Yahoo Finance ArcBest Corp (ARCB) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges with ...
Revenue: $1 billion, down 6% year-over-year.
Non-GAAP Operating Income: $43 million, down from $52 million last year.
Adjusted EPS: $1.34, decreased from $1.58 in Q1 2023.
Asset-Light Segment Revenue: $396 million, daily decrease of approximately 9% year-over-year.
Asset-Light Operating Loss: Non-GAAP operating loss of $4.7 million for the quarter.
Asset-Based Segment Revenue: $672 million, per-day decrease of 3%.
Asset-Based Operating Ratio: Improved to 92.0%, up 30 basis points from last year.
Net Income Impact: Non-cash impairment charge related to equity investment in Phantom Auto resulted in a $22 million reduction in net income.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Judy, how do you balance price and volumes, especially as we enter an upcycle? How do you think about operating leverage versus pricing dropping through to the bottom line? A: Christopher Adkins, Chief Yield Officer, responded that ArcBest aims for both growth and appropriate compensation to ensure financial health. The company uses an advanced, proprietary activity-based costing system to inform pricing decisions at both individual shipment and customer levels. This system ensures that new and existing business is priced to cover costs profitably. Matt Beasley, CFO, added that both the Asset-Light and ABF segments are positioned to leverage operating efficiencies to enhance profitability as market conditions improve.
Q: Can you provide insights into the tonnage trends, especially considering the disposal of transactional freight? A: Christopher Adkins explained that significant changes in tonnage began in the second half of the previous year, affecting Q1 and Q2 figures. By Q3, more consistent year-over-year comparisons in tonnage and shipment changes are expected. The first quarter operated similarly to typical seasonality for the core business.
Q: How do you expect weight per shipment to normalize in the latter half of the year, and what proportion of your LTL business is core versus transactional? A: Matt Beasley noted potential tailwinds for weight per shipment improvement, including a rebound in the truckload market and a strengthening manufacturing economy. The company continues to strengthen its core business, which should positively impact future metrics.
Q: Could you discuss the economic backdrop given the trends observed in April, such as the deceleration in tons per day and shipments per day? A: Matt Beasley acknowledged a slight deceleration in April but highlighted ongoing improvements in operational efficiency and productivity. He remains optimistic about the acceleration in core business and operational metrics as the quarter progresses.
Q: What are the expectations for the sequential operating ratio (OR) movement from Q1 to Q2, and how does it compare to pre-COVID norms? A: Matt Beasley clarified that the expected 200 to 300 basis points improvement in OR from Q1 to Q2 is based on more recent performance rather than older historical data. The comparison to pre-COVID times might not be directly applicable due to different operating conditions and baseline operating ratios.
Q: How are service improvements influencing your yield gains, and what trends do you foresee for May, June, and beyond in terms of yield, tonnage, and shipments? A: Christopher Adkins indicated that improvements in service quality are helping to drive yield gains. For May and June, similar trends to April are expected, with a normalization in year-over-year comparisons starting in July. This reflects ongoing efforts to optimize service and pricing strategies in response to customer needs and market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
