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ArcBest Corp. reported record profits and revenue for the fourth quarter and the full year thanks to surging freight demand.
The Fort Smith, Ark.-based logistics company said fourth-quarter net income rose 173.8% to $65.5 million, or $2.47 diluted earnings per share, from $23.9 million in the same period a year earlier, 89 cents.
Revenue jumped 45.2% to $1.2 billion from $816 million a year earlier.
For the full year, net income rose 200% to $213.5 million, $7.98, from $71.1 million, or $2.69 the year before. Revenue grew 35.4% to $3.98 billion from $2.94 billion in the prior year.
“In 2021, challenges across the world contributed to demand for our services, reaching all-time highs,” ArcBest CEO Judy McReynolds said in a Feb. 1 conference call with industry analysts and investors.
McReynolds said ArcBest benefited from a robust pricing environment.
“We continue to see solid growth from our core customers. That continued into January,” Chief Financial Officer David Cobb said.
With supply chains disrupted by the ongoing coronavirus pandemic, clients value the reliable capacity ArcBest can provide, Cobb said.
McReynolds said the record financial performance during 2021 will “act as a springboard for further growth.”
The company said it expects revenue to nearly double to $7 billion to $8 billion by 2025. It targets operating profit margins of 10% to 15% for its asset-based trucking business and 4% to 6% for its asset-light contracted business.
“We firmly believe we are in a position to deliver our financial goals,” McReynolds said.
Still, there were some hiccups. The same supply chain disruption that contributed to solid pricing also delayed some ArcBest tractor orders, limiting capacity. Cobb said the company expects to catch up on tractor deliveries this year.
Additionally, the surging omicron variant of coronavirus created staffing issues at ArcBest and its clients, McReynolds said.
“We have seen the peak, and we are coming back down,” she said. McReynolds also said ArcBest was progressing rapidly toward having a better balance between its asset-light and asset-based freight operations.
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About 44% of its revenue now comes from the asset-light side of the business, up from just 10% a decade ago, she said.
Both of ArcBest’s business segments performed well in the fourth quarter.
The company’s asset-light business segment saw fourth-quarter revenue rise to $541.2 million from $301.2 million, a per-day increase of 79.7%. It posted an operating income of $13.9 million compared to $5.5 million in the same period a year earlier.
The segment benefited from increased truckload brokerage revenue and shipments spurred by ArcBest’s $235 million acquisition of the Chicago-based truckload freight broker MoLo Solutions on Nov. 1.
Its asset-based business segment saw quarterly revenue rise to $683.5 million from $554.4 million a year earlier. That represented a per-day increase of 23.3%. Total tonnage per day increased 5.1%, the company said. Total shipments per day rose 1.5%, while total billed revenue per hundredweight increased 17.3% and was positively impacted by higher fuel surcharges.
Operating income for the segment rose to $83.1 million from $27.9 million. The annual operating ratio — the percentage expenses represent of revenue — improved to 89.9 from 95.3.
As a result of the operating ratio achieved in 2021, the company’s ABF Freight division will pay a 3% profit-sharing bonus to its union employees.
McReynolds said ArcBest has ordered a handful of electric Class 8 tractors for delivery in the second half of the year.
It also is exploring the use of other electric vehicles. ArcBest recently conducted a four-week test of a battery-electric yard tractor in its Kansas City service center, McReynolds said.
“And we’ve also partnered with multiple companies to investigate the deployment of electric vehicles for our city pickup and delivery and warehouse handling units,” she said.
ArcBest ranks No. 15 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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