ArcBest quarterly revenue tops $1 billion for first time

For the first time in ArcBest’s 98-year history, the Fort Smith-based shipping and logistics company topped $1 billion in quarterly revenue. Third-quarter revenue was $1.016 billion, up 27.9% compared with the same period in 2020, the company reported Tuesday (Nov. 2).

The quarterly revenue beat the consensus estimate of $1.01 billion. Third-quarter net income was $63.691 million, well ahead of the $29.404 million in the same quarter of 2020. Earnings per share (diluted) in the quarter was $2.38, below the consensus estimate of $2.45. However, excluding one-time costs in the quarter of $5.236 million related to a freight handling test program and $1.187 million to close the MoLo Solutions acquisition, earnings per share was $2.59, better than the consensus estimate.

ArcBest announced Sept. 29 the agreement to buy MoLo Solutions, a Chicago-based truckload freight brokerage firm, for at least $235 million. The deal was finalized Monday (Nov. 1). MoLo has access to more than 70,000 “carrier partners” in the truckload shipping business, posted 2020 revenue of $274 million, and is on track for $600 million in revenue in 2021.

“Our strategic vision, which is centered on accelerating growth through targeted investments in innovation, technology, logistics solutions and our people, continues to pay off. Furthering these efforts, yesterday’s closing of the MoLo Solutions acquisition is expected to build and amplify our powerful portfolio of shipping and logistics services to help our customers drive the economy forward and unlock incremental value for our shareholders,” Judy McReynolds, ArcBest chairman, president and CEO, said in the earnings report.

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

Revenue in the first nine months of 2021 is $2.794 billion, up from the $2.123 billion in the same period of 2020. Net income in the first nine months is $148.033 million, up 213.7% compared with $47.186 million in the same period of 2020.

In a Sept. 30 call with analysts to discuss the MoLo deal, McReynolds said the company at the time had total liquidity of more than $660 million to pursue more deals and invest in the company.

“Within ABF, we have added over 1,000 new employees so far this year, and netted over 500 when considering normal employee departures, primarily retirements. We have previously mentioned our plans to invest $100 million to $135 million in 2022, above our historic CapEx levels in equipment purchases and real estate investments to enable further growth. The addition of approximately 350 new employees has contributed to the growth across our asset-light business this year,” she noted, according to a Seeking Alpha transcript.

The company reported Tuesday cash and cash equivalents of $408.207 million, up from the $267.645 million at the end of the same period in 2020.

TRUCKING, ASSET-LIGHT SEGMENTS
As it has noted in a recent quarterly report, the company said ABF Freight primarily benefited from “strong shipper demand and a solid pricing environment” and “allocating network resources to serving core LTL customers.”

Quarterly operating income at ABF was $83.618 million, well ahead of the $36.646 million in the same period of 2020. Segment revenue in the quarter was $681.164 million, also better than the $561.856 million in the 2020 quarter. For the nine months of the year, the segment posted an operating income of $177.584 million, more than double the $70.922 million in the same period of 2020. The nine-month revenue totaled $1.89 billion in the segment, up from $1.537 billion in the same period of 2020.

In the asset-light business (logistics and FleetNet) quarterly operating income totaled $11.451 million, up from $5.818 million in the same period of 2020. Segment revenue was $371.721 million, up from $267.839 million in the same quarter of 2020. Asset-light segment revenue in the first nine months of 2021 was $1.013 billion, better than the $682.96 million in the same period of 2020. Operating income in the segment during the nine months was $37.004 million, well ahead of the $7.534 million in the same period of 2020.

“Customers’ needs for managed transportation solutions also contributed to third-quarter revenue growth and improved operating results. The increase in operating income reflects the benefits of higher revenue, partially offset by increased personnel costs in response to shipment growth and continued investments in technology,” the company noted in the earnings report.

OTHER KEY METRICS
A clear picture of what is driving the ArcBest financial gains emerges from its shipments and tonnage data. The billing and shipping figures show the company moved more freight at considerably higher rates than in the previous quarters.

The company reported 3.716 million shipments in the first nine months of 2020, up 4.7% compared with the same period in 2020.

Average billed revenue per hundredweight, a closely watched metric in the sector, was $38.95 in the first nine months, up 13.9% compared with the $34.21 in the same period of 2020. Average billed revenue per shipment in the first nine months was $511.43, up 17.3% compared with the same period in 2020.

Tonnage shipped in the first nine months was 2.44 million, also better than the 2.261 million in the same period of 2020.

ArcBest shares (NASDAQ: ARCB) closed Monday at $96.80, with the price ranging between $101.26 and $30.55 in the past 52 weeks. As of Monday, the share price was up 124.7% compared with the Jan. 4 closing price of $43.08.