Trucking and logistics provider ArcBest missed second-quarter expectations ahead of the market open on Wednesday.
The Fort Smith, Arkansas-based company reported second-quarter adjusted earnings per share of $1.36, which was 10 cents light of the consensus estimate and 62 cents lower year over year.
ArcBest’s (NASDAQ: ARCB) consolidated revenue declined 5% y/y to $1.02 billion and came in just shy of consensus. The company’s asset-based unit, which includes results from less-than-truckload subsidiary ABF Freight, reported a slight y/y increase in revenue to $713 million.
Click for full report – “ArcBest’s efficiency initiatives helping offset soft demand”
Tonnage per day at the unit was up 4.3% y/y as a 5.6% increase in daily shipments was partially offset by a 1.2% decline in weight per shipment. Revenue per hundredweight, or yield, was down 3.1% y/y (also off by a low-single digit excluding fuel surcharges).
Comparisons to the prior year were skewed. The tonnage comp from the 2024 second quarter (a 20.3% y/y decline) was easy, while the yield comp (plus-23%) was not. The company has been taking on more freight from core accounts and using a dynamic pricing model to improve equipment utilization in down markets.
Revenue per day is down 1% y/y so far in July, the result of flat tonnage and a 1% decline in yield. The month is facing a relatively easy tonnage comp from July 2024 (negative-12.5%).
The company said “LTL industry pricing remains rational” in a news release, pointing to a 4% average increase in contractual rate renewals and a new 5.9% general rate increase, which will take effect on Monday. It implemented a similar GRI last September.
The asset-based unit reported a 92.8% adjusted operating ratio (inverse of operating margin), which was 300 basis points worse y/y. The OR improved 310 bps from the first quarter, which was in line with the historical sequential average change of 300 to 400 bps of improvement.
Salaries, wages and benefits expenses were up 180 bps y/y (as a percentage of revenue). Rents and purchased transportation expenses were up 80 bps.
The company said it expects to see roughly 70 bps of sequential OR improvement from the second to the third quarter, which is in line with historical trends. That implies a 92.1% OR for the third quarter, which would be 110 bps worse y/y.
Click for full report – “ArcBest’s efficiency initiatives helping offset soft demand”
ArcBest’s asset-light segment, which includes truck brokerage, reported an adjusted operating profit of $1.1 million after seven consecutive quarterly losses. The unit is expected to see breakeven results to $1 million in adjusted operating income in the third quarter.
ArcBest will host a conference call at 9:00 a.m. EDT on Wednesday to discuss second-quarter results.
