ArcBest posts decline in second quarter income, revenue; misses estimates

Fewer orders and smaller shipments were primarily responsible for a 60.5% decline in second quarter net income at Fort Smith-based ArcBest, the company reported Friday (July 28). Revenue in the quarter for the shipping and logistics company was down more than 16%.

The company posted second quarter net income of $40.443 million, down 60.5% compared with $102.461 million in the same quarter of 2022. Total revenue in the quarter was $1.103 billion, down 16.5% compared with the same quarter in 2022 and below the consensus estimate of $1.11 billion.

Diluted earnings per share for the quarter was $1.64, also below the consensus estimate of $2.05.

Net income in the first half of the fiscal year totaled $111.726 million, below the $172.03 million in the same period of 2022. Revenue in the first six months was $2.209 billion, also below the $2.589 billion compared with record levels set in the same period of 2022.

ArcBest is the parent company of ABF Freight, one of the nation’s largest less-than-truckload (LTL) carriers. The company said a weaker economy compared with conditions in 2022 and reductions in fuel surcharge revenue pushed the second quarter numbers lower.

“The decrease in second quarter total revenue for ArcBest’s Asset-Based business compared to the prior-year period was primarily due to a general slowing of core customer order frequency, smaller average shipment quantities related to a weaker economy and less fuel surcharge revenue based on lower diesel fuel prices,” the company noted in the earnings report.

ABF revenue in the quarter was $722.015 million, below the $802.622 million in the same quarter of 2022. The second quarter operating income at ABF was $43.325 million, well below the $116.656 million in the same period of 2022.

Revenue per hundredweight at ABF, a key metric in the LTL sector, for the first half of the year was $41.33, below the $44.77 in the same period of 2022. Revenue per shipment in the first six months was $537.38, below the $606.14 in the same period of 2022.

Second quarter revenue in the company’s logistics business was $409.816 million, below the $549.655 million in the same quarter of 2022. Operating income in the quarter was $13.18 million, lower than the $27.479 million in the same period of 2022.

“Current year second quarter revenue results were impacted by lower average revenue per shipment as a result of a softer market environment. Despite the increase in daily shipments resulting from growth in the truckload business, lower shipment rates and related shipment margins drove reduced second quarter profitability,” the company noted about the logistics division.

The company on July 26 announced a quarterly dividend of 12 cents per share to shareholders of record as of Aug. 9, and payable on Aug. 23.

ArcBest recently secured a new five-year labor contract with the International Brotherhood of Teamsters. The new contract will cover an estimated 8,600 ABF workers who are members of 137 local unions under the Teamsters umbrella. A wage increase was a key change in the new contract. Union members will receive a $3.50 per hour raise effective July 1, 2023, with a total of $6.50 in raises over the life of the agreement. The wage increase in year one alone surpasses those of the entire previous contract, according to both parties.

ArcBest shares (NASDAQ: ARCB) closed Thursday at $118.83 and were trading slightly lower in Friday morning trades. The share price in the past 52 weeks has ranged between $122.86 and $68.