An estimated $2 million loss from severe weather is partially to blame for a 51% drop in first quarter net income, ArcBest officials noted in the company’s first quarter report posted Friday (May 3). Quarterly net income was $4.888 million, well below the $9.954 million in the same quarter of 2018.
Per share net income of 18 cents was also below the 37 cents in the same quarter of 2018, and well below the 30 cents expected by a consensus of market watchers. Shares of Fort Smith-based ArcBest (NASDAQ: ARCB) set a new 52 week low of $28.34 during morning trading, but bounced back above $30 per share in early afternoon trading. The shares closed Friday at $30.20, down 29 cents.
Revenue during the quarter was $711.839 million, up 1.7% from $700.001 million in the 2018 quarter. Operating income totaled $8.591 million, down 32.4% from $12.725 million in the 2018 quarter.
The weather, which the company said reduced business activity and hurt freight handling margins, adding employees in “a tight labor market,” and a decline in tonnage shipped resulted in the lower net income and operating income, the company said.
“Business conditions, while still relatively strong, moderated in the first quarter from the levels seen last year particularly with regard to capacity and weather,” Chairman, President and CEO Judy McReynolds said in the report. “We were pleased to see positive results in a historically slow quarter, as our yield management initiatives on the asset-based side remained productive and net revenue margins in our ArcBest Asset-Light business improved, offset by reduced demand for expedited services resulting from a more balanced truckload capacity environment.”
Revenue with ABF Freight, the company’s less-than-truckload operation, was $506.079 million in the quarter, up from $482.115 million in the same quarter of 2018. Operating income in the segment was $13.615 million, just ahead of the $13.402 million in the 2018 quarter.
Quarterly tonnage shipped reached 730,409, down almost 4% from the same quarter in 2018. However, billed revenue per-hundredweight was $34.66 in the quarter, up 8% from the 2018 quarter.
Revenue in the asset light segment, which includes ArcBest Logistics and FleetNet, was $226.463 million in the quarter, down from $229.692 million in the same quarter of 2018. Operating income in the segment was $3.2185 million, below the $4.686 million in the 2018 quarter.
“Elevated costs in the Asset-Light ArcBest segment, that were the result of long-term strategic spending needed to build ArcBest’s owner-operator and contract carrier capacity, resulted in a reduction in first quarter operating income of approximately $1 million versus last year,” the company noted in the report.
The disappointing first quarter report follows a 2018 in which the company set a revenue record and posted a healthy net income. Full-year net income in 2018 for the company was $103.006 million, ahead of the $59.726 million in 2017, with per share income of $3.86 beating the consensus estimate of $3.78. Revenue for the year was $3.093 billion, up from $2.826 billion and the first time revenue topped the $3 billion mark, according to the company’s earning report posted Jan. 30.