ArcBest beat expectations for the third quarter as it benefited from a lift in volumes and yields as former competitor Yellow Corp. closed its doors.
The transportation and logistics provider reported third-quarter adjusted earnings per share of $2.31 Friday before the market opened. The result was well ahead of the $1.50 consensus estimate but 39% lower year over year (y/y). The number excluded several items, including costs from a freight handling pilot, acquisition-related items and noncash impairments on some leases.
ArcBest’s (NASDAQ: ARCB) asset-based unit, which includes less-than-truckload operations, saw shipments at its core accounts increase more than 20% from the second quarter. However, the new freight is lighter in weight than the transactional shipments it had been moving prior to Yellow’s demise.
The asset-based unit reported a 6% y/y decline in revenue to $741 million as tonnage per day was down 6% and revenue per hundredweight, or yield, increased 2%. The tonnage decline was the result of a 2% increase in daily shipments and an 8% decline in weight per shipment.
Link to full story – ArcBest prudent in approach to new freight opportunities
Yields on LTL shipments increased by a mid-single-digit percentage when excluding fuel surcharges. The company cited a “reduction in LTL industry carrier capacity” as the reason for the improvement. Increases on contract renewals and deferred pricing agreements averaged 4% in the quarter.
ArcBest implemented a 5.9% general rate increase on base rate tariffs on Oct. 2.
Revenue per day was down y/y by 11% in July but flat by September. So far in October, the segment’s revenue is up 5% y/y as tonnage is down 4% but yield is up 9%. The increase in the yield metric is largely due to an 8% decline in weight per shipment.
When compared to the second quarter, asset-based revenue was up 3% as tonnage was down 12% and yield improved 16%.
The asset-based segment reported an 88.8% adjusted operating ratio, which was 350 basis points worse y/y. However, compared to the second quarter, the adjusted OR was 400 bps better. “Network cost savings actions” implemented during the third quarter likely provided some relief.
The company said its OR normally deteriorates 100 bps to 300 bps between the third and fourth quarters, however, modest improvement is expected this year.
ArcBest will host a call at 9 a.m. EDT Friday to discuss third-quarter results.
Link to full story – ArcBest prudent in approach to new freight opportunities
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