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ArcBest's LTL Metrics Are Solid For The Quarter; $3 Billion Revenue For The Year

ArcBest's LTL Metrics Are Solid For The Quarter; $3 Billion Revenue For The Year

By all the traditional measures of valuing less than truckload (LTL) companies, ArcBest Corp (NASDAQ: ARCB) had a strong fourth quarter.

Its billed revenue per hundredweight (CWT) for the quarter, one of the most basic benchmarks for LTL companies, rose 7.9 percent in its Asset Based segment, of which LTL is about 70 percent. That figure rose to $34.90 from $32.34 in the fourth quarter of last year. Billed revenue per shipment rose 6.5 percent to $430.36.

For the full year, billed revenue per CWT was up 9.2 percent, to $34.16 from $31.27. Billed revenue per shipment was up 12.8 percent to $430.34 from $381.55.

Shipments rose 4.2 percent to 1.266 million and shipments per day also were up 4.2 percent to 20,591. Tonnage and tons per day were both up 2.8 percent.

For the fourth quarter in the asset-based segment, the operating ratio (OR) was 93.3 percent, an improvement from 96.1 percent in the fourth quarter of 2017. Operating income for the segment in the quarter rose to $36.9 million, up from $19.6 million.

For the full year, the OR in that segment was 95.2 percent compared to 97.1 percent in full year 2017. Operating income rose to 95.2 percent from 97.1 percent in 2017. Its non-GAAP OR was 93.5 percent, which in a note to investors Deutsche Bank said was the highest in a decade.

In its prepared statement disclosing its earnings, the company said the Asset-Based segment "continued to benefit from the positive effects of improved pricing combined with prudent management of costs." The increases in revenue per CWT and the average revenue per shipment "continued to highlight the benefits of yield management initiatives implemented throughout the year."

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In the company's 8-K report filed with the Securities and Exchange Commission for the third quarter, ArcBest had laid out what its strategy was in its asset-based segment to improve yield as defined by revenue per CWT. "The (third quarter) increase in total billed revenue per hundredweight reflects yield improvement initiatives, including a general rate increase, contract renewals and CMC pricing which was introduced in the third quarter of 2017," as well as higher fuel surcharge revenues, ArcBest said in the filing. CMC pricing is linked to the space a shipment takes up in the LTL truck.

ArcBest said it had implemented an increase of 5.9 percent in the LTL base rate tariffs in April 2018. On top of that, accounts that were subject to deferred pricing agreements and annual contracts that were settled in that third quarter were up approximately 5.3 percent and 4.8 percent for the three and nine months ended September 30, helping to set the foundation for the strong fourth quarter.

The company's asset light division, which includes transportation solutions and truckload brokerage, showed a per-day gain in revenue of 9.7 percent for the quarter to $243.8 million from $222.2 million. EBITDA in the segment rose to $11.3 million from $9.3 million.

Source: SONAR

Source: SONAR

The company as a whole exceeded $3 billion in annual revenue for the first time, coming in at $3.09 billion, up from $2.826 billion in 2017.   

Management is holding a call with investors Thursday morning at 10:30 a.m. Unlike most other earnings calls, ArcBest only answers pre-submitted questions from analysts. ArcBest's stock barely budged in post-session trade after the earnings were released, holding near its closing price of $41.06.

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