ArcBest Corporation® Announces Fourth Quarter 2015 And Full Year 2015 Results

- Fourth quarter 2015 net income was $5.0 million, or $0.19 per diluted share. Excluding certain identified items, fourth quarter 2015 net income was $0.21 per diluted share.

- Fourth quarter 2015 ABF Freight® revenue and operating margin were below 2014, due to reduced business levels resulting from a sluggish freight economy and lower fuel surcharge revenue.

- Fourth quarter 2015 revenue at ArcBest's asset-light logistics businesses was $198.3 million, an increase of 6 percent over the previous year.

- Full year 2015 revenue at ArcBest Corporation of $2.7 billion.

- ArcBest's full year 2015 operating income increased 9 percent to $75.5 million.

Feb 03, 2016, 04:00 ET from ArcBest Corporation

FORT SMITH, Ark., Feb. 3, 2016 /PRNewswire/ -- ArcBest Corporation (Nasdaq: ARCB) today reported fourth quarter 2015 financial results reflecting a soft freight environment associated with high customer inventory levels and weakness in the manufacturing and industrial sectors of the economy. Fourth quarter and full year revenues were significantly impacted by the effect of lower diesel fuel prices on fuel surcharge revenues. 

Fourth Quarter 2015 Results

ArcBest's revenue was $648.1 million compared to revenue of $664.8 million in the fourth quarter of 2014, a decrease of 2.5 percent.  Net income was $5.0 million, or $0.19 per diluted share compared to fourth quarter 2014 net income of $14.5 million, or $0.53 per diluted share.  As shown in the attached reconciliation tables, both of these periods were impacted by favorable effective tax rates and adjustments for certain other items.  On an adjusted basis, ArcBest's fourth quarter 2015 net income was $5.5 million, or $0.21 per diluted share compared to fourth quarter 2014 net income of $11.9 million, or $0.44 per diluted share. 

Freight Transportation (ABF Freight)

Results of Operations

Fourth Quarter 2015

  • Revenue of $461.5 million compared to $485.9 million in fourth quarter 2014, a decrease of 5.0 percent. ABF Freight's fourth quarter 2015 revenue was impacted by lower fuel surcharges.
  • Tonnage per day decrease of 4.9 percent versus fourth quarter 2014.
  • Total billed revenue per hundredweight decreased 1.1 percent compared to the prior year which included the impact of lower fuel surcharges in 2015. Excluding fuel surcharge, the percentage increase on ABF Freight's traditional LTL freight was in the mid-single digits.
  • Operating income of $8.3 million and operating ratio of 98.2 percent excluding adjustments for pension settlement charges compared to similarly adjusted operating income of $15.8 million and an operating ratio of 96.8 percent in fourth quarter 2014.

ABF Freight's® fourth quarter operating margin was in-line with historical sequential changes from the third quarter. However, operating margins declined versus the prior year due to weak freight levels associated with U.S. manufacturing which in the fourth quarter contracted at levels not seen since 2009.  Though the pricing environment has remained positive despite sluggish freight levels, ABF Freight's revenues were impacted by the significant reduction in diesel fuel prices that lowered fuel surcharge revenue and related costs. During the quarter, ABF Freight's continued emphasis on customer service led to challenges in aligning costs with the lower business levels.

Asset-Light Logistics

Results of Operations

Fourth Quarter 2015

  • Revenue of $198.3 million compared to $187.1 million in fourth quarter 2014, an increase of 6 percent, which included lower revenue at Panther.
  • Asset-light revenue equaled 30 percent of total consolidated revenue, compared to 28 percent during the same period last year.
  • Fourth quarter 2015 earnings before interest, taxes, depreciation and amortization ("EBITDA") of $7.1 million compared to EBITDA in fourth quarter 2014 of $9.4 million.

Strategic initiatives continued to generate solid growth in managed shipments and business levels across all the asset-light businesses during fourth quarter 2015.  However, Panther Premium Logistics'® fourth quarter 2015 revenue and operating margin were below the same period of 2014.  Though Panther's shipment levels increased, their average shipment size declined compared to the historically strong 2014 period when spot truckload market capacity was constrained and fuel surcharges were higher.   ArcBest's remaining asset-light logistics companies – ABF Logistics®, FleetNet America® and ABF Moving® – each reported increased fourth quarter revenue resulting from additional new customers and increased business from existing customers.

Full Year 2015 Results

"While weakness in the industrial and manufacturing segments of the economy accelerated toward the end of 2015, we made significant progress throughout the year to improve operations at ABF Freight and also provide the full suite of complementary asset-light logistics services our customers seek from us," said ArcBest President and CEO Judy R. McReynolds.  "By the end of 2015, 23 percent of the ABF Freight account base also transacted business with ABF Logistics or Panther. In 2011, that figure was just 6 percent. The 2015 investments we have made in our enterprise services are allowing us greater penetration of these accounts through the single point of contact they desire from ArcBest as a trusted logistics provider."

ArcBest's revenue totaled $2.7 billion, an increase of 2 percent compared to $2.6 billion in 2014.  ArcBest's 2015 operating income increased 9 percent versus the previous year to $75.5 million, or $81.0 million on an adjusted basis.  Net income was $44.9 million, or $1.67 per diluted share.  Excluding adjustments for certain other items in the attached reconciliation table, ArcBest had 2015 net income of $47.9 million, or $1.78 per diluted share compared to similarly adjusted net income of $45.7 million, or $1.67 per diluted share in 2014.

Freight Transportation (ABF Freight)

Results of Operations

Full Year 2015

  • Revenue of $1.9 billion, comparable to $1.9 billion in 2014. ABF Freight's 2015 revenue was impacted by lower fuel surcharges
  • Tonnage per day decrease of 1.5 percent versus 2014.
  • Total billed revenue per hundredweight increased 0.8 percent compared to the prior year reflecting the impact of lower fuel surcharges in 2015. Excluding fuel surcharge, the increase in total billed revenue per hundredweight was in the mid-single digits.
  • Operating income excluding adjustments for pension settlement charges increased 17 percent with an operating ratio of 96.6 percent compared to an operating ratio of 97.1 percent in 2014.

Asset-Light Logistics

Results of Operations

Full Year 2015

  • Revenue of $798.1 million compared to $722.5 million in 2014, an increase of 10 percent, which was significantly impacted by lower revenue at Panther.
  • 2015 earnings before interest, taxes, depreciation and amortization of $39.3 million compared to $40.5 million in 2014.
  • ABF Logistics acquired Smart Lines Transportation Group in January 2015 and Bear Transportation Services in December 2015.

Closing Comments

"As we move through 2016 during a period of economic uncertainty, we will closely monitor our cost structure and work to manage our labor levels consistent with business trends.  Our goals for this year include accelerating efforts to provide customers with easier access to all of our services, continued improvements in operations and ongoing investments in technology and enterprise solutions among other initiatives," said Ms. McReynolds.

Capital Expenditures

In 2015, total net capital expenditures equaled $152 million, including approximately $106 million of revenue equipment for ABF Freight and Panther.  Depreciation and amortization costs on property, plant and equipment were $89 million.

For 2016, total net capital expenditures are estimated to range from $170 million to $200 million. This includes revenue equipment purchases of $95 million primarily at ABF Freight. Expected real estate expenditures totaling approximately $45 million are for expansion opportunities, and include construction costs delayed from 2015 for previously disclosed call center facilities and a needed office building, a portion of which replaces leased space.  The remainder of expected capital expenditures includes the costs of other facility and handling equipment at ABF Freight and technology investments across the corporation.  ArcBest's depreciation and amortization costs on property, plant and equipment in 2016 are estimated to be in a range of $100 million to $110 million.

The new equipment added during 2015 increased the dependability and consistency of service offered to ArcBest customers.  On-going benefits to be fully realized from ArcBest's investment and enhancement of assets include reduced equipment age, improved fuel economy, lower maintenance costs and reduction of rented equipment.  The 2016 capital expenditure plan reflects continuation of the accelerated replacement of revenue equipment and alignment with ArcBest's long-term strategy to advance operational efficiencies.   For instance, during 2016 upgrades will be made to the data information system ABF Freight utilizes to handle shipments throughout its network.

Conference Call

ArcBest Corporation will host a conference call with company executives to discuss the 2015 fourth quarter and full year results. The call will be today, Wednesday, February 3, at 9:30 a.m. ET (8:30 a.m. CT). Interested parties are invited to listen by calling (800) 682-8593. Following the call, a recorded playback will be available through the end of the day on March 15, 2016. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21802368. The conference call and playback can also be accessed, through March 15, 2016, on ArcBest's website at arcb.com.

About ArcBest

ArcBest Corporation® (Nasdaq: ARCB) solves complex logistics and transportation challenges. Our companies and brands – ABF Freight®, ABF Logistics®, Panther Premium Logistics®, FleetNet America®, U-Pack® and ArcBest Technologies – apply the skill and the will with every shipment and supply chain solution, household move or vehicle repair. ArcBest finds a way.

For more information, visit arcb.com, abf.com, pantherpremium.com, fleetnetamerica.com and upack.com. ArcBest Corporation®. The Skill & The Will®.

Forward-Looking Statements

Certain statements and information in this press release concerning results for the three and twelve months ended December 31, 2015 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, which are generally not historical in nature. These forward-looking statements are based on management's current expectations and beliefs concerning future developments and their potential effect on us. Although management believes that these forward-looking statements are reasonable, as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and management's present expectations or projections. Important factors that could cause our actual results to differ materially from those in the forward-looking statements include, but are not limited to: costs of continuing investments in technology, a failure of our information systems and the impact of cyber incidents; disruptions or failures of services essential to the operation of our business or the use of information technology platforms in our business; governmental regulations and policies; litigation or claims asserted against us; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer pension plans; competitive initiatives, pricing pressures, 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; general economic conditions and related shifts in market demand that impact the performance and needs of industries served by ArcBest Corporation's subsidiaries and/or limit our customers' access to adequate financial resources; 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; relationships with employees, including unions, and our ability to attract and retain employees and/or independent owner operators; availability of fuel; default on covenants of financing arrangements and the availability and terms of future financing arrangements; availability and cost of reliable third-party services; increased competition from freight transportation service providers outside the motor carrier freight transportation industry; timing and amount of capital expenditures, increased prices for and decreased availability of new revenue equipment and decreases in value of used revenue equipment; future costs of operating expenses such as maintenance and fuel and related taxes; self-insurance claims and insurance premium costs; environmental laws and regulations, including emissions-control regulations; potential impairment of goodwill and intangible assets; the impact of our brands and corporate reputation; the cost, timing and performance of growth initiatives; the cost, integration and performance of any future acquisitions; weather conditions; and other financial, operational and legal risks and uncertainties detailed from time to time in ArcBest Corporation's Securities and Exchange Commission public filings. 

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with 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.

Investor Relations Contact: David Humphrey

Media Contact: Kathy Fieweger

Title: Vice President – Investor Relations

Phone: 479-719-4358

Phone: 479-785-6200

Email: kfieweger@arcb.com

Email: dhumphrey@arcb.com

 

Financial Data and Operating Statistics

The following tables show financial data and operating statistics on ArcBest Corporation® and its subsidiary companies.

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

December 31

Year Ended

December 31

2015

2014

2015

2014

(Unaudited)

($ thousands, except share and per share data)

REVENUES

$

648,134

$

664,848

$

2,666,905

$

2,612,693

OPERATING EXPENSES

640,822

646,799

2,591,409

2,543,454

OPERATING INCOME

7,312

18,049

75,496

69,239

OTHER INCOME (COSTS)

Interest and dividend income

402

252

1,284

851

Interest and other related financing costs

(1,217)

(822)

(4,400)

(3,190)

Other, net

370

2,161

354

3,712

(445)

1,591

(2,762)

1,373

INCOME BEFORE INCOME TAXES

6,867

19,640

72,734

70,612

INCOME TAX PROVISION

1,878

5,097

27,880

24,435

NET INCOME

$

4,989

$

14,543

$

44,854

$

46,177

EARNINGS PER COMMON SHARE(1)

Basic

$

0.19

$

0.53

$

1.71

$

1.69

Diluted

$

0.19

$

0.53

$

1.67

$

1.69

AVERAGE COMMON SHARES OUTSTANDING

Basic

25,936,709

26,073,256

26,013,716

25,993,255

Diluted

26,415,839

26,073,256

26,530,127

25,993,612

CASH DIVIDENDS DECLARED   PER COMMON SHARE

$

0.08

$

0.06

$

0.26

$

0.15

(1)  ArcBest uses the two-class method for calculating earnings per share. This method, as calculated below, requires an allocation of dividends paid and a portion of undistributed net income to unvested restricted stock for calculating per share amounts.

NET INCOME

$

4,989

$

14,543

$

44,854

$

46,177

EFFECT OF UNVESTED RESTRICTED  STOCK AWARDS

(45)

(703)

(443)

(2,300)

ADJUSTED NET INCOME FOR CALCULATING EARNINGS PER COMMON SHARE

$

4,944

$

13,840

$

44,411

$

43,877

 

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31

2015

December 31

2014

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

164,973

$

157,042

Short-term investments

61,597

45,909

Restricted cash

1,384

1,386

Accounts receivable, less allowances (2015 – $4,825; 2014 – $5,731)

236,097

228,056

Other accounts receivable, less allowances (2015 – $1,029; 2014 – $1,701)

6,718

6,582

Prepaid expenses

20,801

20,906

Deferred income taxes

38,443

40,220

Prepaid and refundable income taxes

18,134

9,920

Other

3,936

4,968

        TOTAL CURRENT ASSETS

552,083

514,989

PROPERTY, PLANT AND EQUIPMENT

Land and structures

273,839

251,836

Revenue equipment

699,844

633,455

Service, office, and other equipment

145,286

136,145

Software

127,010

116,112

Leasehold improvements

25,419

24,377

1,271,398

1,161,925

Less allowances for depreciation and amortization

788,351

752,075

483,047

409,850

GOODWILL

96,465

77,078

INTANGIBLE ASSETS, net

76,787

72,809

OTHER ASSETS

54,527

52,896

$

1,262,909

$

1,127,622

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

130,869

$

120,325

Income taxes payable

91

527

Accrued expenses

188,727

194,674

Current portion of long-term debt

44,910

25,256

TOTAL CURRENT LIABILITIES

364,597

340,782

LONG-TERM DEBT, less current portion

167,599

102,474

PENSION AND POSTRETIREMENT LIABILITIES

51,241

42,418

OTHER LIABILITIES

12,689

16,667

DEFERRED INCOME TAXES

78,055

64,398

STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2015: 27,938,319 shares; 2014: 27,722,010 shares

279

277

Additional paid-in capital

309,653

303,045

Retained earnings

376,827

338,810

Treasury stock, at cost, 2015: 2,080,187 shares; 2014: 1,677,932 shares

(70,535)

(57,770)

Accumulated other comprehensive loss

(27,496)

(23,479)

TOTAL STOCKHOLDERS' EQUITY

588,728

560,883

$

1,262,909

$

1,127,622

Note: The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended

December 31

2015

2014

(Unaudited)

($ thousands)

OPERATING ACTIVITIES

Net income

$

44,854

$

46,177

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

89,040

81,870

Amortization of intangibles

4,002

4,352

Pension settlement expense

3,202

6,595

Share-based compensation expense

8,029

6,998

Provision for losses on accounts receivable

998

1,942

Deferred income tax provision

16,435

4,692

Gain on sale of property and equipment

(2,225)

(1,461)

Changes in operating assets and liabilities:

Receivables

4,242

(26,892)

Prepaid expenses

362

(1,888)

Other assets

1,090

889

Income taxes

(8,918)

(11,972)

Accounts payable, accrued expenses, and other liabilities

(15,092)

32,464

NET CASH PROVIDED BY OPERATING ACTIVITIES

146,019

143,766

INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of financings

(78,425)

(35,483)

Proceeds from sale of property and equipment

6,639

4,928

Purchases of short-term investments

(61,363)

(45,831)

Proceeds from sale of short-term investments

45,831

35,853

Business acquisitions, net of cash acquired

(29,813)

(2,647)

Capitalization of internally developed software

(8,512)

(8,418)

NET CASH USED IN INVESTING ACTIVITIES

(125,643)

(51,598)

FINANCING ACTIVITIES

Borrowings under credit facilities

70,000

Borrowings under accounts receivable securitization program

35,000

Payments on long-term debt

(100,813)

(40,440)

Net change in book overdrafts

3,843

2,486

Net change in restricted cash

2

516

Deferred financing costs

(875)

(76)

Payment of common stock dividends

(6,837)

(4,102)

Purchases of treasury stock

(12,765)

Proceeds from the exercise of stock options

1,136

NET CASH USED IN FINANCING ACTIVITIES

(12,445)

(40,480)

NET INCREASE IN CASH AND CASH EQUIVALENTS             

7,931

51,688

Cash and cash equivalents at beginning of period

157,042

105,354

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

164,973

$

157,042

NONCASH INVESTING ACTIVITIES

Equipment financed

$

80,592

$

55,325

Accruals for equipment received

$

748

$

928

 

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended

Year Ended

December 31

December 31

2015

2014

2015

2014

(Unaudited)

($ thousands)

FREIGHT TRANSPORTATION (ABF FREIGHT)

Operating Income ($) Operating Ratio (% of revenues)

­

Amounts on a GAAP basis

$

7,725

98.3%

$

14,704

97.0%

$

62,436

96.7%

$

50,093

97.4%

Pension settlement expense

544

(0.1)%

1,085

(0.2)%

2,404

(0.1)%

5,309

(0.3)%

Non-GAAP amounts

$

8,269

98.2%

$

15,789

96.8%

$

64,840

96.6%

$

55,402

97.1%

Three Months Ended

Year Ended

December 31

December 31

2015

2014

2015

2014

(Unaudited)

($ thousands, except per share data)

ARCBEST CORPORATION – CONSOLIDATED

Operating Income

Amounts on a GAAP basis

$

7,312

$

18,049

$

75,496

$

69,239

Transaction costs, pre-tax(1)

1,379

1,408

Third-party casualty expense at FleetNet, pre-tax(3)

847

932

Pension settlement expense, pre-tax

724

1,190

3,202

6,595

Non-GAAP amounts

$

10,262

$

19,239

$

81,038

$

75,834

Net Income

Amounts on a GAAP basis

$

4,989

$

14,543

$

44,854

$

46,177

Life insurance proceeds and changes in cash surrender value

(401)

(2,462)

(316)

(3,799)

Transaction costs, after-tax(1)

838

856

Tax benefits (credits)(2)

(847)

(861)

22

(696)

Third-party casualty expense at FleetNet, after-tax(3)

515

566

Pension settlement expense, after-tax

443

727

1,956

4,030

Non-GAAP amounts

$

5,537

$

11,947

$

47,938

$

45,712

Diluted Earnings Per Share

Amounts on a GAAP basis

$

0.19

$

0.53

$

1.67

$

1.69

Life insurance proceeds and changes in cash surrender value

(0.02)

(0.09)

(0.01)

(0.15)

Transaction costs, after-tax(1)

0.03

0.03

Tax benefits (credits)(2)

(0.03)

(0.03)

(0.03)

Third-party casualty expense at FleetNet, after-tax(3)

0.02

0.02

Pension settlement expense, after-tax

0.02

0.03

0.07

0.16

Non-GAAP amounts

$

0.21

$

0.44

$

1.78

$

1.67

(1)

Transaction costs for the three months ended December 31, 2015 are associated with the December 1, 2015 acquisition of Bear Transportation Services, L.P. ("Bear"). Transaction costs for the three months and year ended December 31, 2015 are associated with the Bear acquisition and the January 2, 2015 acquisition of Smart Lines Transportation Group, LLC.

(2)

Tax credits for the three months ended December 31, 2015 and 2014 include the amount of the alternative fuel tax credit related to the first nine months of each year which was recorded in the fourth quarter due to the December reinstatement of the alternative fuel tax credit to January 1. Tax benefits (credits) also include a net decrease in deferred tax asset valuation allowances for the year ended December 31, 2014 and net increases in deferred tax asset valuation allowances for the other periods presented.

(3)

Unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.

 

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended December 31

Year Ended

December 31

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

2015

2014

2015

2014

(Unaudited)

($ thousands)

ARCBEST CORPORATION – CONSOLIDATED

Net income

$

4,989

$

14,543

$

44,854

$

46,177

Interest and other related financing costs

1,217

822

4,400

3,190

Income tax provision

1,878

5,097

27,880

24,435

Depreciation and amortization

24,821

22,367

93,042

86,222

Amortization of share-based compensation

1,686

1,636

8,029

6,998

Amortization of actuarial losses of benefit plans and pension settlement expense(1)

1,919

1,927

7,432

9,300

$

36,510

$

46,392

$

185,637

$

176,322

(1)

Consolidated pension settlement expense totaled $0.7 million (pre-tax) and $1.2 million (pre-tax) for the three months ended December 31, 2015 and 2014, respectively, and $3.2 million (pre-tax) and $6.6 million (pre-tax) for the year ended December 31, 2015 and 2014, respectively.

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

Three Months Ended December 31 2015

Three Months Ended December 31 2014

(Unaudited)

($ thousands)

ASSET-LIGHT LOGISTICS

Operating

Income

Depreciation and Amortization

EBITDA

Operating Income

Depreciation

and Amortization

EBITDA

Premium Logistics (Panther)(2)

$

2,032

$

2,801

$

4,833

$

3,801

$

2,897

$

6,698

Transportation Management (ABF Logistics)

1,486

349

1,835

1,386

282

1,668

Emergency & Preventative Maintenance (FleetNet)(3)

(189)

281

92

282

284

566

Household Goods Moving Services (ABF Moving)

173

211

384

88

340

428

Total asset-light logistics

$

3,502

$

3,642

$

7,144

$

5,557

$

3,803

$

9,360

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

Year Ended December 31 2015

Year Ended December 31 2014

(Unaudited)

($ thousands)

ASSET-LIGHT LOGISTICS

Operating

Income

Depreciation and Amortization

EBITDA

Operating Income

Depreciation

and Amortization

EBITDA

Premium Logistics (Panther)(2)

$

10,798

$

11,436

$

22,234

$

15,640

$

11,362

$

27,002

Transportation Management (ABF Logistics)

5,861

1,138

6,999

3,835

1,006

4,841

Emergency & Preventative Maintenance (FleetNet)(3)

2,954

1,119

4,073

3,122

961

4,083

Household Goods Moving Services (ABF Moving)

4,836

1,186

6,022

3,179

1,384

4,563

Total asset-light logistics

$

24,449

$

14,879

$

39,328

$

25,776

$

14,713

$

40,489

(2)

Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software associated with the June 15, 2012 acquisition of Panther.

(3)

For the three months and year ended December 31, 2015, FleetNet's operating income was impacted by a $0.9 million unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.

Non-GAAP Financial Measures. ArcBest Corporation ("ArcBest") reports its 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 financial statement users meaningful comparisons between current and prior period results, as well as important information regarding performance trends. Accordingly, using these 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. 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, ArcBest's reported results. 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. However, these financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as defined by GAAP. Other companies may calculate EBITDA differently and, therefore, ArcBest's EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

 

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

Three Months Ended

December 31

Year Ended

December 31

2015

2014

2015

2014

(Unaudited)

($ thousands)

REVENUES

Freight Transportation (ABF Freight)

$

461,526

$

485,911

$

1,918,450

$

1,930,990

Premium Logistics (Panther)

71,222

80,234

300,368

316,668

Transportation Management (ABF Logistics)

56,468

46,750

203,529

152,632

Emergency & Preventative Maintenance (FleetNet)

45,267

38,458

174,952

158,581

Household Goods Moving Services (ABF Moving)

25,382

21,685

119,252

94,628

Total asset-light logistics

198,339

187,127

798,101

722,509

Other and eliminations

(11,731)

(8,190)

(49,646)

(40,806)

Total consolidated revenues

$

648,134

$

664,848

$

2,666,905

$

2,612,693

OPERATING EXPENSES

Freight Transportation (ABF Freight)

Salaries, wages, and benefits

$

289,482

62.7%

$

285,824

58.8%

$

1,174,357

61.2%

$

1,121,177

58.1%

Fuel, supplies, and expenses

70,967

15.4

85,377

17.6

307,348

16.0

360,850

18.7

Operating taxes and licenses

12,230

2.6

12,430

2.6

48,992

2.6

46,955

2.4

Insurance

8,507

1.8

7,101

1.5

28,847

1.5

24,960

1.3

Communications and utilities

4,570

1.0

3,657

0.8

16,129

0.8

15,398

0.8

Depreciation and amortization

20,238

4.4

17,828

3.7

74,765

3.9

68,752

3.6

Rents and purchased transportation

45,929

10.0

56,488

11.6

197,073

10.3

229,443

11.9

Gain on sale of property and equipment

(332)

(0.1)

(895)

(0.2)

(1,734)

(0.1)

(1,471)

(0.1)

Pension settlement expense(1)

544

0.1

1,085

0.2

2,404

0.1

5,309

0.3

Other

1,666

0.4

2,312

0.4

7,833

0.4

9,524

0.4

453,801

98.3%

471,207

97.0%

1,856,014

96.7%

1,880,897

97.4%

Premium Logistics (Panther)

Purchased transportation

52,425

73.6%

58,950

73.5%

220,994

73.6%

235,006

74.2%

Depreciation and amortization(2)

2,801

3.9

2,897

3.6

11,436

3.8

11,362

3.6

Salaries, benefits, insurance, and other

13,964

19.6

14,586

18.2

57,140

19.0

54,660

17.3

69,190

97.1%

76,433

95.3%

289,570

96.4%

301,028

95.1%

Transportation Management (ABF Logistics)

54,982

45,364

197,668

148,797

Emergency & Preventative Maintenance (FleetNet)

45,456

38,176

171,998

155,459

Household Goods Moving Services (ABF Moving)

25,209

21,597

114,416

91,449

Total asset-light logistics(1)

194,837

181,570

773,652

696,733

Other and eliminations(1)

(7,816)

(5,978)

(38,257)

(34,176)

Total consolidated operating expenses(1)

$

640,822

$

646,799

$

2,591,409

$

2,543,454

(1)

 Pension settlement expense totaled $0.7 million (pre-tax) and $1.2 million (pre-tax) on a consolidated basis for the three months ended December 31, 2015 and 2014, respectively, and $3.2 million (pre-tax) and $6.6 million (pre-tax) for the year ended December 31, 2015 and 2014, respectively. For the three months ended December 31, 2015 and 2014, pre-tax pension settlement expense of $0.5 million and $1.1 million, respectively, was reported by ABF Freight; $0.2 million and $0.1 million, respectively, was reported in Other and eliminations; and less than $0.1 million was reported by the asset-light logistics segments. For the year ended December 31, 2015 and 2014, pre-tax pension settlement expense of $2.4 million and $5.3 million, respectively, was reported by ABF Freight; $0.7 million and $1.1 million, respectively, was reported in Other and eliminations; and $0.1 million and $0.2 million , respectively, was reported by the asset-light logistics segments.

(2)

Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software associated with the June 15, 2012 acquisition of Panther.

 

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS – Continued

Three Months Ended

December 31

Year Ended

December 31

2015

2014

2015

2014

(Unaudited)

($ thousands)

OPERATING INCOME

Freight Transportation (ABF Freight)(1)

$

7,725

$

14,704

$

62,436

$

50,093

Premium Logistics (Panther)

2,032

3,801

10,798

15,640

Transportation Management (ABF Logistics)

1,486

1,386

5,861

3,835

Emergency & Preventative Maintenance (FleetNet)(2)

(189)

282

2,954

3,122

Household Goods Moving Services (ABF Moving)

173

88

4,836

3,179

Total asset-light logistics

3,502

5,557

24,449

25,776

Other and eliminations(3)

(3,915)

(2,212)

(11,389)

(6,630)

Total consolidated operating income

$

7,312

$

18,049

$

75,496

$

69,239

(1)

ABF Freight's operating income for all periods presented was impacted by pension settlement expense. (See reconciliation of GAAP operating income to non-GAAP operating income in the Freight Transportation table previously presented.)

(2)

For the three months and year ended December 31, 2015, FleetNet's operating income was impacted by a $0.9 million unfavorable third-party casualty claim associated with a bankrupt FleetNet customer.

(3)

For the three months and year ended December 31, 2015, "Other" corporate costs include acquisition transaction costs and additional investments in enterprise solutions to provide an improved platform for revenue growth and for offering ArcBest services across multiple operating segments.

 

ARCBEST CORPORATION

OPERATING STATISTICS

Three Months Ended

Year Ended

December 31

December 31

2015

2014

% Change

2015

2014

% Change

(Unaudited)

Freight Transportation (ABF Freight)

Workdays

61.5

61.0

251.5

251.5

Billed Revenue(1) / CWT        

$

29.02

$

29.34

(1.1)%

$

28.96

$

28.74

0.8%

Billed Revenue(1) / Shipment

$

367.69

385.02

(4.5)%

376.05

387.60

(3.0)%

Shipments                               

1,246,876

1,255,272

(0.7)%

5,098,322

4,980,365

2.4%

Shipments / Day

20,274

20,578

(1.5)%

20,272

19,803

2.4%

Tonnage (Tons)                      

789,960

823,675

(4.1)%

3,309,573

3,358,910

(1.5)%

Tons / Day

12,845

13,503

(4.9)%

13,159

13,356

(1.5)%

(1)

Revenue for undelivered freight is deferred for financial statement purposes in accordance with ABF Freight's 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. Billed revenue has been adjusted to exclude intercompany revenue that is not related to freight transportation services.

 

SOURCE ArcBest Corporation



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