ArcBest Corporation

11/03/2016 | Press release | Archived content

ArcBest Corporation Announces Third Quarter 2016 Results

Media Contact: Kathy Fieweger
Email: [email protected]
Phone: 479-719-4358

Investor Relations Contact: David Humphrey
Title: Vice President - Investor Relations
Email: [email protected]
Phone: 479-785-6200

  • Third quarter 2016 revenue of $713.9 million and net income of $12.9 million, or $0.49 per diluted share.
  • Third quarter ABF Freight® operating results were impacted by reduced freight levels.
  • ArcBest's asset-light revenue equaled 31 percent of total consolidated revenue in September 2016 following a recent acquisition.

FORT SMITH Arkansas, November 3, 2016 - ArcBest Corporation® (Nasdaq: ARCB) today reported third quarter 2016 net income of $12.9 million, or $0.49 per diluted share, compared to third quarter 2015 net income of $19.2 million, or $0.72 per diluted share. The continued softness in the U.S. industrial economy impacted freight tonnage levels and profit margins at ABF Freight. ArcBest's asset-light logistics companies were highlighted by improved revenue and operating profit at Panther.

Excluding certain items in both periods, ArcBest's non-GAAP net income was $12.7 million, or $0.48 per diluted share, in third quarter 2016 compared to third quarter earnings of $20.2 million, or $0.76 per diluted share, last year.

"As we have seen throughout the year, pricing in the less-than-truckload sector remained rational despite a soft economic environment and we continued to experience benefits from investments in new equipment," said ArcBest Chairman, President and CEO Judy R. McReynolds. "In addition, we continued to expand our asset-light logistics service offerings with the acquisition of Logistics & Distribution Services, as we add further scale to the full supply chain solutions our customers are seeking."

Freight Transportation (ABF Freight)

Results of Operations

Third Quarter 2016

  • Revenue of $509.5 million compared to $511.3 million in third quarter 2015, a slight per-day decrease. Year-over-year reductions in fuel surcharge associated with lower diesel fuel prices contributed to ABF Freight's reduced revenue compared to last year.
  • Tonnage per day decrease of 2.8 percent compared to third quarter 2015.
  • Shipments per day increase of 1.6 percent compared to third quarter 2015.
  • Total billed revenue per hundredweight increased by 2.8 percent despite lower fuel surcharges, reflecting both price increases and changes in total shipment profile compared to the prior year. Excluding fuel surcharge, the percentage increase on ABF Freight's traditional LTL freight was in the mid-single digits.
  • Operating income of $18.1 million and an operating ratio of 96.5 percent compared to $26.6 million and an operating ratio of 94.8 percent in third quarter 2015. Excluding adjustments for nonunion pension settlement charges, third quarter 2016 operating income of $18.7 million and an operating ratio of 96.4 percent.

ABF Freight experienced a slight decrease in average daily revenue reflecting reductions in fuel surcharge and the sluggish economic and market capacity effects that led to shipment growth but tonnage declines. With lower weight and revenue per shipment, the labor hours and local purchased transportation required to service the growing shipment levels impacted operating margins. Higher average claims costs for nonunion healthcare also unfavorably impacted the quarter. However, investments in new power equipment contributed positively to third quarter results. In the midst of a stable LTL industry pricing environment, ABF Freight's disciplined yield management focus has generated reasonable account price increases.

Asset-Light Logistics

Results of Operations

Third Quarter 2016

  • Revenue of $217.9 million compared to $211.1 million in third quarter 2015.
  • Third quarter 2016 operating income of $6.5 million compared to $8.5 million in third quarter 2015.
  • Third quarter 2016 earnings before interest, taxes, depreciation and amortization ("EBITDA") of $10.5 million compared to EBITDA in third quarter 2015 of $12.1 million.

Revenue growth at ArcBest's asset-light logistics businesses was the result of stronger market demand at Panther and the effect of truckload brokerage acquisitions made since last year's third quarter. Panther's profit margin improvement was driven by customer demand for Panther's best-in-class cargo handling. Despite solid shipment growth at its legacy brokerage locations, operating results at ABF Logistics were impacted by lower market-related revenue per shipment, the previously disclosed integration of an acquired location and disruptions in the ocean shipping market. FleetNet's lower third quarter revenue and profit margins reflect a reduction in emergency roadside and fleet maintenance events associated with changes in customer mix and lower business levels from transportation-related customers. ABF Moving's results continued to be below last year, primarily due to declines in government shipments.

"We are encouraged by the improvements seen at Panther during the quarter and were pleased to welcome the Logistics & Distribution Services group to the ArcBest organization," McReynolds added. "As we have continued to invest in all of our businesses, we are making good progress in giving our customers the end-to-end solutions they require from us. Our customers appreciate the value we bring in working closely with them to solve complex supply chain needs, and we will continue to evolve these relationships going forward."

Conference Call

ArcBest Corporation will host a conference call with company executives to discuss the 2016 third quarter results. The call will be today, Thursday, November 3, at 9:30 a.m. ET (8:30 a.m. CT). Interested parties are invited to listen by calling (888) 221-6234. Following the call, a recorded playback will be available through the end of the day on December 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 21819577. The conference call and playback can also be accessed, through December 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 months ended September 30, 2016 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 forward-looking 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; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; competitive initiatives and pricing pressures; governmental regulations; environmental laws and regulations, including emissions-control regulations; the cost, integration, and performance of any future acquisitions; relationships with employees, including unions, and our ability to attract and retain employees and/or independent owner operators; 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; 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; potential impairment of goodwill and intangible assets; availability and cost of reliable third-party services; litigation or claims asserted against us; self-insurance claims and insurance premium costs; 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; the loss of key employees or the inability to execute succession planning strategies; the impact of our brands and corporate reputation; the cost, timing, and performance of growth initiatives; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; and other financial, operational, and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission ("SEC") 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.

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

Nine Months Ended

September 30

September 30

2016

2015

2016

2015

(Unaudited)

($ thousands, except share and per share data)

REVENUES

$

713,923

$

709,380

$

2,012,005

$

2,018,771

OPERATING EXPENSES

693,553

675,942

1,984,246

1,950,588

OPERATING INCOME

20,370

33,438

27,759

68,183

OTHER INCOME (COSTS)

Interest and dividend income

390

378

1,178

882

Interest and other related financing costs

(1,296)

(1,157)

(3,774)

(3,183)

Other, net

1,091

(613)

2,028

(15)

185

(1,392)

(568)

(2,316)

INCOME BEFORE INCOME TAXES

20,555

32,046

27,191

65,867

INCOME TAX PROVISION

7,615

12,892

10,123

26,001

NET INCOME

$

12,940

$

19,154

$

17,068

$

39,866

EARNINGS PER COMMON SHARE(1)

Basic

$

0.50

$

0.73

$

0.66

$

1.52

Diluted

$

0.49

$

0.72

$

0.64

$

1.48

AVERAGE COMMON SHARES OUTSTANDING

Basic

25,724,550

26,009,344

25,779,166

26,033,467

Diluted

26,211,524

26,508,482

26,263,732

26,569,800

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.08

$

0.06

$

0.24

$

0.18

  1. ArcBest uses the two-class method for calculating earnings per share. This method, as calculated below for diluted earnings per share, requires an allocation of dividends paid and a portion of undistributed net income (but not losses) to unvested restricted stock for calculating per share amounts.

NET INCOME

$

12,940

$

19,154

$

17,068

$

39,866

EFFECT OF UNVESTED RESTRICTED STOCK AWARDS

(87)

(172)

(131)

(410)

ADJUSTED NET INCOME FOR CALCULATING EARNINGS PER COMMON SHARE (1)

$

12,853

$

18,982

$

16,937

$

39,456

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

September 30

December 31

2016

2015

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

130,395

$

164,973

Short-term investments

59,346

61,597

Restricted cash

962

1,384

Accounts receivable, less allowances (2016 - $5,118; 2015 - $4,825)

256,316

236,097

Other accounts receivable, less allowances (2016 - $830; 2015 - $1,029)

8,927

6,718

Prepaid expenses

19,622

20,801

Deferred income taxes

39,097

38,443

Prepaid and refundable income taxes

13,934

18,134

Other

4,275

3,936

TOTAL CURRENT ASSETS

532,874

552,083

PROPERTY, PLANT AND EQUIPMENT

Land and structures

296,324

273,839

Revenue equipment

738,350

699,844

Service, office, and other equipment

156,536

145,286

Software

134,312

127,010

Leasehold improvements

27,040

25,419

1,352,562

1,271,398

Less allowances for depreciation and amortization

822,623

788,351

529,939

483,047

GOODWILL

110,487

96,465

INTANGIBLE ASSETS, NET

82,068

76,787

OTHER LONG-TERM ASSETS

65,500

54,527

$

1,320,868

$

1,262,909

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

149,971

$

130,869

Income taxes payable

-

91

Accrued expenses

187,822

188,727

Current portion of long-term debt

61,251

44,910

TOTAL CURRENT LIABILITIES

399,044

364,597

LONG-TERM DEBT, less current portion

176,363

167,599

PENSION AND POSTRETIREMENT LIABILITIES

42,520

51,241

OTHER LONG-TERM LIABILITIES

15,159

12,689

DEFERRED INCOME TAXES

92,629

78,055

STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares;
issued 2016: 28,122,385 shares; 2015: 27,938,319 shares

281

279

Additional paid-in capital

313,794

309,653

Retained earnings

387,646

376,827

Treasury stock, at cost, 2016: 2,499,879 shares; 2015: 2,080,187 shares

(78,129)

(70,535)

Accumulated other comprehensive loss

(28,439)

(27,496)

TOTAL STOCKHOLDERS' EQUITY

595,153

588,728

$

1,320,868

$

1,262,909

Note: The balance sheet at December 31, 2015 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

Nine Months Ended

September 30

2016

2015

Unaudited

($ thousands)

OPERATING ACTIVITIES

Net income

$

17,068

$

39,866

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

Depreciation and amortization

73,633

65,142

Amortization of intangibles

3,059

3,079

Pension settlement expense

2,267

2,478

Share-based compensation expense

6,151

6,343

Provision for losses on accounts receivable

787

941

Deferred income tax provision (benefit)

14,199

(7,862)

Gain on sale of property and equipment

(2,581)

(1,691)

Changes in operating assets and liabilities:

Receivables

(18,906)

(14,881)

Prepaid expenses

1,108

2,353

Other assets

(3,655)

505

Income taxes

2,583

14,295

Accounts payable, accrued expenses, and other liabilities

(7,786)

9,006

NET CASH PROVIDED BY OPERATING ACTIVITIES

87,927

119,574

INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of financings

(45,774)

(53,644)

Proceeds from sale of property and equipment

7,296

4,115

Purchases of short-term investments

(51,760)

(48,868)

Proceeds from sale of short-term investments

54,027

25,347

Business acquisitions, net of cash acquired

(24,805)

(5,239)

Capitalization of internally developed software

(7,660)

(6,155)

NET CASH USED IN INVESTING ACTIVITIES

(68,676)

(84,444)

FINANCING ACTIVITIES

Borrowings under credit facilities

-

70,000

Borrowings under accounts receivable securitization program

-

35,000

Payments on long-term debt

(36,579)

(92,136)

Net change in book overdrafts

(3,829)

2,179

Net change in restricted cash

422

(1)

Deferred financing costs

-

(824)

Payment of common stock dividends

(6,249)

(4,740)

Purchases of treasury stock

(7,594)

(10,004)

NET CASH USED IN FINANCING ACTIVITIES

(53,829)

(526)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(34,578)

34,604

Cash and cash equivalents at beginning of period

164,973

157,042

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

130,395

$

191,646

NONCASH INVESTING ACTIVITIES

Equipment financed

$

61,684

$

51,009

Accruals for equipment received

$

9,391

$

7,150

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, such as EBITDA and Adjusted EBITDA, 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, 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. Management uses EBITDA and Adjusted EBITDA as key measures of performance and for business planning. These measures are particularly meaningful for analysis of the asset-light logistics businesses, because they exclude amortization of acquired intangibles and software, 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 Amended and Restated Credit Agreement. Other companies may calculate EBITDA differently; therefore, our calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Certain information discussed in the scheduled conference call could be considered non-GAAP measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. These financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as determined under GAAP.

Three Months Ended

Nine Months Ended

September 30

September 30

2016

2015

2016

2015

(Unaudited)

($ thousands, except percentages)

Freight Transportation (ABF Freight)

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

Amounts on GAAP basis

$

18,050

96.5

%

$

26,577

94.8

%

$

26,423

98.2

%

$

54,711

96.2

%

Pension settlement expense

604

(0.1)

572

(0.1)

1,705

(0.1)

1,860

(0.1)

Non-GAAP amounts

$

18,654

96.4

%

$

27,149

94.7

%

$

28,128

98.1

%

$

56,571

96.1

%

Three Months Ended

Nine Months Ended

September 30

September 30

2016

2015

2016

2015

(Unaudited)

($ thousands, except per share data)

ArcBest Corporation - Consolidated

Operating Income

Amounts on GAAP basis

$

20,370

$

33,438

$

27,759

$

68,183

Pension settlement expense

803

762

2,267

2,478

Transaction costs(1)

561

-

561

29

Non-GAAP amounts

$

21,734

$

34,200

$

30,587

$

70,690

Net Income

Amounts on GAAP basis

$

12,940

$

19,154

$

17,068

$

39,866

Life insurance proceeds and changes in cash surrender value

(1,088)

613

(1,980)

85

Pension settlement expense, after-tax

490

466

1,385

1,514

Transaction costs, after-tax(1)

341

-

341

18

Non-GAAP amounts

$

12,683

$

20,233

$

16,814

$

41,483

Diluted Earnings Per Share

Amounts on GAAP basis

$

0.49

$

0.72

$

0.64

$

1.48

Life insurance proceeds and changes in cash surrender value

(0.04)

0.02

(0.08)

-

Pension settlement expense, after-tax

0.02

0.02

0.05

0.06

Transaction costs, after-tax(1)

0.01

-

0.01

-

Non-GAAP amounts

$

0.48

$

0.76

$

0.62

$

1.54

  1. Transaction costs for the three and nine months ended September 30, 2016 are associated with the September 2, 2016 acquisition of Logistics & Distribution Services, LLC. Transaction costs for the nine months ended September 30, 2015 are associated with the January 2, 2015 acquisition of Smart Lines Transportation Group, LLC.

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES - Continued

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

Three Months Ended

Nine Months Ended

September 30

September 30

2016

2015

2016

2015

(Unaudited)

($ thousands)

ArcBest Corporation - Consolidated

Net income

$

12,940

$

19,154

$

17,068

$

39,866

Interest and other related financing costs

1,296

1,157

3,774

3,183

Income tax provision

7,615

12,892

10,123

26,001

Depreciation and amortization

25,793

23,373

76,692

68,221

Amortization of share-based compensation

1,951

2,110

6,151

6,343

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

2,124

1,655

6,033

5,513

Consolidated Adjusted EBITDA

$

51,719

$

60,341

$

119,841

$

149,127

  1. Consolidated pension settlement expense totaled $0.8 million (pre-tax) for each of the three months ended September 30, 2016 and 2015 and $2.3 million (pre-tax) and $2.5 million (pre-tax) for the nine months ended September 30, 2016 and 2015, respectively.

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

Three Months Ended September 30

2016

2015

Depreciation

Depreciation

Operating

and

Operating

and

Income

Amortization

EBITDA

Income

Amortization

EBITDA

(Unaudited)

($ thousands)

Asset-Light Logistics

Premium Logistics (Panther)(2)

$

3,973

$

2,860

$

6,833

$

2,733

$

2,773

$

5,506

Transportation Management (ABF Logistics)(2)

410

633

1,043

1,792

259

2,051

Emergency & Preventative Maintenance (FleetNet)

121

312

433

956

279

1,235

Household Goods Moving Services (ABF Moving)

1,986

186

2,172

3,028

287

3,315

Total asset-light logistics

$

6,490

$

3,991

$

10,481

$

8,509

$

3,598

$

12,107

Nine Months Ended September 30

2016

2015

Depreciation

Depreciation

Operating

and

Operating

and

Income

Amortization

EBITDA

Income

Amortization

EBITDA

(Unaudited)

($ thousands)

Asset-Light Logistics

Premium Logistics (Panther)(2)

$

5,331

$

8,565

$

13,896

$

8,767

$

8,636

$

17,403

Transportation Management (ABF Logistics)(2)

1,572

1,467

3,039

4,375

789

5,164

Emergency & Preventative Maintenance (FleetNet)

1,701

900

2,601

3,143

838

3,981

Household Goods Moving Services (ABF Moving)

2,107

569

2,676

4,663

975

5,638

Total asset-light logistics

$

10,711

$

11,501

$

22,212

$

20,948

$

11,238

$

32,186

  1. Depreciation and amortization consists primarily of amortization of intangibles and software associated with acquired businesses.

ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

Three Months Ended

Nine Months Ended

September 30

September 30

2016

2015

2016

2015

Unaudited

($ thousands, except percentages)

REVENUES

Freight Transportation (ABF Freight)

$

509,452

$

511,346

$

1,435,691

$

1,456,924

Premium Logistics (Panther)

75,365

73,583

211,148

229,146

Transportation Management (ABF Logistics)(1)

72,442

49,270

207,344

147,061

Emergency & Preventative Maintenance (FleetNet)

39,073

45,181

124,417

129,685

Household Goods Moving Services (ABF Moving)

31,040

43,076

74,926

93,870

Total asset-light logistics

217,920

211,110

617,835

599,762

Other and eliminations

(13,449)

(13,076)

(41,521)

(37,915)

Total consolidated revenues

$

713,923

$

709,380

$

2,012,005

$

2,018,771

OPERATING EXPENSES

Freight Transportation (ABF Freight)

Salaries, wages, and benefits

$

312,458

61.3

%

$

304,865

59.6

%

$

912,758

63.6

%

$

884,875

60.7

%

Fuel, supplies, and expenses

71,774

14.1

77,708

15.2

210,742

14.7

236,381

16.2

Operating taxes and licenses

12,312

2.4

12,444

2.4

36,446

2.6

36,762

2.5

Insurance

8,487

1.7

8,288

1.6

22,613

1.6

20,340

1.4

Communications and utilities

4,608

0.9

3,808

0.8

13,259

0.9

11,559

0.8

Depreciation and amortization

20,753

4.1

18,841

3.7

62,056

4.3

54,528

3.8

Rents and purchased transportation

58,350

11.5

56,920

11.1

145,846

10.2

151,144

10.4

Gain on sale of property and equipment

(81)

-

(565)

(0.1)

(2,450)

(0.2)

(1,403)

(0.1)

Pension settlement expense(2)

604

0.1

572

0.1

1,705

0.1

1,860

0.1

Other

2,137

0.4

1,888

0.4

6,293

0.4

6,167

0.4

491,402

96.5

%

484,769

94.8

%

1,409,268

98.2

%

1,402,213

96.2

%

Premium Logistics (Panther)

Purchased transportation

54,586

72.4

%

54,015

73.4

%

155,444

73.6

%

168,569

73.6

%

Depreciation and amortization(3)

2,860

3.8

2,773

3.8

8,565

4.1

8,636

3.8

Salaries, benefits, insurance, and other

13,946

18.5

14,062

19.1

41,808

19.8

43,174

18.8

71,392

94.7

%

70,850

96.3

%

205,817

97.5

%

220,379

96.2

%

Transportation Management (ABF Logistics)(1)

72,032

47,478

205,772

142,686

Emergency & Preventative Maintenance (FleetNet)

38,952

44,225

122,716

126,542

Household Goods Moving Services (ABF Moving)

29,054

40,048

72,819

89,207

Total asset-light logistics(2)

211,430

202,601

607,124

578,814

Other and eliminations(2)

(9,279)

(11,428)

(32,146)

(30,439)

Total consolidated operating expenses and costs(2)

$

693,553

$

675,942

$

1,984,246

$

1,950,588

  1. The 2016 periods include the operations of LDS since the September 2, 2016 acquisition date and the operations of Bear, which was acquired in December 2015.
  2. Pension settlement expense totaled $0.8 million (pre-tax) on a consolidated basis for each of the three months ended September 30, 2016 and 2015 and $2.3 million (pre-tax) and $2.5 million (pre-tax) for the nine months ended September 30, 2016 and 2015, respectively. For each of the three months ended September 30, 2016 and 2015, pre-tax pension settlement expense of $0.6 million, was reported by ABF Freight; $0.2 million was reported in Other and eliminations; and less than $0.1 million was reported by the asset-light logistics segments. For the nine months ended September 30, 2016 and 2015, pre-tax pension settlement expense of $1.7 million and $1.9 million, respectively, was reported by ABF Freight, $0.5 million was reported by Other and elimination; and $0.1 million was reported by the asset-light logistics segments.
  3. 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

Nine Months Ended

September 30

September 30

2016

2015

2016

2015

(Unaudited)

($ thousands)

OPERATING INCOME

Freight Transportation (ABF Freight) (1)

$

18,050

$

26,577

$

26,423

$

54,711

Premium Logistics (Panther)

3,973

2,733

5,331

8,767

Transportation Management (ABF Logistics)(2)

410

1,792

1,572

4,375

Emergency & Preventative Maintenance (FleetNet)

121

956

1,701

3,143

Household Goods Moving Services (ABF Moving)

1,986

3,028

2,107

4,663

Total asset-light logistics

6,490

8,509

10,711

20,948

Other and eliminations(3)

(4,170)

(1,648)

(9,375)

(7,476)

Total consolidated operating income

$

20,370

$

33,438

$

27,759

$

68,183

  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. The 2016 periods include the operations of LDS since the September 2, 2016 acquisition date and the operations of Bear, which was acquired in December 2015.
  3. For the three and nine months ended September 30, 2016 and 2015, "Other" corporate costs include additional investments in enterprise solutions to provide an improved platform for revenue growth and for offering ArcBest services across multiple operating segments. For the three months ended September 30, 2016, "Other" corporate costs also include acquisition costs (see reconciliation of GAAP operating income to non-GAAP operating income in the ArcBest Corporation - Consolidated table previously presented).

ARCBEST CORPORATION

OPERATING STATISTICS

Three Months Ended

Nine Months Ended

September 30

September 30

2016

2015

% Change

2016

2015

% Change

(Unaudited)

Freight Transportation (ABF Freight)

Workdays

64.0

64.0

191.5

190.0

Billed Revenue(4) CWT

$

30.52

$

29.68

2.8%

$

29.12

$

28.95

0.6%

Billed Revenue(4) / Shipment

$

371.67

$

377.96

(1.7%)

$

366.80

$

378.76

(3.2%)

Shipments

1,366,052

1,344,083

1.6%

3,925,981

3,851,446

1.9%

Shipments / Day

21,345

21,001

1.6%

20,501

20,271

1.1%

Tonnage (Tons)

831,815

855,952

(2.8%)

2,472,490

2,519,614

(1.9%)

Tons/Day

12,997

13,374

(2.8%)

12,911

13,261

(2.6%)

  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.

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