Wednesday, February 04, 2015

ArcBest Corporation Announces Improved Fourth Quarter 2014 Results And Full Year 2014 Results

·        Fourth quarter 2014 net income increased 41 percent to $14.5 million, or $0.53 per share.  Excluding certain identified items, fourth quarter 2014 net income increased 71 percent.

·        Solid fourth quarter business growth at ABF FreightSM resulted in an 11 percent increase in revenue and improved operating margins.

·        Fourth quarter revenue at ArcBest’s emerging businesses increased by 25 percent from the previous year and EBITDA increased by 14 percent.

·        Full year 2014 revenue at ArcBest Corporation increased 14 percent to $2.6 billion with 27 percent of the total revenue generated by the emerging businesses.

·        Full year 2014 net income was $46.2 million, nearly three times full year 2013 net income of $15.8 million.

ArcBest Corporation reported improved fourth quarter 2014 results reflecting improvements at ABF Freight and continued strong revenue growth at its emerging businesses – ABF Logistics, Panther Premium Logistics, FleetNet America  and ABF Moving.

Fourth Quarter 2014 Results

ArcBest’s revenue was $664.8 million compared to revenue of $578.5 million in the fourth quarter of 2013, an increase of 15 percent.  Net income increased 41 percent to $14.5 million, or $0.53 per share compared to fourth quarter 2013 net income of $10.3 million, or $0.38 per share.  As shown in the attached reconciliation tables, both of these periods were impacted by favorable effective tax rates and adjustments for certain other items.  On an adjusted basis, ArcBest’s fourth quarter 2014 net income increased 71 percent compared to fourth quarter 2013 net income of $8.4 million, or $0.31 per share.

ABF Freight’s revenue was $485.9 million, an 11 percent increase over fourth quarter 2013 revenue of $436.7 million.  Operating income increased to $14.7 million from $9.9 million in fourth quarter 2013.  ABF Freight’s operating ratio was 97.0 percent versus 97.7 percent in 2013. Excluding adjustments for certain other items in the attached reconciliation table, operating income increased to $15.8 million from $7.7 million in fourth quarter 2013, and ABF Freight’s fourth quarter 2014 operating ratio was 96.8 percent versus 98.2 percent in the year-ago period.

Revenue for ArcBest’s emerging, non-asset-based businesses increased 25 percent over the same period of 2013.  Earnings before interest, taxes, depreciation and amortization (“EBITDA”) at the non-asset-based businesses increased 14 percent to $9.4 million compared to EBITDA of $8.2 million in fourth quarter 2013.  The percentage of year-over-year EBITDA improvement is below that of the first three quarters of 2014.  This is related to personnel and IT investments made to enhance continued growth in these businesses and due to a particularly strong fourth quarter result last year at Panther.

Full Year 2014 Results

“We made significant progress this year getting ABF Freight on a firmer path toward sustained, historical profitability and communicating with our customers about the full array of transportation and logistics solutions we offer through all of the ArcBest companies,” said ArcBest President and CEO Judy R. McReynolds.  “Changing our company name, embracing “The Skill & The Will” positioning, and integrating customer offerings at ABF Freight, ABF Logistics and Panther through our Enterprise Customer Solutions group are all examples of how we serve customers better today than ever before.”

ArcBest’s revenue totaled $2.6 billion, an increase of 14 percent compared to $2.3 billion in 2013. Net income was $46.2 million, or $1.69 per share, approximately three times net income of $15.8 million, or $0.59 per share in 2013.  Excluding adjustments for certain other items in the attached reconciliation table, ArcBest had 2014 net income of $49.5 million, or $1.82 per share compared to net income of $14.7 million, or $0.55 per share in 2013.

ABF Freight’s revenue was $1.9 billion, a 10 percent increase over $1.8 billion in 2013. As expected, ABF Freight’s profitability improved as a result of its November 2013 union labor contract that reduced expenses and allowed ABF Freight to be more cost competitive with its LTL industry peers.  As outlined in the attached reconciliation table, ABF Freight’s 2014 adjusted operating income increased to $55.4 million versus $11.9 million in 2013, and its adjusted operating ratio improved by over two percentage points to 97.1 percent.

On a combined basis, ArcBest’s emerging businesses had strong revenue growth and margin improvement while positively contributing to ArcBest’s total results.  These businesses have grown to be 27 percent of ArcBest’s revenue, nearly four times the percentage of total corporate revenue just five years ago.  Combined EBITDA for the emerging businesses in 2014 increased 45 percent to $40.5 million.

Capital Expenditures

In 2014, total net capital expenditures equaled $86 million, including approximately $65 million of revenue equipment for ABF Freight and Panther.  Depreciation and amortization costs on fixed assets equaled $82 million.

For 2015, total net capital expenditures are estimated to be approximately $200 million. This includes revenue equipment purchases of $110 million at ABF Freight and Panther.  Expected real estate expenditures, totaling approximately $55 million, are for previously disclosed growth initiatives at ArcBest and its operating subsidiaries.  These include freight service center construction, call center facilities and needed office buildings, a portion of which replaces leased space.  The remainder of expected capital expenditures includes the costs of other terminal and handling equipment at ABF Freight and technology investments across the corporation. ArcBest’s depreciation and amortization costs on fixed assets in 2015 are estimated to be in a range of $95 million to $100 million.

The majority of the revenue equipment purchases are for road and city tractors and trailers at ABF Freight needed to replace both existing equipment and local rentals.  In order to more rapidly replace used equipment and to reduce maintenance costs, ABF Freight is increasing the number of tractor and trailer replacements in 2015.  In addition, the majority of road tractors ABF Freight is purchasing this year will be equipped with automated manual transmissions.  In conjunction with the transportation industry’s move toward this technology, ABF Freight expects that these tractors will contribute to better fuel economy, reduced maintenance costs and an improved ability to attract new employees to what is already one of the best driver jobs in the industry.

Closing Comments

“In addition to seeing improvements at ABF Freight, we are truly excited about the growth opportunities before us in 2015 in many areas, including truckload brokerage, expansion of premium logistics offerings and ongoing collaboration across all of the ArcBest companies,” said McReynolds. “This past year was one of marked change for our company, and we now have many of the strategies and tools in place necessary to unlock the innovation and market share growth required for the next level of success at ArcBest.  Our improved operational and financial performance, along with ArcBest’s 2014 stock appreciation and previously announced dividend increase, benefit our employees, our customers and our shareholders.”

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