Weather, one-time charge pushes ArcBest to first quarter loss of $5.2 million

The first quarter financials for ArcBest Corporation (formerly known as Arkansas Best Corp.) were not as good as analysts expected thanks to a pension settlement charge and the estimated negative impact of severe winter weather during the quarter.

The transportation holding company reported a loss of $5.2 million during the quarter, or a per share loss of 20 cents, more than double the 8 cent per share that was the consensus estimate of the 15 analysts who watch the company. However, without a $2.9 million pension settlement charge, the loss would have been 11 cents per share.

Also, the loss was better than the $13.395 million loss the company recorded in the first quarter of 2013.

Total revenue during the quarter was $577.904 million, 10.98% better than the first quarter of 2013 and well ahead of the consensus estimate of $551.35 million.

Winter weather during the quarter shaved $10.5 million off the operating income tally, according to a company estimate. Factoring our weather and the settlement charge, the company would have been in the black during the quarter.

“The estimated operating income impact of first quarter severe weather at ABF Freight was approximately $10.5 million. ABF Freight’s pre-tax first quarter pension settlement charges equaled $2.9 million. Thus, ABF Freight’s $12.2 million reported first quarter 2014 operating loss was adversely affected by the $13.4 million total of these two items. Excluding these items, ABF Freight would have generated an operating profit in this year’s first quarter compared to a $22.5 million operating loss in the first quarter of 2013,” the company explained in the earnings report issued Thursday (May 1) after the markets closed.

Despite the weather, tonnage was up 5.4% during the quarter and the number of shipments were up 3.4%. Company officials have said the tonnage could have been up 7% during the quarter if not for the snow and ice storms in many parts of their network.

ArcBest President and CEO Judy McReynolds said all segments of the company performed well during the quarter even with the bad weather, which she said will result in more future business.

“This was a challenging quarter for our industry as severe weather across the nation disrupted operations,” McReynolds said in the statement. “Excluding that impact, our companies performed well, with ABF Freight overcoming the previous year’s loss, Panther posting strong operating profit and FleetNet experiencing record business levels on many days. Our improved success in offering customers holistic solutions and one-stop shopping for a variety of logistics challenges is helping distinguish us in the marketplace. This provides additional opportunities to enhance the relationships we have with existing customers.”

The non-asset based businesses in the ArcBest portfolio generated $4.459 million in operating income during the quarter, a big improvement over the $134,000 during the first quarter of 2013.

The tough first quarter follows a positive financial performance in 2013. Net income during 2013 for ArcBest was $15.8 million, much better than the $7.7 million loss in 2012 and the most the company has earned in a year since 2008. The per share earnings of 59 cents also blew past the consensus estimate of 47 cents per share.

SEGMENT NUMBERS Q1 2014
ABF Freight
Operating income
2014 (January-March): –$12.184 million
2013 (January-March): –$22.549 million

Premium Logistics (Panther)
Operating income
2014 (January-March): $3.364 million
2013 (January-March): –$864,000

Domestic/Global transportation management (ABF Logistics)
Operating income
2014 (January-March): $535,000
2013 (January-March): $518,000

Emergency/preventative maintenance (FleetNet)
Operating income
2014 (January-March): $1.401 million
2013 (January-March): $711,000

Household goods moving (ABF Moving)
Operating income
2014 (January-March): –$841,000
2013 (January-March): – $231,000

Company shares (NASDAQ: ARCB) closed Thursday at $40.57, a gain over the opening price of $39.55, and a new 52-week high for the stock. Prior to Thursday, the share price has ranged from a $39.79 high to a $9.67 low during the past year.