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ArcBest saw revenue and earnings increase from the prior year during the fourth quarter of 2020, the company reported Feb. 2.
The Fort Smith, Ark.-based logistics company posted net income of $26 million, or 97 cents per diluted share, for the three months ending Dec. 31. That compared with $14.8 million, 56 cents, during the same time the previous year. Total revenue increased by 14% to $816.4 million from $717.4 million.
The results surpassed expectations by investment analysts on Wall Street, who had been looking for 88 cents per share and quarterly revenue of $795.13 million, according to Zacks Consensus Estimate.
For the year, ArcBest reported revenue of $2.9 billion compared with $3 billion in 2019. Net income for 2020 was $85.4 million, $3.23, compared with $76.3 million, $2.88, in 2019.
The company attributed the Q4 growth to stronger demand for its integrated capacity solutions as well as cost management efforts. ArcBest CEO Judy McReynolds also credited efforts to strengthen and expand its customer base along with growth in individual business segments.
“Despite the pandemic we made progress in three important areas, expanding revenue opportunities, balancing our mix of revenue and profits and optimizing our cost structure,” McReynolds said during a Feb. 2 conference call with investors. “The 14% year-over-year total revenue growth for the fourth quarter is representative of our progress.”
McReynolds noted that the pandemic shifted the usual busy period for household moving operations from the second and third quarters into the fourth quarter, and added that continued growth in residential delivery shipments associated with online consumer shopping activities represented a meaningful portion of the Q4 revenue increase. But these trends brought added costs.
“Operational strategies included the use of more local and linehaul purchased transportation to supplement our own resources,” McReynolds said. “Thus, these costs increased as a percent of total revenues. However, key operating metrics that we watch closely relative to freight handling on our docks, local delivery and pickup of shipments to and from our customers’ locations and efficiency measures in our over-the-road network improved during the quarter, and contributed positively to greater profitability.”
“I thought they had a pretty strong quarter,” Cowen & Co. analyst Jason Seidl told Transport Topics. “There was a lot of good pricing momentum that was in the marketplace. They were back to … the contract pricing that they were getting in late ’19 and early ’20, which is around that 4%-plus range. That’s a positive thing for investors.”
Seidl added, “You saw really good tonnage growth early on here and really good revenue growth early on here in January.”
The carrier’s asset-based segment saw Q4 revenue increase 8% to $554.4 million from $513.3 million last year. Operating income for the segment increased to $34.9 million compared with $25.4 million during Q4 2019.
“The fourth-quarter results in our asset-based segment reflect the positive impact of improving customer business levels compared to the prior year,” McReynolds said. “In addition to the effects of an improved economic environment, the larger size LTL shipments in our asset-based network were the result of continuing initiatives designed to improve capacity utilization on our equipment and in specific distribution lanes throughout our system, similar to the previous quarter.”
The asset-based segment saw improvements in customer shipping patterns, including strength in the housing market, that lifted shipment and tonnage growth.
The asset-light segment reported a Q4 revenue gain of 27.1%, to $301.2 million from $237 million in Q4 2019. Operating income increased to $5.5 million compared with $1.1 million the prior year. Revenue gains for the segment were driven by improved customer demand combined with higher market-driven rate levels. Plus, limited availability of logistics equipment and carrier resources in the marketplace positively impacted demand for asset-light services, ArcBest said.
ArcBest ranks No. 14 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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