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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 September 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 October 30, 2020

Common Stock, $0.01 par value

25,407,895 shares

ARCBEST CORPORATION

INDEX

    

    

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

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

3

Consolidated Statements of Operations — For the Three and Nine months ended September 30, 2020 and 2019

4

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

5

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

6

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

8

Notes to Consolidated Financial Statements

9

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

53

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

54

Item 1A.

Risk Factors

54

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

55

Item 3.

Defaults Upon Senior Securities

55

Item 4.

Mine Safety Disclosures

55

Item 5.

Other Information

55

Item 6.

Exhibits

56

SIGNATURES

57

PART I.

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

September 30

December 31

    

2020

    

2019

 

(Unaudited)

(in thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

267,645

$

201,909

Short-term investments

 

83,411

 

116,579

Accounts receivable, less allowances (2020 – $7,343; 2019 – $5,448)

 

323,760

 

282,579

Other accounts receivable, less allowances (2020 – $665; 2019 – $476)

 

14,464

 

18,774

Prepaid expenses

 

29,562

 

30,377

Prepaid and refundable income taxes

 

6,163

 

9,439

Other

 

5,235

 

4,745

TOTAL CURRENT ASSETS

 

730,240

 

664,402

PROPERTY, PLANT AND EQUIPMENT

Land and structures

 

346,322

 

342,122

Revenue equipment

 

912,924

 

896,020

Service, office, and other equipment

 

233,689

 

233,354

Software

 

158,454

 

151,068

Leasehold improvements

 

14,064

 

10,383

 

1,665,453

 

1,632,947

Less allowances for depreciation and amortization

 

987,396

 

949,355

PROPERTY, PLANT AND EQUIPMENT, net

 

678,057

 

683,592

GOODWILL

 

88,320

 

88,320

INTANGIBLE ASSETS, net

 

56,016

 

58,832

OPERATING RIGHT-OF-USE ASSETS

112,568

68,470

DEFERRED INCOME TAXES

 

6,975

 

7,725

OTHER LONG-TERM ASSETS

 

74,055

 

79,866

TOTAL ASSETS

$

1,746,231

$

1,651,207

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable

$

162,021

$

134,374

Income taxes payable

 

5

 

12

Accrued expenses

 

249,172

 

232,321

Current portion of long-term debt

 

65,887

 

57,305

Current portion of operating lease liabilities

20,431

20,265

TOTAL CURRENT LIABILITIES

 

497,516

 

444,277

LONG-TERM DEBT, less current portion

 

226,037

 

266,214

OPERATING LEASE LIABILITIES, less current portion

96,549

52,277

POSTRETIREMENT LIABILITIES, less current portion

 

20,486

 

20,294

OTHER LONG-TERM LIABILITIES

 

35,377

 

38,892

DEFERRED INCOME TAXES

 

67,627

 

66,210

STOCKHOLDERS’ EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2020: 29,039,994 shares, 2019: 28,810,902 shares

 

290

 

288

Additional paid-in capital

 

339,908

 

333,943

Retained earnings

 

574,053

 

533,187

Treasury stock, at cost, 2020: 3,632,099 shares; 2019: 3,404,639 shares

 

(110,245)

 

(104,578)

Accumulated other comprehensive income (loss)

 

(1,367)

 

203

TOTAL STOCKHOLDERS’ EQUITY

 

802,639

 

763,043

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,746,231

$

1,651,207

See notes to consolidated financial statements.

3

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended 

Nine Months Ended 

September 30

September 30

    

2020

    

2019

    

2020

    

2019

 

(Unaudited)

(in thousands, except share and per share data)

REVENUES

$

794,980

$

787,563

$

2,123,749

$

2,270,892

OPERATING EXPENSES

 

755,198

756,355

 

2,055,723

2,195,893

OPERATING INCOME

 

39,782

 

31,208

 

68,026

 

74,999

OTHER INCOME (COSTS)

Interest and dividend income

 

756

 

1,768

 

3,122

 

4,862

Interest and other related financing costs

 

(2,860)

 

(2,900)

 

(9,185)

 

(8,593)

Other, net

 

1,500

 

(6,734)

 

334

 

(7,770)

 

(604)

 

(7,866)

 

(5,729)

 

(11,501)

INCOME BEFORE INCOME TAXES

 

39,178

 

23,342

 

62,297

 

63,498

INCOME TAX PROVISION

 

9,774

 

7,072

 

15,111

 

17,964

NET INCOME

$

29,404

$

16,270

$

47,186

$

45,534

EARNINGS PER COMMON SHARE

Basic

$

1.15

$

0.64

$

1.86

$

1.78

Diluted

$

1.11

$

0.62

$

1.79

$

1.72

AVERAGE COMMON SHARES OUTSTANDING

Basic

 

25,470,094

 

25,527,982

 

25,403,786

 

25,550,365

Diluted

 

26,592,457

 

26,416,595

 

26,289,946

 

26,461,668

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.08

$

0.08

$

0.24

$

0.24

See notes to consolidated financial statements.

4

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended 

Nine Months Ended 

September 30

September 30

    

2020

    

2019

    

2020

    

2019

 

(Unaudited)

(in thousands)

NET INCOME

$

29,404

$

16,270

$

47,186

$

45,534

OTHER COMPREHENSIVE INCOME (LOSS), net of tax

Pension and other postretirement benefit plans:

Net actuarial loss, net of tax of: (2020 – Three-month period $—, Nine-month period $3; 2019 – Three-month period $310, Nine-month period $100)

 

 

(894)

 

(8)

 

(291)

Pension settlement expense, including termination expense, net of tax of: (2020 – Three-month period $—, Nine-month period $23; 2019 – Three-month period $651, Nine-month period $1,072)

 

 

5,850

 

66

 

7,063

Amortization of unrecognized net periodic benefit cost (credit), net of tax of: (2020 – Three-month period $38, Nine-month period $114; 2019 – Three-month period $75, Nine-month period $252)

Net actuarial (gain) loss

 

(110)

 

222

 

(327)

 

746

Prior service credit

 

 

(6)

 

 

(18)

Interest rate swap and foreign currency translation:

Change in unrealized loss on interest rate swap, net of tax of: (2020 – Three-month period $48, Nine-month period $366; 2019 – Three-month period $120, Nine-month period $425)

136

(338)

(1,035)

(1,198)

Change in foreign currency translation, net of tax of: (2020 – Three-month period $246, Nine-month period $94; 2019 – Three-month period $12, Nine-month period $108)

 

697

 

(35)

 

(266)

 

306

OTHER COMPREHENSIVE INCOME (LOSS), net of tax

 

723

 

4,799

 

(1,570)

 

6,608

TOTAL COMPREHENSIVE INCOME

$

30,127

$

21,069

$

45,616

$

52,142

See notes to consolidated financial statements.

5

ARCBEST CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Three Months Ended and Nine Months Ended September 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

Net income

 

29,404

 

29,404

Other comprehensive income, net of tax

 

723

 

723

Issuance of common stock under share-based compensation plans

 

82

 

 

 

Tax effect of share-based compensation plans

 

(919)

 

(919)

Share-based compensation expense

 

2,885

 

2,885

Purchase of treasury stock

77

(2,505)

(2,505)

Dividends declared on common stock

 

(2,040)

 

(2,040)

Balance at September 30, 2020

 

29,040

$

290

$

339,908

$

574,053

 

3,632

$

(110,245)

$

(1,367)

$

802,639

6

ARCBEST CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY – CONTINUED

Three Months Ended and Nine Months Ended September 30, 2019

Accumulated

Additional

Other

Common Stock

    

Paid-In

Retained

Treasury Stock

    

Comprehensive

Total

    

Shares

    

Amount

    

Capital

    

Earnings

    

Shares

    

Amount

    

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

Net income

 

16,270

 

16,270

Other comprehensive income, net of tax

4,799

4,799

Issuance of common stock under share-based compensation plans

15

 

Tax effect of share-based compensation plans

(24)

(24)

Share-based compensation expense

2,409

2,409

Purchase of treasury stock

34

(944)