-Light operations.
2
Conference Call
ArcBest will host a conference call with company executives to discuss the 2021 second quarter results. The call will be today, Monday, August 2, at 9:30 a.m. EDT (8:30 a.m. CDT). Interested parties are invited to listen by calling (800) 926-9871. Following the call, a recorded playback will be available through the end of the day on September 15, 2021. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21995988. The conference call and playback can also be accessed, through September 15, 2021, 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, 2021 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: widespread outbreak of an illness or disease, including the COVID-19 pandemic and its effects, 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; 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; interruption or failure of third-party software or information technology systems or licenses; 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; the loss or reduction of business from large customers; the ability to manage our cost structure, and the timing and performance of growth initiatives; maintaining our corporate reputation and intellectual property rights; 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 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; 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; 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; seasonal fluctuations and adverse weather conditions; 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 (the “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.
3
ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| | Three Months Ended | | Six Months Ended | | ||||||||
| | June 30 | | June 30 | | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| ||||
| | (Unaudited) | | ||||||||||
| | ($ thousands, except share and per share data) | | ||||||||||
REVENUES | | $ | 948,973 | | $ | 627,370 | | $ | 1,778,186 | | $ | 1,328,769 | |
| | | | | | | | | | | | | |
OPERATING EXPENSES | |
| 874,674 | | | 606,945 | |
| 1,671,696 | | | 1,300,525 | |
| | | | | | | | | | | | | |
OPERATING INCOME | |
| 74,299 | |
| 20,425 | |
| 106,490 | |
| 28,244 | |
| | | | | | | | | | | | | |
OTHER INCOME (COSTS) | | | | | | | | | | | | | |
Interest and dividend income | |
| 322 | |
| 991 | |
| 714 | |
| 2,366 | |
Interest and other related financing costs | |
| (2,274) | |
| (3,378) | |
| (4,702) | |
| (6,325) | |
Other, net | |
| 1,111 | |
| 2,696 | |
| 2,303 | |
| (1,166) | |
| |
| (841) | |
| 309 | |
| (1,685) | |
| (5,125) | |
| | | | | | | | | | | | | |
INCOME BEFORE INCOME TAXES | |
| 73,458 | |
| 20,734 | |
| 104,805 | |
| 23,119 | |
| | | | | | | | | | | | | |
INCOME TAX PROVISION | |
| 12,477 | |
| 4,854 | |
| 20,463 | |
| 5,337 | |
| | | | | | | | | | | | | |
NET INCOME | | $ | 60,981 | | $ | 15,880 | | $ | 84,342 | | $ | 17,782 | |
| | | | | | | | | | | | | |
EARNINGS PER COMMON SHARE | | | | | | | | | | | | | |
Basic | | $ | 2.38 | | $ | 0.62 | | $ | 3.30 | | $ | 0.70 | |
Diluted | | $ | 2.27 | | $ | 0.61 | | $ | 3.13 | | $ | 0.68 | |
| | | | | | | | | | | | | |
AVERAGE COMMON SHARES OUTSTANDING | | | | | | | | | | | | | |
Basic | |
| 25,586,353 | |
| 25,463,559 | |
| 25,522,453 | |
| 25,468,624 | |
Diluted | |
| 26,910,796 | |
| 26,217,957 | |
| 26,926,133 | |
| 26,252,486 | |
| | | | | | | | | | | | | |
CASH DIVIDENDS DECLARED PER COMMON SHARE | | $ | 0.08 | | $ | 0.08 | | $ | 0.16 | | $ | 0.16 | |
4
ARCBEST CORPORATION
| | June 30 | | December 31 | | ||
|
| 2021 |
| 2020 |
| ||
| | (Unaudited) | | Note | | ||
| | ($ thousands, except share data) | | ||||
ASSETS | | | | | | | |
CURRENT ASSETS | | | | | | | |
Cash and cash equivalents | | $ | 362,619 | | $ | 303,954 | |
Short-term investments | |
| 59,967 | |
| 65,408 | |
Accounts receivable, less allowances (2021 - $7,396; 2020 - $7,851) | |
| 360,498 | |
| 320,870 | |
Other accounts receivable, less allowances (2021 - $667; 2020 - $660) | |
| 13,284 | |
| 14,343 | |
Prepaid expenses | |
| 36,355 | |
| 37,774 | |
Prepaid and refundable income taxes | |
| 5,871 | |
| 11,397 | |
Other | |
| 4,937 | |
| 4,422 | |
TOTAL CURRENT ASSETS | |
| 843,531 | |
| 758,168 | |
| | | | | | | |
PROPERTY, PLANT AND EQUIPMENT | | | | | | | |
Land and structures | |
| 345,829 | |
| 342,178 | |
Revenue equipment | |
| 933,264 | |
| 916,760 | |
Service, office, and other equipment | |
| 239,462 | |
| 233,810 | |
Software | |
| 170,528 | |
| 163,193 | |
Leasehold improvements | |
| 15,835 | |
| 15,156 | |
| | | 1,704,918 | | | 1,671,097 | |
Less allowances for depreciation and amortization | |
| 1,038,974 | |
| 992,407 | |
| |
| 665,944 | |
| 678,690 | |
| | | | | | | |
GOODWILL | |
| 86,368 | |
| 88,320 | |
INTANGIBLE ASSETS, NET | |
| 53,084 | |
| 54,981 | |
OPERATING RIGHT-OF-USE ASSETS | | | 109,860 | | | 115,195 | |
DEFERRED INCOME TAXES | |
| 6,419 | |
| 6,158 | |
OTHER LONG-TERM ASSETS | | | 76,267 | | | 77,496 | |
| | $ | 1,841,473 | | $ | 1,779,008 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| | | | | | | |
CURRENT LIABILITIES | | | | | | | |
Accounts payable | | $ | 204,124 | | $ | 170,898 | |
Income taxes payable | |
| 7,357 | |
| 316 | |
Accrued expenses | |
| 260,185 | |
| 246,746 | |
Current portion of long-term debt | |
| 66,644 | |
| 67,105 | |
Current portion of operating lease liabilities | | | 21,950 | | | 21,482 | |
TOTAL CURRENT LIABILITIES | |
| 560,260 | |
| 506,547 | |
| | | | | | | |
LONG-TERM DEBT, less current portion | |
| 171,075 | |
| 217,119 | |
OPERATING LEASE LIABILITIES, less current portion | | | 92,811 | | | 97,839 | |
POSTRETIREMENT LIABILITIES, less current portion | |
| 18,514 | |
| 18,555 | |
OTHER LONG-TERM LIABILITIES | |
| 35,722 | |
| 37,948 | |
DEFERRED INCOME TAXES | |
| 64,957 | |
| 72,407 | |
| | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | |
Common stock, $0.01 par value, authorized 70,000,000 shares; | |
| 293 | |
| 290 | |
Additional paid-in capital | |
| 338,263 | |
| 342,354 | |
Retained earnings | |
| 676,179 | |
| 595,932 | |
Treasury stock, at cost, 2021: 3,783,227 shares; 2020: 3,656,938 shares | |
| (119,273) | |
| (111,173) | |
Accumulated other comprehensive income | |
| 2,672 | |
| 1,190 | |
TOTAL STOCKHOLDERS’ EQUITY | |
| 898,134 | |
| 828,593 | |
| | $ | 1,841,473 | | $ | 1,779,008 | |
Note: The balance sheet at December 31, 2020 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.
5
ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Six Months Ended | | ||||
| | June 30 | | ||||
|
| 2021 |
| 2020 |
| ||
| | Unaudited | | ||||
| | ($ thousands) | | ||||
OPERATING ACTIVITIES | | | | | | | |
Net income | | $ | 84,342 | | $ | 17,782 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | |
| 58,709 | |
| 56,140 | |
Amortization of intangibles | |
| 1,927 | |
| 1,959 | |
Pension settlement expense | |
| — | |
| 89 | |
Share-based compensation expense | |
| 5,678 | |
| 5,071 | |
Provision for losses on accounts receivable | |
| (334) | |
| 999 | |
Change in deferred income taxes | |
| (7,612) | |
| (5,170) | |
Gain on sale of property and equipment and lease termination | |
| (8,408) | |
| (3,581) | |
Gain on sale of subsidiaries | | | (6,923) | | | — | |
Changes in operating assets and liabilities: | | | | | | | |
Receivables | |
| (37,745) | |
| 9,626 | |
Prepaid expenses | |
| 1,419 | |
| 1,444 | |
Other assets | |
| 25 | |
| 4,358 | |
Income taxes | |
| 12,275 | |
| 8,413 | |
Operating right-of-use assets and lease liabilities, net | |
| 761 | |
| (230) | |
Accounts payable, accrued expenses, and other liabilities | |
| 41,786 | |
| (14,833) | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | |
| 145,900 | |
| 82,067 | |
| | | | | | | |
INVESTING ACTIVITIES | | | | | | | |
Purchases of property, plant and equipment, net of financings | |
| (25,395) | |
| (16,209) | |
Proceeds from sale of property and equipment | |
| 10,864 | |
| 7,670 | |
Proceeds from sale of subsidiaries | |
| 9,013 | | | — | |
Purchases of short-term investments | |
| (43,690) | |
| (97,493) | |
Proceeds from sale of short-term investments | |
| 49,165 | |
| 46,725 | |
Capitalization of internally developed software | |
| (9,477) | |
| (6,495) | |
NET CASH USED IN INVESTING ACTIVITIES | |
| (9,520) | |
| (65,802) | |
| | | | | | | |
FINANCING ACTIVITIES | | | | | | | |
Borrowings under credit facilities | |
| — | |
| 180,000 | |
Borrowings under accounts receivable securitization program | | | — | | | 45,000 | |
Payments on long-term debt | |
| (54,643) | |
| (29,185) | |
Net change in book overdrafts | |
| (922) | |
| 615 | |
Deferred financing costs | |
| (189) | |
| — | |
Payment of common stock dividends | |
| (4,095) | |
| (4,082) | |
Purchases of treasury stock | | | (8,100) | | | (3,162) | |
Payments for tax withheld on share-based compensation | |
| (9,766) | |
| (1,070) | |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | |
| (77,715) | |
| 188,116 | |
| | | | | | | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | |
| 58,665 | |
| 204,381 | |
Cash and cash equivalents at beginning of period | |
| 303,954 | |
| 201,909 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | | $ | 362,619 | | $ | 406,290 | |
| | | | | | | |
NONCASH INVESTING ACTIVITIES | | | | | | | |
Equipment financed | | $ | 8,138 | | $ | 13,566 | |
Accruals for equipment received | | $ | 5,984 | | $ | 857 | |
Lease liabilities arising from obtaining right-of-use assets | | $ | 6,051 | | $ | 23,727 | |
6
ARCBEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS
| | Three Months Ended | | | Six Months Ended |
| ||||||||||||||||||
| | June 30 | | | June 30 |
| ||||||||||||||||||
|
| 2021 |
| | 2020 |
| | 2021 |
| | 2020 |
| ||||||||||||
| | Unaudited |
| |||||||||||||||||||||
| | ($ thousands, except percentages) |
| |||||||||||||||||||||
REVENUES | | | | | | | | | | | | | | | | | | | | | | | | |
Asset-Based |
| $ | 652,832 |
| |
|
| $ | 460,070 |
| |
|
| $ | 1,209,124 |
| |
|
| $ | 975,783 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | |
ArcBest | |
| 270,748 | | | | |
| 151,467 | | | | |
| 523,084 | | | | |
| 316,242 | | | |
FleetNet | |
| 59,547 | | | | |
| 46,440 | | | | |
| 118,710 | | | | |
| 98,879 | | | |
Total Asset-Light | | | 330,295 | | | | | | 197,907 | | | | | | 641,794 | | | | | | 415,121 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Other and eliminations | |
| (34,154) | | | | |
| (30,607) | | | | |
| (72,732) | | | | |
| (62,135) | | | |
Total consolidated revenues |
| $ | 948,973 |
| |
|
| $ | 627,370 |
| |
|
| $ | 1,778,186 |
| |
|
| $ | 1,328,769 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | |
OPERATING EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | |
Asset-Based | | | | | | | | | | | | | | | | | | | | | | | | |
Salaries, wages, and benefits |
| $ | 302,370 |
| 46.3 | % |
| $ | 248,995 |
| 54.1 | % |
| $ | 588,064 |
| 48.6 | % |
| $ | 532,833 | | 54.6 | % |
Fuel, supplies, and expenses | |
| 64,689 | | 9.9 | | |
| 45,675 | | 9.9 | | |
| 125,530 | | 10.4 | | |
| 106,900 | | 11.0 | |
Operating taxes and licenses | |
| 12,303 | | 1.9 | | |
| 11,629 | | 2.5 | | |
| 24,551 | | 2.0 | | |
| 24,423 | | 2.5 | |
Insurance | |
| 9,454 | | 1.4 | | |
| 8,247 | | 1.8 | | |
| 18,393 | | 1.5 | | |
| 16,071 | | 1.6 | |
Communications and utilities | |
| 4,663 | | 0.7 | | |
| 4,342 | | 1.0 | | |
| 9,633 | | 0.8 | | |
| 9,053 | | 0.9 | |
Depreciation and amortization | |
| 23,308 | | 3.6 | | |
| 23,327 | | 5.1 | | |
| 46,792 | | 3.9 | | |
| 46,597 | | 4.8 | |
Rents and purchased transportation | |
| 95,082 | | 14.6 | | |
| 46,152 | | 10.0 | | |
| 170,670 | | 14.1 | | |
| 101,922 | | 10.4 | |
Shared services | | | 69,372 | | 10.6 | | | | 45,605 | | 9.9 | | | | 125,238 | | 10.4 | | | | 94,490 | | 9.7 | |
Gain on sale of property and equipment(1) | |
| 71 | | — | | |
| (1,175) | | (0.2) | | |
| (8,624) | | (0.7) | | |
| (3,339) | | (0.3) | |
Innovative technology costs(2) | | | 7,532 | | 1.2 | | |
| 4,789 | | 1.0 | | |
| 14,400 | | 1.2 | | |
| 9,322 | | 1.0 | |
Other | |
| 77 | | — | | |
| 1,448 | | 0.3 | | |
| 511 | | — | | |
| 3,235 | | 0.3 | |
Total Asset-Based | |
| 588,921 | | 90.2 | % | |
| 439,034 | | 95.4 | % | |
| 1,115,158 | | 92.2 | % | |
| 941,507 | | 96.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
ArcBest | | | | | | | | | | | | | | | | | | | | | | | | |
Purchased transportation | |
| 226,603 | | 83.7 | % | |
| 125,090 | | 82.6 | % | |
| 437,598 | | 83.6 | % | |
| 262,272 | | 82.9 | % |
Supplies and expenses | | | 2,476 | | 0.9 | | |
| 1,989 | | 1.3 | | |
| 5,044 | | 1.0 | | |
| 4,269 | | 1.3 | |
Depreciation and amortization(3) | |
| 2,366 | | 0.9 | | |
| 2,449 | | 1.6 | | |
| 4,752 | | 0.9 | | |
| 4,919 | | 1.6 | |
Shared services | | | 29,078 | | 10.7 | | | | 18,840 | | 12.4 | | | | 55,150 | | 10.5 | | | | 40,567 | | 12.8 | |
Gain on sale of subsidiaries(4) | | | (6,923) | | (2.6) | | | | — | | — | | |
| (6,923) | | (1.3) | | |
| — | | — | |
Other | |
| 2,021 | | 0.8 | | |
| 1,796 | | 1.2 | | |
| 4,071 | | 0.8 | | |
| 4,321 | | 1.4 | |
| |
| 255,621 | | 94.4 | % | |
| 150,164 | | 99.1 | % | |
| 499,692 | | 95.5 | % | |
| 316,348 | | 100.0 | % |
FleetNet | |
| 58,409 | | 98.1 | % | |
| 45,658 | | 98.3 | % | |
| 116,549 | | 98.2 | % | |
| 97,057 | | 98.2 | % |
Total Asset-Light | | | 314,030 | | | | | | 195,822 | | | | | | 616,241 | | | | | | 413,405 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Other and eliminations(5) | |
| (28,277) | | | | |
| (27,911) | | | | |
| (59,703) | | | | |
| (54,387) | | | |
Total consolidated operating expenses |
| $ | 874,674 |
| 92.2 | % |
| $ | 606,945 |
| 96.7 | % |
| $ | 1,671,696 |
| 94.0 | % |
| $ | 1,300,525 |
| 97.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
OPERATING INCOME (LOSS) | | | | | | | | | | | | | | | | | | | | | | | | |
Asset-Based | | $ | 63,911 | | | | | $ | 21,036 | | | | | $ | 93,966 | | | | | $ | 34,276 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
ArcBest | |
| 15,127 | | | | |
| 1,303 | | | | | | 23,392 | | | | | | (106) | | | |
FleetNet | |
| 1,138 | | | | |
| 782 | | | | | | 2,161 | | | | | | 1,822 | | | |
Total Asset-Light | | | 16,265 | | | | | | 2,085 | | | | | | 25,553 | | | | | | 1,716 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Other and eliminations(5) | |
| (5,877) | | | | |
| (2,696) | | | | |
| (13,029) | | | | |
| (7,748) | | | |
Total consolidated operating income | | $ | 74,299 | | | | | $ | 20,425 | | | | | $ | 106,490 | | | | | $ | 28,244 | | | |
| 1) | The six months ended June 30, 2021 includes an $8.6 million gain on the sale of an unutilized service center property. |
| 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) | Gain recognized for the three and six months ended June 30, 2021 relates to the sale of the labor services portion of the ArcBest segment’s moving business in May 2021. |
| 5) | “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. |
7
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 | | |||||||
|
| 2021 | | 2020 |
|
| 2021 | | | 2020 | | ||
ArcBest Corporation - Consolidated | | (Unaudited) | | ||||||||||
| | ($ thousands, except per share data) | | ||||||||||
Operating Income | | | | | | | | | | | | | |
Amounts on GAAP basis | | $ | 74,299 | | $ | 20,425 | | $ | 106,490 | | $ | 28,244 | |
Innovative technology costs, pre-tax(1) | | | 7,432 | | | 4,699 | | | 14,342 | | | 9,299 | |
Gain on sale of subsidiaries, pre-tax(2) | | | (6,923) | | | — | | | (6,923) | | | — | |
Non-GAAP amounts | | $ | 74,808 | | $ | 25,124 | | $ | 113,909 | | $ | 37,543 | |
| | | | | | | | | | | | | |
Net Income | | | | | | | | | | | | | |
Amounts on GAAP basis | | $ | 60,981 | | $ | 15,880 | | $ | 84,342 | | $ | 17,782 | |
Innovative technology costs, after-tax (includes related financing costs)(1) | | | 5,642 | | | 3,637 | | | 10,903 | | | 7,207 | |
Gain on sale of subsidiaries, after-tax(2) | | | (5,437) | | | — | | | (5,437) | | | — | |
Nonunion pension expense, including settlement expense, after-tax(3) | | | — | | | — | | | — | | | 66 | |
Life insurance proceeds and changes in cash surrender value | | | (1,248) | | | (2,560) | | | (2,514) | | | 1,245 | |
Tax expense (benefit) from vested RSUs(4) | | | (6,796) | | | 659 | | | (6,931) | | | 679 | |
Non-GAAP amounts | | $ | 53,142 | | $ | 17,616 | | $ | 80,363 | | $ | 26,979 | |
| | | | | | | | | | | | | |
Diluted Earnings Per Share | | | | | | | | | | | | | |
Amounts on GAAP basis | | $ | 2.27 | | $ | 0.61 | | $ | 3.13 | | $ | 0.68 | |
Innovative technology costs, after-tax (includes related financing costs)(1) | | | 0.21 | | | 0.14 | | | 0.40 | | | 0.27 | |
Gain on sale of subsidiaries, after-tax(2) | | | (0.20) | | | — | | | (0.20) | | | — | |
Nonunion pension expense, including settlement expense, after-tax(3) | | | — | | | — | | | — | | | — | |
Life insurance proceeds and changes in cash surrender value | | | (0.05) | | | (0.10) | | | (0.09) | | | 0.05 | |
Tax expense (benefit) from vested RSUs(4) | | | (0.25) | | | 0.03 | | | (0.26) | | | 0.03 | |
Non-GAAP amounts(5) | | $ | 1.97 | | $ | 0.67 | | $ | 2.98 | | $ | 1.03 | |
| 1) | Represents costs associated with the freight handling pilot test program at ABF Freight. |
| 2) | Gain recognized for the three and six months ended June 30, 2021 relates to the sale of the labor services portion of ArcBest segment’s moving business in May 2021. |
| 3) | For the six months ended June 30, 2020, represents pension settlement expense related to the Company’s supplemental benefit plan. |
| 4) | The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax expense (benefit) during the three and six months ended June 30, 2021 and 2020. |
| 5) | Non-GAAP EPS is calculated in total and may not foot due to rounding. |
8
ARCBEST CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued
| | Three Months Ended | | Six Months Ended | | ||||||||||||||||||||
| | June 30 | | June 30 | | ||||||||||||||||||||
|
| 2021 | | 2020 | | 2021 | | 2020 | | ||||||||||||||||
Segment Operating Income Reconciliations | | (Unaudited) | | ||||||||||||||||||||||
| | ($ thousands, except percentages) | | ||||||||||||||||||||||
Asset-Based Segment | | | | | | ||||||||||||||||||||
Operating Income ($) and Operating Ratio (% of revenues) | | | | | | | | | | | | | | | | ||||||||||
Amounts on GAAP basis | | $ | 63,911 | | 90.2 | % | | $ | 21,036 | | 95.4 | % | | $ | 93,966 | | 92.2 | % | | $ | 34,276 | | 96.5 | % | |
Innovative technology costs, pre-tax(1) | | | 7,532 | | (1.2) | | | | 4,789 | | (1.0) | | | | 14,400 | | (1.2) | | | | 9,322 | | (1.0) | | |
Non-GAAP amounts | | $ | 71,443 | | 89.0 | % | | $ | 25,825 | | 94.4 | % | | $ | 108,366 | | 91.0 | % | | $ | 43,598 | | 95.5 | % | |
| | | | | | ||||||||||||||||||||
Asset-Light | | | | | | ||||||||||||||||||||
| | | | | | ||||||||||||||||||||
ArcBest Segment | | | | | | ||||||||||||||||||||
Operating Income (Loss) ($) and Operating Ratio (% of revenues) | | | | | | | | | | | | | | | | ||||||||||
Amounts on GAAP basis | | $ | 15,127 | | 94.4 | % | | $ | 1,303 | | 99.1 | % | | $ | 23,392 | | 95.5 | % | | $ | (106) | | 100.0 | % | |
Gain on sale of subsidiaries, pre-tax(2) | | | (6,923) | | 2.6 | | | | — | | — | | | | (6,923) | | 1.3 | | | | — | | — | | |
Non-GAAP amounts | | $ | 8,204 | | 97.0 | % | | $ | 1,303 | | 99.1 | % | | $ | 16,469 | | 96.8 | % | | $ | (106) | | 100.0 | % | |
| | | | | | ||||||||||||||||||||
FleetNet Segment | | | | | | ||||||||||||||||||||
Operating Income ($) and Operating Ratio (% of revenues) | | | | | | | | | | | | | | | | ||||||||||
Amounts on GAAP basis | | $ | 1,138 | | 98.1 | % | | $ | 782 | | 98.3 | % | | $ | 2,161 | | 98.2 | % | | $ | 1,822 | | 98.2 | % | |
| | | | | | ||||||||||||||||||||
Total Asset-Light | | | | | | ||||||||||||||||||||
Operating Income (Loss) ($) and Operating Ratio (% of revenues) | | | | | | | | | | | | | | | | ||||||||||
Amounts on GAAP basis | | $ | 16,265 | | 95.1 | % | | $ | 2,085 | | 98.9 | % | | $ | 25,553 | | 96.0 | % | | $ | 1,716 | | 99.6 | % | |
Gain on sale of subsidiaries, pre-tax(2) | | | (6,923) | | 2.1 | | | | — | | — | | | | (6,923) | | 1.1 | | | | — | | — | | |
Non-GAAP amounts | | $ | 9,342 | | 97.2 | % | | $ | 2,085 | | 98.9 | % | | $ | 18,630 | | 97.1 | % | | $ | 1,716 | | 99.6 | % | |
| | | | | | ||||||||||||||||||||
Other and Eliminations | | | | | | ||||||||||||||||||||
Operating Loss ($) | | | | | | | | | | | | | | | | ||||||||||
Amounts on GAAP basis | | $ | (5,877) | | | | | $ | (2,696) | | | | | $ | (13,029) | | | | | $ | (7,748) | | | | |
Innovative technology costs, pre-tax(1) | | | (100) | | | | | | (90) | | | | | | (58) | | | | | | (23) | | | | |
Non-GAAP amounts | | $ | (5,977) | | | | | $ | (2,786) | | | | | $ | (13,087) | | | | | $ | (7,771) | | | | |
| 1) | Represents costs associated with the freight handling pilot test program at ABF Freight. |
| 2) | Gain recognized for the three and six months ended June 30, 2021 relates to the sale of the labor services portion of the ArcBest segment’s moving business in May 2021. |
9
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 June 30, 2021 | ||||||||||||||||
| | | | | Other | | Income | | Income | | | | | | | |||
| | Operating | | Income | | Before Income | | Tax | | Net | | | ||||||
| | Income | | (Costs) | | Taxes | | Provision | | Income | | Tax Rate(4) | ||||||
Amounts on GAAP basis | | $ | 74,299 | | $ | (841) | | $ | 73,458 | | $ | 12,477 | | $ | 60,981 | | 17.0 | % |
Innovative technology costs(1) | | | 7,432 | | | 166 | | | 7,598 | | | 1,956 | | | 5,642 | | 25.7 | |
Gain on sale of subsidiaries(2) | | | (6,923) | | | — | | | (6,923) | | | (1,486) | | | (5,437) | | (21.5) | |
Life insurance proceeds and changes in cash surrender value | | | — | | | (1,248) | | | (1,248) | | | — | | | (1,248) | | — | |
Tax benefit from vested RSUs(3) | | | — | | | — | | | — | | | 6,796 | | | (6,796) | | — | |
Non-GAAP amounts | | $ | 74,808 | | $ | (1,923) | | $ | 72,885 | | $ | 19,743 | | $ | 53,142 | | 27.1 | % |
| | Six Months Ended June 30, 2021 | ||||||||||||||||
| | | | Other | | Income Before | | Income | | | | | | | ||||
| | Operating | | Income | | Income | | Tax | | Net | | | ||||||
| | Income | | (Costs) | | Taxes | | Provision | | Income | | Tax Rate(4) | ||||||
Amounts on GAAP basis | | $ | 106,490 | | $ | (1,685) | | $ | 104,805 | | $ | 20,463 | | $ | 84,342 | | 19.5 | % |
Innovative technology costs(1) | | | 14,342 | | | 340 | | | 14,682 | | | 3,779 | | | 10,903 | | 25.7 | |
Gain on sale of subsidiaries(2) | | | (6,923) | | | — | | | (6,923) | | | (1,486) | | | (5,437) | | (21.5) | |
Life insurance proceeds and changes in cash surrender value | | | — | | | (2,514) | | | (2,514) | | | — | | | (2,514) | | — | |
Tax expense from vested RSUs(3) | | | — | | | — | | | — | | | 6,931 | | | (6,931) | | — | |
Non-GAAP amounts | | $ | 113,909 | | $ | (3,859) | | $ | 110,050 | | $ | 29,687 | | $ | 80,363 | | 27.0 | % |
| | Three Months Ended June 30, 2020 | ||||||||||||||||
| | | | Other | | Income | | | | | | | | |||||
| | Operating | | Income | | Before Income | | Income | | Net | | | ||||||
| | Income | | (Costs) | | Taxes | | Tax 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 (4) | | | — | | | 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 | % |
| 1) | Represents costs associated with the freight handling pilot test program at ABF Freight. |
| 2) | Gain recognized for the three and six months ended June 30, 2021 relates to the sale of the labor services portion of the ArcBest segment’s moving business in May 2021. |
| 3) | The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax expense (benefit) during the three and six months ended June 30, 2021 and 2020. |
| 4) | For the six months ended June 30, 2020, represents pension settlement expense related to the Company’s supplemental benefit plan. |
| 5) | 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. |
10
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 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. The calculation of Asset-Light Adjusted EBITDA as presented below begins with operating income (loss), as other income (costs), income taxes, and net income 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 | | Six Months Ended | |||||||||
| | June 30 | | | June 30 | | |||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| ||||
| | (Unaudited) |
| ||||||||||
ArcBest Corporation - Consolidated Adjusted EBITDA | | ($ thousands) |
| ||||||||||
| | | |||||||||||
Net Income | | $ | 60,981 | | $ | 15,880 | | $ | 84,342 | | $ | 17,782 | |
Interest and other related financing costs | |
| 2,274 | |
| 3,378 | |
| 4,702 | |
| 6,325 | |
Income tax provision | |
| 12,477 | |
| 4,854 | |
| 20,463 | |
| 5,337 | |
Depreciation and amortization | |
| 30,282 | |
| 29,086 | |
| 60,636 | |
| 58,099 | |
Amortization of share-based compensation | |
| 3,324 | |
| 2,890 | |
| 5,678 | |
| 5,071 | |
Amortization of net actuarial gains of benefit plans and pension settlement expense(1) | |
| (134) | |
| (148) | |
| (269) | |
| (204) | |
Consolidated Adjusted EBITDA | | $ | 109,204 | | $ | 55,940 | | $ | 175,552 | | $ | 92,410 | |
| 1) | The six months ended June 30, 2020 includes pre-tax pension settlement expense of $0.1 million related to the Company’s supplemental benefit plan. |
| | Three Months Ended | | Six Months Ended | | ||||||||
| | June 30 | | June 30 | | ||||||||
|
| 2021 | | 2020 | | 2021 | | 2020 | | ||||
Asset-Light Adjusted EBITDA | | (Unaudited) | | ||||||||||
| | ($ thousands) | | ||||||||||
| | | | | |||||||||
ArcBest | | | | | | | | | | | | | |
Operating Income (Loss) | | $ | 15,127 | | $ | 1,303 | | $ | 23,392 | | $ | (106) | |
Depreciation and amortization(2) | | | 2,366 | | | 2,449 | | | 4,752 | | | 4,919 | |
Adjusted EBITDA | | $ | 17,493 | | $ | 3,752 | | $ | 28,144 | | $ | 4,813 | |
| | | | | |||||||||
FleetNet | | | | | |||||||||
Operating Income | | $ | 1,138 | | $ | 782 | | $ | 2,161 | | $ | 1,822 | |
Depreciation and amortization(2) | | | 413 | | | 402 | | | 828 | | | 793 | |
Adjusted EBITDA | | $ | 1,551 | | $ | 1,184 | | $ | 2,989 | | $ | 2,615 | |
| | | | | |||||||||
Total Asset-Light | | | | | | | | | | | | | |
Operating Income | | $ | 16,265 | | $ | 2,085 | | $ | 25,553 | | $ | 1,716 | |
Depreciation and amortization(2) | | | 2,779 | | | 2,851 | | | 5,580 | | | 5,712 | |
Adjusted EBITDA | | $ | 19,044 | | $ | 4,936 | | $ | 31,133 | | $ | 7,428 | |
| 2) | Depreciation and amortization includes amortization of intangibles associated with acquired businesses. |
11
ARCBEST CORPORATION
OPERATING STATISTICS
| | Three Months Ended | | Six Months Ended | | ||||||||||||
| | June 30 | | June 30 | | ||||||||||||
|
| 2021 |
| 2020 |
| % Change |
| 2021 |
| 2020 |
| % Change | | ||||
| | (Unaudited) | | | | | | | | | | ||||||
Asset-Based | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Workdays |
| | 63.5 |
| | 63.5 | | |
| | 126.5 |
| | 127.5 | | | |
| | | | | | | | | | | | | | | | | |
Billed Revenue(1) / CWT | | $ | 38.87 | | $ | 33.69 |
| 15.4% | | $ | 37.54 | | $ | 33.41 |
| 12.4% | |
| | | | | | | | | | | | | | | | | |
Billed Revenue(1) / Shipment | | $ | 528.33 | | $ | 423.39 |
| 24.8% | | $ | 495.76 | | $ | 425.73 |
| 16.4% | |
| | | | | | | | | | | | | | | | | |
Shipments | |
| 1,251,791 | |
| 1,103,106 |
| 13.5% | |
| 2,467,207 | |
| 2,306,522 |
| 7.0% | |
| | | | | | | | | | | | | | | | | |
Shipments / Day | |
| 19,713 | |
| 17,372 |
| 13.5% | |
| 19,504 | |
| 18,090 |
| 7.8% | |
| | | | | | | | | | | | | | | | | |
Tonnage (Tons) | |
| 850,817 | |
| 693,192 |
| 22.7% | |
| 1,629,232 | |
| 1,469,660 |
| 10.9% | |
| | | | | | | | | | | | | | | | | |
Tons / Day | |
| 13,399 | |
| 10,916 |
| 22.7% | |
| 12,879 | |
| 11,527 |
| 11.7% | |
| | | | | | | | | | | | | | | | | |
Pounds / Shipment | |
| 1,359 | |
| 1,257 | | 8.1% | | | 1,321 | |
| 1,274 | | 3.7% | |
| | | | | | | | | | | | | | | | | |
Average Length of Haul (Miles) | |
| 1,107 | |
| 1,084 |
| 2.1% | |
| 1,099 | |
| 1,062 |
| 3.5% | |
| | | | | | | | | | | | | | | | | |
| 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, 2021 | June 30, 2021 | |||
| | (Unaudited) | ||||
ArcBest(2) | | | | | | |
| | | | | | |
Revenue / Shipment | | | 32.9% | | | 29.5% |
| | | | | | |
Shipments / Day | | | 39.0% | | | 30.4% |
| 2) | Statistical data related to managed transportation solutions transactions are not included in the presentation of operating statistics for the ArcBest segment. |
###
12
Exhibit 99.2
ArcBest® is providing this exhibit as supplemental information to its scheduled conference call and the press release announcing the Company’s unaudited second quarter 2021 results filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K. Certain statements and information in this exhibit may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Refer to the “Forward-Looking Statements” disclosure at the end of this exhibit.
Non-GAAP Financial Measures
ArcBest reports its financial results in accordance with generally accepted accounting principles (“GAAP”); however, this exhibit includes certain non-GAAP information. Refer to the discussion of non-GAAP information included in Item 2.02 of the Current Report on Form 8-K to which this exhibit is included for further information, including reference to reconciliations of GAAP to non-GAAP financial measures provided by the Company.
Summary Operating and Financial Impacts
(Additional Detailed Information follows)
ArcBest Consolidated
On a preliminary basis, July 2021 consolidated revenues grew approximately 33% on a per day basis compared to July 2020, reflecting continued customer demand for our logistics solutions and growth in all three operating segments.
Asset-Based Segment
2Q’21 Year-over-Year Yield Metrics
| ● | Billed Rev/Cwt on LTL-rated freight, excluding fuel surcharges, increased by a percentage in the mid-single digits. |
| ● | Average increase on Contract renewals and Deferred Pricing agreements negotiated during 2Q’21: +6.7% |
Year-over-Year Monthly Total Daily Business Trends
|
| April 2021 |
| May 2021 |
| June 2021 |
| July 2021(1)(2) |
| ||||
| | | | | | | | | | | | | |
Billed Revenue/Day(3) | | | +48.9 | % | | +41.0 | % | | +36.3 | % | | +25 | % |
Tons/Day | |
| +28.9 | % |
| +21.3 | % |
| +18.7 | % |
| +5 | % |
Shipments/Day | |
| +19.1 | % |
| +11.8 | % |
| +9.9 | % |
| +3 | % |
| 1) | Statistics for the full month of July 2021 have not been finalized and are preliminary. |
| 2) | There were 21 workdays in July 2021 and 22 workdays in July 2020. |
| 3) | Revenue for undelivered freight is deferred for financial statement purposes in accordance with the Asset-Based segment revenue recognition policy. Billed revenue per day has not been adjusted for the portion of revenue deferred for financial statement purposes. |
1
July 2021 Business Update
See tables above for July 2021 revenue, tonnage and shipment metric comparisons.
Statistics for July 2021 have not been finalized. Preliminary Asset-Based financial metrics and business trends for July 2021, compared to the same period last year, are as follows:
| ● | On a year-over-year basis, revenue has been positively impacted by demand for U-Pack household goods moving services. However, sequentially versus June, U-Pack shipments declined at a rate greater than historical averages in order to serve core customers. |
| ● | Total Billed Revenue/CWT increased approximately 20% including higher fuel surcharge, compared to a total Revenue/CWT decrease of 2.1% in July 2020 due to business mix changes related to the pandemic. |
| ● | Total Billed Revenue/Shipment increased approximately 22%. |
| ● | Total Weight/Shipment increased approximately 2%. |
In recent years, excluding 2020, the historical average sequential change in ArcBest’s Asset-Based operating ratio in the third quarter, versus the second quarter, has been roughly flat.
3Q’21 Other Items
| ● | 64 Working Days in both 3Q’21 and 3Q’20 |
| ● | Projected Innovative Technology Costs in our Asset-Based business associated with the freight handling pilot test program at ABF Freight (non-GAAP item): $7.5 million vs. $6 million in 3Q’20 |
Asset-Light ArcBest Operating Segment [Excluding FleetNet]
Year-over-Year Monthly Total Daily Business Trends
|
| April 2021 |
| May 2021 |
| June 2021 |
| July 2021(1)(2) |
| ||||
| | | | | | | | | | | | | |
Revenue/Day | | | +88.2 | % | | +91.0 | % | | +60.5 | % | | +47 | % |
| 1) | Statistics for the full month of July 2021 have not been finalized and are preliminary. |
| 2) | There were 21 workdays in July 2021 and 22 workdays in July 2020. |
Preliminary Asset-Light (excluding FleetNet) financial metrics and business trends for July 2021, compared to July 2020, are as follows:
| ● | Purchased transportation expense per day increased approximately 47%. |
| ● | Purchased transportation expense represented approximately 84% of revenues in both July 2021 and July 2020. |
2
ArcBest Consolidated
3Q’21 – Projected
| ● | Loss in the “Other and eliminations” segment (non-GAAP basis): $5 million vs. $3 million in 3Q’20 |
| ● | Interest Expense, net of Interest Income: $2 million vs. $2 million in 3Q’20 |
FY’21 – Projected
| ● | Loss in the “Other and eliminations” segment (non-GAAP basis): $24 million vs. $13 million in 2020. The increase versus the 2020 amount primarily reflects actions taken during the pandemic to reduce costs in 2020. The estimated loss in 2021 is more comparable to 2019. |
| ● | Interest Expense, net of Interest Income: $8 million vs. $8.1 million in 2020 |
| ● | Income (Expense) in the “Other, net” line (non-GAAP basis): $0.2 million expense vs. $0.1 million income in 2020 |
ArcBest Consolidated Capital Expenditures
| ● | 2021 Total Net Capital Expenditures, including financed equipment: $160 million to $170 million, reflecting an increase of $10 million to the previously stated range related to planned real estate investments in the second half of 2021. |
| ● | Includes revenue equipment purchases (majority for Asset-Based) of $100 million. The 2021 increase in revenue equipment also reflects trailer purchases for the Asset-Light business, primarily replacements of leased units. |
| ● | The remaining amount of 2021 capital expenditures includes items related to real estate, technology, and dock equipment upgrades and enhancements. |
| ● | Depreciation and amortization costs on property, plant and equipment: $115 million to $120 million in 2021. |
| ● | Intangible asset amortization: $4 million in 2021 |
| ● | As previously announced, preliminary estimates for 2022 revenue equipment are expected to increase by $50 million to $60 million from 2021 projected levels. This includes an expected increase in fleet size although the number of additional units has not been finalized. In addition, capital expenditures for expanding existing service centers as well as upgrades that would also improve energy efficiency are expected to increase in 2022 compared to recent years. |
3
Additional Detailed Information
Asset-Based Segment
Annual Union Profit-Sharing Bonus
As provided in ABF Freight’s current Teamster labor contract, for the full years of 2019 through 2022, ABF Freight’s Teamster employees are eligible for an annual profit-sharing bonus, as shown in the following table. The operating ratio (“OR”) used to calculate the bonus amount is on a GAAP basis. The potential bonus would be based on full-year union employee earnings. While impacted by business and associated labor levels which are subject to change, the estimate of one percent of the annual earnings for the ABF Freight union employees who are eligible for this benefit approximates $5 million - $6 million of union bonus expense.
During years in which ArcBest’s internal forecasts indicate an expectation of paying the union bonus, we will accrue for this expense throughout the year, generally in proportion of the quarterly results as a percentage of the annual projection. As we do not provide public updates on our projected operating ratio or our expectations for paying the union bonus, any details of amounts accrued will not be provided. If financial models reflect an operating ratio that meets the payout thresholds shown below, ArcBest encourages analysts to include expenses for the union bonus in quarterly and annual earnings per share projections for the company.
ABF Freight Published Annual OR (GAAP basis) | Bonus Amount |
95.1 to 96.0 | 1% |
93.1 to 95.0 | 2% |
93.0 and below | 3% |
ArcBest Consolidated
ArcBest’s second quarter 2021 effective GAAP tax rate was 17.0%. During the second quarter, this rate was impacted by several items identified in the “Effective Tax Rate Reconciliation” table of ArcBest’s second quarter 2021 earnings press release in Exhibit 99.1 that shows the reconciliation of GAAP to non-GAAP effective tax rates. Large items included the sale of a portion of the Asset-Light moving business, settlement of share-based payment awards that vested during the quarter and changes in cash surrender value of life insurance. For the first six months of 2021, the tax rate used to calculate non-GAAP EPS was 27.0%. Under the current tax laws, we expect our full year 2021 non-GAAP tax rate to be in a range of 26% to 27%. The effective GAAP tax rate may be impacted by discrete items that could occur during the remainder of the year.
4
“Other and eliminations” within Operating Income on the Operating Segment Data and Operating Ratios statement
The “Other and eliminations” line includes expenses related to shared services for the delivery of comprehensive transportation and logistics services to ArcBest’s customers. Shared services represent costs incurred to support all segments including sales, yield, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, legal and other company-wide services. Shared services are primarily allocated to the reporting segments based upon resource utilization-related metrics, such as shipment levels, and therefore fluctuate with business levels. As a result, the loss in “Other and eliminations” tends to be higher in periods when business levels are lower, and consequently allocations to operating segments are lower, which is typically during the first and fourth quarters of the year.
“Other, net” line within Other Income (Costs) on the Consolidated Statements of Operations
The “Other, net” line of ArcBest’s income statement primarily includes the costs associated with postretirement plans and changes in cash surrender value of life insurance. After excluding non-GAAP items detailed in the table below, ArcBest expects the 2021 non-GAAP “Other net” expense to approximate the 2020 expense.
Changes in cash surrender value of life insurance reflected an increase of $1.2 million in second quarter 2021 compared to $2.6 million in second quarter 2020, reflecting higher market gains experienced in second quarter 2020 on these assets that are invested much like pension plan assets. ArcBest excludes changes in cash surrender value when presenting non-GAAP net income and EPS.
|
| Three Months Ended | | ||||
| | June 30 | | ||||
|
| 2021 |
| 2020 |
| ||
|
| (in millions) | |||||
Other, net | | | | | | | |
Amounts on GAAP basis - income (costs) | | $ | 1.1 | | $ | 2.7 | |
Non-GAAP Adjustments: | | | | | | | |
Life insurance proceeds and gains in cash surrender value(1) | |
| (1.2) | |
| (2.6) | |
Non-GAAP amounts - income (costs) | | $ | (0.1) | | $ | 0.1 | |
| 1) | Amounts in parentheses indicate gains. |
5
Forward-Looking Statements
The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: Certain statements and information in this exhibit 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: widespread outbreak of an illness or disease, including the COVID-19 pandemic and its effects, 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; 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; interruption or failure of third-party software or information technology systems or licenses; 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; the loss or reduction of business from large customers; the ability to manage our cost structure, and the timing and performance of growth initiatives; maintaining our corporate reputation and intellectual property rights; 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 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; 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; 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; seasonal fluctuations and adverse weather conditions; 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 (the “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.
6