Share Name | Share Symbol | Market | Type |
---|---|---|---|
ArcBest Corporation | NASDAQ:ARCB | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-1.64 | -1.64% | 98.47 | 94.60 | 103.52 | 101.11 | 98.05 | 99.55 | 193,473 | 00:11:26 |
June 30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
ITEM 2.02 – RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 2, 2024, ArcBest® (Nasdaq: ARCB) (the “Company”) issued a press release announcing its unaudited second quarter 2024 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 information and presentation slides to be used in connection with the scheduled conference call to discuss the second quarter results are furnished as Exhibit 99.2 and Exhibit 99.3 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, the supplemental information in Exhibit 99.2, and the presentation slides in Exhibit 99.3 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”). Reconciliations of non-GAAP measures included in the presentation slides to the most directly comparable GAAP financial measures are also included within Exhibit 99.3 herein.
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 | ||
99.3 | ||
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, 2024 | /s/ Michael R. Johns | |
Michael R. Johns | |||
Chief Legal Officer and Corporate Secretary | |||
Exhibit 99.1
Investor Relations Contact: Amy Mendenhall | Media Contact: Autumnn Mahar |
Title: Vice President – Treasury & Investor Relations Phone: 479-785-6200 | Title: Director External Communications and Public Relations |
Email: invrel@arcb.com | Phone: 479-494-8221 |
| Email: amahar@arcb.com |
ArcBest Announces Second Quarter 2024 Results
Strong gains in productivity and service metrics
● | Delivered second quarter 2024 net income of $46.9 million, or $1.96 per diluted share, and non-GAAP net income of $47.4 million, or $1.98 per diluted share. |
● | Significant efficiency improvements at ABF Freight while delivering the best on-time service in five years. |
● | Improved Asset-Based operating income, despite higher labor contract costs and lower revenue. |
FORT SMITH, Arkansas, August 2, 2024 — ArcBest® (Nasdaq: ARCB), a leader in supply chain logistics, today reported second quarter 2024 revenue from continuing operations of $1.08 billion, compared to $1.10 billion in the second quarter of 2023. Second quarter 2024 operating income from continuing operations was $48.8 million, compared to $42.1 million in the prior year period, and net income from continuing operations was $46.9 million, or $1.96 per diluted share, compared to $39.6 million, or $1.60 per diluted share, in 2023.
Excluding certain items in both periods as identified in the attached reconciliation tables, second quarter 2024 non-GAAP operating income from continuing operations was $64.2 million, compared to $50.1 million in the prior year period, an improvement of $14.1 million. On a non-GAAP basis, net income from continuing operations was $47.4 million, or $1.98 per diluted share, compared to $38.0 million, or $1.54 per diluted share, in the second quarter of 2023.
“I am incredibly proud of our employees’ commitment to utilizing our quality process in pursuit of excellence every day. This dedication has led to significant improvements in our operational execution, with ABF Freight achieving its best on-time service performance in recent years,” said Judy R. McReynolds, ArcBest Chairman and CEO. “Furthermore, our substantial year-over-year improvement in operating income is a solid performance, especially considering ongoing macroeconomic headwinds.”
1
Results of Operations Comparisons
Asset-Based
Second Quarter 2024 Versus Second Quarter 2023
● | Revenue of $712.7 million compared to $722.0 million, a per-day decrease of 2.1 percent. |
● | Total tonnage per day decrease of 20.3 percent. |
● | Total shipments per day decrease of 4.8 percent. |
● | Total billed revenue per hundredweight increase of 23.0 percent. |
● | Core daily shipments increase of 14 percent and tonnage increase of 11 percent. |
● | Operating income of $72.8 million and an operating ratio of 89.8 percent, on both a GAAP and non-GAAP basis, compared to prior-year GAAP operating income of $43.3 million and an operating ratio of 94.0 percent and prior-year non-GAAP operating income of $51.7 million and an operating ratio of 92.8 percent. |
On a non-GAAP basis, the Asset-Based segment generated $21.1 million more operating income than second quarter 2023 despite lower revenue levels and higher labor costs, which highlights the continued focus on serving core customers well and improving operational efficiencies. Total second quarter daily shipment and tonnage levels were below the prior year, due primarily to fewer transactional shipments offset by increased core shipments, which positively impacted productivity and contributed to an improved operating ratio. On a non-GAAP basis, the Asset-Based segment delivered its second-best operating income result for a second quarter in company history.
Pricing momentum continued in the quarter, driven by improved freight mix, higher pricing on transactional shipments and contract renewal increases of 5.1 percent. Overall, LTL industry pricing remains rational.
Compared sequentially to the first quarter of 2024, second quarter 2024 revenue per day was up 5.3 percent, tons per day improved 2.3 percent and shipments per day were better by 1.9 percent. Second quarter billed revenue per hundredweight increased 3.2 percent from first quarter 2024. The operating ratio improved 220 basis points sequentially, which was within the range of sequential quarterly changes seen in recent years.
Asset-Light
Second Quarter 2024 Versus Second Quarter 2023
● | Revenue of $395.8 million compared to $409.8 million, a per-day decrease of 4.2 percent. |
● | Operating loss of $9.5 million compared to operating income of $13.2 million. On a non-GAAP basis, operating loss of $2.5 million compared to operating income of $6.4 million. |
● | Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of negative $0.6 million compared to $8.3 million, as detailed in the attached non-GAAP reconciliation tables. |
Compared to the second quarter of 2023, Asset-Light revenues were impacted by lower revenue per shipment and reduced margins associated with the soft rate environment and a higher mix of managed transportation business, which has lower revenue per shipment and margins. Shipments per day grew 12.6 percent, driven in part by customers turning to ArcBest’s managed solution to optimize their logistics spend. The decline in financial results on a year-over-year basis was primarily due to lower rates and margins for truckload solutions, reflecting the soft freight environment and excess full truckload capacity. The segment continues to benefit from productivity initiatives, as shipments per employee per day and SG&A cost per shipment both significantly improved on a year-over-year basis.
Compared sequentially to first quarter 2024, second quarter 2024 revenue per day was down one percent. Purchased transportation costs decreased sequentially as carrier rates dipped following the first quarter spike related to winter weather. The reduced purchased transportation costs were the biggest contributor to the lower non-GAAP operating loss in second quarter 2024, versus first quarter. Total shipments per day decreased 1.4 percent compared to first quarter 2024 and revenue per shipment was flat.
2
Conference Call
ArcBest will host a conference call with company executives to discuss the quarterly results. The call will be today, Friday, August 2, 2024 at 9:30 a.m. EDT (8:30 a.m. CDT). Interested parties are invited to listen by calling (800) 715-9871 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 August 2, 2024, 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 August 15, 2024. To listen to the playback, dial (800) 770-2030. The conference call ID for the live conference call and the playback is 4743250. The conference call and playback can also be accessed through August 15, 2024 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 15,000 employees across 250 campuses and service centers, the company is a logistics powerhouse, using its technology, expertise and scale to connect shippers with the solutions they need — from ground, air and ocean transportation to fully managed supply chains. ArcBest has a long history of innovation that is enriched by deep customer relationships. With a commitment to helping customers navigate supply chain challenges now and in the future, the company is developing ground-breaking technology like Vaux™, one of the TIME Best Inventions of 2023. For more information, visit arcb.com.
3
The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: Certain statements and information in this press release 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 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 our customer pilot offering of Vaux; the loss or reduction of business from large customers or an overall reduction in our customer base; 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 and the inability to realize the anticipated benefits of the acquisition within the expected time period or at all; unsolicited takeover proposals, proxy contests, and other proposals/actions by activist investors; 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 equipment, including 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, insurance premium costs, and loss of our ability to self-insure; potential impairment of long-lived assets and 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 higher 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 8K.
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.
4
ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| | Three Months Ended | | Six Months Ended | | ||||||||
| | June 30 | | June 30 | | ||||||||
|
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| ||||
| | (Unaudited) | | ||||||||||
| | ($ thousands, except share and per share data) | | ||||||||||
REVENUES | | $ | 1,077,831 | | $ | 1,103,464 | | $ | 2,114,250 | | $ | 2,209,558 | |
| | | | | | | | | | | | | |
OPERATING EXPENSES | |
| 1,028,986 | | | 1,061,348 | |
| 2,042,970 | | | 2,146,283 | |
| | | | | | | | | | | | | |
OPERATING INCOME | |
| 48,845 | |
| 42,116 | |
| 71,280 | |
| 63,275 | |
| | | | | | | | | | | | | |
OTHER INCOME (COSTS) | | | | | | | | | | | | | |
Interest and dividend income | |
| 3,241 | |
| 3,725 | |
| 6,556 | |
| 6,658 | |
Interest and other related financing costs | |
| (2,078) | |
| (2,205) | |
| (4,306) | |
| (4,532) | |
Other, net | |
| (781) | |
| 5,038 | |
| (28,980) | |
| 6,818 | |
| |
| 382 | |
| 6,558 | |
| (26,730) | |
| 8,944 | |
| | | | | | | | | | | | | |
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | |
| 49,227 | |
| 48,674 | |
| 44,550 | |
| 72,219 | |
| | | | | | | | | | | | | |
INCOME TAX PROVISION | |
| 2,303 | |
| 9,074 | |
| 538 | |
| 13,772 | |
| | | | | | | | | | | | | |
NET INCOME FROM CONTINUING OPERATIONS | | | 46,924 | | | 39,600 | | | 44,012 | | | 58,447 | |
| | | | | | | | | | | | | |
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX(1) | | | — | | | 843 | | | 600 | | | 53,279 | |
| | | | | | | | | | | | | |
NET INCOME | | $ | 46,924 | | $ | 40,443 | | $ | 44,612 | | $ | 111,726 | |
| | | | | | | | | | | | | |
BASIC EARNINGS PER COMMON SHARE(2) | | | | | | | | | | | | | |
Continuing operations | | $ | 1.99 | | $ | 1.65 | | $ | 1.87 | | $ | 2.42 | |
Discontinued operations(1) | | | — | | | 0.04 | | | 0.03 | | | 2.20 | |
| | $ | 1.99 | | $ | 1.68 | | $ | 1.89 | | $ | 4.62 | |
| | | | | | | | | | | | | |
DILUTED EARNINGS PER COMMON SHARE(2) | | | | | | | | | | | | | |
Continuing operations | | $ | 1.96 | | $ | 1.60 | | $ | 1.83 | | $ | 2.35 | |
Discontinued operations(1) | | | — | | | 0.03 | | | 0.02 | | | 2.14 | |
| | $ | 1.96 | | $ | 1.64 | | $ | 1.86 | | $ | 4.49 | |
| | | | | | | | | | | | | |
AVERAGE COMMON SHARES OUTSTANDING | | | | | | | | | | | | | |
Basic | |
| 23,618,318 | |
| 24,064,882 | |
| 23,589,814 | |
| 24,175,893 | |
Diluted | |
| 23,919,613 | |
| 24,672,948 | |
| 24,025,499 | |
| 24,864,691 | |
1) | Represents the discontinued operations of FleetNet America® (“FleetNet”), which sold on February 28, 2023. The six months ended June 30, 2024 represents adjustments related to the prior year gain on sale of FleetNet. The six months ended June 30, 2023 includes the net gain on sale of FleetNet of $52.3 million after-tax, or $2.16 basic earnings per share and $2.10 diluted earnings per share. |
2) | Earnings per common share is calculated in total and may not equal the sum of earnings per common share from continuing operations and discontinued operations due to rounding. |
5
ARCBEST CORPORATION
| | June 30 | | December 31 | | ||
|
| 2024 |
| 2023 |
| ||
| | (Unaudited) | | Note | | ||
| | ($ thousands, except share data) | | ||||
ASSETS | | | | | | | |
CURRENT ASSETS | | | | | | | |
Cash and cash equivalents | | $ | 215,590 | | $ | 262,226 | |
Short-term investments | |
| 44,865 | |
| 67,842 | |
Accounts receivable, less allowances (2024 - $8,788; 2023 - $10,346) | |
| 429,511 | |
| 430,122 | |
Other accounts receivable, less allowances (2024 - $654; 2023 - $731) | |
| 11,846 | |
| 52,124 | |
Prepaid expenses | |
| 31,835 | |
| 37,034 | |
Prepaid and refundable income taxes | |
| 22,555 | |
| 24,319 | |
Other | |
| 11,011 | |
| 11,116 | |
TOTAL CURRENT ASSETS | |
| 767,213 | |
| 884,783 | |
| | | | | | | |
PROPERTY, PLANT AND EQUIPMENT | | | | | | | |
Land and structures | |
| 507,194 | |
| 460,068 | |
Revenue equipment | |
| 1,143,985 | |
| 1,126,055 | |
Service, office, and other equipment | |
| 326,633 | |
| 319,466 | |
Software | |
| 177,933 | |
| 173,354 | |
Leasehold improvements | |
| 27,675 | |
| 24,429 | |
| | | 2,183,420 | | | 2,103,372 | |
Less allowances for depreciation and amortization | |
| 1,212,381 | |
| 1,188,548 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
| 971,039 | |
| 914,824 | |
| | | | | | | |
GOODWILL | |
| 304,753 | |
| 304,753 | |
INTANGIBLE ASSETS, NET | |
| 94,740 | |
| 101,150 | |
OPERATING RIGHT-OF-USE ASSETS | | | 186,779 | | | 169,999 | |
DEFERRED INCOME TAXES | |
| 9,974 | |
| 8,140 | |
OTHER LONG-TERM ASSETS | | | 74,031 | | | 101,445 | |
TOTAL ASSETS | | $ | 2,408,529 | | $ | 2,485,094 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
CURRENT LIABILITIES | | | | | | | |
Accounts payable | | $ | 222,303 | | $ | 214,004 | |
Income taxes payable | |
| — | |
| 10,410 | |
Accrued expenses | |
| 332,258 | |
| 378,029 | |
Current portion of long-term debt | |
| 58,615 | |
| 66,948 | |
Current portion of operating lease liabilities | | | 32,674 | | | 32,172 | |
TOTAL CURRENT LIABILITIES | |
| 645,850 | |
| 701,563 | |
| | | | | | | |
LONG-TERM DEBT, less current portion | |
| 144,972 | |
| 161,990 | |
OPERATING LEASE LIABILITIES, less current portion | | | 185,637 | | | 176,621 | |
POSTRETIREMENT LIABILITIES, less current portion | |
| 13,264 | |
| 13,319 | |
CONTINGENT CONSIDERATION | | | 104,070 | | | 92,900 | |
OTHER LONG-TERM LIABILITIES | |
| 37,606 | |
| 40,553 | |
DEFERRED INCOME TAXES | |
| 45,592 | |
| 55,785 | |
| | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | |
Common stock, $0.01 par value, authorized 70,000,000 shares; | |
| 304 | |
| 300 | |
Additional paid-in capital | |
| 324,645 | |
| 340,961 | |
Retained earnings | |
| 1,311,549 | |
| 1,272,584 | |
Treasury stock, at cost, 2024: 6,711,805 shares; 2023: 6,460,137 shares | |
| (407,433) | |
| (375,806) | |
Accumulated other comprehensive income | |
| 2,473 | |
| 4,324 | |
TOTAL STOCKHOLDERS’ EQUITY | |
| 1,231,538 | |
| 1,242,363 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | $ | 2,408,529 | | $ | 2,485,094 | |
Note: The balance sheet at December 31, 2023 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.
6
ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Six Months Ended | | ||||
| | June 30 | | ||||
|
| 2024 |
| 2023 |
| ||
| | (Unaudited) | | ||||
| | ($ thousands) | | ||||
OPERATING ACTIVITIES | | | | | | | |
Net income | | $ | 44,612 | | $ | 111,726 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | |
| 66,693 | |
| 64,804 | |
Amortization of intangibles | |
| 6,416 | |
| 6,398 | |
Share-based compensation expense | |
| 6,322 | |
| 5,585 | |
Provision for losses on accounts receivable | |
| 1,248 | |
| 2,257 | |
Change in deferred income taxes | |
| (11,457) | |
| (8,228) | |
Loss on sale of property and equipment | |
| 565 | |
| 1,188 | |
Pre-tax gain on sale of discontinued operations | | | (806) | | | (70,215) | |
Change in fair value of contingent consideration | | | 11,170 | | | 5,040 | |
Change in fair value of equity investment | | | 28,739 | | | (3,739) | |
Changes in operating assets and liabilities: | | | | | | | |
Receivables | |
| 38,702 | |
| 83,542 | |
Prepaid expenses | |
| 5,199 | |
| 6,353 | |
Other assets | |
| (2,789) | |
| 759 | |
Income taxes | |
| (8,806) | |
| (35,968) | |
Operating right-of-use assets and lease liabilities, net | |
| (7,262) | |
| 3,059 | |
Accounts payable, accrued expenses, and other liabilities | |
| (38,344) | |
| (68,804) | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | |
| 140,202 | |
| 103,757 | |
| | | | | | | |
INVESTING ACTIVITIES | | | | | | | |
Purchases of property, plant and equipment, net of financings | |
| (104,909) | |
| (83,171) | |
Proceeds from sale of property and equipment | |
| 2,341 | |
| 2,853 | |
Proceeds from sale of discontinued operations | | | — | | | 100,949 | |
Purchases of short-term investments | |
| (5,236) | |
| (46,858) | |
Proceeds from sale of short-term investments | |
| 28,504 | |
| 63,693 | |
Capitalization of internally developed software | |
| (7,779) | |
| (7,010) | |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | |
| (87,079) | |
| 30,456 | |
| | | | | | | |
FINANCING ACTIVITIES | | | | | | | |
Payments on long-term debt | |
| (35,705) | |
| (35,114) | |
Net change in book overdrafts | |
| (4,146) | |
| (13,171) | |
Deferred financing costs | |
| — | | | 57 | |
Payment of common stock dividends | |
| (5,647) | |
| (5,809) | |
Purchases of treasury stock | | | (31,627) | | | (41,240) | |
Payments for tax withheld on share-based compensation | |
| (22,634) | |
| (10,022) | |
NET CASH USED IN FINANCING ACTIVITIES | |
| (99,759) | |
| (105,299) | |
| | | | | | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | |
| (46,636) | |
| 28,914 | |
Cash and cash equivalents of continuing operations at beginning of period | |
| 262,226 | |
| 158,264 | |
Cash and cash equivalents of discontinued operations at beginning of period | | | — | |
| 108 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | | $ | 215,590 | | $ | 187,286 | |
| | | | | | | |
NONCASH INVESTING ACTIVITIES | | | | | | | |
Equipment financed | | $ | 10,354 | | $ | 3,478 | |
Accruals for equipment received | | $ | 3,904 | | $ | 10,106 | |
Lease liabilities arising from obtaining right-of-use assets | | $ | 26,001 | | $ | 43,366 | |
Note: The statements of cash flows for the six months ended June 30, 2024 and 2023 include cash flows from continuing operations and cash flows from discontinued operations of FleetNet, which sold on February 28, 2023.
7
ARCBEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS
| Three Months Ended | | | Six Months Ended |
| ||||||||||||||||||
| June 30 | | | June 30 |
| ||||||||||||||||||
| 2024 |
| | 2023 |
| | 2024 |
| | 2023 |
| ||||||||||||
| (Unaudited) |
| |||||||||||||||||||||
| ($ thousands, except percentages) |
| |||||||||||||||||||||
REVENUES FROM CONTINUING OPERATIONS | | | | | | | | | | | | | | | | | | | | | | | |
Asset-Based | $ | 712,725 |
| |
|
| $ | 722,015 |
| |
|
| $ | 1,384,192 |
| |
|
| $ | 1,419,832 |
| | |
Asset-Light |
| 395,817 | | | | |
| 409,816 | | | | |
| 792,180 | | | | |
| 847,908 | | | |
Other and eliminations |
| (30,711) | | | | |
| (28,367) | | | | |
| (62,122) | | | | |
| (58,182) | | | |
Total consolidated revenues from continuing operations | $ | 1,077,831 |
| |
|
| $ | 1,103,464 | | |
|
| $ | 2,114,250 |
| |
|
| $ | 2,209,558 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | |
OPERATING EXPENSES FROM CONTINUING OPERATIONS | | | | | | | | | | | | | | | | | | | | | | | |
Asset-Based | | | | | | | | | | | | | | | | | | | | | | | |
Salaries, wages, and benefits | $ | 352,678 | | 49.5 | % | | $ | 344,538 | | 47.7 | % | | $ | 697,677 | | 50.4 | % | | $ | 680,143 | | 47.9 | % |
Fuel, supplies, and expenses |
| 82,938 | | 11.6 | | |
| 90,897 | | 12.6 | | |
| 163,982 | | 11.8 | | |
| 185,185 | | 13.1 | |
Operating taxes and licenses |
| 13,557 | | 1.9 | | |
| 14,094 | | 2.0 | | |
| 27,086 | | 2.0 | | |
| 28,073 | | 2.0 | |
Insurance |
| 16,964 | | 2.4 | | |
| 12,889 | | 1.8 | | |
| 31,446 | | 2.3 | | |
| 26,162 | | 1.8 | |
Communications and utilities |
| 4,412 | | 0.6 | | |
| 4,553 | | 0.6 | | |
| 9,211 | | 0.7 | | |
| 9,857 | | 0.7 | |
Depreciation and amortization |
| 26,646 | | 3.8 | | |
| 25,273 | | 3.5 | | |
| 53,653 | | 3.9 | | |
| 50,184 | | 3.5 | |
Rents and purchased transportation |
| 70,315 | | 9.9 | | |
| 101,922 | | 14.1 | | |
| 135,986 | | 9.8 | | |
| 192,666 | | 13.6 | |
Shared services |
| 72,245 | | 10.1 | | |
| 74,468 | | 10.3 | | |
| 137,159 | | 9.9 | | |
| 139,081 | | 9.8 | |
(Gain) loss on sale of property and equipment |
| (91) | | — | | |
| 416 | | 0.1 | | |
| 58 | | — | | |
| 365 | | — | |
Innovative technology costs(1) |
| — | | — | | |
| 8,343 | | 1.1 | | |
| — | | — | | |
| 14,411 | | 1.0 | |
Other |
| 269 | | — | | |
| 1,297 | | 0.2 | | |
| 1,686 | | 0.1 | | |
| 2,909 | | 0.2 | |
Total Asset-Based | | 639,933 | | 89.8 | % | | | 678,690 | | 94.0 | % | | | 1,257,944 | | 90.9 | % | | | 1,329,036 | | 93.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
Asset-Light | | | | | | | | | | | | | | | | | | | | | | | |
Purchased transportation | $ | 339,247 | | 85.7 | % | | $ | 343,102 | | 83.7 | % | | $ | 683,369 | | 86.3 | % | | $ | 713,265 | | 84.1 | % |
Salaries, wages, and benefits(2) | | 31,036 | | 7.8 | | | | 32,485 | | 7.9 | | |
| 61,340 | | 7.7 | | |
| 67,495 | | 8.0 | |
Supplies and expenses(2) | | 2,768 | | 0.7 | | |
| 2,905 | | 0.7 | | |
| 5,577 | | 0.7 | | |
| 6,534 | | 0.8 | |
Depreciation and amortization(3) |
| 5,039 | | 1.3 | | |
| 5,085 | | 1.2 | | |
| 10,117 | | 1.3 | | |
| 10,153 | | 1.2 | |
Shared services(2) | | 17,297 | | 4.4 | | |
| 16,500 | | 4.1 | | |
| 33,571 | | 4.2 | | |
| 33,014 | | 3.9 | |
Contingent consideration(4) | | 3,850 | | 1.0 | | |
| (10,000) | | (2.4) | | |
| 11,170 | | 1.4 | | |
| 5,040 | | 0.6 | |
Other(2) |
| 6,078 | | 1.5 | | |
| 6,559 | | 1.6 | | |
| 11,792 | | 1.5 | | |
| 13,318 | | 1.5 | |
Total Asset-Light |
| 405,315 | | 102.4 | % | |
| 396,636 | | 96.8 | % | |
| 816,936 | | 103.1 | % | |
| 848,819 | | 100.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
Other and eliminations(5) |
| (16,262) | | | | |
| (13,978) | | | | |
| (31,910) | | | | |
| (31,572) | | | |
Total consolidated operating expenses from continuing operations | $ | 1,028,986 | | 95.5 | % | | $ | 1,061,348 | | 96.2 | % | | $ | 2,042,970 | | 96.6 | % | | $ | 2,146,283 | | 97.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS | | | | | | | | | | | | | | | | | | | | | | | |
Asset-Based | $ | 72,792 | | | | | $ | 43,325 | | | | | $ | 126,248 | | | | | $ | 90,796 | | | |
Asset-Light |
| (9,498) | | | | |
| 13,180 | | | | | | (24,756) | | | | | | (911) | | | |
Other and eliminations(5) |
| (14,449) | | | | |
| (14,389) | | | | |
| (30,212) | | | | |
| (26,610) | | | |
Total consolidated operating income from continuing operations | $ | 48,845 | | | | | $ | 42,116 | | | | | $ | 71,280 | | | | | $ | 63,275 | | | |
1) | Represents costs associated with the freight handling pilot test program at ABF Freight, for which the decision was made to pause the pilot during third quarter 2023. |
2) | For the 2023 period, certain expenses have been reclassed to conform to the current year presentation, including amounts previously reported in “Shared services” that were reclassed to present “Salaries, wages, and benefits” expenses in a separate line item. |
3) | Includes amortization of intangibles associated with acquired businesses. |
4) | 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, including catch-up provisions. |
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, costs related to our customer pilot offering of Vaux, and other investments in ArcBest technology and innovations. |
8
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 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, net income or earnings per share, as determined under GAAP.
| | Three Months Ended | | Six Months Ended | |||||||||
| | June 30 | | June 30 | | ||||||||
|
| 2024 | | 2023 |
| 2024 | | 2023 | | ||||
ArcBest Corporation - Consolidated | | (Unaudited) | | ||||||||||
| | ($ thousands, except per share data) | | ||||||||||
Operating Income from Continuing Operations | | | | | | | | | | | | | |
Amounts on GAAP basis | | $ | 48,845 | | $ | 42,116 | | $ | 71,280 | | $ | 63,275 | |
Innovative technology costs, pre-tax(1) | | | 8,311 | | | 14,821 | | | 18,009 | | | 27,299 | |
Purchase accounting amortization, pre-tax(2) | | | 3,192 | | | 3,192 | | | 6,384 | | | 6,384 | |
Change in fair value of contingent consideration, pre-tax(3) | | | 3,850 | | | (10,000) | | | 11,170 | | | 5,040 | |
Non-GAAP amounts | | $ | 64,198 | | $ | 50,129 | | $ | 106,843 | | $ | 101,998 | |
| | | | | | | | | | | | | |
Net Income from Continuing Operations | | | | | | | | | | | | | |
Amounts on GAAP basis | | $ | 46,924 | | $ | 39,600 | | $ | 44,012 | | $ | 58,447 | |
Innovative technology costs, after-tax (includes related financing costs)(1) | | | 6,380 | | | 11,206 | | | 13,820 | | | 20,686 | |
Purchase accounting amortization, after-tax(2) | | | 2,400 | | | 2,398 | | | 4,801 | | | 4,796 | |
Change in fair value of contingent consideration, after-tax(3) | | | 2,896 | | | (7,512) | | | 8,401 | | | 3,787 | |
Change in fair value of equity investment, after-tax(4) | | | — | | | (2,786) | | | 21,603 | | | (2,786) | |
Life insurance proceeds and changes in cash surrender value | | | (440) | | | (1,086) | | | (1,673) | | | (2,582) | |
Tax benefit from vested RSUs(5) | | | (10,777) | | | (3,864) | | | (11,264) | | | (4,915) | |
Non-GAAP amounts | | $ | 47,383 | | $ | 37,956 | | $ | 79,700 | | $ | 77,433 | |
| | | | | | | | | | | | | |
Diluted Earnings Per Share from Continuing Operations | | | | | | | | | | | | | |
Amounts on GAAP basis | | $ | 1.96 | | $ | 1.60 | | $ | 1.83 | | $ | 2.35 | |
Innovative technology costs, after-tax (includes related financing costs)(1) | | | 0.27 | | | 0.45 | | | 0.58 | | | 0.83 | |
Purchase accounting amortization, after-tax(2) | | | 0.10 | | | 0.10 | | | 0.20 | | | 0.19 | |
Change in fair value of contingent consideration, after-tax(3) | | | 0.12 | | | (0.30) | | | 0.35 | | | 0.15 | |
Change in fair value of equity investment, after-tax(4) | | | — | | | (0.11) | | | 0.90 | | | (0.11) | |
Life insurance proceeds and changes in cash surrender value | | | (0.02) | | | (0.04) | | | (0.07) | | | (0.10) | |
Tax benefit from vested RSUs(5) | | | (0.45) | | | (0.16) | | | (0.47) | | | (0.20) | |
Non-GAAP amounts(6) | | $ | 1.98 | | $ | 1.54 | | $ | 3.32 | | $ | 3.11 | |
See “Notes to Non-GAAP Financial Tables” for footnotes to this ArcBest Corporation – Consolidated non-GAAP table.
9
ARCBEST CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | | ||||||||||||||||||||
| | June 30 | | June 30 | | ||||||||||||||||||||
|
| 2024 | | 2023 | | 2024 | | 2023 | | ||||||||||||||||
Segment Operating Income (Loss) Reconciliations | | (Unaudited) | | ||||||||||||||||||||||
| | ($ thousands, except percentages) | | ||||||||||||||||||||||
Asset-Based Segment | | | | | | ||||||||||||||||||||
Operating Income ($) and Operating Ratio | | | | | | | | | | | | | | | | ||||||||||
Amounts on GAAP basis | | $ | 72,792 | | 89.8 | % | | $ | 43,325 | | 94.0 | % | | $ | 126,248 | | 90.9 | % | | $ | 90,796 | | 93.6 | % | |
Innovative technology costs, pre-tax(7) | | | — | | — | | | | 8,343 | | (1.1) | | | | — | | — | | | | 14,411 | | (1.0) | | |
Non-GAAP amounts(6) | | $ | 72,792 | | 89.8 | % | | $ | 51,668 | | 92.8 | % | | $ | 126,248 | | 90.9 | % | | $ | 105,207 | | 92.6 | % | |
| | | | | | ||||||||||||||||||||
Asset-Light Segment | | | | | | ||||||||||||||||||||
Operating Income (Loss) ($) and Operating Ratio | | | | | | | | | | | | | | | | ||||||||||
Amounts on GAAP basis | | $ | (9,498) | | 102.4 | % | | $ | 13,180 | | 96.8 | % | | $ | (24,756) | | 103.1 | % | | $ | (911) | | 100.1 | % | |
Purchase accounting amortization, pre-tax(2) | | | 3,192 | | (0.8) | | | | 3,192 | | (0.8) | | | | 6,384 | | (0.8) | | | | 6,384 | | (0.8) | | |
Change in fair value of contingent consideration, pre-tax(3) | | | 3,850 | | (1.0) | | | | (10,000) | | 2.4 | | | | 11,170 | | (1.4) | | | | 5,040 | | (0.6) | | |
Non-GAAP amounts(6) | | $ | (2,456) | | 100.6 | % | | $ | 6,372 | | 98.4 | % | | $ | (7,202) | | 100.9 | % | | $ | 10,513 | | 98.8 | % | |
| | | | | | ||||||||||||||||||||
Other and Eliminations | | | | | | ||||||||||||||||||||
Operating Income (Loss) ($) | | | | | | | | | | | | | | | | ||||||||||
Amounts on GAAP basis | | $ | (14,449) | | | | | $ | (14,389) | | | | | $ | (30,212) | | | | | $ | (26,610) | | | | |
Innovative technology costs, pre-tax(1) | | | 8,311 | | | | | | 6,478 | | | | | | 18,009 | | | | | | 12,888 | | | | |
Non-GAAP amounts(6) | | $ | (6,138) | | | | | $ | (7,911) | | | | | $ | (12,203) | | | | | $ | (13,722) | | | | |
Note: See “Notes to Non-GAAP Financial Tables” for footnotes to this Segment Operating Income (Loss) Reconciliations non-GAAP table.
10
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, 2024 | ||||||||||||||||
| | | | | Other | | Income | | Income | | | | | | ||||
CONTINUING OPERATIONS | | Operating | | Income | | Before Income | | Tax | | Net | | | ||||||
| | Income | | (Costs) | | Taxes | | Provision | | Income | | Tax Rate(8) | ||||||
Amounts on GAAP basis | | $ | 48,845 | | $ | 382 | | $ | 49,227 | | $ | 2,303 | | $ | 46,924 | | 4.7 | % |
Innovative technology costs(1) | | | 8,311 | | | 172 | | | 8,483 | | | 2,103 | | | 6,380 | | 24.8 | |
Purchase accounting amortization(2) | | | 3,192 | | | — | | | 3,192 | | | 792 | | | 2,400 | | 24.8 | |
Change in fair value of contingent consideration(3) | | | 3,850 | | | — | | | 3,850 | | | 954 | | | 2,896 | | 24.8 | |
Life insurance proceeds and changes in cash surrender value | | | — | | | (440) | | | (440) | | | — | | | (440) | | — | |
Tax benefit from vested RSUs(5) | | | — | | | — | | | — | | | 10,777 | | | (10,777) | | — | |
Non-GAAP amounts | | $ | 64,198 | | $ | 114 | | $ | 64,312 | | $ | 16,929 | | $ | 47,383 | | 26.3 | % |
| | Six Months Ended June 30, 2024 | ||||||||||||||||
| | | | Other | | Income | | Income | | | | | | | ||||
| | Operating | | Income | | Before Income | | Tax | | Net | | | ||||||
| | Income | | (Costs) | | Taxes | | Provision | | Income | | Tax Rate(8) | ||||||
Amounts on GAAP basis | | $ | 71,280 | | $ | (26,730) | | $ | 44,550 | | $ | 538 | | $ | 44,012 | | 1.2 | % |
Innovative technology costs(1) | | | 18,009 | | | 367 | | | 18,376 | | | 4,556 | | | 13,820 | | 24.8 | |
Purchase accounting amortization(2) | | | 6,384 | | | — | | | 6,384 | | | 1,583 | | | 4,801 | | 24.8 | |
Change in fair value of contingent consideration(3) | | | 11,170 | | | — | | | 11,170 | | | 2,769 | | | 8,401 | | 24.8 | |
Change in fair value of equity investment(4) | | | — | | | 28,739 | | | 28,739 | | | 7,136 | | | 21,603 | | 24.8 | |
Life insurance proceeds and changes in cash surrender value | | | — | | | (1,673) | | | (1,673) | | | — | | | (1,673) | | — | |
Tax benefit from vested RSUs(5) | | | — | | | — | | | — | | | 11,264 | | | (11,264) | | — | |
Non-GAAP amounts | | $ | 106,843 | | $ | 703 | | $ | 107,546 | | $ | 27,846 | | $ | 79,700 | | 25.9 | % |
| | Three Months Ended June 30, 2023 | ||||||||||||||||
| | | | Other | | Income | | Income | | | | | | |||||
CONTINUING OPERATIONS | | Operating | | Income | | Before Income | | Tax | | Net | | | ||||||
| | Income | | (Costs) | | Taxes | | Provision | | Income | | Tax Rate(8) | ||||||
Amounts on GAAP basis | | $ | 42,116 | | $ | 6,558 | | $ | 48,674 | | $ | 9,074 | | $ | 39,600 | | 18.6 | % |
Innovative technology costs(1) | | | 14,821 | | | 241 | | | 15,062 | | | 3,856 | | | 11,206 | | 25.6 | |
Purchase accounting amortization(2) | | | 3,192 | | | — | | | 3,192 | | | 794 | | | 2,398 | | 24.9 | |
Change in fair value of contingent consideration(3) | | | (10,000) | | | — | | | (10,000) | | | (2,488) | | | (7,512) | | (24.9) | |
Change in fair value of equity investment(4) | | | — | | | (3,739) | | | (3,739) | | | (953) | | | (2,786) | | (25.5) | |
Life insurance proceeds and changes in cash surrender value | | | — | | | (1,086) | | | (1,086) | | | — | | | (1,086) | | — | |
Tax benefit from vested RSUs(5) | | | — | | | — | | | — | | | 3,864 | | | (3,864) | | — | |
Non-GAAP amounts | | $ | 50,129 | | $ | 1,974 | | $ | 52,103 | | $ | 14,147 | | $ | 37,956 | | 27.2 | % |
| | Six Months Ended June 30, 2023 | ||||||||||||||||
| | | | Other | | Income | | Income | | | | | | | ||||
| | Operating | | Income | | Before Income | | Tax | | Net | | | ||||||
| | Income | | (Costs) | | Taxes | | Provision | | Income | | Tax Rate(8) | ||||||
Amounts on GAAP basis | | $ | 63,275 | | $ | 8,944 | | $ | 72,219 | | $ | 13,772 | | $ | 58,447 | | 19.1 | % |
Innovative technology costs(1) | | | 27,299 | | | 500 | | | 27,799 | | | 7,113 | | | 20,686 | | 25.6 | |
Purchase accounting amortization(2) | | | 6,384 | | | — | | | 6,384 | | | 1,588 | | | 4,796 | | 24.9 | |
Change in fair value of contingent consideration(3) | | | 5,040 | | | — | | | 5,040 | | | 1,253 | | | 3,787 | | 24.9 | |
Change in fair value of equity investment(4) | | | — | | | (3,739) | | | (3,739) | | | (953) | | | (2,786) | | (25.5) | |
Life insurance proceeds and changes in cash surrender value | | | — | | | (2,582) | | | (2,582) | | | — | | | (2,582) | | — | |
Tax benefit from vested RSUs(5) | | | — | | | — | | | — | | | 4,915 | | | (4,915) | | — | |
Non-GAAP amounts | | $ | 101,998 | | $ | 3,123 | | $ | 105,121 | | $ | 27,688 | | $ | 77,433 | | 26.3 | % |
Note: See “Notes to Non-GAAP Financial Tables” for footnotes to this Effective Tax Rate Reconciliation non-GAAP table.
11
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 and changes in the fair values of contingent consideration and our equity investment, which are significant expenses resulting from strategic decisions or other factors 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 | | Six Months Ended | |||||||||
| | June 30 | | | June 30 | | |||||||
|
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| ||||
| | (Unaudited) |
| ||||||||||
| | ($ thousands) |
| ||||||||||
ArcBest Corporation - Consolidated Adjusted EBITDA from Continuing Operations | | | |||||||||||
Net Income from Continuing Operations | | $ | 46,924 | | $ | 39,600 | | $ | 44,012 | | $ | 58,447 | |
Interest and other related financing costs | |
| 2,078 | |
| 2,205 | |
| 4,306 | |
| 4,532 | |
Income tax provision | |
| 2,303 | |
| 9,074 | |
| 538 | |
| 13,772 | |
Depreciation and amortization(9) | |
| 36,276 | |
| 35,811 | |
| 73,109 | |
| 70,821 | |
Amortization of share-based compensation | |
| 3,433 | |
| 3,350 | |
| 6,322 | |
| 5,532 | |
Change in fair value of contingent consideration(3) | |
| 3,850 | |
| (10,000) | |
| 11,170 | |
| 5,040 | |
Change in fair value of equity investment(4) | | | — | |
| (3,739) | | | 28,739 | | | (3,739) | |
Consolidated Adjusted EBITDA from Continuing Operations | | $ | 94,864 | | $ | 76,301 | | $ | 168,196 | | $ | 154,405 | |
Note: See “Notes to Non-GAAP Financial Tables” for footnotes to this ArcBest Corporation – Consolidated Adjusted EBITDA from Continuing Operations non-GAAP table.
| | Three Months Ended | | Six Months Ended | | ||||||||
| | June 30 | | June 30 | | ||||||||
|
| 2024 | | 2023 | | 2024 | | 2023 | | ||||
| | (Unaudited) | | ||||||||||
| | ($ thousands) | | ||||||||||
Asset-Light Adjusted EBITDA | | | | | | | | | | | | | |
Operating Income (Loss) | | $ | (9,498) | | $ | 13,180 | | $ | (24,756) | | $ | (911) | |
Depreciation and amortization(9) | | | 5,039 | | | 5,085 | | | 10,117 | | | 10,153 | |
Change in fair value of contingent consideration(3) | | | 3,850 | | | (10,000) | | | 11,170 | | | 5,040 | |
Asset-Light Adjusted EBITDA | | $ | (609) | | $ | 8,265 | | $ | (3,469) | | $ | 14,282 | |
Note: See “Notes to Non-GAAP Financial Tables” for footnotes to this Asset-Light Adjusted EBITDA non-GAAP table.
12
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 related to our customer pilot offering of Vaux and initiatives to optimize our performance through technological innovation. The 2023 period also includes costs associated with the freight handling pilot test program at ABF Freight, for which the decision was made to pause the pilot during third quarter 2023. |
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) | For the six months ended June 30, 2024, represents a noncash impairment charge to write off our equity investment in Phantom Auto, a provider of human-centered remote operation software, which ceased operations during first quarter 2024. For the three and six months ended June 30, 2023, represents the increase in fair value of our investment in Phantom Auto based on observable price changes during second quarter 2023. |
5) | Represents recognition of the tax impact for the vesting of share-based compensation. |
6) | 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. |
7) | Represents costs associated with the freight handling pilot test program at ABF Freight, for which the decision was made to pause the pilot during third quarter 2023. |
8) | 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. |
9) | Includes amortization of intangibles associated with acquired businesses. |
13
ARCBEST CORPORATION
OPERATING STATISTICS
| | Three Months Ended | | | Six Months Ended | | ||||||||||||
| | June 30 | | | June 30 | | ||||||||||||
|
| 2024 |
| 2023 |
| % Change |
|
| 2024 |
| 2023 |
| % Change | | ||||
| | (Unaudited) | | |||||||||||||||
Asset-Based | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Workdays |
| | 64.0 |
| | 63.5 | | |
|
| | 127.5 |
| | 127.5 | | | |
| | | | | | | | | | | | | | | | | | |
Billed Revenue(1) / CWT | | $ | 50.09 | | $ | 40.72 |
| 23.0% | | | $ | 49.34 | | $ | 41.33 |
| 19.4% | |
| | | | | | | | | | | | | | | | | | |
Billed Revenue(1) / Shipment | | $ | 562.17 | | $ | 545.35 |
| 3.1% | | | $ | 552.64 | | $ | 537.38 |
| 2.8% | |
| | | | | | | | | | | | | | | | | | |
Tonnage / Day | |
| 11,186 | |
| 14,027 |
| (20.3%) | | |
| 11,062 | |
| 13,586 |
| (18.6%) | |
| | | | | | | | | | | | | | | | | | |
Shipments / Day | |
| 19,934 | |
| 20,946 |
| (4.8%) | | |
| 19,751 | |
| 20,901 |
| (5.5%) | |
| | | | | | | | | | | | | | | | | | |
Shipments / DSY hour | |
| 0.448 | |
| 0.417 |
| 7.4% | | |
| 0.445 | |
| 0.424 |
| 5.0% | |
| | | | | | | | | | | | | | | | | | |
Weight / Shipment | |
| 1,122 | |
| 1,339 | | (16.2%) | | | | 1,120 | |
| 1,300 | | (13.8%) | |
| | | | | | | | | | | | | | | | | | |
Average Length of Haul (Miles) | |
| 1,135 | |
| 1,122 |
| 1.2% | | |
| 1,123 | |
| 1,109 |
| 1.3% | |
| | | | | | | | | | | | | | | | | | |
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, 2024 | June 30, 2024 | |||
| | (Unaudited) | ||||
Asset-Light(2) | | | | | | |
| | | | | | |
Revenue / Shipment | | | (14.9%) | | | (17.4%) |
| | | | | | |
Shipments / Day | | | 12.6% | | | 13.1% |
2) | Statistical data for the periods presented include transactions related to managed transportation solutions which were previously excluded from the presentation of operating statistics for the Asset-Light segment for the three and six months ended June 30, 2023. |
###
14
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 2024 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
● | Statistics for July 2024 have not been finalized and are preliminary. |
● | There are 21.5 workdays in July 2024, and there were 19.5 workdays in July 2023. |
● | There will be 63.5 workdays in 3Q’24, and there were 62.5 workdays in 3Q’23. |
Asset-Based Operating Segment
● | Average price increase on contract renewals and deferred pricing agreements negotiated during 2Q’24: +5.1% |
Year-over-Year Business Trends
|
| | April 2024 | | May 2024 | | June 2024 | | July 2024 | | ||||
| | | | | | | | | | | | | | |
Billed Revenue/Day(1) | | | -2.2 | % | | -2.0 | % | | -0.9 | % | | +1 | % | |
Total Tons/Day | |
| -21.5 | % |
| -22.0 | % |
| -16.9 | % |
| -13 | % | |
Total Shipments/Day | |
| -6.6 | % |
| -3.4 | % |
| -4.5 | % |
| +1 | % | |
Total Billed Revenue/CWT | | | +24.6 | % | | +25.7 | % | | +19.2 | % |
| +16 | % | |
Total Billed Revenue/Shipment | | | +4.7 | % | | +1.5 | % | | +3.7 | % |
| -1 | % | |
Total Weight/Shipment | | | -16.0 | % | | -19.2 | % | | -13.0 | % |
| -14 | % | |
As we served our customers during the market disruption that began in July 2023 due to financial challenges at a major LTL competitor, we experienced an increase in our core business volumes. As these volumes grew, we strategically raised prices and reduced volumes in our transactional business. This shift, along with a softer market backdrop, led to year-over-year decreases in daily tonnage in the first half of 2024. However, these decreases were partially offset by higher billed revenue per hundredweight (cwt) due to improved pricing on fewer dynamic LTL-rated and truckload-rated shipments. Additionally, changes in mix positively impacted our results, with core, published LTL-rated tonnage representing a larger proportion of our Asset-Based business at higher pricing.
Pricing remains rational, and the strength of our core business allows us to optimize spot prices for transactional business. Based on preliminary results, total revenue per day and shipments per day both increased year-over-year in July 2024. We anticipate that daily tonnage levels for third quarter 2024 will be below the prior year, as some of the core business increase that began in July 2023 was project-related, and some of the increased business has shifted to other providers over the past year.
1
Effective July 1, 2024, the contractual wage rate under the 2023 ABF NMFA increased, and the health, welfare, and pension benefit contribution rate for most contractual employees increased on August 1, 2024. This resulted in a combined contractual wage and benefits rate increase of approximately 2.7%.
Historically, the average sequential change in the Asset-Based operating ratio from the second to the third quarter has ranged from flat to a 100-basis point improvement. With the current market backdrop and cost outlook for the third quarter, including the previously mentioned contractual wage and benefit increase, we expect the third quarter 2024 operating ratio to be consistent with the second quarter 2024.
Asset-Light Operating Segment
Year-over-Year Business Trends
|
| | April 2024 | | May 2024 | | June 2024 | | July 2024 | ||||
| | | | | | | | | | | | | |
Revenue/Day (Year-over-Year) | | | -12.4 | % | | -4.7 | % | | +5.2 | % | | -10 | % |
Shipments/Day (Year-over-Year) | | | +8.5 | % | | +11.1 | % | | +18.3 | % | | +1 | % |
Revenue/Shipment (Year-over-Year) | | | -19.2 | % | | -14.2 | % | | -11.1 | % | | -10 | % |
Purchased Transportation Expense as a % of Revenue | |
| 84.8 | % |
| 85.9 | % |
| 86.4 | % |
| 87 | % |
In July 2024, revenue per day decreased year-over-year, primarily due to lower revenue per shipment. This was partially offset by an increase in shipment volumes.
Shipment volumes increased on a year-over-year basis in July, driven by growth in our Managed solution. However, this growth has recently moderated due to lower demand from existing customers, reflecting current macroeconomic conditions. Additionally, truckload volume has slowed as we strategically reduce less profitable freight.
The decrease in revenue per shipment is attributable to softer freight market conditions and growth in the segment's Managed business, which typically has smaller shipment sizes and lower revenue per shipment.
Purchased transportation expense as a percentage of revenue increased sequentially throughout the second quarter and into July, as carrier rates rose. These higher costs have reduced margins for our truckload brokerage contract business.
We continue to focus on improving productivity and reducing cost per shipment in our Asset-Light segment. However, operating profit will remain impacted in the near term by current truckload brokerage market conditions. For the third quarter of 2024, we expect operating loss levels, excluding any impacts from changes in the fair value of contingent consideration, to be consistent with the second quarter of 2024.
Additional Detailed Information
Consolidated Capital Expenditures 2024 Projected
● | Total Net Capital Expenditures, including financed equipment: $325 million to $375 million |
● | Includes revenue equipment purchases (majority for Asset-Based) of $155 million |
● | Includes real estate expenditures of $130 million |
● | The remaining amount of capital expenditures includes items related to technology and miscellaneous dock equipment upgrades and enhancements. |
● | Depreciation and amortization costs on property, plant and equipment: approximately $142 million |
● | Intangible asset amortization, primarily reflecting purchase accounting amortization related to the MoLo acquisition: $13 million |
Share Repurchase Program
● | Based on repurchases settled through Wednesday, July 31, 2024, $94.5 million remains available under the current repurchase authorization for future common stock purchases. |
2
MoLo Contingent Earnout Consideration
● | As previously disclosed, contingent earnout 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. The liability for contingent earnout consideration is remeasured at fair value each quarter, and any change in fair value as a result of the recurring quarterly assessment is recognized in operating income. Factors impacting the fair value of the contingent earnout consideration include actual and forecasted operating results of MoLo, market volatility and discount rate considerations (including interest rates and other market factors). No consideration was paid for year 2023 because the earnout target was not achieved. |
Tax Rate
● | ArcBest’s second quarter 2024 effective GAAP tax rate for continuing operations was 4.7%. The lower effective tax rate was primarily due to the tax benefit from the vesting of restricted stock units granted in 2020 and 2021. The “Effective Tax Rate Reconciliation” table of ArcBest’s second quarter 2024 earnings press release in Exhibit 99.1 shows the reconciliation of GAAP to non-GAAP effective tax rates. The effective non-GAAP tax rate for second quarter 2024 was 26.3%. Under the current tax laws, we expect our full year 2024 non-GAAP tax rate for continuing operations to be in a range of 26% to 27%. The effective tax rate may be impacted by discrete items that could occur throughout the year. |
Asset-Based Annual Union Profit-Sharing Bonus
As provided in ABF Freight’s current Teamster labor contract, for the full years of 2024 through 2027, 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 $6 million - $6.5 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 |
91.1 to 93.0 | 1% |
89.1 to 91.0 | 2% |
87.1 to 89.0 | 3% |
87.0 or below | 4% |
3
“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 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. |
● | It also includes innovative technology costs related to our freight handling pilot program with third-party customers and human-centered remote and automated operations, which are typically disclosed as a non-GAAP reconciling item. |
● | Projected amounts for third quarter and full year 2024, and actual amounts for third quarter and full year 2023, are included below. |
| | Three Months Ended | | Year Ended | | ||||||||
| | September 30 | | December 31 | | ||||||||
| | 2024 |
| 2023 |
| 2024 |
| 2023 | | ||||
| | (in millions) | | ||||||||||
Innovative technology costs, pre-tax (incl. financing costs) | | $ | 8 | | $ | 7 | | $ | 30 | | $ | 31 | |
Operating loss, excl. innovative technology costs, pre-tax | | $ | (7) | | $ | (4) | | $ | (25) | | $ | (23) | |
Other Income (Costs) on the Consolidated Statements of Operations
● | Other income and costs include separate lines for interest income and interest expense. |
● | The “Other, net” line primarily includes changes in cash surrender value of life insurance, expenses associated with non-operating properties, and the first quarter 2024, $28.7 million, pre-tax, noncash impairment charge to write off our equity investment in Phantom Auto, a provider of human-centered remote operation software, which ceased operations. |
● | The changes in cash surrender value of life insurance and the equity investment impairment charge are typically disclosed as non-GAAP reconciling items. |
● | As such, the non-GAAP amounts for “Other, net” are expected to be minimal. |
● | Projected amounts for third quarter and full year 2024, and actual amounts for third quarter and full year 2023, are included below. |
| | Three Months Ended | | Year Ended |
| ||||||||
| | September 30 | | December 31 | | ||||||||
|
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| ||||
|
| (in millions) | | ||||||||||
Interest and dividend income | | $ | 3 | | $ | 4 | | $ | 12 | | $ | 15 | |
Interest and other related financing costs | | $ | (2) | | $ | (2) | | $ | (10) | | $ | (9) | |
Other, net, excluding non-GAAP reconciling items | | $ | (1) | | $ | — | | $ | (2) | | $ | — | |
4
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, 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 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 our customer pilot offering of Vaux; the loss or reduction of business from large customers or an overall reduction in our customer base; 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 and the inability to realize the anticipated benefits of the acquisition within the expected time period or at all; unsolicited takeover proposals, proxy contests, and other proposals/actions by activist investors; 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 equipment, including 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, insurance premium costs, and loss of our ability to self-insure; potential impairment of long-lived assets and 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 higher 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 8K.
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.
5
2Q’24 Earnings Presentation |
Forward Looking Statements 2 The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: Certain statements and information in this presentation 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 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 our customer pilot offering of Vaux; the loss or reduction of business from large customers or an overall reduction in our customer base; 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 and the inability to realize the anticipated benefits of the acquisition within the expected time period or at all; unsolicited takeover proposals, proxy contests, and other proposals/actions by activist investors; 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 equipment, including 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, insurance premium costs, and loss of our ability to self-insure; potential impairment of long-lived assets and 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 higher 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. |
Three-Point Strategy Continues to Deliver Shareholder Value & Drive Business Growth 3 1 2 3 ENHANCED SHAREHOLDER VALUE Increase Efficiency Leverage technology Optimize ABF network Drive scale and productivity to improve Asset-Light operating margin Drive Innovation Develop and implement disruptive and game changing innovations Launch new revenue streams Co-create and scale with customers Accelerate Growth Secure new customers Expand with existing customers through market penetration Retain existing customers |
80% of revenue from customers with 10+ year relationship QUARTER IN REVIEW 4 Double Digit Growth in Managed Transportation +38% Pipeline This Year Customer Demand is Strong and Growing Significant Efficiency Improvements Best On-Time Performance in Five Years $1B Revenue Generated C U S T O M E R - L E D S T R A T E G Y : |
LEADERSHIP CHANGES 5 Seth Runser named ArcBest President – to oversee day-to-day operations across the integrated solutions Judy R. McReynolds remains Chairman and CEO – focused on advancing strategy Matt Godfrey named ABF President – advancing the transformation of ABF |
✓ Enables Growth ✓ Improves Service ✓ Increases Efficiency STRATEGIC FACILITY AND NETWORK ENHANCEMENTS 6 Strategically adding capacity: ~800 door expansion since 2021, with 316 adds in 2024, and another 40 in 1Q25 +16% Productivity Improvement at New Locations 79 Added in 2Q24 NEW DOORS A New Service Center in Lithia Springs, GA. Adding Capacity: 8,820 8,820 8,955 9,254 9,307 9,386 9,504 9,570 135 299 53 79 118 66 40 8,500 8,700 8,900 9,100 9,300 9,500 9,700 2021 2022 2023 1Q24 2Q24 3Q24 4Q24 1Q25 8,820 8,955 9,254 9,307 9,386 9,504 9,570 Projected 9,610 Ongoing remodels & renovations across other existing facilities Net New Doors Since 2021 Existing Doors New Doors Legend: |
CONTINUALLY RAISING THE BAR ON EXCELLENCE 7 • Culture of continuous improvement • 40-years of using the Quality Process to drive efficiencies • Do-It-Right-The-First-Time • Problem Elimination Process • Relaunched commitment in 2024 as we accelerate into 2nd century • Increase in new employees through pandemic • Focused efforts on training and compliance beginning in our largest locations and expanding through the network Exceeded 2Q Goal 3.8x Process and compliance training exceeding expectations on net revenue impact Process and compliance training complete at 5% of locations with additional locations planned beyond 2025 2Q Projected Net Savings 2Q Actual Net Savings Locations Completed 2H24 thru 1H25 2H25 and Beyond 11 64 166 |
TRANSFORMING OPERATIONS THROUGH ABF OPTIMIZATION 8 ~70 projects in Optimization portfolio • 30% Operationalized • 30% In pilot to expand stages City Route Optimization Phase 1 is complete and saving $13M+ annually City Route Optimization Phases 2 and 3 pilots underway • Daily demand forecasting • Optimizing the pickup process 2021 2022 2023 2024 Idea Pilot Learn Refine Expand Operationalize $50K $13M+ Iterative approach for optimization efforts City Route Optimization Phase 1 Savings Per Year Per Year |
Non-GAAP Operating Income (2) Key Metrics Q2 2024(1) 9 $1.08B ArcBest Consolidated Revenue $64.2M Non-GAAP Operating Income (2) $1.98/diluted share Non-GAAP Net Income(2) +25% ARCBEST CONSOLIDATED (From Continuing Operations) 1) All comparisons are on a year-over-year basis. 2) See non-GAAP reconciliation in the Additional Information section of this presentation. Asset-Based Asset-Light -2% +28% +21M -$9M |
Key Metrics Q2 2024(1) 10 ASSET-BASED 1) All comparisons are on a year-over-year basis. 2) See non-GAAP reconciliation in the Additional Information section of this presentation. $713M Revenue Average Increase on Contract Renewals and Deferred Pricing Agreements Daily Total Tonnage -20% Daily Total Shipments -5% Total Billed Rev/CWT +23% 5.1% $72.8M Non-GAAP Operating Income (2) 89.8% Non-GAAP Operating Ratio (2) 300 bps improvement +41% -2% per day Daily Core Tonnage Daily Core Shipments +11% +14% 2 nd Best Operating Income in 2Q History Weight/ Shipment -16% |
Effective Initiative Management Overcomes Headwinds (Non-GAAP) (1) Strategy in Action 11 (1) Operating Income adjusted for certain unusual items. See Reconciliations of GAAP to non-GAAP Financial Measures in the Additional Information section of this presentation. I M P R O V E D A S S E T- B A S E D O P E R AT I N G I N C O M E 2Q23 Operating Income (Non-GAAP) (1) 2Q24 Lower Revenue • - Transactional • - Soft Economy • + More Core • + Higher Yield 2Q24 Higher Labor Contract Costs • Union Wages +13% • Union Benefits +4% 2Q24 Cost Savings • Cost Management • Productivity • Network Efficiency • Profit Optimization 2Q24 Operating Income (Non-GAAP) (1) |
Improvement in Asset-Based Operating Ratio(1) (Non-GAAP) Strategy in Action 12 (1) Operating Ratio adjusted for certain unusual items. See Reconciliations of GAAP to non-GAAP Financial Measures in the Additional Information section of this presentation. 840 bps IMPROVEMENT Compared to 2016 97.9% 96.9% 93.3% 94.5% 94.2% 88.8% 86.4% 90.4% 89.5% 2016 2017 2018 2019 2020 2021 2022 2023 2Q'24 TTM FREIGHT RECESSION COVID-19 IMPACTS FREIGHT RECESSION |
Key Metrics 13 Daily Billed Revenue Total Billed Rev/CWT ASSET-BASED Daily Total Tonnage Daily Total Shipments +16% Total Billed Rev/Shipment Total Weight/Shipment +1% -1% J U LY 2 0 2 4 P R E L I M I N A RY 1) All comparisons are on a year-over-year basis. -13% +1% -14% JULY 2024(1) |
Purchased Transportation as % of Revenue Key Metrics Q2 2024(1) ASSET-LIGHT Revenue/ Shipment $396M Revenue -4% per day ($2.5M) Non-GAAP Operating Loss (2) ($0.6M) Adjusted EBITDA(2) 1) All comparisons are on a year-over-year basis. 2) See non-GAAP reconciliation in the Additional Information section of this presentation. -139% -107% 86% 14 +13% Daily Total Shipments -15% |
Key Metrics July 2024(1) 15 ASSET-LIGHT Revenue/Day -10% 1) All comparisons are on a year-over-year basis. Revenue/Shipment Daily Total Shipments -10% 87% +1% Purchased Transportation as % of Revenue J U LY 2 0 2 4 P R E L I M I N A RY |
ARCBEST’S CUSTOMER-LED STRATEGY YIELDS RESULTS 16 Profit Revenue Single-Solution Accounts Cross-Sold Accounts >3x Revenue & Profit per account is over 3X higher in cross-sold accounts Revenue & Profit 3x 3x >70% Over 70% of our customers who use asset-light services also utilize our asset-based services Single-Solution Accounts Cross-Sold Accounts 5% Higher Customer Retention A customer-focused growth strategy enables faster and more efficient growth Asset-Light + Asset-Based Retention rates are 5 percentage points higher on cross-sold accounts than on single-solution accounts |
17 BALANCED INVESTMENT APPROACH Strong business performance enables ArcBest to invest organically in the business and provide returns to shareholders while maintaining a solid balance sheet and investment-grade credit metrics Strategic Growth Investments Share Repurchases & Dividends M&A Strategies • Investing in strategic initiatives and innovative projects to enhance revenue growth, optimize costs and drive long-term shareholder value • Projected 2024 Net Capital Expenditures of $325M - $375M as part of a strategic, multi-year investment plan for equipment, real estate, innovation and technology • Increased share repurchase program authorization to $125 million in early 2024 • Currently paying a $0.12/share quarterly dividend • Returned $37 million, year-to-date, to shareholders • Complementary to our solutions offered • Strong culture fit, experienced leadership team and a pathway to solid returns • Strategic technology and innovative partnerships Solid Financial Position • Net cash position of $57 million • $500M in Available Liquidity |
EXCELLENCE IN ACTION 18 10x Winner ATA Excellence in Security The Only |
19 Note: ArcBest Corporation reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures utilized for internal analysis provides analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. Accordingly, using these measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management's opinion, do not reflect our core operating performance. 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. Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) ADDITIONAL INFORMATION |
ARCBEST CORPORATION – CONSOLIDATED Three Months Ended Millions ($000,000), except per share data 6/30/2024 6/30/2023 Operating Income from Continuing Operations Amounts on a GAAP basis $ 48.8 $ 42.1 Innovative technology costs, pre-tax (1) 8.3 14.8 Purchase accounting amortization, pre-tax (2) 3.2 3.2 Change in fair value of contingent consideration, pre-tax (3) 3.9 (10.0) Non-GAAP amounts $ 64.2 $ 50.1 Net Income from Continuing Operations Amounts on a GAAP basis $ 46.9 $ 39.6 Innovative technology costs, after-tax (includes related financing costs) (1) 6.4 11.2 Purchase accounting amortization, after-tax (2) 2.4 2.4 Change in fair value of contingent consideration, after-tax (3) 2.9 (7.5) Change in fair value of equity investment, after-tax (4) - (2.8) Life insurance proceeds and changes in cash surrender value (0.4) (1.1) Tax benefit from vested RSUs (5) (10.8) (3.9) Non-GAAP amounts (6) $ 47.4 $ 38.0 Diluted Earnings Per Share from Continuing Operations Amounts on a GAAP basis $ 1.96 $ 1.60 Innovative technology costs, after-tax (includes related financing costs) (1) 0.27 0.45 Purchase accounting amortization, after-tax (2) 0.10 0.10 Change in fair value of contingent consideration, after-tax (3) 0.12 (0.30) Change in fair value of equity investment, after-tax (4) - (0.11) Life insurance proceeds and changes in cash surrender value (0.02) (0.04) Tax benefit from vested RSUs (5) (0.45) (0.16) Non-GAAP amounts (6) $ 1.98 $ 1.54 Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) 20 1) Represents costs related to our customer pilot offering of Vaux and initiatives to optimize our performance through technological innovation. The 2023 period also includes costs associated with the freight handling pilot test program at ABF Freight, for which the decision was made to pause the pilot during third quarter 2023. 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. 4) Represents the increase in fair value of our investment in Phantom Auto, which ceased operations during first quarter 2024, based on observable price changes during second quarter 2023. 5) Represents recognition of the tax impact for the vesting of share-based compensation. 6) 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. |
Reconciliations of GAAP to Non -GAAP Financial Measures (Unaudited) 21 1) Adjusted EBITDA is a primary component of the financial covenants contained in ArcBest Corporation’s Fourth Amended and Restated Credit Agreement. Management believes 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. Furthermore, management uses Adjusted EBITDA as a key measure of performance and for business planning. However, these non -GAAP financial measures should not be construed as better measurements than operating income (loss), net income, or earnings per share, as determined under GAAP. Non -GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. Other companies may calculate EBITDA differently; therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies. 2) Includes amortization of intangibles associated with acquired businesses. 3) Represents change in fair value of the contingent earnout consideration recorded for the MoLo acquisition. 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) Represents estimated settlement expenses related to the classification of certain Asset -Light employees under the Fair Labor Standards Act. 6) Represents a noncash impairment charge to write off our equity investment in Phantom Auto, a provider of human -centered remote operation software, which ceased operations during first quarter 2024. 7) Adjusted EBITDA amounts are calculated in total and may not equal the sum of the Net Income and the adjustments due to rounding. Three Months Ended ASSET -LIGHT ADJUSTED EBITDA (1) 6/30/2024 6/30/2023 ($ millions) Operating Income (Loss) $ (9.5) $ 13.2 Depreciation and amortization (2) 5.0 5.1 Change in fair value of contingent consideration (3) 3.9 (10.0) Adjusted EBITDA $ (0.6) $ 8.3 CONSOLIDATED ADJUSTED EBITDA (1) Twelve Months Ended 6/30/2024 ($ millions) Net Income from Continuing Operations $ 127.7 Interest and other related financing costs 8.9 Income tax provision 31.5 Depreciation and amortization (2) 147.6 Amortization of share -based compensation 12.2 Change in fair value of contingent consideration (3) (13.0) Lease impairment charges (4) 30.2 Legal settlement (5) 9.5 Change in fair value of equity investment (6) 28.7 Consolidated Adjusted EBITDA (7) $ 383.4 |
Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) 22 1) Represents costs associated with the freight handling pilot test program at ABF Freight, for which the decision was made to pause the pilot during third quarter 2023. 2) 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. 3) Represents the amortization of acquired intangible assets in the Asset-Light segment. 4) Represents change in fair value of the contingent earnout consideration recorded for the MoLo acquisition. Three Months Ended Millions ($000,000) 6/30/2024 6/30/2023 ASSET-BASED Operating Income Amounts on a GAAP basis $ 72.8 89.8% $ 43.3 94.0% Innovative technology costs, pre-tax (1) - - 8.3 (1.1) Non-GAAP amounts (2) $ 72.8 89.8% $ 51.7 92.8% ASSET-LIGHT Operating Income (Loss) Amounts on a GAAP basis $ (9.5) 102.4% $ 13.2 96.8% Purchase accounting amortization, pre-tax (3) 3.2 (0.8) 3.2 (0.8) Change in fair value of contingent consideration, pre-tax (4) 3.9 (1.0) (10.0) 2.4 Non-GAAP amounts (2) $ (2.5) 100.6% $ 6.4 98.4% |
Document and Entity Information |
Aug. 02, 2024 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Document Period End Date | Aug. 02, 2024 |
Entity Registrant Name | ARCBEST CORPORATION |
Entity Incorporation, State or Country Code | DE |
Entity File Number | 0-19969 |
Entity Tax Identification Number | 71-0673405 |
Entity Address, Address Line One | 8401 McClure Drive |
Entity Address, City or Town | Fort Smith |
Entity Address, State or Province | AR |
Entity Address, Postal Zip Code | 72916 |
City Area Code | 479 |
Local Phone Number | 785-6000 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock $0.01 Par Value |
Trading Symbol | ARCB |
Security Exchange Name | NASDAQ |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0000894405 |
Amendment Flag | false |
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