ARCB - Earnings call transcript Q1 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the ArcBest First Quarter 2018 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded Thursday, May 10, 2018. I would now like to turn the conference over to David Humphrey, Vice President of Investor Relations. ahead. go Please

David Humphrey

ArcBest the XXXX Conference Earnings Welcome First Call. to Quarter

Chairman, morning Our by – McReynolds, Vice Executive President, will ArcBest. R. this Officer Mr. this of Ms. and ArcBest; Officer afternoon, R. Chief done done Cobb, be be presentation David Chief will excuse Judy of Financial President me,

on final or As most with March we’re as tomorrow. this any team quarter bargaining tabulation process. on afternoon, conclusion we to commentary. understand will give teams vote respect our it following on for expecting reached for but Tuesday today we tabulation an We take of XX, the you update this results not reasons receive the of you near Out process, the can first our voting of will vote sometime know, prepared agreement hope a results later questions ended the tentative doing way

tomorrow, with our the be the made us following will ArcBest be available to we today. needed, XXXX In quarter call. some first disclosed this speak to you publicly better results, statements We order forward-looking results. call for As and understand you during thank could joining discuss to information and help you its about

are know, by all forward-looking As we uncertainties their subject very statements, and nature, to risk.

our outlined recent in of For the earnings filings. financial this Company’s public the certain the described Company’s the a press to discussed comparisons, provide as could SEC that in statements to includes release discussion more of most conference section future non-GAAP Company’s the complete information tables in affect factors In measures results, earnings forward-looking meaningful release. please and call order and refer

begin now will Judy. with We

Judy R. McReynolds

positive market services to time favorable focus good first shipping and this for David, This our for appropriate some typically were their on we slow the needed in of today. tight have Customers environment looking rose XX%. led Asset-Based afternoon, offerings. broad first optimize the and some are per report finding for the and and our quarter in of strong light solutions in ArcBest to year. asset securing experienced amid the everyone. Conditions chains and revenues asset value strongest Both growth, conditions our nearly the the shipment seasonally our of period you, and seen supply value results quarter Thank logistics light businesses we revenue industry our scope

to continue business in a we our segment, the initiative and the operations As the on shipments I’m we executed for us value of way impacted. seeing we were we have, brought the along shed with new unprofitable freight adequately that of doesn’t type that better the Asset-Based are customers we board. But suited pleased this is to compensate has provide, profile been with

tentative contract being employees. Teamsters reach an that a you and As company and bargaining teams agreement our for XX, March for Votes the on know, and the tabulated. term. from cast agreement XX-months were is have fair on We reached a a new to ABF the are been currently pleased to affordable

yield quarter. complimented conditions experience first tight the This implemented to of capacity. strong in results management and midst I’ll we discuss now, We details our offering. the quarter, And the In more from become impacts benefited first additional will business on our as information they about the of positive XXXX continued the market the results industry provide throughout from in available. actions service Asset-Based

XXXX in to yielding continues CMC is traction pricing margins qualifying on which and improved results in program August Our those shipments. of gain space-based began positive profit

is rational as call. X.X% of provide in into customer rates been pricing market at and remained from David XX were details historically as ABF been price, the managing quarter account previous we slightly specific have level. the and during that have the contract in at deferred April effect our levels. later XXXX enacted. increases successfully on on base quarter the of Renewal rate metrics first quarter pricing illustrated environment general believe terms the price a negotiated management implementation Freight by high will marketplace. still went increases agreements in The improved our the We yield GRI the on

Turning to the reductions not business of experienced, pricing April spite shipments customer quarter taken. the first with and In reflect and illustrate of positive Freight to we in financial shipments reductions through moving surprising, statistics the experienced the results that system we’ve we have Though the weight quarter made the through pricing the level were our first to continues XXXX, average have handling cargo service effects a better offers. of trade-offs aligning our high in level continue of actions ABF shipment climb. we’ve

the shipment pickup moving of the In the place, of Asset-Based in dock contributing tonnage a In opportunities profile shippers, quantities more are equipment freight metric we revenue has full sizes levels, increased in cost we at has economic resources handled spite the on implemented to to shipment Asset-Based higher managing order in and delivery good shipment factors of profit. our stronger reductions, done bring Because count to and our margins. network that shipment market increase we’ve addition business to the impacted and experiencing the and city customers, constrained very we’ve these will our growth shipment trend, actively of customer through our the are and freight average and shipments truck-liberated shipment-based the increases of in job productivity the In and network. with our lower and size. of and price to handle able greater resulting from operations. contributed to experienced to in greater the team number operational a transactional characteristics currently are value were our unison we levels lower prices the available controls Despite better load to recent pursuing shipments

improvement. benefit we reductions further management levels, profitability are productivity As positive results cost come will continuing from from and operational on returning historic focus to

in city equipment local of During the use the and from recent of rental did lower cartage. quarter, benefit our cost city reductions structure

and In of a believe because purchased use of strategic reductions were good are We balance in service, pursue achieving the tight growth addition, linehaul going the This be cost we costs marketplace. the between important asset superior of owned known forward will transportation. as customer and resulting lower are our factor management business in the which in an profitable control we we level.

per truckload quarter, driven market resulted ArcBest the count experienced the growth first rate This in revenue current of from increases shipment. despite tight shipment associated During market. Asset-Light significant nearly XX% business by revenue the increases with lower capacity

covering loads while high, yields. was customer in seeking team remain contributor was costs fulfillment challenges maximize total in shipping impacted main to transportation purchased improvements As our operating of net Growth income. to revenue by Asset-Light the committed the

in results to This improvement management our income other the quarters, revenue XX% to recent and decrease the positively contributed it for increase big year. quarter, the continuing our of dividends revenue of including line. earnings same last of we increased more in and labor as healthy expenses first our lifestyle, improvement these significant to costs health to the claim. ArcBest events pattern of a purchased over is net Asset-Light for help non-union specific in Reductions the claims goals result the However, net corporate I’ll wide we’ve paying Cobb year. the positively FleetNet’s costs operating operating an cost a filed transportation cost number achieve an outpaced operating in improvements activities, were In statistics. was placed positive of throughout wellness the our higher emphasis turn rates. XXXX. impact Efficient period versus seen last quarter a approximately primarily bottom year, operating healthcare the per trend margins XX% continue results financial also versus in declined now, average increase. The we approximately experienced and generated David recent and employees that designed due continues in in total below last that family customer and to revenue ArcBest income on discussion And

David R. Cobb

good you, afternoon, and everyone. Thank Judy,

information. me with consolidated begin Let some

a of compared were X.X%. net of day year’s million First had last per quarter On first per share, to XXXX income $X.XX $X.XX quarter we GAAP share of year. to compared increase a consolidated net loss revenues in last first basis, per million $XXX diluted XXXX quarter, $XXX

the reconciliation first net in compared earnings period to loss a this $X.XX press XXXX release, same was of in to detailed quarter adjusted afternoon’s table of diluted the share, As in GAAP per non-GAAP income XXXX. $X.XX

non-union Our after-tax related included $X.X net XXXX $X including per to income plan, first settlement share pension of million in expense. or quarter our and charge pre-tax $X.XX million

$X.X million estimated settlement approximately The first expense, $X.X million or of of charge XXXX $X tax Pension currently quarter per similar is a $X.X charges $X.XX million of be for second or quarter share. pre-tax after million pretax to including and included after-tax. XXXX

reminder, of of million half is settlement termination due plan. a charge $XX approximately of a of second and to $XX pre-tax the cash estimate As to the funding expected we million XXXX termination occur in approximately

first this restructuring organizational which $X.XX income an approach. total We the and related quarter, of just eliminations XXXX the XXXX Last year million costs approximately million, in year’s in enhanced $X.X or the these related million of were to share adjustment I loss line reported to included $X expect realignment. currently in restructuring was cost $X.XX This charges $XXX,XXX $X.X $XXX,XXX incur quarter restructuring quarter of or market after-tax. first pre-tax other per mentioned. Our included first net to pre-tax our per after-tax XXXX, share

was delivery we Interest services eliminations we multiples in other here. be same first ArcBest expect for and to net $X.X previously loss was customers all line as included the and the quarter as lines these of are offered comprehensive have logistics approximately we and In million in includes quarter, expect the investments expense discussed, this of expenses innovations in transportation well first in interest services totaled the approximately to to quarter. $XX investments a XXXX income segment. certain the loss technology improving Also across investments of as The non-GAAP operating million. from ArcBest through line and in related it the second as

and income interest XXXX the year total to expect quarter approximately of XXXX expense $X.X the be approximately $X net interest We interest expense second full million. net to million

in have and previously we first value value surrender of compared XXXX. when income exclude in line of share. surrender $XXX,XXX non-GAAP in per our first are XXXX of quarter income income which earnings quarter discussed, We net had income statement representing the cash to changes in changes of cash in we of As net reported the of $XXX,XXX other

statement other net the income the financial postretirement X, now line costs non-union statement standard, benefit other we to retrospective benefit non-union new related benefit. plans. addition, the these January and includes of which pension presentation our In Effective components components expenses a of accounting of XXXX, some of readopted changes periodic to requires net certain

our plans these of $X.X to of other XXXX be the of As the net our appear we statements, included these a which and the XXXX now quarter financial operating continues plans of component result, the the XXXX other first the to while both amount In for presentation. XXXX conform components income in statement. cost have service cost expenses, totaled to year line million reclassified current in

effective of Our tax first a rate benefit XX.X%. rate was quarter

saw Reform the Tax rate we became fourth quarter, As financial late be in and continue our tax results by law in Act to that December. the impacted

U.S. Tax As recorded legibility under of the provisional December the tax rate lower in corporate net quarter, mentioned tax Act. federal related last reduction we deferred a to Reform the

fiscal XX. ends February year Our tax

of benefit $X.X our due result, tax a per year-end. an deferred recorded to we tax net additional $X.XX liability quarter the through tax first million As share reduction recent a or

include rate While these the future. many the deferred tax of the deferred over has legislation alternative this tax tax XXXX related on quarter lower retroactive use at realized tax the items February tax million. Also years rates benefit first yields lower in recognized, the in will liability taxes year of the signed of the in year’s XXXX. $X.X benefit of results on tax been impact full paying of credits be all established of to Therefore,

the we that first and full in of our while of page the Based items the Additional impacted the the XX%, estimate quarter, in rate on straight occurred range earnings full that law press maybe tax new items to fuels of effective impacting XX% be X in are by currently to the the release. quarter year XXXX credit tax our on of expect effect period. any approximate provided tax our our impact rate rate of effective to alternative tax

we liquidity of the investments quarter, million. the X,XXX our As program, total agreement, receivable million. securitization stock a we amount repurchase available $XXX quarter bought equals ended the our and shares first of program resources total part $XXX have minimum cash credit of We unrestricted and for the stock purchase existing availability. of $XX repurchase of our amount in of approximately with first Combined short-term revolver $XXX,XXX. a currently million with under about our the Under

year days at interest securitization Our Full million X.X%. our notes and a are details included year. XX.X in compared first working revolver, includes of per ArcBest last in the million rate last had first our X.X% receivable payable, year’s is $XX press debt the revenue quarter. of XXXX, total We $XXX compared of of days quarter balance flow end in first cash $XX reported earnings in on operations. the to our of GAAP on $XXX asset-based our day our our million, XX release. increase quarter primarily on to of working debt composite million equipment of for of million The the credit all $XXX asset-based borrowed

per first declined quarterly tonnage last versus Asset-based quarter. X.X% day year’s

asset-based XXXX February, quarter March. the decreased decreased X.X%, period year month, daily first in in same decreased X.X% tonnage January and versus X.X% by For by last in

First decreased quarter total to year’s quarter. last shipments per first X.X% compared day

on first year’s program Total quarter, introduced X.X% tonnage an was throughout implemented initiatives first the increase quarter of first shipment declines a quarter shipments last the the last per beginning decrease August. Judy versus yield XXXX. increase a X.X% sequential pricing of a XXXX, increased year. quarter continued result quarter fourth per but from of last LTL X,XXX slight XXXX. shipment weight months, at was As were on shipment compared to X% and miles, including of management space-based and £X,XXX, fourth and increase a the XX last over Average haul X.X% asset-based weight length of from basis described, asset-based

last First less revenue impacted price the yield per offset a than this positively compared increase billed freight which increased of quarter comparisons of X.X% some yield year. pressure higher downward were first was asset-based by quarter this On of profile changes. Year-over-year on an to surcharge, X%. total levels hundredweight and basis, figure shipments from fuel improved sequential metric $XX.XX,

businesses asset-based deferred fuel Excluding We increase first per asset-based during increase billed the an agreements was surcharge, X.X% LTL years. daily increase over This equals increase last the average of total, year’s our negotiated quarter on highest had the customer average secured million, quarter. quarter revenue last have second high the hundredweight In we the $XXX XX% revenue freight XX the contract first secured quarter. in a and Asset-Light in year-over-year first pricing in of single-digits. and renewals

income income first $X.X operating operating operating million last $X.X quarter. $X.X Asset-Light first adjusted was quarter compared totaled $X.X First last compared EBITDA to to year’s EBITDA XXXX million million Asset-Light of $X.X and year’s Adjusted adjusted of quarter income million, of million. in

the factors the XXXX segments in the experience revenue in day and billed mix favorable by Asset-based different healthcare April to account to ArcBest due new as growth be and amortization results reductions expense range. change tonnage LTL asset-based contract, X%. April ongoing year-on-year points. fuel changes second of versus asset-based the with These Daily business. Total XX%. a the positively effective year, quarter its quarter labor Total sequential rated metric approximately contract This of ratio the cause approximately counts Since this operating approximately increased sequential benefited XX%, elements decrease in our initiatives. XXX XXX hundredweight such the affected quarter first ratio being per surcharges as vacation shipment a has increased been asset-based historical shipment that not ratification shipment may implementation Upon Also, approximately current of by yield labor of bonus. historical for to are our of to results asset-based April improvement offset and reduction contract management month daily approximately XXXX be is Total tonnage in from per billed related follows. revenues Total per additional costs per could implementation, truckload and of union in will yield first X weight change initiatives, revenue approximately April versus increased our operating X% total than – the the certain decreased to partially increased asset-based X%. average an ratification yield higher the in in basis X%. continue.

have quarter we XX half than year will more day in XXXX, of had which quarter. days working year’s second We a second last quarter this in is in and first

versus per by our impacted Asset-Light April higher increased last day FleetNet, year, XX% ArcBest per revenue For segment, revenue not shipment. positively including XXXX

our experiencing to adequately in costs of and are shipment purchase we However, year-over-year those net rising associated cost challenges on customers. compression passing declines revenue the transportation with

to over for I’ll it turn Now, comments. Judy closing some

Judy R. McReynolds

implemented we reflected of we lot cross-selling XXXX, percentage is in have from customer seen positive also received Since retrack David. customers, comments revenue form market the secondary statistics from in of solutions. is Thanks, on feedback beginning in the approach of in This enhanced actual our a coming feedback. and the

on satisfaction sales customers As our rate doing gives they than a partner from confidence relationships problem-solving, wallet. chain was the March, deepen to in ArcBest also us teams work key XXXX In solution trusted great one Texas. ranked and And once consecutive one excellence have achievement Wichita a a a program. great employees some highlights like higher me program to magazine I now and and share would in such offer is additional more we ease lot recognized. February, broaden opportunity deal company’s our nine Training This management and additional as truly Falls, as and be customer XXth was XXX which again, areas to of for purchase the once of supply business. us, this top the being and again to quarter. of features do, training the for companies list our of appeared highly of placed XXXX so usually We It I the campus Texas of and years. of and that In development have named on best training sponsor

we very individuals a Congratulations an proud to our who and Additionally, committed everyone team. from March, our announced professionals skills are customers have our Road group new have of safety to XXXX records outstanding ranks. road driving team in always ABF members to all superb we needs. the are XX on in XX-member These

of set of We also technology the in transportation announced to a our chain that for block standards have part becoming and work use group ArcBest in developed joined chain has that block large will a alliance companies industry.

our the know, enhance believe group you is that as customers. to business and As looking beneficial ArcBest and our ensure to adapt technologies changing that alliance joining always we way market play. we team do for our this a for We

be marketplace as Looking the of both Teamsters ahead at have the initiatives team’s as results will to execute many to of experience. and our aided on the the year, we and in improve on encouraged I’m the we process. continue to charge from done. will by the always, are rest favorable and that the are earlier, And we monitor get cost who contract operations ability in conditions I awaiting our to the large, in job confident mentioned finally, we customer

closing information will to provided. have over David for some turn we it be comments As I’ll to share, now. it

David Humphrey

in joining your us Thank call. We thank you. we concludes our interest you ArcBest. for This this Well, appreciate afternoon.

Operator

and that thank disconnect the your you you for today. lines. and participation call does for your please Ladies ask We gentlemen, conference that conclude

ArcBest (ARCB) 10 May 182018 Q1 Earnings call transcript