ArcBest(US:ARCB)2024-11-01 20:01Revenue Performance - Consolidated revenues decreased by 5.8% and 4.8% for the three and nine months ended September 30, 2024, compared to the same prior-year periods, primarily due to lower market rates and decreased tonnage levels [109]. - Asset-Based revenues declined by 4.2% and 3.1% for the three and nine months ended September 30, 2024, while Asset-Light revenues decreased by 8.1% and 7.1% for the same periods [109]. - The Asset-Light segment generated approximately 35% and 36% of total revenues for the three and nine months ended September 30, 2024, respectively [111]. - The Asset-Based segment revenues for the three months ended September 30, 2024, totaled $709.7 million, a decrease of 4.2% compared to $741.2 million for the same period in 2023 [134]. - Total shipments decreased by 0.7% for the three months ended September 30, 2024, compared to the same period in 2023, reflecting a softer freight environment [136]. - Tonnage per day decreased by 11.3% for the three months ended September 30, 2024, compared to the same period in 2023, contributing to the revenue decline [134]. Income and Operating Results - Total consolidated operating income increased to $134.993 million for the three months ended September 30, 2024, compared to $45.091 million for the same period in 2023 [108]. - Net income from continuing operations was $100.314 million for the three months ended September 30, 2024, up from $34.927 million in the prior year [108]. - Consolidated net income for the three months ended September 30, 2024, was $100.3 million, compared to $34.9 million for the same period in 2023, representing a significant increase [122]. - Adjusted EBITDA from continuing operations for the three months ended September 30, 2024, was $86.4 million, down from $101.6 million in the prior year, indicating a decrease of approximately 14.9% [122]. - The Asset-Based segment generated operating income of $64.0 million and $190.3 million for the three and nine months ended September 30, 2024, respectively, compared to $74.8 million and $165.6 million for the same periods of 2023 [139]. - The Asset-Light segment operating income totaled $84.8 million and $60.0 million for the three and nine months ended September 30, 2024, compared to an operating loss of $3.7 million and $4.6 million for the same periods of 2023 [157]. Expenses and Impairments - Innovative technology costs decreased consolidated operating results by $8.5 million (pre-tax) for the third quarter of 2024, compared to $14.1 million (pre-tax) for the same period in 2023 [113]. - A one-time, noncash impairment charge of $21.6 million (after-tax) was recognized for the nine months ended September 30, 2024, related to the equity investment in Phantom Auto [115]. - Lease impairment charges reduced operating results by $30.2 million (pre-tax) for the three months ended September 30, 2023 [118]. - Changes in the fair value of contingent earnout consideration reduced expenses by $91.9 million and $80.7 million for the three and nine months ended September 30, 2024, compared to $17.8 million and $12.8 million for the same periods of 2023 [157]. - Labor costs represented 50.5% and 50.4% of Asset-Based segment revenues for the three and nine months ended September 30, 2024, compared to 48.2% and 48.0% for the same periods of 2023 [140]. Cash Flow and Capital Expenditures - Cash provided by operating activities for the nine months ended September 30, 2024, was $229.0 million, an increase of 18.0% compared to $194.0 million in the same prior-year period [183]. - Capital expenditures for the nine months ended September 30, 2024, totaled $163.7 million, with an estimated total for 2024 projected at approximately $300.0 million [184][195]. - Cash, cash equivalents, and short-term investments decreased by $139.0 million from December 31, 2023, to September 30, 2024 [181]. - As of September 30, 2024, cash and cash equivalents decreased to $150.5 million from $262.2 million as of December 31, 2023 [186]. - The company repurchased 478,315 shares of common stock for an aggregate cost of $56.1 million during the nine months ended September 30, 2024 [185][201]. Taxation - The effective tax rate for continuing operations was 26.6% for the three months ended September 30, 2024, compared to 25.5% for the same period in 2023 [211]. - The total provision for income taxes for the nine months ended September 30, 2024, was $36,390 thousand, compared to $25,735 thousand for the same period in 2023 [217]. - The company made federal, state, and foreign tax payments totaling $29.2 million during the nine months ended September 30, 2024 [216]. - The effective tax rate for the nine months ended September 30, 2023, was 23.1%, indicating a decrease in the effective tax rate year-over-year [217]. - The company’s tax benefit from vested RSUs increased significantly due to vesting of RSUs granted in prior years [213]. Market Conditions and Economic Factors - Economic conditions are impacted by higher interest rates, supply chain volatility, and a slowing labor market, with potential disruptions from geopolitical conflicts [166]. - The consumer price index (CPI) increased by 2.4% year-over-year in September 2024, indicating ongoing inflationary pressures [170]. - The soft freight environment resulted in a year-over-year decline in market pricing for many Asset-Light services compared to the first nine months of 2023 [169]. - The estimated settlement expense related to the classification of certain Asset-Light employees under the Fair Labor Standards Act is $9.5 million, with preliminary court approval expected by year-end [179].