ArcBest First Quarter Profit Ends Seven Year Q1 Loss Streak

by Michael Tilley ([email protected]) 48 views 

First quarter net income of $745,000 for Fort Smith-based ArcBest was well below what the market expected, but it was the company’s first first-quarter profit for the first time in seven years and a wide swing from the first quarter 2014 loss of $5.19 million.

Quarterly revenue for ArcBest, a transportation holding company with less-than-truckload carrier ABF Freight as its largest subsidiary, was $613.276 million, up 6.1% compared to the first quarter of 2014.

The net income of 3 cents per share was below the consensus estimate of 10 cents per share. Also, first quarter revenue was below the consensus estimate of $621.27 million.

A pension settlement charge of $684,000 was incurred in the first quarter, which shaved 3 cents per share from net income.

First quarter earnings did not carry the momentum from a strong fourth quarter and full year 2014. ArcBest reported in February full year net income of $46.177 million, up 192% compared to the $15.811 million in 2013, and a wide swing from the $7.7 million loss in 2012. Fourth quarter net income was $14.543 million, up 40.5% compared to the same quarter of 2013.

ArcBest CEO Judy McReynolds said in the earnings report issued early Monday (May 4) that productivity and pricing helped end the streak of first-quarter losses.

“We were very gratified to see ArcBest post a first-quarter profit for the first time in seven years,” McReynolds noted in the statement. “As productivity and pricing improved, ABF Freight reversed last year’s first-quarter losses while maintaining its focus on better serving customers. The emerging businesses contributed their largest revenue portion yet to ArcBest, at 29 percent of total consolidated revenue, as our efforts to provide tailored, customized solutions across the supply chain are resonating well.”

ABF Freight, the company’s largest segment, posted first quarter revenue of $441.207 million, just above the $428.871 million in the 2014 quarter.

Key measurements in the segment were mixed. Billed revenue per hundredweight was $28.06, up 3.7% and the number of shipments was up 4.9%. However, tonnage shipped during the quarter was down 1.3%.

ArcBest did see first quarter improvements with respect to growing its non-asset (non-trucking) business revenue. In total, the company’s four non-trucking subsidiaries – Premium, FleetNet, ABF Logistics, and ABF Moving – generated $183.7 million in quarterly revenue, or 29% of the company’s total revenue. That was up from $158.4 million in the 2014 first quarter, which was then 27% of the company’s revenue.

The first quarter non-asset revenue was below the 34% of total revenue for all of 2014.

Premium Logistics (Panther), the company’s largest non-asset segment, posted first quarter revenue of $75.292 million, better than the $72.226 million in the first quarter of 2014. However, operating income in the segment fell to $1.195 million compared to $3.364 million in the first quarter of 2014.

“The quarter’s results were impacted by unfavorable experience in casualty claims and higher than expected healthcare costs, which in total increased Panther’s operating costs versus the same period last year by $1.5 million,” the company noted in the earnings report. “Finally, costs associated with investments in additional sales personnel and infrastructure for future business growth also reduced first quarter 2015 profitability.”

SEGMENT OPERATING INCOME – First Quarter 2015
ABF Freight
Q1 2015: $43,000
Q1 2014: –$12,184 million

Premium Logistics (Panther)
Q1 2015: $1.195 million
Q1 2014: $3.364 million

FleetNet (maintenance services)
Q1 2015: $1.17 million
Q1 2014: $1.401 million

ABF Logistics
Q1 2015: $775,000
Q1 2014: $535,000

ABF Moving
Q1 2015: –$363,000
Q1 2014: –$841,000

ArcBest shares (NASDAQ: ARCB) closed Friday at $35.70. During the past 52 weeks the share price ranged from a $47.52 high to a $30.14 low.