ARCBEST CORP /DE/ (ARCB) FY 2023 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,” “ArcBest®,” “we,” “us,” and “our”) is a multibillion-dollar integrated logistics company that leverages our technology and a full suite of solutions to meet our customers’ supply chain needs. Our operations are conducted through two reportable operating segments:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Asset-Based, which consists of ABF Freight System, Inc. and certain other subsidiaries (“ABF Freight”); and |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Asset-Light, which includes MoLo Solutions, LLC (“MoLo”), Panther Premium Logistics®, and certain other subsidiaries. |
For more information, see additional segment descriptions in Part I, Item 1 (Business) and in Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
On February 28, 2023, the Company sold FleetNet America, Inc. (“FleetNet”), a wholly owned subsidiary of the Company, for an aggregate adjusted cash purchase price of $100.9 million, including post-closing adjustments. Following the sale, FleetNet was 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. Unless otherwise indicated, all amounts in this Annual Report on Form 10-K refer to continuing operations, including comparisons to the prior year. For more information on our discontinued operations, see Note D to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
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, including the principal factors affecting our results of operations, liquidity and capital resources, and critical accounting policies. MD&A includes additional information about significant accounting policies, practices, and the transactions that underlie our financial results. 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:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Results of Operations includes: |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | an overview of consolidated results with 2023 compared to 2022, and a consolidated Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”) reconciliation to net income; |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | a financial summary and analysis of our Asset-Based segment results of 2023 compared to 2022, including a discussion of key actions and events that impacted the results; |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | a financial summary and analysis of the results of our Asset-Light segment for 2023 compared to 2022, including a discussion of key actions and events that impacted the results; and |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | a discussion of other matters impacting operating results, including effects of inflation, current economic conditions, environmental and legal matters, and information technology and cybersecurity. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | 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. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Income Taxes provides an analysis of the effective tax rates and deferred tax balances, including deferred tax asset valuation allowances. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | 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. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | 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. |
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Table of Contents
RESULTS OF OPERATIONS
This Results of Operations section of MD&A generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 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, 2022.
Consolidated Results
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | | |||||||||
| | | Year Ended December 31 | | |||||||
| | 2023 | 2022 | 2021 | |||||||
| | (in thousands, except per share data) | |||||||||
| REVENUES | | | | | | | | | | |
| Asset-Based | | $ | 2,871,004 | | $ | 3,010,900 | | $ | 2,573,773 | |
| Asset-Light(1) | | 1,680,645 | | 2,139,272 | | 1,300,626 | | |||
| Other and eliminations | | (124,206) | | (121,164) | | (108,214) | | |||
| Total consolidated revenues | | $ | 4,427,443 | | $ | 5,029,008 | | $ | 3,766,185 | |
| | | | | | | | | | | |
| OPERATING INCOME (LOSS) | | | | | | | | | | |
| Asset-Based | | $ | 253,152 | | $ | 381,133 | | $ | 260,707 | |
| Asset-Light(1) | | (12,271) | | 52,725 | | 46,397 | | |||
| Other and eliminations | | (68,262) | | (39,332) | | (30,126) | | |||
| Total consolidated operating income | | $ | 172,619 | | $ | 394,526 | | $ | 276,978 | |
| | | | | | | | | | | |
| NET INCOME FROM CONTINUING OPERATIONS | | $ | 142,164 | | $ | 294,648 | | $ | 210,459 | |
| | | | | | | | | | | |
| INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX(2) | | | 53,269 | | | 3,561 | | | 3,062 | |
| | | | | | | | | | | |
| NET INCOME | | $ | 195,433 | | $ | 298,209 | | $ | 213,521 | |
| | | | | | | | | | | |
| DILUTED EARNINGS PER COMMON SHARE | | | | | | | | | | |
| Continuing operations | | $ | 5.77 | | $ | 11.55 | | $ | 7.86 | |
| Discontinued operations(2) | | | 2.16 | | | 0.14 | | | 0.11 | |
| Total diluted earnings per common share | | $ | 7.93 | | $ | 11.69 | | $ | 7.98 | |
| Column 1 | Column 2 |
|---|---|
| (1) | Includes the operations of MoLo® since the November 1, 2021 acquisition. The acquisition of MoLo is more fully described in the Asset-Light Segment Overview section of Asset-Light Operations. |