ArcBest reports first Q1 profit in seven years

ArcBest has announced its financial results for the first quarter of 2015. It reported revenue of $613.28m, an increase of 6% over the first quarter of 2014. The company also recorded operating income of $1.28m, a vast improvement from an operating loss of $8.70m in Q1 2014. Accordingly ArcBest’s margin stood at 0.21%.

“We were very gratified to see ArcBest post a first-quarter profit for the first time in seven years,” said ArcBest President and CEO Judy McReynolds. “As productivity and pricing improved, ABF Freight reversed last year’s first-quarter losses while maintaining its focus on better serving customers. The emerging businesses contributed their largest revenue portion yet to ArcBest, at 29% of total consolidated revenue, as our efforts to provide tailored, customized solutions across the supply chain are resonating well.”

ArcBest’s freight subsidiary, ABF Freight, recorded a 2.9% year-on-year increase in revenue to $428.9m. The business also recorded Q1 operating income of $43m, a marked improvement from the loss of $12.2m sustained in Q1 2015.

ABF Freight experienced first quarter revenue growth on improved pricing despite the effects of a slight reduction in total freight tonnage. Through management of its labour and equipment resources during the quarter, ABF Freight sought to maintain consistent service levels to both new and existing LTL customers. This resulted in improved dock productivity as employees hired in 2014 are more experienced in freight handling and loading. Despite year-over-year reductions in fuel surcharge related to lower fuel prices, ABF Freight continued to experience positive account pricing through its traditional ability to focus on unique, customer-specific solutions.

ArcBest’s emerging, non-asset-based businesses, recorded revenue of $183.7m compared to $158.4m in first quarter 2014, an increase of 16%. These businesses equalled 29% of total consolidated revenue compared to 27% during the same of 2014. However ArcBest’s non-asset based businesses recorded EBITDA of $6.6m, a fall of 16.46% compared to EBITDA in the first quarter of 2014. This was the result of higher than expected healthcare and casualty claims.

The non-asset-based businesses continued to experience revenue growth highlighted by strong, double digit increases at ABF Logistics and ABF Moving. ABF Logistics experienced significant growth in the freight brokerage business associated with additional shipments from new and existing customers and the expanding benefits of offering logistics services to customers across the ArcBest enterprise of companies.

Compared to strong revenue growth in 2014 Panther, ArcBest’s time critical service division, had a moderate first quarter revenue increase on 16% growth in shipments, primarily driven by new customers. Gross profit margins were impacted by demand softness and lower rates in the expedited market resulting from more readily available truckload capacity versus last year, and a shorter length of haul on new Panther business. The quarter’s results were impacted by unfavourable experience in casualty claims and higher than expected healthcare costs, which in total increased Panther’s operating costs versus the same period last year by $1.5m. Finally, costs associated with investments in additional sales personnel and infrastructure for future business growth also reduced first quarter 2015 profitability.