Revenue up at ArcBest, but full year net income falls more than 58%

More than $8 million in restructuring charges and a “challenging freight environment” pushed ArcBest’s 2016 net income down more than 58%. Fourth quarter and full year income fell well below what Wall Street expected.

Fort Smith-based ArcBest, a transportation and logistics holding company, reported early Wednesday (Feb. 8) that 2016 net income was $18.652 million, down from $44.854 million in 2015. Full year per share earnings were 71 cents, below the 89 cents that was the consensus estimate of seven analysts.

Full year revenue totaled $2.7 billion, better than then $2.666 billion in 2015, and better than the consensus estimate of $2.69 billion.

“Although 2016 was a challenging freight environment, we were pleased with our positive momentum, particularly in our expedited service offerings, as we closed the year,” ArcBest Chairman, President and CEO Judy McReynolds said in the statement.

“Throughout 2016, during an inconsistent operating environment in our industry, we saw a positive reception from customers about our commitment to provide full supply chain solutions they seek as we continued to grow our company,” she added.

Fourth quarter net income was $1.584 million, below the $4.989 million in the fourth quarter of 2015. Per share income in the quarter was 6 cents, off the consensus estimate of 25 cents. Fourth quarter revenue reached $688.214 million, above the $648.134 million in the same quarter of 2015. The fourth quarter revenue also bested the consensus estimate of $680.75 million.

A hit to the bottom line was a reported $8.038 million in restructuring charges primarily related to a “significant” change in the company’s management structure announced Nov. 3. The changes were expected to result in a loss of 130 jobs.

Another factor in the company’s financial performance was differences between gains in shipments and tonnage, and revenue collected per shipment and per ton. For the full year, the number of shipments totaled 5.237 million, up 2.7% compared to 2015. However, billed revenue per shipment averaged $365.68, down 2.8% for the year.

Tonnage hauled by ABF Freight – the largest subsidiary of ArcBest and one of the nation’s largest less-than-truckload carriers – totaled 3.263 million tons, down 1.4% on the year. Billed revenue per hundredweight averaged $29.35, up 1.3%.

“In fourth quarter 2016, freight shipments grew at a faster rate than freight tonnage.  Thus, the average weight, and resulting revenue, of each shipment was below that of fourth quarter 2015. The shipment growth contributed to increased freight handling labor and purchased transportation costs,” the company noted in the report.

Operating income for ABF Freight in 2016 was $33.6 million, below the $62.4 million in 2015. Operating income at ArcBest’s asset-light divisions – the combination of ABF Logistics, ABF Moving and Panther Logistics – totaled $9.3 million in 2016, down from $23.7 million in 2015.

ArcBest shares (NASDAQ: ARCB) closed Tuesday (Feb. 7) at $31.20, down 65 cents. The share price in the past 52 weeks has ranged from a $33.95 high to a $14.85 low.