ArcBest posts record quarterly net income, boosts quarterly dividend

by Michael Tilley ([email protected]) 326 views 

(photo from ArcBest)

Record quarterly net income, driven in part by a more than 20% increase in a key billing measure, has Fort Smith-based ArcBest rewarding shareholders with a $75 million share buyback and a boost in the quarterly dividend from 8 cents to 12 cents.

The trucking and logistics company on Friday (April 29) announced first-quarter net income of $69.569 million, almost three times more than the $23.361 million in the first quarter of 2021. Earnings per share of $2.68 was considerably more than the $2.15 consensus estimate among analysts.

Revenue in the quarter was $1.335 billion, up 61% compared with the $829.213 million in the same quarter of 2021.

“Our outstanding first quarter results, including record profitability, demonstrate our success in transforming ArcBest and positioning it as one of the country’s leading integrated logistics companies,” Judy McReynolds, ArcBest chairman, president and CEO, noted in Friday’s earnings report. “As announced yesterday, our strong cash flow allows us to return more capital to shareholders by increasing both our share repurchase program and our dividend. We are confident our talented team is poised to execute on our clearly defined strategy, which will accelerate our growth trajectory while positioning ArcBest to operate even more efficiently and consistently for years to come.”

ABF Freight, the company’s largest subsidiary and one of the nation’s largest less-than-truckload carriers, posted revenue of $705.311 million, well ahead of the $556.292 million in the same quarter of 2021. Operating income in the segment was $80.034 million, also well ahead of the $30.055 million in the 2021 quarter.

Billed revenue per hundredweight, a closely watched metric for the company, was $43.70, up 21.1% compared with $36.09 in the first quarter of 2021. The gain reflects ArcBest’s pricing power during the ongoing challenges with global supply chains. Tonnage shipped rose 4.4% in the quarter compared with the same quarter in 2021.

“Freight trends with ArcBest’s core LTL customers were also positive throughout the quarter while activities designed to optimize revenue, network balance, freight mix and shipments resulted in more efficient utilization of labor and network resources, and improved profitability. Asset-Based hiring initiatives were successful, contributing to ABF Freight adding over 600 new employees across key locations during the quarter,” the company noted.

ArcBest Logistics, the company’s second-largest subsidiary, posted revenue of $595.284 million, more than double the $252.336 million in the same quarter of 2021. Operating income in the segment was $21.116 million, well above the $8.265 million in the 2021 quarter. The company said higher “customer demand and higher market rates” resulted in record profitability in the growing segment. Revenue per shipment in the segment rose 32.3% in the quarter.

The company expects the logistics segment will show bigger gains in future quarters as it fully integrates the $235 million acquisition of Chicago-based MoLo Solutions. When acquired in late 2021, MoLo was a truckload freight brokerage firm with access to more than 70,000 “carrier partners” in the truckload shipping business. MoLo posted 2020 revenue of $274 million, and was estimated to be on track for $600 million in revenue in 2021.

FleetNet, the ArcBest subsidiary that provides maintenance for truck fleets, posted revenue of $78.378 million, up 32.4% compared with the $59.163 million in the same quarter of 2021. Operating income in the segment was $1.717 million, better than the $1.023 million in the 2021 quarter.

The first quarter gains for ArcBest followed significant full-year gains in 2021. ArcBest’s 2021 net income was $213.521 million, well above the $71.1 million in 2020. Full-year revenue totaled $3.98 billion, up 35.4% compared with $2.94 billion in 2020.

The 12-cent dividend will be paid on May 25 to shareholders of record on May 11. Company shares (NASDAQ: ARCB) closed Thursday at $76.43. During the past 52 weeks, the share price has ranged between $125 and $52.86.