ArcBest(ARCB) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Second quarter 2019 consolidated revenues were $771 million, a decrease of 2% from $793 million in the same period last year [19] - Net income for the second quarter was $0.92 per diluted share compared to $0.05 per share last year, with adjusted net income at $0.93 per diluted share compared to $1.12 per share last year [19] - Total debt at the end of the second quarter was $282 million, with total liquidity at $500 million [19][20] Business Line Data and Key Metrics Changes - Asset-Based revenue for the second quarter was $560 million, a per day increase of 1% compared to last year, while total tonnage per day decreased by 3.4% [21] - Asset-Light average daily revenue decreased by 5% compared to last year's second quarter, with operating income declining to $3.1 million from $4.7 million [26] - The Asset-Based operating ratio was 93.5% compared to 92.6% in the previous year [25] Market Data and Key Metrics Changes - The LTL pricing environment remains rational, with billed revenue per hundredweight increasing in the high single digits [39][44] - The overall demand environment is mixed, with some areas like construction and housing showing growth while manufacturing and industrial sectors are weaker [80][82] Company Strategy and Development Direction - The company is focused on growth through strategic investments in technology, equipment, and customer solutions, with an emphasis on improving customer experience [25][71] - The launch of Retail+, a compliance solution for vendors, aims to enhance service offerings and address customer needs in a competitive market [28][29] - The company is actively reviewing acquisition opportunities that align with its strategic goals, particularly those that enhance technology and operational efficiencies [78] Management Comments on Operating Environment and Future Outlook - Management noted a mixed economic outlook, with some customer segments showing strength while others remain volatile [6][7] - The company anticipates continued demand for its logistics services, driven by customers seeking more comprehensive supply chain solutions [7][30] - There is a cautious optimism regarding the second half of 2019, with expectations of stable demand despite uncertainties in the freight environment [68] Other Important Information - The company has moved up on the Fortune 1000 list to number 745, reflecting its growth and ability to provide full logistics solutions [27] - The company is monitoring labor costs closely while ensuring service levels are maintained [30][63] Q&A Session Summary Question: Can you talk about the dynamic between LTL-rated and truckload-rated freight in July? - Management noted a decline in LTL-rated shipments and an increase in truckload-rated shipments, which helped balance the network and reduce costs [33] Question: How is the LTL pricing environment trending? - The LTL pricing environment remains rational, with solid pricing increases observed, although challenges exist due to lower weight per shipment [39][44] Question: What are the expectations for peak season in 2019? - The company feels adequately staffed for seasonal demand and is positioned to meet customer needs with its Asset-Based and Asset-Light solutions [66][68] Question: What is the current demand environment? - The demand environment is mixed, with growth in certain sectors like e-commerce while others, such as manufacturing, are weaker [80][82]