ArcBest Q2 Profit Climbs on LTL Margin, Price Increase
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Profit at ArcBest rose 16.1% year over year in the second quarter of 2024 as an improvement in less-than-truckload revenue per shipment and an increase in prices trumped a decline in shipments.
The company ranks No. 12 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and its ABF Freight unit ranks No. 7 among less-than-truckload haulers.
Fort Smith, Ark.-based ArcBest posted net income of $46.9 million in the most recent quarter, compared with $40.4 million in the year-ago period, the carrier said Aug. 2.
Earnings per diluted share rose 19.5% to $1.96 from $1.64.
Revenue totaled $1.078 billion in Q2, a 2.35% decrease from $1.104 billion in the same period a year earlier, but ArcBest topped consensus analyst expectations of $1.05 billion, according to Zacks Equity Research.
ArcBest releases 2Q earnings results for 2024. Read complete details and listen to this morning's earnings call starting at 8:30 a.m. CDT: https://t.co/xFjfMyNTs9 pic.twitter.com/FMzOArbYaD — ArcBest (@ArcBestCorp) August 2, 2024
ArcBest’s asset-based unit, built around ABF Freight, posted Q2 revenue of $712.7 million, down 1.3% from $722 million in the year-ago period.
The division’s daily total tonnage fell 20.3% year over year to 11,186 from 14,027, total shipments per day fell 4.8% to 19,934 from 29,946, and weight per shipment fell 16.2% to 1,122 from 1,339, but revenue per hundredweight rose 23% year over year to $50.09 from $40.72.
Also, the operating ratio at the unit improved to 89.8 in the most recent quarter from 94 in the same period a year earlier. Operating ratio provides insight on how well a company is balancing its costs and revenue generation. The lower the ratio, the better a company’s performance.
“Total second-quarter daily shipment and tonnage levels were below the prior year, due primarily to fewer transactional shipments offset by increased core shipments, which positively impacted productivity and contributed to an improved operating ratio,” the company said.
ArcBest said the price it achieved continued to improve in Q2, driven by an improved freight mix, higher pricing on transactional shipments and contract renewal increases of 5.1%. Overall, LTL industry pricing remains rational, the company added.
Q2 revenue per day rose 5.3% compared with the first three months of 2024 while billed revenue per hundredweight increased 3.2%, which ArcBest said led to an operating ratio improvement of 220 basis points sequentially.
In a presentation accompanying the results, the carrier detailed how the trend continued in July. The company said the unit’s revenue per hundredweight rose 16% year over year in July.
In addition, the steepness of the decline in the weight per shipment has started to moderate and ArcBest expects that trend to continue, President Seth Runser said during the quarterly earnings call.
“We’re working across a bottom here, and we really don’t have a crystal ball as to when that will inflect,” added CEO Judy McReynolds. “While we don’t have a crystal ball, we feel confident in our ability to navigate through the choppy waters, as they hopefully settle down, and we can move to a more normal environment.”
Part of the optimism, said Runser, is because only half the terminals previously operated by Yellow Corp. before it filed for bankruptcy have reopened.
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ArcBest bought four Yellow facilities in the auction that followed the Knoxville, Tenn.-based carrier’s demise. Two of those facilities reopened in July, and the other two will reopen in the third quarter “after renovations are complete,” Runser said.
The company opened 79 new doors in Q2, including a terminal in Lithia Springs, Ga., on the outskirts of metropolitan Atlanta. It expects to add 316 doors in 2024 and has added 800 doors since 2021, according to the presentation.
ArcBest expects to have 9,610 terminal doors by the end of the first quarter of 2025. At the end of 2023, the company had 9,254 doors, after adding 299 doors during the year.
“We’re investing where we see growth opportunities or productivity improvements, a great example of that was Lithia Springs,” said Runser.
Meanwhile, the company’s asset-light unit saw revenue fall 3.4% year over year in Q2 to $395.8 million from $409.8 million.
The decline primarily was due to lower rates and margins for truckload solutions, reflecting the soft freight environment and excess full truckload capacity, ArcBest said. The division’s revenue per shipment fell 14.9% year on year while total daily shipments rose 1%.
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