The parent company to less-than-truckload carrier ABF Freight and others saw its first quarter losses grow despite healthy shipment growth and improved pricing, while a truckload carrier saw lower profits but beat expectations.
ArcBest Corp. recorded a net loss $7.4 million, or 29 cent per share, compared to a first quarter 2016 net loss of $6.1 million, or 24 cent per share. Revenue in the most recent quarter was $651.1 million compared $621.5 million a year earlier. Both revenue and the per share performance fell short of a consensus estimate from analysts.
“The first quarter, typically the most challenging of the year, saw revenue growth in both our asset-based and asset-light businesses, but also experienced some changing freight characteristics on the less-than-truckload side and a degree of weaker demand, particularly in the truckload sector,” said president and CEO Judy R. McReynolds.
The company’s asset-based segment, which includes ABF, had revenue of $464.4 million compared to $439.1 million, a per-day increase of 4.9%. Tonnage per day decreased 0.7% but shipments per day increased 5.7%. All this led to an operating loss of $10 million, up from an operating loss of $9 million in the first quarter of 2016.
“Asset-based services maintained pricing discipline, and average shipment rates were positively impacted by changes in freight profile and increases in fuel surcharge,” the company said in a statement. “Recent trends of asset-based shipment growth continued, resulting in the need for increased amounts of freight handling labor and purchased transportation resources.”
ArcBest’s asset-light operation had revenue of $193.1 million compared to $186 million a year earlier with operating income of $1.9 million compared to operating income of $1 million during the first quarter of last year.
The increase in revenue was the result of growth in expedited services and the impact of additional dedicated truckload business related to a second half 2016 acquisition, according to the company.
Better Revenue Doesn’t Lead to Higher Profit for P.A.M. Transportation
This follows the carrier P.A.M. Transportation releasing first quarter numbers recently that showed net income of $2.3 million in the first quarter, down from $2.9 million a year earlier. Earnings per share were 36 cents, far better than the 16 cents expected by Wall Street, but lower than 41 cents in the first quarter of 2016.
Revenue for the Arkansas-based company improved 5.6% from a year earlier to $109.4 million while operating income was less than half of what it was a year earlier, totaling $2.7 million.
According to President Daniel H. Cushman, the first quarter of 2017 was somewhat of a continuation of the trends the company experienced in 2016, where it saw higher costs and downward rate pressure from customers.
“While we have had some success in implementing cost reduction strategies, we have yet to achieve success in obtaining any significant rate increases from customers,” he said. “In fact, the largest variance in our results during the first quarter of 2017, compared to the first quarter of 2016, has been the variance in our rates charged to customers. The impact of the continuous downward rate pressure experienced throughout 2016 is evident, as after a full year of monthly customer rate reductions, our average rate per mile has declined to a point well below that of last year at this time.”
Cushman said some of P.A.M.’s customer base is beginning to show concern for future truck capacity due to the electronic logging device regulations that are scheduled to take effect in December, and the company believes industry capacity will begin to tighten as this timeframe approaches.
“These customers are looking to lock in multi-year rates while rates are at depressed levels,” he said. “Other customers seem to be taking the position that the new regulations will not have an impact on their capacity needs as their current carrier base is already compliant with the regulations.”