ArcBest reports loss of $7.4M; revenue up 5% in 1st quarter

ArcBest Corp. reported a $7.4 million loss for its first quarter of 2017, or 29 cents loss per share, missing analysts’ average expectation of 12 cents loss per share.

“As you know, the first quarter is typically our most challenging of the year. While bringing some unique aspects into play, this one was no exception,” Judy McReynolds, president, CEO and chairman, said in an earnings call.

The Fort Smith company blamed $2 million of the loss on ongoing technology and innovation investments. McReynolds also said both its core businesses “experienced some changing freight characteristics on the less-than-truckload side and a degree of weaker demand, particularly in the truckload sector.”

Total revenue was up just under 5 percent, to $651.1 million, from last year’s first quarter.

Investors punished ArcBest’s stock Friday. Shares fell 24.76 percent — a loss of $6.50 — to close at $19.75.

In its asset-based segment, ABF Freight saw a 5 percent increase in revenue to $464.4 million, but ended up with a $10 million operating loss. In a release, the company blamed the loss on “the need for increased amounts of freight handling labor and purchased transportation resources.”

The results showed the continuation of an existing

● trend in the market — a rise in e-commerce and residential deliveries. Tonnage per day shrank less than 1 percent, but shipments per day increased by about 6 percent, which “impacted dock and city handling costs, as well as cartage costs and therefore profitability,” McReynolds said in the call.

She said the company’s moving service is “a trusted partner for customers that require residential deliveries, and as a result, we have seen tremendous growth in this area.”

“That whole industry is getting turned on its ear, and it may only just be the beginning,” said Bob Williams, senior vice president and managing director of Simmons First Investment Group Inc. “No one knows what the future holds.”

The asset-light segment posted a $1.9 million operating

income and a 4 percent yearover-year revenue increase to $193.1 million. The segment remained around 30 percent of total business, as it was last year. The company has previously stated its plan to eventually bring that figure up to 50 percent.

When asked by an analyst on the earnings call whether the diversification of services was still the right business model, McReynolds stood by the plan. “I spent a lot of time with customers during the first quarter, and there was not a single conversation that I had with the customer that was oriented toward one service offering,” she said.

“If we’re not in a conversation that offers multiple service offerings, then we are not in the conversation that’s going to help them with their supply chain challenges,” she added.

McReynolds said the company’s recent corporate restructuring, which consolidated many of its previous brands into one ArcBest umbrella, plus its traditional asset-based ABF Freight business, has already been paying dividends.

“The asset-based business that would have gone elsewhere is now coming back to us as one part of a multilayered solution.”