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ArcBest Corp. reported a drop in revenue and profits for the first quarter, and the company’s business took a turn for the worse at the start of the second quarter as it dealt with the growing economic effects of the coronavirus pandemic.
“We’re experiencing large reductions in our business over a very short period of time, which required us to take difficult actions in order to reduce costs,” CEO Judy McReynolds said in a conference call with industry analysts and investors May 5.
The actions include salary cuts and layoffs, including drivers and those at service centers.
“The impact of the coronavirus pandemic has been swift, and there is still much unknown, particularly about the severity and recovery across the globe,” McReynolds said.
The Fort Smith, Ark.-based logistics company said first-quarter net income plummeted 61% to $1.9 million, or 7 cents a share, from $4.9 million, or 18 cents, in the same period a year earlier.
Operating income dropped 9.3% to $7.8 million from $8.6 million.
Revenue fell 1.5% to $701.4 million from $711.8 million. A sudden influx of business from shipping health care supplies helped offset some of the declines in other areas as the pandemic set in, McReynolds said.
“However in April we experienced significant business declines in all operating segments,” she said. ArcBest’s April revenue fell 20% compared to April 2019.
For the first quarter, revenue in the company’s asset-based freight segment rose by 1.9% to $515.7 million from $506.1 million in the first quarter of 2019. Operating income dipped 2.9% to $13.2 million from $13.6 million.
Revenue in the company’s asset-light segment fell 4.1% to $217.2 million compared with $226.5 million in the same period a year earlier. The segment swung to an operating loss of $369,000 compared with a gain of $3.2 million.
The company made a series of moves in April to shore up its business operations and financial position as it navigates the recession.
ArcBest drew down the $180 million it had remaining in available borrowing capacity of its revolving credit facility and borrowed $45 million under an accounts receivable securitization program. Those actions raised ArcBest’s cash and short-term investments position to $531 million as of March 31.
It also is slashing capital expenditures by 30% to an estimated range of $95 million to $105 million for the year to preserve cash.
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ArcBest also launched cost reductions that include a 15% decrease in the salaries or work hours of all nonunion employees, and it suspended the employer match of its nonunion 401(k) plan. It cut fees paid to board members and to the board committee chairpersons by 15%. Those actions will save $15 million to $20 million in the second quarter compared with the same quarter a year earlier, said David Cobb, ArcBest’s chief financial officer.
Additionally, the company is trimming its workforce, laying off 12% of its drivers, or about 270 workers, and 14%, or 700, of the employees at its service centers. The workforce reduction better matches ArcBest’s headcount with the decline in business, Cobb said.
ArcBest ranks No. 14 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 7 on the less-than-truckload list.
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