ArcBest net income down 34.4% in 2023, fourth quarter income up 30.7%

by Michael Tilley ([email protected]) 407 views 

Full-year net income reported by Fort Smith-based ArcBest was down 34.4% thanks in large part to a more than 2% decline in a closely watched revenue metric, a more than 7% decline in total shipments, and a 2.6% dip in tonnage shipped.

The logistics and shipping company on Tuesday (Feb. 6) reported that full-year net income was $195.433 million, down 34.4% compared with $298.209 million in 2022. Revenue in 2023 totaled $4.427 billion, down 12% compared with $5.029 billion in 2022.

Fourth quarter net income was $48.79 million, up 30.7% compared with $37.337 million in the same quarter of 2022. Diluted earnings per share of $2.01 missed the consensus estimate of $2.21 per share. Revenue in the quarter was $1.089 billion, just below the $1.163 billion in the 2022 quarter. The revenue was essentially flat against the consensus estimate of $1.09 billion.

“2023 was a milestone year for ArcBest as we celebrated our 100-year anniversary and again delivered solid financial results,” Judy McReynolds, ArcBest chairman, president and CEO, noted in the earnings report. “In a year marked by market disruptions and increased supply chain complexity, our people remained a critical driver of our success, helping us achieve the second-best revenue performance in ArcBest’s history.”

Stephens Inc. analyst Jack Atkins said the company posted a better-than-expected operating income with ABF Freight and a lower loss than expected in the company’s logistics segment. In a note that included associate analysts Grant Smith and Collin Neiman, Stephens is optimistic about the company’s future results.

“Looking into the 1Q, we are encouraged that ARCB continues to see growth within its core LTL customer base as it works to cull less profitable transactional shipments. That said, challenging weather early in the quarter has negatively impacted the Company’s results in January,” Smith and others wrote in a “First Look” report following the earnings report.

Stephens also maintains an “Overweight” rating on ArcBest shares (NASDAQ: ARCB), meaning the company’s share performance is likely to be better than the industry sector.

Billed revenue per hundredweight, a key metric in the trucking sector, was $44.46 in 2023, down 2.2% compared with $45.45 in 2022. Revenue per shipment in 2023 was $554.53, down 7.4% compared with $599.04 in 2022. Tonnage shipped in 2023 was 3.22 million tons, down 2.6% compared with 2022.

ABF FREIGHT
A nationwide decline in freight activity resulted in “reduced customer demand” for ABF Freight, the company’s largest subsidiary and one of the largest less-than-truckload carriers in the nation.

Total Revenue
2023: $2.871 billion
2022: $3.01 billion

Operating Income
2023: $253.152 million
2022: $381.133 million

“Despite a softer freight environment leading to reduced customer demand, fourth quarter Asset-Based daily revenue was only slightly below the prior-year period. This resilience is largely attributable to ArcBest’s effective strategies in helping customers navigate market disruptions, coupled with a disciplined pricing approach,” the company noted in the report.

Q4 Revenue
Q4 2023: $709.986 million
Q4 2022: $711.436 million

Q4 Operating Income
Q4 2023: $87.533 million
Q4 2022: $75.131 million

ASSET LIGHT
ArcBest’s logistics shipment, which was a financial star during the global supply chain unwinding after the COVID-19 pandemic, posted an operating loss of $12.271 million in 2023 after posting a $52.725 million gain in 2022.

Total Revenue
2023: $1.68 billion
2022: $2.139 billion

Operating Income
2023: -$12.271 million
2022: $52.725 million

Q4 Revenue
Q4 2023: $413.425 million
Q4 2022: $479.098 million

Q4 Operating Income
Q4 2023: -$7.656 million
Q4 2022: -$11.254 million

“Compared to the fourth quarter of 2022, Asset-Light results were impacted by lower revenue per shipment and reduced margins associated with changes in business mix and the soft rate environment. Total shipments grew by 12.4% per day, as the managed transportation solution helped customers navigate recent LTL market disruption. However, lower rates and margins for the truckload solution were the biggest drivers of reduced profitability,” ArcBest noted in the earnings report.

ArcBest shares were trading almost 10% higher in Tuesday morning trading, after closing Monday at $128.07. In the past 52 weeks, the share price has ranged between $144 and $82.18.