UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
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
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
(
(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 |
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. ☒
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). ☒
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.
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).
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 April 29, 2022 |
Common Stock, $0.01 par value |
ARCBEST CORPORATION
INDEX
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARCBEST CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31 | December 31 | ||||||
| 2022 |
| 2021 |
| |||
(Unaudited) | |||||||
(in thousands, except share data) | |||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | | $ | | |||
Short-term investments |
| |
| | |||
Accounts receivable, less allowances (2022 – $ |
| |
| | |||
Other accounts receivable, less allowances (2022 – $ |
| |
| | |||
Prepaid expenses |
| |
| | |||
Prepaid and refundable income taxes |
| |
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Other |
| |
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TOTAL CURRENT ASSETS |
| |
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PROPERTY, PLANT AND EQUIPMENT | |||||||
Land and structures |
| |
| | |||
Revenue equipment |
| |
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Service, office, and other equipment |
| |
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Software |
| |
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Leasehold improvements |
| |
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| |
| | ||||
Less allowances for depreciation and amortization |
| |
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PROPERTY, PLANT AND EQUIPMENT, net |
| |
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GOODWILL |
| |
| | |||
INTANGIBLE ASSETS, net |
| |
| | |||
OPERATING RIGHT-OF-USE ASSETS | | | |||||
DEFERRED INCOME TAXES |
| |
| | |||
OTHER LONG-TERM ASSETS |
| |
| | |||
TOTAL ASSETS | $ | | $ | | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | $ | | $ | | |||
Income taxes payable |
| |
| | |||
Accrued expenses |
| |
| | |||
Current portion of long-term debt |
| |
| | |||
Current portion of operating lease liabilities | | | |||||
TOTAL CURRENT LIABILITIES |
| |
| | |||
LONG-TERM DEBT, less current portion |
| |
| | |||
OPERATING LEASE LIABILITIES, less current portion | | | |||||
POSTRETIREMENT LIABILITIES, less current portion |
| |
| | |||
OTHER LONG-TERM LIABILITIES |
| |
| | |||
DEFERRED INCOME TAXES |
| |
| | |||
STOCKHOLDERS’ EQUITY | |||||||
Common stock, $ |
| |
| | |||
Additional paid-in capital |
| |
| | |||
Retained earnings |
| |
| | |||
Treasury stock, at cost, 2022: |
| ( |
| ( | |||
Accumulated other comprehensive income |
| |
| | |||
TOTAL STOCKHOLDERS’ EQUITY |
| |
| | |||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | | $ | |
See notes to consolidated financial statements.
3
ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended | |||||||
March 31 | |||||||
| 2022 |
| 2021 |
| |||
(Unaudited) | |||||||
(in thousands, except share and per share data) | |||||||
REVENUES | $ | | $ | | |||
OPERATING EXPENSES |
| | | ||||
OPERATING INCOME |
| |
| | |||
OTHER INCOME (COSTS) | |||||||
Interest and dividend income |
| |
| | |||
Interest and other related financing costs |
| ( |
| ( | |||
Other, net |
| ( |
| | |||
| ( |
| ( | ||||
INCOME BEFORE INCOME TAXES |
| |
| | |||
INCOME TAX PROVISION |
| |
| | |||
NET INCOME | $ | | $ | | |||
EARNINGS PER COMMON SHARE | |||||||
Basic | $ | | $ | | |||
Diluted | $ | | $ | | |||
AVERAGE COMMON SHARES OUTSTANDING | |||||||
Basic |
| |
| | |||
Diluted |
| |
| |
See notes to consolidated financial statements.
4
ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended | |||||||
March 31 | |||||||
| 2022 |
| 2021 |
| |||
(Unaudited) | |||||||
(in thousands) | |||||||
NET INCOME | $ | | $ | | |||
OTHER COMPREHENSIVE INCOME, net of tax | |||||||
Postretirement benefit plans: | |||||||
Amortization of unrecognized net periodic benefit credit, net of tax of: (2022 – $ | |||||||
Net actuarial gain |
| ( |
| ( | |||
Interest rate swap and foreign currency translation: | |||||||
Change in unrealized income on interest rate swap, net of tax of: (2022 – $ | | | |||||
Change in foreign currency translation, net of tax of: (2022 – $ |
| |
| | |||
OTHER COMPREHENSIVE INCOME, net of tax |
| |
| | |||
TOTAL COMPREHENSIVE INCOME | $ | | $ | |
See notes to consolidated financial statements.
5
ARCBEST CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
Three Months Ended March 31, 2022 | |||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||
Additional | Other | ||||||||||||||||||||||
Common Stock |
| Paid-In | Retained | Treasury Stock |
| Comprehensive | Total | ||||||||||||||||
| Shares |
| Amount |
| Capital |
| Earnings |
| Shares |
| Amount |
| Income |
| Equity |
| |||||||
(Unaudited) | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Balance at December 31, 2021 | | $ | | $ | | $ | |
| | $ | ( | $ | | $ | | ||||||||
Net income |
| |
| | |||||||||||||||||||
Other comprehensive income, net of tax |
| |
| | |||||||||||||||||||
Issuance of common stock under share-based compensation plans |
| |
| — |
| — |
| — | |||||||||||||||
Shares withheld for employee tax remittance on share-based compensation |
| ( |
| ( | |||||||||||||||||||
Share-based compensation expense |
| |
| | |||||||||||||||||||
Purchase of treasury stock | | ( | ( | ||||||||||||||||||||
Forward contract for accelerated share repurchases | | | ( | — | |||||||||||||||||||
Dividends declared on common stock |
| ( |
| ( | |||||||||||||||||||
Balance at March 31, 2022 |
| | $ | | $ | | $ | |
| | $ | ( | $ | | $ | |
Three Months Ended March 31, 2021 | |||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||
Additional | Other | ||||||||||||||||||||||
Common Stock |
| Paid-In | Retained | Treasury Stock |
| Comprehensive | Total | ||||||||||||||||
| Shares |
| Amount |
| Capital |
| Earnings |
| Shares |
| Amount |
| Income |
| Equity |
| |||||||
(Unaudited) | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Balance at December 31, 2020 |
| | $ | | $ | | $ | |
| | $ | ( | $ | | $ | | |||||||
Net income |
| |
| | |||||||||||||||||||
Other comprehensive income, net of tax | | | |||||||||||||||||||||
Issuance of common stock under share-based compensation plans | |
| | ( | — | ||||||||||||||||||
Shares withheld for employee tax remittance on share-based compensation | ( | ( | |||||||||||||||||||||
Share-based compensation expense | | | |||||||||||||||||||||
Purchase of treasury stock | | ( | ( | ||||||||||||||||||||
Dividends declared on common stock |
| ( | ( | ||||||||||||||||||||
Balance at March 31, 2021 |
| | $ | | $ | | $ | |
| | $ | ( | $ | | $ | |
See notes to consolidated financial statements.
6
ARCBEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended | |||||||
March 31 | |||||||
| 2022 |
| 2021 |
| |||
(in thousands) | |||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | | $ | | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization |
| |
| | |||
Amortization of intangibles |
| |
| | |||
Share-based compensation expense |
| |
| | |||
Provision for losses on accounts receivable |
| |
| ( | |||
Change in deferred income taxes |
| ( |
| ( | |||
Gain on sale of property and equipment and lease termination |
| ( |
| ( | |||
Changes in operating assets and liabilities: | |||||||
Receivables |
| ( |
| ( | |||
Prepaid expenses |
| ( |
| ( | |||
Other assets |
| ( |
| ( | |||
Income taxes |
| ( |
| | |||
Operating right-of-use assets and lease liabilities, net | | | |||||
Accounts payable, accrued expenses, and other liabilities |
| ( |
| ( | |||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
| ( |
| | |||
INVESTING ACTIVITIES | |||||||
Purchases of property, plant and equipment, net of financings |
| ( |
| ( | |||
Proceeds from sale of property and equipment |
| |
| | |||
Purchases of short-term investments |
| ( |
| ( | |||
Proceeds from sale of short-term investments |
| |
| | |||
Capitalization of internally developed software | ( |
| ( | ||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES |
| ( |
| | |||
FINANCING ACTIVITIES | |||||||
Borrowings under credit facilities |
| |
| — | |||
Payments on long-term debt |
| ( |
| ( | |||
Net change in book overdrafts |
| |
| ( | |||
Payment of common stock dividends |
| ( |
| ( | |||
Purchases of treasury stock | ( | ( | |||||
Payments for tax withheld on share-based compensation |
| ( |
| ( | |||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
| |
| ( | |||
NET DECREASE IN CASH AND CASH EQUIVALENTS |
| ( |
| ( | |||
Cash and cash equivalents at beginning of period |
| |
| | |||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | | $ | | |||
NONCASH INVESTING ACTIVITIES | |||||||
Equipment and other financings | $ | | $ | — | |||
Accruals for equipment received | $ | | $ | | |||
Lease liabilities arising from obtaining right-of-use assets | $ | | $ | | |||
See notes to consolidated financial statements.
7
NOTE A – ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION
ArcBest Corporation™ (the “Company”) is a multibillion-dollar integrated logistics company that helps keep the global supply chain moving. The Company’s operations are conducted through its
The Asset-Based segment represented approximately
On November 1, 2021, we acquired MoLo Solutions, LLC (“MoLo”). As a result of the acquisition, MoLo® became a wholly owned subsidiary of the Company. The acquired operations are reported within the ArcBest segment of our Asset-Light operations (see Note K). The fair value measurements related to MoLo reflected in the accompanying consolidated financial statements are preliminary, as fair values of acquired assets and liabilities assumed are subject to revision during the measurement period if information becomes available that warrants further adjustments. See Note C for further discussion of the MoLo acquisition.
Financial Statement Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore, should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2021 Annual Report on Form 10-K and other current filings with the SEC. In the opinion of management, all adjustments (which are of a normal and recurring nature) considered necessary for a fair presentation have been included.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts may differ from those estimates.
Accounting Pronouncements Not Yet Adopted
Management believes there is no new accounting guidance issued but not yet effective that would have a material impact to the Company’s current financial statements.
8
NOTE B – FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Financial Instruments
The following table presents the components of cash and cash equivalents and short-term investments:
| March 31 |
| December 31 |
| |||
2022 | 2021 |
| |||||
(in thousands) | |||||||
Cash and cash equivalents | |||||||
Cash deposits(1) | $ | | $ | | |||
Variable rate demand notes(1)(2) |
| |
| | |||
Money market funds(3) |
| |
| | |||
Total cash and cash equivalents | $ | | $ | | |||
Short-term investments | |||||||
Certificates of deposit(1) | $ | | $ | |
(1) | Recorded at cost plus accrued interest, which approximates fair value. |
(2) | Amounts may be redeemed on a daily basis with the original issuer. |
(3) | Recorded at fair value as determined by quoted market prices (see amounts presented in the table of financial assets and liabilities measured at fair value within this Note). |
The Company’s long-term financial instruments are presented in the table of financial assets and liabilities measured at fair value within this Note.
Concentrations of Credit Risk of Financial Instruments
The Company is potentially subject to concentrations of credit risk related to its cash, cash equivalents, and short-term investments. The Company reduces credit risk by maintaining its cash deposits primarily in FDIC-insured accounts and placing its short-term investments primarily in FDIC-insured certificates of deposit. However, certain cash deposits and certificates of deposit may exceed federally insured limits. At March 31, 2022 and December 31, 2021, cash, cash equivalents, and short-term investments totaling $
Fair Value Disclosure of Financial Instruments
Fair value disclosures are made in accordance with the following hierarchy of valuation techniques based on whether the inputs of market data and market assumptions used to measure fair value are observable or unobservable:
● | Level 1 — Quoted prices for identical assets and liabilities in active markets. |
● | Level 2 — Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. |
● | Level 3 — Unobservable inputs (Company’s market assumptions) that are significant to the valuation model. |
9
Fair value and carrying value disclosures of financial instruments are presented in the following table:
March 31 | December 31 | ||||||||||||
| 2022 |
| 2021 |
| |||||||||
(in thousands) | |||||||||||||
Carrying |
| Fair |
| Carrying |
| Fair | |||||||
Value |
| Value |
| Value |
| Value | |||||||
Credit Facility(1) | $ | | $ | | $ | | $ | | |||||
Notes payable(2) |
| |
| |
| |
| | |||||
New England Pension Fund withdrawal liability(3) | | | | | |||||||||
$ | | $ | | $ | | $ | |
(1) | The revolving credit facility (the “Credit Facility”) carries a variable interest rate based on LIBOR, plus a margin, that is considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy). |
(2) | Fair value of the notes payable was determined using a present value income approach based on quoted interest rates from lending institutions with which the Company would enter into similar transactions (Level 2 of the fair value hierarchy). |
(3) | ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “New England Pension Fund”) was restructured under a transition agreement effective on August 1, 2018, which resulted in a related withdrawal liability. The fair value of the outstanding withdrawal liability is equal to the present value of the future withdrawal liability payments, discounted at an interest rate of |
10
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents the assets and liabilities that are measured at fair value on a recurring basis:
March 31, 2022 | |||||||||||||
Fair Value Measurements Using | |||||||||||||
Quoted Prices |
| Significant |
| Significant | |||||||||
| In Active | Observable | Unobservable | ||||||||||
Markets | Inputs | Inputs | |||||||||||
Total |
| (Level 1) |
| (Level 2) |
| (Level 3) |
| ||||||
(in thousands) | |||||||||||||
Assets: | |||||||||||||
Money market funds(1) | $ | | $ | | $ | — | $ | — | |||||
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2) |
| |
| |
| — |
| — | |||||
Interest rate swaps(3) | | — | | — | |||||||||
$ | | $ | | $ | | $ | — | ||||||
Liabilities: |
| ||||||||||||
Interest rate swaps(3) | $ | | $ | — | $ | | $ | — | |||||
Contingent consideration(4) | | — | — | | |||||||||
$ | | $ | — | $ | | $ | |
December 31, 2021 | |||||||||||||
Fair Value Measurements Using | |||||||||||||
Quoted Prices |
| Significant |
| Significant | |||||||||
| In Active | Observable | Unobservable | ||||||||||
Markets | Inputs | Inputs | |||||||||||
Total |
| (Level 1) |
| (Level 2) |
| (Level 3) |
| ||||||
(in thousands) | |||||||||||||
Assets: | |||||||||||||
Money market funds(1) | $ | | $ | | $ | — | $ | — | |||||
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2) |
| |
| |
| — |
| — | |||||
Interest rate swaps(3) | | — | | — | |||||||||
$ | | $ | | $ | | $ | — | ||||||
Liabilities: |
| ||||||||||||
Interest rate swaps(3) | $ | | $ | — | $ | | $ | — | |||||
Contingent consideration(4) | | — | — | | |||||||||
$ | | $ | — | $ | | $ | |
(1) | Included in cash and cash equivalents. |
(2) | Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities. |
(3) | Included in other long-term assets or other long-term liabilities. The fair values of the interest rate swaps were determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are generally considered to be in Level 3 of the fair value hierarchy. However, the Company assessed Level 3 inputs as insignificant to the valuation at March 31, 2022 and December 31, 2021 and considers the interest rate swap valuations in Level 2 of the fair value hierarchy. |
(4) | Included in other long-term liabilities, based on when expected payouts become due. The estimated fair value of contingent consideration for the earn-out agreement related to the November 2021 acquisition of MoLo was determined by assessing Level 3 inputs. The Level 3 assessments utilize a Monte Carlo simulation with inputs including scenarios of estimated revenues and earnings before interest, taxes, depreciation and amortization to be achieved for the applicable performance periods, volatility factors applied to the simulations, and the discount rate applied, which was |