The parent to less-than-truckload carrier ABF Freight and other trucking and logistics operations reported that its fourth quarter net income fell in both the final quarter of 2016 and all of last year.
ArcBest Corp. said on Wednesday that its fourth quarter 2016 net income totaled $1.6 million, or 6 cent per share, compared to fourth quarter 2015 net income of $5 million, or 19 per share. In contrast, revenue increased 6.2% to $688.2 million.
The company said its bottom line during the quarter was affected by a $10.3 million reorganization charge for impairment of software, contract and lease terminations and severance associated with its new corporate structure that was implemented beginning this year.
For all of 2016, ArcBest reported net income fell to $18.7 million, down from $44.9 million in 2015, as revenue increased slightly to $2.7 billion from $2.67 billion.
In the company’s asset based operations, which includes ABF Freight, 2016 fourth quarter revenue of $482.1 million compared to $461 million, a per-day increase of 5.4%.
Tonnage per day increased 0.9% during the quarter while shipments per day increased 6.1%. Total billed revenue per hundredweight increased by 3.6%
ArcBest's asset-based services experienced higher average daily revenue resulting from increased revenue per hundredweight, according to a statement from the company.
“In the midst of a competitive but rational industry yield environment, ArcBest's asset-based pricing remained disciplined. In fourth quarter 2016, freight shipments grew at a faster rate than freight tonnage,” ArcBest said. “Thus, the average weight, and resulting revenue, of each shipment was below that of fourth quarter 2015. The shipment growth contributed to increased freight handling labor and purchased transportation costs."
The company’s asset-light segment, which incudes its ABF Logistics, Panther, ABF Moving and FleetNet, reported revenue of $211.2 million in the fourth quarter compared to $191.5 million during the 2015 fourth quarter. Despite the increase, it posted an operating loss of $900,000 compared to operating income of $3.4 million a year ago.
“Asset-light revenue grew due to continued strength in the demand for expedited services and additional revenue from previous asset-light acquisitions within the truckload and dedicated truckload markets,” said ArcBest.
P.A.M. Transportation 2016 Profit Falls from Record 2015 Level
Meantime, the truckload fleet P.A.M. Transportation Services Inc. reported its fourth quarter and full-year 2016 profits fell by a similar margins.
Net income totaled $723,000, or 11 cents per share, in the final quarter of 2016 compared net income of $3.2 million or 45 cents per share a year earlier. Total revenue increased to $108.3 million from $102.4 million as fuel surcharge revenue moved 10% higher while base revenue improved 5.2%
For all of 2016, P.A.M. had net income of $11.1 million, or $1.67 per share, compared to net income of $21.4 million, or $2.93 per share in 2015. Revenue in 2016 increased 3.8% from 2015 to $432.9 million as fuel surcharge revenue fell 18.7% for the year while base revenue increased 7.7%.
Company President Daniel H. Cushman described 2016 as “a very challenging year.”
“Overcapacity in the industry resulted in sustained downward rate pressure while cost increases in our operating costs, particularly in the areas of employee health insurance and driver acquisition costs, continued to plague us throughout the year,” he said. “The increase in operating costs and our inability to pass these cost increases on through rate increases played a large part in our miss of profitability goals for the year."
While P.A.M.’s truckload operations saw its total miles increase during the fourth quarter to 58.4 million from 54.7 million a year earlier, the amount of empty miles also increased while its operating ratio moved higher to 98.15% from 93.96%. Also, its average number of company driver trucks fell from 1.405 a year ago to 1,284 in the most recent quarter but the average number of owner-operators increased to 589 from 470.
The company’s logistics segment saw only a slight increase in its operating ratio, hitting 98.65%, while total revenue slipped to $10.2 million in the fourth quarter of 2016 from $10.6 million a year earlier
"While our financial performance for 2016 fell short of our record-setting 2015 performance, we did make significant progress in many areas,” Cushman said. “We believe that 2016 can be summed up as a strong positioning year in which we grew divisions where we perform the best, added many new shippers with significant growth potential in new markets, reduced the average age of our tractor and trailer fleets to one of the newest in the industry, grew base trucking revenue by almost 9% and, despite the significant industry challenges, finished the year as one of the top four in the company's history from an earnings per share standpoint."