ArcBest posts record quarterly revenue, pension fund charge dings income

Better pricing in a transportation sector witnessing more freight demand than shipping supply helped push Fort Smith-based ArcBest to record quarterly revenue of $793.35 million, better than the consensus estimate of $786.33 million and up 10.1% compared with the same quarter in 2017.

However, second quarter net income was just $1.233 million, well below the $15.777 million in the second quarter of 2017 thanks to a $37.9 million charge for a multiemployer pension fund. Without the one-time charge, quarterly net income would have been $29.787 million, or $1.12 per share. That reality would have beat the consensus earnings per share estimate of $1.01.

The charge relates to a “transition agreement” between ArcBest and the New England Teamsters and Trucking Industry Pension Fund.

Revenue in the first half of 2018 for the shipping and logistics company was $1.493 billion, ahead of the $1.371 billion in the first half of 2017. Net income in the first half of the year was $11.187 million, up 33.65% compared with the $8.37 million in the same period of 2017. Without the pension fund charge, net income for the first half of the year would have totaled $37.55 million.

“We were pleased to report a very solid second quarter, once again recording growth in revenue and operating income, particularly in our Asset-Based business,” Chairman, President and CEO Judy McReynolds said in the earnings report issued after the markets closed Tuesday (July 31). “While shipment levels were down amid slightly lower freight tonnage in our Asset-Based business, our pricing remained strong and we were pleased to see continued growth in revenue per hundredweight. Our Asset-Light business also experienced strong revenue growth on higher pricing, with operating results impacted by higher purchased transportation costs reflecting tight capacity conditions.”

Quarterly operating income for ABF Freight, the largest subsidiary of ArcBest and one of the nation’s largest less-than-truckload carriers, was $3.381 million, down from $22.895 million in the same quarter of 2017. That decline also was attributed to the one-time pension fund charge. ABF Freight revenue in the quarter was $559.239 million, better than the $514.537 million in the second quarter of 2017.

“Strength in account pricing and higher fuel surcharges contributed to strong growth in both revenue per hundredweight and billed revenue per shipment,” the company noted in the earnings report about ABF performance in the quarter. “Average shipment size increased reflecting positive changes in freight mix and shipment profile.”

Billed revenue per hundred-weight was $33.73 in the quarter, up 9.4% compared to the same quarter in 2017. Billed revenue per hundred-weight in the first half of the year was $32.96, up 9.2% compared to the first half of 2017. Billed revenue per shipment in the quarter was $436.52, up 15.4% compared with the same quarter in 2017.

Tonnage shipped in the quarter was down 0.1%, and tonnage shipped during the first half of the year was down 2.2%.

The company’s asset-light segments – ArcBest Logistics and Fleetnet – combined to generate revenue of $246.779 million, with logistics accounting for $199.987 million of that. Quarterly operating income for logistics was $3.707 million, down from the $5.929 million in the same quarter of 2017.

“As experienced in recent periods, market conditions contributed to reductions in net revenue margins related to the challenges of adequately matching shipper rates with the costs of purchased transportation. The decline in second quarter ArcBest (logistics) operating income was the result of net revenue margin compression and the impact of the previously announced sale of the military moving business in December 2017,” the company noted in the earnings report.

Quarterly operating income for Fleetnet was $1.029 million, ahead of the $747,000 in the same quarter of 2017.

ArcBest shares (NASDAQ: ARCB) closed Tuesday at $46.55, up $1.75. During the past 52 weeks the share price has ranged between $24.85 and $50.45.