ArcBest Q2 Profit More Than Halves on Weak Demand
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ArcBest posted second-quarter 2023 net income of $40.4 million, or $1.64 per diluted share, compared with a profit of $102.5 million, or $4 per diluted share, in the same quarter in 2022, the carrier said July 28.
Fort Smith, Ark-based ArcBest posted second-quarter revenue from continuing operations of $1.1 billion, compared with $1.3 billion in the second quarter of 2022.
ArcBest ranks No. 12 on the TT Top 100 list of the largest for-hire carriers in North America and No. 7 on the LTL list.
The company’s earnings per share total missed the consensus analyst expectations from Zacks Equity Research. Zacks said consensus EPS was $2.05. The consensus revenue expectation from Zacks was $1.11 billion in the second quarter.
ArcBest’s asset-based segment posted revenue of $722 million in the most recent three months, compared with $802.6 million in the year-ago period, a per-day decrease of 10%.
Total tonnage per day at ArcBest’s asset-based segment increased 0.9% year-over-year to 14,027 tons from 13,896 in the second quarter of 2022. Total shipments per day increased 4.2% compared with the year-ago period to 1.33 million from 1.277 million.
The decrease in second-quarter total revenue for the asset-based segment was largely 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.
U.S. on-highway diesel prices averaged $3.767 per gallon in the final week of the second quarter, $1.908 a gallon cheaper than a year earlier.
ArcBest’s asset-light segment posted revenue of $409.8 million in the most recent quarter, compared with $549.7 million a year earlier, a per-day decrease of 25.4%. The company said the unit’s revenue was hurt by lower average revenue per shipment as a result of a softer market.
Press Release: ArcBest Announces Q2 Earnings for 2023: https://t.co/cQu8g8ts4v pic.twitter.com/Xni6LGVSE6 — ArcBest (@ArcBestCorp) July 28, 2023
Freight demand continued to be soft as a result of customers managing inventory and economic growth slowing, ArcBest Chairman and CEO Judy McReynolds said during the company’s July 28 earnings call.
Still, the company saw continued truckload volume growth despite that environment, with total shipments rising in the most recent three-month period.
“This soft market will end,” she said.
McReynolds said business was picking up, with more customers contacting the company in what she termed a period of “market disruption,” an opaque reference to ArcBest’s embattled LTL peer Yellow Corp. .
Yellow’s headline-making fight with the Teamsters union is in distinct contrast to ArcBest’s ABF Freight unit reaching a five-year national master freight agreement with the union, which was ratified at the start of July.
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ArcBest has the ability to increase its capacity as a result of any disruption or a rebound in demand, McReynolds said, adding the situation was evolving daily.
“With those customers, we’re well-positioned. Those customers, we have relationships with them, and they’re coming to us looking for solutions. And with our capability set, a lot of times, we’re able to respond in a way that gives them more options,” added Steven Leonard, asset-light logistics president.
McReynolds added that ArcBest is having “a lot of good conversations as a result” of what is happening with Yellow, and the fallout would continue for a number of years given Nashville, Tenn.-based Yellow is No. 3 on the Transport Topics Top 100 list of the largest less-than-truckload carriers in North America, behind FedEx Freight and Old Dominion Freight Line.
ArcBest is looking to expand through acquisitions or pickup assets as well as increasing its service center footprint organically, with ABF Freight President Seth Runser saying such moves would be carried out in an “opportunistic” fashion.
“We’re well-connected with the real estate folks at all the competition, and that really helps us to see what opportunities are there,” McReynolds said. “You always have to keep your ear to the ground and watch what happens, and this could be a unique opportunity.”
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Also in the call, Chief Strategy Officer Dennis Anderson said any M&A would generally focus on asset-light businesses and managed transportation.
The company also expects to make more strategic investments in new tractors through the rest of the year but also watch for ad-hoc opportunities in the upcoming quarter to reduce the age or increase the size of its fleet, Runser said.
