ArcBest Records Rising Q3 Net Income

Third quarter net income for Fort Smith-based ArcBest was $19.618 million, well ahead of the $13.982 million in the same quarter of 2013, and thanks in large part to an almost 10% gain in ABF Freight revenue.

Per share earnings of 72 cents missed the consensus estimate of 75 cents. Excluding a one-time charge for a pension settlement, the per share earnings were 74 cents.

Total revenue in the quarter was $711.3 million, better than the $623.4 million in the same quarter of 2013, and better than the consensus estimate of $699.25 million.

For the first nine months of the year, ArcBest has recorded net income of $31.633 million, considerably better than the $5.465 million in the same period of 2013. Total revenue for the first nine months of 2014 is $1.947 billion, up 11.6% compared to the 2013 nine-month period.

“We continued to see strong demand for services from the ArcBest companies in the third quarter and are pleased that our commitment to provide customers easier access to our supply chain solutions is being well received,” Judy McReynolds, ArcBest president and CEO, said in the earnings report released early Monday (Nov. 3).

Gains at ABF Freight, ArcBest’s largest subsidiary and one of the nation’s largest less-than-truckload carriers, were driven by rate increases, tighter capacity in the sector and more shipments from existing customers. Shipments during the quarter were more than 1.33 million, up 10.7% compared to the same quarter in 2013. Tonnage during the quarter was up 7.2%, and is up 5.9% year-to-date.

The company reported that it continues to struggle with inexperienced dock workers and other employees the company has had to hire to handle the increase in shipments.

“Actions are actively being taken to drive productivity improvements and to reduce total labor hours to match available freight levels. In order to reduce costs and improve the transportation services offered to our customers, returning productivity to historical levels is an important priority for ABF Freight’s management team,” the company noted in the statement.

Panther, the logistics company ArcBest acquired in June 2012, continues to perform well. Panther revenue during the quarter is $82.784 million, well ahead of the $65.851 million in the same quarter of 2013. Revenue in the division for the first nine months of the year is $236.435 million, better than the $179.533 million in the same period of 2013.

“Panther, in particular, reported one of its strongest quarters ever, contributing over $4 million of operating income and $7 million of EBITDA. Year-to-date through September, Panther’s EBITDA was more than $20 million,” McReynolds noted in the report.

SEGMENT NUMBERS
ABF Freight
Operating income
2014 (January-September): $35.389 million
2013 (January-September): $164,000

Panther (premium logistics freight services)
Operating income
2014 (January-September): $11.841 million
2013 (January-September): $3.745 million

Domestic/Global transportation management
Operating income
2014 (January-September): $2.449 million
2013 (January-September): $1.564 million

Emergency/preventative maintenance
Operating income
2014 (January-September): $2.84 million
2013 (January-September): $2.367 million

Household goods moving
Operating income
2014 (January-September): $3.091 million
2013 (January-September): $2.552 million

ABF Freight had 73.5% of total company revenue in the quarter, up from 73% in the second quarter. For the first nine months of the year, ABF recorded 74.1% of ArcBest total revenue.

McReynolds has set as a goal to grow non-asset based revenue so the company is not as dependent on the whims of the national trucking sector. Non-asset based revenue during the third quarter accounted for 26.5% of the total, up from 24% in the second quarter. Revenue from non-asset-based operations was 17.8% of the 2012 total revenue, and just 10.6% in 2011.

Also, the company continues to bolster its financial position. Available cash and short-term investments totaled $203.24 million at the end of the quarter, up 43.8% over the $141.26 million as of Dec. 31, 2013.

Company shares (NASDAQ: ARCB) were set to open Monday at $39. During the past 52 weeks the share price has ranged from a $45.68 high to a $25.25 low.