ArcBest second quarter income down almost 35%, some cost-cutting measures end

Revenue and income at Fort Smith-based ArcBest for the first half of 2020 are below that of the same period in 2019, but improving conditions have allowed an end to salary cuts and other cost-cutting measures implemented April 6.

The less-than-truckload carrier and logistics company reported Wednesday (July 29) second quarter net income of $15.88 million, down 34.9% from the $24.376 million in the same quarter of 2019. Earnings per share of 61 cents were significantly better than the 0 cents per share expected by a consensus of analyst estimates.

ArcBest is the parent company of ABF Freight, one of the nation’s largest less-than-truckload carriers, and ArcBest Logistics and FleetNet.

Revenue in the second quarter was $627.37 million, below the $771.49 million in the same quarter of 2019, and below the consensus estimate of $642.54 million.

Net income in the first half of 2020 is $17.782 million, down 39.2% from the $29.264 million in the same period of 2019. Revenue in the first half of the year is $1.328 billion, down from the $1.483 billion in the same period of 2019.

RESTORING FULL WAGE LEVELS
“The sequential improvement in revenue for each month of the quarter resulted in a greater portion of the second quarter profitability being earned in June. As a result of this positive momentum in our business, some cost reductions will be restored beginning in the third quarter of 2020. These include the restoration of nonunion salaries; the 401(k) company match; and the board fees,” the company noted in the earnings report.

In early April the company implemented cost-cutting measures that included a 15% reduction in hours worked or “other equivalent adjustment” for hourly employees, 15% salary reduction for salaried employees, a hiring freeze for “noncritical roles,” a pay increase freeze, and suspension of the 401(k) match. The cuts resulted in $15 million in savings in the second quarter, according to the company.

“As an essential business, our employees have worked on the front lines in sacrifice, both personally and financially, to serve our customers and our nation,” Judy McReynolds, ArcBest chair, president and CEO, said in a statement. “We value our employees and appreciate their efforts, and are pleased to now be able to restore full wage levels.”

ArcBest posted 2019 net income of $39.985 million, well below the $67.262 million in 2018, but the sixth consecutive year of positive income. The company posted full-year revenue of $2.988 billion, below the $3.093 billion in 2018.

The company boosted its cash position by 80% from $318.488 million in cash, cash equivalents and short-term investments as of Dec. 31, to $574.009 million as of June 30.

ABF, ARCBEST LOGISTICS FINANCIALS
Second quarter revenue at ABF was $460.07 million, down from $559.648 million in the same quarter of 2019. Quarterly operating income for the less-than-truckload carrier was $21.036 million, also below the $36.178 million in the same quarter of 2019.

Revenue in the first half of the year for ABF was $975.783 million, down from $1.065 billion in the same period of 2019. Operating income for the first half was $34.276 million, down from $49.793 million in the same period of 2019.

Revenue per hundredweight – a key metric in the industry – for the first half of 2020 was $33.41, down 4.3% from the $34.90 in the same period of 2019. Tonnage shipped in the first half of the year was 1.469 million tons, down 4.3% from the 1.534 million tons in the same period of 2019.

Second quarter revenue at ArcBest (logistics) was $151.467 million, down from $181.173 million in the same quarter of 2019. Quarterly operating income was $1.303 million, below the $2.122 million in the same quarter of 2019. Revenue in the first half of the year for the logistics division was $316.242 million, down from $354.377 million in the same period of 2019. Operating income for the first half was a loss of $106,000, well below the $3.852 million in the same period of 2019.

Second quarter revenue at FleetNet was $46.44 million, down from $51.722 million in the same quarter of 2019. Quarterly operating income was $782,000, below the $1.026 million in the same quarter of 2019. Revenue in the first half of the year for FleetNet was $98.879 million, down from $104.981 million in the same period of 2019. Operating income for the first half was $1.822 million, below the $2.514 million in the same period of 2019.

Company shares (NASDAQ: ARCB) opened Wednesday at $32.53 and trading more than 5% lower in early afternoon trading. During the past 52 weeks the share price has ranged between $33.53 and $13.54.