ArcBest Corporation Announces Improved Fourth Quarter 2014 Results And Full Year 2014 Results

Investor Relations Contact: David Humphrey

Media Contact: Kathy Fieweger

Title: Vice President – Investor Relations 

Title: Chief Marketing Officer

Phone: 479-785-6200

Phone: 479-719-4358

Email: [email protected]

Email: [email protected]

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

December 31

Year Ended

December 31

2014

2013

2014

2013

(Unaudited)

($ thousands, except share and per share data)

REVENUES

$

664,848

$

578,549

$

2,612,693

$

2,299,549

OPERATING EXPENSES

646,799

565,047

2,543,454

2,280,479

OPERATING INCOME

18,049

13,502

69,239

19,070

OTHER INCOME (COSTS)

Interest and dividend income

252

182

851

681

Interest and other related financing costs

(822)</span>

(903)

(3,190)

(4,183)

Other, net

2,161

1,114

3,712

3,893

1,591

393

1,373

391

INCOME BEFORE INCOME TAXES

19,640

13,895

70,612

19,461

INCOME TAX PROVISION

5,097

3,549

24,435

3,650

NET INCOME

$

14,543

$

10,346

$

46,177

$

15,811

EARNINGS PER COMMON SHARE⁽¹⁾

Basic

$

0.53

$

0.38

$

1.69

$

0.59

Diluted

$

0.53

$

0.38

$

1.69

$

0.59

AVERAGE COMMON SHARES OUTSTANDING

Basic

26,073,256

25,785,485

25,993,255

25,714,205

Diluted

26,073,256

25,793,366

25,993,612

25,714,205

CASH DIVIDENDS DECLARED
  PER COMMON SHARE

$

0.06

$

0.03

$

0.15

$

0.12

(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

$

14,543

$

10,346

$

46,177

$

15,811

EFFECT OF UNVESTED RESTRICTED
  STOCK AWARDS

(703)

(505)

(2,300)

(720)

ADJUSTED NET INCOME FOR CALCULATING

  EARNINGS PER COMMON SHARE

$

13,840

$

9,841

$

43,877

$

15,091

December 31

2014

December 31

2013

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

157,042

$

105,354

Short-term investments

45,909

35,906

Restricted cash, cash equivalents, and short-term investments

1,386

1,902

Accounts receivable, less allowances (2014 – $5,731; 2013 – $4,533)

228,056

202,540

Other accounts receivable, less allowances (2014 – $1,701; 2013 – $1,422)

6,582

7,272

Prepaid expenses

20,906

19,016

Deferred income taxes

40,220

37,482

Prepaid and refundable income taxes

9,920

2,061

Other

4,968

6,952

        TOTAL CURRENT ASSETS

514,989

418,485

PROPERTY, PLANT AND EQUIPMENT

Land and structures

251,836

245,805

Revenue equipment

633,455

589,902

Service, office, and other equipment

136,145

124,303

Software

116,112

110,998

Leasehold improvements

24,377

23,582

1,161,925

1,094,590

Less allowances for depreciation and amortization

752,075

700,193

409,850

394,397

GOODWILL

77,078

76,448

INTANGIBLE ASSETS, net

72,809

75,387

OTHER ASSETS

52,896

52,609

$

1,127,622

$

1,017,326

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank overdraft and drafts payable

$

16,095

$

13,609

Accounts payable

104,230

89,091

Income taxes payable

527

Accrued expenses

194,674

173,622

Current portion of long-term debt

25,256

31,513

TOTAL CURRENT LIABILITIES

340,782

309,617

LONG-TERM DEBT, less current portion

102,474

81,332

PENSION AND POSTRETIREMENT LIABILITIES

42,418

26,847

OTHER LIABILITIES

16,667

15,041

DEFERRED INCOME TAXES

64,398

64,028

STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2014: 27,722,010 shares; 2013: 27,507,241 shares

277

275

Additional paid-in capital

303,045

296,133

Retained earnings

338,810

296,735

Treasury stock, at cost, 1,677,932 shares

(57,770)

(57,770)

Accumulated other comprehensive loss

(23,479)

(14,912)

TOTAL STOCKHOLDERS' EQUITY

560,883

520,461

$

1,127,622

$

1,017,326

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended

December 31

2014

2013

(Unaudited)

($ thousands)

OPERATING ACTIVITIES

Net income

$

46,177

$

15,811

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

Depreciation and amortization

81,870

84,215

Amortization of intangibles

4,352

4,174

Pension settlement expense

6,595

2,111

Share-based compensation expense

6,998

5,494

Provision for losses on accounts receivable

1,942

2,065

Deferred income tax provision (benefit)

4,692

(10,367)

Gain on sale of property and equipment

(1,461)

(153)

Changes in operating assets and liabilities:

Receivables

(26,892)

(24,200)

Prepaid expenses

(1,888)

(1,670)

Other assets

889

(1,015)

Income taxes

(11,972)

8,468

Accounts payable, accrued expenses, and other liabilities⁽¹⁾

32,464

8,571

NET CASH PROVIDED BY OPERATING ACTIVITIES

143,766

93,504

INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of financings

(35,483)

(26,369)

Proceeds from sale of property and equipment

4,928

2,194

Purchases of short-term investments

(45,831)

(39,605)

Proceeds from sale of short-term investments

35,853

32,718

Business acquisition, net of cash acquired

(2,647)

(4,146)

Capitalization of internally developed software

(8,418)

(7,668)

NET CASH USED IN INVESTING ACTIVITIES

(51,598)

(42,876)

FINANCING ACTIVITIES

Payments on long-term debt

(40,440)

(43,176)

Net change in bank overdraft and drafts payable

2,486

(37)

Net change in restricted cash, cash equivalents, and short-term investments

516

7,756

Deferred financing costs

(76)

(71)

Payment of common stock dividends

(4,102)

(3,233)

Proceeds from the exercise of stock options

1,136

2,785

(40,480)

(35,976)

NET INCREASE IN CASH AND CASH EQUIVALENTS

51,688

14,652

Cash and cash equivalents at beginning of period

105,354

90,702

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

157,042

$

105,354

NONCASH INVESTING ACTIVITIES

Accruals for equipment received

$

928

$

324

Equipment financed

$

55,325

$

36

(1)

2013 includes $17.8 million of cash contributions to the Company's nonunion defined benefit pension plan.

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended

December 31

Year Ended

December 31

2014

2013

2014

2013

(Unaudited)

($ thousands, except per share data)

ARCBEST CORPORATION – CONSOLIDATED

Net Income

Amounts on a GAAP basis

$

14,543

$

10,346

$

46,177

$

15,811

Collective bargaining agreement adjustments, after tax⁽¹⁾

–

(1,435)

–

–

Tax benefits and credits⁽²⁾

(861)

(670)

(696)

(2,352)

Pension settlement expense, after-tax⁽³⁾

727

169

4,030

1,290

Non-GAAP amounts

$

14,409

$

8,410

$

49,511

$

14,749

Diluted Earnings Per Share

Amounts on a GAAP basis

$

0.53

$

0.38

$

1.69

$

0.59

Collective bargaining agreement adjustments, after tax⁽¹⁾

–

(0.06)

–

–

Tax benefits and credits⁽²⁾

(0.03)

(0.02)

(0.03)

(0.09)

Pension settlement expense, after-tax⁽³⁾

0.03

0.01

0.16

0.05

Non-GAAP amounts

$

0.53

$

0.31

$

1.82

$

0.55

Income Tax Rate Reconciliation

Statutory federal income tax rate:

35.0%

35.0%

35.0%

35.0%

State income taxes, net of federal benefit

2.4

3.7

3.1

3.4

Federal income tax effects of:

  Alternative fuel tax credit

(5.8)

(1.6)

(1.6)

(9.9)

  Life insurance proceeds and changes in cash surrender value

(4.4)

<span class="prnews_span">(2.7)

(1.9)

(6.8)

  Decrease in valuation allowances

–

(4.8)

(1.0)

(7.4)

  Nondeductible expenses and other

(1.2)

(4.1)

1.0

4.5

Effective tax rate

26.0%

25.5%

34.6%

18.8%

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

Net income

$

14,543

$

10,346

$

46,177

$

15,811

Interest and other related financing costs

822

903

3,190

4,183

Income tax provision

5,097

3,549

24,435

3,650

Depreciation and amortization

22,367

20,820

86,222

88,389

Amortization of share-based compensation

1,636

1,915

6,998

5,494

Amortization of actuarial losses of benefit plans and pension settlement expense⁽³⁾

1,927

1,228

9,300

10,046

$

46,392

$

38,761

$

176,322

$

127,573

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended
December 31
2014

Three Months Ended
December 31
2013

(Unaudited)

($ thousands)

NON-ASSET-BASED SEGMENTS

Operating

Income

Depreciation
and
Amortization

EBITDA

Operating Income

Depreciation
and
Amortization

EBITDA

Premium Logistics (Panther)⁽¹⁾

$

3,801

$

2,897

$

6,698

$

3,211

$

2,707

$

5,918

Emergency & Preventative Maintenance (FleetNet)

282

284

566

907

141

1,048

Transportation Management (ABF Logistics)

1,386

282

1,668

1,409

191

1,600

Household Goods Moving Services (ABF Moving)

88

340

428

(702)

367

(335)

Total non-asset-based segments

$

5,557

$

3,803

$

9,360

$

4,825

$

3,406

$

8,231

Year Ended
December 31
2014

Year Ended
December 31
2013

(Unaudited)

($ thousands)

NON-ASSET-BASED SEGMENTS

Operating

Income

Depreciation
and
Amortization

EBITDA

Operating Income

Depreciation
and
Amortization

EBITDA

Premium Logistics (Panther)⁽¹⁾

$

15,640

$

11,362

$

27,002

$

6,956

$

10,516

$

17,472

Emergency & Preventative Maintenance (FleetNet)

3,122

961

4,083

3,274

540

3,814

Transportation Management (ABF Logistics)

3,835

1,006

4,841

2,973

640

3,613

Household Goods Moving Services (ABF Moving)

3,179

1,384

4,563

1,850

1,247

3,097

Total non-asset-based segments

$

25,776

$

14,713

$

40,489

$

15,053

$

12,943

$

27,996

Three Months Ended

Year Ended

December 31

December 31

2014

2013

2014

2013

(Unaudited)

($ thousands)

FREIGHT TRANSPORTATION (ABF FREIGHT)

Operating Income ($) Ratio (%)

Amounts on a GAAP basis

$

14,704

97.0%

$

9,869

97.7%

$

50,093

97.4%

$

10,033

99.4%

Collective bargaining agreement adjustments⁽²⁾

–

–

(2,361)

0.6%

–

–

–

–

Pension settlement expense

1,085

(0.2)%

219

(0.1)%

5,309

(0.3)%

1,831

(0.1)%

Non-GAAP amounts

$

15,789

96.8%

$

7,727

98.2%

$

55,402

97.1%

$

11,864

99.3%

Non-GAAP Financial Measures.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. 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 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 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

2014

2013

2014

2013

(Unaudited)

($ thousands, except percentages)

REVENUES

Freight Transportation (ABF Freight)

$

485,911

$

436,654

$

1,930,990

$

1,761,716

Premium Logistics (Panther)

80,234

67,316

316,668

246,849

Emergency & Preventative Maintenance (FleetNet)

38,458

35,042

158,581

137,546

Transportation Management (ABF Logistics)

46,750

30,668

152,632

105,223

Household Goods Moving Services (ABF Moving)

21,685

16,811

94,628

82,169

Total non-asset-based segments

187,127

149,837

722,509

571,787

Other and eliminations

(8,190)

(7,942)

(40,806)

(33,954)

Total consolidated revenues

$

664,848

$

578,549

$

2,612,693

$

2,299,549

OPERATING EXPENSES

Freight Transportation (ABF Freight)

Salaries, wages, and benefits

$

285,824

$

258,757

59.3%

$

1,121,177

58.1%

$

1,075,259

61.0%

Fuel, supplies, and expenses

85,377

17.6

81,946

18.8

360,850

18.7

332,433

18.9

Operating taxes and licenses

12,430

2.6

11,072

2.5

46,955

2.4

43,865

2.5

Insurance

7,101

1.5

4,413

1.0

24,960

1.3

21,823

1.2

Communications and utilities

3,657

0.8

3,492

0.8

15,398

0.8

15,027

0.9

Depreciation and amortization

17,828

3.7

16,810

3.8

68,752

3.6

72,971

4.1

Rents and purchased transportation

56,488

11.6

47,453

10.9

229,443

11.9

180,689

10.3

Gain on sale of property and equipment

(895)

(0.2)

(90)

–

(1,471)

(0.1)

(576)

–

Pension settlement expense⁽¹⁾

1,085

0.2

219

0.1

5,309

0.3

1,831

0.1

Other

2,312

0.4

2,713

0.5

9,524

0.4

8,361

0.4

471,207

97.0%

426,785

97.7%

1,880,897

97.4%

1,751,683

99.4%

Premium Logistics (Panther)

Purchased transportation

$

58,950

73.9%

$

51,072

75.9%

$

235,006

74.6%

$

188,561

76.4%

Depreciation and amortization⁽²⁾

2,897

3.6

2,707

4.0

11,362

3.6

10,516

Salaries, benefits, insurance, and other

14,586

17.7

10,326

15.3

54,660

16.8

40,816

16.5

76,433

95.3%

64,105

95.2%

301,028

95.1%

239,893

97.2%

Emergency & Preventative Maintenance (FleetNet)

$

38,176

$

34,135

$

155,459

$

134,272

Transportation Management (ABF Logistics)

45,364

29,259

148,797

102,250

Household Goods Moving Services (ABF Moving)

21,597

17,513

91,449

80,319

Total non-asset-based segments⁽¹⁾

181,570

145,012

696,733</span>

556,734

Other and eliminations⁽¹⁾

(5,978)

(6,750)

(34,176)

(27,938)

Total consolidated operating expenses and costs⁽¹⁾

$

646,799

$

565,047

$

2,543,454

$

2,280,479

(1)

Pension settlement expense totaled $1.2 million (pre-tax) and $6.6 million (pre-tax) on a consolidated basis for the three months and year ended December 31, 2014, respectively, and $0.3 million (pre-tax) and $2.1 million (pre-tax) for the three months and year ended December 31, 2013, respectively. Of the total $6.6 million (pre-tax) pension settlement expense for the twelve months ended December 31, 2014, $5.3 million was reported by ABF Freight, $1.1 million was reported in Other and eliminations, and $0.2 million was reported by the non-asset-based segments. Of the total $2.1 million (pre-tax) pension settlement expense for the year ended December 31, 2013, $1.8 million was reported by ABF Freight and $0.3 million was reported in Other and eliminations.

(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

2014

2013

2014

2013

(Unaudited)

($ thousands)

OPERATING INCOME

Freight Transportation (ABF Freight)

$

14,704

$

9,869

$

50,093

$

10,033

Premium Logistics (Panther)

3,801

3,211

15,640

6,956

Emergency & Preventative Maintenance (FleetNet)

282

907

3,122

3,274

Transportation Management (ABF Logistics)

1,386

1,409

3,835

2,973

Household Goods Moving Services (ABF Moving)

88

(702)

3,179

1,850

Total non-asset-based segments

5,557

4,825

25,776

15,053

Other and eliminations

(2,212)

(1,192)

(6,630)

(6,016)

Total consolidated operating income

$

18,049

$

13,502

$

69,239

$

19,070