ARCBEST CORP /DE/ (ARCB) FY 2021 MD&A
This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ArcBest Corporation™ (together with its subsidiaries, the “Company,” “we,” “us,” and “our”) provides a comprehensive suite of freight transportation and integrated logistics services to deliver innovative solutions. Our operations are conducted through our three reportable operating segments:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Asset-Based, which consists of ABF Freight System, Inc. and certain other subsidiaries (“ABF Freight”); |
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|---|---|---|
| ● | ArcBest, our asset-light logistics operation; and |
| Column 1 | Column 2 | Column 3 |
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| ● | FleetNet. |
The ArcBest and FleetNet reportable segments combined represent our Asset-Light operations. See additional segment descriptions in Part I, Item 1 (Business) and in Note N to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. References to the Company, including “we,” “us,” and “our,” in this Annual Report on Form 10-K are primarily to the Company and its subsidiaries on a consolidated basis.
ORGANIZATION OF INFORMATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided to assist readers in understanding our financial performance during the periods presented and significant trends which may impact our future performance. This discussion should be read in conjunction with our consolidated financial statements and the related notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K. MD&A includes forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially from the statements made in this section due to a number of factors that are discussed in Part I (Forward-Looking Statements) and Part I, Item 1A (Risk Factors) of this Annual Report on Form 10-K. MD&A is comprised of the following:
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| ● | Results of Operations includes: |
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| ● | an overview of consolidated results with 2021 compared to 2020, and a consolidated Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”) reconciliation to net income; |
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| ● | a financial summary and analysis of our Asset-Based segment results of 2021 compared to 2020, including a discussion of key actions and events that impacted the results; |
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| ● | a financial summary and analysis of the results of our Asset-Light operations for 2021 compared to 2020, including a discussion of key actions and events that impacted the results; and |
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| ● | a discussion of other matters impacting operating results, including effects of inflation, current economic conditions, environmental and legal matters, and information technology and cybersecurity. |
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| ● | Liquidity and Capital Resources provides an analysis of key elements of the cash flow statements, borrowing capacity, and contractual cash obligations, including a discussion of financing arrangements and financial commitments. |
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| ● | Income Taxes provides an analysis of the effective tax rates and deferred tax balances, including deferred tax asset valuation allowances. |
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| ● | Critical Accounting Policies and Estimates discusses those accounting policies that are important to understanding certain material judgments and assumptions incorporated in the reported financial results. |
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| ● | Recent Accounting Pronouncements discusses accounting standards that are not yet effective for our financial statements but are expected to have a material effect on our future results of operations or financial condition. |
RESULTS OF OPERATIONS
This Results of Operations section of MD&A generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions of 2019 items and year-to-year comparisons between 2020 and 2019 that are not included in this Form 10-K can be found in the Results of Operations section of MD&A in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
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Table of Contents
Consolidated Results
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | | |||||||||
| | | Year Ended December 31 | | |||||||
| | 2021 | 2020 | 2019 | |||||||
| | (in thousands, except per share data) | |||||||||
| REVENUES | | | | | | | | | | |
| Asset-Based | | $ | 2,573,773 | | $ | 2,092,031 | | $ | 2,144,679 | |
| | | | | | | | | | | |
| ArcBest(1) | | 1,300,626 | | 779,115 | | 738,392 | | |||
| FleetNet | | 254,087 | | 205,049 | | 211,738 | | |||
| Total Asset-Light | | | 1,554,713 | | | 984,164 | | | 950,130 | |
| | | | | | | | | | | |
| Other and eliminations | | (148,419) | | (136,032) | | (106,499) | | |||
| Total consolidated revenues | | $ | 3,980,067 | | $ | 2,940,163 | | $ | 2,988,310 | |
| | | | | | | | | | | |
| OPERATING INCOME | | | | | | | | | | |
| Asset-Based | | $ | 260,707 | | $ | 98,865 | | $ | 102,061 | |
| | | | | | | | | | | |
| ArcBest(1)(2) | | 46,397 | | 9,655 | | (20,189) | | |||
| FleetNet | | 4,544 | | 3,367 | | 4,806 | | |||
| Total Asset-Light | | | 50,941 | | | 13,022 | | | (15,383) | |
| | | | | | | | | | | |
| Other and eliminations | | (30,662) | | (13,609) | | (22,908) | | |||
| Total consolidated operating income | | $ | 280,986 | | $ | 98,278 | | $ | 63,770 | |
| | | | | | | | | | | |
| NET INCOME(1)(2)(3) | | $ | 213,521 | | $ | 71,100 | | $ | 39,985 | |
| | | | | | | | | | | |
| DILUTED EARNINGS PER SHARE(1)(2)(3) | | $ | 7.98 | | $ | 2.69 | | $ | 1.51 | |
| Column 1 | Column 2 |
|---|---|
| (1) | Includes the operations of MoLo since the November 1, 2021 acquisition date. |
| Column 1 | Column 2 |
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| (2) | Includes a noncash impairment charge of $26.5 million (pre-tax), or $19.8 million (after-tax) and $0.75 per diluted share, in 2019 related to a portion of the goodwill, customer relationship intangible assets, and revenue equipment associated with the acquisition of truckload and dedicated businesses within the ArcBest segment. |