ArcBest Corp. on Tuesday reported strong 2021 fourth quarter earnings gains that surpassed Wall Street expectations.
Net Income nearly tripled to $65.5 million in the three months that ended Dec. 31, compared to results in the same period of 2020.
Revenue increased 45% to $1.2 billion.
The Fort Smith-based trucking and logistics firm logged its highest revenue and net income on a fourth quarter and annual basis as the industry struggled with supply chain challenges and effects from the ongoing covid-19 pandemic.
Judy McReynolds, ArcBest chairman, president and chief executive officer, said in a morning investor call that the current economic backdrop fueled customer demand for the company's services.
"We've made great progress and have no intentions of slowing down," she said.
During the quarter, ArcBest acquired truckload brokerage firm MoLo Solutions, expanding its asset-light operations and revenue in the process, for approximately $239.4 million, according to the earnings report.
It also invested $25 million in Phantom Auto, a startup company that is experimenting with remote control software that allows forklift operators to work from the comfort of their homes.
Fourth quarter earnings per share surged to $2.47 compared to 89 cents the year prior and a net loss the year before that.
In a research brief, analyst Jack Atkins, of Stephens Inc., attributed the unexpected earnings to better-than-expected performance overall and significant growth on the asset-light side of the business.
Adjusted earnings per share was $2.79, higher than the expected $2.40 from Stephens and $2.27 from a FactSet consensus.
A decade ago, ArcBest's asset-light segment represented 10% of company revenue. Today it represents 44% with the acquisition of MoLo, McReynolds said.
The asset-based business, which consists of ABF Freight, recorded higher fourth quarter revenue and income compared to 2020, in part because of solid customer demand and pricing.
Asset-based revenue improved 23.3% to $683.5 million. Total tonnage per day grew 5.1% and total shipments per day improved 1.5%, with total weight increasing 17.3%.
Asset-based operating income climbed to $83.1 million compared to $27.9 million the year prior.
The asset-light business, which does logistics, transportation management and household goods moving services, revenue and income increased year over year on higher market rates linked to tight transport capacity and solid customer demand.
Asset-light revenue grew 79.7% to $541.2 million. For the months of November and December, MoLo had revenue of $120.3 million.
Asset-light operating income more than doubled to $13.9 million.
This growth and profitability came from customers seeking supply chain solutions, ArcBest said. FleetNet, the company's roadside assistance business, had an increase in total events and higher revenue.
The company's operating ratio improved dramatically to 87.8% compared to 95% the year prior. Because of this, ArcBest said ABF Freight will pay a 3% profit-sharing bonus to union-represented employees.
For the full year, revenue climbed 35.4% to $3.9 billion on higher asset-light results. Net income tripled to $213.5 million in the 12 months that ended Dec. 31.
In 2021, ArcBest spent $104 million on net capital expenditures, including $79 million on equipment for asset-based operations.
ArcBest had $125 million in cash and equivalents at the end of the year. It also had $226 million in debt in the forms of credit and notes borrowed. Total liquidity was $365 million.
ArcBest returned $116 million to shareholders through stock repurchase programs and dividends. McReynolds said efforts to increase shareholder value and improve environmental, social and corporate governance remains a priority.
Over the next three years, she said ArcBest expects to see significant operating margin growth in both segments and for revenue to be as much as $8 billion.
"Our record setting performance in 2021 will act as a springboard for a growing and profitable future," McReynolds said.
Shares of ArcBest rose nearly 6%, or $5.19, to close Tuesday at $93.63 on the Nasdaq stock exchange.