A boost in tonnage and the number of shipments helped Fort Smith-based ArcBest Corp. post second quarter net income of $15.777 million, up 54% compared to the same quarter in 2016. The positive quarter also puts the company in the black following a $7.4 million loss in the first quarter.
The shipping and logistics company reported Friday morning (July 28) that second quarter revenue totaled $720.368 million, better than the $676.627 million in the second quarter of 2016. The revenue was just under analysts’ estimate of $720.54 million.
Per share net income of 60 cents was well ahead of the 48 cents per share that was the average estimate of nine analysts who follow the company.
Net income for the first six months of the year reached $8.37 million, doubling the $4.128 million in the same period of 2016. Revenue during the first six months totaled $1.371 billion, better than the $1.298 billion in the same period of 2016.
The company cited a “positive industry pricing environment” and lower operational costs as key reasons for the income gain. Key metrics were positive for ABF Freight, one of the nation’s largest less-than-truckload (LTL) carriers and ArcBest’s largest subsidiary. Tonnage per day increased 0.1%, shipments per day increased 4.4%, and total billed revenue per hundredweight increased 6.1%.
“We were pleased to see improved results in the second quarter,” ArcBest Chairman, President and CEO Judy McReynolds said in the earnings statement. “Our responsiveness to customers’ logistics needs supported by assured capacity options contributed to revenue growth and improved profitability. Favorable trends in economic indicators are expected to positively impact the freight environment going forward. In situations where multiple logistics solutions are increasingly required by customers to meet their own business objectives, we are well positioned to deliver.”
In the company’s asset-light division, which is the combination of what was once ABF Logistics, ABF Moving and Panther Logistics, second quarter revenue totaled $212.4 million, better than the $196.1 million in the same period of 2016. Operating income was $6.544 million compared with $2.769 million in the same quarter of 2016. The asset-light division also includes FleetNet, which provides maintenance and repair services for medium- and heavy-duty trucks.
“The significant year-over-year increase in asset-light operating income was the result of labor efficiencies, continued cost management and expedited revenue growth,” the company noted in the statement.
The LTL industry is expected to benefit from the shift in the supply chain from long-haul truckload to regional LTL, said Allison Landry, transportation analyst for Credit Suisse.
“While supply chains were originally structured keeping brick-and-mortar retail stores in mind, they are ill-equipped to serve the rapid growth in e-commerce volumes. As a result, retailers are reorganizing their supply chains in order to deliver goods ordered online more quickly to the end consumer.”
Retailers are building more distribution centers, allowing them to reach consumers with one or two-day shipping, according to Landry. “In return, we suspect that they are demanding that suppliers distribute smaller amounts of inventory more widely amongst multiple distribution centers.
“E-commerce is creating a more fragmented supply chain system that is inherently less suited for long-haul (truckload) and more suited toward regional LTL.”
ArcBest shares (NASDAQ: ARCB) closed Thursday at $21.50, but opened Friday with trades above $26 per share. During the past 52 weeks the share price has ranged from a $33.95 high to a $16.95 low.