ArcBest adjusted earnings trail estimates as revenue declines

ArcBest Corp. reported higher second-quarter net income on Friday, while adjusted earnings came in below Wall Street expectations as revenue declined in a softer rate environment. The transportation company said revenue fell 2.3% to $1.08 billion, with lower revenue per shipment weighing on results.

Net income increased to $46.9 million, or $1.96 a share, from $40.4 million, or $1.64 a share, in the same quarter a year earlier, according to the company’s results. On an adjusted basis, ArcBest earned $1.98 a share, below the $2.07 consensus estimate compiled by FactSet.

The earnings report showed a split between stronger reported profit and weaker underlying revenue momentum. ArcBest’s results reflected pressure from pricing conditions in freight markets, where a soft rate environment can reduce the revenue generated on each shipment even when the company continues to move freight through its network and customer relationships.

Revenue pressure across business lines

ArcBest said per-day revenue in its asset-based operations declined 2.1%. Per-day revenue in asset-light operations fell 4.2%, a steeper drop.

The company attributed the asset-light decline to pricing and business mix. “Asset-Light revenues were impacted by lower revenue per shipment and reduced margins associated with the soft rate environment and a higher mix of managed transportation business, which has lower revenue per shipment and margins,” ArcBest said.

The distinction matters for investors because per-day revenue removes the effect of the number of working days in a quarter, giving a clearer comparison of operating activity across reporting periods. Revenue per shipment is also a key freight-market measure because it reflects the combined effect of rates, shipment characteristics and mix.

ArcBest’s asset-light comment pointed to two separate pressures: lower pricing per shipment and a larger share of managed transportation work. The company said that managed transportation carries lower revenue per shipment and lower margins, which can reduce segment revenue and profitability even when the business remains active.

Market reaction and stock performance

ArcBest shares had not traded in the premarket after the report, according to MarketWatch. Through Thursday, the stock was up 1.2% for the year.

That gain lagged the broader U.S. equity market. The S&P 500 had advanced 14.2% over the same period, according to MarketWatch data cited in the report.

The second-quarter figures place ArcBest among transport operators dealing with weaker freight pricing, while still reporting a year-over-year increase in net income. Investors will likely focus on whether revenue per shipment and margins stabilize in future periods, but the company’s Friday release did not provide additional guidance in the reported figures.

This story draws on original reporting from MarketWatch.