ArcBest blew past third quarter revenue and net income estimates thanks primarily to higher shipping prices, a “steady freight environment” and fuel surcharges. Net income in the quarter was $40.776 million, up more than 175% compared to the same quarter in 2017.
The diluted earnings per share of $1.52 was well ahead of the $1.12 consensus estimate of 11 analysts providing an income prediction, and well ahead of the 56 cents per share in the 2017 quarter.
Total revenue in the third quarter for ArcBest – the Fort Smith-based parent company of ABF Freight, one of the largest less-than-truckload carriers in the country – was $826.158 million, up 11% compared to the same period in 2017. The tally was also better than the consensus estimate of $815.02 million among the six analysts offering a revenue target.
“Our sales, yield and operations teams – supported by significant technology investments we have made over the last several years – are doing an excellent job helping our customers navigate the industry capacity shortage while ensuring that ArcBest receives the appropriate value for our services,” ArcBest Chairman, President and CEO Judy McReynolds said in the earnings report. “Significantly, our asset-based business reported its best third quarter operating ratio since 2006, and we experienced a strong net revenue improvement in our asset-light business.”
Net income in the first three quarters of 2018 is $51.963 million, more than double the $23.158 million during the same period in 2017. Total revenue for the first three quarters was $2.319 billion, up 9.64% over the $2.115 billion in the comparable 2017 period. The improved financials also include a $37.922 million multiemployer pension fund liability charge.
ArcBest shares (NASDAQ: ARCB) closed Thursday at $36.90, down 22 cents. During the past 52 weeks, the share price has ranged between $29.40 and $51.45. The markets liked the report, which was released after the markets closed, with the share price jumping $1.10 to $38 per share in early after-hours trading.
ABF, LOGISTICS NUMBERS
Quarterly revenue at ABF totaled $585.29 million, up over the $517.417 million in the same quarter of 2017. Operating income in the segment was $50.15 million, more than double the $23.74 million during the same quarter in 2017.
Revenue during the first nine months of 2018 for ABF was $1.626 billion, up 8.68% compared with the $1.496 billion during the same period of 2017. Operating income in the segment for the first nine months was $66.933 million, up 75% compared with the $38.287 million during the same period in 2017.
Average revenue per shipment in the quarter was $440.65, a 13% gain over the $389.79 million in the same quarter of 2017. The number of shipments in the quarter fell 0.2% to 1.312 million. Average revenue per shipment during the first nine months of 2018 was $430.34, up almost 15% compared with the same period in 2017.
“The strong improvement in both revenue per hundredweight and revenue per shipment versus the same period last year was driven by the benefits of pricing initiatives implemented throughout the year and an increase in fuel surcharge. Increases in average shipment size and the average length of haul were additional factors positively impacting revenue per shipment,” the company noted in the earnings report.
Quarterly revenue at ArcBest Logistics and Fleetnet – the company’s asset-light divisions – totaled $255.943 million, up over the $235.317 million in the same quarter of 2017. The logistics division generated $205.449 million of the revenue. Operating income in the segment was $11.081 million, better than the $8.76 million during the same quarter in 2017. The logistics division accounted for $9.993 million of the operating income.
Revenue during the first nine months of 2018 for the asset-light division was $732.414 million, up 14.3% compared with the $640.861 million during the same period of 2017. Operating income in the segment for the first nine months was $20.503 million, just ahead of the $17.549 million during the same period in 2017.
“Compared to last year’s third quarter, total revenue growth in the Asset-Light ArcBest segment was the result of increased revenue per shipment associated with higher market rates, somewhat offset by a reduction in total shipments handled,” the company noted. “Though net revenue margins continued to be under pressure related to limited availability of competitively priced equipment capacity, the rate of margin compression in the third quarter was less than in the first half of this year.”
The improved financials have boosted the company’s cash position. Cash and cash equivalents as of Sept. 30 was $177.436 million, a sizeable gain over the $109.034 million as of Sept. 30, 2017.