ArcBest Reports Record-Setting Quarter for Q2
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ArcBest Corp. posted records for quarterly revenue, operating income and net income for the second quarter of 2022.
The Fort Smith, Ark.-based logistics company on July 29 reported net income of $102.5 million, or $4 per diluted share, for the three months ending June 30. That compared with $61 million, or $2.27, during the previous year. Total revenue increased 46.8% to $1.39 billion from $949 million.
“It’s a remarkable time to be at ArcBest as we celebrate another record quarter driven by the execution of our growth-focused business strategy,” ArcBest CEO Judy McReynolds said during a call with investors. “We have so much to be proud of this quarter including revenue growth of 47% and releasing our third annual environmental, social and governance report.”
McReynolds also pointed to ongoing progress in building a safer, more sustainable and more inclusive company. ArcBest provided an update on its Environmental, Social and Corporate Governance (ESG) priorities a few days earlier. The company purchased electric straight trucks to pilot at its ABF Freight service center in San Bernardino, Calif., and also recently purchased Orange EV electric yard tractors for several service centers.
“Our revenue growth was driven by increasing demand across our business line and our breadth of integrated solutions,” McReynolds said. “At the core of our business and strategy is a focus on technology and innovation investment and importantly the development of our people. Put together, we are confident, we can thrive regardless of the environment.”
McReynolds also noted that a strategic focus on technology, innovation and workforce development positions the company to thrive in all environments even as supply chains become even more complex and economic pressures increase. She noted that includes investing capital back into the business to differentiate it as a logistics leader.
“Supply chains are getting more complex and we are helping our customers navigate these challenges,” McReynolds said. “We are committed to staying ahead of the curve to better serve customers as a trusted provider and partner. Our business results enable us to do that by continuing to reinvest and progress our strategic growth goals.”
Operating income increased 84.8% to a record of $137.3 million from $74.3 million last year. ArcBest attributed its improvements to strategic growth initiatives as well as innovation investments.
“We are well-positioned in growth markets and highly attuned to our customers’ needs,” McReynolds said. “This leads to the increasing demand we are seeing and enables the introduction of new offerings. Strong growth in key services like truckload and managed solutions is proof that we are responsive to our customers’ needs and that our strategy is working.”
The results surpassed Wall Street expectations. Analysts forecast earnings of $3.91 per share and quarterly revenue of $1.35 billion, according to Zacks Consensus Estimate.
The ArcBest asset-based segment reported second-quarter revenue increased 22.9% to $802.6 million from $652.8 million last year. Operating income increased 82.6% to $116.7 million from $63.9 million. Growth in the segment was due in part to a healthy pricing environment, higher fuel surcharges and customer demand driving an increase in freight shipments and tonnage.
ArcBest noted it was able to achieve higher profitability using optimization tools and improved freight data, which helped it maintain more consistent day-to-day business levels while optimizing revenue and managing costs.
ABF Freight, the company’s less-than-truckload subsidiary, contributed to the asset-based segment with an increase in average weight per shipment. Plus, hiring initiatives at specific service center locations throughout the ABF Freight network contributed to a net increase in employees.
The asset-light segment reported second-quarter revenue increased 91.3% to $631.8 million from $330.3 million during the prior-year quarter. Operating income increased 78.5% to $29.1 million from $16.3 million last year. Growth was driven by higher market rates combined with continued customer demand for services. The segment includes transportation, dedicated, expedited and international services. ArcBest noted that each service contributed to improved profitability compared with the prior-year period, as operating leverage increased due to the revenue growth of the business.
MoLo Solutions, acquired in November, continues to be integrated into the asset-light segment. It contributed to the unit by enhancing revenue and shipment totals through additional truckload brokerage services. FleetNet America, another subsidiary that provides fleet maintenance and repair service technology, helped lift segment revenue and profitability through increases in both total events and revenue per event.
Cowen and Co. said the results came in nicely above consensus expectations with continued growth going into the second half of the year. The investment bank and financial services company said in a report that the first look into July on the asset side suggests 6% tonnage growth and billed revenue per day increasing 18%. This would be above prior-quarter forecasts.
“Management withheld from offering MoLo contribution or margin color in 2H,” Cowen analyst Jason Seidl wrote in a report. “We model some freight softness in 2H despite a stronger-than-expected July.”
ArcBest ranks No. 15 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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