ArcBest®, a leader in supply chain logistics, has announced its financial results for the third quarter of 2024, reporting revenues of $1.06 billion, down from $1.13 billion in the same quarter of 2023. The company recorded a net income of $100.3 million, equivalent to $4.23 per diluted share. This includes a $69.1 million after-tax benefit from the decrease in fair value of contingent consideration related to a 2021 acquisition. In comparison, net income in the prior year was $34.9 million, or $1.42 per diluted share. On a non-GAAP basis, the net income for Q3 2024 was $38.8 million, or $1.64 per diluted share, down from $56.7 million, or $2.31 per diluted share, a year earlier.
Judy R. McReynolds, ArcBest’s Chairman and CEO, commented on the company’s progress, stating, “Over the past year, we have made substantial strides in controlling costs, improving productivity, and enhancing our service quality. These efforts contributed to ABF once again being recognized by Mastio for exceeding the industry benchmark for service. This achievement is a testament to our unwavering commitment to excellence and our strategic investments in technology, training, and network design. Thank you to our customers for this recognition and to our team for their hard work and dedication.”
In 2021, ArcBest acquired a truckload brokerage with a potential earnout provision based on specific performance targets through 2025. However, due to a prolonged soft truckload market, no payments were made in 2023 and none are anticipated for 2024. As forecasts indicate a potential market recovery in 2025, the likelihood of an earnout payment has diminished. Consequently, the estimated contingent consideration liability was reduced by $91.9 million pre-tax, or $69.1 million after-tax, in the third quarter. This reduction is reflected as a decrease in expenses in the Company’s GAAP results but has been excluded from non-GAAP results to more accurately portray normal operations.
Operational Results Overview
Asset-Based Segment: Third Quarter 2024 vs. Third Quarter 2023
- Revenue: $709.7 million, down from $741.2 million, reflecting a per-day decrease of 5.8%.
- Daily tonnage decreased by 11.3%.
- Daily shipments saw a minor decrease of 0.7%.
- Total billed revenue per hundredweight increased by 7.4%.
- Operating income was $64.0 million, with an operating ratio of 91.0%, compared to $74.8 million and an operating ratio of 89.9% in the previous year.
On a non-GAAP basis, the Asset-Based segment generated $64.0 million in operating income with the same operating ratio of 91.0%, compared to $82.8 million and an operating ratio of 88.8% from Q3 2023. The decline in tonnage was primarily due to a 10.7% reduction in weight per shipment, while daily shipments were only slightly lower. The ongoing weakness in the manufacturing sector continues to negatively affect weight metrics. Despite these challenges, productivity improvements of 5.7% and various cost control initiatives have helped mitigate the impact of a softer market, rising insurance costs, and labor increases due to a new annual union contract effective in Q3 2024.
Pricing momentum was maintained during the quarter, aided by a 5.9% general rate increase implemented on September 9, 2024, along with a 4.6% rise in contract renewals. Overall, LTL industry pricing remains stable.
When compared to Q2 2024, Q3 2024 showed flat revenue per day, a 1.4% increase in daily shipments, and a 1.3% rise in billed revenue per hundredweight. However, weight per shipment fell by 3.2%, and tonnage per day decreased by 1.8%. The combination of lower tonnage and increased labor and insurance costs contributed to a 120-basis-point deterioration in the operating ratio, below the average sequential changes observed in recent years.