Driven by shipments growth of nearly 3%, ArcBest grew its third-quarter net income by nearly 40% to $88.8 million, but its leaders said October volumes have retreated a bit in line with historical trends.
Arkansas-based ArcBest grew its revenues 33% to $1.35 billion in the three months ended Sept. 30. Asset-based sales at the No. 27 on the FleetOwner 500 Top For-Hire Fleets list rose 16% to more than $790 million that its asset-light division, boosted by the acquisition a year ago of truckload brokerage MoLo Solutions, grew nearly 70% to $515 million.
Tonnage rose 4.4% during the quarter from 2021, and revenue per hundredweight climbed more than 11%. That growth reversed in October, with initial tonnage coming in 4% lower than the year before, while shipments were up about 1%. CFO David Cobb said the less-than-truckload business did well during the month while the company booked fewer heavier truckloads.
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On a conference call with analysts, executives noted that the October drop fits with seasonal patterns and said the shift to more LTL business reflects the changing needs of some customers as economic growth slows.
“There are some macro factors I think that are conspiring to soften demand,” said Chief Customer Officer Dennis Anderson. “There are still supply chain needs that need to be met. And the fact is people need goods moved, and we're in the business of moving them–and supply chains are also not getting less complex.”
Similarly, Chairman, President, and CEO Judy McReynolds and Cobb said they are confident in the ability of ArcBest’s various units to ride out this slowdown and position themselves to take market share when growth picks up again. McReynolds cited the food and beverage clients of MoLo as one factor that helps smooth out the ebbs and flows.
“There are some things that really will help us mitigate some of the retail softness or if there is less manufacturing industrial activity,” McReynolds said. “Although I think that remains to be seen because there’s so many unfilled orders that we deal with that on our equipment side that I’m thinking that’s going to hang in there as we look toward 2023. But what we tell our team is despite the economic backdrop, we have a lot of opportunity and we need to go pursue it.”
Shares of ArcBest (Ticker: ARCB) rose about 1% on Nov. 1 to close at $80.26. Over the past six months, they are up about 6%, growing the company’s market capitalization to nearly $2 billion.
