ArcBest® Announces Fourth Quarter 2019 And Full Year 2019 Results

FORT SMITH, Ark., Jan. 30, 2020 /PRNewswire/ -- ArcBest^® ARCB, a leading logistics company with creative problem solvers who deliver innovative solutions, today reported fourth quarter 2019 revenue of $717.4 million compared to fourth quarter 2018 revenue of $774.3 million.  ArcBest had a fourth quarter 2019 operating loss of $11.2 million compared to operating income of $37.2 million last year, and a net loss of $5.5 million, or $0.22 per diluted share compared to fourth quarter 2018 net income of $15.3 million, or $0.57 per diluted share.  Fourth quarter 2019 results include a previously announced noncash impairment charge of $26.5 million (pre-tax), or $19.8 million (after-tax) and $0.75 per diluted share.

Excluding certain items in both periods as identified in the attached reconciliation tables, non-GAAP operating income was $20.2 million in fourth quarter 2019 compared to fourth quarter 2018 operating income of $39.9 million.  On a non-GAAP basis, net income was $14.8 million, or $0.56 per diluted share, in fourth quarter 2019 compared to fourth quarter 2018 net income of $28.3 million, or $1.06 per diluted share.

"Overall, 2019 represented a solidly profitable year for ArcBest filled with ongoing innovation and customer-centric initiatives," said Chairman, President and CEO Judy R. McReynolds. "While conditions were not as favorable as those seen in 2018, our team succeeded in providing customers with valued expertise, a better experience and the full suite of logistics services they require. As a result of our expansion and investments in recent years, our cross-sold accounts have become larger in size and are growing faster than single-service accounts. Importantly, they also have higher rates of retention, which is a more stable foundation for future growth."

ArcBest's full year 2019 revenue totaled $3.0 billion compared to $3.1 billion in 2018.  Net income was $40.0 million, or $1.51 per diluted share, compared to net income of $67.3 million, or $2.51 per diluted share in 2018.  On a non-GAAP basis, ArcBest had 2019 net income of $76.3 million, or $2.88 per diluted share compared to net income of $107.4 million, or $4.02 per diluted share in 2018. 

McReynolds noted that returning the asset-based business to historic margins has been a stated long-term goal. Payment of a profit-sharing bonus to union-represented employees as provided for in the 2018 collective bargaining agreement by achieving a 95.2 percent ABF Freight operating ratio in 2019 represented a significant milestone. "We thank our ABF employees for their hard work and are proud to distribute this profit-sharing bonus to them," McReynolds said.

Fourth Quarter Results of Operations Comparisons

Asset-Based

Fourth Quarter 2019 Versus Fourth Quarter 2018

• Revenue of $513.3 million compared to $548.9 million, a per-day decrease of 6.5 percent.
• Total tonnage per day decrease of 8.1 percent, with a double-digit percentage decrease in LTL-rated tonnage partially offset by a double-digit percentage increase in TL-rated spot shipment tonnage moving in the Asset-Based network.
• Total shipments per day decrease of 7.3 percent. Total weight per shipment decrease of 0.8 percent and a decrease of 6.3 percent in LTL-rated weight per shipment.
• Total billed revenue per hundredweight increased 2.1 percent and was negatively impacted by lower fuel surcharges versus prior year. Excluding fuel surcharge, the percentage increase on LTL-rated freight was in the high-single digits.
• Operating income of $20.5 million and an operating ratio of 96.0 percent compared to operating income of $36.9 million and an operating ratio of 93.3 percent. On a non-GAAP basis, operating income of $25.4 million and an operating ratio of 95.0 percent compared to operating income of $37.8 million and an operating ratio of 93.1 percent.

Fourth quarter tonnage and shipment totals in the Asset-Based business were below the same period last year due to weaker customer demand and smaller average sized LTL shipments associated with a tempered economic operating environment.   These factors, along with reduced fuel surcharge revenue, and associated reductions in fuel-related expenses, contributed to lower fourth quarter revenue.  Reductions in total Asset-Based business levels resulting from fewer LTL-rated shipments were somewhat mitigated by an increase in TL‑rated, spot shipments moving through the ABF Freight network.  Efforts to secure adequate Asset-Based yields during the quarter were successful, especially on LTL-rated shipments, amidst a positive pricing marketplace.  ABF Freight continues to have success in achieving pricing levels that match the superior customer service it offers. 

Fourth quarter Asset-Based linehaul costs improved as a result of the combined impact of lower empty equipment costs and efficient management of outside capacity resources including rail, purchased transportation and cartage.  Lower business levels contributed to reduced efficiency in providing dock, city pickup and delivery services, thus impacting operating costs per shipment. During this year's fourth quarter, Asset-Based results also benefitted from asset sales.   

Asset-Light^‡

Fourth Quarter 2019 Versus Fourth Quarter 2018

• Revenue of $237.0 million compared to $243.8 million, a per-day decrease of 2.8 percent.
• An operating loss of $25.4 million due to a noncash impairment charge compared to operating income of $7.5 million. On a non-GAAP basis, operating income of $1.1 million compared to operating income of $7.8 million.
• Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") of $4.0 million compared to Adjusted EBITDA of $11.3 million.

Reduced fourth quarter revenue in the Asset-Light ArcBest segment versus the prior year reflects a market-driven reduction in total average revenue per shipment, primarily in the expedite and truckload brokerage businesses.  Though purchased transportation costs are below the prior year, the rate of decrease in these carrier capacity costs did not match that of the quarter's decline in revenue.  This year's more available truckload capacity, compared to the tighter spot market last year, was a factor impacting demand for expedite services and operating margins. Strong demand for ArcBest's managed transportation solutions continues to be a positive contributor to Asset-Light financial results.  At FleetNet, an increase in total events resulted in improved operating income over the prior year period.

Full Year Results of Operations Comparisons

Asset-Based

Full Year 2019 Versus Full Year 2018

• Revenue of $2.1 billion, compared to $2.2 billion in 2018, an average daily decrease of 1.2 percent.
• Tonnage per day decrease of 4.8 percent.
• Shipments per day decrease of 2.4 percent.
• Total billed revenue per hundredweight increased 3.7 percent. Excluding fuel surcharge, the percentage increase on LTL-rated freight was in the high-single digits.
• Operating income of $102.1 million compared to $103.9 million in 2018. On a non-GAAP basis, operating income of $118.8 million compared to $145.6 million in 2018.
• Profit-sharing bonus to union-represented ABF Freight employees of $5.1 million for 2019

Asset-Light^‡

Full Year 2019 Versus Full Year 2018

• Revenue of $950.1 million compared to $976.2 million in 2018, an average daily decrease of 2.5 percent.
• An operating loss of $15.4 million compared to operating income of $28.0 million. On a non-GAAP basis, operating income of $11.2 million compared to operating income of $26.5 million.
• Adjusted EBITDA of $23.8 million compared to $43.4 million in 2018.

Capital Expenditures

In 2019, total net capital expenditures, including equipment financed, equaled $147 million which was below previous expectations reflecting shifts in the timing of some expenditures into 2020 and higher sale proceeds.  2019 net capital expenditures included $86 million of revenue equipment, the majority of which was for ArcBest's Asset-Based operation.  Depreciation and amortization costs on property, plant and equipment were $108 million.

For 2020, total net capital expenditures are estimated to range from $135 million to $145 million. This includes revenue equipment purchases of approximately $82 million primarily for ArcBest's Asset-Based operation.  ArcBest's depreciation and amortization costs on property, plant and equipment in 2020 are estimated to range from $110 million to $115 million.

Quarterly Dividends and Share Repurchase Program

During 2019, ArcBest increased shareholder returns through payment of an eight cent per share quarterly dividend and purchase of ArcBest shares valued at approximately $9.1 million, and these are expected to continue at comparable levels in 2020.

Closing Comments

"For the last 10 years, our strategy has evolved purposefully by expanding our logistics offerings and opening up new avenues for growth to address our rapidly changing industry," said McReynolds. "Ease of doing business through multiple channels has become a customer requirement. We are confident that the solutions we have in place, and continue to develop and enhance, provide value in any environment, but especially this environment, as evidenced by the growth seen in our managed transportation and Retail+ solutions.  As we look ahead, we are accelerating our efforts to deepen and broaden our customer relationships and to increase the effectiveness of our efforts to improve supply chain efficiencies."

NOTE

 ‡ - The ArcBest and FleetNet reportable segments, combined, represent Asset-Light operations.

Conference Call

ArcBest will host a conference call with company executives to discuss the 2019 fourth quarter and full year results. The call will be on Friday, January 31st at 9:30 a.m. EST (8:30 a.m. CST). Interested parties are invited to listen by calling (800) 756‑3565. Following the call, a recorded playback will be available through the end of the day on March 15, 2020. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21950554. The conference call and playback can also be accessed, through March 15, 2020, on ArcBest's website at arcb.com.

Call participants can submit questions this afternoon prior to the conference call by emailing them to ir@arcb.com.  On the call, responses will be provided to as many questions as possible in the time available.

About ArcBest

ArcBest^® ARCB is a leading logistics company with creative problem solvers who deliver innovative solutions.  We'll find a way to deliver knowledge, expertise and a can-do attitude with every shipment and supply chain solution, household move or vehicle repair.  At ArcBest, we're More Than Logistics^SM.  For more information, visit arcb.com.

Forward-Looking Statements

Certain statements and information in this press release concerning results for the three months ended September 30, 2019 may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Terms such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "foresee," "intend," "may," "plan," "predict," "project," "scheduled," "should," "would," and similar expressions and the negatives of such terms are intended to identify forward-looking statements. These statements are based on management's beliefs, assumptions, and expectations based on currently available information, are not guarantees of future performance, and involve certain risks and uncertainties (some of which are beyond our control). Although we believe that the expectations reflected in these forward-looking statements are reasonable as and when made, we cannot provide assurance that our expectations will prove to be correct. Actual outcomes and results could materially differ from what is expressed, implied, or forecasted in these statements due to a number of factors, including, but not limited to: a failure of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data breach, and/or cybersecurity incidents; untimely or ineffective development and implementation of new or enhanced technology or processes, including the pilot test program at ABF Freight; failure to realize potential benefits associated with new or enhanced technology or processes, including the pilot test program at ABF Freight, and any write-offs associated therewith; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; relationships with employees, including unions, and our ability to attract and retain 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; the cost, timing, and performance of growth initiatives; 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; availability and cost of reliable third-party services; governmental regulations; environmental laws and regulations, including emissions-control regulations; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; 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; maintaining our intellectual property rights, brand, and corporate reputation; the loss of key employees or the inability to execute succession planning strategies; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; self-insurance claims and insurance premium costs; the cost, integration, and performance of any recent or future acquisitions; 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; increased prices for and decreased availability of new revenue equipment, decreases in value of used revenue equipment, and higher costs of equipment-related operating expenses such as maintenance and fuel and related taxes; potential impairment of goodwill and intangible assets; greater than anticipated funding requirements for our nonunion defined benefit pension plan; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; antiterrorism and safety measures; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest's public filings with the Securities and Exchange Commission ("SEC").

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

Financial Data and Operating Statistics

The following tables show financial data and operating statistics on ArcBest^® and its reportable segments. 

 

 

 

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles ("GAAP"). However, management believes that certain non-GAAP performance measures and ratios utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management's opinion, do not reflect our core operating performance. Other companies may calculate non-GAAP measures differently; therefore, our calculation may not be comparable to similarly titled measures of other companies. Certain information discussed in the scheduled conference call could be considered non-GAAP measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. These financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as determined under GAAP.

Notes to Non-GAAP Financial Tables

The following footnotes apply to the non-GAAP financial tables presented in this press release.

 

 

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA)

Management uses Adjusted EBITDA as a key measure of performance and for business planning. The measure is particularly meaningful for analysis of operating performance, because it excludes amortization of acquired intangibles and software of the Asset-Light businesses, which are significant expenses resulting from strategic decisions rather than core daily operations. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our credit agreement.

 

 

 

Investor Relations Contact: David Humphrey

Title: Vice President – Investor Relations

Phone: 479-785-6200

Email: dhumphrey@arcb.com

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SOURCE ArcBest