ArcBest efficiently provided integrated logistics solutions to customers in a changing market

Asset-Based operating ratio of 89.9 percent. On a non-GAAP basis, Asset-Based operating ratio of 88.8 percent, an improvement of 400 basis points versus second quarter 2023.
Year-to-date, returned $85.5 million of capital to shareholders through common stock share repurchases and dividends

ArcBest^® (NASDAQ:ARCB), a leader in supply chain logistics, today reported third quarter 2023 revenue from continuing operations of $1.1 billion, compared to $1.3 billion in the third quarter of 2022. ArcBest's third quarter 2023 operating income from continuing operations was $45.1 million, compared to $115.3 million in the third quarter of 2022, and net income from continuing operations was $34.9 million, or $1.42 per diluted share, compared to $88.6 million, or $3.49 per diluted share, in the prior-year period. ArcBest's third quarter 2023 results were impacted by $30.2 million of noncash lease impairment charges with no comparable charges in the prior-year period.

Excluding certain items in both periods as identified in the attached reconciliation tables, third quarter 2023 non‑GAAP operating income from continuing operations was $74.7 million, compared to $130.6 million in the prior‑year period. On a non-GAAP basis, net income from continuing operations was $56.7 million, or $2.31 per diluted share, compared to $96.1 million, or $3.79 per diluted share, in third quarter 2022.

"At ArcBest, our ability to see the world through customers' eyes has positioned our company as the partner of choice for integrated logistics solutions for 100 years," said Judy R. McReynolds, ArcBest chairman, president and CEO. "Our success is underpinned by the ability to efficiently solve logistics challenges and help customers navigate market disruptions, rapidly changing economic conditions, and increased supply chain complexity."

Third Quarter Results of Operations Comparisons

Asset-Based

Third Quarter 2023 Versus Third Quarter 2022

Revenue of $741.2 million compared to $791.5 million, a per-day decrease of 4.1 percent.
Total tonnage per day decreased 6.3 percent; LTL-rated weight per shipment decreased 6.4 percent.
Total shipments per day increased 1.5 percent.
Total billed revenue per hundredweight increased 1.9 percent. Revenue per hundredweight on LTL-rated business, excluding fuel surcharge, increased by a percentage in the mid-single digits.
Operating income of $74.8 million and an operating ratio of 89.9 percent compared to operating income of $109.3 million and an operating ratio of 86.2 percent. On a non-GAAP basis, operating income of $82.8 million and an operating ratio of 88.8 percent compared to operating income of $116.6 million and an operating ratio of 85.3 percent.

Compared to the prior-year period, third quarter revenue in ArcBest's Asset-Based business declined due to a weaker logistics industry backdrop, including continued manufacturing sector contraction. However, this impact was somewhat offset by increased revenue from new shipments added as a result of recent market disruption associated with the third quarter bankruptcy of a major LTL competitor. Core, LTL-rated average daily shipments, tonnage and revenue increased more than 20% compared to second quarter 2023 due to this additional new profitable business. As new core shipments were added during the quarter, overall Asset-Based network capacity was re-allocated to serve this increase in business by reducing shipments sourced from the transactional LTL pricing program. Average shipment size decreased during the quarter as larger average sized transactional shipments were replaced by lower average sized core shipments.

Asset-Based yields were positively impacted by the change in shipment mix moving through the ABF network and the improved pricing strength as a result of the reduction in LTL industry carrier capacity. On a sequential basis, compared to the second quarter, total revenue per hundredweight increased by over 16 percent while year-over-year total revenue per hundredweight increased approximately 2 percent compared to a strong year-over-year increase during last year's third quarter. The overall pricing environment continues to be rational and has been strengthened by the recent market changes.

Higher employee wage and benefit costs associated with the implementation of ABF Freight's new labor agreement added approximately 350 operating ratio basis points in the third quarter, relative to the second quarter. Despite those increased operating expenses, improved yields and initiatives enacted to reduce costs in other operational areas of the Asset-Based network, combined with effective handling of the changing profile of shipments, resulted in sequential improvement in the non-GAAP Asset-Based operating ratio of 400 basis points compared to the second quarter.

Asset-Light^‡

Third Quarter 2023 Versus Third Quarter 2022

Revenue of $419.3 million compared to $515.2 million, a per-day decrease of 16.7 percent.
Operating loss of $3.7 million compared to operating income of $15.4 million. On a non‑GAAP basis, operating loss of $3.9 million compared to operating income of $18.9 million.
Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") of negative $2.0 million compared to positive $20.5 million, as detailed in the attached non-GAAP reconciliation tables.

Third quarter Asset-Light results, compared to the prior-year period, reflect lower revenue per shipment and reduced margins associated with business mix changes and the soft rate environment. Our truckload solution experienced significant margin compression as decreases in customer pricing exceeded the reduced cost of purchased transportation. Asset-Light average daily shipments increased during the recent quarter despite a period of weak demand. Market disruption in LTL carrier capacity resulted in the need for some shippers to find alternative sources for moving goods within our managed transportation solution. Efforts to more effectively match costs with business levels continue, which lowered operating expenses.

Share Repurchase Program and Common Stock Dividends

In September 2023, ArcBest entered into a 10b5-1 plan allowing for share repurchases during the current closed trading window under ArcBest's share repurchase program. ArcBest has settled repurchases of 798,818 shares of common stock for an aggregate cost of $76.8 million, year-to-date through Thursday, October 26, 2023, including under the current 10b5-1 plan and the previously disclosed 10b5-1 plan, which extended from March 16, 2023 through May 2, 2023. With these purchases, $48.2 million remains available under the current repurchase authorization for future common stock purchases.

ArcBest common stock dividends paid this year through September 30, 2023 equaled $8.7 million.

NOTE‡ - Asset-Light represents the reportable segment previously named ArcBest. Asset-Light financial results previously included the ArcBest segment and FleetNet, which was sold on February 28, 2023.

Conference Call

ArcBest will host a conference call with company executives to discuss the third quarter 2023 results. The call will be today, Friday, October 27 at 9:00 a.m. EDT (8:00 a.m. CDT). Interested parties are invited to listen by calling (800) 916-9049 or by joining the webcast which can be found on ArcBest's website at arcb.com. Slides to accompany this call are included in Exhibit 99.3 of the Form 8-K filed on October 27, 2023, will be posted and available to download on the company's website prior to the scheduled conference time, and will be included in the webcast. Following the call, a recorded playback will be available through the end of the day on December 15, 2023. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 22028126. The conference call and playback can also be accessed, through December 15, 2023, on ArcBest's website at arcb.com.

About ArcBest

ArcBest^® (NASDAQ:ARCB) is a multibillion-dollar integrated logistics company that helps keep the global supply chain moving. Founded in 1923 and now with over 15,000 employees across over 250 campuses and service centers, the company is a logistics powerhouse fueled by the simple notion of finding a way to get the job done. Through innovative thinking, agility and trust, ArcBest leverages its full suite of shipping and logistics solutions to meet customers' critical needs, each and every day. For more information, visit arcb.com.

The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: Certain statements and information in this press release concerning results for the three months ended September 30, 2023, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding (i) our expectations about our intrinsic value or our prospects for growth and value creation and (ii) our financial outlook, position, strategies, goals, and expectations. Terms such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "foresee," "intend," "may," "plan," "predict," "project," "scheduled," "should," "would," and similar expressions and the negatives of such terms are intended to identify forward-looking statements. These statements are based on management's beliefs, assumptions, and expectations based on currently available information, are not guarantees of future performance, and involve certain risks and uncertainties (some of which are beyond our control). Although we believe that the expectations reflected in these forward-looking statements are reasonable as and when made, we cannot provide assurance that our expectations will prove to be correct. Actual outcomes and results could materially differ from what is expressed, implied, or forecasted in these statements due to a number of factors, including, but not limited to: the effects of a widespread outbreak of an illness or disease, including the COVID-19 pandemic, or any other public health crisis, as well as regulatory measures implemented in response to such events; external events which may adversely affect us or the third parties who provide services for us, for which our business continuity plans may not adequately prepare us, including, but not limited to, acts of war or terrorism, or military conflicts; data privacy breaches, cybersecurity incidents, and/or failures of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely; interruption or failure of third-party software or information technology systems or licenses; untimely or ineffective development and implementation of, or failure to realize the potential benefits associated with, new or enhanced technology or processes, including the Vaux freight handling pilot test program at ABF Freight and our customer pilot offering of Vaux, including human-centered remote operation software; the loss or reduction of business from large customers; the timing and performance of growth initiatives and the ability to manage our cost structure; the cost, integration, and performance of any recent or future acquisitions, including the acquisition of MoLo Solutions, LLC, and the inability to realize the anticipated benefits of the acquisition within the expected time period or at all; maintaining our corporate reputation and intellectual property rights; nationwide or global disruption in the supply chain resulting in increased volatility in freight volumes; competitive initiatives and pricing pressures; increased prices for and decreased availability of new revenue equipment, decreases in value of used revenue equipment, and higher costs of equipment-related operating expenses such as maintenance, fuel, and related taxes; availability of fuel, the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates, and the inability to collect fuel surcharges; relationships with employees, including unions, and our ability to attract, retain, and upskill employees; unfavorable terms of, or the inability to reach agreement on, future collective bargaining agreements or a workforce stoppage by our employees covered under ABF Freight's collective bargaining agreement; union employee wages and benefits, including changes in required contributions to multiemployer plans; availability and cost of reliable third-party services; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; litigation or claims asserted against us; governmental regulations; environmental laws and regulations, including emissions-control regulations; default on covenants of financing arrangements and the availability and terms of future financing arrangements; our ability to generate sufficient cash from operations to support significant ongoing capital expenditure requirements and other business initiatives; self-insurance claims and insurance premium costs; potential impairment of goodwill and intangible assets; general economic conditions and related shifts in market demand that impact the performance and needs of industries we serve and/or limit our customers' access to adequate financial resources; increasing costs due to inflation and rising interest rates; seasonal fluctuations, adverse weather conditions, natural disasters, and climate change; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest Corporation's public filings with the Securities and Exchange Commission ("SEC").

For additional information regarding known material factors that could cause our actual results to differ from those expressed in these forward-looking statements, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10‑Q, and Current Reports on Form 8‑K.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

Financial Data and Operating Statistics

The following tables show financial data and operating statistics on ArcBest^® and its reportable segments.

ARCBEST CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2023			2022			2023			2022
	(Unaudited)
	($ thousands, except share and per share data)
REVENUES	$	1,128,350		$	1,275,730		$	3,337,908		$	3,865,513

OPERATING EXPENSES		1,083,259			1,160,394			3,229,542			3,521,196

OPERATING INCOME		45,091			115,336			108,366			344,317

OTHER INCOME (COSTS)
Interest and dividend income		3,946			1,127			10,604			1,579
Interest and other related financing costs		(2,236	)		(1,755	)		(6,768	)		(5,558	)
Other, net		89			(189	)		6,907			(3,822	)
		1,799			(817	)		10,743			(7,801	)

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		46,890			114,519			119,109			336,516

INCOME TAX PROVISION		11,963			25,906			25,735			78,353

NET INCOME FROM CONTINUING OPERATIONS		34,927			88,613			93,374			258,163

INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX⁽¹⁾		(10	)		229			53,269			2,709

NET INCOME	$	34,917		$	88,842		$	146,643		$	260,872

BASIC EARNINGS PER COMMON SHARE⁽²⁾
Continuing operations	$	1.46		$	3.60		$	3.87		$	10.48
Discontinued operations⁽¹⁾		—			0.01			2.21			0.11
	$	1.45		$	3.61		$	6.08		$	10.59

DILUTED EARNINGS PER COMMON SHARE⁽²⁾
Continuing operations	$	1.42		$	3.49		$	3.77		$	10.07
Discontinued operations⁽¹⁾		—			0.01			2.15			0.11
	$	1.42		$	3.50		$	5.92		$	10.18

AVERAGE COMMON SHARES OUTSTANDING
Basic		24,004,255			24,605,228			24,119,449			24,640,706
Diluted		24,525,258			25,372,755			24,756,993			25,626,225

¹⁾	Discontinued operations represents the FleetNet segment, which sold on February 28, 2023. The nine months ended September 30, 2023 includes the net gain on sale of FleetNet of $52.3 million after-tax, or $2.17 basic earnings per share and $2.11 diluted earnings per share.
²⁾	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.

ARCBEST CORPORATION CONSOLIDATED BALANCE SHEETS

	September 30			December 31
	2023			2022
	(Unaudited)
	($ thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	251,503		$	158,264
Short-term investments		89,326			167,662
Accounts receivable, less allowances (2023 - $10,825; 2022 - $13,892)		469,490			517,494
Other accounts receivable, less allowances (2023 - $730; 2022 - $713)		10,984			11,016
Prepaid expenses		30,957			39,484
Prepaid and refundable income taxes		26,534			19,239
Current assets of discontinued operations		—			64,736
Other		11,342			11,888
TOTAL CURRENT ASSETS		890,136			989,783

PROPERTY, PLANT AND EQUIPMENT
Land and structures		430,263			401,840
Revenue equipment		1,094,183			1,038,832
Service, office, and other equipment		313,062			298,234
Software		169,434			167,164
Leasehold improvements		26,062			23,466
		2,033,004			1,929,536
Less allowances for depreciation and amortization		1,170,914			1,129,366
		862,090			800,170

GOODWILL		304,753			304,753
INTANGIBLE ASSETS, NET		104,288			113,733
OPERATING RIGHT-OF-USE ASSETS		164,082			166,515
DEFERRED INCOME TAXES		7,618			6,342
LONG-TERM ASSETS OF DISCONTINUED OPERATIONS		—			11,097
OTHER LONG-TERM ASSETS		104,479			101,893
TOTAL ASSETS	$	2,437,446		$	2,494,286

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	245,899		$	269,854
Income taxes payable		1,390			16,017
Accrued expenses		322,809			338,457
Current portion of long-term debt		66,862			66,252
Current portion of operating lease liabilities		31,414			26,225
Current liabilities of discontinued operations		—			51,665
TOTAL CURRENT LIABILITIES		668,374			768,470

LONG-TERM DEBT, less current portion		176,296			198,371
OPERATING LEASE LIABILITIES, less current portion		171,755			147,828
POSTRETIREMENT LIABILITIES, less current portion		12,167			12,196
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS		—			781
CONTINGENT CONSIDERATION		99,200			112,000
OTHER LONG-TERM LIABILITIES		38,552			42,745
DEFERRED INCOME TAXES		50,369			60,494

STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2023: 30,017,658 shares; 2022: 29,758,716 shares		300			298
Additional paid-in capital		338,368			339,582
Retained earnings		1,226,640			1,088,693
Treasury stock, at cost, 2023: 6,217,885 shares; 2022: 5,529,383 shares		(350,161	)		(284,275	)
Accumulated other comprehensive income		5,586			7,103
TOTAL STOCKHOLDERS' EQUITY		1,220,733			1,151,401
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,437,446		$	2,494,286

ARCBEST CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30
	2023			2022
	(Unaudited)
	($ thousands)
OPERATING ACTIVITIES
Net income	$	146,643		$	260,872
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		98,711			95,169
Amortization of intangibles		9,631			9,691
Share-based compensation expense		8,590			9,816
Provision for losses on accounts receivable		2,621			5,065
Change in deferred income taxes		(10,880	)		3,745
(Gain) loss on sale of property and equipment		1,134			(9,759	)
Gain on sale of subsidiary		—			(402	)
Pre-tax gain on sale of discontinued operations		(70,201	)		—
Lease impairment charges		30,162			—
Change in fair value of contingent consideration		(12,800	)		810
Change in fair value of equity investment		(3,739	)		—
Changes in operating assets and liabilities:
Receivables		43,478			(54,889	)
Prepaid expenses		8,640			7,550
Other assets		2,393			287
Income taxes		(22,051	)		(11,068	)
Operating right-of-use assets and lease liabilities, net		3,286			1,579
Accounts payable, accrued expenses, and other liabilities		(40,863	)		31,983
NET CASH PROVIDED BY OPERATING ACTIVITIES		194,755			350,449

INVESTING ACTIVITIES
Purchases of property, plant and equipment, net of financings		(129,779	)		(76,068	)
Proceeds from sale of property and equipment		5,972			13,938
Proceeds from sale of discontinued operations		100,949			—
Business acquisition, net of cash acquired⁽¹⁾		—			2,279
Proceeds from sale of subsidiary		—			475
Purchases of short-term investments		(80,353	)		(145,254	)
Proceeds from sale of short-term investments		160,570			48,161
Capitalization of internally developed software		(9,424	)		(13,922	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		47,935			(170,391	)

FINANCING ACTIVITIES
Borrowings under credit facilities		—			58,000
Proceeds from notes payable		—			12,113
Payments on long-term debt		(52,489	)		(99,567	)
Net change in book overdrafts		(12,489	)		2,102
Deferred financing costs		57			(53	)
Payment of common stock dividends		(8,696	)		(7,892	)
Purchases of treasury stock		(65,886	)		(50,117	)
Payments for tax withheld on share-based compensation		(10,056	)		(15,733	)
NET CASH USED IN FINANCING ACTIVITIES		(149,559	)		(101,147	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		93,131			78,911
Cash and cash equivalents of continuing operations at beginning of period		158,264			76,568
Cash and cash equivalents of discontinued operations at beginning of period		108			52
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	251,503		$	155,531

NONCASH INVESTING ACTIVITIES
Equipment financed	$	31,024		$	57,241
Accruals for equipment received	$	5,743		$	5,587
Lease liabilities arising from obtaining right-of-use assets	$	49,033		$	78,324

¹⁾	Represents cash received from escrow for post-closing adjustments related to the acquisition of MoLo.

Note: The statements of cash flows for the nine months ended September 30, 2023 and 2022 include cash flows from continuing operations and cash flows from discontinued operations of FleetNet America^®, which was sold on February 28, 2023.

ARCBEST CORPORATION FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

	Three Months Ended										Nine Months Ended
	September 30										September 30
	2023					2022					2023					2022
	(Unaudited)
	($ thousands, except percentages)
REVENUES FROM CONTINUING OPERATIONS
Asset-Based	$	741,186				$	791,531				$	2,161,018				$	2,299,464
Asset-Light⁽¹⁾		419,312					515,235					1,267,220					1,660,174
Other and eliminations		(32,148	)				(31,036	)				(90,330	)				(94,125	)
Total consolidated revenues from continuing operations	$	1,128,350				$	1,275,730				$	3,337,908				$	3,865,513

OPERATING EXPENSES FROM CONTINUING OPERATIONS
Asset-Based
Salaries, wages, and benefits	$	357,582		48.2	%	$	332,359		42.0	%	$	1,037,725		48.0	%	$	973,924		42.4	%
Fuel, supplies, and expenses		91,493		12.4			97,279		12.3			276,678		12.8			281,406		12.2
Operating taxes and licenses		13,865		1.9			13,089		1.6			41,938		1.9			38,405		1.7
Insurance		13,654		1.8			13,180		1.7			39,816		1.8			35,808		1.5
Communications and utilities		4,729		0.6			4,794		0.6			14,586		0.7			14,129		0.6
Depreciation and amortization		26,537		3.6			24,117		3.0			76,721		3.6			72,885		3.2
Rents and purchased transportation		79,233		10.7			123,714		15.6			271,899		12.6			348,249		15.1
Shared services		70,699		9.5			72,286		9.1			209,780		9.7			215,020		9.4
(Gain) loss on sale of property and equipment and lease impairment charges⁽²⁾		540		0.1			(5,910	)	(0.7	)		905		—			(9,975	)	(0.4	)
Innovative technology costs⁽³⁾		7,300		1.0			6,068		0.8			21,711		1.0			20,982		0.9
Other		731		0.1			1,243		0.2			3,640		0.2			2,629		0.1
Total Asset-Based		666,363		89.9	%		682,219		86.2	%		1,995,399		92.3	%		1,993,462		86.7	%

Asset-Light⁽¹⁾
Purchased transportation	$	365,217		87.1	%	$	425,567		82.6	%	$	1,078,482		85.1	%	$	1,382,107		83.3	%
Supplies and expenses		2,773		0.7			4,378		0.9			10,193		0.8			11,907		0.7
Depreciation and amortization⁽⁴⁾		5,097		1.2			5,072		1.0			15,250		1.2			15,720		0.9
Shared services		47,411		11.3			56,371		10.9			147,825		11.7			164,554		9.9
Contingent consideration⁽⁵⁾		(17,840	)	(4.3	)		—		—			(12,800	)	(1.0	)		810		—
Lease impairment charges⁽⁶⁾		14,407		3.4			—		—			14,407		1.1			—		—
Gain on sale of subsidiary⁽⁷⁾		—		—			—		—			—		—			(402	)	—
Other		5,951		1.5			8,463		1.6			18,478		1.5			21,499		1.3
Total Asset-Light		423,016		100.9	%		499,851		97.0	%		1,271,835		100.4	%		1,596,195		96.1	%

Other and eliminations⁽⁸⁾		(6,120	)				(21,676	)				(37,692	)				(68,461	)
Total consolidated operating expenses from continuing operations	$	1,083,259		96.0	%	$	1,160,394		91.0	%	$	3,229,542		96.8	%	$	3,521,196		91.1	%

OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS
Asset-Based	$	74,823				$	109,312				$	165,619				$	306,002
Asset-Light⁽¹⁾		(3,704	)				15,384					(4,615	)				63,979
Other and eliminations⁽⁸⁾		(26,028	)				(9,360	)				(52,638	)				(25,664	)
Total consolidated operating income from continuing operations	$	45,091				$	115,336				$	108,366				$	344,317

¹⁾	Asset-Light represents the reportable segment previously named ArcBest. Asset-Light financial results previously included the ArcBest segment and FleetNet, which was sold on February 28, 2023.
²⁾	The three and nine months ended September 30, 2023 include $0.7 million of noncash lease-related impairment charges for a service center. The three and nine months ended September 30, 2022 include a $4.3 million noncash gain on a like-kind property exchange of a service center.
³⁾	Represents costs associated with the Vaux freight handling pilot test program at ABF Freight. The decision was made to pause the pilot during third quarter 2023, as previously announced.
⁴⁾	Depreciation and amortization includes amortization of intangibles associated with acquired businesses.
⁵⁾	Represents the change in fair value of the contingent earnout consideration recorded for the MoLo acquisition. The liability for contingent consideration is remeasured at each quarterly reporting date, and any change in fair value as a result of the recurring assessments is recognized in operating income (loss). The contingent consideration for the MoLo acquisition will be paid based on achievement of certain targets of adjusted earnings before interest, taxes, depreciation, and amortization, as adjusted for certain items pursuant to the merger agreement, for years 2023 through 2025.
⁶⁾	Represents noncash lease-related impairment charges for certain office spaces that were made available for sublease.
⁷⁾	Gain relates to the contingent amount recognized in second quarter 2022 when the funds from the May 2021 sale of the labor services portion of the Asset-Light segment's moving business were released from escrow.
⁸⁾	"Other and eliminations" includes $15.1 million of noncash lease-related impairment charges for a Vaux pilot facility, corporate costs for certain unallocated shared service costs which are not attributable to any segment, additional investments to offer comprehensive transportation and logistics services across multiple operating segments, and other investments in ArcBest technology and innovations.

ARCBEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Non-GAAP Financial Measures

We report our financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, management believes that certain non-GAAP performance measures and ratios utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. Accordingly, non-GAAP results are presented on a continuing operations basis, excluding the discontinued operations of FleetNet, which was sold on February 28, 2023. The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management's opinion, do not reflect our core operating performance. Other companies may calculate non-GAAP measures differently; therefore, our calculation may not be comparable to similarly titled measures of other companies. Certain information discussed in the scheduled conference call could be considered non-GAAP measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. These financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as determined under GAAP.


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2023			2022			2023			2022
ArcBest Corporation - Consolidated	(Unaudited)
	($ thousands, except per share data)
Operating Income from Continuing Operations
Amounts on GAAP basis	$	45,091		$	115,336		$	108,366		$	344,317
Innovative technology costs, pre-tax⁽¹⁾		14,059			10,056			41,358			30,083
Purchase accounting amortization, pre-tax⁽²⁾		3,192			3,213			9,576			9,640
Change in fair value of contingent consideration, pre-tax⁽³⁾		(17,840	)		—			(12,800	)		810
Lease impairment charges, pre-tax⁽⁴⁾		30,162			—			30,162			—
Gain on sale of subsidiary, pre-tax⁽⁵⁾		—			—			—			(402	)
Nonunion vacation policy enhancement, pre-tax⁽⁶⁾		—			1,990			—			1,990
Non-GAAP amounts	$	74,664		$	130,595		$	176,662		$	386,438

Net Income from Continuing Operations
Amounts on GAAP basis	$	34,927		$	88,613		$	93,374		$	258,163
Innovative technology costs, after-tax (includes related financing costs)⁽¹⁾		10,630			7,608			31,316			22,686
Purchase accounting amortization, after-tax⁽²⁾		2,398			2,396			7,194			7,189
Change in fair value of contingent consideration, after-tax⁽³⁾		(13,404	)		—			(9,617	)		604
Lease impairment charges, after-tax⁽⁴⁾		22,571			—			22,571			—
Gain on sale of subsidiary, after-tax⁽⁵⁾		—			—			—			(317	)
Nonunion vacation policy enhancement, after-tax⁽⁶⁾		—			1,479			—			1,479
Change in fair value of equity investment, after-tax⁽⁷⁾		—			—			(2,786	)		—
Life insurance proceeds and changes in cash surrender value		(212	)		176			(2,794	)		3,679
Tax benefit from vested RSUs⁽⁸⁾		(188	)		(2,381	)		(5,103	)		(8,310	)
Tax credits⁽⁹⁾		—			(1,831	)		—			(1,190	)
Non-GAAP amounts	$	56,722		$	96,060		$	134,155		$	283,983

Diluted Earnings Per Share from Continuing Operations
Amounts on GAAP basis	$	1.42		$	3.49		$	3.77		$	10.07
Innovative technology costs, after-tax (includes related financing costs)⁽¹⁾		0.43			0.30			1.26			0.89
Purchase accounting amortization, after-tax⁽²⁾		0.10			0.09			0.29			0.28
Change in fair value of contingent consideration, after-tax⁽³⁾		(0.55	)		—			(0.39	)		0.02
Lease impairment charges, after-tax⁽⁴⁾		0.92			—			0.91			—
Gain on sale of subsidiary, after-tax⁽⁵⁾		—			—			—			(0.01	)
Nonunion vacation policy enhancement, after-tax⁽⁶⁾		—			0.06			—			0.06
Change in fair value of equity investment, after-tax⁽⁷⁾		—			—			(0.11	)		—
Life insurance proceeds and changes in cash surrender value		(0.01	)		0.01			(0.11	)		0.14
Tax benefit from vested RSUs⁽⁸⁾		(0.01	)		(0.09	)		(0.21	)		(0.32	)
Tax credits⁽⁹⁾		—			(0.07	)		—			(0.05	)
Non-GAAP amounts⁽¹⁰⁾	$	2.31		$	3.79		$	5.42		$	11.08

See "Notes to Non-GAAP Financial Tables" for footnotes to this ArcBest Corporation – Consolidated Non-GAAP table.

ARCBEST CORPORATION RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES – Continued

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2023				2022				2023				2022
Segment Operating Income (Loss) Reconciliations	(Unaudited)
	($ thousands, except percentages)
Asset-Based Segment
Operating Income ($) and Operating Ratio (% of revenues)
Amounts on GAAP basis	$	74,823	89.9	%	$	109,312	86.2	%	$	165,619	92.3	%	$	306,002	86.7	%
Innovative technology costs, pre-tax⁽¹¹⁾		7,300	(1.0	)		6,068	(0.8	)		21,711	(1.0	)		20,982	(0.9	)
Lease impairment charges, pre-tax⁽⁴⁾		684	(0.1	)

ArcBest Announces Third Quarter 2023 Results