“ArcBest is uniquely positioned to meet customers’ needs, especially in a market that is rapidly changing,” stated Judy McReynolds, chairman, president and CEO. “We serve as trusted advisors — ready to keep customer supply chains moving with a full suite of logistics solutions, including a nationwide network of asset-based LTL capacity.”
ArcBest (NASDAQ: ARCB) reported adjusted earnings per share of $1.54 Friday before the market opened. The result was 51 cents light of consensus and well below the year-ago result.
ArcBest’s asset-based unit, which includes less-than-truckload operations, reported a 10% year-over-year (y/y) decline in revenue to $722 million as tonnage was up 1% and revenue per hundredweight, or yield, fell 11% inclusive of fuel surcharges. The yield metric was up against a tough comp (up 18% y/y) from the second quarter of 2022. Lower fuel prices, down nearly 30% y/y in the period, weighed on the comparison as well.
Excluding fuel, yield was off by a mid-single-digit percentage on LTL shipments. However, pricing on the company’s core LTL business (excluding fuel) increased y/y by a high-single-digit percentage. Contract renewals and deferred pricing agreements saw an average y/y increase of 3.1%.
A news release said less freight from core customers, smaller shipments and lower fuel surcharges were some of the revenue headwinds. Less-than-truckload tonnage increased from the first quarter but shipments were flat, “which is weaker than normal, seasonal expectations,” it noted.
The company said it recently implemented a cost-savings plan in the unit, which resulted in total daily shipments declining 5% from the second quarter. Even with the increase in core LTL shipments over the last week, the company’s transition from dynamic pricing has kept volumes lower in the month. However, the volume weakness will likely be cured quickly if Yellow closes.
Total yield was down 7% y/y in July. Pricing on core LTL business was up by a low-single-digit percentage excluding fuel.
The unit posted a 92.8% operating ratio, 830 basis points worse y/y. Most expenses as a percentage of revenue were higher, including the compensation line, which was up 680 bps. The company said it will increase the usage of training programs and prioritize service to core accounts.
The company’s asset-light division, which includes truck brokerage, reported a 25% y/y decline in revenue to $410 million. The unit’s adjusted OR deteriorated 390 bps to 98.4%.
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