ArcBest posts record full year revenue, net income

For the second consecutive quarter, Fort Smith-based ArcBest posted revenue above $1 billion, and full-year net income of $213.521 million was three times the $71.1 million in 2020. Full-year earnings per share of $7.98 beat the consensus estimate of $7.84. Full-year revenue totaled $3.98 billion, up 35.4% compared with $2.94 billion in 2020.

The third quarter marked the first time ArcBest quarterly revenue topped $1 billion in the company’s 98-year history. The shipping and logistics company benefited primarily from global supply chain issues that boosted demand and allowed carriers to raise rates.

Fourth-quarter revenue was $1.185 billion, well ahead of the $816.414 million in the same quarter of 2020. Quarterly net income was $65.488 million, up 173.8% compared with the $23.914 million in the 2020 quarter. Earnings per share of $2.47 was well ahead of the consensus estimate of $2.24.

Excluding non-recurring costs related to a freight handling pilot test program at ABF Freight, technology investments, new human resources software, and costs associated with the $235 million deal to buy MoLo which closed Nov. 1, earnings per share in the quarter was $2.79.

“I am extremely proud of the talented people of ArcBest, whose dedication and hard work have driven our record-breaking fourth quarter and full-year results,” Judy McReynolds, ArcBest chairman, president and CEO, said in the report posted Tuesday (Feb. 1) before the markets opened. “2021 was a year of immense challenges – from the ongoing pandemic to extreme supply chain pressures – but our team stayed focused on our strategic initiatives and consistently exceeded expectations. We are making smart investments across our business to advance our strategic vision and adapt to the rapidly evolving market environment, all while being true advisors to our customers.”

ArcBest shares (NASDAQ: ARCB) were set to open Tuesday at $85.20. During the past 52 weeks the share price has ranged between $125 an $46.04. The company’s primary subsidiary is ABF Freight, one of the nation’s largest less-than-truckload carriers. ArcBest, which has a market capitalization of $2.261 billion, has almost 14,000 employees and operates at 250 campuses and service centers.

ABF FREIGHT GROWTH, UNION BONUS
Fourth-quarter revenue at ABF Freight was $683.485 million, up from $554.392 million in the 2020 quarter. The quarterly operating income in the segment was $83.123 million, up from $27.943 million in the 2020 quarter. Full-year revenue was $2.573 billion, up from $2.092 billion in 2020. Full-year operating income was $260.707 million, also well ahead of the $90.865 million in 2020.

Driving the considerably improved financials for the year and quarter was higher rates charged on increased shipments. Average billed revenue per hundredweight (CWT), a closely watched metric in the sector, was $39.70 for the year, up 14.7% compared with 2020. The average revenue per shipment was $522.85, up 18.4% compared with 2020. Pricing power for ABF was strong to end the year and begin 2021, with October CWT up 20.4%, November up 25.4%, December up 24.4% and preliminary January figures up 22%.

“Continued customer demand for ArcBest’s Asset-Based services and a solid pricing environment are reflected in the segment’s record-setting fourth quarter and full-year revenue and profit,” the company noted in the earnings report. “As a result of the operating ratio achieved in 2021, ABF Freight will pay a 3% profit-sharing bonus to qualifying union-represented employees – the maximum amount provided in the collective bargaining agreement.”

The number of ABF shipments in 2021 totaled 4.94 million, up 3.9%, and tonnage was up 7.2% to 3.253 million tons.

LOGISTICS, FLEETNET FINANCIALS
ArcBest, the logistics segment, posted fourth-quarter revenue of $472.335 million, almost double the $245.579 million in the same quarter of 2020. Quarterly operating income in the segment was $12.823 million, well ahead of the $4.93 million in the 2020 quarter. Full-year revenue was $1.301 billion, up from $779.115 million in 2020. Full-year operating income was $46.397 million, almost five times more than the $9.655 million in 2020.

“Revenue growth and enhanced profitability were driven by strong demand from customers seeking supply chain solutions requiring expedited, managed transportation and international services,” the company noted, adding that the segment benefited from its new MoLo business.

ArcBest announced Sept. 29 a deal to acquire Chicago-based MoLo Solutions, a truckload freight brokerage firm, in a cash deal of at least $235 million. The statement from ArcBest noted that MoLo has access to more than 70,000 “carrier partners” in the truckload shipping business. MoLo posted 2020 revenue of $274 million and is on track for $600 million in revenue in 2021.

FleetNet, a maintenance service provider, posted fourth-quarter revenue of $68.863 million, better than the $55.625 million in the same quarter of 2020. Quarterly operating income in the segment was $1.114 million, also above the $558,000 in the 2020 quarter. Full-year revenue was $254.087 million, up from $205.049 million in 2020. Full-year operating income was $4.544 million, better than the $3.367 million in 2020.

CAPITAL EXPENDITURES, CASH HOLDINGS
The company also reported that net capital expenditures in 2021 totaled $104 million, including ABF Freight equipment purchases of $79 million. But the company had planned to spend more in 2021.

“Revenue equipment purchases in 2021 were lower than the original estimate because of pandemic-related manufacturing delays, primarily on new road tractors. As a result, approximately $35 million of planned 2021 net capital expenditures are included in the 2022 net capital expenditures total,” the company noted.

Total net capital expenditures in 2022 are estimated to range between $270 million to $290 million, which will include the $35 million planned to be spent in 2021. Of that, $160 million is for ABF Freight equipment and $45 million to $55 million is for real estate.

The company ended the year with $76.62 million in cash and cash equivalents, well below the $303.954 million on hand at the end of 2020. The $235 million MoLo deal reduced the cash holdings. Also reflected in the cash position is a $25 million investment in Phantom Auto, a Silicon Valley-based provider of remote vehicle operation software, that ArcBest announced on Jan. 19.