8-K

June 30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549-1004

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 31, 2019 (October 31, 2019)

ARCBEST CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	0-19969	71-0673405
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS 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)

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

☐ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.☐

ITEM 2.02 – RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On October 31, 2019, ArcBest^® (Nasdaq: ARCB) (the “Company”) issued a press release announcing its unaudited third quarter 2019 results. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference. Additional supplemental and other information to be used in connection with the scheduled conference call to discuss the third quarter results is furnished as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.

The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP financial measures and ratios and other information utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing the Company’s core operating performance and provide meaningful comparisons between current and prior period results, as well as important information regarding performance trends. The use of certain non-GAAP measures improves comparability in analyzing ArcBest’s performance because it removes the impact of items from operating results that, in management’s opinion, do not reflect ArcBest’s core operating performance.

The press release in Exhibit 99.1 and the supplemental and other information in Exhibit 99.2 include certain non-GAAP information. Certain information discussed in the scheduled conference call could also be considered non-GAAP measures. Reconciliations of the non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included in Exhibit 99.1 herein, including reconciliations of GAAP earnings and earnings per share to non-GAAP financial measures, reconciliations of GAAP to non-GAAP effective tax rates, and calculations of adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”).

Management believes EBITDA and Adjusted EBITDA to be relevant and useful information as EBITDA is a standard measure commonly reported and widely used by analysts, investors and others to measure financial performance and ability to service debt obligations. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in ArcBest’s credit agreement. Other companies may calculate EBITDA and Adjusted EBITDA differently; therefore, ArcBest’s calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, ArcBest’s reported results. These financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as determined under GAAP.

ITEM 9.01 – FINANCIAL STATEMENTS AND EXHIBITS

Exhibit No.	Description of Exhibit
99.1	Press release of ArcBest dated October 31, 2019
99.2	Supplemental and other information
104	Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ARCBEST CORPORATION
		(Registrant)
Date:	October 31, 2019	/s/ Michael R. Johns
		Michael R. Johns
		Vice President – General Counsel
		and Corporate Secretary

EX-99.1

Exhibit 99.1

Investor Relations Contact: David Humphrey	Media Contact: Kathy Fieweger
Title: Vice President – Investor Relations	Phone: 479-719-4358
Phone: 479-785-6200	Email: kfieweger@arcb.com
Email: dhumphrey@arcb.com

ArcBest® Announces Third Quarter 2019 Results

· Third quarter 2019 revenue of $787.6 million, and net income of $16.3 million, or $0.62 per diluted share.  On a non‑GAAP1 basis, third quarter 2019 net income was $27.0 million, or $1.02 per diluted share.

· Asset-Based yield improvement despite a decrease in shipment and tonnage levels 

· Asset-Light revenue and operating income decreased due to lower demand

FORT SMITH, Arkansas, October 31, 2019 — ArcBest® (Nasdaq: ARCB), a leading logistics company with creative problem solvers who deliver innovative solutions, today reported third quarter 2019 revenue of $787.6 million compared to third quarter 2018 revenue of $826.2 million.  Third quarter 2019 operating income was $31.2 million compared to operating income of $56.1 million in third quarter last year.  Third quarter net income was $16.3 million, or $0.62 per diluted share compared to third quarter 2018 net income of $40.8 million, or $1.52 per diluted share.

Excluding certain items in both periods, as identified in the attached reconciliation tables, including final nonunion pension charges of $6.0 million, or $0.23 per diluted share, eliminating any further nonunion pension expense, non‑GAAP net income was $27.0 million, or $1.02 per diluted share, in third quarter 2019 compared to third quarter 2018 net income of $40.0 million, or $1.49 per diluted share. 

“While below last year’s record-setting levels, the third quarter represented one of the best performances achieved for that period in recent history as we continued to see rational pricing amid softer demand compared with last year,” said Chairman, President & CEO Judy R. McReynolds. “Revenue for expedite and truckload brokerage services declined as available capacity increased, which has been the case throughout the year, while our managed transportation solutions revenue continued to grow as a result of our team’s ability to provide valued expertise.”

Asset-Based

Results of Operations

Third Quarter 2019 Versus Third Quarter 2018

· Revenue of $565.6 million compared to $585.3 million,  a per-day decrease of 4.1 percent.

· Tonnage per day decrease of 4.6 percent, with a ten percent decrease in LTL‑rated freight offset by a double digit percentage increase in truckload‑rated freight.

· Shipments per day decrease of 3.9 percent.    

· Total weight per shipment decreased 0.7 percent with a decrease in the average LTL‑rated weight per shipment of approximately 6 percent.

· Total billed revenue per hundredweight increased 1.5 percent.  Excluding fuel surcharge, the percentage increase on LTL‑rated freight was in the high‑single digits.

· Operating income of $31.7 million and an operating ratio of 94.4 percent compared to operating income of $50.2 million and an operating ratio of 91.4 percent.  On a non-GAAP basis, operating income of $38.5 million and an operating ratio of 93.2 percent compared to operating income of $51.2 million and an operating ratio of 91.2 percent.

1. U.S. Generally Accepted Accounting Principles

1

Reduced customer demand during a more moderate economic period resulted in fewer third quarter shipments and lower total freight tonnage in the Asset‑Based operating segment compared to the same period last year.  The lower business levels experienced during the third quarter reflect a reduction in LTL‑rated tonnage partially offset by an increase in TL‑rated, spot shipments.  This Asset‑Based business mix, combined with a decrease in the size of the average LTL‑rated shipment, contributed to a reduction in total third quarter Asset‑Based revenue.  Yield management initiatives continue to generate positive results.  The improvement in third quarter total revenue per hundredweight included additional, solid increases in average LTL pricing above a strong pricing period in 2018.

Lower freight levels adversely impacted productivity in city pickup, dock handling and final shipment delivery contributing to cost increases in these operational areas.  Despite a reduction in fuel expense, increased repair and parts costs contributed to higher third quarter equipment maintenance costs.  Third quarter linehaul costs were below the prior year due to improved utilization of owned equipment combined with reductions in the use of rail and other outside carrier resources.

Asset-Light2

Results of Operations

Third Quarter 2019 Versus Third Quarter 2018

· Revenue of $253.7 million compared to $255.9 million.

· Operating income of $3.6 million compared to operating income of $11.1 million.  On a non-GAAP basis, operating income of $3.7 million compared to operating income of $9.1 million.

· Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $6.6 million compared to Adjusted EBITDA of $14.9 million.

A reduction in both total shipments and average revenue per shipment associated with lower market demand resulted in a third quarter revenue decline in the Asset-Light ArcBest segment compared to last year.  As seen throughout this year relative to 2018, expedite and truckload brokerage services were the primary reasons for the overall reduction in revenue.  Current market conditions have impacted customer pricing and freight mix.  This, combined with purchased transportation costs that were comparable to those experienced in last year’s higher revenue environment, put pressure on third quarter margins and reduced Asset-Light operating income.  Managed transportation services were a significant positive contributor to Asset-Light results as the recent trend of solid demand for these value-added logistics services continued.  Household goods shipments handled within the Asset‑Light business increased and were another positive contributor to this segment’s revenue and profitability totals.  At FleetNet, total event growth resulted in improved third quarter operating income.

Closing Comments

“Results for the first nine months remained solid though below last year’s record-setting pace, as our customers’ need for complex supply chain solutions aligns well with the broad array of services and expertise we provide,” said McReynolds. “We expect the trends that began in the first quarter, including more available capacity and softer market demand, to remain prevalent for the rest of the year. We will work to reduce costs where prudent while still investing in innovative technology that enables a best-in-class customer experience and offers the optimum benefit and improved efficiency to ArcBest.”

2. The ArcBest and FleetNet reportable segments, combined, represent Asset-Light operations.

2

Conference Call

ArcBest will host a conference call with company executives to discuss the 2019 third quarter results. The call will be on Friday, November 1st at 9:30 a.m. EDT (8:30 a.m. CDT). Interested parties are invited to listen by calling (800) 931‑4071. Following the call, a recorded playback will be available through the end of the day on December 15, 2019. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21930608. The conference call and playback can also be accessed, through December 15, 2019, on ArcBest’s website at arcb.com.

Call participants can submit questions this afternoon prior to the conference call by emailing them to ir@arcb.com.  On the call, responses will be provided to as many questions as possible in the time available.

About ArcBest

ArcBest® (Nasdaq: ARCB) is a leading logistics company with creative problem solvers who deliver integrated solutions.  We'll find a way to deliver knowledge, expertise and a can-do attitude with every shipment and supply chain solution, household move or vehicle repair.  At ArcBest, we’re More Than LogisticsSM.  For more information, visit arcb.com.

Forward-Looking Statements

Certain statements and information in this press release concerning results for the three months ended September 30, 2019 may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  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: a failure of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data breach, and/or cybersecurity incidents; untimely or ineffective development and implementation of new or enhanced technology or processes, including the pilot test program at ABF Freight; failure to realize potential benefits associated with new or enhanced technology or processes, including the pilot test program at ABF Freight, and any write-offs associated therewith; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; relationships with employees, including unions, and our ability to attract and retain 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; the cost, timing, and performance of growth initiatives; 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; availability and cost of reliable third-party services; governmental regulations; environmental laws and regulations, including emissions-control regulations; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; 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; maintaining our intellectual property rights, brand, and corporate reputation; the loss of key employees or the inability to execute succession planning strategies; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; self-insurance claims and insurance premium costs; the cost, integration, and performance of any recent or future acquisitions; 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; 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 and fuel and related taxes; potential impairment of goodwill and intangible assets; greater than anticipated funding requirements for our nonunion defined benefit pension plan; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; antiterrorism and safety measures; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest’s public filings with the Securities and Exchange Commission (“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. 

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ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2019		2018		2019		2018
	(Unaudited)
	($ thousands, except share and per share data)
REVENUES	$	787,563	$	826,158	$	2,270,892	$	2,319,509
OPERATING EXPENSES(1)		756,355		770,103		2,195,893		2,247,573
OPERATING INCOME		31,208		56,055		74,999		71,936
OTHER INCOME (COSTS)
Interest and dividend income		1,768		1,120		4,862		2,360
Interest and other related financing costs		(2,900)		(2,470)		(8,593)		(6,542)
Other, net		(6,734)		(714)		(7,770)		(4,038)
		(7,866)		(2,064)		(11,501)		(8,220)
INCOME BEFORE INCOME TAXES		23,342		53,991		63,498		63,716
INCOME TAX PROVISION		7,072		13,215		17,964		11,753
NET INCOME	$	16,270	$	40,776	$	45,534	$	51,963
EARNINGS PER COMMON SHARE(2)
Basic	$	0.64	$	1.58	$	1.78	$	2.02
Diluted	$	0.62	$	1.52	$	1.72	$	1.94
AVERAGE COMMON SHARES OUTSTANDING
Basic		25,527,982		25,697,509		25,550,365		25,670,435
Diluted		26,416,595		26,795,659		26,461,668		26,708,259
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.08	$	0.08	$	0.24	$	0.24

¹⁾ Includes a one-time charge of $37.9 million for the nine months ended September 30, 2018 for the multiemployer pension fund withdrawal liability resulting from the transition agreement ABF Freight, Inc. entered into with the New England Teamsters and Trucking Industry Pension Fund.

²⁾ ArcBest uses the two-class method for calculating earnings per share. This method requires an allocation of dividends paid and a portion of undistributed net income (but not losses) to unvested restricted stock for calculating per share amounts.

4

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

	September 30		December 31
	2019		2018
	(Unaudited)		Note
	($ thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	183,838	$	190,186
Short-term investments		124,257		106,806
Accounts receivable, less allowances (2019 - $5,548; 2018 - $7,380)		292,935		297,051
Other accounts receivable, less allowances (2019 - $469; 2018 - $806)		18,122		19,146
Prepaid expenses		25,365		25,304
Prepaid and refundable income taxes		8,186		1,726
Other		5,285		9,007
TOTAL CURRENT ASSETS		657,988		649,226
PROPERTY, PLANT AND EQUIPMENT
Land and structures		339,298		339,640
Revenue equipment		902,289		858,251
Service, office, and other equipment		229,691		199,230
Software		146,789		138,517
Leasehold improvements		10,212		9,365
		1,628,279		1,545,003
Less allowances for depreciation and amortization		948,205		913,815
		680,074		631,188
GOODWILL		108,320		108,320
INTANGIBLE ASSETS, NET		65,583		68,949
OPERATING RIGHT-OF-USE ASSETS		67,404		—
DEFERRED INCOME TAXES		6,128		7,468
OTHER LONG-TERM ASSETS		85,135		74,080
	$	1,670,632	$	1,539,231
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	160,054	$	143,785
Income taxes payable		198		1,688
Accrued expenses		234,863		243,111
Current portion of long-term debt		50,197		54,075
Current portion of operating lease liabilities		18,492		—
Current portion of pension and postretirement liabilities		1,921		8,659
TOTAL CURRENT LIABILITIES		465,725		451,318
LONG-TERM DEBT, less current portion		248,223		237,600
OPERATING LEASE LIABILITIES, less current portion		52,782		—
PENSION AND POSTRETIREMENT LIABILITIES, less current portion		32,059		31,504
OTHER LONG-TERM LIABILITIES		38,151		44,686
DEFERRED INCOME TAXES		70,066		56,441
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2019: 28,801,025 shares; 2018: 28,684,779 shares		288		287
Additional paid-in capital		331,773		325,712
Retained earnings		540,778		501,389
Treasury stock, at cost, 2019: 3,299,669 shares; 2018: 3,097,634 shares		(101,583)		(95,468)
Accumulated other comprehensive loss		(7,630)		(14,238)
TOTAL STOCKHOLDERS’ EQUITY		763,626		717,682
	$	1,670,632	$	1,539,231

Note:  The balance sheet at December 31, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

5

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30
	2019		2018
	Unaudited
	($ thousands)
OPERATING ACTIVITIES
Net income	$	45,534	$	51,963
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		79,967		78,305
Amortization of intangibles		3,365		3,394
Pension settlement expense, including termination expense		8,135		1,603
Share-based compensation expense		7,268		6,185
Provision for losses on accounts receivable		832		1,937
Change in deferred income taxes		14,099		3,697
Gain on sale of property and equipment		(1,384)		(188)
Gain on sale of subsidiaries		—		(1,945)
Changes in operating assets and liabilities:
Receivables		4,216		(47,287)
Prepaid expenses		(265)		1,013
Other assets		(4,236)		(4,826)
Income taxes		(7,883)		5,675
Operating right-of-use assets and lease liabilities, net		526		—
Multiemployer pension fund withdrawal liability(1)		(435)		22,744
Accounts payable, accrued expenses, and other liabilities		(11,726)		51,309
NET CASH PROVIDED BY OPERATING ACTIVITIES		138,013		173,579
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net of financings		(69,773)		(39,249)
Proceeds from sale of property and equipment		4,748		2,917
Proceeds from sale of subsidiaries		—		4,680
Purchases of short-term investments		(105,747)		(67,121)
Proceeds from sale of short-term investments		88,730		47,878
Capitalization of internally developed software		(8,500)		(7,411)
NET CASH USED IN INVESTING ACTIVITIES		(90,542)		(58,306)
FINANCING ACTIVITIES
Payments on long-term debt		(43,773)		(49,967)
Proceeds from notes payable		9,552		—
Net change in book overdrafts		(5,570)		(1,975)
Deferred financing costs		(562)		(202)
Payment of common stock dividends		(6,145)		(6,176)
Purchases of treasury stock		(6,115)		(201)
Payments for tax withheld on share-based compensation		(1,206)		(88)
NET CASH USED IN FINANCING ACTIVITIES		(53,819)		(58,609)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(6,348)		56,664
Cash and cash equivalents at beginning of period		190,186		120,772
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	183,838	$	177,436
NONCASH INVESTING ACTIVITIES
Equipment financed	$	40,966	$	71,575
Accruals for equipment received	$	18,949	$	438
Lease liabilities arising from obtaining right-of-use assets	$	26,810	$	—

1) The nine months ended September 30, 2018 includes a one-time charge related to the multiemployer pension plan withdrawal liability.

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ARCBEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2019				2018				2019				2018
	Unaudited
	($ thousands, except percentages)
REVENUES
Asset-Based	$	565,621			$	585,290			$	1,631,348			$	1,626,644
ArcBest		199,758				205,449				554,135				587,369
FleetNet		53,976				50,494				158,957				145,045
Total Asset-Light		253,734				255,943				713,092				732,414
Other and eliminations		(31,792)				(15,075)				(73,548)				(39,549)
Total consolidated revenues	$	787,563			$	826,158			$	2,270,892			$	2,319,509
OPERATING EXPENSES
Asset-Based
Salaries, wages, and benefits	$	296,503	52.4	%	$	292,082	49.9	%	$	873,795	53.6	%	$	848,611	52.2	%
Fuel, supplies, and expenses(1)		65,738	11.6			63,936	10.9			195,502	12.0			191,163	11.7
Operating taxes and licenses		12,865	2.3			12,261	2.1			37,477	2.3			35,927	2.2
Insurance		7,646	1.4			9,448	1.6			23,235	1.4			24,055	1.5
Communications and utilities		5,064	0.9			4,308	0.7			14,181	0.9			12,964	0.8
Depreciation and amortization		23,776	4.2			22,200	3.8			66,370	4.0			64,492	4.0
Rents and purchased transportation		61,102	10.8			70,946	12.1			167,234	10.2			180,332	11.1
Shared services(1)		56,031	9.9			57,472	9.8			161,664	9.9			158,042	9.7
Multiemployer pension fund withdrawal liability charge(2)		—	—			—	—			—	—			37,922	2.3
Gain on sale of property and equipment		(82)	—			(123)	—			(1,703)	(0.1)			(522)	—
Innovative technology costs(1)(3)		4,664	0.8			1,080	0.2			9,200	0.6			2,947	0.2
Other(1)		592	0.1			1,530	0.3			2,878	0.2			3,778	0.2
Total Asset-Based		533,899	94.4	%		535,140	91.4	%		1,549,833	95.0	%		1,559,711	95.9	%
ArcBest
Purchased transportation		164,521	82.4	%		164,322	80.0	%		452,178	81.6	%		475,614	81.0	%
Supplies and expenses		2,780	1.4			3,522	1.7			8,412	1.5			10,290	1.7
Depreciation and amortization(4)		2,607	1.3			3,558	1.7			8,813	1.6			10,563	1.8
Shared services		25,032	12.5			23,453	11.4			71,204	12.9			68,857	11.7
Other		2,366	1.2			2,546	1.2			7,224	1.3			6,973	1.2
Restructuring costs		—	—			—	—			—	—			152	—
Gain on sale of subsidiaries(5)		—	—			(1,945)	(0.9)			—	—			(1,945)	(0.3)
		197,306	98.8	%		195,456	95.1	%		547,831	98.9	%		570,504	97.1	%
FleetNet		52,805	97.8	%		49,406	97.8	%		155,272	97.7	%		141,407	97.5	%
Total Asset-Light		250,111				244,862				703,103				711,911
Other and eliminations		(27,655)				(9,899)				(57,043)				(24,049)
Total consolidated operating expenses	$	756,355	96.0	%	$	770,103	93.2	%	$	2,195,893	96.7	%	$	2,247,573	96.9	%
OPERATING INCOME
Asset-Based	$	31,722			$	50,150			$	81,515			$	66,933
ArcBest		2,452				9,993				6,304				16,865
FleetNet		1,171				1,088				3,685				3,638
Total Asset-Light		3,623				11,081				9,989				20,503
Other and eliminations(6)		(4,137)				(5,176)				(16,505)				(15,500)
Total consolidated operating income	$	31,208			$	56,055			$	74,999			$	71,936

¹⁾ In third quarter 2019, the presentation of Asset-Based segment expenses was modified to present innovative technology costs as a separate operating expense line item. Previously, innovative technology costs incurred directly by the segment or allocated through shared services were categorized in individual segment expense line items. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on the segment’s total expenses as a result of the reclassifications.

²⁾ The nine months ended September 30, 2018 includes a one-time charge for the multiemployer pension plan withdrawal liability.

³⁾ Represents costs associated with the previously announced freight handling pilot test program at ABF Freight.

⁴⁾ Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships, and software associated with acquired businesses.

⁵⁾ Gain recognized in the 2018 periods relates to the sale of the ArcBest segment’s military moving businesses in December 2017.

⁶⁾ “Other and eliminations” includes corporate costs for certain unallocated shared service costs which are not attributable to any segment, additional investments to offer comprehensive transportation and logistics services across multiple operating segments, and other investments in ArcBest technology and innovations, including innovative technology costs.

7

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures and ratios utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management's opinion, do not reflect our core operating performance. Other companies may calculate non-GAAP measures differently; therefore, our calculation may not be comparable to similarly titled measures of other companies. Certain information discussed in the scheduled conference call could be considered non-GAAP measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. These financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as determined under GAAP.

	Three Months Ended				Nine Months Ended
	September 30					September 30
	2019		2018			2019		2018
	(Unaudited)
	($ thousands, except per share data)
ArcBest Corporation - Consolidated
Operating Income
Amounts on GAAP basis	$	31,208	$	56,055	$	74,999	$	71,936
Innovative technology costs, pre-tax(1)		4,727		1,753		11,104		4,060
ELD conversion costs, pre-tax(2)		1,796		—		2,358		—
Nonunion pension termination costs, pre-tax(3)		350		—		350		—
Multiemployer pension fund withdrawal liability charge, pre-tax(4)		—		—		—		37,922
Restructuring charges, pre-tax(5)		—		50		—		766
Gain on sale of subsidiaries, pre-tax(6)		—		(1,945)		—		(1,945)
Non-GAAP amounts	$	38,081	$	55,913	$	88,811	$	112,739
Net Income
Amounts on GAAP basis	$	16,270	$	40,776	$	45,534	$	51,963
Innovative technology costs, after-tax (includes related financing costs)(1)		3,614		1,304		8,462		3,017
ELD conversion costs, after-tax(2)		1,333		—		1,751		—
Nonunion pension termination costs, after-tax(3)		260		—		260		—
Multiemployer pension fund withdrawal liability charge, after-tax(4)		—		—		—		28,161
Restructuring charges, after-tax(5)		—		37		—		566
Gain on sale of subsidiaries, after-tax(6)		—		(1,437)		—		(1,437)
Nonunion pension expense, including settlement and termination expense, after-tax(7)		6,011		1,325		7,675		4,146
Life insurance proceeds and changes in cash surrender value		(557)		(1,296)		(2,713)		(2,230)
Tax expense (benefit) from vested RSUs(8)		56		(24)		464		(325)
Deferred tax adjustment for 2017 Tax Reform Act(9)		—		(825)		—		(3,466)
Impact of 2017 Tax Reform Act on current tax expense(9)		—		22		—		(47)
Alternative fuel tax credit(10)		—		—		—		(1,203)
Non-GAAP amounts	$	26,987	$	39,882	$	61,433	$	79,145
Diluted Earnings Per Share
Amounts on GAAP basis	$	0.62	$	1.52	$	1.72	$	1.94
Innovative technology costs, after-tax (includes related financing costs)(1)		0.14		0.05		0.32		0.11
ELD conversion costs, after-tax(2)		0.05		—		0.07		—
Nonunion pension termination costs, after-tax(3)		0.01		—		0.01		—
Multiemployer pension fund withdrawal liability charge, after-tax(4)		—		—		—		1.05
Restructuring charges, after-tax(5)		—		—		—		0.02
Gain on sale of subsidiaries, after-tax(6)		—		(0.05)		—		(0.05)
Nonunion pension expense, including settlement and termination expense, after-tax(7)		0.23		0.05		0.29		0.16
Life insurance proceeds and changes in cash surrender value		(0.02)		(0.05)		(0.10)		(0.08)
Tax expense (benefit) from vested RSUs(8)		—		—		0.02		(0.01)
Deferred tax adjustment for 2017 Tax Reform Act(9)		—		(0.03)		—		(0.13)
Impact of 2017 Tax Reform Act on current tax expense(9)		—		—		—		—
Alternative fuel tax credit(10)		—		—		—		(0.05)
Non-GAAP amounts(11)	$	1.02	$	1.49	$	2.32	$	2.96

Note: See “Notes to Non-GAAP Financial Tables” for the footnotes to this ArcBest Corporation – Consolidated non-GAAP table.

8

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

Notes to Non-GAAP Financial Tables

The following footnotes apply to the non-GAAP financial tables presented in this press release.

¹⁾ Represents costs associated with the previously announced freight handling pilot test program at ABF Freight.

²⁾ The three and nine months ended September 30, 2019 include impairment charges related to equipment replacement and other one-time costs incurred to comply with the electronic logging device (“ELD”) mandate which will be effective in December 2019.

³⁾ The three and nine months ended September 30, 2019 include a one-time consulting fee associated with the termination of the nonunion defined benefit pension plan.

⁴⁾ The nine months ended September 30, 2018 includes a one-time charge for the multiemployer pension plan withdrawal liability.

⁵⁾ Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.

⁶⁾ Gain recognized in the 2018 periods relates to the sale of the ArcBest segment’s military moving businesses in December 2017.

⁷⁾ Nonunion pension expense is presented as a non-GAAP adjustment with pension settlement expense, because expenses related to the plan have been excluded from the financial information management uses to make operating decisions, as the nonunion defined benefit pension plan was amended to terminate the plan with a termination date of December 31, 2017. Pension settlements related to benefit distributions for the plan termination began in fourth quarter 2018 and were completed in third quarter 2019.The three and nine months ended September 30, 2019 include a noncash pension termination expense related to an amount which was stranded in accumulated other comprehensive income until the pension benefit obligation was settled upon plan termination. 

⁸⁾ The Company recognized the tax impact for the vesting of share-based compensation resulting in excess tax expense (benefit) during the three and nine months ended September 30, 2019 and 2018.

⁹⁾ Impact on current or deferred income tax expense as a result of recognizing the tax effects of the Tax Cuts and Jobs Act (“2017 Tax Reform Act”) that was signed into law on December 22, 2017.

¹⁰⁾ Represents the amount of the alternative fuel tax credit related to the year ended December 31, 2017 which was recorded in first quarter 2018 due to the February 2018 retroactive reinstatement.

¹¹⁾ Non-GAAP EPS is calculated in total and may not foot due to rounding.

9

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

Effective Tax Rate Reconciliation
ArcBest Corporation - Consolidated
(Unaudited)
($ thousands, except percentages)	Three Months Ended September 30, 2019
			Other		Income Before		Income
	Operating		Income		Income		Tax		Net		Effective
	Income		(Costs)		Taxes		Provision		Income		Tax Rate
Amounts on GAAP basis	$	31,208	$	(7,866)	$	23,342	$	7,072	$	16,270	30.3	%
Innovative technology costs(1)		4,727		139		4,866		1,252		3,614	25.7
ELD conversion costs(2)		1,796		—		1,796		463		1,333	25.8
Nonunion pension termination costs(3)		350		—		350		90		260	25.7
Nonunion pension expense, including settlement and termination expense(7)		—		6,718		6,718		707		6,011	10.5
Life insurance proceeds and changes in cash surrender value		—		(557)		(557)		—		(557)	—
Tax expense from vested RSUs(8)		—		—		—		(56)		56	—
Non-GAAP amounts	$	38,081	$	(1,566)	$	36,515	$	9,528	$	26,987	26.1	%

	Nine Months Ended September 30, 2019
			Other		Income Before		Income
	Operating		Income		Income		Tax		Net		Effective
	Income		(Costs)		Taxes		Provision		Income		Tax Rate
Amounts on GAAP basis	$	74,999	$	(11,501)	$	63,498	$	17,964	$	45,534	28.3	%
Innovative technology costs(1)		11,104		291		11,395		2,933		8,462	25.7
ELD conversion costs(2)		2,358		—		2,358		607		1,751	25.7
Nonunion pension termination costs(3)		350		—		350		90		260	25.7
Nonunion pension expense, including settlement and termination expense(7)		—		8,959		8,959		1,284		7,675	14.3
Life insurance proceeds and changes in cash surrender value		—		(2,713)		(2,713)		—		(2,713)	—
Tax expense from vested RSUs(8)		—		—		—		(464)		464	—
Non-GAAP amounts	$	88,811	$	(4,964)	$	83,847	$	22,414	$	61,433	26.7	%

	Three Months Ended September 30, 2018
			Other		Income Before		Income
	Operating		Income		Income		Tax		Net		Effective
	Income		(Costs)		Taxes		Provision		Income		Tax Rate
Amounts on GAAP basis	$	56,055	$	(2,064)	$	53,991	$	13,215	$	40,776	24.5	%
Innovative technology costs(1)		1,753		2		1,755		451		1,304	25.7
Restructuring charges(5)		50		—		50		13		37	26.0
Gain on sale of subsidiaries(6)		(1,945)		—		(1,945)		(508)		(1,437)	(26.1)
Nonunion pension expense, including settlement(7)		—		1,785		1,785		460		1,325	25.8
Life insurance proceeds and changes in cash surrender value		—		(1,296)		(1,296)		—		(1,296)	—
Tax benefit from vested RSUs(8)		—		—		—		24		(24)	—
Deferred tax adjustment for 2017 Tax Reform Act(9)		—		—		—		825		(825)	—
Impact of 2017 Tax Reform Act on current tax expense(9)		—		—		—		(22)		22	—
Non-GAAP amounts	$	55,913	$	(1,573)	$	54,340	$	14,458	$	39,882	26.6	%

	Nine Months Ended September 30, 2018
			Other		Income Before		Income
	Operating		Income		Income		Tax		Net		Effective
	Income		(Costs)		Taxes		Provision		Income		Tax Rate
Amounts on GAAP basis	$	71,936	$	(8,220)	$	63,716	$	11,753	$	51,963	18.4	%
Innovative technology costs(1)		4,060		2		4,062		1,045		3,017	25.7
Multiemployer pension fund withdrawal liability charge(4)		37,922		—		37,922		9,761		28,161	25.7
Restructuring charges(5)		766		—		766		200		566	26.1
Gain on sale of subsidiaries(6)		(1,945)		—		(1,945)		(508)		(1,437)	(26.1)
Nonunion pension expense, including settlement(7)		—		5,584		5,584		1,438		4,146	25.8
Life insurance proceeds and changes in cash surrender value		—		(2,230)		(2,230)		—		(2,230)	—
Tax benefit from vested RSUs(8)		—		—		—		325		(325)	—
Deferred tax adjustment for 2017 Tax Reform Act(9)		—		—		—		3,466		(3,466)	—
Impact of 2017 Tax Reform Act on current tax expense(9)		—		—		—		47		(47)	—
Alternative fuel tax credit(10)		—		—		—		1,203		(1,203)	—
Non-GAAP amounts	$	112,739	$	(4,864)	$	107,875	$	28,730	$	79,145	26.6	%

Note: See “Notes to Non-GAAP Financial Tables” for the footnotes to this ArcBest Corporation – Consolidated Effective Tax Rate Reconciliation table.

10

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2019				2018				2019				2018
Segment Operating Income Reconciliations	(Unaudited)
	($ thousands, except percentages)
Asset-Based Segment
Operating Income ($) and Operating Ratio (% of revenues)
Amounts on GAAP basis	$	31,722	94.4	%	$	50,150	91.4	%	$	81,515	95.0	%	$	66,933	95.9	%
Innovative technology costs, pre-tax(1)		4,664	(0.8)			1,080	(0.2)			9,200	(0.6)			2,947	(0.2)
ELD conversion costs, pre-tax(2)		1,796	(0.3)			—	—			2,358	(0.1)			—	—
Nonunion pension termination costs, pre-tax(3)		295	(0.1)			—	—			295	—			—	—
Multiemployer pension fund withdrawal liability charge, pre-tax(4)		—	—			—	—			—	—			37,922	(2.3)
Non-GAAP amounts	$	38,477	93.2	%	$	51,230	91.2	%	$	93,368	94.3	%	$	107,802	93.4	%
Asset-Light
ArcBest Segment
Operating Income ($) and Operating Ratio (% of revenues)
Amounts on GAAP basis	$	2,452	98.8	%	$	9,993	95.1	%	$	6,304	98.9	%	$	16,865	97.1	%
Nonunion pension termination costs, pre-tax(3)		23	—			—	—			23	—			—	—
Restructuring charges, pre-tax(5)		—	—			—	—			—	—			152	—
Gain on sale of subsidiaries, pre-tax(6)		—	—			(1,945)	0.9			—	—			(1,945)	0.3
Non-GAAP amounts	$	2,475	98.8	%	$	8,048	96.0	%	$	6,327	98.9	%	$	15,072	97.4	%
FleetNet Segment
Operating Income ($) and Operating Ratio (% of revenues)
Amounts on GAAP basis	$	1,171	97.8	%	$	1,088	97.8	%	$	3,685	97.7	%	$	3,638	97.5	%
Nonunion pension termination costs, pre-tax(3)		12	—			—	—			12	—			—	—
Non-GAAP amounts	$	1,183	97.8	%	$	1,088	97.8	%	$	3,697	97.7	%	$	3,638	97.5	%
Total Asset-Light
Operating Income ($) and Operating Ratio (% of revenues)
Amounts on GAAP basis	$	3,623	98.6	%	$	11,081	95.7	%	$	9,989	98.6	%	$	20,503	97.2	%
Nonunion pension termination costs, pre-tax(3)		35	—			—	—			35	—			—	—
Restructuring charges, pre-tax(5)		—	—			—	—			—	—			152	—
Gain on sale of subsidiaries, pre-tax(6)		—	—			(1,945)	0.8			—	—			(1,945)	0.3
Non-GAAP amounts	$	3,658	98.6	%	$	9,136	96.5	%	$	10,024	98.6	%	$	18,710	97.5	%
Other and Eliminations
Operating Loss ($)
Amounts on GAAP basis	$	(4,137)			$	(5,176)			$	(16,505)			$	(15,500)
Innovative technology costs, pre-tax(1)		63				673				1,904				1,113
Nonunion pension termination costs, pre-tax(3)		20				—				20				—
Restructuring charges, pre-tax(5)		—				50				—				614
Non-GAAP amounts	$	(4,054)			$	(4,453)			$	(14,581)			$	(13,773)

Note: See “Notes to Non-GAAP Financial Tables” for the footnotes to this ArcBest Corporation – Segment Operating Income Reconciliations non-GAAP table.

11

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA)

Management uses Adjusted EBITDA as a key measure of performance and for business planning. The measure is particularly meaningful for analysis of operating performance, because it excludes amortization of acquired intangibles and software of the Asset-Light businesses, which are significant expenses resulting from strategic decisions rather than core daily operations. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our credit agreement.

	Three Months Ended				Nine Months Ended
	September 30					September 30
	2019		2018		2019		2018
	(Unaudited)
ArcBest Corporation - Consolidated Adjusted EBITDA	($ thousands)
Net Income	$	16,270	$	40,776	$	45,534	$	51,963
Interest and other related financing costs		2,900		2,470		8,593		6,542
Income tax provision		7,072		13,215		17,964		11,753
Depreciation and amortization		29,361		28,026		83,332		81,699
Amortization of share-based compensation		2,409		2,641		7,268		6,185
Amortization of net actuarial losses of benefit plans and pension settlement expense, including termination expense(1)		6,800		1,108		9,140		3,755
Multiemployer pension fund withdrawal liability charge(2)		—		—		—		37,922
Restructuring charges(3)		—		50		—		766
Consolidated Adjusted EBITDA	$	64,812	$	88,286	$	171,831	$	200,585

¹⁾ The three and nine months ended September 30, 2019 include a noncash pension termination expense related to an amount which was stranded in accumulated other comprehensive income until the pension benefit obligation was settled upon plan termination.

²⁾ The three and nine months ended September 30, 2018 include a one-time charge for the multiemployer pension plan withdrawal liability.

³⁾ Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2019		2018		2019		2018
Asset-Light Adjusted EBITDA	(Unaudited)
	($ thousands, except percentages)
ArcBest
Operating Income	$	2,452	$	9,993	$	6,304	$	16,865
Depreciation and amortization(4)		2,607		3,558		8,813		10,563
Restructuring charges(5)		—		—		—		152
Adjusted EBITDA	$	5,059	$	13,551	$	15,117	$	27,580
FleetNet
Operating Income	$	1,171	$	1,088	$	3,685	$	3,638
Depreciation and amortization		332		291		982		834
Adjusted EBITDA	$	1,503	$	1,379	$	4,667	$	4,472
Total Asset-Light
Operating Income	$	3,623	$	11,081	$	9,989	$	20,503
Depreciation and amortization(4)		2,939		3,849		9,795		11,397
Restructuring charges(5)		—		—		—		152
Adjusted EBITDA	$	6,562	$	14,930	$	19,784	$	32,052

⁴⁾ Depreciation and amortization consists primarily of amortization of intangibles and software associated with acquired businesses.

⁵⁾ Restructuring charges relate to the realignment of the Company’s organizational structure as announced on November 3, 2016.

12

ARCBEST CORPORATION

OPERATING STATISTICS

	Three Months Ended					Nine Months Ended
	September 30					September 30
	2019		2018		% Change	2019		2018		% Change
	(Unaudited)
Asset-Based
Workdays		63.5		63.0			190.0		190.5
Billed Revenue(1) / CWT	$	36.35	$	35.83	1.5%	$	35.38	$	33.92	4.3%
Billed Revenue(1) / Shipment	$	443.82	$	440.65	0.7%	$	435.61	$	430.34	1.2%
Shipments		1,271,697		1,312,621	(3.1%)		3,754,801		3,793,276	(1.0%)
Shipments / Day		20,027		20,835	(3.9%)		19,762		19,912	(0.8%)
Tonnage (Tons)		776,370		807,110	(3.8%)		2,311,266		2,406,250	(3.9%)
Tons / Day		12,226		12,811	(4.6%)		12,165		12,631	(3.7%)
Pounds / Shipment		1,221		1,230	(0.7%)		1,231		1,269	(3.0%)
Average Length of Haul (Miles)		1,040		1,043	(0.3%)		1,035		1,042	(0.7%)

¹⁾ Revenue for undelivered freight is deferred for financial statement purposes in accordance with the Asset-Based segment revenue recognition policy. Billed revenue used for calculating revenue per hundredweight measurements has not been adjusted for the portion of revenue deferred for financial statement purposes.

	Year Over Year % Change
	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
	(Unaudited)
ArcBest(2)
Revenue / Shipment		(7.9%)		(8.1%)
Shipments / Day		(1.9%)		(1.5%)

²⁾ Statistical data related to managed transportation services transactions are not included in the presentation of operating statistics for the ArcBest segment.  

###

13

EX-99.2

Exhibit 99.2

ArcBest® is providing this exhibit as supplemental information to its scheduled conference call and the press release announcing the Company’s unaudited third quarter 2019 results filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K. Certain statements and information in this exhibit may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Refer to the “Forward-Looking Statements” disclosure at the end of this exhibit.

Non-GAAP Financial Measures

ArcBest reports its financial results in accordance with generally accepted accounting principles (“GAAP”); however, this exhibit includes certain non-GAAP information. Refer to the discussion of non-GAAP information included in Item 2.02 of the Current Report on Form 8-K to which this exhibit is included for further information, including reference to reconciliations of GAAP to non-GAAP financial measures provided by the Company.

Asset-Based Segment – Highlights of Projected Non-GAAP Operating Impacts

(Additional Detailed Information follows)

· Union vacation expense in fourth quarter 2019, relative to fourth quarter 2018, is estimated to increase approximately $1 million.  On a sequential basis, these costs in fourth quarter 2019 are expected to be approximately the same as in third quarter 2019.

· In recent years, the historical average sequential change in ArcBest’s Asset-Based operating ratio in the fourth quarter, versus the third quarter, has been an increase of approximately 200 basis points. There will be 61.5 working days in the fourth quarter which is the same as in fourth quarter 2018.

· During years in which ArcBest’s internal forecasts indicate an expectation of paying the Annual Union Profit-Sharing Bonus, we will accrue for this expense throughout the year, generally in proportion of the quarterly results as a percentage of the annual projection.

October 2019 Business Update – Asset-Based Segment

Statistics for October 2019 have not been finalized. Preliminary Asset-Based financial metrics and business trends for the month of October 2019, compared to October 2018 are as follows: 

· Daily Billed Revenue decreased approximately 7%.

· Total Tonnage/Day decreased approximately 9% with a double digit percentage decrease in LTL-rated tonnage offset by a double digit percentage increase in TL-rated spot tonnage moving in the Asset-Based network.

· Shipments/Day decreased approximately 7%.   

· Total Billed Revenue/CWT increased approximately 2% as a high-single digit percentage increase in LTL Billed Revenue/CWT, excluding fuel surcharge,  was offset by lower Revenue/CWT on an increased number of TL-rated spot shipments moving in the Asset-Based network related to available truckload capacity in 2019 versus the tight truckload market in 2018.   As a reminder, in fourth quarter 2018, Total Billed Revenue/CWT increased 7.9%.

· Total Billed Revenue/Shipment and Billed Revenue/LTL-rated shipment were flat.

· Total Weight/Shipment decreased approximately 2%, with the weight/shipment on LTL‑rated shipments down approximately 6%.  The reduction in LTL‑rated weight/shipment is primarily the result of changes in account mix.

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Asset-Light ArcBest Segment – Highlights of Projected Operating Impacts

· As mentioned in previous quarters during 2019, elevated costs associated with long-term strategic development of ArcBest’s owner-operator and contract carrier capacity will continue for the remainder of the year and will increase the expenses of the Asset-Light ArcBest segment by approximately $0.5 million in fourth quarter 2019, compared to fourth quarter 2018.

October 2019 Business Update – Asset-Light ArcBest Segment [Excluding FleetNet]

Statistics for October 2019 have not been finalized. For the Asset-Light ArcBest segment, not including FleetNet, preliminary revenue per day decreased approximately 6% and purchased transportation expense per day decreased approximately 2% versus the same period in 2018.  Available truckload capacity in the current year compared to the tight capacity environment in the prior-year period has led to lower revenue per shipment and reduced demand for expedite services compared to 2018 record levels.  Managed Solutions continues to have a positive impact on the Asset-Light business.

ArcBest Consolidated – Highlights of Projected Financial Impacts

· In the fourth quarter of 2019, we currently estimate the loss in the “Other and eliminations” line to approximate $8 million.

· ArcBest expects fourth quarter 2019 interest expense net of interest income to approximate $1.3 million.

· ArcBest expects the non-GAAP “Other net” expense to approximate $0.5 million in fourth quarter 2019.

· ArcBest’s third quarter 2019 and year-to-date effective GAAP tax rates were 30.3% and 28.3%, respectively.  The “Effective Tax Rate Reconciliation” table on Page 11 of ArcBest’s third quarter 2019 earnings press release in Exhibit 99.1 shows the reconciliation of GAAP to non-GAAP effective tax rates.  The non-GAAP effective tax rates of 26.1% for third quarter 2019 and 26.6% for third quarter 2018 were used to calculate the non-GAAP net income and EPS amounts for the respective quarters.  ArcBest currently expects the full year 2019 non-GAAP tax rate to be approximately 27%, while the effective rate in any quarter may be impacted by items discrete to that period. 

______________________________________________________________________

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Additional Detailed Information

Asset-Based Segment

Excluding fuel surcharge, the increase in third quarter billed Rev/Cwt on Asset-Based, LTL‑rated freight was in the high‑single digits.  ArcBest secured an average 2.9% increase on Asset-Based customer contract renewals and deferred pricing agreements negotiated during the third quarter.   

Asset-Based quarterly daily total tonnage decreased 4.6% versus last year’s third quarter.  For third quarter, by month, Asset-Based daily total tonnage versus the same period last year decreased by 1.7% in July, decreased by 4.8% in August and decreased by 7.5% in September.  In third quarter 2019, truckload-rated shipments in the ABF Freight Asset‑Based network increased by a double digit percentage over the prior year.  During the fourth quarter, we will be comparing back to monthly periods in 2018 that reflected increases of 2% to 3% in total pounds per day.

As we have mentioned before, ABF Freight’s current five year labor agreement, effective as of April 1, 2018, included additional vacation time for many union employees.   The additional week of vacation is being expensed as it is earned for anniversary dates that begin on or after April 1, 2018.  As a result, vacation costs increased approximately $1 million in third quarter 2019 versus third quarter 2018. The quarterly costs associated with the additional vacation time, which have gradually increased since the April 1, 2018 contract effective date, will continue to result in year-over-year increases in the fourth quarter of 2019.  The increase in additional union vacation in fourth quarter 2019, relative to fourth quarter 2018, is estimated to be approximately $1 million.

Innovative Technology Non-GAAP Costs

ArcBest expects that the previously disclosed innovative technology costs in our Asset-Based business associated with the freight handling pilot test program at ABF Freight which have been identified as a non-GAAP reconciling item, will approximate $4 million in fourth quarter 2019 as compared to $1 million in fourth quarter 2018.  Creating a best-in-class customer experience is a fundamental part of our growth strategy and we will continue to make investments in technology, equipment and other areas as customers’ needs evolve.  While ArcBest believes the pilot has potential to provide safer and improved freight-handling, a number of factors will be involved in determining proof of concept and there can be no assurances that pilot testing will be successful or expand beyond current testing locations.

Annual Union Profit-Sharing Bonus

As provided in ABF Freight’s current Teamster labor contract, for the full years of 2019 through 2022, ABF Freight’s Teamster employees would be eligible for an annual profit-sharing bonus, as shown in the following table. The operating ratio (“OR”) used to calculate the bonus amount is on a GAAP basis and must include the related benefit expense estimated under this plan. The potential bonus would be based on union employee earnings for the full year.  While impacted by business and associated labor levels, we estimate that one percent of the annual earnings for the ABF Freight union employees who are eligible for this benefit would equate to approximately $5 million - $6 million of union bonus expense. 

During years in which ArcBest’s internal forecasts indicate an expectation of paying the union bonus, we will accrue for this expense throughout the year, generally in proportion of the quarterly results as a percentage of the annual projection. As we do not provide public updates on our projected operating ratio or our expectations for paying the union bonus, any details of amounts accrued will not be provided.  If financial models reflect an operating ratio that meets the payout thresholds shown below, ArcBest encourages analysts to include expenses for the union bonus in quarterly and annual earnings per share projections for the company. 

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ABF Freight Published Annual OR (GAAP basis)	Bonus Amount
95.1 to 96.0	1%
93.1 to 95.0	2%
93.0 and below	3%

ArcBest Consolidated

“Other and eliminations” line within Operating Income on the Operating Segment Data and Operating Ratios statement

In the fourth quarter of 2019, we currently estimate the loss in the “Other and eliminations” line to approximate $8 million which includes expenses related to shared services for the delivery of comprehensive transportation and logistics services to ArcBest’s customers.  Shared services represent costs incurred to support all segments including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, legal and other company-wide services. Shared services are primarily allocated to the reporting segments based upon resource utilization-related metrics, such as shipment levels, and therefore fluctuate with business levels. As a result, the loss in this line tends to be higher in periods when business levels are lower, typically the first and fourth quarters of the year.

“Other, net” line within Other Income (Costs) on the Consolidated Statements of Operations

The “Other, net” line of ArcBest’s income statement, primarily includes the costs associated with nonunion pension and postretirement plans and changes in cash surrender value of life insurance.  After excluding non-GAAP items detailed in the table below, the remaining costs were $0.6 million in third quarter 2019 and $0.2 million in third quarter 2018. ArcBest expects the non-GAAP “Other net” expense to approximate $0.5 million in fourth quarter 2019.

	Three Months Ended
	September 30
	2019		2018
	(in millions)
Other, net - income (costs)
Amounts on GAAP basis	$	(6.7)	$	(0.7)
Non-GAAP Adjustments:
Life insurance proceeds and changes in cash surrender value		(0.6)		(1.3)
Nonunion pension expense, including settlement and termination expense, pre-tax		6.7		1.8
Non-GAAP amounts	$	(0.6)	$	(0.2)

In the third quarter of 2019, nonunion pension expense, including settlement charges and termination expense, was $6.7 million and ArcBest made $7.7 million of tax-deductible cash contributions to the plan to fund the plan benefit and expense distributions in excess of plan assets. As previously disclosed, ArcBest has been in the process of terminating its nonunion defined benefit pension plan. The benefit obligations of the plan were settled in third quarter 2019, and the plan was substantially liquidated as of September 30, 2019. As a result, we do not anticipate any further pension expense, settlement charges or cash funding related to this plan in the future.

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Capital Expenditures

ArcBest’s 2019 total net capital expenditures, including financed equipment, are expected to be in an estimated range of $160 million to $165 million.  This is a reduction from the previously stated range of $170 million to $180 million.  This updated amount includes the majority of the revenue equipment purchases planned for 2019, including the replacement tractors at ABF Freight.  The decrease from previous estimates is primarily due to shifts in the timing of some expenditures into 2020.

ArcBest’s 2019 depreciation and amortization costs on property, plant and equipment are expected to approximate $107 million.  This does not include amortization of intangible assets which are expected to approximate $5 million in 2019.

Forward-Looking Statements

Certain statements and information in this exhibit may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  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: a failure of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data breach, and/or cybersecurity incidents; untimely or ineffective development and implementation of new or enhanced technology or processes, including the pilot test program at ABF Freight; failure to realize potential benefits associated with new or enhanced technology or processes, including the pilot test program at ABF Freight, and any write-offs associated therewith; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; relationships with employees, including unions, and our ability to attract and retain 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; the cost, timing, and performance of growth initiatives; 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; availability and cost of reliable third-party services; governmental regulations; environmental laws and regulations, including emissions-control regulations; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer plans; 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; maintaining our intellectual property rights, brand, and corporate reputation; the loss of key employees or the inability to execute succession planning strategies; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; self-insurance claims and insurance premium costs; the cost, integration, and performance of any recent or future acquisitions; 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; 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 and fuel and related taxes; potential impairment of goodwill and intangible assets; greater than anticipated funding requirements for our nonunion defined benefit pension plan; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; antiterrorism and safety measures; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest’s public filings with the Securities and Exchange Commission (“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.

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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.

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XML

Document and Entity Information	Oct. 31, 2019
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	Oct. 31, 2019
Entity Registrant Name	ARCBEST CORPORATION
Entity Incorporation, State or Country Code	DE
Entity File Number	0-19969
Entity Tax Identification Number	71-0673405
Entity Address, Address Line One	8401 McClure Drive
Entity Address, City or Town	Fort Smith
Entity Address, State or Province	AR
Entity Address, Postal Zip Code	72916
City Area Code	479
Local Phone Number	785-6000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock $0.01 Par Value
Trading Symbol	ARCB
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0000894405
Amendment Flag	false