Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 28, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-19969 | |
Entity Registrant Name | ARCBEST CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
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 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | ARCB | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 23,953,189 | |
Entity Central Index Key | 0000894405 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 203,319 | $ 158,264 |
Short-term investments | 162,487 | 167,662 |
Accounts receivable, less allowances (2023 - $11,585; 2022 - $13,892) | 470,440 | 517,494 |
Other accounts receivable, less allowances (2023 - $721; 2022 - $713) | 11,485 | 11,016 |
Prepaid expenses | 41,061 | 39,484 |
Prepaid and refundable income taxes | 16,351 | 19,239 |
Current assets of discontinued operations | 64,736 | |
Other | 11,887 | 11,888 |
TOTAL CURRENT ASSETS | 917,030 | 989,783 |
PROPERTY, PLANT AND EQUIPMENT | ||
Land and structures | 418,011 | 401,840 |
Revenue equipment | 1,039,771 | 1,038,832 |
Service, office, and other equipment | 303,698 | 298,234 |
Software | 170,523 | 167,164 |
Leasehold improvements | 24,693 | 23,466 |
TOTAL PROPERTY, PLANT AND EQUIPMENT, Gross | 1,956,696 | 1,929,536 |
Less allowances for depreciation and amortization | 1,151,396 | 1,129,366 |
PROPERTY, PLANT AND EQUIPMENT, net | 805,300 | 800,170 |
GOODWILL | 304,753 | 304,753 |
INTANGIBLE ASSETS, net | 110,622 | 113,733 |
OPERATING RIGHT-OF-USE ASSETS | 189,610 | 166,515 |
DEFERRED INCOME TAXES | 7,287 | 6,342 |
LONG-TERM ASSETS OF DISCONTINUED OPERATIONS | 11,097 | |
OTHER LONG-TERM ASSETS | 96,991 | 101,893 |
TOTAL ASSETS | 2,431,593 | 2,494,286 |
CURRENT LIABILITIES | ||
Accounts payable | 253,578 | 269,854 |
Income taxes payable | 19,460 | 16,017 |
Accrued expenses | 278,658 | 338,457 |
Current portion of contingent consideration | 43,390 | |
Current portion of long-term debt | 64,491 | 66,252 |
Current portion of operating lease liabilities | 28,466 | 26,225 |
Current liabilities of discontinued operations | 51,665 | |
TOTAL CURRENT LIABILITIES | 688,043 | 768,470 |
LONG-TERM DEBT, less current portion | 185,961 | 198,371 |
OPERATING LEASE LIABILITIES, less current portion | 170,253 | 147,828 |
POSTRETIREMENT LIABILITIES, less current portion | 12,169 | 12,196 |
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS | 781 | |
CONTINGENT CONSIDERATION, less current portion | 83,650 | 112,000 |
OTHER LONG-TERM LIABILITIES | 34,248 | 42,745 |
DEFERRED INCOME TAXES | 51,410 | 60,494 |
STOCKHOLDERS' EQUITY | ||
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2023: 29,808,628 shares; 2022: 29,758,716 shares | 298 | 298 |
Additional paid-in capital | 340,481 | 339,582 |
Retained earnings | 1,157,061 | 1,088,693 |
Treasury stock, at cost, 2023: 5,683,472 shares; 2022: 5,529,383 shares | (298,367) | (284,275) |
Accumulated other comprehensive income | 6,386 | 7,103 |
TOTAL STOCKHOLDERS' EQUITY | 1,205,859 | 1,151,401 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 2,431,593 | $ 2,494,286 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowances (in dollars) | $ 11,585 | $ 13,892 |
Other accounts receivable, allowances (in dollars) | $ 721 | $ 713 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 70,000,000 | 70,000,000 |
Common stock, issued shares | 29,808,628 | 29,758,716 |
Treasury stock, at cost, shares | 5,683,472 | 5,529,383 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
REVENUES | $ 1,106,094 | $ 1,268,091 |
OPERATING EXPENSES | 1,084,935 | 1,175,148 |
OPERATING INCOME | 21,159 | 92,943 |
OTHER INCOME (COSTS) | ||
Interest and dividend income | 2,933 | 99 |
Interest and other related financing costs | (2,327) | (1,940) |
Other, net | 1,780 | (826) |
TOTAL OTHER INCOME (COSTS) | 2,386 | (2,667) |
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 23,545 | 90,276 |
INCOME TAX PROVISION | 4,698 | 22,268 |
NET INCOME FROM CONTINUING OPERATIONS | 18,847 | 68,008 |
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | 52,436 | 1,561 |
NET INCOME | $ 71,283 | $ 69,569 |
BASIC EARNINGS PER COMMON SHARE | ||
Continuing operations (in dollars per share) | $ 0.78 | $ 2.75 |
Discontinued operations (in dollars per share) | 2.16 | 0.06 |
BASIC EARNINGS PER COMMON SHARE (in dollars per share) | 2.93 | 2.82 |
DILUTED EARNINGS PER COMMON SHARE | ||
Continuing operations (in dollars per share) | 0.75 | 2.62 |
Discontinued operations (in dollars per share) | 2.09 | 0.06 |
DILUTED EARNINGS PER COMMON SHARE (in dollars per share) | $ 2.84 | $ 2.68 |
AVERAGE COMMON SHARES OUTSTANDING | ||
Basic (in shares) | 24,288,138 | 24,710,685 |
Diluted (in shares) | 25,057,726 | 25,911,200 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
NET INCOME | $ 71,283 | $ 69,569 |
Amortization of unrecognized net periodic benefit credit, net of tax of: (2023 - $86; 2022 - $48) | ||
Net actuarial gain | (247) | (141) |
Interest rate swap and foreign currency translation: | ||
Change in unrealized income (loss) on interest rate swap, net of tax of: (2023 - $161; 2022 - $517) | (452) | 1,458 |
Change in foreign currency translation, net of tax of: (2023 - $6; 2022 - $108) | (18) | 307 |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | (717) | 1,624 |
TOTAL COMPREHENSIVE INCOME | $ 70,566 | $ 71,193 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Amortization of unrecognized net periodic benefit credit, tax | $ (86) | $ (48) |
Change in unrealized income (loss) on interest rate swap, tax | (161) | 517 |
Change in foreign currency translation, tax | $ (6) | $ 108 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Share Repurchase Program | Total |
Balances at Dec. 31, 2021 | $ 294 | $ 318,033 | $ 801,314 | $ (194,273) | $ 3,699 | $ 929,067 | |
Balances (in shares) at Dec. 31, 2021 | 29,360,000 | ||||||
Balances, Treasury stock (in shares) at Dec. 31, 2021 | 4,493,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 69,569 | 69,569 | |||||
Other comprehensive (loss) income, net of tax | 1,624 | 1,624 | |||||
Issuance of common stock under share-based compensation plans (in shares) | 25,000 | ||||||
Shares withheld for employee tax remittance on share-based compensation | (1,367) | (1,367) | |||||
Share-based compensation expense | 2,763 | 2,763 | |||||
Purchase of treasury stock | $ (16,506) | (16,506) | |||||
Purchase of treasury stock (in shares) | 194,000 | ||||||
Forward contract for accelerated share repurchase | 25,000 | $ (25,000) | |||||
Forward contract for accelerated share repurchase (in shares) | 214,000 | ||||||
Dividends declared on common stock | (1,978) | (1,978) | |||||
Balances at Mar. 31, 2022 | $ 294 | 344,429 | 868,905 | $ (235,779) | 5,323 | 983,172 | |
Balances (in shares) at Mar. 31, 2022 | 29,385,000 | ||||||
Balances, Treasury stock (in shares) at Mar. 31, 2022 | 4,901,000 | ||||||
Balances at Dec. 31, 2022 | $ 298 | 339,582 | 1,088,693 | $ (284,275) | 7,103 | $ 1,151,401 | |
Balances (in shares) at Dec. 31, 2022 | 29,759,000 | ||||||
Balances, Treasury stock (in shares) at Dec. 31, 2022 | 5,529,000 | 5,529,383 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 71,283 | $ 71,283 | |||||
Other comprehensive (loss) income, net of tax | (717) | (717) | |||||
Issuance of common stock under share-based compensation plans (in shares) | 50,000 | ||||||
Shares withheld for employee tax remittance on share-based compensation | (1,590) | (1,590) | |||||
Share-based compensation expense | 2,489 | 2,489 | |||||
Purchase of treasury stock | $ (14,092) | $ (14,100) | (14,092) | ||||
Purchase of treasury stock (in shares) | 154,000 | 154,089 | |||||
Dividends declared on common stock | (2,915) | (2,915) | |||||
Balances at Mar. 31, 2023 | $ 298 | $ 340,481 | $ 1,157,061 | $ (298,367) | $ 6,386 | $ 1,205,859 | |
Balances (in shares) at Mar. 31, 2023 | 29,809,000 | ||||||
Balances, Treasury stock (in shares) at Mar. 31, 2023 | 5,683,000 | 5,683,472 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
OPERATING ACTIVITIES | ||
Net income | $ 71,283 | $ 69,569 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 32,187 | 31,591 |
Amortization of intangibles | 3,203 | 3,232 |
Share-based compensation expense | 2,235 | 2,763 |
Provision for losses on accounts receivable | 1,427 | 1,628 |
Change in deferred income taxes | (9,814) | (1,417) |
Gain on sale of property and equipment | (9) | (3,002) |
Pre-tax gain on sale of discontinued operations | (69,083) | |
Changes in operating assets and liabilities: | ||
Receivables | 43,977 | (103,677) |
Prepaid expenses | (1,464) | (2,858) |
Other assets | 3,874 | (2,781) |
Income taxes | 6,221 | (3,017) |
Operating right-of-use assets and lease liabilities, net | 1,570 | 14 |
Accounts payable, accrued expenses, and other liabilities | (64,944) | (3,298) |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 20,663 | (11,253) |
INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment, net of financings | (34,657) | (19,471) |
Proceeds from sale of property and equipment | 1,833 | 5,334 |
Proceeds from sale of discontinued operations | 101,138 | |
Purchases of short-term investments | (35,588) | (12,339) |
Proceeds from sale of short-term investments | 41,865 | 23,590 |
Capitalization of internally developed software | (3,631) | (4,510) |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 70,960 | (7,396) |
FINANCING ACTIVITIES | ||
Borrowings under credit facilities | 58,000 | |
Payments on long-term debt | (17,649) | (32,967) |
Net change in book overdrafts | (10,493) | 955 |
Deferred financing costs | 63 | |
Payment of common stock dividends | (2,915) | (1,978) |
Purchases of treasury stock | (14,092) | (16,506) |
Payments for tax withheld on share-based compensation | (1,590) | (1,367) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (46,676) | 6,137 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 44,947 | (12,512) |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 203,319 | 64,108 |
NONCASH INVESTING ACTIVITIES | ||
Equipment financed | 3,478 | 8,113 |
Accruals for equipment received | 1,453 | 712 |
Lease liabilities arising from obtaining right-of-use assets | $ 30,581 | $ 25,473 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Cash and cash equivalents of continuing operations | $ 158,264 | $ 76,568 |
Cash and cash equivalents of discontinued operations | $ 108 | $ 52 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | 3 Months Ended |
Mar. 31, 2023 | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | NOTE A – ORGANIZATIO N AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION ArcBest Corporation ™ ® The Asset-Based segment represented approximately 61% of the Company’s total revenues before other revenues and intercompany eliminations for the three months ended March 31, 2023. As of March 2023, approximately 82% of the Asset-Based segment’s employees were covered under a collective bargaining agreement, the ABF National Master Freight Agreement (the “2018 ABF NMFA”), with the International Brotherhood of Teamsters (the “IBT”), which will remain in effect through June 30, 2023. ABF Freight began negotiations with the IBT in late March 2023 for its new collective bargaining agreement for the period subsequent to June 30, 2023. The risks related to negotiations for the new collective bargaining agreement are further discussed in Part I, Item 1A (Risk Factors) of our 2022 Annual Report on Form 10-K. Financial Statement Presentation On February 28, 2023, the Company sold FleetNet America, Inc. (“FleetNet”), a wholly owned subsidiary and reportable operating segment of the Company, for an aggregate purchase price of $101.1 million in cash, subject to certain tax and other customary adjustments. The sale of FleetNet is a strategic shift for the Company as it is exiting the fleet roadside assistance and maintenance management business; therefore, the sale is accounted for as discontinued operations. As such, historical results of FleetNet have been excluded from both continuing operations and segment results for all periods presented, and reclassifications have been made to the prior-period financial statements to conform to the current-year presentation. Related assets and liabilities associated with FleetNet are classified as discontinued operations in the consolidated balance sheets for all periods presented. The cash flows related to the discontinued operations have not been segregated and are included in the consolidated statements of cash flows. Unless otherwise indicated, all amounts in this Quarterly Report on Form 10-Q refer to continuing operations, including comparisons to the prior year. For more information on our discontinued operations, see Note C. Certain reclassifications have also been made to the prior period presentation of other long-term liabilities in the consolidated balance sheets to conform to the current year presentation. Long-term portion of contingent consideration liability previously presented in other long-term liabilities has been reclassed to a separate line in the consolidated balance sheets. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore, should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2022 Annual Report on Form 10-K, which have not been adjusted to reflect FleetNet as discontinued operations, and other current filings with the SEC. In the opinion of management, all adjustments (which are of a normal and recurring nature) considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts may differ from those estimates. Accounting Pronouncements Not Yet Adopted Management believes there is no new accounting guidance issued but not yet effective that would have a material impact to the Company’s current financial statements. |
FINANCIAL INSTRUMENTS AND FAIR
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2023 | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | NOTE B – FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS Financial Instruments The following table presents the components of cash and cash equivalents and short-term investments: March 31 December 31 2023 2022 (in thousands) Cash and cash equivalents Cash deposits (1)(2) $ 129,640 $ 137,247 Variable rate demand notes (1)(3) 121 9,285 Money market funds (4) 73,558 11,732 Total cash and cash equivalents $ 203,319 $ 158,264 Short-term investments Certificates of deposit (1) $ 113,307 $ 88,851 U.S. Treasury securities (5) 49,180 78,811 Total short-term investments $ 162,487 $ 167,662 (1) Recorded at cost plus accrued interest, which approximates fair value. (2) The December 31, 2022 balance reflects the reclassification of FleetNet cash deposits to discontinued operations. (3) Amounts may be redeemed on a daily basis with the original issuer. (4) Recorded at fair value as determined by quoted market prices (see amounts presented in the table of financial assets and liabilities measured at fair value within this Note). (5) Recorded at amortized cost plus accrued interest, which approximates fair value. U.S. Treasury securities included in short-term investments are held-to-maturity investments with maturity dates of less than one year. The Company’s long-term financial instruments are presented in the table of financial assets and liabilities measured at fair value within this Note. Concentrations of Credit Risk of Financial Instruments The Company is potentially subject to concentrations of credit risk related to its cash, cash equivalents, and short-term investments. The Company reduces credit risk by maintaining its cash deposits and short-term investments in accounts and certificates of deposit which are primarily FDIC-insured or in direct obligations of the U.S. government. At March 31, 2023 and December 31, 2022, cash deposits and short-term investments which were neither FDIC insured nor direct obligations of the U.S. government totaled $105.2 million and $87.6 million, respectively. The Company also holds money market funds which are invested in U.S. government securities and repurchase agreements collateralized solely by U.S. government securities. Fair Value Disclosure of Financial Instruments Fair value disclosures are made in accordance with the following hierarchy of valuation techniques based on whether the inputs of market data and market assumptions used to measure fair value are observable or unobservable: ● Level 1 — Quoted prices for identical assets and liabilities in active markets. ● Level 2 — Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Unobservable inputs (Company’s market assumptions) that are significant to the valuation model. Fair value and carrying value disclosures of financial instruments are presented in the following table: March 31 December 31 2023 2022 (in thousands) Carrying Fair Carrying Fair Value Value Value Value Credit Facility (1) $ 50,000 $ 50,000 $ 50,000 $ 50,000 Notes payable (2) 200,452 194,705 214,623 207,778 New England Pension Fund withdrawal liability (3) 19,929 19,253 20,100 18,911 $ 270,381 $ 263,958 $ 284,723 $ 276,689 (1) The revolving credit facility (the “Credit Facility”) carries a variable interest rate based on Secured Overnight Financing Rate (“SOFR”), plus a margin, priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy). (2) Fair value of the notes payable was determined using a present value income approach based on quoted interest rates from lending institutions with which the Company would enter into similar transactions (Level 2 of the fair value hierarchy). (3) ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “New England Pension Fund”) was restructured under a transition agreement effective on August 1, 2018, which resulted in a related withdrawal liability. The fair value of the outstanding withdrawal liability is equal to the present value of the future withdrawal liability payments, discounted at an interest rate of 4.9% and 5.3% at March 31, 2023 and December 31, 2022, respectively, determined using the 20-year U.S. Treasury rate plus a spread (Level 2 of the fair value hierarchy). As of March 31, 2023, the outstanding withdrawal liability totaled $19.9 million, of which $0.7 million and $19.2 million were recorded in accrued expenses and other long-term liabilities, respectively. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents the assets and liabilities that are measured at fair value on a recurring basis: March 31, 2023 Fair Value Measurements Using Quoted Prices Significant Significant In Active Observable Unobservable Markets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in thousands) Assets: Money market funds (1) $ 73,558 $ 73,558 $ — $ — Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2) 3,898 3,898 — — Interest rate swap (3) 2,913 — 2,913 — $ 80,369 $ 77,456 $ 2,913 $ — Liabilities: Contingent consideration (4) 127,040 — — 127,040 $ 127,040 $ — $ — $ 127,040 December 31, 2022 Fair Value Measurements Using Quoted Prices Significant Significant In Active Observable Unobservable Markets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in thousands) Assets: Money market funds (1) $ 11,732 $ 11,732 $ — $ — Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2) 3,982 3,982 — — Interest rate swap (3) 3,526 — 3,526 — $ 19,240 $ 15,714 $ 3,526 $ — Liabilities: Contingent consideration (4) 112,000 — — 112,000 $ 112,000 $ — $ — $ 112,000 (1) Included in cash and cash equivalents. (2) Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities. (3) Included in other long-term assets. The fair value of the interest rate swap was determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are generally considered to be in Level 3 of the fair value hierarchy. However, the Company assessed Level 3 inputs as insignificant to the valuation at March 31, 2023 and December 31, 2022, and considers the interest rate swap valuation in Level 2 of the fair value hierarchy. (4) As part of the Agreement and Plan of Merger (the “Merger Agreement”) of MoLo, executed in November 2021, certain additional cash consideration is required to be paid by the Company based on the achievement of certain incremental targets of adjusted earnings before interest, taxes, depreciation and amortization for each of the years ended December 31, 2023, 2024, and 2025. At 100% of the target, the cumulative additional consideration for years 2023 through 2025 would be $215.0 million, with the possible undiscounted cash consideration due ranging from a total of $95.0 million at 80% of target to $455.0 million at 300% of target, as outlined in the Merger Agreement. The estimated fair value of contingent earnout consideration is determined by assessing Level 3 inputs. The Level 3 assessments utilize a Monte Carlo simulation with inputs including scenarios of estimated revenues and earnings before interest, taxes, depreciation and amortization to be achieved for the applicable performance periods, volatility factors applied to the simulations, and the discount rate applied, which was 13.7% and 14.0% as of March 31, 2023 and December 31, 2022, respectively. Changes in the significant unobservable inputs might result in a significantly higher or lower fair value at the reporting date. As of March 31, 2023, the contingent earnout consideration totaled $127.0 million, of which $43.4 million was recorded in current liabilities based on when expected payouts become due, and the remaining portion was recorded in long-term liabilities. The increase in fair value upon the remeasurement at March 31, 2023 reflects increases in assumptions for business growth, combined with a lower discount rate versus the previous measurement period. Adjustments to the contingent earnout consideration liability are included in operating income. The following table provides the changes in fair value of the liabilities measured at fair value using inputs categorized in Level 3 of the fair value hierarchy: Contingent Consideration (in thousands) Balances at December 31, 2022 $ 112,000 Change in fair value included in operating income 15,040 Balances at March 31, 2023 $ 127,040 |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 3 Months Ended |
Mar. 31, 2023 | |
DISCONTINUED OPERATIONS | |
DISCONTINUED OPERATIONS | NOTE C – DISCONTINUED OPERATIONS On February 28, 2023, the Company sold FleetNet, an indirect wholly owned subsidiary of the Company, for an aggregate cash purchase price of $101.1 million, subject to certain tax and other customary adjustments and recorded a pre-tax gain on sale of $69.1 million, or $51.4 million, net of tax. FleetNet provided roadside repair solutions and vehicle maintenance management services for commercial and private fleets through a network of third-party service providers. The financial results of FleetNet have been accounted for as discontinued operations for all periods presented. The sale of FleetNet allows the Company to focus on growing its continuing operations, as FleetNet was no longer core to the Company’s growth initiatives. The following table summarizes the financial results from discontinued operations: Three Months Ended March 31 2023 2022 (in thousands) Revenues $ 55,929 $ 66,983 Operating expenses Gain on sale of business (1) (69,083) — Other 54,623 64,998 (14,460) 64,998 Operating income 70,389 1,985 Other income, net (2) 17 8 Income from discontinued operations before income taxes 70,406 1,993 Income tax provision 17,970 432 Income from discontinued operations, net of tax $ 52,436 $ 1,561 (1) Includes estimated transaction costs of $4.4 million consisting of consulting fees, professional fees, and employee-related expenses. (2) Includes interest expense, which is immaterial for the three months ended March 31, 2023 and 2022. The following table summarizes the assets and liabilities from discontinued operations: December 31, 2022 (in thousands) Cash and cash equivalents $ 108 Accounts receivable, net 63,022 Other current assets 1,606 Total current assets of discontinued operations $ 64,736 Property, plant and equipment, net 10,350 Goodwill 630 Intangible assets, net 63 Other long-term assets 54 Total long-term assets of discontinued operations $ 11,097 Accounts payable 47,687 Income taxes payable 613 Accrued expenses 3,365 Total current liabilities of discontinued operations $ 51,665 Deferred tax liability 781 Total long-term liabilities of discontinued operations $ 781 Cash flows from discontinued operations of FleetNet were as follows: Three Months Ended March 31 2023 2022 (in thousands) Net cash provided by (used in) operating activities (1) $ 762 $ (749) Net cash used in investing activities (2) (398) (1,062) Net cash provided by (used in) financing activities (472) 1,867 Net increase (decrease) in cash and cash equivalents $ (108) $ 56 (1) Includes depreciation and amortization expense of $0.4 million for the three-month periods ended March 31, 2023 and 2022 . Also includes share-based compensation expense for the three months ended March 31, 2023 of $0.3 million, which is included in the “Pre-tax gain on sale of discontinued operations” line of the consolidated statements of cash flows. (2) Includes purchases of property, plant and equipment of $0.1 million and $0.7 million for the three months ended March 31, 2023 and 2022, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | NOTE D – GOODWILL AND INTANGIBLE ASSETS Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired. The December 31, 2022 balance has been adjusted to reclassify the goodwill portion related to FleetNet of $0.6 million to discontinued operations. The remaining goodwill balance of $304.8 million at both March 31, 2023 and December 31, 2022, primarily relates to the Asset-Light segment acquisitions of MoLo and Panther. Intangible assets consisted of the following: March 31, 2023 December 31, 2022 (1) Weighted-Average Accumulated Net Accumulated Net Amortization Period Cost Amortization Value Cost Amortization Value (in years) (in thousands) (in thousands) Finite-lived intangible assets Customer relationships 12 $ 99,579 $ 45,040 $ 54,539 $ 99,579 $ 42,933 $ 56,646 Other 8 29,998 6,215 23,783 29,914 5,127 24,787 11 129,577 51,255 78,322 129,493 48,060 81,433 Indefinite-lived intangible assets Trade name N/A 32,300 N/A 32,300 32,300 N/A 32,300 Total intangible assets N/A $ 161,877 $ 51,255 $ 110,622 $ 161,793 $ 48,060 $ 113,733 (1) The December 31, 2022 balances reflect the reclassification of intangibles of FleetNet to discontinued operations. The future amortization for intangible assets as of March 31, 2023, was as follows: Amortization of Intangible Assets (in thousands) Remainder of 2023 $ 9,586 2024 12,778 2025 12,778 2026 8,671 2027 7,247 Thereafter 27,262 Total amortization $ 78,322 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE E – INCOME TAXES The Company’s total effective tax rate was 24.1% and 24.6% for the three months ended March 31, 2023 and 2022, respectively, including discontinued operations which are further discussed in Note C. The effective tax rate from continuing operations was 20.0% and 24.7% for the three months ended March 31, 2023 and 2022, respectively. State tax rates vary among states and average approximately 6.0% to 6.5%, although some state rates are higher, and a small number of states do not impose an income tax. For the three months ended March 31, 2023 and 2022, the difference between the Company’s effective tax rate from continuing operations and the federal statutory rate resulted from state income taxes, nondeductible expenses, changes in the cash surrender value of life insurance, the federal research and development tax credit, changes in tax valuation allowances, and the tax benefit from the vesting of stock awards. The Company’s effective tax rate for the three months ended March 31, 2023, was also impacted by the reinstatement of the federal alternative fuel tax credit. As of March 31, 2023, the Company’s deferred tax liabilities, which will reverse in future years, exceeded the deferred tax assets. The Company evaluated the total deferred tax assets at March 31, 2023, and concluded that, other than for certain deferred tax assets related to foreign and state tax credit carryforwards and state net operating losses, the assets did not exceed the amount for which realization is more likely than not. In making this determination, the Company considered the future reversal of existing taxable temporary differences, future taxable income, and tax planning strategies. Valuation allowances for deferred tax assets totaled $1.7 million at both March 31, 2023 and December 31, 2022. For the three months ended March 31, 2023, the Company paid federal, state, and foreign income taxes of $27.7 million and received refunds of $1.6 million of federal and state income taxes that were paid in prior years. For the three months ended March 31, 2022, the Company paid federal and state income taxes of $27.2 million and received refunds of less than $0.1 million that were paid in prior years. Income tax expense reflected in discontinued operations is $18.0 million, or an effective tax rate of 25.5%, for the three months ended March 31, 2023, which primarily consisted of federal and state income taxes on the gain on the sale of FleetNet, and $0.4 million, or an effective tax rate of 21.7%, for the three months ended March 31, 2022. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
LEASES | |
LEASES | NOTE F – LEASES The Company leases, under finance and operating lease arrangements, certain facilities used primarily in the Asset-Based segment service center operations, certain revenue equipment used in the Asset-Light segment operations, and certain other office equipment. The components of operating lease expense were as follows: Three Months Ended March 31 2023 2022 (in thousands) Operating lease expense $ 9,166 $ 7,083 Variable lease expense 1,540 976 Sublease income (114) (161) Total operating lease expense (1) $ 10,592 $ 7,898 (1) Operating lease expense excludes short-term leases with a term of 12 months or less. The operating cash flows from operating lease activity were as follows: Three Months Ended March 31 2023 2022 (in thousands) Noncash change in operating right-of-use assets $ 7,485 $ 6,171 Change in operating lease liabilities (5,915) (6,157) Operating right-of-use-assets and lease liabilities, net $ 1,570 $ 14 Cash paid for amounts included in the measurement of operating lease liabilities $ (7,596) $ (7,071) Maturities of operating lease liabilities at March 31, 2023, were as follows: Equipment Land and and Total Structures (1) Other (in thousands) Remainder of 2023 $ 26,455 $ 26,161 $ 294 2024 35,844 35,527 317 2025 32,060 32,037 23 2026 29,118 29,118 — 2027 22,883 22,883 — Thereafter 87,528 87,528 — Total lease payments 233,888 233,254 634 Less imputed interest (35,169) (35,147) (22) Total $ 198,719 $ 198,107 $ 612 (1) Excludes future minimum lease payments for leases which were executed but had not yet commenced as of March 31, 2023, totaling $32.0 million which will be paid over approximately 10 years . |
LONG-TERM DEBT AND FINANCING AR
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | 3 Months Ended |
Mar. 31, 2023 | |
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | |
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | NOTE G – LONG-TERM DEBT AND FINANCING ARRANGEMENTS Long-Term Debt Obligations Long-term debt consisted of borrowings outstanding under the Company’s revolving credit facility, which is further described in Financing Arrangements within this Note, notes payable and finance lease obligations related to the financing of revenue equipment (tractors and trailers used primarily in Asset-Based segment operations), certain other equipment, and software as follows: March 31 December 31 2023 2022 (in thousands) Credit Facility (interest rate of 6.0% (1) $ 50,000 $ 50,000 Notes payable (weighted-average interest rate of 3.4% at March 31, 2023) 200,452 214,623 250,452 264,623 Less current portion 64,491 66,252 Long-term debt, less current portion $ 185,961 $ 198,371 (1) The interest rate swap mitigates interest rate risk by effectively converting the $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.55% based on the margin of the Credit Facility as of both March 31, 2023 and December 31, 2022. Scheduled maturities of long-term debt obligations as of March 31, 2023, were as follows: Credit Notes Total Facility (1) Payable (in thousands) Due in one year or less $ 73,256 $ 2,981 $ 70,275 Due after one year through two years 113,166 51,217 61,949 Due after two years through three years 40,882 — 40,882 Due after three years through four years 29,413 — 29,413 Due after four years through five years 11,261 — 11,261 Total payments 267,978 54,198 213,780 Less amounts representing interest 17,526 4,198 13,328 Long-term debt $ 250,452 $ 50,000 $ 200,452 (1) The future interest payments included in the scheduled maturities due are calculated using variable interest rates based on the SOFR swap curve, plus the anticipated applicable margin, exclusive of payments on the interest rate swap. Assets securing notes payable or held under finance leases were included in property, plant and equipment as follows: March 31 December 31 2023 2022 (in thousands) Revenue equipment $ 305,925 $ 294,700 Service, office, and other equipment 39,121 41,522 Total assets securing notes payable or held under finance leases 345,046 336,222 Less accumulated depreciation and amortization (1) 130,896 119,244 Net assets securing notes payable or held under finance leases $ 214,150 $ 216,978 (1) Amortization of assets held under finance leases and depreciation of assets securing notes payable are included in depreciation expense. Financing Arrangements Credit Facility As of March 31, 2023, the Company has a revolving credit facility (the “Credit Facility”) under its Fourth Amended and Restated Credit Agreement (the “Credit Agreement”), with an initial maximum credit amount of up to $250.0 million, including a swing line facility in an aggregate amount of up to $40.0 million and a letter of credit sub-facility providing for the issuance of letters of credit up to an aggregate amount of $20.0 million. The Company may request additional revolving commitments or incremental term loans thereunder up to an aggregate amount of $125.0 million, subject to the satisfaction of certain additional conditions as provided in the Credit Agreement. As of March 31, 2023, the Company had available borrowing capacity of $200.0 million under the initial maximum credit amount of the Credit Facility. Principal payments under the Credit Facility are due upon maturity of the facility on October 7, 2027; however, borrowings may be repaid, at the Company’s discretion, in whole or in part at any time, without penalty, subject to required notice periods and compliance with minimum prepayment amounts. In addition, the Credit Facility requires the Company to pay a fee on unused commitments. The Credit Agreement contains conditions, representations and warranties, events of default, and indemnification provisions that are customary for financings of this type, including, but not limited to, a minimum interest coverage ratio, a maximum adjusted leverage ratio, and limitations on incurrence of debt, investments, liens on assets, certain sale and leaseback transactions, transactions with affiliates, mergers, consolidations, and sales of assets. The Company was in compliance with the covenants under the Credit Agreement at March 31, 2023. Interest Rate Swaps The Company has an interest rate swap agreement with a $50.0 million notional amount, which will end on October 1, 2024. The Company received floating-rate interest amounts based on one-month SOFR in exchange for fixed-rate interest payments of 0.33% throughout the remaining term of the agreement. The interest rate swap agreement effectively converted $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.55% based on the margin of the Credit Facility as of March 31, 2023. The fair value of the interest rate swap of $2.9 million and $3.5 million was recorded in other long-term assets at March 31, 2023 and December 31, 2022, respectively. The unrealized gain or loss on the interest rate swap instruments in effect at the balance sheet date was reported as a component of accumulated other comprehensive income, net of tax, in stockholders’ equity at March 31, 2023 and December 31, 2022, and the change in the unrealized gain or loss on the interest rate swaps for the three months ended March 31, 2023 and 2022 was reported in other comprehensive income (loss), net of tax, in the consolidated statements of comprehensive income. The interest rate swaps are subject to certain customary provisions that could allow the counterparty to request immediate settlement of the fair value liability or asset upon violation of any or all of the provisions. The Company was in compliance with all provisions of the interest rate swap agreement at March 31, 2023. Accounts Receivable Securitization Program The Company’s accounts receivable securitization program, which matures on July 1, 2024, provides available cash proceeds of $50.0 million to be provided under the program and has an accordion feature allowing the Company to request additional borrowings up to $100.0 million, subject to certain conditions. Under this program, certain subsidiaries of the Company continuously sell a designated pool of trade accounts receivables to a wholly owned subsidiary which, in turn, may borrow funds on a revolving basis. This wholly owned consolidated subsidiary is a separate bankruptcy-remote entity, and its assets would be available only to satisfy the claims related to the lenders’ interest in the trade accounts receivables. Borrowings under the accounts receivable securitization program bear interest based upon SOFR, plus a margin, and an annual facility fee. The securitization agreement contains representations and warranties, affirmative and negative covenants, and events of default that are customary for financings of this type, including a maximum adjusted leverage ratio covenant. The Company was in compliance with the covenants under the accounts receivable securitization program at March 31, 2023. The accounts receivable securitization program includes a provision under which the Company may request, and the letter of credit issuer may issue standby letters of credit, primarily in support of workers’ compensation and third-party casualty claims liabilities in various states in which the Company is self-insured. The outstanding standby letters of credit reduce the availability of borrowings under the program. As of March 31, 2023, standby letters of credit of $10.0 million have been issued under the program, which reduced the available borrowing capacity to $40.0 million. Letter of Credit Agreements and Surety Bond Programs As of March 31, 2023, the Company had letters of credit outstanding of $10.6 million (including $10.0 million issued under the accounts receivable securitization program). The Company has programs in place with multiple surety companies for the issuance of surety bonds in support of its self-insurance program. As of March 31, 2023, surety bonds outstanding related to the self-insurance program totaled $64.9 million. Notes Payable The Company has financed the purchase of certain revenue equipment, other equipment, and software through promissory note arrangements, including $3.5 million for revenue equipment during the three months ended March 31, 2023. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE H – STOCKHOLDERS’ EQUITY Accumulated Other Comprehensive Income Components of accumulated other comprehensive income were as follows: March 31 December 31 2023 2022 (in thousands) Pre-tax amounts: Unrecognized net periodic benefit credit $ 8,954 $ 9,287 Interest rate swap 2,913 3,526 Foreign currency translation (3,271) (3,247) Total $ 8,596 $ 9,566 After-tax amounts: Unrecognized net periodic benefit credit $ 6,649 $ 6,896 Interest rate swap 2,152 2,604 Foreign currency translation (2,415) (2,397) Total $ 6,386 $ 7,103 The following is a summary of the changes in accumulated other comprehensive income, net of tax, by component for the three months ended March 31, 2023 and 2022: Unrecognized Interest Foreign Net Periodic Rate Currency Total Benefit Credit Swap Translation (in thousands) Balances at December 31, 2022 $ 7,103 $ 6,896 $ 2,604 $ (2,397) Other comprehensive loss before reclassifications (470) — (452) (18) Amounts reclassified from accumulated other comprehensive income (247) (247) — — Net current-period other comprehensive loss (717) (247) (452) (18) Balances at March 31, 2023 $ 6,386 $ 6,649 $ 2,152 $ (2,415) Balances at December 31, 2021 $ 3,699 $ 4,160 $ 309 $ (770) Other comprehensive income before reclassifications 1,765 — 1,458 307 Amounts reclassified from accumulated other comprehensive income (141) (141) — — Net current-period other comprehensive income (loss) 1,624 (141) 1,458 307 Balances at March 31, 2022 $ 5,323 $ 4,019 $ 1,767 $ (463) The following is a summary of the significant reclassifications out of accumulated other comprehensive income by component: Unrecognized Net Periodic Benefit Credit (1)(2) Three Months Ended March 31 2023 2022 (in thousands) Amortization of net actuarial gain, pre-tax $ 333 $ 189 Tax expense (86) (48) Total, net of tax $ 247 $ 141 (1) Amounts in parentheses indicate increases in expense or loss. (2) These components of accumulated other comprehensive income are included in the computation of net periodic benefit cost of the Company’s supplemental benefit plan (“SBP”) and postretirement health benefit plan. Dividends on Common Stock The following table is a summary of dividends declared during the applicable quarter: 2023 2022 Per Share Amount Per Share Amount (in thousands, except per share data) First quarter $ 0.12 $ 2,915 $ 0.08 $ 1,978 On April 26, 2023, the Company announced its Board of Directors declared a dividend of $0.12 per share to stockholders of record as of May 10, 2023. Treasury Stock The Company has a program to repurchase its common stock in the open market or in privately negotiated transactions (the “share repurchase program”). The share repurchase program has no expiration date but may be terminated at any time at the Board of Directors’ discretion. Repurchases may be made using the Company’s cash reserves or other available sources. As of December 31, 2022, the Company had $26.5 million available for repurchases of its common stock in total under the share repurchase program. In February 2023, the Board of Directors reauthorized the share repurchase program and increased the total amount available for purchases of the Company’s common stock under the program to $125.0 million. In March 2023, the Company entered into a 10b5-1 agreement allowing for stock repurchases during our closed trading window extending from March 16, 2023 to May 2, 2023. During the three months ended March 31, 2023, the Company repurchased 154,089 shares for an aggregate cost of $14.1 million. The Company had $110.9 million remaining under its share repurchase program as of March 31, 2023. During April 2023, the Company settled repurchases of 171,967 shares for an aggregate cost of $15.9 million pursuant to the 10b5-1 agreement under the Company’s share repurchase program, leaving $95.0 million available under the program as of April 28, 2023. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2023 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE I – EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per common share: Three Months Ended March 31 2023 2022 (in thousands, except share and per share data) Basic Numerator: Net income from continuing operations $ 18,847 $ 68,008 Net income from discontinued operations 52,436 1,561 Net income $ 71,283 $ 69,569 Denominator: Weighted-average shares 24,288,138 24,710,685 Basic earnings per common share Continuing operations $ 0.78 $ 2.75 Discontinued operations 2.16 0.06 Total basic earnings per common share (1) $ 2.93 $ 2.82 Diluted Numerator: Net income from continuing operations $ 18,847 $ 68,008 Net income from discontinued operations 52,436 1,561 Net income $ 71,283 $ 69,569 Denominator: Weighted-average shares 24,288,138 24,710,685 Effect of dilutive securities 769,588 1,200,515 Adjusted weighted-average shares and assumed conversions 25,057,726 25,911,200 Diluted earnings per common share Continuing operations $ 0.75 $ 2.62 Discontinued operations 2.09 0.06 Total diluted earnings per common share (1) $ 2.84 $ 2.68 (1) Earnings per common share is calculated in total and may not equal the sum of earnings per common share from continuing operations and discontinued operations due to rounding. |
OPERATING SEGMENT DATA
OPERATING SEGMENT DATA | 3 Months Ended |
Mar. 31, 2023 | |
OPERATING SEGMENT DATA | |
OPERATING SEGMENT DATA | NOTE J – OPERATING SEGMENT DATA The Company uses the “management approach” to determine its reportable operating segments, as well as to determine the basis of reporting the operating segment information. The management approach focuses on financial information that the Company’s management uses to make operating decisions. Management uses revenues, operating expense categories, operating ratios, operating income, and key operating statistics to evaluate performance and allocate resources to the Company’s operations. On February 28, 2023, the Company sold FleetNet, a wholly owned subsidiary and reportable operating segment of the Company. Following the sale, FleetNet is reported as discontinued operations. As such, historical results of FleetNet have been excluded from both continuing operations and segment results for all periods presented, and reclassifications have been made to the prior-period financial statements to conform to the current-year presentation. The Company’s reportable operating segments are impacted by seasonal fluctuations which affect tonnage and shipment levels and demand for services, as described below; therefore, operating results for the interim periods presented may not necessarily be indicative of the results for the fiscal year. In recent periods, including the three months ended March 31, 2023 and 2022, the Company’s operations have not been as heavily impacted by seasonal fluctuations. Inclement weather conditions can adversely affect freight shipments and operating costs of the Asset-Based and Asset-Light segments. Shipments may decline during winter months because of post-holiday slowdowns; however, expedite shipments can be subject to short-term increases depending on the impact of weather or other disruptions to customers’ supply chains. Plant shutdowns during summer months may affect shipments for automotive and manufacturing customers of the Asset-Light segment, but disruptive events can result in higher demand for expedite services. Moving services of the Asset-Light segment are impacted by seasonal fluctuations, generally resulting in higher business levels in the second and third quarters as the demand for moving services is typically stronger in the summer months. Historically, the second and third calendar quarters of each year usually have the highest tonnage and shipment levels, while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies; available capacity in the market; the impact of yield initiatives; and the impact of adverse external events or conditions, may influence quarterly business levels. The Company’s yield initiatives, along with increased intelligence and visibility with respect to demand, have allowed for shipment optimization in non-peak times, reducing the Company’s susceptibility to seasonal fluctuations in recent years. The Company’s reportable operating segments are as follows: ● The Asset-Based segment includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries. The segment operations include national, inter-regional, and regional transportation of general commodities through standard, expedited, and guaranteed LTL services. The Asset-Based segment provides services to the Asset-Light segment, including freight transportation related to certain consumer household goods self-move services. ● The Asset-Light segment includes the results of operations of the Company’s service offerings in ground truckload, expedite, dedicated, intermodal, household goods moving, managed transportation, warehousing and distribution, and international freight transportation for air, ocean, and ground. The Asset-Light segment provides services to the Asset-Based segment. The Company’s other business activities and operations that are not reportable segments include ArcBest Corporation (the parent holding company) and certain subsidiaries. Certain costs incurred by the parent holding company and the Company’s shared services subsidiary are allocated to the reportable segments. The Company eliminates intercompany transactions in consolidation. However, the information used by the Company’s management with respect to its reportable operating segments is before intersegment eliminations of revenues and expenses. Shared services represent costs incurred to support all segments, including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, and other company-wide services. Certain overhead costs are not attributable to any segment and remain unallocated in “Other and eliminations.” Included in unallocated costs are expenses related to investor relations, legal, the Company’s Board of Directors, and certain technology investments. Shared services costs attributable to the reportable operating segments are predominantly allocated based upon estimated and planned resource utilization-related metrics such as estimated shipment levels or number of personnel supported. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the reportable operating segments. Management believes the methods used to allocate expenses are reasonable. Further classifications of operations or revenues by geographic location are impracticable and, therefore, are not provided. The Company’s foreign operations are not significant. The following tables reflect the Company’s reportable operating segment information from continuing operations: Three Months Ended March 31 2023 2022 (in thousands) REVENUES FROM CONTINUING OPERATIONS Asset-Based $ 697,817 $ 705,311 Asset-Light 438,092 595,284 Other and eliminations (29,815) (32,504) Total consolidated revenues $ 1,106,094 $ 1,268,091 OPERATING EXPENSES FROM CONTINUING OPERATIONS Asset-Based Salaries, wages, and benefits $ 335,605 $ 313,497 Fuel, supplies, and expenses 94,288 84,831 Operating taxes and licenses 13,979 12,493 Insurance 13,273 10,431 Communications and utilities 5,304 4,687 Depreciation and amortization 24,911 24,305 Rents and purchased transportation 90,744 102,985 Shared services 64,613 67,150 Gain on sale of property and equipment (51) (2,695) Innovative technology costs (1) 6,068 6,960 Other 1,612 633 Total Asset-Based 650,346 625,277 Asset-Light Purchased transportation 370,163 508,380 Supplies and expenses 4,072 3,266 Depreciation and amortization (2) 5,068 5,180 Shared services 51,429 50,197 Contingent consideration (3) 15,040 810 Other 6,411 6,335 Total Asset-Light 452,183 574,168 Other and eliminations (17,594) (24,297) Total consolidated operating expenses $ 1,084,935 $ 1,175,148 OPERATING INCOME FROM CONTINUING OPERATIONS Asset-Based $ 47,471 $ 80,034 Asset-Light (14,091) 21,116 Other and eliminations (12,221) (8,207) Total consolidated operating income $ 21,159 $ 92,943 OTHER INCOME (COSTS) FROM CONTINUING OPERATIONS Interest and dividend income $ 2,933 $ 99 Interest and other related financing costs (2,327) (1,940) Other, net (4) 1,780 (826) Total other income (costs) 2,386 (2,667) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ 23,545 $ 90,276 (1) Represents costs associated with the freight handling pilot test program at ABF Freight. (2) Depreciation and amortization includes amortization of intangibles associated with acquired businesses. (3) Represents the increase in fair value of the contingent earnout consideration related to the MoLo acquisition (see Note B). (4) Includes the components of net periodic benefit cost (credit) other than service cost related to the Company’s SBP and postretirement plans and proceeds and changes in cash surrender value of life insurance policies. The following table reflects information about revenues from customers and intersegment revenues: Three Months Ended March 31 2023 2022 (in thousands) Revenues from customers Asset-Based $ 669,220 $ 675,518 Asset-Light 436,033 591,722 Other 841 851 Total consolidated revenues $ 1,106,094 $ 1,268,091 Intersegment revenues Asset-Based $ 28,597 $ 29,793 Asset-Light 2,059 3,562 Other and eliminations (30,656) (33,355) Total intersegment revenues $ — $ — Total segment revenues Asset-Based $ 697,817 $ 705,311 Asset-Light 438,092 595,284 Other and eliminations (29,815) (32,504) Total consolidated revenues $ 1,106,094 $ 1,268,091 The following table presents operating expenses by category on a consolidated basis: Three Months Ended March 31 2023 2022 (in thousands) OPERATING EXPENSES Salaries, wages, and benefits $ 436,982 $ 414,905 Rents, purchased transportation, and other costs of services 429,605 577,849 Fuel, supplies, and expenses 122,618 110,359 Depreciation and amortization (1) 35,010 34,396 Contingent consideration (2) 15,040 810 Other 45,680 36,829 $ 1,084,935 $ 1,175,148 (1) Includes amortization of intangible assets. (2) Represents the increase in fair value of the contingent earnout consideration related to the MoLo acquisition (see Note B). |
LEGAL PROCEEDINGS, ENVIRONMENTA
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS | 3 Months Ended |
Mar. 31, 2023 | |
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS | |
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS | NOTE K – LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS The Company is involved in various legal actions arising in the ordinary course of business. The Company maintains liability insurance against certain risks arising out of the normal course of its business, subject to certain self-insured retention limits. The Company routinely establishes and reviews the adequacy of reserves for estimated legal, environmental, and self-insurance exposures. While management believes that amounts accrued in the consolidated financial statements are adequate, estimates of these liabilities may change as circumstances develop. Considering amounts recorded, routine legal matters are not expected to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Legal Proceedings In January 2023, the Company and MoLo were named as defendants in lawsuits related to an auto accident which involved a MoLo contract carrier. The accident occurred prior to the Company’s acquisition of MoLo on November 1, 2021. The Company intends to vigorously defend against these lawsuits. The Company believes that a loss related to this matter is reasonably possible. The Company cannot estimate the amount or a range of reasonably possible losses for this matter, if any, at this time; however, it is reasonably possible that such amounts could be material to the Company’s financial condition, results of operations, or cash flows. The Company will pursue recovery for its losses, if any, against all available sources, including, but not limited to, insurance and any potentially responsible third parties. Environmental Matters The Company’s subsidiaries store fuel for use in tractors and trucks in underground tanks at certain facilities. Maintenance of such tanks is regulated at the federal and, in most cases, state levels. The Company believes it is in substantial compliance with all such regulations. The Company’s underground storage tanks are required to have leak detection systems. The Company is not aware of any leaks from such tanks that could reasonably be expected to have a material adverse effect on the Company. The Company has received notices from the Environmental Protection Agency (the “EPA”) and others that it has been identified as a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act of 1980, On March 20, 2023, ABF Freight entered into a consent decree with the EPA (the “Consent Decree”) and, as a result, will pay a civil penalty of $0.5 million, including interest to resolve alleged compliance issues under the federal Clean Water Act (the “CWA”). By the date of the Consent Decree, the Asset-Based service center facilities were in general compliance with the stormwater laws and have ensured compliance with applicable stormwater permits under the CWA. As a result of the Consent Decree, ABF Freight will internally develop an environmental stormwater management strategy, including the delineation of roles and responsibilities for stormwater compliance; develop procedures for tracking the permit process, including comprehensive employee training; implement standard operating procedures; ensure contractor awareness of stormwater laws; and track facility-specific corrective actions. The settlement expense for this matter was reserved within accrued expenses as of March 31, 2023 and December 31, 2022. Other Events During February 2023, the Company received a Notice of Intent to Assess from a state regarding an ongoing sales and use tax audit for the trailing time period of December 1, 2018 to March 31, 2021. This is in addition to the February 2021 Notice of Assessment from that state pertaining to uncollected sales and use tax, including interest and penalties, for the period September 1, 2016 to November 30, 2018. The Company does not agree with the basis of the February 2021 assessment and filed an appeal in May 2021. The Company intends to appeal the potential February 2023 assessment on the same legal basis as the prior Notice of Assessment. The Company has previously accrued an amount related to this assessment consistent with applicable accounting guidance, but if the state prevails in its position, the Company may owe additional tax. Management does not believe the resolution of this matter will have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | |
Financial Statement Presentation | Financial Statement Presentation On February 28, 2023, the Company sold FleetNet America, Inc. (“FleetNet”), a wholly owned subsidiary and reportable operating segment of the Company, for an aggregate purchase price of $101.1 million in cash, subject to certain tax and other customary adjustments. The sale of FleetNet is a strategic shift for the Company as it is exiting the fleet roadside assistance and maintenance management business; therefore, the sale is accounted for as discontinued operations. As such, historical results of FleetNet have been excluded from both continuing operations and segment results for all periods presented, and reclassifications have been made to the prior-period financial statements to conform to the current-year presentation. Related assets and liabilities associated with FleetNet are classified as discontinued operations in the consolidated balance sheets for all periods presented. The cash flows related to the discontinued operations have not been segregated and are included in the consolidated statements of cash flows. Unless otherwise indicated, all amounts in this Quarterly Report on Form 10-Q refer to continuing operations, including comparisons to the prior year. For more information on our discontinued operations, see Note C. Certain reclassifications have also been made to the prior period presentation of other long-term liabilities in the consolidated balance sheets to conform to the current year presentation. Long-term portion of contingent consideration liability previously presented in other long-term liabilities has been reclassed to a separate line in the consolidated balance sheets. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore, should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2022 Annual Report on Form 10-K, which have not been adjusted to reflect FleetNet as discontinued operations, and other current filings with the SEC. In the opinion of management, all adjustments (which are of a normal and recurring nature) considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts may differ from those estimates. |
Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Not Yet Adopted Management believes there is no new accounting guidance issued but not yet effective that would have a material impact to the Company’s current financial statements. |
FINANCIAL INSTRUMENTS AND FAI_2
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
Schedule components of cash and cash equivalents, short term investments, and restricted funds | March 31 December 31 2023 2022 (in thousands) Cash and cash equivalents Cash deposits (1)(2) $ 129,640 $ 137,247 Variable rate demand notes (1)(3) 121 9,285 Money market funds (4) 73,558 11,732 Total cash and cash equivalents $ 203,319 $ 158,264 Short-term investments Certificates of deposit (1) $ 113,307 $ 88,851 U.S. Treasury securities (5) 49,180 78,811 Total short-term investments $ 162,487 $ 167,662 (1) Recorded at cost plus accrued interest, which approximates fair value. (2) The December 31, 2022 balance reflects the reclassification of FleetNet cash deposits to discontinued operations. (3) Amounts may be redeemed on a daily basis with the original issuer. (4) Recorded at fair value as determined by quoted market prices (see amounts presented in the table of financial assets and liabilities measured at fair value within this Note). (5) Recorded at amortized cost plus accrued interest, which approximates fair value. U.S. Treasury securities included in short-term investments are held-to-maturity investments with maturity dates of less than one year. |
Schedule of fair value and carrying value disclosures of financial instruments | March 31 December 31 2023 2022 (in thousands) Carrying Fair Carrying Fair Value Value Value Value Credit Facility (1) $ 50,000 $ 50,000 $ 50,000 $ 50,000 Notes payable (2) 200,452 194,705 214,623 207,778 New England Pension Fund withdrawal liability (3) 19,929 19,253 20,100 18,911 $ 270,381 $ 263,958 $ 284,723 $ 276,689 (1) The revolving credit facility (the “Credit Facility”) carries a variable interest rate based on Secured Overnight Financing Rate (“SOFR”), plus a margin, priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy). (2) Fair value of the notes payable was determined using a present value income approach based on quoted interest rates from lending institutions with which the Company would enter into similar transactions (Level 2 of the fair value hierarchy). (3) ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “New England Pension Fund”) was restructured under a transition agreement effective on August 1, 2018, which resulted in a related withdrawal liability. The fair value of the outstanding withdrawal liability is equal to the present value of the future withdrawal liability payments, discounted at an interest rate of 4.9% and 5.3% at March 31, 2023 and December 31, 2022, respectively, determined using the 20-year U.S. Treasury rate plus a spread (Level 2 of the fair value hierarchy). As of March 31, 2023, the outstanding withdrawal liability totaled $19.9 million, of which $0.7 million and $19.2 million were recorded in accrued expenses and other long-term liabilities, respectively. |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | March 31, 2023 Fair Value Measurements Using Quoted Prices Significant Significant In Active Observable Unobservable Markets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in thousands) Assets: Money market funds (1) $ 73,558 $ 73,558 $ — $ — Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2) 3,898 3,898 — — Interest rate swap (3) 2,913 — 2,913 — $ 80,369 $ 77,456 $ 2,913 $ — Liabilities: Contingent consideration (4) 127,040 — — 127,040 $ 127,040 $ — $ — $ 127,040 December 31, 2022 Fair Value Measurements Using Quoted Prices Significant Significant In Active Observable Unobservable Markets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in thousands) Assets: Money market funds (1) $ 11,732 $ 11,732 $ — $ — Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2) 3,982 3,982 — — Interest rate swap (3) 3,526 — 3,526 — $ 19,240 $ 15,714 $ 3,526 $ — Liabilities: Contingent consideration (4) 112,000 — — 112,000 $ 112,000 $ — $ — $ 112,000 (1) Included in cash and cash equivalents. (2) Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities. (3) Included in other long-term assets. The fair value of the interest rate swap was determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are generally considered to be in Level 3 of the fair value hierarchy. However, the Company assessed Level 3 inputs as insignificant to the valuation at March 31, 2023 and December 31, 2022, and considers the interest rate swap valuation in Level 2 of the fair value hierarchy. (4) As part of the Agreement and Plan of Merger (the “Merger Agreement”) of MoLo, executed in November 2021, certain additional cash consideration is required to be paid by the Company based on the achievement of certain incremental targets of adjusted earnings before interest, taxes, depreciation and amortization for each of the years ended December 31, 2023, 2024, and 2025. At 100% of the target, the cumulative additional consideration for years 2023 through 2025 would be $215.0 million, with the possible undiscounted cash consideration due ranging from a total of $95.0 million at 80% of target to $455.0 million at 300% of target, as outlined in the Merger Agreement. The estimated fair value of contingent earnout consideration is determined by assessing Level 3 inputs. The Level 3 assessments utilize a Monte Carlo simulation with inputs including scenarios of estimated revenues and earnings before interest, taxes, depreciation and amortization to be achieved for the applicable performance periods, volatility factors applied to the simulations, and the discount rate applied, which was 13.7% and 14.0% as of March 31, 2023 and December 31, 2022, respectively. Changes in the significant unobservable inputs might result in a significantly higher or lower fair value at the reporting date. As of March 31, 2023, the contingent earnout consideration totaled $127.0 million, of which $43.4 million was recorded in current liabilities based on when expected payouts become due, and the remaining portion was recorded in long-term liabilities. The increase in fair value upon the remeasurement at March 31, 2023 reflects increases in assumptions for business growth, combined with a lower discount rate versus the previous measurement period. Adjustments to the contingent earnout consideration liability are included in operating income. |
Schedule of changes in fair value of liabilities measured at fair value using inputs categorized in Level 3 | Contingent Consideration (in thousands) Balances at December 31, 2022 $ 112,000 Change in fair value included in operating income 15,040 Balances at March 31, 2023 $ 127,040 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
FleetNet | Discontinued Operations, Disposed of by Sale | |
Discontinued Operations | |
Schedules of Discontinued Operations - Financial information, Assets and liabilities and Cash flows | The following table summarizes the financial results from discontinued operations: Three Months Ended March 31 2023 2022 (in thousands) Revenues $ 55,929 $ 66,983 Operating expenses Gain on sale of business (1) (69,083) — Other 54,623 64,998 (14,460) 64,998 Operating income 70,389 1,985 Other income, net (2) 17 8 Income from discontinued operations before income taxes 70,406 1,993 Income tax provision 17,970 432 Income from discontinued operations, net of tax $ 52,436 $ 1,561 (1) Includes estimated transaction costs of $4.4 million consisting of consulting fees, professional fees, and employee-related expenses. (2) Includes interest expense, which is immaterial for the three months ended March 31, 2023 and 2022. The following table summarizes the assets and liabilities from discontinued operations: December 31, 2022 (in thousands) Cash and cash equivalents $ 108 Accounts receivable, net 63,022 Other current assets 1,606 Total current assets of discontinued operations $ 64,736 Property, plant and equipment, net 10,350 Goodwill 630 Intangible assets, net 63 Other long-term assets 54 Total long-term assets of discontinued operations $ 11,097 Accounts payable 47,687 Income taxes payable 613 Accrued expenses 3,365 Total current liabilities of discontinued operations $ 51,665 Deferred tax liability 781 Total long-term liabilities of discontinued operations $ 781 Cash flows from discontinued operations of FleetNet were as follows: Three Months Ended March 31 2023 2022 (in thousands) Net cash provided by (used in) operating activities (1) $ 762 $ (749) Net cash used in investing activities (2) (398) (1,062) Net cash provided by (used in) financing activities (472) 1,867 Net increase (decrease) in cash and cash equivalents $ (108) $ 56 (1) Includes depreciation and amortization expense of $0.4 million for the three-month periods ended March 31, 2023 and 2022 . Also includes share-based compensation expense for the three months ended March 31, 2023 of $0.3 million, which is included in the “Pre-tax gain on sale of discontinued operations” line of the consolidated statements of cash flows. (2) Includes purchases of property, plant and equipment of $0.1 million and $0.7 million for the three months ended March 31, 2023 and 2022, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of intangible assets | March 31, 2023 December 31, 2022 (1) Weighted-Average Accumulated Net Accumulated Net Amortization Period Cost Amortization Value Cost Amortization Value (in years) (in thousands) (in thousands) Finite-lived intangible assets Customer relationships 12 $ 99,579 $ 45,040 $ 54,539 $ 99,579 $ 42,933 $ 56,646 Other 8 29,998 6,215 23,783 29,914 5,127 24,787 11 129,577 51,255 78,322 129,493 48,060 81,433 Indefinite-lived intangible assets Trade name N/A 32,300 N/A 32,300 32,300 N/A 32,300 Total intangible assets N/A $ 161,877 $ 51,255 $ 110,622 $ 161,793 $ 48,060 $ 113,733 (1) The December 31, 2022 balances reflect the reclassification of intangibles of FleetNet to discontinued operations. |
Schedule of future amortization for intangible assets | Amortization of Intangible Assets (in thousands) Remainder of 2023 $ 9,586 2024 12,778 2025 12,778 2026 8,671 2027 7,247 Thereafter 27,262 Total amortization $ 78,322 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
LEASES | |
Schedule of components of lease expense | Three Months Ended March 31 2023 2022 (in thousands) Operating lease expense $ 9,166 $ 7,083 Variable lease expense 1,540 976 Sublease income (114) (161) Total operating lease expense (1) $ 10,592 $ 7,898 (1) Operating lease expense excludes short-term leases with a term of 12 months or less. |
Schedule of operating cash flows from operating lease activity | Three Months Ended March 31 2023 2022 (in thousands) Noncash change in operating right-of-use assets $ 7,485 $ 6,171 Change in operating lease liabilities (5,915) (6,157) Operating right-of-use-assets and lease liabilities, net $ 1,570 $ 14 Cash paid for amounts included in the measurement of operating lease liabilities $ (7,596) $ (7,071) |
Schedule of maturities of operating lease liabilities | Equipment Land and and Total Structures (1) Other (in thousands) Remainder of 2023 $ 26,455 $ 26,161 $ 294 2024 35,844 35,527 317 2025 32,060 32,037 23 2026 29,118 29,118 — 2027 22,883 22,883 — Thereafter 87,528 87,528 — Total lease payments 233,888 233,254 634 Less imputed interest (35,169) (35,147) (22) Total $ 198,719 $ 198,107 $ 612 (1) Excludes future minimum lease payments for leases which were executed but had not yet commenced as of March 31, 2023, totaling $32.0 million which will be paid over approximately 10 years . |
LONG-TERM DEBT AND FINANCING _2
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | |
Schedule of long-term debt | March 31 December 31 2023 2022 (in thousands) Credit Facility (interest rate of 6.0% (1) $ 50,000 $ 50,000 Notes payable (weighted-average interest rate of 3.4% at March 31, 2023) 200,452 214,623 250,452 264,623 Less current portion 64,491 66,252 Long-term debt, less current portion $ 185,961 $ 198,371 (1) The interest rate swap mitigates interest rate risk by effectively converting the $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.55% based on the margin of the Credit Facility as of both March 31, 2023 and December 31, 2022. |
Scheduled maturities of long-term debt obligations | Scheduled maturities of long-term debt obligations as of March 31, 2023, were as follows: Credit Notes Total Facility (1) Payable (in thousands) Due in one year or less $ 73,256 $ 2,981 $ 70,275 Due after one year through two years 113,166 51,217 61,949 Due after two years through three years 40,882 — 40,882 Due after three years through four years 29,413 — 29,413 Due after four years through five years 11,261 — 11,261 Total payments 267,978 54,198 213,780 Less amounts representing interest 17,526 4,198 13,328 Long-term debt $ 250,452 $ 50,000 $ 200,452 (1) The future interest payments included in the scheduled maturities due are calculated using variable interest rates based on the SOFR swap curve, plus the anticipated applicable margin, exclusive of payments on the interest rate swap. |
Schedule of assets securing notes payable or held under capital leases | March 31 December 31 2023 2022 (in thousands) Revenue equipment $ 305,925 $ 294,700 Service, office, and other equipment 39,121 41,522 Total assets securing notes payable or held under finance leases 345,046 336,222 Less accumulated depreciation and amortization (1) 130,896 119,244 Net assets securing notes payable or held under finance leases $ 214,150 $ 216,978 (1) Amortization of assets held under finance leases and depreciation of assets securing notes payable are included in depreciation expense. |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
STOCKHOLDERS' EQUITY | |
Components of accumulated other comprehensive income | March 31 December 31 2023 2022 (in thousands) Pre-tax amounts: Unrecognized net periodic benefit credit $ 8,954 $ 9,287 Interest rate swap 2,913 3,526 Foreign currency translation (3,271) (3,247) Total $ 8,596 $ 9,566 After-tax amounts: Unrecognized net periodic benefit credit $ 6,649 $ 6,896 Interest rate swap 2,152 2,604 Foreign currency translation (2,415) (2,397) Total $ 6,386 $ 7,103 |
Summary of changes in accumulated other comprehensive income, net of tax, by component | Unrecognized Interest Foreign Net Periodic Rate Currency Total Benefit Credit Swap Translation (in thousands) Balances at December 31, 2022 $ 7,103 $ 6,896 $ 2,604 $ (2,397) Other comprehensive loss before reclassifications (470) — (452) (18) Amounts reclassified from accumulated other comprehensive income (247) (247) — — Net current-period other comprehensive loss (717) (247) (452) (18) Balances at March 31, 2023 $ 6,386 $ 6,649 $ 2,152 $ (2,415) Balances at December 31, 2021 $ 3,699 $ 4,160 $ 309 $ (770) Other comprehensive income before reclassifications 1,765 — 1,458 307 Amounts reclassified from accumulated other comprehensive income (141) (141) — — Net current-period other comprehensive income (loss) 1,624 (141) 1,458 307 Balances at March 31, 2022 $ 5,323 $ 4,019 $ 1,767 $ (463) |
Summary of the significant reclassifications out of accumulated other comprehensive income (loss) by component | Unrecognized Net Periodic Benefit Credit (1)(2) Three Months Ended March 31 2023 2022 (in thousands) Amortization of net actuarial gain, pre-tax $ 333 $ 189 Tax expense (86) (48) Total, net of tax $ 247 $ 141 (1) Amounts in parentheses indicate increases in expense or loss. (2) These components of accumulated other comprehensive income are included in the computation of net periodic benefit cost of the Company’s supplemental benefit plan (“SBP”) and postretirement health benefit plan. |
Summary of dividends declared | 2023 2022 Per Share Amount Per Share Amount (in thousands, except per share data) First quarter $ 0.12 $ 2,915 $ 0.08 $ 1,978 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earnings (loss) per share | Three Months Ended March 31 2023 2022 (in thousands, except share and per share data) Basic Numerator: Net income from continuing operations $ 18,847 $ 68,008 Net income from discontinued operations 52,436 1,561 Net income $ 71,283 $ 69,569 Denominator: Weighted-average shares 24,288,138 24,710,685 Basic earnings per common share Continuing operations $ 0.78 $ 2.75 Discontinued operations 2.16 0.06 Total basic earnings per common share (1) $ 2.93 $ 2.82 Diluted Numerator: Net income from continuing operations $ 18,847 $ 68,008 Net income from discontinued operations 52,436 1,561 Net income $ 71,283 $ 69,569 Denominator: Weighted-average shares 24,288,138 24,710,685 Effect of dilutive securities 769,588 1,200,515 Adjusted weighted-average shares and assumed conversions 25,057,726 25,911,200 Diluted earnings per common share Continuing operations $ 0.75 $ 2.62 Discontinued operations 2.09 0.06 Total diluted earnings per common share (1) $ 2.84 $ 2.68 (1) Earnings per common share is calculated in total and may not equal the sum of earnings per common share from continuing operations and discontinued operations due to rounding. |
OPERATING SEGMENT DATA (Tables)
OPERATING SEGMENT DATA (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
OPERATING SEGMENT DATA | |
Schedule of reportable operating segment information from continuing operations | Three Months Ended March 31 2023 2022 (in thousands) REVENUES FROM CONTINUING OPERATIONS Asset-Based $ 697,817 $ 705,311 Asset-Light 438,092 595,284 Other and eliminations (29,815) (32,504) Total consolidated revenues $ 1,106,094 $ 1,268,091 OPERATING EXPENSES FROM CONTINUING OPERATIONS Asset-Based Salaries, wages, and benefits $ 335,605 $ 313,497 Fuel, supplies, and expenses 94,288 84,831 Operating taxes and licenses 13,979 12,493 Insurance 13,273 10,431 Communications and utilities 5,304 4,687 Depreciation and amortization 24,911 24,305 Rents and purchased transportation 90,744 102,985 Shared services 64,613 67,150 Gain on sale of property and equipment (51) (2,695) Innovative technology costs (1) 6,068 6,960 Other 1,612 633 Total Asset-Based 650,346 625,277 Asset-Light Purchased transportation 370,163 508,380 Supplies and expenses 4,072 3,266 Depreciation and amortization (2) 5,068 5,180 Shared services 51,429 50,197 Contingent consideration (3) 15,040 810 Other 6,411 6,335 Total Asset-Light 452,183 574,168 Other and eliminations (17,594) (24,297) Total consolidated operating expenses $ 1,084,935 $ 1,175,148 OPERATING INCOME FROM CONTINUING OPERATIONS Asset-Based $ 47,471 $ 80,034 Asset-Light (14,091) 21,116 Other and eliminations (12,221) (8,207) Total consolidated operating income $ 21,159 $ 92,943 OTHER INCOME (COSTS) FROM CONTINUING OPERATIONS Interest and dividend income $ 2,933 $ 99 Interest and other related financing costs (2,327) (1,940) Other, net (4) 1,780 (826) Total other income (costs) 2,386 (2,667) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ 23,545 $ 90,276 (1) Represents costs associated with the freight handling pilot test program at ABF Freight. (2) Depreciation and amortization includes amortization of intangibles associated with acquired businesses. (3) Represents the increase in fair value of the contingent earnout consideration related to the MoLo acquisition (see Note B). (4) Includes the components of net periodic benefit cost (credit) other than service cost related to the Company’s SBP and postretirement plans and proceeds and changes in cash surrender value of life insurance policies. |
Schedule of revenues from customers and intersegment revenues | Three Months Ended March 31 2023 2022 (in thousands) Revenues from customers Asset-Based $ 669,220 $ 675,518 Asset-Light 436,033 591,722 Other 841 851 Total consolidated revenues $ 1,106,094 $ 1,268,091 Intersegment revenues Asset-Based $ 28,597 $ 29,793 Asset-Light 2,059 3,562 Other and eliminations (30,656) (33,355) Total intersegment revenues $ — $ — Total segment revenues Asset-Based $ 697,817 $ 705,311 Asset-Light 438,092 595,284 Other and eliminations (29,815) (32,504) Total consolidated revenues $ 1,106,094 $ 1,268,091 |
Schedule of consolidated operating expenses by component | Three Months Ended March 31 2023 2022 (in thousands) OPERATING EXPENSES Salaries, wages, and benefits $ 436,982 $ 414,905 Rents, purchased transportation, and other costs of services 429,605 577,849 Fuel, supplies, and expenses 122,618 110,359 Depreciation and amortization (1) 35,010 34,396 Contingent consideration (2) 15,040 810 Other 45,680 36,829 $ 1,084,935 $ 1,175,148 (1) Includes amortization of intangible assets. (2) Represents the increase in fair value of the contingent earnout consideration related to the MoLo acquisition (see Note B). |
ORGANIZATION AND DESCRIPTION _3
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION - Organization (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
Organization and description of business | |
Number of reportable operating segments | 2 |
Asset Based | |
Organization and description of business | |
Percentage of the Company's revenues, before other revenues and intercompany eliminations, represented by the Asset-Based segment | 61% |
Asset Based | Unionized employees concentration risk | Number of employees | |
Organization and description of business | |
Percentage of Asset-Based segment employees covered under collective bargaining agreement with the IBT | 82% |
ORGANIZATION AND DESCRIPTION _4
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION - Discontinued Operations (Details) $ in Millions | Feb. 28, 2023 USD ($) |
FleetNet | Discontinued Operations, Disposed of by Sale | |
Discontinued Operations | |
Aggregate purchase price | $ 101.1 |
FINANCIAL INSTRUMENTS AND FAI_3
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Cash and Cash Equivalents and Short-term Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fair value disclosure | ||
Cash and cash equivalents | $ 203,319 | $ 158,264 |
Short-term investments | 162,487 | 167,662 |
Concentrations of Credit Risk of Financial Instruments | ||
Cash deposits and short-term investments which were neither FDIC insured nor direct obligations of the U.S. government | 105,200 | 87,600 |
Cash deposits | ||
Fair value disclosure | ||
Cash and cash equivalents | 129,640 | 137,247 |
Variable rate demand notes | ||
Fair value disclosure | ||
Cash and cash equivalents | 121 | 9,285 |
Money market funds | ||
Fair value disclosure | ||
Cash and cash equivalents | 73,558 | 11,732 |
Certificates of deposit | ||
Fair value disclosure | ||
Short-term investments | 113,307 | 88,851 |
U.S. Treasury securities | ||
Fair value disclosure | ||
Short-term investments | $ 49,180 | $ 78,811 |
FINANCIAL INSTRUMENTS AND FAI_4
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Debt (Details) $ in Thousands | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Fair value disclosure | ||
Outstanding withdrawal liability | $ 19,900 | |
Accrued expenses | ||
Fair value disclosure | ||
Outstanding withdrawal liability | 700 | |
Other long-term liabilities | ||
Fair value disclosure | ||
Outstanding withdrawal liability | 19,200 | |
Carrying value | ||
Fair value disclosure | ||
Financial instruments | 270,381 | $ 284,723 |
Fair value disclosure | ||
Fair value disclosure | ||
Financial instruments | 263,958 | 276,689 |
Credit Facility | Carrying value | Level 2 | ||
Fair value disclosure | ||
Financial instruments | 50,000 | 50,000 |
Credit Facility | Fair value disclosure | Level 2 | ||
Fair value disclosure | ||
Financial instruments | 50,000 | 50,000 |
Notes payable | Carrying value | Level 2 | ||
Fair value disclosure | ||
Financial instruments | 200,452 | 214,623 |
Notes payable | Fair value disclosure | Level 2 | ||
Fair value disclosure | ||
Financial instruments | $ 194,705 | $ 207,778 |
New England Pension Fund withdrawal liability | Discount Rate | ||
Fair value disclosure | ||
Measurement input | 0.049 | 0.053 |
New England Pension Fund withdrawal liability | Carrying value | Level 2 | ||
Fair value disclosure | ||
Financial instruments | $ 19,929 | $ 20,100 |
New England Pension Fund withdrawal liability | Fair value disclosure | Level 2 | ||
Fair value disclosure | ||
Financial instruments | $ 19,253 | $ 18,911 |
FINANCIAL INSTRUMENTS AND FAI_5
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Assets and Liabilities (Details) $ in Thousands | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Discount Rate | Valuation Technique, Discounted Cash Flow | ||
Liabilities: | ||
Measurement input | 0.137 | 0.140 |
Recurring basis | ||
Assets: | ||
Assets | $ 80,369 | $ 19,240 |
Liabilities: | ||
Liabilities | 127,040 | 112,000 |
Recurring basis | Cash and cash equivalents | ||
Assets: | ||
Money market funds | 73,558 | 11,732 |
Recurring basis | Other long-term assets | ||
Assets: | ||
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan | 3,898 | 3,982 |
Interest rate swap | 2,913 | 3,526 |
Recurring basis | Other long-term liabilities | ||
Liabilities: | ||
Contingent consideration | 127,040 | 112,000 |
Recurring basis | Level 1 | ||
Assets: | ||
Assets | 77,456 | 15,714 |
Recurring basis | Level 1 | Cash and cash equivalents | ||
Assets: | ||
Money market funds | 73,558 | 11,732 |
Recurring basis | Level 1 | Other long-term assets | ||
Assets: | ||
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan | 3,898 | 3,982 |
Recurring basis | Level 2 | ||
Assets: | ||
Assets | 2,913 | 3,526 |
Recurring basis | Level 2 | Other long-term assets | ||
Assets: | ||
Interest rate swap | 2,913 | 3,526 |
Recurring basis | Level 3 | ||
Liabilities: | ||
Liabilities | 127,040 | 112,000 |
Recurring basis | Level 3 | Other long-term liabilities | ||
Liabilities: | ||
Contingent consideration | $ 127,040 | $ 112,000 |
FINANCIAL INSTRUMENTS AND FAI_6
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Merger Agreement (Details) $ in Thousands | Mar. 31, 2023 USD ($) | Dec. 31, 2022 | Nov. 01, 2021 USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Current portion of contingent consideration | $ 43,390 | ||
Valuation Technique, Discounted Cash Flow | Discount Rate | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Measurement input | 0.137 | 0.140 | |
MoLo Solutions, LLC | 100% of target | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Adjusted EBITDA target percentage | 100% | ||
Contingent consideration, target | $ 215,000 | ||
MoLo Solutions, LLC | 80% of target | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Adjusted EBITDA target percentage | 80% | ||
Contingent consideration, low range | $ 95,000 | ||
MoLo Solutions, LLC | 300% of target | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Adjusted EBITDA target percentage | 300% | ||
Contingent consideration, high range | $ 455,000 |
FINANCIAL INSTRUMENTS AND FAI_7
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Changes in Fair Value of Liabilities (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Changes in fair value | |
Beginning Balances | $ 112,000 |
Change in fair value included in operating income | $ 15,040 |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income | Operating income |
Ending Balances | $ 127,040 |
Current portion of contingent consideration | 43,390 |
Contingent Consideration | |
Changes in fair value | |
Contingent earnout consideration | 127,000 |
Current portion of contingent consideration | $ 43,400 |
DISCONTINUED OPERATIONS - Finan
DISCONTINUED OPERATIONS - Financial results (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Feb. 28, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | |
Operating expenses | |||
Income tax provision | $ 18,000 | $ 400 | |
Income from discontinued operations, net of tax | 52,436 | 1,561 | |
FleetNet | Discontinued Operations, Disposed of by Sale | |||
Discontinued Operations | |||
Aggregate purchase price | $ 101,100 | ||
Pre-tax gain on sale of discontinued operations | 69,100 | 69,083 | |
Gain on sale of discontinued operations, net of tax | 51,400 | ||
Financial results from discontinued operations | |||
Revenues | 55,929 | ||
Operating expenses | |||
Gain on sale of business | $ (69,100) | (69,083) | |
Other | 54,623 | ||
Operating expenses | (14,460) | ||
Operating Income | 70,389 | ||
Other income, net | 17 | ||
Income from discontinued operations before income taxes | 70,406 | ||
Income tax provision | 17,970 | ||
Income from discontinued operations, net of tax | 52,436 | ||
Transaction costs | $ 4,400 | ||
FleetNet | Discontinued Operations, Held-for-sale | |||
Financial results from discontinued operations | |||
Revenues | 66,983 | ||
Operating expenses | |||
Other | 64,998 | ||
Operating expenses | 64,998 | ||
Operating Income | 1,985 | ||
Other income, net | 8 | ||
Income from discontinued operations before income taxes | 1,993 | ||
Income tax provision | 432 | ||
Income from discontinued operations, net of tax | $ 1,561 |
DISCONTINUED OPERATIONS - Asset
DISCONTINUED OPERATIONS - Assets and liabilities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Assets and liabilities from discontinued operations | |
Total current assets of discontinued operations | $ 64,736 |
Total long-term assets of discontinued operations | 11,097 |
Total current liabilities of discontinued operations | 51,665 |
Total long-term liabilities of discontinued operations | 781 |
FleetNet | Discontinued Operations, Held-for-sale | |
Assets and liabilities from discontinued operations | |
Cash and cash equivalents | 108 |
Accounts receivable, net | 63,022 |
Other current assets | 1,606 |
Total current assets of discontinued operations | 64,736 |
Property, plant and equipment, net | 10,350 |
Goodwill | 630 |
Intangible assets, net | 63 |
Other long-term assets | 54 |
Total long-term assets of discontinued operations | 11,097 |
Accounts payable | 47,687 |
Income taxes payable | 613 |
Accrued expenses | 3,365 |
Total current liabilities of discontinued operations | 51,665 |
Deferred tax liability | 781 |
Total long-term liabilities of discontinued operations | $ 781 |
DISCONTINUED OPERATIONS - Cash
DISCONTINUED OPERATIONS - Cash flows (Details) - FleetNet - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Discontinued Operations, Disposed of by Sale | ||
Cash flows from discontinued operations | ||
Net cash provided by (used in) operating activities | $ 762 | |
Net cash used in investing activities | (398) | |
Net cash provided by (used in) financing activities | (472) | |
Net increase (decrease) in cash and cash equivalents | (108) | |
Depreciation and amortization expense | 400 | |
Share-based compensation expense | 300 | |
Purchases of property, plant and equipment | $ 100 | |
Discontinued Operations, Held-for-sale | ||
Cash flows from discontinued operations | ||
Net cash provided by (used in) operating activities | $ (749) | |
Net cash used in investing activities | (1,062) | |
Net cash provided by (used in) financing activities | 1,867 | |
Net increase (decrease) in cash and cash equivalents | 56 | |
Depreciation and amortization expense | 400 | |
Purchases of property, plant and equipment | $ 700 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Goodwill by reportable operating segment | ||
Goodwill | $ 304,753 | $ 304,753 |
FleetNet Segment | Discontinued Operations, Held-for-sale | ||
Goodwill by reportable operating segment | ||
Goodwill, Discontinued operation | $ 600 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Intangible (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Finite-lived intangible assets | ||
Weighted Average Amortization Period | 11 years | |
Cost | $ 129,577 | $ 129,493 |
Accumulated Amortization | 51,255 | 48,060 |
Net Value | 78,322 | 81,433 |
Total intangible assets | ||
Cost | 161,877 | 161,793 |
Net Value | 110,622 | 113,733 |
Trade name | ||
Indefinite-lived intangible assets | ||
Net Value | $ 32,300 | 32,300 |
Customer relationships | ||
Finite-lived intangible assets | ||
Weighted Average Amortization Period | 12 years | |
Cost | $ 99,579 | 99,579 |
Accumulated Amortization | 45,040 | 42,933 |
Net Value | $ 54,539 | 56,646 |
Other intangible assets | ||
Finite-lived intangible assets | ||
Weighted Average Amortization Period | 8 years | |
Cost | $ 29,998 | 29,914 |
Accumulated Amortization | 6,215 | 5,127 |
Net Value | $ 23,783 | $ 24,787 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Amortization (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Future amortization for intangible assets | ||
Remainder of 2023 | $ 9,586 | |
2024 | 12,778 | |
2025 | 12,778 | |
2026 | 8,671 | |
2027 | 7,247 | |
Thereafter | 27,262 | |
Net Value | $ 78,322 | $ 81,433 |
INCOME TAXES - Tax Rate (Detail
INCOME TAXES - Tax Rate (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
INCOME TAXES | ||
Effective tax rate, including discontinued operations (as a percent) | 24.10% | 24.60% |
Effective tax rate from continuing operations (as a percent) | 20% | 24.70% |
State tax, low end of range of rate (as a percent) | 6% | 6% |
State tax, high end of range of rate (as a percent) | 6.50% | 6.50% |
INCOME TAXES - Allowance (Detai
INCOME TAXES - Allowance (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Valuation allowance | $ 1.7 | $ 1.7 |
INCOME TAXES - Taxes Paid (Deta
INCOME TAXES - Taxes Paid (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income taxes | ||
Income taxes paid (in dollars) | $ 27.7 | $ 27.2 |
Income tax refunds received (in dollars) | 1.6 | |
Income tax expense, discontinued operations | $ 18 | $ 0.4 |
Effective tax rate, discontinued operations (as a percent) | 25.50% | 21.70% |
Maximum | ||
Income taxes | ||
Income tax refunds received (in dollars) | $ 0.1 |
LEASES - Components of Lease Ex
LEASES - Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
LEASES | ||
Operating lease expense | $ 9,166 | $ 7,083 |
Variable lease expense | 1,540 | 976 |
Sublease income | (114) | (161) |
Total operating lease expense | $ 10,592 | $ 7,898 |
LEASES - Cash Flows (Details)
LEASES - Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating leases | ||
Noncash change in operating right-of-use assets | $ 7,485 | $ 6,171 |
Change in operating lease liabilities | (5,915) | (6,157) |
Operating right-of-use assets and lease liabilities, net | 1,570 | 14 |
Cash paid for amounts included in the measurement of operating lease liabilities | $ (7,596) | $ (7,071) |
LEASES - Maturities of Operatin
LEASES - Maturities of Operating Lease Liabilities (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Maturities of operating lease liabilities | |
Remainder of 2023 | $ 26,455 |
2024 | 35,844 |
2025 | 32,060 |
2026 | 29,118 |
2027 | 22,883 |
Thereafter | 87,528 |
Total lease payments | 233,888 |
Less imputed interest | (35,169) |
Total operating lease liabilities | $ 198,719 |
Operating Lease, Liability, Statement of Financial Position | Operating Lease, Liability, Current, Operating Lease, Liability, Noncurrent |
Land and Structures | |
Maturities of operating lease liabilities | |
Remainder of 2023 | $ 26,161 |
2024 | 35,527 |
2025 | 32,037 |
2026 | 29,118 |
2027 | 22,883 |
Thereafter | 87,528 |
Total lease payments | 233,254 |
Less imputed interest | (35,147) |
Total operating lease liabilities | 198,107 |
Future minimum payments for leases that have not yet commenced | $ 32,000 |
Lease term for lease commitments that have not yet commenced | 10 years |
Equipment and Others | |
Maturities of operating lease liabilities | |
Remainder of 2023 | $ 294 |
2024 | 317 |
2025 | 23 |
Total lease payments | 634 |
Less imputed interest | (22) |
Total operating lease liabilities | $ 612 |
LONG-TERM DEBT AND FINANCING _3
LONG-TERM DEBT AND FINANCING ARRANGEMENTS - Summary (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Long-term debt obligations | ||
Long-term debt | $ 250,452 | $ 264,623 |
Less current portion | 64,491 | 66,252 |
Long-term debt, less current portion | 185,961 | 198,371 |
Credit Facility | ||
Long-term debt obligations | ||
Long-term debt | $ 50,000 | 50,000 |
Interest rate (as a percent) | 6% | |
Credit Facility | Interest rate swap agreement | ||
Long-term debt obligations | ||
Amount of borrowings covered by the interest rate swap | $ 50,000 | $ 50,000 |
Effective fixed interest rate on hedged borrowings (as a percent) | 1.55% | 1.55% |
Notes payable | ||
Long-term debt obligations | ||
Long-term debt | $ 200,452 | $ 214,623 |
Weighted-average interest rate (as a percent) | 3.40% |
LONG-TERM DEBT AND FINANCING _4
LONG-TERM DEBT AND FINANCING ARRANGEMENTS - Maturities (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Maturities of long-term debt obligations | |
Due in one year or less | $ 73,256 |
Due after one year through two years | 113,166 |
Due after two years through three years | 40,882 |
Due after three years through four years | 29,413 |
Due after four years through five years | 11,261 |
Total payments | 267,978 |
Less amounts representing interest | 17,526 |
Long-term debt | 250,452 |
Credit Facility | |
Maturities of long-term debt obligations | |
Due in one year or less | 2,981 |
Due after one year through two years | 51,217 |
Total payments | 54,198 |
Less amounts representing interest | 4,198 |
Long-term debt | 50,000 |
Notes payable | |
Maturities of long-term debt obligations | |
Due in one year or less | 70,275 |
Due after one year through two years | 61,949 |
Due after two years through three years | 40,882 |
Due after three years through four years | 29,413 |
Due after four years through five years | 11,261 |
Total payments | 213,780 |
Less amounts representing interest | 13,328 |
Long-term debt | $ 200,452 |
LONG-TERM DEBT AND FINANCING _5
LONG-TERM DEBT AND FINANCING ARRANGEMENTS - Assets Securing Notes (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Financing Arrangements | ||
Total assets securing notes payable or held under finance leases | $ 345,046 | $ 336,222 |
Less accumulated depreciation and amortization | 130,896 | 119,244 |
Net assets securing notes payable or held under finance leases | 214,150 | 216,978 |
Revenue equipment | ||
Financing Arrangements | ||
Total assets securing notes payable or held under finance leases | 305,925 | 294,700 |
Service, office, and other equipment | ||
Financing Arrangements | ||
Total assets securing notes payable or held under finance leases | $ 39,121 | $ 41,522 |
LONG-TERM DEBT AND FINANCING _6
LONG-TERM DEBT AND FINANCING ARRANGEMENTS - Credit Facility (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Financing Arrangements | ||
Borrowings under credit facilities | $ 58,000 | |
Repayment of debt | $ 17,649 | $ 32,967 |
Outstanding letters of credit | 10,600 | |
Credit Facility | ||
Financing Arrangements | ||
Maximum borrowing capacity | 250,000 | |
Additional borrowing capacity that may be requested | 125,000 | |
Remaining borrowing capacity | 200,000 | |
Swing Line Facility | ||
Financing Arrangements | ||
Maximum borrowing capacity | 40,000 | |
Letters of Credit, Sub-Facility | ||
Financing Arrangements | ||
Maximum borrowing capacity | $ 20,000 |
LONG-TERM DEBT AND FINANCING _7
LONG-TERM DEBT AND FINANCING ARRANGEMENTS - Interest Rate Swaps (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2022 |
Interest rate swap agreement | Credit Facility | |||
Financing Arrangements | |||
Amount of borrowings covered by the interest rate swap | $ 50 | $ 50 | |
Effective fixed interest rate on hedged borrowings (as a percent) | 1.55% | 1.55% | |
Interest rate swap agreement, maturing on October 1, 2024 | |||
Financing Arrangements | |||
Notional amount | $ 50 | ||
Fixed interest rate payments (as a percent) | 0.33% | ||
Interest rate swap agreement, maturing on October 1, 2024 | Other long-term assets | |||
Financing Arrangements | |||
Fair value of interest rate swap, asset | $ 2.9 | $ 3.5 | |
Interest rate swap agreement, maturing on October 1, 2024 | Credit Facility | |||
Financing Arrangements | |||
Amount of borrowings covered by the interest rate swap | $ 50 | ||
Effective fixed interest rate on hedged borrowings (as a percent) | 1.55% |
LONG-TERM DEBT AND FINANCING _8
LONG-TERM DEBT AND FINANCING ARRANGEMENTS - Securitization Program (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Financing Arrangements | |
Outstanding letters of credit | $ 10.6 |
Accounts receivable securitization program | |
Financing Arrangements | |
Maximum borrowing capacity | 50 |
Additional borrowing capacity that may be requested | 100 |
Outstanding letters of credit | 10 |
Remaining borrowing capacity | $ 40 |
LONG-TERM DEBT AND FINANCING _9
LONG-TERM DEBT AND FINANCING ARRANGEMENTS - Letters of Credit & Surety Bonds (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Financing Arrangements | |
Outstanding letters of credit | $ 10.6 |
Accounts receivable securitization program | |
Financing Arrangements | |
Outstanding letters of credit | 10 |
Surety bonds | |
Financing Arrangements | |
Outstanding surety bonds under uncollateralized bond programs | $ 64.9 |
LONG-TERM DEBT AND FINANCING_10
LONG-TERM DEBT AND FINANCING ARRANGEMENTS - Notes Payable (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Notes payable | |
Financing Arrangements | |
Assets financed during the period under promissory note arrangements | $ 3.5 |
STOCKHOLDERS' EQUITY - AOCI (De
STOCKHOLDERS' EQUITY - AOCI (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Accumulated Other Comprehensive Income | ||||
Total after-tax amount | $ 1,205,859 | $ 1,151,401 | $ 983,172 | $ 929,067 |
Accumulated Other Comprehensive Income (Loss) | ||||
Accumulated Other Comprehensive Income | ||||
Total pre-tax amount | 8,596 | 9,566 | ||
Total after-tax amount | 6,386 | 7,103 | 5,323 | 3,699 |
Unrecognized Net Periodic Benefit Credit | ||||
Accumulated Other Comprehensive Income | ||||
Total pre-tax amount | 8,954 | 9,287 | ||
Total after-tax amount | 6,649 | 6,896 | 4,019 | 4,160 |
Interest Rate Swap | ||||
Accumulated Other Comprehensive Income | ||||
Total pre-tax amount | 2,913 | 3,526 | ||
Total after-tax amount | 2,152 | 2,604 | 1,767 | 309 |
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Income | ||||
Total pre-tax amount | (3,271) | (3,247) | ||
Total after-tax amount | $ (2,415) | $ (2,397) | $ (463) | $ (770) |
STOCKHOLDERS' EQUITY - AOCI Com
STOCKHOLDERS' EQUITY - AOCI Components (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Changes in accumulated other comprehensive income, net of tax, by component | ||
Balances | $ 1,151,401 | $ 929,067 |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | (717) | 1,624 |
Balances | 1,205,859 | 983,172 |
Accumulated Other Comprehensive Income (Loss) | ||
Changes in accumulated other comprehensive income, net of tax, by component | ||
Balances | 7,103 | 3,699 |
Other comprehensive income (loss) before reclassifications | (470) | 1,765 |
Amounts reclassified from accumulated other comprehensive income | (247) | (141) |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | (717) | 1,624 |
Balances | 6,386 | 5,323 |
Unrecognized Net Periodic Benefit Credit | ||
Changes in accumulated other comprehensive income, net of tax, by component | ||
Balances | 6,896 | 4,160 |
Amounts reclassified from accumulated other comprehensive income | (247) | (141) |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | (247) | (141) |
Balances | 6,649 | 4,019 |
Interest Rate Swap | ||
Changes in accumulated other comprehensive income, net of tax, by component | ||
Balances | 2,604 | 309 |
Other comprehensive income (loss) before reclassifications | (452) | 1,458 |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | (452) | 1,458 |
Balances | 2,152 | 1,767 |
Foreign Currency Translation | ||
Changes in accumulated other comprehensive income, net of tax, by component | ||
Balances | (2,397) | (770) |
Other comprehensive income (loss) before reclassifications | (18) | 307 |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | (18) | 307 |
Balances | $ (2,415) | $ (463) |
STOCKHOLDERS' EQUITY - Reclass
STOCKHOLDERS' EQUITY - Reclass (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Unrecognized Net Periodic Benefit Credit | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Tax expense | $ (86) | $ (48) |
Total, net of tax | 247 | 141 |
Amortization of net actuarial gain | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Total, pre-tax | $ 333 | $ 189 |
STOCKHOLDERS' EQUITY - Dividend
STOCKHOLDERS' EQUITY - Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Apr. 26, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | |
Dividends on Common Stock | |||
Dividends declared (in dollars per share) | $ 0.12 | $ 0.08 | |
Dividend Amount | $ 2,915 | $ 1,978 | |
Subsequent Event | |||
Dividends on Common Stock | |||
Dividends declared (in dollars per share) | $ 0.12 |
STOCKHOLDERS' EQUITY - Treasury
STOCKHOLDERS' EQUITY - Treasury Stock (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||||
Apr. 30, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | Apr. 28, 2023 | Feb. 28, 2023 | Dec. 31, 2022 | |
Treasury Stock | ||||||
Cost of repurchased shares | $ 14,092 | $ 16,506 | ||||
Share Repurchase Program | ||||||
Treasury Stock | ||||||
Amount available for repurchase | $ 110,900 | $ 26,500 | ||||
Amount of stock repurchases authorized | $ 125,000 | |||||
Number of shares repurchased during the period | 154,089 | |||||
Cost of repurchased shares | $ 14,100 | |||||
Share Repurchase Program | Subsequent Event | ||||||
Treasury Stock | ||||||
Amount available for repurchase | $ 95,000 | |||||
Number of shares repurchased during the period | 171,967 | |||||
Cost of repurchased shares | $ 15,900 |
EARNINGS PER SHARE - Basic And
EARNINGS PER SHARE - Basic And Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Basic, numerator: | ||
Net income from continuing operations | $ 18,847 | $ 68,008 |
Net income from discontinued operations | 52,436 | 1,561 |
Net income | $ 71,283 | $ 69,569 |
Basic, denominator: | ||
Weighted-average shares | 24,288,138 | 24,710,685 |
Basic earnings per common share | ||
Continuing operations (in dollars per share) | $ 0.78 | $ 2.75 |
Discontinued operations (in dollars per share) | 2.16 | 0.06 |
BASIC EARNINGS PER COMMON SHARE (in dollars per share) | $ 2.93 | $ 2.82 |
Diluted, numerator: | ||
Net income from continuing operations | $ 18,847 | $ 68,008 |
Net income from discontinued operations | 52,436 | 1,561 |
Net income | $ 71,283 | $ 69,569 |
Diluted, denominator: | ||
Weighted-average shares | 24,288,138 | 24,710,685 |
Effect of dilutive securities | 769,588 | 1,200,515 |
Adjusted weighted-average shares and assumed conversions | 25,057,726 | 25,911,200 |
Diluted earnings per common share | ||
Continuing operations (in dollars per share) | $ 0.75 | $ 2.62 |
Discontinued operations (in dollars per share) | 2.09 | 0.06 |
DILUTED EARNINGS PER COMMON SHARE (in dollars per share) | $ 2.84 | $ 2.68 |
OPERATING SEGMENT DATA - Revenu
OPERATING SEGMENT DATA - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | $ 1,106,094 | $ 1,268,091 |
Asset Based | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 669,220 | 675,518 |
Asset-Light | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 436,033 | 591,722 |
Operating Segments | Asset Based | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 697,817 | 705,311 |
Operating Segments | Asset-Light | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 438,092 | 595,284 |
Other and eliminations | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | $ (29,815) | $ (32,504) |
OPERATING SEGMENT DATA - Operat
OPERATING SEGMENT DATA - Operating Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
OPERATING EXPENSES FROM CONTINUING OPERATIONS | ||
Salaries, wages, and benefits | $ 436,982 | $ 414,905 |
Fuel, supplies, and expenses | 122,618 | 110,359 |
Depreciation and amortization | 35,010 | 34,396 |
Contingent consideration | 15,040 | 810 |
Pre-tax gain on sale of discontinued operations | (69,083) | |
Gain on sale of property and equipment | (9) | (3,002) |
Other | 45,680 | 36,829 |
Total consolidated operating expenses | 1,084,935 | 1,175,148 |
Operating Segments | Asset Based | ||
OPERATING EXPENSES FROM CONTINUING OPERATIONS | ||
Salaries, wages, and benefits | 335,605 | 313,497 |
Fuel, supplies, and expenses | 94,288 | 84,831 |
Operating taxes and licenses | 13,979 | 12,493 |
Insurance | 13,273 | 10,431 |
Communications and utilities | 5,304 | 4,687 |
Depreciation and amortization | 24,911 | 24,305 |
Rents and purchased transportation | 90,744 | 102,985 |
Shared services | 64,613 | 67,150 |
Gain on sale of property and equipment | (51) | (2,695) |
Innovative technology costs | 6,068 | 6,960 |
Other | 1,612 | 633 |
Total consolidated operating expenses | 650,346 | 625,277 |
Operating Segments | Asset-Light | ||
OPERATING EXPENSES FROM CONTINUING OPERATIONS | ||
Purchased transportation | 370,163 | 508,380 |
Supplies and expenses | 4,072 | 3,266 |
Depreciation and amortization | 5,068 | 5,180 |
Shared services | 51,429 | 50,197 |
Contingent consideration | 15,040 | 810 |
Other | 6,411 | 6,335 |
Total consolidated operating expenses | 452,183 | 574,168 |
Other and eliminations | ||
OPERATING EXPENSES FROM CONTINUING OPERATIONS | ||
Total consolidated operating expenses | $ (17,594) | $ (24,297) |
OPERATING SEGMENT DATA - Oper_2
OPERATING SEGMENT DATA - Operating Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
OPERATING INCOME FROM CONTINUING OPERATIONS | ||
Operating income | $ 21,159 | $ 92,943 |
OTHER INCOME (COSTS) FROM CONTINUING OPERATIONS | ||
Interest and dividend income | 2,933 | 99 |
Interest and other related financing costs | (2,327) | (1,940) |
Other, net | 1,780 | (826) |
TOTAL OTHER INCOME (COSTS) | 2,386 | (2,667) |
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 23,545 | 90,276 |
Operating Segments | Asset Based | ||
OPERATING INCOME FROM CONTINUING OPERATIONS | ||
Operating income | 47,471 | 80,034 |
Operating Segments | Asset-Light | ||
OPERATING INCOME FROM CONTINUING OPERATIONS | ||
Operating income | (14,091) | 21,116 |
Other and eliminations | ||
OPERATING INCOME FROM CONTINUING OPERATIONS | ||
Operating income | $ (12,221) | $ (8,207) |
OPERATING SEGMENT DATA - Reve_2
OPERATING SEGMENT DATA - Revenue from Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | $ 1,106,094 | $ 1,268,091 |
Asset Based | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 669,220 | 675,518 |
Asset-Light | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 436,033 | 591,722 |
Corporate and Other | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 841 | 851 |
Operating Segments | Asset Based | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 697,817 | 705,311 |
Operating Segments | Asset-Light | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 438,092 | 595,284 |
Intersegment revenues | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | (30,656) | (33,355) |
Intersegment revenues | Asset Based | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 28,597 | 29,793 |
Intersegment revenues | Asset-Light | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | 2,059 | 3,562 |
Other and eliminations | ||
REVENUES FROM CONTINUING OPERATIONS | ||
Revenues | $ (29,815) | $ (32,504) |
OPERATING SEGMENT DATA - Oper_3
OPERATING SEGMENT DATA - Operating Expenses by Category (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
OPERATING EXPENSES | ||
Salaries, wages, and benefits | $ 436,982 | $ 414,905 |
Rents, purchased transportation, and other costs of services | 429,605 | 577,849 |
Fuel, supplies, and expenses | 122,618 | 110,359 |
Depreciation and amortization | 35,010 | 34,396 |
Contingent consideration | 15,040 | 810 |
Other | 45,680 | 36,829 |
Total consolidated operating expenses | $ 1,084,935 | $ 1,175,148 |
LEGAL PROCEEDINGS, ENVIRONMEN_2
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS (Details) $ in Millions | Mar. 20, 2023 USD ($) |
Compliance issues under federal Clean Water Act | |
Environmental Matters | |
Amount of civil penalty | $ 0.5 |