ArcBest Announces Fourth Quarter 2022 and Record-Setting Full Year 2022 Results
Advancing Strategic Initiatives to Better Serve Customers,
Drive Efficiencies and Enhance Value
Celebrates 100 Years of Delivering Cutting-Edge Supply Chain
and Logistics Solutions to Customers Worldwide
Delivered fourth quarter 2022 net income of $37.3 million, or $1.48 per diluted share, with non-GAAP fourth quarter 2022 net income of $61.6 million, or $2.45 per diluted share.
Generated full year 2022 net income of $298.2 million, or $11.69 per diluted share. On a non-GAAP basis, full year 2022 net income was $348.4 million, or $13.66 per diluted share.
Achieved a second consecutive year of record-setting annual revenue and net income.
Returned $76 million to shareholders through stock repurchase program and dividends paid.
Continued strong results will enable ABF Freight to pay a profit-sharing bonus to qualifying union-represented employees for the fourth year in a row.
FORT SMITH, Ark., Feb. 3, 2023 /PRNewswire/ -- ArcBest® (Nasdaq: ARCB), a leader in supply chain logistics, today reported fourth quarter 2022 revenue of $1.2 billion, reflecting an increase of $59.0 million compared to fourth quarter 2021. Fourth quarter 2022 results include the impact of a full quarter of the operations of MoLo Solutions, LLC ("MoLo"), for which the acquisition closed on November 1, 2021.
ArcBest's fourth quarter 2022 operating income was $51.2 million and net income was $37.3 million, or $1.48 per diluted share, compared to fourth quarter 2021 operating income of $86.9 million and net income of $65.5 million, or $2.47 per diluted share.
Excluding certain items in both periods as identified in the attached reconciliation tables, fourth quarter 2022 non-GAAP operating income was $82.7 million, compared to $102.2 million in the prior-year period. On a non-GAAP basis, net income was $61.6 million, or $2.45 per diluted share, in fourth quarter 2022 compared to $73.9 million, or $2.79 per diluted share, in fourth quarter 2021.
ArcBest's full year 2022 revenue totaled a record $5.3 billion compared to $4.0 billion in 2021. Net income was $298.2 million, or $11.69 per diluted share, compared to net income of $213.5 million, or $7.98 per diluted share in 2021. On a non-GAAP basis, ArcBest's 2022 net income was $348.4 million, or $13.66 per diluted share, compared to net income of $228.0 million, or $8.52 per diluted share, in 2021.
"I am pleased to report that ArcBest exceeded $5 billion in annual revenue for the first time and delivered the highest annual earnings per share in company history," said Judy R. McReynolds, ArcBest chairman, president and CEO. "Our fourth quarter and record-breaking full-year 2022 results are directly related to our relentless pursuit of excellence. Despite the challenges in 2022 as a result of ongoing macro trends, the ArcBest team remained focused on serving our customers and advancing our strategic initiatives. We see tremendous opportunity ahead as we celebrate our 100th anniversary in 2023 – an impressive milestone that would not be possible without our dedicated people, who are at the heart of our success. Looking forward, we are confident that our continued investments in ArcBest's people, our unrivaled network of integrated logistics solutions and innovative mindset will drive continued growth, greater efficiency and value creation for generations to come."
Fourth Quarter Results of Operations Comparisons
Fourth Quarter 2022 Versus Fourth Quarter 2021
Revenue of $711.4 million compared to $683.5 million, a per-day increase of 4.9 percent.
Total tonnage per day decrease of 5.5 percent, including a decrease of 1.6 percent in LTL-rated weight per shipment.
Total shipments per day increase of 0.8 percent.
Total billed revenue per hundredweight increased 9.3 percent and was positively impacted by higher fuel surcharges. Revenue per hundredweight on LTL-rated business, excluding fuel surcharge, improved by a percentage in the low single digits.
Operating income of $75.1 million compared to $83.1 million. On a non-GAAP basis, operating income of $81.4 million compared to $89.5 million.
Monthly business levels in ArcBest's Asset-Based business slowed throughout the fourth quarter, resulting in moderate year-over-year revenue growth associated with flat, total daily shipments combined with a decrease in total freight tonnage and an increase in price. Market conditions and diminished customer demand contributed to a decrease in the size of shipments moving through the Asset-Based network. Total Asset-Based freight trends were weaker in the quarter. However, year-over-year revenue and operating statistics on LTL-rated shipments were better than those of Truckload-rated spot shipments, including household goods U-Pack moves, whose demand was impacted by current market conditions and revenue optimization actions.
Fourth quarter pricing levels were solid and followed historic LTL price increases in previous quarters. ArcBest's focus on maximizing yield management opportunities continues. During the current period of reduced business levels, ArcBest is focused on effectively managing personnel, equipment and other network resources to provide superior customer service, while controlling costs and working to improve profit margins. Optimization initiatives in the Asset-Based network are positively contributing to efficiency improvements and reduced costs.
As a result of the operating ratio achieved in 2022, ABF Freight will pay a 3% profit-sharing bonus to qualifying union-represented employees – the maximum amount provided in its collective bargaining agreement.
"Our integrated solutions are a differentiator for us and the team at ABF Freight is a key part of that. It's because of their efforts that we're able to pay a profit-sharing bonus for the fourth year in a row, and at the highest level," added McReynolds.
Fourth Quarter 2022 Versus Fourth Quarter 2021 (including the results of MoLo beginning November 1, 2021)
Revenue of $572.4 million compared to $541.2 million, a per-day increase of 6.6 percent.
Operating loss of $9.6 million, including a charge of $17.5 million associated with the increase in fair value of the contingent earnout consideration recorded for the November 1, 2021 MoLo acquisition, compared to operating income of $13.9 million. On a non–GAAP basis, operating income of $11.1 million compared to $16.4 million.
Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") of $13.4 million compared to $18.6 million, as detailed in the attached non-GAAP reconciliation tables.
In the ArcBest Asset-Light segment, following growth earlier in the year, total revenue levels during the recent quarter were comparable to the previous year period. Fourth quarter 2022 benefited from a full quarter of operations of MoLo; however, revenue levels versus the prior year quarter were impacted by a slowdown in customer shipping volumes, softness in market rates and changes in business mix, including fewer expedite and international shipments. Daily fourth quarter Asset-Light truckload shipments, compared to the recent third quarter, increased by a percentage in the high-single digits. Enhanced truckload capabilities as a result of the MoLo acquisition are an essential part of the creative logistics solutions ArcBest is delivering to customers during a more challenging economic environment. In addition, year-over-year growth in managed transportation services was a positive contributor to quarterly revenue totals. Fourth quarter operating margins were pressured as sequential revenue levels decreased as a result of weakening market conditions and three fewer workdays versus third quarter 2022, while operating expenses, excluding purchased transportation and the increase in fair value of contingent earnout consideration related to the MoLo acquisition, were at similar levels to those in the recent third quarter. Moving forward, ArcBest Asset-Light operating costs will be monitored and managed in response to customer demand and on-going market conditions.
Increased event volume combined with improved revenue per event contributed to higher quarterly revenue for the FleetNet segment and an increase in operating income over the prior year's fourth quarter.
Full Year Results of Operations Comparisons
Full Year 2022 Versus Full Year 2021
Revenue of $3.0 billion, compared to $2.6 billion, a per-day increase of 17.0 percent.
Tonnage per day increase of 1.6 percent.
Shipments per day increase of 1.5 percent.
Total billed revenue per hundredweight increase of 14.5 percent, positively impacted by higher fuel surcharges.
Operating income of $381.1 million compared to $260.7 million. On a non-GAAP basis, operating income of $409.6 million compared to $288.3 million.
Profit-sharing bonus to qualifying union-represented ABF Freight employees of approximately $16.2 million, an increase of approximately $1 million over the amount paid for 2021.
Full Year 2022 Versus Full Year 2021 (including the results of MoLo beginning November 1, 2021)
Revenue of $2.5 billion compared to $1.6 billion, a per-day increase of 59.7 percent.
Operating income of $58.6 million, including a charge of $18.3 million associated with the increase in fair value of the contingent earnout consideration recorded for the November 1, 2021 MoLo acquisition, compared to operating income of $50.9 million. On a non-GAAP basis, operating income of $89.7 million compared to $49.3 million.
Adjusted EBITDA of $99.1 million compared to $57.1 million.
In 2022, total net capital expenditures, including equipment financed, equaled $211 million. Net capital expenditures in 2022 included $93 million of revenue equipment, the majority of which was for ArcBest's Asset-Based operation. Revenue equipment purchases in 2022 were lower than the original estimate because of supply chain-related manufacturing delays and cancellations, primarily on new road tractors and trailers. Depreciation and amortization costs on property, plant and equipment were $127 million in 2022.
Share Repurchase and Quarterly Dividend Programs
ArcBest generated solid cash from operations in 2022 and continued to return capital to shareholders through its share repurchase and dividend programs. In 2022, 822,106 ArcBest shares were purchased for $65 million. Currently, $26.5 million remains available under the authorized program for future common stock purchases. In April 2022, the ArcBest Board of Directors authorized a fifty percent increase in ArcBest's quarterly cash dividend to twelve cents per share from the previous eight cents per share.
‡ - The ArcBest and FleetNet reportable segments, combined, represent Asset-Light operations.
ArcBest will host a conference call with company executives to discuss the 2022 fourth quarter and full year 2022 results. The call will be today, Friday, February 3, at 9:30 a.m. EST (8:30 a.m. CST). Interested parties are invited to listen by calling (877) 231-8701 or by joining the webcast which can be found on ArcBest's website at arcb.com. Slides to accompany this call are included in Exhibit 99.3 of the Form 8-K filed on February 3, 2023, will be posted and available to download on the company's website prior to the scheduled conference time, and will be included in the webcast. Following the call, a recorded playback will be available through the end of the day on March 15, 2023. To listen to the playback, dial (800) 633–8284 or (402) 977–9140 (for international callers). The conference call ID for the playback is 22025410. The conference call and playback can also be accessed, through March 15, 2023, on ArcBest's website at arcb.com.
ArcBest® (Nasdaq: ARCB) is a multibillion-dollar integrated logistics company that helps keep the global supply chain moving. Founded in 1923 and now with over 15,000 employees across more than 250 campuses and service centers, the company is a logistics powerhouse, fueled by the simple notion of finding a way to get the job done. Through innovative thinking, agility and trust, ArcBest leverages its full suite of shipping and logistics solutions to meet customers' critical needs, each and every day. For more information, visit arcb.com.
The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: Certain statements and information in this press release concerning results for the three and twelve months ended December 31, 2022 may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding (i) our expectations about our intrinsic value or our prospects for growth and value creation and (ii) our financial outlook, position, strategies, goals, and expectations. 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 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: the effects of widespread outbreak of an illness or disease, including the COVID-19 pandemic, or any other public health crisis, as well as regulatory measures implemented in response to such events; external events which may adversely affect us or the third parties who provide services for us, for which our business continuity plans may not adequately prepare us, including acts of war or terrorism or military conflicts; data breach, cybersecurity incidents, and/or failure of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely; interruption or failure of third-party software or information technology systems or licenses; untimely or ineffective development and implementation of, or failure to realize potential benefits associated with, new or enhanced technology or processes, including the pilot test program at ABF Freight and our investments in human-centered remote operation software; the loss or reduction of business from large customers; the ability to manage our cost structure, and the timing and performance of growth initiatives; the cost, integration, and performance of any recent or future acquisitions, including the acquisition of MoLo Solutions, LLC, and the inability to realize the anticipated benefits of the acquisition within the expected time period or at all; market fluctuations and interruptions affecting the price of our stock; maintaining our corporate reputation and intellectual property rights; nationwide or global disruption in the supply chain resulting in increased volatility in freight volumes; competitive initiatives and pricing pressures; 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, fuel, and related taxes; 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; relationships with employees, including unions, and our ability to attract, retain, and develop employees; 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; union employee wages and benefits, including changes in required contributions to multiemployer plans; availability and cost of reliable third-party services; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; litigation or claims asserted against us; governmental regulations; environmental laws and regulations, including emissions-control regulations; default on covenants of financing arrangements and the availability and terms of future financing arrangements; self-insurance claims and insurance premium costs; potential impairment of goodwill and intangible assets; 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; increasing costs due to inflation and rising interest rates; seasonal fluctuations and adverse weather conditions; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest Corporation's public filings with the Securities and Exchange Commission (the "SEC").
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the 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® and its reportable segments.
Three Months Ended
($ thousands, except share and per share data)
OTHER INCOME (COSTS)
Interest and dividend income
Interest and other related financing costs
INCOME BEFORE INCOME TAXES
INCOME TAX PROVISION
EARNINGS PER COMMON SHARE
AVERAGE COMMON SHARES OUTSTANDING
($ thousands, except share data)
Cash and cash equivalents
Accounts receivable, less allowances (2022 - $14,172; 2021 - $13,226)
Other accounts receivable, less allowances (2022 - $713; 2021 - $690)
Prepaid and refundable income taxes
TOTAL CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT
Land and structures
Service, office, and other equipment
Less allowances for depreciation and amortization
INTANGIBLE ASSETS, NET
OPERATING RIGHT-OF-USE ASSETS
DEFERRED INCOME TAXES
OTHER LONG-TERM ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY