0001558370-20-009618.txt : 20200806 0001558370-20-009618.hdr.sgml : 20200806 20200806154618 ACCESSION NUMBER: 0001558370-20-009618 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 80 CONFORMED PERIOD OF REPORT: 20200630 FILED AS OF DATE: 20200806 DATE AS OF CHANGE: 20200806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARCBEST CORP /DE/ CENTRAL INDEX KEY: 0000894405 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 710673405 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19969 FILM NUMBER: 201081342 BUSINESS ADDRESS: STREET 1: 8401 MCCLURE DRIVE CITY: FORT SMITH STATE: AR ZIP: 72916 BUSINESS PHONE: 4797856000 MAIL ADDRESS: STREET 1: P O BOX 10048 CITY: FORT SMITH STATE: AR ZIP: 72917-0048 FORMER COMPANY: FORMER CONFORMED NAME: ARKANSAS BEST CORP /DE/ DATE OF NAME CHANGE: 19930917 10-Q 1 arcb-20200630x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2020

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                          to                         

Commission file number 000-19969

ARCBEST CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of
incorporation or organization)

71-0673405

(I.R.S. Employer Identification No.)

8401 McClure Drive

Fort Smith, Arkansas 72916

(479) 785-6000

(Address, including zip code, and telephone number, including

area code, of the registrant’s principal executive offices)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock $0.01 Par Value

ARCB

Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

    

Outstanding at July 31, 2020

Common Stock, $0.01 par value

25,444,939 shares

ARCBEST CORPORATION

INDEX

    

    

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Balance Sheets — June 30, 2020 and December 31, 2019

3

Consolidated Statements of Operations — For the Three and Six months ended June 30, 2020 and 2019

4

Consolidated Statements of Comprehensive Income — For the Three and Six months ended June 30, 2020 and 2019

5

Consolidated Statement of Stockholders’ Equity — For the Three and Six months ended June 30, 2020 and 2019

6

Consolidated Statements of Cash Flows — For the Three and Six months ended June 30, 2020 and 2019

7

Notes to Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

53

Item 4.

Controls and Procedures

54

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

55

Item 1A.

Risk Factors

55

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

56

Item 3.

Defaults Upon Senior Securities

56

Item 4.

Mine Safety Disclosures

56

Item 5.

Other Information

56

Item 6.

Exhibits

57

SIGNATURES

58

PART I.

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

June 30

December 31

    

2020

    

2019

 

(Unaudited)

(in thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

406,290

$

201,909

Short-term investments

 

167,719

 

116,579

Accounts receivable, less allowances (2020 – $7,130; 2019 – $5,448)

 

273,135

 

282,579

Other accounts receivable, less allowances (2020 – $661; 2019 – $476)

 

16,812

 

18,774

Prepaid expenses

 

28,928

 

30,377

Prepaid and refundable income taxes

 

4,236

 

9,439

Other

 

4,923

 

4,745

TOTAL CURRENT ASSETS

 

902,043

 

664,402

PROPERTY, PLANT AND EQUIPMENT

Land and structures

 

344,951

 

342,122

Revenue equipment

 

891,029

 

896,020

Service, office, and other equipment

 

232,058

 

233,354

Software

 

155,411

 

151,068

Leasehold improvements

 

11,821

 

10,383

 

1,635,270

 

1,632,947

Less allowances for depreciation and amortization

 

974,464

 

949,355

PROPERTY, PLANT AND EQUIPMENT, net

 

660,806

 

683,592

GOODWILL

 

88,320

 

88,320

INTANGIBLE ASSETS, net

 

56,915

 

58,832

OPERATING RIGHT-OF-USE ASSETS

81,069

68,470

DEFERRED INCOME TAXES

 

7,507

 

7,725

OTHER LONG-TERM ASSETS

 

74,100

 

79,866

TOTAL ASSETS

$

1,870,760

$

1,651,207

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable

$

140,632

$

134,374

Income taxes payable

 

3,181

 

12

Accrued expenses

 

217,020

 

232,321

Current portion of long-term debt

 

59,050

 

57,305

Current portion of operating lease liabilities

19,769

20,265

TOTAL CURRENT LIABILITIES

 

439,652

 

444,277

LONG-TERM DEBT, less current portion

 

473,850

 

266,214

OPERATING LEASE LIABILITIES, less current portion

65,249

52,277

POSTRETIREMENT LIABILITIES, less current portion

 

20,448

 

20,294

OTHER LONG-TERM LIABILITIES

 

36,077

 

38,892

DEFERRED INCOME TAXES

 

60,393

 

66,210

STOCKHOLDERS’ EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2020: 28,958,258 shares, 2019: 28,810,902 shares

 

290

 

288

Additional paid-in capital

 

337,942

 

333,943

Retained earnings

 

546,689

 

533,187

Treasury stock, at cost, 2020: 3,554,639 shares; 2019: 3,404,639 shares

 

(107,740)

 

(104,578)

Accumulated other comprehensive income (loss)

 

(2,090)

 

203

TOTAL STOCKHOLDERS’ EQUITY

 

775,091

 

763,043

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,870,760

$

1,651,207

See notes to consolidated financial statements.

3

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended 

Six Months Ended 

June 30

June 30

    

2020

    

2019

    

2020

    

2019

 

(Unaudited)

(in thousands, except share and per share data)

REVENUES

$

627,370

$

771,490

$

1,328,769

$

1,483,329

OPERATING EXPENSES

 

606,945

736,290

 

1,300,525

1,439,538

OPERATING INCOME

 

20,425

 

35,200

 

28,244

 

43,791

OTHER INCOME (COSTS)

Interest and dividend income

 

991

 

1,616

 

2,366

 

3,094

Interest and other related financing costs

 

(3,378)

 

(2,811)

 

(6,325)

 

(5,693)

Other, net

 

2,696

 

(445)

 

(1,166)

 

(1,036)

 

309

 

(1,640)

 

(5,125)

 

(3,635)

INCOME BEFORE INCOME TAXES

 

20,734

 

33,560

 

23,119

 

40,156

INCOME TAX PROVISION

 

4,854

 

9,184

 

5,337

 

10,892

NET INCOME

$

15,880

$

24,376

$

17,782

$

29,264

EARNINGS PER COMMON SHARE

Basic

$

0.62

$

0.95

$

0.70

$

1.14

Diluted

$

0.61

$

0.92

$

0.68

$

1.10

AVERAGE COMMON SHARES OUTSTANDING

Basic

 

25,463,559

 

25,554,286

 

25,468,624

 

25,562,306

Diluted

 

26,217,957

 

26,431,592

 

26,252,486

 

26,483,011

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.08

$

0.08

$

0.16

$

0.16

See notes to consolidated financial statements.

4

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended 

Six Months Ended 

June 30

June 30

    

2020

    

2019

    

2020

    

2019

 

(Unaudited)

(in thousands)

NET INCOME

$

15,880

$

24,376

$

17,782

$

29,264

OTHER COMPREHENSIVE INCOME (LOSS), net of tax

Pension and other postretirement benefit plans:

Net actuarial gain (loss), net of tax of: (2020 – Three-month period $—, Six-month period $3; 2019 – Three-month period $20, Six-month period $210)

 

 

(58)

 

(8)

 

603

Pension settlement expense, net of tax of: (2020 – Three-month period $—, Six-month period $23; 2019 – Three-month period $72, Six-month period $421)

 

 

206

 

66

 

1,213

Amortization of unrecognized net periodic benefit cost (credit), net of tax of: (2020 – Three-month period $39, Six-month period $76; 2019 – Three-month period $77, Six-month period $177)

Net actuarial (gain) loss

 

(109)

 

229

 

(217)

 

524

Prior service credit

 

 

(6)

 

 

(12)

Interest rate swap and foreign currency translation:

Change in unrealized loss on interest rate swap, net of tax of: (2020 – Three-month period $766, Six-month period $414; 2019 – Three-month period $187, Six-month period $305)

(174)

(528)

(1,171)

(860)

Change in foreign currency translation, net of tax of: (2020 – Three-month period $842, Six-month period $340; 2019 – Three-month period $41, Six-month period $120)

 

457

 

116

 

(963)

 

341

OTHER COMPREHENSIVE INCOME (LOSS), net of tax

 

174

 

(41)

 

(2,293)

 

1,809

TOTAL COMPREHENSIVE INCOME

$

16,054

$

24,335

$

15,489

$

31,073

See notes to consolidated financial statements.

5

ARCBEST CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Three Months Ended and Six Months Ended June 30, 2020

Accumulated

Additional

Other

Common Stock

    

Paid-In

Retained

Treasury Stock

    

Comprehensive

Total

    

Shares

    

Amount

    

Capital

    

Earnings

    

Shares

    

Amount

    

Income (Loss)

    

Equity

 

(Unaudited)

(in thousands)

Balance at December 31, 2019

28,811

$

288

$

333,943

$

533,187

 

3,405

$

(104,578)

$

203

$

763,043

Adjustments to beginning retained earnings for adoption of accounting standard (see Note A)

(198)

(198)

Balance at January 1, 2020

 

28,811

288

333,943

532,989

3,405

(104,578)

203

762,845

Net income

 

1,902

 

1,902

Other comprehensive loss, net of tax

 

(2,467)

 

(2,467)

Issuance of common stock under share-based compensation plans

 

6

 

 

 

Tax effect of share-based compensation plans

 

(60)

 

(60)

Share-based compensation expense

 

2,181

 

2,181

Purchase of treasury stock

150

(3,162)

(3,162)

Dividends declared on common stock

 

(2,033)

 

(2,033)

Balance at March 31, 2020

 

28,817

$

288

$

336,064

$

532,858

 

3,555

$

(107,740)

$

(2,264)

$

759,206

Net income

 

15,880

 

15,880

Other comprehensive income, net of tax

 

174

 

174

Issuance of common stock under share-based compensation plans

 

141

 

2

 

(2)

 

Tax effect of share-based compensation plans

 

(1,010)

 

(1,010)

Share-based compensation expense

 

2,890

 

2,890

Dividends declared on common stock

 

(2,049)

 

(2,049)

Balance at June 30, 2020

 

28,958

$

290

$

337,942

$

546,689

 

3,555

$

(107,740)

$

(2,090)

$

775,091

Three Months Ended and Six Months Ended June 30, 2019

Accumulated

Additional

Other

Common Stock

    

Paid-In

Retained

Treasury Stock

    

Comprehensive

Total

    

Shares

    

Amount

    

Capital

    

Earnings

    

Shares

    

Amount

    

Income (Loss)

    

Equity

(Unaudited)

(in thousands)

Balance at December 31, 2018

 

28,685

$

287

$

325,712

$

501,389

 

3,098

$

(95,468)

$

(14,238)

$

717,682

Net income

 

4,888

 

4,888

Other comprehensive income, net of tax

1,850

1,850

Tax effect of share-based compensation plans

(8)

(8)

Share-based compensation expense

2,058

2,058

Purchase of treasury stock

74

(2,663)

(2,663)

Dividends declared on common stock

 

(2,052)

(2,052)

Balance at March 31, 2019

 

28,685

$

287

$

327,762

$

504,225

 

3,172

$

(98,131)

$

(12,388)

$

721,755

Net income

 

24,376

 

24,376

Other comprehensive loss, net of tax

(41)

(41)

Issuance of common stock under share-based compensation plans

101

 

1

(1)

Tax effect of share-based compensation plans

(1,174)

(1,174)

Share-based compensation expense

2,801

2,801

Purchase of treasury stock

94

(2,508)

(2,508)

Dividends declared on common stock

 

(2,050)

(2,050)

Balance at June 30, 2019

 

28,786

$

288

$

329,388

$

526,551

 

3,266

$

(100,639)

$

(12,429)

$

743,159

See notes to consolidated financial statements.

6

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended 

June 30

    

2020

    

2019

 

(Unaudited)

(in thousands)

OPERATING ACTIVITIES

Net income

$

17,782

$

29,264

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

Depreciation and amortization

 

56,140

 

51,722

Amortization of intangibles

 

1,959

 

2,249

Pension settlement expense

 

89

 

1,634

Share-based compensation expense

 

5,071

 

4,859

Provision for losses on accounts receivable

 

999

 

621

Change in deferred income taxes

 

(5,170)

 

5,124

Gain on sale of property and equipment and lease termination

 

(3,581)

 

(1,469)

Changes in operating assets and liabilities:

Receivables

 

9,626

 

1,781

Prepaid expenses

 

1,444

 

(3,323)

Other assets

 

4,358

 

(2,798)

Income taxes

 

8,413

 

(3,042)

Operating right-of-use assets and lease liabilities, net

(230)

159

Accounts payable, accrued expenses, and other liabilities

 

(14,833)

 

(6,310)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

82,067

 

80,471

INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of financings

 

(16,209)

 

(41,909)

Proceeds from sale of property and equipment

 

7,670

 

3,798

Purchases of short-term investments

 

(97,493)

 

(43,327)

Proceeds from sale of short-term investments

 

46,725

 

33,332

Capitalization of internally developed software

 

(6,495)

 

(5,535)

NET CASH USED IN INVESTING ACTIVITIES

 

(65,802)

 

(53,641)

FINANCING ACTIVITIES

Borrowings under credit facilities

 

180,000

 

Borrowings under accounts receivable securitization program

45,000

Proceeds from notes payable

9,552

Payments on long-term debt

 

(29,185)

 

(29,984)

Net change in book overdrafts

 

615

 

(4,398)

Payment of common stock dividends

 

(4,082)

 

(4,102)

Purchases of treasury stock

(3,162)

(5,171)

Payments for tax withheld on share-based compensation

 

(1,070)

 

(1,182)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

188,116

 

(35,285)