10-Q 1 arcb-20230930x10q.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 September 30, 2023

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 November 2, 2023

Common Stock, $0.01 par value

23,661,868 shares

ARCBEST CORPORATION

INDEX

    

    

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Balance Sheets — September 30, 2023 and December 31, 2022

3

Consolidated Statements of Operations — For the Three and Nine Months ended September 30, 2023 and 2022

4

Consolidated Statements of Comprehensive Income — For the Three and Nine Months ended September 30, 2023 and 2022

5

Consolidated Statements of Stockholders’ Equity — For the Three and Nine Months ended September 30, 2023 and 2022

6

Consolidated Statements of Cash Flows — For the Nine Months ended September 30, 2023 and 2022

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

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

54

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

    

2023

    

2022

 

(Unaudited)

(in thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

251,503

$

158,264

Short-term investments

 

89,326

 

167,662

Accounts receivable, less allowances (2023 – $10,825; 2022 – $13,892)

 

469,490

 

517,494

Other accounts receivable, less allowances (2023 – $730; 2022 – $713)

 

10,984

 

11,016

Prepaid expenses

 

30,957

 

39,484

Prepaid and refundable income taxes

 

26,534

 

19,239

Current assets of discontinued operations

64,736

Other

 

11,342

 

11,888

TOTAL CURRENT ASSETS

 

890,136

 

989,783

PROPERTY, PLANT AND EQUIPMENT

Land and structures

 

430,263

 

401,840

Revenue equipment

 

1,094,183

 

1,038,832

Service, office, and other equipment

 

313,062

 

298,234

Software

 

169,434

 

167,164

Leasehold improvements

 

26,062

 

23,466

 

2,033,004

 

1,929,536

Less allowances for depreciation and amortization

 

1,170,914

 

1,129,366

PROPERTY, PLANT AND EQUIPMENT, net

 

862,090

 

800,170

GOODWILL

 

304,753

 

304,753

INTANGIBLE ASSETS, net

 

104,288

 

113,733

OPERATING RIGHT-OF-USE ASSETS

164,082

166,515

DEFERRED INCOME TAXES

 

7,618

 

6,342

LONG-TERM ASSETS OF DISCONTINUED OPERATIONS

11,097

OTHER LONG-TERM ASSETS

 

104,479

 

101,893

TOTAL ASSETS

$

2,437,446

$

2,494,286

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable

$

245,899

$

269,854

Income taxes payable

 

1,390

 

16,017

Accrued expenses

 

322,809

 

338,457

Current portion of long-term debt

 

66,862

 

66,252

Current portion of operating lease liabilities

31,414

26,225

Current liabilities of discontinued operations

51,665

TOTAL CURRENT LIABILITIES

 

668,374

 

768,470

LONG-TERM DEBT, less current portion

 

176,296

 

198,371

OPERATING LEASE LIABILITIES, less current portion

171,755

147,828

POSTRETIREMENT LIABILITIES, less current portion

 

12,167

 

12,196

LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS

781

CONTINGENT CONSIDERATION

99,200

112,000

OTHER LONG-TERM LIABILITIES

 

38,552

 

42,745

DEFERRED INCOME TAXES

 

50,369

 

60,494

STOCKHOLDERS’ EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2023: 30,017,658 shares;
2022: 29,758,716 shares

 

300

 

298

Additional paid-in capital

 

338,368

 

339,582

Retained earnings

 

1,226,640

 

1,088,693

Treasury stock, at cost, 2023: 6,217,885 shares; 2022: 5,529,383 shares

 

(350,161)

 

(284,275)

Accumulated other comprehensive income

 

5,586

 

7,103

TOTAL STOCKHOLDERS’ EQUITY

 

1,220,733

 

1,151,401

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,437,446

$

2,494,286

See notes to consolidated financial statements.

3

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended 

Nine Months Ended 

September 30

September 30

    

2023

    

2022

    

2023

    

2022

 

(Unaudited)

(in thousands, except share and per share data)

REVENUES

$

1,128,350

$

1,275,730

$

3,337,908

$

3,865,513

OPERATING EXPENSES

 

1,083,259

1,160,394

 

3,229,542

3,521,196

OPERATING INCOME

 

45,091

 

115,336

 

108,366

 

344,317

OTHER INCOME (COSTS)

Interest and dividend income

 

3,946

 

1,127

 

10,604

 

1,579

Interest and other related financing costs

 

(2,236)

 

(1,755)

 

(6,768)

 

(5,558)

Other, net

 

89

 

(189)

 

6,907

 

(3,822)

 

1,799

 

(817)

 

10,743

 

(7,801)

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

 

46,890

 

114,519

 

119,109

 

336,516

INCOME TAX PROVISION

 

11,963

 

25,906

 

25,735

 

78,353

NET INCOME FROM CONTINUING OPERATIONS

34,927

88,613

93,374

258,163

INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX

(10)

229

53,269

2,709

NET INCOME

$

34,917

$

88,842

$

146,643

$

260,872

BASIC EARNINGS PER COMMON SHARE

Continuing operations

$

1.46

$

3.60

$

3.87

$

10.48

Discontinued operations

0.01

2.21

0.11

$

1.45

$

3.61

$

6.08

$

10.59

DILUTED EARNINGS PER COMMON SHARE

Continuing operations

$

1.42

$

3.49

$

3.77

$

10.07

Discontinued operations

0.01

2.15

0.11

$

1.42

$

3.50

$

5.92

$

10.18

AVERAGE COMMON SHARES OUTSTANDING

Basic

 

24,004,255

 

24,605,228

 

24,119,449

 

24,640,706

Diluted

 

24,525,258

 

25,372,755

 

24,756,993

 

25,626,225

See notes to consolidated financial statements.

4

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended 

Nine Months Ended 

September 30

September 30

    

2023

    

2022

    

2023

    

2022

 

(Unaudited)

(in thousands)

NET INCOME

$

34,917

$

88,842

$

146,643

$

260,872

OTHER COMPREHENSIVE INCOME (LOSS), net of tax

Postretirement benefit plans:

Amortization of unrecognized net periodic benefit credit, net of tax of:
(2023 – Three-month period $86, Nine-month period $257)
(2022 – Three-month period $49, Nine-month period $146)

Net actuarial gain

 

(247)

 

(141)

 

(741)

 

(422)

Interest rate swap and foreign currency translation:

Change in unrealized income (loss) on interest rate swap, net of tax of:
(2023 – Three-month period $127, Nine-month period $277)
(2022 – Three-month period $206, Nine-month period $844)

(360)

581

(781)

2,383

Change in foreign currency translation, net of tax of:
(2023 – Three-month period $132, Nine-month period $3)
(2022 – Three-month period $509, Nine-month period $595)

 

(376)

 

(1,436)

 

5

 

(1,682)

OTHER COMPREHENSIVE INCOME (LOSS), net of tax

 

(983)

 

(996)

 

(1,517)

 

279

TOTAL COMPREHENSIVE INCOME

$

33,934

$

87,846

$

145,126

$

261,151

See notes to consolidated financial statements.

5

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2023 and 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 June 30, 2023

 

30,008

$

300

$

335,397

$

1,194,610

 

5,983

$

(325,515)

$

6,569

$

1,211,361

Net income

 

34,917

 

34,917

Other comprehensive loss, net of tax

 

(983)

 

(983)

Issuance of common stock under share-based compensation plans

 

10

 

 

 

Shares withheld for employee tax remittance on share-based compensation

 

(34)

 

(34)

Share-based compensation expense

 

3,005

 

3,005

Purchase of treasury stock

235

(24,646)

(24,646)

Dividends declared on common stock

 

(2,887)

 

(2,887)

Balance at September 30, 2023

 

30,018

$

300

$

338,368

$

1,226,640

 

6,218

$

(350,161)

$

5,586

$

1,220,733

Balance at June 30, 2022

 

29,615

$

296

$

340,035

$

968,417

 

5,109

$

(250,510)

$

4,974

$

1,063,212

Net income

 

88,842

 

88,842

Other comprehensive loss, net of tax

 

(996)

 

(996)

Issuance of common stock under share-based compensation plans

 

133

 

1

 

(1)

 

Shares withheld for employee tax remittance on share-based compensation

 

(6,096)

 

(6,096)

Share-based compensation expense

 

3,175

 

3,175

Purchase of treasury stock

232

(18,880)

(18,880)

Dividends declared on common stock

 

(2,965)

 

(2,965)

Balance at September 30, 2022

 

29,748

$

297

$

337,113

$

1,054,294

 

5,341

$

(269,390)

$

3,978

$

1,126,292

Nine Months Ended September 30, 2023 and 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, 2022

 

29,759

$

298

$

339,582

$

1,088,693

 

5,529

$

(284,275)

$

7,103

$

1,151,401

Net income

 

146,643

 

146,643

Other comprehensive loss, net of tax

(1,517)

(1,517)

Issuance of common stock under share-based compensation plans

259

 

2

(2)

Shares withheld for employee tax remittance on share-based compensation

(10,056)

(10,056)

Share-based compensation expense

8,844

8,844

Purchase of treasury stock

689

(65,886)

(65,886)

Dividends declared on common stock

 

(8,696)

(8,696)

Balance at September 30, 2023

 

30,018

$

300

$

338,368

$

1,226,640

 

6,218

$

(350,161)

$

5,586

$

1,220,733

Balance at December 31, 2021

 

29,360

$

294

$

318,033

$

801,314

 

4,493

$

(194,273)

$

3,699

$

929,067

Net income

 

260,872

 

260,872

Other comprehensive income, net of tax

279

279

Issuance of common stock under share-based compensation plans

388

 

3

(3)

Shares withheld for employee tax remittance on share-based compensation

(15,733)

(15,733)

Share-based compensation expense

9,816

9,816

Purchase of treasury stock

634

(50,117)

(50,117)

Forward contract for accelerated share repurchases

25,000

214

(25,000)

Dividends declared on common stock

 

(7,892)

(7,892)

Balance at September 30, 2022

 

29,748

$

297

$

337,113

$

1,054,294

 

5,341

$

(269,390)

$

3,978

$

1,126,292

See notes to consolidated financial statements.

6

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended 

September 30

    

2023

    

2022

 

(Unaudited)

(in thousands)

OPERATING ACTIVITIES

Net income

$

146,643

$

260,872

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

Depreciation and amortization

 

98,711

 

95,169

Amortization of intangibles

 

9,631

 

9,691

Share-based compensation expense

 

8,590

 

9,816

Provision for losses on accounts receivable

 

2,621

 

5,065

Change in deferred income taxes

 

(10,880)

 

3,745

(Gain) loss on sale of property and equipment

 

1,134

 

(9,759)

Gain on sale of subsidiary

(402)

Pre-tax gain on sale of discontinued operations

(70,201)

Lease impairment charges

30,162

Change in fair value of contingent consideration

(12,800)

810

Change in fair value of equity investment

(3,739)

Changes in operating assets and liabilities:

Receivables

 

43,478

 

(54,889)