‘High demand’ pushes quarterly income up more than 200% at ArcBest

by Michael Tilley ([email protected]ess.net) 474 views 

There’s good money in moving stuff from point A to point B. Fort Smith-based ArcBest posted a more than 200% increase in adjusted net income in the second quarter, with revenue up more than 50%. Adjusted per share earnings of $1.97 blew past the estimate of $1.61.

The shipping and logistics company on Monday (Aug. 2) reported second-quarter net income of $53.142 million, up 201.6% compared with the $17.616 million in the same quarter of 2020 when the pandemic was creating significant disruptions in global supply chains. Quarterly earnings were adjusted to reflect non-core gains and expenses related to property sales, “innovative technology costs,” gains on sales of subsidiaries and nonunion pension costs.

Revenue in the quarter was $988.973 million, up 51.2% compared with the $627.37 million in the same period of 2020, and also much better than the consensus estimate of $915.95 million.

“We’re very pleased to report record results for the second consecutive quarter,” ArcBest Chair, President and CEO Judy McReynolds noted in the report posted prior to the markets opening. “Our strong results for the first half of 2021 reflect our tireless execution in a period of extremely tight capacity and high demand. We put the customer at the center of everything we do, and we’re seeing our approach pay off as we work alongside shippers and capacity providers to solve their complex challenges.”

Clear examples of how demand and better pricing is driving revenue and boosting margins are in billing and tonnage info. Billed revenue per hundredweight – a key metric in the industry – was $38.87 in the second quarter, up 15.4% compared with the same quarter in 2020. The price increase is magnified with 850,817 tons shipped in the quarter, which was up 22.7% compared with the same quarter in 2020. Also, shipments in the quarter totaled 1.251 million, up 13.5% compared with the same period in 2020.

Revenue in the first half of 2021 was $1.778 billion, up 34% compared with the $1.328 billion in the same period of 2020. Net income (unadjusted) in the first half was $84.342 million, considerably more than the $17.782 million in the same period of 2020.

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

SEGMENT PERFORMANCE
The company said its trucking business, ABF Freight, “continued to benefit from increasing customer demand and a solid pricing environment that contributed to record-setting revenue and profits.”

Quarterly operating income at ABF was $63.911 million, more than triple the $21.036 million in the same period of 2020. Segment revenue in the quarter was $652.832 million, well ahead of the $460.07 million in the 2020 quarter. For the first half of the year, the segment posted an operating income of $93.966 million, significantly better than the $34.276 million in the same period of 2020. First-half revenue totaled $1.209 billion in the segment, up from $975.783 million in the first half of 2020.

In the asset-light business (logistics and FleetNet) quarterly operating income totaled $16.265 million, up from $2.085 million in the same period of 2020. Segment revenue was $330.295 million, up from $197.907 million in the same quarter of 2020.

“Solid customer demand and higher market rates resulting from continued tightness in available truckload capacity translated into strong second-quarter revenue growth in the ArcBest segment,” the company noted in the earnings report.

Asset-light segment revenue in the first half of 2021 was $641.794 million, better than the $415.121 million in the same period of 2020. Operating income in the segment was $25.553 million, well ahead of the $1.716 million in the first half of 2020.

ArcBest shares (NASDAQ: ARCB) closed Friday at $59.11, with the price ranging between $93.96 and $28.53 in the past 52 weeks. As of Friday, the share price is up 37.2% compared with the Jan. 4 closing price of $43.08.

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