ArcBest Third Quarter Numbers Miss Estimates, But YTD Income Up 26%

Reduced consumer spending and a dip in manufacturing pushed third quarter financials for ArcBest below market expectations. But for the first nine months of 2015 the transportation and logistics company remains ahead of its healthy pace in 2014.

The Fort Smith-based company posted third quarter net income of $19.62 million, just below the $20.11 million in the same quarter of 2014. Per share income of 74 cents was below the consensus analyst estimate of 79 cents per share. A one time pension settlement charge reduced third quarter net income to $19.154 million.

Total revenue during the quarter was $709.38 million, below the $711.295 million in the same period of 2014, and below the consensus estimate of $715.2 million.

For the first nine months of the year, total revenue reached $2.018 billion, ahead of the $1.947 billion during the same period of 2014. Net income for the first nine months of 2015 totaled $39.866 million, up 26% over the $31.633 million during the same period in 2014.

The company said in its earnings statement posted early Friday (Oct. 30) that third quarter results were impacted by “weaker than expected freight markets, resulting from high inventories, lower industrial-related manufacturing production, and weaker consumer spending.”

ABF Freight, the largest subsidiary of ArcBest, handled 855,952 tons of freight during the quarter, down 2.5% compared to the same period of 2014. Year-to-date, tonnage is down 0.6%.

“While softer freight demand amid an increasingly sluggish economy impacted our third quarter results, revenue growth in our asset-light logistics businesses confirms that our customers find value in our expanded supply chain, moving and fleet maintenance offerings,” ArcBest President and CEO Judy McReynolds said in the earnings statement.

Third quarter revenue for ABF Freight was $511.346 million, down 2.3% compared to the $523.351 million in the 2014 quarter. However, year-to-date revenue for the main division of the company is $1.456 million, better than the $1.445 billion during the same period in 2014.

Entering the fourth quarter, ABF Freight boosted general rates by 4.95%, which the company said will apply to about 35% of its business.

The company does continue to benefit from the non-trucking (asset light) operations created or acquired in recent years to help diversify its business model and revenue stream. Panther (logistics), ABF Logistics, Fleetnet and ABF Moving generated 29% of total revenue during the quarter, up compared to 28% during the same period of 2014.

“Despite economic effects and lower fuel surcharges, ABF Logistics, ABF Moving and FleetNet America all produced double-digit increases in revenue, and ABF Freight generated a solid improvement in its operating ratio through better use of resources. Panther contributed profitable results and new account growth but experienced lower revenue per load compared to record prior year levels when spot truckload capacity was constrained and fuel surcharges were higher,” Reynolds noted in the earnings report.

Operating Income (January – September)
ABF Freight
January-September 2015: $54.711 million
January-September 2014: $35.389 million

Panther (Premium Logistics)
January-September 2015: $8.767 million
January-September 2014: $11.841 million

Fleetnet
January-September 2015: $3.143 million
January-September 2014: $2.84 million

ABF Logistics
January-September 2015: $4.375 million
January-September 2014: $2.449 million

ABF Moving
January-September 2015: $4.663 million
January-September 2014: $3.091 million

Although the company’s quarterly revenue and income was slightly under expectations, the relatively debt-free operation again boosted its cash position. At the end of the quarter, cash and short-term investments at ArcBest totaled $261.213 million, up almost 29% compared to $202.951 million at the end of the 2014 third quarter.

ArcBest has posted two consecutive years in the black. Full year net income in 2014 was $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. Total revenue during 2014 for the publicly held company was $2.612 billion, up 13.6% compared to 2013.

Company shares (NASDAQ: ARCB) closed Thursday (Oct. 29) at $25.66, up 66 cents. During the past 52 weeks the share price has ranged from a $47.52 high to a $24.56 low.