ArcBest(ARCB) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents ArcBest Corporation's unaudited consolidated financial statements, including Balance Sheets, Operations, Cash Flows, and detailed notes Consolidated Balance Sheets Total assets increased to $2.47 billion as of June 30, 2025, driven by property, plant, and equipment, with liabilities rising and equity at $1.30 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $638,168 | $675,642 | | Property, Plant and Equipment, net | $1,113,157 | $1,066,046 | | Total Assets | $2,467,436 | $2,429,731 | | Total Current Liabilities | $661,402 | $665,985 | | Long-Term Debt, less current portion | $163,850 | $125,156 | | Total Liabilities | $1,167,010 | $1,115,369 | | Total Stockholders' Equity | $1,300,426 | $1,314,362 | Consolidated Statements of Operations Q2 2025 revenues decreased to $1.02 billion and net income fell to $25.8 million year-over-year, reflecting a challenging market for both quarterly and year-to-date periods Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,022,256 | $1,077,831 | $1,989,333 | $2,114,250 | | Operating Income | $37,309 | $48,845 | $43,939 | $71,280 | | Net Income | $25,809 | $46,924 | $28,940 | $44,612 | | Diluted EPS | $1.12 | $1.96 | $1.25 | $1.86 | Consolidated Statements of Cash Flows Net cash from operating activities for the first six months of 2025 decreased to $86.1 million, with cash used in investing and financing leading to a $12.6 million decrease in cash Six Months Ended June 30 Cash Flow (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $86,111 | $140,202 | | Net Cash Used in Investing Activities | ($36,897) | ($87,079) | | Net Cash Used in Financing Activities | ($61,784) | ($99,759) | | Net Decrease in Cash and Cash Equivalents | ($12,570) | ($46,636) | Notes to Consolidated Financial Statements These notes detail the company's business structure, accounting policies, financial instruments, goodwill, income taxes, debt, leases, and segment performance - The company operates through two reportable segments: Asset-Based (ABF Freight) and Asset-Light (MoLo, Panther), with the Asset-Based segment accounting for approximately 66% of total revenues for the first six months of 2025[18][19] - The goodwill balance of $304.8 million relates entirely to the Asset-Light segment[39] - The company's effective tax rate for the first six months of 2025 was 27.9%, significantly higher than the 1.6% in the same period of 2024, which was impacted by a noncash impairment charge[42] - During the first six months of 2025, the company repurchased 565,562 shares for $41.7 million[63] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the 5.9% year-to-date revenue decline due to lower market rates and shipment levels in the Asset-Light segment, covering segment results, liquidity, and capital resources Consolidated Results Consolidated revenues decreased 5.9% year-to-date, primarily due to an 11.9% decline in the Asset-Light segment, while operating income fell, positively impacted by a $2.7 million reduction in MoLo contingent consideration Consolidated Revenue and Operating Income (in thousands) | Metric | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $1,989,333 | $2,114,250 | (5.9)% | | Operating Income | $43,939 | $71,280 | (38.4)% | - The MoLo contingent consideration liability was reduced to zero in Q2 2025, resulting in a $2.7 million pre-tax gain, compared to an $11.2 million pre-tax expense in the first half of 2024[95] - The first half of 2024 included a one-time, noncash impairment charge of $28.7 million (pre-tax) to write off the equity investment in Phantom Auto[96] Asset-Based Operations The Asset-Based segment's year-to-date revenue was nearly flat, with operating income declining to $77.4 million and the operating ratio increasing to 94.3% due to higher labor costs from the new collective bargaining agreement Asset-Based Segment Key Operating Statistics (% Change YTD 2025 vs YTD 2024) | Metric | % Change | | :--- | :--- | | Billed revenue per hundredweight | (0.8)% | | Tonnage per day | 0.1% | | Shipments per day | 2.6% | | Weight per shipment | (2.5)% | - Salaries, wages, and benefits as a percentage of revenue increased to 52.2% year-to-date from 50.4% in the prior year, reflecting contractual rate increases under the 2023 ABF NMFA[119] - A nominal general rate increase of 5.9% on LTL base rate tariffs will take effect on August 4, 2025[116] Asset-Light Operations The Asset-Light segment's revenues decreased 11.9% year-to-date due to a soft market and lower revenue per shipment, but its operating loss significantly narrowed to $3.8 million due to improved cost management Asset-Light Segment Key Operating Statistics (% Change YTD 2025 vs YTD 2024) | Metric | % Change | | :--- | :--- | | Revenue per shipment | (6.4)% | | Shipments per day | (5.1)% | | Shipments per employee per day | 19.2% | - The segment's operating loss for the first six months improved to $(3.8) million in 2025 from $(24.8) million in 2024[133] - Purchased transportation costs as a percentage of revenue decreased by 1.3 percentage points year-to-date, reflecting improved cost management[135] Liquidity and Capital Resources The company maintains solid liquidity with $139.7 million in cash and short-term investments, estimating 2025 capital expenditures at the lower end of $225.0 million to $275.0 million, while returning capital to shareholders - Total cash, cash equivalents, and short-term investments stood at $139.7 million as of June 30, 2025, down from $157.2 million at year-end 2024[158] - 2025 net capital expenditures are estimated to be at the lower end of the $225.0 million to $275.0 million range[168] - The company has $225.0 million available under its revolving credit facility and $26.3 million under its A/R Securitization Program as of June 30, 2025[163][164] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is from interest rate fluctuations on variable-rate debt, with no significant changes reported since December 31, 2024 - The primary market risk is from interest rate fluctuations on variable-rate debt[189] - No significant changes in market risks were reported since the 2024 Annual Report on Form 10-K[190] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[191] - There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[192] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note J for details on legal proceedings, including an ongoing state sales and use tax audit with an estimated loss range of $0.2 million to $14.2 million - For details on legal proceedings, the report refers to Note J in Part I, Item 1[194] Item 1A. Risk Factors No material changes to the company's risk factors have occurred since the filing of its 2024 Annual Report on Form 10-K - No material changes to the company's risk factors have occurred since the 2024 Annual Report on Form 10-K was filed[195] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 306,797 shares for approximately $19.7 million in Q2 2025, with $14.8 million remaining available under the share repurchase program as of June 30, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining in Program (in thousands) | | :--- | :--- | :--- | :--- | | April 2025 | 117,859 | $62.36 | $27,236 | | May 2025 | 101,017 | $63.35 | $20,837 | | June 2025 | 87,921 | $68.22 | $14,838 | | Total Q2 | 306,797 | $64.37 | $14,838 | - For the six months ended June 30, 2025, the company repurchased a total of 565,562 shares for an aggregate cost of $41.7 million[199] Item 5. Other Information No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter[204] Item 6. Exhibits This section lists filed exhibits, including amendments to financing agreements, the company's change in control plan, and Sarbanes-Oxley Act certifications - Exhibits filed include the Fourth Amendment to the Receivables Loan Agreement, the Amended and Restated 2012 Change in Control Plan, and Sarbanes-Oxley Act certifications[205]